A

Assignment on
Investment Avenue

Submitted to submitted by
Ram Sangawa sir Pallavi Mathur
 INVESTMENT
Definition

1. In finance, the purchase of a financial product or other item of value with an

expectation of favourable future returns. In general terms, investment means the use
money in the hope of making more money.

2. In business, the purchase by a producer of a physical good, such as durable

equipment or inventory, in the hope of improving future business.

Investment Objective

The options for investing our savings are continually increasing, yet every single
investment vehicle can be easily categorized according to three fundamental
characteristics - safety, income and growth - which also correspond to types of
investor objectives. While it is possible for an investor to have more than one of
these objectives, the success of one must come at the expense of others. Let's
examine these three types of objectives, the investments that are used to achieve
them and the ways in which investors can incorporate them in devising a strategy.

Safety
Perhaps there is truth to the axiom that there is no such thing as a completely safe
and secure investment. Yet we can get close to ultimate safety for our investment
funds through the purchase of government-issued securities in stable economic
systems, or through the purchase of the highest quality corporate bonds issued by
the economy's top companies. Such securities are arguably the best means of
preserving principal while receiving a specified rate of return.
The safest investments are usually found in the money market and include such
securities as Treasury bills (T-bills), certificates of deposit (CD), commercial paper or
bankers' acceptance slips; or in the fixed income (bond) market in the form of
municipal and other government bonds, and in corporate bonds. The securities listed
above are ordered according to the typical spectrum of increasing risk and, in turn,
increasing potential yield. To compensate for their higher risk, corporate bonds
return a greater yield than T-bills.

It is important to realize that there's an enormous range of relative risk within the
bond market. At one end are government and high-grade corporate bonds, which are
considered some of the safest investments around; at the other end are junk bonds,
which have a lower investment grade and may have more risk than some of the
more speculative stocks. In other words, it's incorrect to think that corporate bonds
are always safe, but most instruments from the money market can be considered
very safe.

Income
The safest investments are also the ones that are likely to have the lowest rate of
income return, or yield. Investors must inevitably sacrifice a degree of safety if they
want to increase their yields. This is the inverse relationship between safety and
yield: as yield increases, safety generally goes down, and vice versa.

Most investors, even the most conservative-minded ones, want some level of income
generation in their portfolios, even if it's just to keep up with the economy's rate of
inflation. But maximizing income return can be an overarching principle for a
portfolio, especially for individuals who require a fixed sum from their portfolio every
month. A retired person who requires a certain amount of money every month is well
served by holding reasonably safe assets that provide funds over and above other
income-generating assets, such as pension plans, for example.

Growth of Capital

This discussion has thus far been concerned only with safety and yield as investing
objectives, and has not considered the potential of other assets to provide a rate of
return from an increase in value, often referred to as a capital gain. Capital gains are
entirely different from yield in that they are only realized when the security is sold for
a price that is higher than the price at which it was originally purchased. Selling at a
lower price is referred to as a capital loss. Therefore, investors seeking capital gains
are likely not those who need a fixed, ongoing source of investment returns from
their portfolio, but rather those who seek the possibility of longer-term growth.

Growth of capital is most closely associated with the purchase of common stock,
particularly growth securities, which offer low yields but considerable opportunity for
increase in value. For this reason, common stock generally ranks among the most
speculative of investments as their return depends on what will happen in an
unpredictable future. Blue-chip stocks, by contrast, can potentially offer the best of all
worlds by possessing reasonable safety, modest income and potential for growth in
capital generated by long-term increases in corporate revenues and earnings as the
company matures. Yet rarely is any common stock able to provide the near-absolute
safety and income-generation of government bonds.

It is also important to note that capital gains offer potential tax advantages by virtue
of their lower tax rate in most jurisdictions. Funds that are garnered through common
stock offerings, for example, are often geared toward the growth plans of small
companies, a process that is extremely important for the growth of the overall
economy. In order to encourage investments in these areas, governments choose to
tax capital gains at a lower rate than income. Such systems serve to encourage
entrepreneurship and the founding of new businesses that help the economy grow.

Secondary Objectives

Tax Minimization

An investor may pursue certain investments in order to adopt tax minimization as

part of his or her investment strategy. A highly-paid executive, for example, may
want to seek investments with favourable tax treatment in order to lessen his or her
overall income tax burden. Making contributions to an IRA or other tax-sheltered
retirement plan, such as a 401(k), can be an effective tax minimization strategy.
Marketability / Liquidity

Many of the investments we have discussed are reasonably illiquid, which means
they cannot be immediately sold and easily converted into cash. Achieving a degree
of liquidity, however, requires the sacrifice of a certain level of income or potential for
capital gains.

Common stock is often considered the most liquid of investments, since it can
usually be sold within a day or two of the decision to sell. Bonds can also be fairly
marketable, but some bonds are highly illiquid, or non-tradable, possessing a fixed
term. Similarly, money market instruments may only be redeemable at the precise
date at which the fixed term ends. If an investor seeks liquidity, money market assets
and non-tradable bonds aren't likely to be held in his or her portfolio.

Conclusion
As we have seen from each of the five objectives discussed above, the advantages
of one often comes at the expense of the benefits of another. If an investor desires
growth, for instance, he or she must often sacrifice some income and safety.
Therefore, most portfolios will be guided by one pre-eminent objective, with all other
potential objectives occupying less significant weight in the overall scheme.

