bajaj.rajnesh
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Index
Introduction
Meaning
Different sectors of investment
share market
insurance
banks
post office
bonds
mutual fund
Analysis of choosing the best sector
Meaning:-
In today’s world it is necessary for everyone to earn to meet their needs. Saving is also necessary for an individual to meet any emergency or uncertain expenditure.
But the question arises here
Is the saving is enough for an individual because whatever the person is saving today it is used as need of tomorrow because of the inflation rate. Then what for emergency? And uncertainty?
The solution for that is
Investment
The money an individual earn some part is spent on meeting the needs, and some of the part is saved for future expenses. Instead of saving only an individual do the saving in order to get returns from it. That is called as investment.
One of the important reason why there is a need to invest is to meet the cost of inflation.
What is the right time for an individual to invest?
The early investment is the better because it will allow an investment to grow.
An investor must take care of certain aspects while investing:
obtain written documents explaining the investment
read and understand the documents
verifying the legitimacy of that investment
consider the benefits of that investment
find out the risk involved in that investment
liquidity and safety
comparison with the other available options of investment
deal through the legal authority
There are lots of options available for long term and shot term investment:
An investor can invest in
Physical assets like property, jewellery, commodities.
Financial assets such as fixed deposits in banks, small saving instruments with post offices, insurance, provident fund, pension fund etc. or securities, bonds, debentures.
Short term options are:
v Saving bank account
v Money market
v Fixed deposits
Long term options are:
Post office
Public provident fund
Company fixed deposits
Bonds and debentures
Mutual funds
We have chosen to invest in long term investment.
Different sectors of investment
Where should an investor invest?
share market
insurance
banks
post offices
bonds
mutual fund
The main two factors which comes into the while investing are risk and returns.
We can not say that there is no risk in any of the options available but the amount of risk is somewhere high and somewhere low.
Returns are fixed in some of the options and in some of them are fluctuating
Share market:
SEBI is the regulatory authority of share market (Securities and exchange board of India) provides the platform for trading, where buyers and sellers can meet and transact in securities.
NSE is another electronic platform available for trading. There is no need to buyers and sellers to meet personally. They can communicate through internet and the screens provided to the members of NSE.
A debt instrument issued for the period of more than one year with the purpose of raising capital by borrowing. The federal government, states, cities, corporations, and many other types of institutions sell bonds. Generally, a bond is a promise to repay the principal along with interest. some bonds do not pay interest, but all bonds require a repayment of principal. When an investor buys a bond, he becomes a creditor of the issuer. However , the buyer does not gain any kind of ownership rights to the issuer unlike in the case of equities. On the hand, a bond holder has a greater claim on an issuer’s income than a shareholder in the case of financial distress. Bonds are often divided into different types based on tax status., credit quality, issuer type, Maturity and secured/unsecured. U.S Treasury bonds are generally considered as safest unsecured bonds.
Types of Shares:
Equity shares
Rights issue
Bonus shares
Preference share
Types of risks involved while investing in share market:
Equity Risk:
It is the risk that one’s investment will depreciate because of stock market dynamics causing one to lose money.
Interest rate risk:
In this type of risk the relative value of security, especially a bond, will worsen due to an interest rate increases. This risk is commonly measured by bond’s duration.
Currency risk:
It is the form of risk that arises from changes in the p[rice of one currency against another. Whenever investors or companies have assets or business operations across national borders, they face currency risk if their positions are not hedged. The exchange risk associated with the foreign denominated instrument is a key element in foreign investment. The risk flows from differential monetary policy and growth in real productivity, which results in differential inflation rates.
Commodity risk:
Commodity risk refers to the uncertainties of future market values and the size of the future income, caused by the fluctuation in the prices of commodities. These commodities may be grain, metals, gas, electricity etc. a commodity enterprises needs to deal with the following risks:
Price risk
Quantity risk
Cost risk
Political risk
Returns on shares:
Returns depends upon the economic environment of the nation. If something is called bad phase is going on in the economy of the country there will bullish phase and vice versa.
An investor will get return in the form of
Dividend
Bonus share
Buying and selling
It is the riskiest investment.
Banks
a bank is the business that borrows from its customers on current accounts repayable to its customer’s cheques and collects cheques for its customers account. Banks may also issue bank notes and lend money to customers on current account. Accept term deposits and make term loans and provide other financial services. Banks that issue notes are called banks of issue.
Currently in most jurisdications the business of banking is regulated and banks require a licence. Banking licenses are granted by the bank regulatory authorities and provide rights to conduct the most fundamental banking services such as accepting deposits and making loans. There are also financial institutes that provide certain banking services without meeting the legal definition of bank, so celled non- banki9ng financial company.
Banks have a long history, and have influenced economies and politics for centuries.
Generally services offered by banks:
Taking deposits
Extending loans
Cashing cheques
Facilitating money transactions
Issuing credit cards, ATM cards etc.
Storing valuables
Types of investment an investor can make in banks:
Investment banks “underwrite” stock and bond issue, trade for their own accounts, make markets, and advise corporations on capital markets activities such as mergers and acquisitions.
