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Porfolio Guide in investment management An undergraduate course requirement in management 107

submitted by: Virgilio

f Montilla Jr

A BSAB IV , student of the College of Agriculture, WPU, Aborlan, Palawan

submitted to:

Dr Lourdes s Arcilla

The Dean of the College of Business Economics and Management, WPU, Aborlan, Palawan

List of topics .

Savings accounts are generally for money that you don’t intend to use for daily expenses.Savings and Time Deposit What are saving accounts? • • Savings accounts are accounts maintained by retail financial institutions that pay interests but cannot be used directly as money. You need to gather information about the annual percentage yield of various savings packages and then compare the banks that offer higher interest rate. which allows you to withdraw money from the ATM of your bank Service and facilities: The service and facilities are more critical features of a savings account. Types of savings account Regular savings account The most common type of savings account and the simplest way to duse . ATM cards: It is valuable to confirm whether the savings account come with ATM card. Important features to be consider before opening a savings account: Interest rate The rate of interest is one of the most important features of a savings account. Some banks offer online banksing service. which you need to confirm. which lets you use your computer acces your account Prevention of overdrafts Prevention of overdraft is in fact the most beneficial feature of savings account.

Liquid CD’s Liquid CD’s are locked in at rate but the owners are able to initially withdraw money at any time without a penalty Brokered CD Brokered CD’s are bought by a broker from a bank and the resold to the brokers costumer.CD’s (certificate of deposit) CD’s offer the biggest interest rates among savings accounts. Types of Time Deposit Traditional CD’s The money is invested for a predetermined amount of time at predetermined interest rate. Interest is made by putting your savings for a pre –determined time. What are the Time deposit? A deposit at a bank or financial institution that has a fixed returned and a set maturity. Deposit products Peso checking account Regular checking account Smart checking account Peso checking account payroll Other deposit products Peso savings account Automatic transfer facility Dollar savings account Third currency savings account Peso term account Dollar term account .

3. savings and loan associations and mutual savings Meaning and types of banks Commercial banks Industrial banks Agricultural bank Exchange banks THE TEASURY BILLS.S Government. notes and bonds are length until maturity    Treasury bills are issued for terms less than a year Treasury notes are issued in terms of 2.What is savings deposit? savings deposits are standard savings accounts or passbook accounts offered by traditional commercial banks.5 and 10years Treasury bonds are issued in terms of 30 years. since they are backed by the U. note and bonds are sold by the Treasury Department. note and bonds Treasury bills. The difference between bills. these are the safest investment in the world. term of 365 days. NOTE AND BONDS What are treasury bills. tend the lowest interest rate. Treasury Bill –T-Bill Treasury Bills (T-Bill are peso – denominated bills with a maximum. Since they are so safe. and were reintroduced in February 2006. .

Why Invest in Bonds? Many personal financial advisors recommend that investors maintain a diversified investment  portfolio consisting of bonds.S. How To Invest There are several ways to invest in bonds. and the U. 10 YEARS NOTE Treasury notes bear a stated interest rate. treasury notes can be bought either directly from the U. Government or through a bank. Whatever your investment goals. Treasury bills are short –term obligations with a term of year at less and Treasury bonds have a term of greater than 10 years. DIFFERENT TYPES OF BONDS . TREASURY NOTES A marketable U.S treasury regarding the next bill auction.s.S. depending upon  individual circumstances and objectives. including purchasing individual bonds or investing in  bond funds or unit investment trusts. Government. stocks and cash in varying percentages. government debt security with a fixed interest rate and a maturity between one and 10 years. taking into account your income  needs and tolerance for risk. WHAT IS BOND? Bonds are another word for loans taken out by large organization. cities. and owner receives semi annual interest payments.What does bill announcement mean? an announcements published by the U. your investment  advisor can help explain the investment options available. such us corporations.

