ASSIGNMENT 1

Investment avenues:
Financial assets:
Financial assets are known as traditional investment avenues of India. At first,
they were only available to the minimum audience. Still, later, as many
alternatives came into the picture, they made available widely available to all
the people.
Direct Equity:
 It is a long-term investment; it is just referred to as investing in stocks.
You usually buy a company’s stock, and you become a partial owner of
that organization. Your profit and loss are dependent on the company’s
growth and development.
 The company’s stock you want to buy depends upon the knowledge you
have about the market and its trends. Investing in direct equity is of high
risk, and profit is not necessary. When someone buys a stock, then an
individual is exposed to the associated risk as well. Stocks of the various
companies are listed for the public. Any individual can buy or sell the
stock if they have a Demat account and KYC verification is complete.
 It is a wise choice if you take advice from a professional before you put
your hard-earned money into equity. Direct Equity is one of the most
used investment avenue options. It gives a higher growth rate than other
types of investment avenues. An individual can earn on the day to day
basis by using this investment option.
Mutual Funds:
 Mutual funds are one of the traditional investment avenues that are
subjected to a good return. It acts as a good investment option for many
people in India. Relatively people should take advice from the
consultants, experts and even the agents and distributors. After doing so,
then take the first step into this investment pool.
 Mutual funds are becoming popular among the millennials, primarily as
minimum knowledge can also invest. All the fund managers take care of
the portfolio funds. Mutual funds work in a very authentic cycle manner.
It starts with investors pool their money in the respective funds and the
fund manager regulates money.
 The main objective of these fund manager is they invest in securities and
assets to generate optimum returns. It is also the most favourable option.
You can start and stop your investment as per your need; it is considered
the most flexible investment avenues.
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 The returns, profit and loss are all dependent on the market movement.
These mutual funds are of two categories, open-end fund and closed-end
fund. The essential difference between both is open-ended is available for
purchase continuously from time to time. In contrast, close-ended mutual
funds are restricted and open only for a certain period of years.
 Investing also requires a decent amount of income in your hand. An
individual does not want to be cut off his/her necessary expenses for the
sake of investing them into some significant investment avenues in India.
Fixed Deposit:
 This is the oldest investment avenues that the people of India are using.
You must have heard from your elders about it. This fixed deposit is the
most used and trusted by the more senior society. Fixed deposits are the
option that the banks provide.
 The process is as straightforward; all you need to do is deposit a certain
amount for a specified period. You can earn a predetermined interest rate
on that amount from the bank or any other financial institution. This
source of investment acts as the working capital of banks.
 As the name depicts, all the deposits are for the fixed tenure, which
implies that the investor deposits a fixed amount for the specified period
of time.
 An individual can still withdraw these funds by two methods; they can
take a loan on that particular fixed deposit. Second, you can pay the
penalty to take out all the money you invested till now.
 According to the reports, most private banks provide a great interest rate
compared to the government, but this is just data that can be fluctuated
based on the market trends.
 Some of the perks of choosing Fixed deposit as your following
investment avenues are reliable, and depositing in a bank is safe and
secure. Any age group above 18+ can avail of this investment just by
opening a bank account.
 An individual can also help with loan services based on the fixed deposit.
As a coin has two sides, the Fixed deposit also has demerits. The rate of
investment is comparatively low in comparison to other investment
avenues, and Regulatory bodies and government have a significant
impact on the growth of banks.
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Public Provident Fund (PPF):
 Public Provident fund or PPF is a longterm investment plan with a long
tenure of 15 years. The Government of India governs it. It is generally a
tax saving instrument cum Investment Avenue. It has an interest rate that
is revised on a quarterly basis by the government.
 You can open a PPF just by visiting a designated post office all over