Merchant banks were traditionally banks which engaged in trade financing. The modern definition, however refers to banks which provide capitalk to firms in the form of shares rather than loans.
Post Offices
the server and associated storage and mail handling services that provide the centralized location for collection and distribution of e_mail over a network.
A facility operated by the United States Postal service for the collection, processing and distribution of letters, packages and other mail and for related postal services. A post office does not include commercial packaging and mailing services.
A post office is a facility where the public can purchase postage stamps for mailing correspondence or merchandise, and also drop off or pick up packages or other special delivery items
Investment account
An account into which investor can pay atany post office. To withdraw you must give one month’s notice or suffer 30 days penalty.
Anyone can invest in post office
Risk involved in none.
Full value of original investment returned on withdrawal
Insurance
Insurance in law and economics is a form of risk management primarily used to hedge against the risk of potential financial losses. Insurance is defined as the equitable transfer of the risk of potential loss from one entity to another, in excahneg for premium and duty of care.
Losses may be uncertain
The rate and distributuion of losses may be predictable.
Types of Insurance
Any risk can be quantified probably has a type of insurance to protyect it
Automobiles insurance
Boiler insurance
Casuality insurance
Credit insurance
Directors and officers insurance
Financial loss insurane
Health insurance
Liability insurance
Political insurance
Professional indemnity insurance
Property insurance
Terrorism insurance
Title insurance
Travel insurance
Workers compensation insurance
Analysis
Acording to us investing in Mutual Fund is the best
Mutual fund can be defined as a pool of money invested by various investors with certain investment objectives.
History of mutual funds
In 1963 UTI came out with the mutual fund and till 1987 there was no bank or institute in mutual fund.
In 1987 public sector banks and life insurance corporation were allowed to come with mutual fund offering
In 1993 foreign players and private players were allowed to come up with mutual fund offering.
Structure of mutual company os instiute:
SEBI
Sponsor
Asset management company
Clients
The schemes available in mutual fund
Equity
Debt
Balanced
Other schemes are also available but we opted for these three
Big players of mutual fund
Kotak
Tata
Birla
Reliance
J p Morgan
SBI
ICICI etc
Reason for choosing mutual fund as the best option
Professional expert management of our investment in the fund
Diversification of portfolio
Less risk compared to share market
Flexible and convenient
Liquidity
Good returns as compared to banks and post office
Tax benefits
· In banks the returns are fixed and there is in private banks getting Bankrupt
· Post offices are with minimum risk but the returns are very low.
· In bonds they have fixed returns
· Share market is the riskiest
· Mutual fund returns are high and risk is low
Index
Introduction
Meaning
Different sectors of investment
share market
insurance
banks
post office
bonds
mutual fund
Analysis of choosing the best sector
Meaning:-
In today’s world it is necessary for everyone to earn to meet their needs. Saving is also necessary for an individual to meet any emergency or uncertain expenditure.
But the question arises here
Is the saving is enough for an individual because whatever the person is saving today it is used as need of tomorrow because of the inflation rate. Then what for emergency? And uncertainty?
The solution for that is
Investment
The money an individual earn some part is spent on meeting the needs, and some of the part is saved for future expenses. Instead of saving only an individual do the saving in order to get returns from it. That is called as investment.
One of the important reason why there is a need to invest is to meet the cost of inflation.
What is the right time for an individual to invest?
The early investment is the better because it will allow an investment to grow.
An investor must take care of certain aspects while investing:
obtain written documents explaining the investment
read and understand the documents
verifying the legitimacy of that investment
consider the benefits of that investment
find out the risk involved in that investment
liquidity and safety
comparison with the other available options of investment
deal through the legal authority
There are lots of options available for long term and shot term investment:
An investor can invest in
Physical assets like property, jewellery, commodities.
Financial assets such as fixed deposits in banks, small saving instruments with post offices, insurance, provident fund, pension fund etc. or securities, bonds, debentures.
Short term options are:
v Saving bank account
v Money market
v Fixed deposits
Long term options are:
Post office
Public provident fund
Company fixed deposits
Bonds and debentures
Mutual funds
We have chosen to invest in long term investment.
Different sectors of investment
Where should an investor invest?
share market
insurance
banks
post offices
bonds
mutual fund
The main two factors which comes into the while investing are risk and returns.
We can not say that there is no risk in any of the options available but the amount of risk is somewhere high and somewhere low.
Returns are fixed in some of the options and in some of them are fluctuating
Share market:
SEBI is the regulatory authority of share market (Securities and exchange board of India) provides the platform for trading, where buyers and sellers can meet and transact in securities.
NSE is another electronic platform available for trading. There is no need to buyers and sellers to meet personally. They can communicate through internet and the screens provided to the members of NSE.
A debt instrument issued for the period of more than one year with the purpose of raising capital by borrowing. The federal government, states, cities, corporations, and many other types of institutions sell bonds. Generally, a bond is a promise to repay the principal along with interest. some bonds do not pay interest, but all bonds require a repayment of principal. When an investor buys a bond, he becomes a creditor of the issuer. However , the buyer does not gain any kind of ownership rights to the issuer unlike in the case of equities. On the hand, a bond holder has a greater claim on an issuer’s income than a shareholder in the case of financial distress. Bonds are often divided into different types based on tax status., credit quality, issuer type, Maturity and secured/unsecured. U.S Treasury bonds are generally considered as safest unsecured bonds.
