INVESTMENT

AVENUES
 Investment
Alternatives

Direct Investment Indirect

Alternatives Investment
Alternatives

Financial Non- Financial

Assets/ Assets/
Investments Investments

Fixed Principal Variable

Investments Principal
Investments
Fixed Principal Investments
⚫ Cash
⚫ Savings Bank Account
⚫ Savings Certificates
⚫ Government Bonds
⚫ Corporate Bonds
⚫ Corporate Debentures
Variable Principal Investments
⚫ Equity Shares
⚫ Preference Shares
⚫ Convertible Debt and Preference Shares
⚫ Mutual Funds
Non Financial Assets/Investments
⚫ Real Estate
⚫ Commodities
⚫ Art/ Antiques
 Indirect Investment Alternatives
⚫ Pension Fund
⚫ Provident Fund
⚫ Insurance
⚫ Investment Companies
 Cash
Cash is legal tender or coins that can be used to
exchange goods, debt or services. Sometimes it
also includes the value of assets that can be
converted into cash immediately, as reported by a
company.

The total currency (in cash) with the public

is at Rs 14,129.2 (RBI, May, 2017)
 Bank Accounts
⚫The number of deposit accounts increased
by 17.4 per cent in 2015 to 1,440 million
from about 1,227 million in 2014.
⚫ Total number of savings bank accounts in
2015 was1,170 million as compared to 978
million in 2014 (RBI, 2016 report)
Saving Certificates
National Savings Certificates (NSC)

⚫ NSC VIII Issue

⚫ Scheme specially designed for Government

employees, Businessmen and other salaried
classes who are Income Tax assesses.

⚫ No maximum limit for investment.

⚫ No Tax deduction at source.

Contd..
⚫ Certificates can be kept as collateral security to get
loan from banks.

⚫ Trust and HUF cannot invest.

⚫ A single holder type certificate can be purchased by

an adult for himself or on behalf of a minor or to a
minor.

⚫ Deposits qualify for tax rebate under Sec. 80C of IT

Act.

⚫ Rate of interest 7.9%.

EQUITY SHARES
1) Blue Chip Shares:

Blue chip stocks are shares of very large and well-orgnised

companies with a long history of sound financial

performance.

These stocks are known to have capabilities to endure tough

market conditions and give high returns in good market

conditions. (ET, Glossary)

TCS, Reliance Industries, ONGC, ITC, HDFC, Coal India, Sun

Pharma, Infosys, SBI, ICICI Bank

Source: bsiness.mapsofindia.com
2) Growth Stock
A Growth Stock is a share in a company whose
earnings are expected to grow at an
above-average rate relative to the market.
3) Income Shares: A class of shares offered by a
dual purpose fund that has little room for capital
appreciation but gives the holder a portion of all
income earned in the portfolio.(Investopedia)
4) A cyclical Shares is an equity security whose price is affected by
ups and downs in the overall economy. Cyclical stocks typically
relate to companies that sell discretionary items consumers can
afford to buy more of in a booming economy and cut back on
during a recession.

⚫ Airlines Cos , Hotels and Restaurants, Luxury items manufactures

etc.

5) Defensive Share A defensive stock is a stock that provides a

constant dividend and stable earnings regardless of the state
of the overall stock market. Because of the constant demand
for their products, defensive stocks tend to remain stable during
the various phases of the business cycle
⚫ Preference Shares
No Voting rights, Fixed Dividend Rate
⚫ Debentures
⚫ Bonds
Classification of Bonds

Government bonds

These kinds of bonds are issued and backed by the

Government of India. In other words, the Indian
government offers investors bonds at a fixed rate.

⚫ Indian Renewable Energy Development Agency

⚫ IFCI
⚫ Tax Free Bonds:

The income by way of interest on these Bonds is fully exempt from Income

Tax and shall not form part of Total Income as per provisions under

section 10 (15) (iv) (h) of I.T. Act, 1961. These bonds are generally

issued by Government Backed entities and thus have very low default

risk.

