FINANCIAL

MANAGEMENT

TIME VALUE OF
MONEY

Anjana. A
20/UCMA/374
 Ms Rani is currently working in TCS. Her
income per month is ₹ 50,000. From her
salary, she kept ₹10,000 [20% of her
salary] separately for investments. She
has planned to park her savings in some
short term investments. She has a short
term goal of saving her money for her
higher education. So she started to do
market research to find better options.
After all this she came up with some
investment options which are as follows:
RECURRING DEPOSITS
SAVINGS ACCOUNT
NATIONAL SAVINGS CERTIFICATE
CORPORATE DEPOSITS
LIQUID FUNDS
MONEY MARKET FUNDS
Now she is in a dilemma to choose the
best option among these. Let's help her
out to conclude and come up with the
best one.
SHORT TERM INVESTMENTS

.
Short term investments also known as
marketable securities or temporary
investments are financial investments that
can easily be converted to cash typically
within 5 years. Many short term investments
are sold or converted to cash after a period
of 3 -12 months.
Pros
Short-term investment gains are reflected
directly on the income statement.
Short-term investments take on lower
risk, making them stable options.
Short-term investments help diversify
income types, in case of market volatility.
Cons
Short-term investments typically have
lower rates of return.
Any declines in the value of a short-term
investment will directly affect the net
income of a business.

 RECURRING DEPOSITS
An RD account means a banking or postal
service account in which a depositor puts
a certain amount of money each month
for a set length of time (commonly
spanning from one year to five years).
This structure is for people who want to
put down a set amount each month with
the goal of receiving a payout after a few
years
.
 SAVINGS ACCOUNT
Savings account is a basic account
type that lets you deposit money
safely with a bank. It ensures safety
and access to your money whenever
you need. You can withdraw your
funds, either digitally or in person, at
any point in time.
 NATIONAL SAVINGS
CERTIFICATE
The National Savings Certificate
(NSC) is a fixed income investment
scheme that you can open with any
post office branch. The scheme is a
Government of India initiative. It is a
savings bond that encourages
subscribers – mainly small to mid-
income investors – to invest while
saving on income tax.