An Introduction

INVESTMENT MANAGEMENT
What is Investment

Investment is the employment of funds with

the aim of achieving additional income or
growth in value.

 Essential Quality- Waiting for Reward.

 Commitment of resources- To accrue future
benefits.
 Long term Commitment
Financial Meaning

An investment is Financial investment if –

 Assets Allocation
 Positive Return
 Time frame
Investment Range

Risky
Investment
Safe
Investments
Investor’s point of view-

 Supplier of Capital
 Commitment of a person’s fund
 To derive Future income-
 Interest, Dividends, Rent, Premiums, Pensions
benefits, Appreciation of value of principle capital
 Not important- use of money
 Considered to be transfers of financial assets
Economic Investment

Net Additions to the economy’s capital stock.

( goods and services ) are Economic
Investments
 Thus Investment implies formation of new
and productive capital in the form of new
things
 Inventories and human capital are included in
investment
INVESTMENT RELATIONSHIPS

2 PARTIES
Investors Investors
Suppliers Users
Investments v/s Speculation

Particulars Investment Speculation

Time Horizon Long term ( > 12 months) Short term ( one day)

Risk Limited High risk

Return Consistent and moderate High profits/ gains

Use of funds Own funds through savings Own or borrowed funds

Safety, liquidity, profitability, information, judgment,

Decisions
stability, performance hunches, beliefs
Investment and Gambling
Particulars Investment Gambling

Time Horizon Long term ( > 12 months) Short term (few hours)

Risk Limited High risk

Return Consistent and moderate High profits/ gains

Planning Planned Unplanned

Use of funds Own funds through savings Own or borrowed funds

Tips, rumors, hunches,

Decisions Scientific analysis, nature of risk
beliefs
Importance of Investments
Longer life
expectancy

Income Taxation

Interest
Inflation
Rates
Objective of Investment

 Good Rate of Return

 Reduced risk
 Liquidity in time of emergency
 Safety of funds
 Hedge against inflation
 Money in future
Favorable Factors

 To function effectively- favorable

environment Is must.
 Business Activities are marked by- Social
economic and political considerations.
 Economic and Political factors are important.
 There are four main considerations.
Main Favorable factors

Legal Safeguards

Stable Currency
Factors

Existence of F.I and F.S

Form of business organization

Choice of Investment
 Investment Media
Direct Investment alternatives-
Fixed principal incentives
• Cash
• Saving accounts
• Saving certificates
• Government bonds
• Corporate bonds and
debentures
Variable Principle Securities-
• Equity Shares
• Convertible Debentures
• Preference
• Securities
Indirect Investment Alternatives-
• Pension Funds
• Provident Funds
• Insurance
• Investment Companies
• Unit trust of India
Non- Securities Investments-
• Real Estate
• Mortgages
• Commodities
• Art, Antique and other Variable
Features of investment
program
Safety of principal

Liquidity

Income stability

Appreciation and PP Stability

Legality and Freedom From Care

Tangibility
Investment Policy

Investment Policy

Investment Analysis

Valuation of Securities

Portfolio Construction
Submitted to
• Mrs. Navneet Kaur Bhatiya

Submitted by
• Anjali Patel
• Gopal Uikey
• Lokendra Ankaley