Training Investasi

Ciawi, 29 Agustus 2016

Investment
Basic Scope - Objectives

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Investment Planning

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Different Aspects of Investment

Investment
Generally

In Finance
Meaning

In Business

According to
Economics

Application of money for earning more money. Investment also

means savings or savings made through delayed consumption
(no credit card exp)
The purchase of a financial product or other item of value with
an expectation of favorable future returns. The practice of
investment refers to the buying of a financial product or any
valued item with an anticipation that positive returns will be
received in the future
The purchase by a producer of a physical good, such as durable
equipment or inventory, in the hope of improving future
business
The utilization of resources in order to increase income or
production output in the future. An amount deposited into a
bank or machinery that is purchased in anticipation of earning
income in the long run are both examples of investments.

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Investment Choices Personal

Property

Bonds

Fine Gold

Antiques

Stock
s

Other Investment
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Investment Choices Corporate

People

Office

Training

Machinery

System
System &
& Applications
Applications
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SoWhat is Investing?

Invesment:

Purchase of assets with the goal of

increasing future income
Focuses on wealth accumulation
Appropriate for long-term goals

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Two Forms Investment

Investment

Financial
Investment

Real Investment

Fine Gold

Bonds

Antiques

Stock
s

Property
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Investment Decision
1. Financial
Planning
Tools
6.
Retirement
& Estate
Planning
(Retirement
(Retirement
Planning,
Planning,
Estate
Estate
Planning)
Planning)

(Budgeting,
(Budgeting,
Time
Time Value,
Value, Tax
Tax
Planning)
Planning)

2. Liquidity
Managemen
t
(Banking,
(Banking,
Money
Money
management,
management,
Credit
Credit
Management))
Management))

Decide
where
to
invest

5. Investing

3. Financing

(Stocks,
(Stocks, Bonds,
Bonds,
Mutual
Mutual Funds)
Funds)

(Personal
(Personal Loans,
Loans,
Mortgage)
Mortgage)

4.
Protecting
Your Assets
& Income
(Insurance)
(Insurance)
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Scope Of Investment Management

Identification of Investors Requirements
Investors differ from each other in terms of objectives , preferences and constraints.
The foundation of investment management is thus, collection of data relating to
investors requirements. The analysis of this data gives an idea about the assets and
securities to be selected
Formulation of Investment Policy and Strategy
The policy will lay down the different asset classes of investment exc. shares,
debentures, bonds etc. and the proportion of funds to be invested in each class. After
formulating the investment policy, the next stage is to prepare the investment
strategy.
Execution of Strategy
Next strategy is the implementation and execution of investment process. This
process requires a lot of research, analysis and judgment. The portfolio thus,
constructed may relate to the needs of a given level of income, liquidity, safety, high
yielding growth stocks etc. The success of the portfolio would depend upon the
initiative, innovation and judgment of the person constructing the portfolio
Monitoring of Portfolio
The performance of the portfolio is evaluated and adjustments are made in the
portfolio composition from time to time. Thus is called monitoring and risk structuring
of the portfolios
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The Investment Management Process

Investment policy provides the raw material for the Investment
management. In this stage various investment assets are identified and
their features are connected. The goal of investment policy is to decide
which stock to be held in an investment portfolio.

1.

Set
Investment
policy

2.

Conduct
security
analysis

Its objective is to determine future risk and return in holding various

blends of individual securities. It helps in generating efficient portfolio. To
determine efficient portfolio expected return level is chosen and assets are
substituted until portfolio combination with a smallest variance at that
return level is found

Valuation of
Securities

Investment value is generally taken to be the present worth to the owners

of future benefits from investments. An appropriate stet of weights have
to be applied with the use of forecasted benefits to estimate the value of
investment assets.
Comparison of the value with the current market price of the asset allows
the determination of the relative attractiveness of the assets

Portfolio
Construction

It involves the following step :

1. Deciding the diversification level.
2. The investment timing.
3. Selection of Investment timing.
4. Allocation of investible funds to investment assets.
5. Acquisition of assets

3.

4.

5.

Portfolio
Evaluation and
Revision

The
formulation
of
investment
policy
requires

Determination of amount invested.

Determination of investment objectives.
Identification of potential investment assets.
Consideration of attributes of various investment assets.
Allocation of investible funds to various investment
categories.

It is continuous process. After selection of portfolio the next step is that of

evaluation from time to time depending on market conditions. The primary
motive of evaluation is to improve performance. Effective portfolio
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evaluation requires an investor to
balance what he has against available

Investment objectives
Primary
Objectives

Income

Capital
appreciation

Forms Of Return
Safety and Security
Of Funds
Liquidity

Tax considerations

to increase the rate of return and to

reduce the risk
Main objective is to earn income in form of dividend yield
or interest. Investment should earn reasonable and
expected return on the investment
The other important objective of investment is
appreciation in the capital invested over a period of time.
Can be achieved by following:
Conservative Growth
Aggressive Growth
Speculation
Periodical Cash Receipts
Capital Gain
fund so invested should be safe and secure . The
investment should be capable for redemption as and when
due
Before making the investment, the investor should
consider the degree of liquidity require
Considering the provisions of income tax, capital gain tax
and wealth tax to minimize his tax burden

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Rate of Return

Total return on investment expressed as a

percentage of the amount of money
invested
Total
Return

Amount
of
Money
Investe
d

Rate of
Return

Investments usually earn higher

rates of return than savings
tools
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Saving and investment

Once an appropriate amount of
liquid assets are reached

Recommend refocusing
goals from saving to
investing
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Risk

Potential
Return

RISK

Risk- uncertainty regarding the outcome of a situation

or event.
Investment Risk- possibility that an investment will fail to
pay the expected return or fail to pay a return at all

All investment tools carry some level of risk

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Investment v/s Speculation

Risk
- Normally risk involved in investments either loss of profit or
lower profit than expected.
- Speculation is a baseless guess and may result in a very high
profits or high loss. The risk in case of speculation is very high.
- Capital gain
- The motive of investment is achievement of appreciation.
- The motive of speculation is achievement of profits through
price changes
Time
- If securities are purchased and investor does not expect an
immediate return on it and waits for long term benefit, it is
termed as investment
- If a person expects immediate returns on his investment and
dispose of the in a short period, it is known as speculation.
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Features of an Ideal Investment Program

Safety

Every investor wants to be insured of the safety of principle

amount which he is investing. An ideal investment programe must
be consistent with the objectives preferences and constraints of
the investor. To minimize risk and to ensure safety , the investor
should diversify his investment

2.

Liquidity

Investor must insure a minimum liquidity in his investment to

meet contingencies. The investor should keep a part of his total
investment in the form of readily saleable securities

3.

Regularity
And Stability
of Income

Regularity of income at a stable and consistent rate is essential in

investment program

4.

Stability of
Purchasing
Power

Investors should balance their investment programmes to fight

against any purchasing power instability. Any rational investor
knows that money is losing its value by the extent of rise in prices

5.

Capital
Appreciation

The ideal growth stock is the right issue in the right industry
bought at the right time. The investor should try and forecast
which securities will appreciate in future

Tax Benefits

The investor should plan their investment in such a way that the
tax liability is minimum. Investor should concerned about the
return on investment as well as the burden of taxes on such
investment

Legality

Investor should aware of the various legal provisions relating to

the purchase of investment. The safest way to invest in securities
issued by UTI, NSC etc.

1.

6.

7.

Most of investor prefer to keep

in
17 a part of their money invested
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Quote

Remember
NEVER invest in
something you dont
understand!

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end of session 1

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