Choosing a single strategic objective and assigning weightings to all other possible
objectives is a process that depends on such factors as the investor's temperament,
his or her stage of life, marital status, family situation, and so forth. Out of the
multitude of possibilities out there, each investor is sure to find an appropriate mix of
investment opportunities. You need only be concerned with spending the appropriate
amount of time and effort in finding, studying and deciding on the opportunities that
match your objectives.
  Mutual fund
A mutual fund is a professionally managed type of collective investment scheme
that pools money from many investors and invests typically in investment securities
(stocks, bonds, short-term money market instruments, other mutual funds, other
securities, and/or commodities such as precious metals). The mutual fund will have a
fund manager that trades (buys and sells) the fund's investments in accordance with
the fund's investment objective. In the U.S., a fund registered with the Securities and
Exchange Commission (SEC) under both SEC and Internal Revenue Service (IRS)
rules must distribute nearly all of its net income and net realized gains from the sale
of securities (if any) to its investors at least annually. Most funds are overseen by a
board of directors or trustees (if the U.S. fund is organized as a trust as they
commonly are) which is charged with ensuring the fund is managed appropriately by
its investment adviser and other service organizations and vendors, all in the best
interests of the fund's investors.

Usage, investment objectives

Since the Investment Company Act of 1940, a mutual fund is one of three basic
types of investment companies available in the United States.

Mutual funds may invest in many kinds of securities (subject to its investment
objective as set forth in the fund's prospectus, which is the legal document under
SEC laws which offers the funds for sale and contains a wealth of information about
the fund). The most common securities purchased are "cash" or money market
instruments, stocks, bonds, other mutual fund shares and more exotic instruments
such as derivatives like forwards, futures, options and swaps. Some funds'
investment objectives define the type of investments in which the fund invests. For
example, the fund's objective might state "...the fund will seek capital appreciation by
investing primarily in listed equity securities (stocks) of U.S. companies with any
market capitalization range." This would be "stock" fund or a "domestic/US stock"
fund since it stated U.S. companies. A fund may invest primarily in the shares of a
particular industry or market sector, such as technology, utilities or financial services.
These are known as specialty or sector funds. Bond funds can vary according to risk
Example- high-yield junk bonds or investment-grade corporate bonds, type of issuers
Example- government agencies, corporations, or municipalities, or maturity of the
bonds (short- or long-term). Both stock and bond funds can invest in primarily U.S.
securities (domestic funds), both U.S. and foreign securities (global funds), or
primarily foreign securities (international funds). Since fund names in the past may
not have provided a prospective investor a good indication of the type of fund it was,
the SEC issued a rule under the '40 Act which aims to better align fund names with
the primary types of investments in which the fund invests, commonly called the
"name rule". Thus, under this rule, a fund must invest under normal circumstances in
at least 80% of the securities referenced in its name. For example, the "ABC New
Jersey Tax Free Bond Fund" would generally have to invest, under normal
circumstances, at least 80% of its assets in tax-exempt bonds issued by the state of
New Jersey and its political subdivisions. Some fund names are not associated with
specific securities so the name rule has less relevance in those situations. For
example, the "ABC Freedom Fund" is such that its name does not imply a specific
investment style or objective. Lastly, an index fund strives to match the performance
of a particular market index, such as the S&P 500 Index. In such a fund, the fund
would invest in securities and likely specific derivates such as S&P 500 stock index
futures in order to most closely match the performance of that index.

Most mutual funds' investment portfolios are continually monitored by one or more
employees within the sponsoring investment adviser or management company,
typically called a portfolio manager and their assistants, who invest the fund’s assets
in accordance with its investment objective and trade securities in relation to any net
inflows or outflows of investor capital (if applicable), as well as the ongoing
performance of investments appropriate for the fund. A mutual fund is advised by the
investment adviser under an advisory contract which generally is subject to renewal
annually.

Mutual funds are subject to a special set of regulatory, accounting, and tax rules. In
the U.S., unlike most other types of business entities, they are not taxed on their
income as long as they distribute 90% of it to their shareholders and the funds meet
certain diversification requirements in the Internal Revenue Code. Also, the type of
income they earn is often unchanged as it passes through to the shareholders.
Mutual fund distributions of tax-free municipal bond income are tax-free to the
shareholder. Taxable distributions can be either ordinary income or capital gains,
depending on how the fund earned those distributions. Net losses are not distributed
or passed through to fund investors.

Some of the many benefits of investing in mutual funds are: 

1. Easy to buy and sell.

2. Investments can be made in lump sum or periodic payments (easy on the pocket

3. Mutual fund industry in India is very well regulated and transparent.

4. Professional management saves time and costs.

5. Diversification helps to protect from downside risk.

6. Rupee cost averaging helps profit from small regular investments.

Types of mutual funds

Open-end fund-

The term mutual fund is the common name for what is classified as an open-end
investment company by the SEC. Being open-ended means that, at the end of every
day, the fund continually issues new shares to investors buying into the fund and
must stand ready to buy back shares from investors redeeming their shares at the
then current net asset value per share.