Types of Shares:
Equity shares
Rights issue
Bonus shares
Preference share
Types of risks involved while investing in share market:
Equity Risk:
It is the risk that one’s investment will depreciate because of stock market dynamics causing one to lose money.
Interest rate risk:
In this type of risk the relative value of security, especially a bond, will worsen due to an interest rate increases. This risk is commonly measured by bond’s duration.
Currency risk:
It is the form of risk that arises from changes in the p[rice of one currency against another. Whenever investors or companies have assets or business operations across national borders, they face currency risk if their positions are not hedged. The exchange risk associated with the foreign denominated instrument is a key element in foreign investment. The risk flows from differential monetary policy and growth in real productivity, which results in differential inflation rates.
Commodity risk:
Commodity risk refers to the uncertainties of future market values and the size of the future income, caused by the fluctuation in the prices of commodities. These commodities may be grain, metals, gas, electricity etc. a commodity enterprises needs to deal with the following risks:
Price risk
Quantity risk
Cost risk
Political risk
Returns on shares:
Returns depends upon the economic environment of the nation. If something is called bad phase is going on in the economy of the country there will bullish phase and vice versa.
An investor will get return in the form of
Dividend
Bonus share
Buying and selling
It is the riskiest investment.
Banks
a bank is the business that borrows from its customers on current accounts repayable to its customer’s cheques and collects cheques for its customers account. Banks may also issue bank notes and lend money to customers on current account. Accept term deposits and make term loans and provide other financial services. Banks that issue notes are called banks of issue.
Currently in most jurisdications the business of banking is regulated and banks require a licence. Banking licenses are granted by the bank regulatory authorities and provide rights to conduct the most fundamental banking services such as accepting deposits and making loans. There are also financial institutes that provide certain banking services without meeting the legal definition of bank, so celled non- banki9ng financial company.
Banks have a long history, and have influenced economies and politics for centuries.
Generally services offered by banks:
Taking deposits
Extending loans
Cashing cheques
Facilitating money transactions
Issuing credit cards, ATM cards etc.
Storing valuables
Types of investment an investor can make in banks:
Investment banks “underwrite” stock and bond issue, trade for their own accounts, make markets, and advise corporations on capital markets activities such as mergers and acquisitions.
Merchant banks were traditionally banks which engaged in trade financing. The modern definition, however refers to banks which provide capitalk to firms in the form of shares rather than loans.
Post Offices
the server and associated storage and mail handling services that provide the centralized location for collection and distribution of e_mail over a network.
A facility operated by the United States Postal service for the collection, processing and distribution of letters, packages and other mail and for related postal services. A post office does not include commercial packaging and mailing services.
A post office is a facility where the public can purchase postage stamps for mailing correspondence or merchandise, and also drop off or pick up packages or other special delivery items
Investment account
An account into which investor can pay atany post office. To withdraw you must give one month’s notice or suffer 30 days penalty.
Anyone can invest in post office
Risk involved in none.
Full value of original investment returned on withdrawal
Insurance
Insurance in law and economics is a form of risk management primarily used to hedge against the risk of potential financial losses. Insurance is defined as the equitable transfer of the risk of potential loss from one entity to another, in excahneg for premium and duty of care.
Losses may be uncertain
The rate and distributuion of losses may be predictable.
Types of Insurance
Any risk can be quantified probably has a type of insurance to protyect it
Automobiles insurance
Boiler insurance
Casuality insurance
Credit insurance
Directors and officers insurance
Financial loss insurane
Health insurance
Liability insurance
Political insurance
Professional indemnity insurance
Property insurance
Terrorism insurance
Title insurance
Travel insurance
Workers compensation insurance
Analysis
Acording to us investing in Mutual Fund is the best
Mutual fund can be defined as a pool of money invested by various investors with certain investment objectives.
History of mutual funds
In 1963 UTI came out with the mutual fund and till 1987 there was no bank or institute in mutual fund.
In 1987 public sector banks and life insurance corporation were allowed to come with mutual fund offering
In 1993 foreign players and private players were allowed to come up with mutual fund offering.
Structure of mutual company os instiute:
SEBI
Sponsor
Asset management company
Clients
The schemes available in mutual fund
Equity
Debt
Balanced
Other schemes are also available but we opted for these three
Big players of mutual fund
Kotak
Tata
Birla
Reliance
J p Morgan
SBI
ICICI etc
Reason for choosing mutual fund as the best option
Professional expert management of our investment in the fund
Diversification of portfolio
Less risk compared to share market
Flexible and convenient
Liquidity
Good returns as compared to banks and post office
Tax benefits
· In banks the returns are fixed and there is in private banks getting Bankrupt
· Post offices are with minimum risk but the returns are very low.
· In bonds they have fixed returns
· Share market is the riskiest
· Mutual fund returns are high and risk is low