Professional Documents
Culture Documents
These are:
Financial investment
Used for consumption or production of goods and services
It can be used for further creation of assets e.g. shares and
bonds.
Marketable and Non marketable investment
Investments listed on stock exchanges are easily marketable.
Non marketable securities are not traded in market such as bank
drafts.
One can take decision only after analyzing entire process of investment
that starts with fund contribution and ends with getting expectations
fulfilled.
Liquidity:- Before making the investment, the investor should consider the
degree of liquidity require. Certain securities are capable of being sold in
the readily available market and some securities may not be so liquid.
Recommend refocusing
goals from saving to
investing
POTENTIAL
RETURN RISK
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.
Money market securities
Stocks
◦ Primary and secondary stock markets
◦ Primary market: a market where newly issued securities are traded
Initial public offering (IPO): the first offering of a firm’s stock to the
public
◦ Secondary market: a market where existing stocks are traded.
Bonds
Return from investing in bonds is in the form of coupon payments and price
appreciation.
Mutual Funds
Return from investing in mutual funds comes from coupon or dividend
payments generated by the portfolio of the fund.
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.