Mutual funds must be structured as corporations or trusts, such as business trusts,

and any corporation or trust will be classified by the SEC as an investment company
if it issues securities and primarily invests in non-government securities. An
investment company will be classified by the SEC as an open-end investment
company if they do not issue undivided interests in specified securities and if they
issue redeemable securities. Registered investment companies that are not UITs or
open-end investment companies are closed-end funds.

Closed-end funds

Closed-end funds are like open end except they are more like a company which sells
its shares a single time to the public under an initial public offering or "IPO".
Subsequently, the fund's shares trade with buyers and sellers of shares in the
secondary market at a market-determined price (which is likely not equal to net asset
value) such as on the New York or American Stock Exchange. Except for some
special transactions, the fund cannot continue to grow in size by attracting more
investor capital like an open-end fund may.

Mutual funds vs. other investments

Mutual funds offer several advantages over investing in individual stocks. For
example, the transaction costs are divided among all the mutual fund shareholders,
which allows for cost-effective diversification. Investors may also benefit by having a
third party (professional fund managers) apply expertise and dedicate time to
manage and research investment options, although there is dispute over whether
professional fund managers can, on average, outperform simple index funds that
mimic public indexes. Yet, the Wall Street Journal reported that Separately Managed
Accounts (SMA) performed better than mutual funds in 22 of 25 categories from
2006 to 2008. This included beating mutual funds performance in 2008, a tough year
in which the global stock market lost US$21 trillion in value. In the story, Morningstar,
Inc said SMAs outperformed mutual funds in 25 of 36 stock and bond market
categories. Whether actively managed or passively indexed, mutual funds are not
immune to risks. They share the same risks associated with the investments made. If
the fund invests primarily in stocks, it is usually subject to the same ups and downs
and risks as the stock market.

Top 10mutual funds companies

The Indian economy is starting to become quite resilient and has also bounced back
rather robustly from the recent global economic recession--even though a good
portion of the world is still struggling to get back on track. Additionally, many of the
foreign investors are beginning to invest in India's stock market which is starting to
grow as well. Because there are so many different mutual fund enterprises in India, it
can be quite difficult to name some of the Top 10 Indian Mutual funds currently in
existence.

1. HDFC Mutual Fund

HDFC mutual fund was approved originally by the SEBI in June of 2000. It offers in
Balance Funds, Equity Funds and also Debt Funds. In the last few years, HDFC
Mutual Fund has been witnessing significant growth.

2. Tata Mutual Fund

Deutche Bank and ABN AMRO Bank., NV are some of the custodians for Tata
Mutual Fund. Because of the reputation of these companies, the fact that they are
apart of it speaks volumes about Tata's reliability. It's commonly believed that Tata
Asset Management Ltd. is one of the rapidly growing management firms within India.
Also, the AMC for Tata Mutual Fund is consistently performing well and also
provides great returns for its many investors.

3. SBI Mutual Fund

SBI or State bank of India is one of India's largest banks and the mutual fund division
is sponsored by SBI bank. SBI Mutual Fund always has had an amazing record of
providing wealth for most of its many members.

4. Reliance Mutual Fund (RMF)

Reliance Mutual Fund is a part of the industrial giant Ambani group's Reliance and is
contentiously one of the quickest growing mutual funds in India.

5. DSP's Black Rock Mutual Fund

DSP's Black Rock Investment Manager's Ltd. Pvt. manages the investments for DSP
Black Rock Mutual Fund. This company is known for it's well seasoned and
experienced investment professionals who retain huge varieties of analytical tools in
order to consistently and successful add lots of value for client portfolio.

6. Kotak Mutual Fund

Kotak Mahindra Bank Ltd. sponsors KMF and has also emerged as one of the best
and fastest growing banks in India.

7. Principal Mutual Fund

PMF has been thriving successfully for many years now. Their principal goal is to
mobilize savings made from the public, provide investment expertise for people and
also to achieve the highest possible returns for its members.

8. Sundaram's BNP Paribas Mutual Fund

This mutual fund's investments are amazingly well done. Sundaram Asset
Management is the major sponsor for the fund. Sundaram is one of the many trusted
financial companies in the entire country.

9. Templeton Mutual Fund

Frank Templeton is a very well known mutual fund within the country and has over
thirty-three different locations throughout the country and also has assets that are
worth more than Rs. 35000 crores and also have over twenty-three lakh investors.

10. Birla Sun's Life Mutual Fund

This mutual fund is currently a joint venture with Aditya Birla Group and also Sun Life
Financial. Thankfully, Sun Life has been one of the leading financial organizations
that provide a huge range of protection.
  Fixed Deposits (FDs)
A fixed deposit account allows you to deposit your money for a set period of time,
thereby earning you a higher rate of interest in return. Fixed deposits also give you a
higher rate of interest than a savings bank account. Any investment portfolio should
comprise the right mix of safe, moderate and risky investments. While mutual funds
and stocks are the preferred contenders for moderate and risky investments, fixed
deposits, government bonds etc. are considered safe investments. Fixed deposits
have been particularly popular among a large section of investors in India as a safe
investment option for a long period. With fixed deposits or FDs as they are popularly
known, a person can invest an amount for a fixed duration. The banks give interest
rates depending on this loan amount and the tenure of deposit.
 

