Study of Portfolio Management
Saving are excess of income over expenditure for any economicunit. Thus,S = Y – EWhere, S is saving,Y is income andE is expenditure.Secondly, excess funds or surplus in profits or capital gains arealso available for investment. Thus,S = W1 – W2Where, W1 is wealth in period 2,W2 is wealth in period 1,So, the difference between them is capital gains or losses.Thirdly, investment is also made by many companies andindividuals by borrowing, from others. Thus the Corporate Sector andGovernment Sector are always net borrows, as they invest more than their savings. Thus,S = B – LWhere, B is borrowingsL is landingsSavings can be negative or positive
Saving is abstaining from present consumption for a future use.Saving are sometimes autonomous coming from households as a matter of habit. But bulk of the savings come for specific objectives, like interestincome, future needs, contingencies, precautionary purposes, or growth infuture wealth, leading to rise in the standard of living etc.
Saving and Investment:
PProf. V. B. Shah Institute of Management & R. V. Patel College of Commerce, Amroli.