Zoning for residential use may permit some services or work opportunities or may totally exclude business and industry. Housing may vary significantly between. The area may be large or small. are tax deductible. Advantanges of Investing in Residential Property • • • Expenses. especially to oceans and seas. to sight land after a long voyage. or mobile homes. including depreciation on the property and interest on your borrowings. You can leverage your investment. -.opposed to water as constituting a part of such surface. . and through. as. as opposed to industrial andcommercial areas. Residential zoning usually includes a smaller FAR (floor area ratio) than business. Land The solid part of the surface of the earth. commercial or industrial/manufacturing zoning. It may permit high density land use or only permit low density uses. These include single family housing. residential areas. multi-family residential. You make money as the value of the property increases. Savings Bonds  I Bonds  Municipal Bonds  Corporate Bonds  Junk Bonds Bond Equity Earnings Yield Ratio – BEER a metric used to evaluate the relationship between bonds yields and earnings yields in the stock market. Residential area A residential area is a land use in which housing predominates.

Ensure that your flat’s building has taken approval from native Municipal Corporation.• • You get rental income. Additionally guarantee whether or not or not the building is built on legal land or not. If the home is allowed to appreciate for long enough. Advantages A buy and hold strategy can offer several advantages to the knowledgeable investor. Hospital. In . The property could be untenanted for a period of time. Risks of Investing in Residential Property • • • • • Interest rates could rise. If it’s in below development then you will request developer to make some very little changes as per your desires moreover. They have vast info of assorted location of the city where upcoming comes are in progress. They are also having knowledge of Mumbai ResIdential Apartments for rent in prime locations. Must Visit the Site: Don’t merely purchase the property whereas not seeing the flat yourself. Inform prefer right society or area that’s sweet and friendly Verify the Documents: This could be most important. POINTS TO BE CONSIDERED BEFORE INVESTING RESIDENTIAL PROPERTY Below 5 little print that you just ought to place confidence in whereas buying a property. kitchen rest room and locality moreover. Identify your Needs: Before you purchase any property you would like to try to your home work initial. feet (or total area) you will need Choose wonderful Place: whereas buying a property it’s necessary to determine on right place. Verify your basic demand whereas buying a property or flats for sale in Mumbai. or even fall. the investor can generally expect a higher rate of return on their money than they would see with other investments. you want to ensure that you just will get all access and detailed information of your possession and connected documents. Bank. Ask Agents: Agents are one who having best info of properties. You could get "bad" tenants. faculties and various necessary areas have to be compelled to be with reference to the position. For people who can't save. Schools. If you are aiming to keep in flat then what range loved one goes to live there. Inform contact to a reliable and renowned agent who will not solely assist you to go looking out your dream home but additionally offer some discount moreover. It has to be compelled to be remote from station since Railway is lifeline of Mumbai. paying off a mortgage is an enforced savings programme. House prices could remain static. Check all rooms. what have to be compelled to be the sq. It could take up a lot of your personal time.

managing the property when tenants are unreliable. and being at the mercy of real estate cycles. you can choose a plot of land which is available cheap and will fetch you a great price appreciation in the time to come. you have to face the challenge of choosing a very good location for your land. Things to Consider Before Buying Agricultural Land Conduct a Research for the Location For making your land investment profitable. you should check whether the area around has essential facilities such as water supply. The right tenant can also offer the benefit of watching over the property.addition. Agricultural Land. The reality is there will be no profit if the investor is forced to sell when the market is low so always employ a positive cash flow situation or pass on the deal. and excludes any dwelling house or garden. and this can provide the investor with a positive cash flow. Through careful observation. Disadvantages Of course. power supply.available or being used used for agriculture. this requires a great deal of patience as it might take years to see a return on the investment from appreciation. The absence of these things in the vicinity can create problems for you and the land would not be much . "agricultural land" land which means before development permitted by thisPart is carried out. is land in use for agriculture and which is so used forthe purposes of a trade or business. Plus. health care facilities and many other things. an extensive research needs to be conducted by actually visiting the region where you wish to buy the land. there are also disadvantages to a buy and hold strategy. tenants actually end up paying the expenses and build equity for the owner on the home through rent. In order to get the best location. In the broadest sense 'agricultural land' means land suitable. Other disadvantages include the cost of renovations. the investment cannot be easily liquidated. Check for Essential Facilities While making any kind of land investment. For one thing.