 Commercial Papers 
Commercial Paper (CP) is an unsecured money market instrument issued in the
form of a promissory note. It was introduced in India in 1990 with a view to enable
highly rated corporate borrowers/ to diversify their sources of short-term borrowings
and to provide an additional instrument to investors. Subsequently, primary dealers
and satellite dealers were also permitted to issue CP to enable them to meet their
short-term funding requirements for their operations. CP can be issued in
denominations of Rs.5 lakh or multiples thereof. Amount invested by a single
investor should not be less than Rs.5 lakh (face value). It will be issued foe a
duration of 30/45/60/90/120/180/270/364 days. Only a scheduled bank can act as an
Issuing and Paying Agent IPA for issuance of CP.
  National savings Certificate
National Savings Certificate (NSC) is a fixed interest, long term instrument for
investment. NSCs are issued by the Department of Post, Government of India. Since
they are backed by the Government of India, NSCs are a practically risk free avenue
of investment. They can be bought from authorized post offices. NSCs have a
maturity of 6 years. They offer a rate of return of 8% per annum. This interest is
calculated every six months, and is merged with the principal. That is, the interest is
reinvested, and is paid along with the principal at the time of maturity. For every Rs.
100 invested, you receive Rs. 160.10 at maturity.
 
NSCs qualify for investment under Section 80C of the Income Tax Act (IT Act). Even
the interest earned every year qualifies under Sec 80C. This means that investments
in NSCs and the interest earned on it every year, uptoRs. 1 Lakh, are deductible
from the income of the investor. There is no tax deducted at source (TDS).
 
Features of NSC
·         Minimum investment Rs. 500/- No maximum limit.
·         Rate of interest 8% compounded half yearly.
·         Rs. 1000/- grow to Rs. 1601/- in six years.
·         Two adults, Individuals, and minor through guardian can purchase.
·         Companies, Trusts, Societies and any other Institutions not eligible to purchase.
·         Non-resident Indian/HUF cannot purchase.
·         No pre-mature encashment.
·         Annual interest earned is deemed to be reinvested and qualifies for tax rebate for
first 5 years under section 80 C of Income Tax Act.
·         Maturity proceeds not drawn are eligible to Post Office Savings account interest for
a maximum period of two years.
·         Facility of reinvestment on maturity.
·         Certificate can be pledged as security against a loan to banks/ Govt. Institutions.
·         Facility of encashment of certificates through banks.
·         Certificates are encashable any Post office in India before maturity by way of
transfer to desired post office.
·         Certificates are transferable from one Post office to any Post office.
·         Certificates are transferable from one person to another person before maturity.
·         Duplicate Certificate can be issued for lost, stolen, destroyed, mutilated or defaced
certificate.
·         Nomination facility available.
·         Facility of purchase/payment to the holder of Power of attorney.
·         Tax Saving instrument - Rebate admissible under section 80 C of Income Tax Act.
·         Interest income is taxable but no TDS
·         Deposits are exempt from Wealth tax.

 Debenture
A debenture is similar to a bond except the securitization conditions are different. A
debenture is generally unsecured in the sense that there are no liens or pledges on
specific assets. It is defined as a certificate of agreement of loans which is given
under the company's stamp and carries an undertaking that the debenture holder will
get a fixed return (fixed on the basis of interest rates) and the principal amount
whenever the debenture matures.
 
In finance, a debenture is a long-term debt instrument used by governments and
large companies to obtain funds. The advantage of debentures to the issuer is they
leave specific assets burden free, and thereby leave them open for subsequent
financing. Debentures are generally freely transferrable by the debenture holder.
Debenture holders have no voting rights and the interest given to them is a charge
against profit.
 
  Bonds
A Bond is simply an 'IOU' in which an investor agrees to lend money to a company
or government in exchange for a predetermined interest rate. If a business wants to
expand, one of its options is to borrow money from individual investors. The
company issues bonds at different interest rates and sells them to the public.
Investors purchase them with the understanding that the company will pay back their
original principal with some interest that is due by a set date (this is known as the
"maturity"). The interest a bondholder earns depends on the strength of the
corporation.
 
For example, a blue chip is more stable and has a lower risk of defaulting on its
debt. Sometimes some big companies issue bonds and they may only pay 7%
interest, but some other small companies may pay you 10%. A general rule of thumb
when investing in bonds is that "the higher the interest rate, the riskier the bond."
 
  REAL ESTATES
Real estate has traditionally been an avenue for considerable investment per se,
and an investment opportunity for high networth individuals (HNIs), financial
institutions as well as individuals looking at parking their money in viable alternatives
such as equities, bullion and properties.

Money invested in real estate, for income and capital growth, provides stable and
predictable returns – similar to bonds – offering a regular return on investment, if the
property is rented, as well as capital appreciation.

Of course, like all other investment options, real estate too has certain risks attached
to it, and they are quite different from the ones involved in other investment avenues.
Real estate investment opportunities can broadly be categorised into the residential,
commercial office space and retail sectors.

In analysing real estate as an investment avenue, a realistic assessment of the risks

to future cash flow, resulting from lease expiry, has become essential today. And, as
such the compensation for such risks is now more closely linked to income
performance.