⚫ Zero coupon bonds

Usually, most types of bonds are offered at a fixed interest rate. However,

zero coupon bonds do not come with any specific coupon rate or

interest rate.

They are offered at a discount on the face value, and on maturity, investors
⚫ Treasury bills are zero coupon securities
and pay no interest.
⚫ They are issued at a discount and redeemed
at the face value at maturity.
⚫ For example, a 91 day Treasury bill of
Rs.100/- (face value) may be issued at say
Rs. 98.20, that is, at a discount of say,
Rs.1.80 and would be redeemed at the face
value of Rs.100/-. (RBI)
Corporate Bonds

⚫ Corporate bonds are debt securities issued by private and

public corporations.

⚫ Companies issue corporate bonds to raise money for a

variety of purposes, such as building a new plant, purchasing
equipment, or growing the business.

⚫ Until that date, the company usually pays you a stated rate of
interest, generally semiannually. (NSE)

1. Convertible Bond

2. Non Convertible Bonds

Masala bonds are bonds issued outside India but
denominated in Indian Rupees, rather than the local
currency. Masala is a Hindi word and it means
spices. The term was used by IFC to evoke the
culture and cuisine of India.
⚫ In Feb 2020 Asian Development Bank
(ADB) has listed its 10-year masala bonds
worth ₹850 crore on the global debt listing
platform of India INX. The proceeds would
be used to support local currency lending
and investment in India, the BSE-owned
exchange. ADB’s masala bonds are listed on
both Luxembourg exchange and India INX.
 Issuer Name Maturity

Reliance Industries Ltd 15/01/2026

Prakash Industries Ltd 01/10/2020

Adani Ports & Special

29/07/2020
Economic Zone Ltd

Export-Import Bank
06/11/2020
Of India/London

Source: Bloomberg
 Deep Discount Bonds
⚫ A deep-discount bond will have a market
price of 20% or more below its face value.
These bonds are perceived to be riskier
than similar bonds and are thus priced
accordingly.
⚫ These low-coupon bonds are typically long
term
A. Ashirwad Deep Discount Bond: ICICI
The Investor can choose either of the
following options in respect of each Deep
Discount Bond applied for
https://www.icicibank.com/Personal-Banki
ng/investments/icici-bank-bonds/past-issue
s/1997/march_97_1.page
⚫ Junk bonds

A speculative bond rated BB or below by Standard

& Poor's Corp. and Ba or below by Moody's
Investor Service.

"Junk bonds" are generally issued by corporations

of questionable financial strength or without proven
track records.

They tend to be more volatile and higher yielding

than bonds with superior quality ratings.
Kisan Vikas Patra
⚫ Kisan Vikas Patra is a small savings
instrument that will facilitate people to
invest in a long term savings plan.
⚫ This scheme was originally introduced by
the Government of India in 1988 and was
again reintroduced in 2014 with some
changes.
⚫ The principal amount invested in KVP will
be doubled in a time of 9 years and 4
months or 113 months.
⚫ he main target audience for this scheme is
people in semi-urban and rural areas
(bankbazaar.com)
 Current interest rate on Post office deposit schemes

Interest rate (%)

Instrument from 01.04.2020 Min Amt (Rs) Max Amt (Rs)

Senior Citizen Saving Scheme 7.40 1000 15 lakh

Sukanya Samriddhi Account 7.60 250 1.50 lakh

1.50 lakh per
Public Provident Fund 7.10 500 annum

5 Yr NSC - VIII Issue 6.80 1000 No limit

Time Deposit# 5.50-6.70 1000 No limit
Post Office Monthly Income Single: 4.50
Scheme 6.60 1000 lakh
Post Office Monthly Income
Scheme 6.60 1000 Joint: 9 lakh
Kisan Vikas Patra 6.90 1000 No limit

Recurring Deposits 5.80 100 No limit

Savings Account 4.00 500 No limit
Source: Government of India circular
Mutual Funds
https://www.youtube.com/watch?v=mInPCU
Xo0lw
Open Ended
Close Ended

