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CONTENTS
Objectives Definition of investment Objective of an investor Investment alternatives 1. Financial assets 2. Real assets How do investors invest? Most preferred investment option
OBJECTIVES
To find out how investors get information about the various financial instruments.
The type of financial instruments, they would prefer to invest. The rate of return they would likely to earn from the investment.
INVESTMENT
Investment refers to putting money into something with the expectation of profit. The future benefits derived from an investment are known as returns 1. Giving loan: with an expectation to get the principal back along with the interest at a future date 2. Buying gold: with an expectation of appreciation in its value in future 3. Buying an insurance plan: for various benefits derivable in future &/or in case of an eventuality 4. Buying shares of companies: for dividend &/ or capital appreciation.
OBJECTIVES OF AN INVESTOR
Maximization
INVESTMENT ALTERNATIVES
FINANCIAL ASSETS Bank Fixed deposits Insurance policies National Saving Certificate(NSC) Public Provident Fund (PPF) Stock Market Mutual Funds Private Equity Non Resident Ordinary (NRO) funds REAL ASSETS Real estate Precious objects
The three golden rules for all investors are: Invest early Invest regularly Invest for long term and not short term
FINANCIAL ASSETS
Insurance
It involves pooling funds from many insured entities to pay for the losses that some may incur. The insured entities are therefore protected from risk for a fee, with the fee being dependent upon the frequency and severity of the event occurring.
Like NSC, Public Provident Fund (PPF) is also supported by the Indian government. An investment of minimum Rs 500 and maximum Rs 70, 000 is required to be deposited in a fiscal year.
Investing in share market yields higher profits. stock market to some extent cannot be considered as the safest investment options..
Mutual funds:
It is a type of collective investment scheme that pools money from many investors and invests typically in investment securities (stocks, bonds, short-term money market instruments, other mutual funds, other securities, and/or commodities such as precious metals)
Futures & Option: These investments can offer 5-10% return even in a day. This market is also very tricky. Commodities: These investments are made in commodities such as rice, wheat, metals. This is very tricky investment. Return from these investments varies between 10-35%. One should be able to understand the weather, crop cycle and market dynamics.
Private Equity :
It refers to a type of investment aimed at gaining significant, or even complete, control of a company in the hopes of earning high return.
Bonds: These have very less risks so offers lower returns. The return from bonds ranges between 7-10% annually. Basic concepts of bond invest must clear in your mind as investor. Non Resident Ordinary (NRO) funds:
Investing in domestic (NRO) is one the best investment alternatives for NRIs who wish to deposit their income accrued abroad and maintain it in Indian rupees.
REAL ASSETS
Art as an investment
avenue has been considered an interesting and profitable alternative, but it is also extremely risky.
GOLD INVESTMENT
Of all the precious metals, gold is the most popular as an investment. Investors generally buy gold as a hedge or safe haven against any economic, political, social, or fiat currency crises
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