The projections of market players and industry analysts in this respect are worth
noting. They now consider A-grade commercial office and the retail segment of
realty, with a projected yield of 11-12 per cent a year, a more lucrative option than
residential properties, with an estimated return of 5-7 per cent a year.

These returns/ yields from different categories of properties typically depend on

location, quality of infrastructure and reputation/ credibility of the developers etc.

Watch out for...

The projections of market players and industry analysts in this respect are worth
noting. They now consider A-grade commercial office and the retail segment of
realty, with a projected yield of 11-12 per cent a year, a more lucrative option than
residential properties, with an estimated return of 5-7 per se cannot sell some units
or a certain part of one's property (as one can do in the case of equities, debts or
even mutual funds) in case of an urgent need of funds.

Further, the maturity period of a realty investment is uncertain. Apart from all this, the
investor has to verify the property title, particularly if the investment is made in India.
Industry experts believe that only persons with deeper pockets and a long-term
investment horizon should invest in properties. They say from a long-term financial
return perspective, it is advisable to invest in higher-grade commercial properties.

Returns from the property market are comparable with that of certain equity and
index funds in the long term. Any investor looking for balancing his portfolio can now
look at the real estate sector as a secure means of investment with a certain degree
of volatility and risk. A right tenant, location, segmental categories of real estate and
individual risk preferences will henceforth prove to be the key indicators in achieving
the target yields from realty investments.

The proposed introduction of REMF (real estate mutual fund) and REIT (real estate
investment trust) are likely to boost realty investments among small investors. This
will also allow small investors to enter the real estate market with contribution as low
as Rs 10,000.

There is also a demand by - as well as need for - different market players in the
sector to gradually relax norms for foreign direct investment in it. Higher foreign
investments mean higher standards/ quality of infrastructure and, hence, a marked
change in the entire market scenario in terms of competition and professionalism of
market participants.

The investor profile

The two most active investor segments are HNIs and financial institutions. And both
these segments are particularly active in commercial real estate. While institutions
such as HDFC and ICICI show preference to investments in commercial properties,
HNIs evince interest in parking their money in residential as well as commercial
properties.
The third category of investors - non-resident Indians - has a clear bias towards
investing in residential properties rather than commercial properties.

This can be attributed to emotional attachment or/and the tendency to guarantee

future security. As the formalities and the necessary documentation for purchasing
immovable properties other than agricultural and plantation properties are quite
simple and the rental income is freely repatriable outside the country, NRIs are
increasing their exposure to real estate.

FDIs in realty form a small portion of the total investments as there are restrictions
such as a minimum lock-in period of three years, a minimum of 25 acres of property
to be developed and conditional exit.

Besides these conditions, foreign investors have to deal with a number of

government departments and interpret many complex laws/ bylaws. All said and
done, the government's decision to allow FDI in the real estate sector is a step in the
right direction.

REIT is close to being introduced in India. But what is important is that, like most
other novel financial instruments, this new concept too needs to be accepted without
too many problems, except those expected to be encountered in the teething time.

REIT will be structured as a company dedicated to owning and, in most cases,

operating income-producing real estate, such as apartments, shopping centres,
offices and warehouses. Thus, a REIT will be a company that buys, develops,
manages and sells real estate assets and allows participants to invest in a
professionally managed portfolio of properties. Some will also be engaged in
financing realty.

Further, REITs are pass-through entities or companies that are able to distribute the
majority of income cash flows to investors, without taxation, at the corporate level. Its
main purpose will be to pass the profits to the investor in as intact manner as
possible. Hence, initially, the REIT business activities will be restricted to generation
of the rental income.
The investor's role is the key in situations where the interests of the seller and those
of the buyer do not match. For example, if the seller is keen to sell the property and
the identified occupier intends to lease the property, between them, the deal will
never be fructified. However, an investor can have competitive yields by buying the
property and leasing it out to the occupier. `                   

Understanding real estate

There are many ways to invest. But the investor should be prudent enough to select
a proper area, which is safe and secure with assured reasonable returns. Few years
ago, bank deposits, stocks, mutual funds, insurance policies and bullion, were the
most opted field. With increased business, globalization of economy has unfolded
many more areas. Investment has become very complex, which has led to the
emergence of specialized investment advisers.

Bank deposits, insurance policies and mutual funds have become unattractive
because of low returns and failure of many companies. Stock market is always
unpredictable. These investment avenues are for short-term investments, and need
close monitoring too. These days, real estate has emerged as a safe and high
yielding investment opportunity. Investment in real estate is a long-term investment
and needs considerable amounts.

The yield in the realty market has to be calculated on the capital invested and annual
rental returns, less property tax, income tax and annual maintenance charges. This
return varies according to the type of property. There are certain determining factors,
which play a crucial part in the property investment.

Investment in real estate needs higher amounts and the minimum entry level will be
in multiples of lakhs, for residential, and much more for office and commercial space.

The sale of property requires a long time to find a suitable purchaser and comply
with the legal requirements. Further, the appreciation of capital value of the land is
slow but certain and stable, unlike in stocks and shares.

The realty investment calls for more discretion and involves complicated process like
title verification, land use according to local laws, floor area ratio, restriction on sale
for some period, and many more laws, rules, etc, depending upon the political
environment.