India. And by contacting the branches of public sector banks. When an
individual extracts the sum at the end of 15 years, it is a tax-free amount.
You can also go for the partial withdrawal system. You can avail yourself
only after five years from the end of the year when you got your account
opened. PPF is another safe option for you to choose as an investment
avenue in India as a sovereign guarantee backs it. A public provident
fund is generally a retirement plan when you don’t have any other
covered insurance for the future.
 Another option available focuses on the retirement-oriented investment; it
is Employee Provident Fund (EPF). Formation of Employee Provident
Funds falls under Income Tax Act, 1961, to help all the salaried
professionals to get a tax break by investing in EPF. The deduction is
done from the individual’s monthly salary, and the individual makes the
same amount. But you can only avail the invested funds after maturity,
which is retirement. Evaluation and Regulation of the interest rate done
by the government quarterly. This type of Investment Avenue has access
only for those who meet necessary conditions.
Real Assets:
This type of investment assets is nothing but physical assets and assets in the
form of infrastructures. It is a physical attribute that is sold later and converted
into cash.
Real Estate:
Since there is an increase in the population of India, one can see a significant
increase in the properties and lands to live on. This, in return, has turned into a
great investment idea from the previous few decades. It comprises of investment
in lands, flats, houses, buildings, agricultural lands, and many more. Buying a
property is in trend for the past few years. Hence makes it the best alternative to
the financial assets in India. Most of the crowd is running towards buying land
and other residential properties. Which leads them to earn a significant sum
after a certain period of time.
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It consists of leasing, selling, and exchanging a particular property as per the
investor’s need. Real Estate is one of the profitable options, but it requires a
viable funding option. It is difficult or impossible to start from the lower funds.
Real assets give a higher rate of return in a short period of time. This also makes
it comparatively good to other Investment avenues in India. When the property
requirement goes high, and the supply or options are limited, the profit acquired
can skyrocket.
It mainly depends upon the many factors that decide how much an investor can
earn profit. Some of them are location and the price of that location which
usually goes as circle rate of the area.
Gold and Silver:
 To this date, Investing in Gold and Silver is still a traditional investment
avenue. Since ancient times there isn’t any dip in the interest of investors
to buy gold and silver. They use it as an investment for future needs. We
all are aware of the fact that gold and silver prices are increasing day by
day. But processing gold in any jewellery is not cost-effective as making
charges and other taxes come into play.
 You can buy golds in the form of gold coins or the state of gold ETF.
Gold ETF’s in India is in use since March 2007. Exchange-traded funds
or ETF have various benefits over physical forms of gold. Whichever is
the form, the risk factor with it is still moderate as the price of gold keeps
fluctuating.
 With the best option in diversification for the investors, they are also
present in electronic form. That makes it easy for everyone to trade online
from anywhere.
Commodities:
 Commodities are simply raw materials that we use to make some of the
essential products we employ daily. Talking about India, almost 60% of
the people are constantly engaging in agriculture. It is one of the most
diversified options to get potential returns.
 When you choose this as your investment avenue, then you can enjoy
some of the essential returns. People generally sell these commodities in
various markets. These things play a significant role in shaping the
economic growth of our country.
 An individual can estimate the commodity price and the fluctuation by
the trends in export and import.
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Investment portfolio for Rs. 5,00,000

Investment avenues Moderate investor

Equities [Direct equity, Equity mutual 2,50,0000 (50%)
funds]
Debt [Debt mutual funds, PPF, SCSS, 1,00,000 (30%)
PMVVY]
Alternate asset class [Real estate, 50,000 (10%)
cash]
Gold 50,000 (10%)

Investment avenues Conservative investor

Fixed income [FD] 2,50,000 (50%)

Equities [Direct equity, Equity 1,50,000 (30%)

Mutual Funds]
Gold 50,000 (10%)
Alternate asset class [Real estate, 50,000 (10%)
Cash]

Investment avenues Aggressive investor

Equities [Direct equity, Equity mutual 3,50,000 (70%)
funds]
Fixed income [FD] 1,50,000 (20%)
Gold 50,000 (10%)