then you will be at a big loss. you should also be aware of the land investment tax benefits which you can definitely get after this deal. Commercial property The term commercial property (also called investment or income property) refers to buildings or land intended to generate a profit. you should ensure that you are actually getting the total area which was promised to you by the seller. The legal documents should be with you once you pay for the land. Land contract should be signed between you and the seller and you must know how does a land contract work. it is necessary to conduct a reality check on the price of the land in the area where you wish to make a purchase.in demand in the future. residential property containing more than a certain number of units qualifies as commercial property for borrowing and tax purposes. you will need several clearances and the land should be non agricultural for that. If this point is neglected. checking the land surface is also a must while making any kind of land investment. warehouses. industrial property. At the same time. Decide the Purpose of Investment Are you investing in the plot of land just to sell it off at a higher price after a few years or you wish to construct commercial or residential building there? This is the question which you should ask yourself before making any kind of land investment. and garages. medical centers. Complete the Legal Formalities While buying land. To erect a building. In many states. malls. hotels. Commercial property includes office buildings. shopping centers. . you will have to get your plans approved in order to utilize it for a construction project. Ideally. The property should be of a clear title so that you do not face difficulties for applying for loans to buy it and sell it whenever you want. multifamily housing buildings. Also. you need to think whether you would be able to pay the amount for the piece of land and how much real estate loan you will require for the same. Many experts will suggest you to refrain from purchasing marshy lands or the ones located in low lying areas. Check the Land Surface Apart from conducting a market research. farm land. retail stores. This is one of the most important point to remember while we discuss how to buy land. You can take help from real estate attorneys and realtors in this regard as they have spent a long time in the industry and know the current trends and happenings well. either from capital gain or rental income. You should see to it that the land owner is not selling the land at a higher price than the ongoing prices. At this time. that kind of land should be given preference which has underground wells which can fulfill your need for water. The land on hill slopes should not be purchased as it can cause a lot of difficulty in the construction activities. Check the Price of the Land While making a land investment.

but less beneficial during property slumps.Commercial property tends to deliver a relatively high income yield throughout the rental period. commercial property tenants are less likely to default on payments and even if the tenant goes into liquidation. with periods of 10 years and more not being uncommon. though. Maintenance . But many comm ercial leases also have added protection for the owner in the form of make good clauses. maintenance clauses and management clauses. Residential property investors must pay all outgoings and other costs. Deductible rates on commercial property. Understand the cycle 7. Research & know the market 6.Commercial lets normally have long lease contracts. Commercial tenants will also tend to maintain the property better as the look and condition of the property is important to their business and their staff. Know your goals 2.Commercial tenants are generally liable for the maintenance and upkeep of the property. Pay down your owner-occupied residence 5. contrasting with residential leasing. although of course this can be negatively geared. itsreturns have been competitive with those of equities and bonds. are higher than for residential because of higher depreciation rates. commercial property offers some key advantages: Long-Term Secure Cashflow . In addition to this. Look for opportunities The benefits of investing in commercial property Leases tend to be much longer anything from three to 20 years . Restrategise and regroup 3. Reduce your personal debt 4. Why Commercial Property? Compared to residential property investments. . In comparison residential property investors rely on the capital value of the house increasing to generate a good return.and they are quite often secured by bank guarantees. This is fine during periods of rising property prices. Over the long term.Commercial property can be a good investment. and it can also help to diversify a portfolio Top tips for investing in an emerging commercial market 1. The return on invested capital on commercial properties ranges between 7% and 10% net after all costs*. the liquidator may continue paying the rent in order to stop the lease being forfeited. where the onus tends to be on the landlord Income Yield . It provides a predictable. steady stream of income and has potential to grow in value.