Uncertain tax rules and rates, which vary every year, need to be considered.
Property tax is an annual commitment which is being increased every year by self-
assessment or capital based assessment. Rental income also attracts income tax to
be paid annually; sale of property attracts capital gains and purchase invites stamp
duty and registration charges. Property tax and stamp duty vary from state to state.

As stated earlier, the type of property is also very important. It may be residential,
commercial or office space. The demand and supply position of each sector needs to
be carefully examined. Real estate sector offers two types of returns.

This is monthly form of returns in the form of rentals, or the returns on the lease
amount invested in bank, securities or in business. The other type is returns on sale
of the property. The amount to be invested also depends on the mode of returns
expected. Generally, leasing of property is attractive only for business people.

Lease amount does not attract interest. While commercial property and office space
yield high returns to the extent of 15%, residential property yields about 8%. 

ASK Real Estate Special Opportunities Fund - Portfolio I (ASK Realty Fund) is a
real-estate private equity fund floated by ASK Investment Holdings (of the ASK
group which is into wealth management). This fund, which seeks to collect about Rs
500 crore, would predominantly invest in residential real-estate projects in the top
seven cities in the country.
Objective

The fund, open only for resident Indians, aims at providing diversification across
various regions and business segments within real-estate without the hassles of
owning and maintaining such estate. It would seek to provide compounded annual
returns of 25 per cent over the five-year tenure of the fund.

Fund details

The realty fund has a minimum ticket size of Rs 25 lakh, with additional investment
allowed in multiples of Rs 5 lakh. The fund has a drawdown period of 24 months; in
other words it would gradually deploy funds in projects across this period. There is
an entry load of 2 per cent for investments up to Rs 5 crore.

Can't sell your home? Rent it!

Some of the unique features of the fund include staggered collection of funds to ease
the burden of investors and also avoid unnecessary holding of cash by the fund. The
fund would collect 20 per cent on application and the remaining (over every quarter
or half-year) amount over the next two years.

Further, even as the there is a lock-in period, the fund would provide a liquidity
window at the end of three years to allow investors to cash-out 10 per cent of their
capital contribution. This provides an opportunity for those investors looking at
liquidity. The fund would not also make any reinvestments. In other words, once a
project is complete, the fund would return the distributable surplus to investors (in the
form of dividend or capital gains) and would not redeploy the same.

Strategy

ASK Realty Fund has chosen Mumbai, Bangalore, Chennai, Pune, Delhi, Hyderabad
and Kolkata (in that order) to deploy its funds. According to the management, the
fund does not see much opportunity at the "land buying" stage as enough land has
been aggregated by developers in the last two-three years.
The fund, therefore, sees opportunities at the development stage in those residential
projects where the plan approvals are in place and the construction is about to start.
Another key strategy of the fund is to enter projects at "asset level" rather than
"holding company level". That is, the fund would invest only in specific projects and
not in a real-estate company.

This strategy, according to the fund, would provide easier exit opportunities, as such
projects are self-liquidating once the units are sold; investing in a company would
entail waiting for right exit opportunities such as exit at the time of an IPO.

The fund would not look at investments in special economic zones or townships as
these tend to have longer gestation and would not suit the fund%u2019s five-year
tenure. As to its strategy of concentrating in residential projects only in the top cities,
the management feels that 50 per cent of the top spends in infrastructure under the
Jawaharlal Nehru National Urban Renewal Mission would be in these top seven
cities.

More India business stories

Further, given the talent pool available in these cities, creation of jobs on an
economic revival can be expected to be faster in these cities. The fund also prefers
to invest in projects of developers in these cities, whose capabilities, quality of work
and scale may be far superior to builders in smaller towns.

Deployment of funds

While 70 per cent of the funds would be deployed in residential projects of the nature
mentioned above, the fund may also invest the remaining 30 per cent in completed
fixed-income generating office space. The fund will not invest in commercial space
that is under construction or not occupied.

This investment is expected to deliver more regular returns over the tenure of the
fund. The fund may also explore more specific opportunities such as redevelopment
projects by housing societies (such as those in Mumbai) or sale and leaseback of old
buildings located in Central Business Districts, after some renovation is carried out.
Such renovation may be done with a view to improve the working
conditions/amenities in the building, thereby improving rental yields.

Here’s an insight into investment avenues for NRIs in the present market situation. For risk-
averse investors, traditional fixed income products such as Foreign Currency Non Resident
(FCNR) fixed deposits and Non Resident External (NRE) fixed deposits are the safest bet.
While FCNR account can be opened in foreign currency, the NRE deposit account is
maintained only in Indian rupee. It is advisable to invest in fixed deposits in INR as rupee is
expected to appreciate in medium to long term. “If someone wants to avoid currency risk
then he may invest in FCNR account. Yield is higher than that prevailing in their home
country,” says Mukesh Gupta, director of Wealth care Securities. For starters, you can
maintain your FCNR fixed deposit account for a minimum period of 12 months and upto a
maximum period of 60 months. FCNR accounts are non-taxable in India.