Equity Mutual Fund

Debt Mutual Fund
Hybrid Mutual Fund
Money Market Mutual Fund
ELSS
Real Estate
⚫ Prices dropped or remained flat in 2019 (% change in avg
price in past 12 months): N.A
Avg price per sq ft: Rs 4,170

But supply increased due to new launches… (% change in

new launches in past 12 months): 23

Number of new units launched during the year

2018: 182,207
2019: 2,23,325

…though sales did not keep pace with supply (% change in

sales in past 12 months): -1

Number of new units sold during ..

⚫ Afforability showed a marked improvement
in 2019
Five of the eight cities are below the Knight Frank
Affordability benchmark of 4.5

Figures denote the ratio of average house price to average annual

household income in each city.
Property price. % of new launches in 2019

Source: India Real Estate 2019 report by Knight Frank India

Gold

Research shows that over 20,000 tonnes

of the precious metal lying idle in
households and temples, whose worth is
estimated at around $800 billion
(economic times, 2017)
Investing in gold? 7 facts you
should know (ndtvprofit)
1. Forms of buying gold: Coins, Ornaments,
Gold ETFs, Gold Sovereign Bonds or E Gold
http://www.moneycontrol.com/mutual-funds/perf
ormance-tracker/returns/gold-etf.html
2. Current income
3. Capital appreciation
4. Risk
5. Liquidity
6. Tax Treatment
7. Convenience
 Commodity Market
⚫ A commodity market is a market that
trades in primary economic sector rather
than manufactured products. Soft
commodities are agricultural products
such as wheat, coffee, cocoa and sugar.
Hard commodities are mined, such as
gold and oil
Art and Antique
⚫ http://www.sothebys.com/en/news-video/
blogs/all-blogs/sotheby-s-at-large/2016/10/
sothebys-acquires-mei-moses-indices.html
Provident Fund
⚫ The Employee Provident Fund, is the retirement
saving scheme available to all the salaried employees, is
backed by the government on which fixed interest is paid.

⚫ The employee provident fund is administered by the

Employees Provident Fund Organization (EPFO),
a statutory body developed by the government of India
under the Ministry of Labor and Employment

⚫ Returns: 8.8% per annum

PPF- Public Provident Fund

⚫ Interest rates: 8.1% p.a

⚫ Tenure: 15 years; account continuance for 5

years at every renewal

⚫ Annual Deposit amount: Rs.500 - Rs.1.5 lakhs

per year (can be revised as per government
directive)

⚫ Withdrawals: Partial premature withdrawals can

be made every year from year 7
⚫ Tax advantages: Interests are tax-free
and deposited amounts are tax deductible
U/S 80C of the Income Tax Act.
⚫ Loan facility: Loans can be availed against
funds held in the PPF account
 Pension and Insurance Schemes
⚫ Atal Pension Yojana
WHAT IT COSTS: For a monthly pension of
Rs 1,000, a 40-year-old subscriber will have to
invest Rs 291 per month for 20 years, while an
18-year-old will have to contribute Rs 42 per
month for 40 years.
⚫ Pradhan Mantri Suraksha Bima Yojana

WHAT IT OFFERS: Accidental death and disability cover of

Rs 2 lakh.

WHAT IT COSTS: Premium is Rs 12 per year

Pradhan Mantri Jeevan Jyoti Bima Yojana

WHAT IT OFFERS: A pure protection term insurance

cover which pays Rs 2 lakh to dependents in the event of
the policyholder's death.

WHAT IT COSTS: Premium is Rs 330 a year.

Company Deposits
⚫ The deposit placed by investors with
companies for a fixed term carrying a
prescribed rate of interest is called
Company Fixed Deposit.
⚫ Deposits thus mobilized are governed by
the Companies Act under Section 58A.
⚫ http://www.moneycontrol.com/fixed-incom
e/company-deposits/