Equity Market investments,

Bank deposits, and Mutual

Funds for Goal-Based
Investments
Group - 9
20PGDM095 Manish Singh
20PGDM104 Paras Sharma
20PGDM107 Prikshit Choudhary
20PGDM116 Shirish Goel
20PGDM124 Vaibhav Borlepawar
20PGDM126 Yash Singhal
20PGDM127 Yogesh Jain
Contents
Equity Market Investments ..................................................................................................................... 3
Primary Market: .................................................................................................................................. 3
Secondary Market: .............................................................................................................................. 3
Bank Deposits.......................................................................................................................................... 3
Savings Account: ................................................................................................................................. 3
Recurring Deposits: ............................................................................................................................. 4
Fixed Deposits: .................................................................................................................................... 4
Mutual Funds .......................................................................................................................................... 4

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 Equity Market investments, Bank
deposits, and Mutual Funds for
Goal-Based Investments

O
ur lives are full of difficulties, in pursuit of happiness, we spend our life on 9:00 to
5:00 office grinds, working for someone else and hoping that what we earn can help
us solve our problems0020and provide us with a happy and fulfilling life. Even if you
are doing something you love you would need money to sustain the business or the venture
that you are pursuing.

While we focus all our lives on earning money and maximizing our wealth, very few of us
know how we should manage our wealth, protect it from inflation and maximize our
returns. Do so many financial advisors recommend that we do goal-based investing.

But What is goal-based investing? Goals are something you want or wish to be in your life
and investing your money towards achieving these goals comes under goal-based investing.
Now while setting goals in life, you need to make sure that your goals are S.M.A.R.T i.e.,
Specific, Measurable, Actionable, Realistic, Timed.

While doing goal-based investing there are various assets for investment for crucial and
non-crucial goals as well as for short-term and long-term goals. They are as follows:

1. Monetary Assets
2. Investment Assets
3. Retirement Assets
4. Real Estate
5. Auto Mobiles and Other vehicles
6. Personal Property
7. Other Tangible and Intangible Assets

However, our focus will be on the following Investment tools:

1. Equity Market Investments

2. Bank Deposits
3. Mutual Funds

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Equity Market Investments
An equity market is a market where traders buy and sell stocks. The equity Market enables
the investor to own a small part of an organization. This small part of ownership is also
called share or stock. Shares are issued by the company in return for money.

There are two types of Equity Market:

Primary Market:
When the company wants to raise money from the public for trading, they need to
launch its IPO (Initial Public Offer). On the launch of the IPO, the general public can
apply to buy the stock of that company. Once the IPO closes the company is listed on
the stock exchange.

Secondary Market:
After listing the IPO of the stocks, they are then traded in the secondary market. Any
person can buy stocks of any company even if they did not acquire the stocks
through IPO. The brokerage firms facilitate the trade between the investors and
stock exchanges.

The companies listed on the stock exchange can be divided based on industry and
market capitalization.

• Large-cap companies have a market cap of INR 20,000 crore or more. These
stocks belong to large companies and are the safest to invest in when we talk
about equity market investment.
• Mid-cap companies have a market cap between Rs 5,000 crore and less than Rs
20,000 crore. They are riskier than large-cap companies and hence they provide
more returns than large-cap companies.
• Small-cap companies have a market cap of below Rs 5,000 crore. Small
companies have a higher risk than large-cap and Mid-cap companies and hence
they provide more return on investment.

Bank Deposits

Savings Account:
This account is suitable for someone who wants to save his money but also wants
liquidity in his investments. A savings account provides an interest rate on the
amount of money present in the account. Banks have set a limited amount to have a
functioning savings account.
The strength of the savings account lies in the flexibility of withdrawing money from
the account. A debit card is also provided to withdraw your money from the ATMs.

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 There are other facilities associated with the Savings Account and they are passbook
and cheque book facility, internet banking, easy entry, and exit.
So, although it is not a great instrument for investment it provides a certain rate of
interest with high liquidity and hence many people keep their money in a savings
account.

Recurring Deposits:
These types of accounts are specifically used by the person who wants to save a
certain amount every month. The rate of interest varies from bank to bank but it is
somewhere between 5-7% rate interest. The recurring deposits can have different
maturity periods. You can take loans on your recurring deposits, and it also provides
additional interest rates for senior citizens. Hence it is a worthwhile investment for
someone who doesn’t want to take risks and wants to keep his investment safe.
There is also a clause for premature withdrawal.

Fixed Deposits:
In these types of accounts, you deposit your money for a fixed tenure. The interest
rate may range from 5-9%. Some banks these days offer fixed deposits that provide
tax exemption of up to INR 1,50,000. (U/S 80C of the Income Tax Act, 1961.). This
type of investment is good for someone who wants to invest his money in the
medium to long term without taking risks. FD account can be shut down prematurely
as well.

Mutual Funds
Mutual funds are company that create a money pool by taking funds from different
investors and then invest them in different securities such as stock, bonds, gold, money
market etc.

There are a wide variety of funds which provide different returns based on the theme of the
fund and risk taken by investing in different securities.

Some of the types of Mutual Funds are as follows:

1. Equity Fund
2. Debt Funds
3. Hybrid Funds
4. Solution Oriented Funds
5. Exchange Traded Funds

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 Goal Based Investing based on the Above-mentioned Investment Tools

Goal Goal Risk

Type of Investment
Duration Importance Appetite
Low Savings Account
Crucial Moderate Liquid Funds, Low Duration Funds, Short Duration Funds
Short High Equity Market, Growth Funds
Term Low Savings Account
Non-crucial Moderate Liquid Funds, Low Duration Funds, Short Duration Funds
High Equity Market, Growth Funds
Low Fixed Deposits, Recurring Deposits
Medium Duration Debt Funds, Hybrid Funds, Large Cap
Crucial Moderate
funds, Large Cap Equity
Medium High Aggressive Hybrid Funds, Large Cap Equity
Term Short Duration Funds, Conservative Hybrid Funds, Large Cap
Low
Equity Investment
Non-crucial
Moderate Mid cap Equity Investment, Hybrid Funds, Multi cap funds
High Midcap Equity Investments
Low Fixed Deposits, Recurring Deposits
Crucial Moderate Large Cap Funds, Blue Chip Companies Equity
Long High Aggressive Hybrid Funds, Hybrid Funds
Term Low Fixed Deposits, Recurring Deposits
Non-crucial Moderate Mid cap Funds, Hybrid Funds, Large Cap Equity
High Small Cap Funds, Small Cap and Mid cap equity Investments.

The above given table gives you an idea as to where you would like to invest based on the
duration, risk appetite and crucial and non-crucial nature of your goals. Age also plays a
significant role in the type of invest that you do.