with implications on the type of building they need. Sector Performance . might depreciate the value of small shops. both in the time spent finding a buyer and making the transaction. For example.Properties whose tenants are reliable. department store and warehouse property to decline sharply.A decline in the sector that your property services could affect your investment. which might receive future government or multi-national investment . the development of a new supermarket. property has poor liquidity. For example the move to open plan office space. This can be further emphasised in poor market conditions when the ability to find a buyer offering the right price will become very difficult. For example a period of poor sales performance and market withdrawal in the retail sector could lead to the demand for small store. Market Factors .Commercial Property Risks In line with all investments. commercial property investment comes with its own risks: Poor Liquidity . Tenant Quality . The same can be said for geographic regions. Many companies also look for facilities like air conditioning and the ability to connect computer terminals through under floor wiring.The property market is prone to cycles. could make older buildings with their rigid enclosed spaces redundant. Investing in a single property can be a risky challenge.The more diverse an investment portfolio. the less susceptible it will be to tough market conditions. Easy access to transport networks is an obvious plus factor for most tenants. Current rental rates could decline in the future. as yields grow and decline depending on the level of supply and demand for commercial property. but consideration should also be given to future developments in the area.Try to identify which sectors and sub-sectors of the market will perform well in the future. supermarket.Compared to equities and bonds. Market Performance . Type Of Building . What To Look For When Buying Commercial Property Location . Poor Diversification . present a low credit risk and hold a longterm lease will hold a premium value.The requirements of tenants can change over time.the location of the property is very important and will be a major factor in determining the value of property and rental income.

furniture and draperies are items of personal property. coupled with the intent to possess and exclude others. In capitalism there is no distinction between personal and private property To many socialists. dams. not a relationship between person and thing according to Marx (e.. there must be a degree of actual control over the object. while personal property refers to consumer and non-capital goods and services. is private property that is moveable. Fixtures include buildings. fences.g. as opposed to real property or real estate Personal property may be classified in a variety of ways.Real estate Real estate is the modern term for land and anything that is permanently affixed to it. etc Private property is a social relationship. For example. roughly speaking. which items of property constitute which is open to debate. heating. televisions. the term private property refers to capital or the means of production.). even though . Constructive possession is the power and intent of an individual to control a particular item. Property that is not affixed is regarded as personal property. (2) the right to recover a chattel that has been wrongfully taken. clothes. Actual possession exists when an individual knowingly has direct physical control over an object at a given time. Possession Possession is a property interest under which an individual is able to exercise power over something to the exclusion of all others.g. They are separated by a sometimes blurry boundary. infrastructure.. mines. Personal versus private property In political/economic theory. It is a basic property right that entitles the possessor to (1) the right to continue peaceful possession against everyone except someone having a superior right. the distinction between private and personal property is extremely important. • • Personal property. • Personal property is part of your person and includes property from which you have the right to exclude others (e. and things attached to buildings. such as plumbing. For example. an individual wearing a particular piece of valuable jewelry has actual possession of it. and (3) the right to recover damages against wrongdoers. etc. and light fixtures. The law recognizes two basic types of possession: actual and constructive. In order to constitute possession. cars. notably socialist and anarchist philosophies. factories.

and decreased capital available to investment. as well as security of return.. Types of housing tenure include owner occupancy. is said to be in constructive possession of the jewelry. In Finance investment is putting money into something with the expectation of gain that upon thorough analysis has a high degree of security of principle. Tenancy. within an expected period of time In contrast putting money into something with an expectation of gain without thorough analysis. investment is the commitment of funds through collateralized lending. which contains a valuable piece of jewelry that she owns. squatting. increased capital available to speculation. For example.it is not physically in that person's control. has significant risk and is not an investment. reduced investor awareness of risk associated with speculation. See Real Estate Speculating Residential real estate The legal arrangement for the right to occupy a dwelling in some countries is known as the housing tenure. Investment has different meanings in finance and economics. reselling or leasing for income. In finance In finance. an individual who has the key to a bank safe deposit box. housing cooperative. if. For example. The occupants of a residence constitute a household. Real estate as the instrument of investment In real estate. condominiums (individually parceled properties in a single building). and cohousing. Different types of housing tenure can be used for the same physical type. or owned separately with an agreement covering the relationship between units and common areas and concerns. Major categories . public housing. Linguistic significance Common usage of "investment" to describe "speculation" has reduced investor capacity to discern investment from speculation. or making a deposit into a secured institution. and how they are connected to neighboring residences and land. and without security of return is speculation or gambling. without security of principal. connected residents might be owned by a single entity and leased out. money used to purchase property for the purpose of holding. Residences can be classified by.