 Commodity
A commodity exchange is a market organized to allow for the selling and buying of
commodities. Commodities, which are hard goods, as opposed to services, may be bought
and sold on a commodity exchange in three types of markets: cash, futures and options.
Cocoa, corn, crude oil, and gold are a few examples of commodities traded on a commodity
exchange. A commodity exchange is considered to be essentially public because anybody
may trade through its member firms. The commodity exchange itself regulates the trading
practices of its members while prices on a commodity exchange are determined by supply
and demand. A commodity exchange provides the rules, procedures, and physical for
commodity trading, oversees trading practices, and gathers and disseminates marketplace
information. Commodity exchange transactions take place on the commodity exchange floor,
in what is called a pit, and must be affected within certain time limits. Floor traders, floor
brokers and futures commissions merchants working on the floor of a commodity exchange
must be registered by the SEC.
SEC stands for the United States Securities and Exchange Commission. The SEC is
a federal commission that resulted from the the Securities Act of 1933 and the
Securities Exchange Act of 1934 enacted by Congress after the great depression.
The Trust Indenture Act of 1939, the Investment Company Act of 1940, Investment
Advisers Act of 1940, and the Sarbanes-Oxley Act of 2002 also give the SEC the
authority to govern the securities markets. The SEC implements those acts/laws by
issuing rules (a.k.a. SEC rules) that must be followed by security market participants
in order to be compliant. The main purpose of the SEC is to regulate the securities
industry and protect investors against fraudulent investment related practices. To
that end, the SEC carries out several functions. First, the SEC promotes
transparency by requiring public companies to register with the SEC and disclose
information relevant to potential investors. The SEC further requires any public
company to provide information about its business, and risk associated with
investing in their company. The SEC also monitors the Financial Accounting
Standards Board (FASB) to promote accuracy in accounting reporting. All of this is
handled by the SEC's division of corporate finance. Second, the SEC oversees many
aspects of the investment world including securities exchanges, brokers, investment
advisors, mutual funds, and rating agencies. This is handled by the SEC's division of
trading and markets and the SEC's division of investment management. Third, the
SEC is responsible for enforcing securities laws. The SEC prosecutes breaches to
those laws. This is handled by the division of enforcement. The president of the
United States is responsible for appointing five commissioners, one of which will be
the chairman of the SEC, to carry out the mission of the SEC. Once appointed, those
commissioners are in charge of the SEC on a staggered five-year term.

Commodity exchange

Definition

Open and organized marketplace where ownership titles to standardized quantities

or volumes of certain commodities (at a specified price and to be delivered on a
specified date) are traded by its members. Although samples of the commodities are
physically examined and graded, physical delivery of the commodity rarely occurs
because the delivery contracts are usually exchanged or closed out (traded out)
before their expiration date. Commodity exchanges are divided roughly into three
main types: metals exchanges, fuels exchanges, and soft (agricultural) commodity
exchanges. Other exchanges deal in currencies and commodity indices. Also called
commodity futures market or commodity market.

 Bullion

Definition
 Gold, silver, platinum, or palladium, in the form of bars or ingots. Some central
banks use bullion for settlement of international debt, and some investors
purchase bullion as a hedge against inflation.
 Oxford English Dictionary

The OED lists a number of meanings, but these include:-

 Gold and silver in the lump, as distinguished from coin or manufactured

articles, also applied to coined or manufactured gold and silver when
considered simply with reference to its value as raw material.
 Precious metal in the mass.
 Solid gold or silver (as opposed to showy imitations).
 Impure gold or silver.
 Melting house or mint. "Place of exchange".
 Any metal in the lump.

 Gold
A very ductile and malleable, brilliant yellow precious metal that is resistant to air and
water corrosion.

It is a precious metal that is very soft when pure (24 Kt.). Gold is the most malleable
and ductile (able to be made into wire) metal. Gold is alloyed (mixed with other
metals, usually silver and copper) to make it less expensive and harder. The purity of
gold jewellery is measured in karats. Some countries hallmark gold with a three-digit
number that indicates the parts per thousand of gold. In this system, "750" means
750/1000 gold (equal to 18K); "500" means 500/1000 gold (equal to 12K). Alloyed
gold comes in many colours.

Uses of gold

Gold has been prized by people since the earliest times for making statues and icons
and also for jewellery to adorn their bodies. Intricately sculptured art objects and
adornment jewellery have been uncovered in the Sumerian royal Tombs in southern
Iraq and the tombs of Egyptian kings. Significant buildings and religious temples and
statues have been covered with thinly beaten sheets of gold. Due to its rarity, gold
has long been considered a symbol of the wealth and power of its possessor.

In 2001, it was estimated that 2870 tons of gold were produced worldwide. About 80
percent of that gold production was used to make jewellery, the majority of which
was sold in India, Europe and the United States of America. Gold jewellery is
universally popular, loved for its lustrous yellow colour and untarnishing character. In
many Asian countries, such as India, Thailand, and China, gold is important to
religious ceremonies and social occasions, such as the Chinese New Year and
Hindu marriages in India.

World Gold Markets

 London as the great clearing house

 New York as the home of futures trading
 Zurich as a physical turntable
 Istanbul, Dubai, Singapore and Hong Kong as doorways to important
consuming regions.
 Tokyo where TOCOM sets the mood of Japan
 Mumbai under India's liberalized gold regime
India in World Gold Industry

(Rounded Figures) India (In Tons) World (In Tons) % Share

Total Stocks 13000 145000 9

Central Bank holding 400 28000 1.4

Annual Production 2 2600 0.08

Annual Recycling 100-300 1100-1200 13
Annual Demand 800 3700 22
Annual Imports 600    
Annual Exports 60    
 Silver
Silver Bullion
In the precious metals industry, bullion refers to precious metals like silver in a
tradable form. Will very high purity contents. Both bullion bars and coins are valued
by the amount of the metal contained, plus a small premium for minting; they have
little or no numismatic / rarity value.

Silver as an investment

Silver, like other precious metals, may be used as an investment. For more than four
thousand years, silver has been regarded as a form of money and store of value.
However, since the end of the silver standard, silver has lost its role as legal tender
in the United States. In 2009, the main demand resulted from industrial applications
(40%), jewellery, bullion coins and exchange-traded funds.[1][2]
 10 year history of market price for silver

1990 4.06 383 94.3

2000 4.95 279 56.4

2005 7.31 444 60.8

2009 14.67 972 66.3

2010 (thru October 13) 24.38 1379 56.6

How to Invest In Silver

There are numerous ways in which you may invest or trade in silver, these include:

 Silver Bullion Bars

The traditional method of investing in silver is to buy a silver bullion bar, these can
vary in size from 1oz to 1000oz in weight. In some countries it is possible to
purchase bullion bars over the counter at high street banks, Switzerland and
Liechtenstein are examples of countries which provide this service. Many people
simply use a home safe to store these bullion bars, although others will use a safe
deposit box at a bank or place in storage with a dealer.

 Silver Coins

Investment in silver coins is a relatively new form of trading, as mentioned previously

it was only in the second half of the 20th century that the value of the metal used
exceeded the currency value of the coins themselves. If silver coin trading is more
your thing, and I am sure that its fun, you must learn the differences between 'fine
silver' and 'junk silver'. The latter is not junk, just simply silver which isn't entirely
pure, just like gold rings are often alloys. Both have a value, dependant on the
weight of the pure silver. An example of 'junk silver' are American coins from pre-
1964 (up to 1970 for half dollar coins), these coins will weigh 25 grams per $1 of face
value. They are 90% pure, so each $1 worth of coins consists 22.5g of silver. 'Junk
coins' can also come in the form of sterling silver, which were once found in Britain
and its colonial countries such as Canada and Australia. British coins contained
92.5% silver, all dating before 1919, whilst Canada produced coins made of 80%
silver between 1920-1967.

 Silver Rounds

Some dedicated investors use .999 fine silver rounds, a cross between a coin and
bars, although these have no status as legal tender. They are popular amongst
many as they can be struck in a custom design (such as a corporate logo).

 Exchange-traded silver funds

There are a number of major funds which hold significant silver reserves, allowing
you to invest in the price of silver without ever having to physically touch the product
itself. You are of course buying units in holding company of the reserve, hopefully for
a price which reflects the value of their assets. Major ones include the iShares Silver
Trust and ETFS Silver Trust. You should be able to buy into these funds through
your regular stock broker.

 Platinum

Platinum is one of the most expensive and famous precious metals that is in demand
today. It is expensive because it only has a limited supply. They can only produce
about 7 million ounces of platinum over a year and industrial companies need it for
industrial purposes.

Unlike before, more and more people are investing in platinum for they believe
platinum is a good investment. There are ways on investing in platinum the coin, bar
and ETF. If you have big money and wanted to invest and buy platinum then you
should purchase the bar type or ETF so you won't be juggling too many coins.
The coin has 2 types the platinum investor and the collectible type. If you want to
invest in platinum and you only have a limited amount in your budget then I suggest
you purchase the coin type or maybe try your hand at an ETF. This platinum
investment is the same with the bar type. The prices vary daily, depending on the
supply and demand of the platinum.

Platinum investment has 2 types the Physical platinum investment and the Non-
physical platinum investment.

Physical platinum investment means owning a precious metal such as purchasing

bar or platinum coins. If you want to invest purely on platinum then you should buy
the platinum investor coin rather than the collectible. For collectible coins are more
expensive than the other one. Wafers and bars are also sold with very little premium
but are not always available like the coins.

Non-physical platinum investment, you could invest in platinum through holding

shares in platinum mining firms or by buying into platinum based ETFs. It can be
quicker to do, but you have to trust that the company has the assets it claims it does.

If you want to invest in collectible coins you should be prepare your pockets. For
collectible coins are much more expensive than their face value. Also when you buy
that kind of coins you need to check its:

Condition, see to it that the coin has no dent and scratches if the coin you want to
buy is brand new. Also check that it is not worn out for its market value will go
downhill.

Age, checking the age of the coins or how old the coin or when it was minted is also
important for the older the coin the more expensive it is.

Rarity, The rareness of the coins is also one of the important points you need to look.
For if your coin is considered as one of the rarest then its value will sour.

Investing in platinum is a good choice but you need to be careful for not all who
invest in the field succeed. You need to study and know more about platinum as an
investment, and not only that you also have to know how to choose which
investment in the platinum field is a good choice that will suit you best.

Investing is not as easy as you think it is, for you are not investing small amounts in
precious metals. So you need to be cautious and if you want you could ask help from
your trusted friends that are into this kind of investment.