or air circulation because there is already responsible for managing it. This fee is to pay for electricity usage in public places.An individual unit in a multi-unit building. Street lights in many townhome neighborhoods add to the feeling of security and further hamper any illegal activity.is one of a row of homes sharing common walls. The boundaries of the apartment are generally defined by a perimeter of locked or lockable doors. elevators. This fee is usually calculated per square meter of apartment units owned. For those who want to park a boat in front of their house. Advantages of townhouse living: Lower Maintenance -Having little to no yard offers some serious advantages in the maintenance department.Most newer homes in the Dulles corridor are overseen by an HOA. Advantages: Apartment units are usually not too large. For example the cost of maintenance (maintenance fee) or services charge to be paid every month. Disadvantages: Besides the advantages of the apartment. paint their doors purple and the front of the house pink. Often seen in multi-story apartment buildings. such as a central courtyard. Better Security -Proximity to other homes and neighbors makes it more difficult for criminals to sneak around the neighborhood and break into homes. They are also not bothered to take care of parks. sewage facilities. Differing from condominiums. the cost of security.Anyone who has ever lived in an apartment or condo and had neighbors above and below knows it’s a plus not to have people walking around over your head or blasting loud music or movies downstairs. while providing those without green thumbs a simple. Amenities -Many townhome communities offer pools. tennis courts and boat docks. or work on their car out front it could be a problem. While the cost of maintaining these facilities is shared by all in the form of a HOA (Homeowner’s Association) fee. Disadvantages of townhome living: Home Owner’s Association .• Attached / multi-unit dwellings Apartment . Many townhomes have just enough front and back yard to allow the owner to enjoy adding their own touch to the landscape. it could still save you some money over joining a private club if you purchase outside of an HOA. . water. inexpensive yard to deal with if they want to pay a local company to do it for them. Townhouse. cleanliness. Persons living under a Home Owner’s Association give up some personal freedoms for the good of the overall community. there are also deficiencies in an apartment you need to know. and others. cleaning public places. sharing the same amenities. townhouse ownership does include individual ownership of the land. so the time and energy needed to clean the room is not too much. similar to condo communities. Less Noise . In northern VA many you will find many developments where townhouses are mixed in with single family homes. fitness centers. and there are advantages and disadvantages of living in one of these developments. that would have shared ownership. There can also be common elements.

You may also not be able to park close to roads. and repairing things like siding or shingles. but they are usually included in your HOA fees. Less Privacy -Since townhouses are connected to at least one neighbor. Some large townhouses solve this problem with elevators. and are there to keep your property managers paid to keep the maintenance activities well maintained. It all depends on what has to be maintained. Most condos are maintained on the outside. Another disadvantage would be parking. o Condominium . workout centers. or on roads. Less Maintenance . mowing the lawns. and will have more neighbors in a smaller area than a single-family home. If you wanted a 2.The best advantage of owning a condo is having a almost maintenance free property. you may have to push a button to be let into the complex. Disadvantages There are disadvantages to owning a condo. other than the HOA fee. kid’s playground. most condos come with limited parking as you have to share the space with your neighbors. a townhouse will generally offer less privacy as a single family home (but more so than a condo). and this could prove to a be a noisy environment.There are a lot of condo complexes that have gated communities.Condos are usually cheaper than a comparable stand alone single family property. like as in. tennis courts. and sometimes a LOT of stairs. which . There are townhouse or rowhouse style condominiums as well. which is good if you are going on vacation. a walls thickness away. Depending on how well built the condo is. a small park. the cost of owning one of these amenities in a standalone environment can be costly to say the least.Most condominiums come with the added benefit of swimming pools. Advantages of a condominium? Cheaper . Most condos are built with a common wall. one of which is the proximity of your neighbors. which means you will be sharing at least one wall with a neighbor. These fees can be anywhere from $50 to a couple hundred dollars a month. which means no more shoveling snow. which means stairs. Most HOA fees are reasonable. Safer . this may or may not affect you. Disadvantage? Well. and having close neighbors won't affect your noise level at all. The cost to maintain these amenities yourself could be enormous. In larger cities. or many other amenities. Some condos you may hear your neighbors.Building or complex. You also have a lot more neighbors that are closer. others are built sound proof. your neighbors are usually really close.Stairs -An inherent feature of townhouses is multiple floors. owned by individuals. Disadvantage? There is usually a Homeowners Association fee (HOA) that you are required to pay. Common grounds and common areas within the complex are owned and shared jointly. Common Areas . this is a great way to be safe. and will be more adept to watching the premise. Disadvantage? I can't think of many. or other security measures to keep you safe. if not more. who doesn't like a pool? This is probably one of the major benefits of living in a condominium. similar to apartments. you would most likely pay 20-30% less if you bought a condo.000 square foot home.

for instance. hotel rooms.Usually very temporary.k. and many of the benefits are similar. There are two main types of stock: Common and Preferred. STOCK What is Stock? A type of security that signifies ownership in a corporation and represents a claim on part of the corporation's assets and earnings. where each floor is a separate apartment or unit.A type of multiple ownership in which the residents of a multi-unit housing complex own shares in the cooperative corporation that owns the property. The legal structure is the same.A floating home o Tents . with roof and walls consisting only of fabric-like material. Multi-family house . . albeit less frequently.Often seen in multi-story detached buildings. o Houseboats . Cooperative (a. "co-op) .Two units with one shared wall.Potentially a full-time residence which can be (might not in practice be) movable on wheels. a nonprofit corporation may face a lower tax liability in an office condominium than in an office rented from a taxable.increases the limits involved with parking. for-profit company. the frequent turnover of commercial land uses in particular can make the inflexibility of condominium arrangements problematic. and storage. group housing facilities (retirement homes or dormitories). giving each resident the right to occupy a specific apartment or unit. Common stock usually entitles the owner to vote at shareholders' meetings and to receive dividends. However. for non-residential land uses: offices. Non-residential uses Condominium ownership is also used. Single-family detached home o Mobile homes . • • Semi-detached dwellings o Duplex . retail shops.a.

Also known as "shares" or "equity". For example. but has a higher claim on assets and earnings than the common shares. b. Growth Stocks  Shares in a company whose earnings are expected to grow at an above- average rate relative to the market.Preferred stock generally does not have voting rights. Types of Stock a. and offers a high yield that may generate the majority of overall returns. owners of preferred stock receive dividends before common shareholders and have priority in the event that a company goes bankrupt and is liquidated. The excess cash flow from profits can therefore be directed back toward investors on a regular basis. and offer higher-than-market dividend yields. c. Also known as a "glamour stock". Blue-Chip Stocks  Stock of a well-established and financially sound company that has demonstrated its ability to pay dividends in both good and bad times. often steadily increasing dividends. While there is no specific breakpoint for classification. Income stocks may have limited future growth options. Income Stocks  An equity security that pays regular. thereby requiring a lower level of ongoing capital investment.  Types of Mutual Funds . most income stocks have lower levels of volatility than the overall stock market.

Investment horizon – mutual funds are not get rich quick schemes. people who have earned significantly in mutual funds have been in it for several years already .Stock Mutual Funds – Stock mutual funds or equity funds invest primarily in shares of stock issued by Philippine corporations. it’s a medium to long term investment. 3. Balanced Mutual Funds – balanced funds invest in both shares of stocks and bonds. Professional management – your mutual fund manager does all the research. your investment does not guarantee a positive return. you can lose money. selection and monitoring of investments 2. Affordable – mutual funds require relatively low initial investments. Liquidity – mutual fund investors can redeem their shares at the current net asset value(NAV) of their investment easily and at any time. Costs and fees – sales commissions and redemption fees are applied to your investment if you decide to redeem your mutual fund investment. 2. The dominance of stock issues within the portfolio positions the fund to attain a more aggressive rate of growth.1. some mutual fund companies are only requires P5. Diversification – mutual fund investments are spread across a wide range of companies and industry sectors which lowers your risk if a company or sector performs badly. Uncertainty of returns – unlike fixed-income products (such as time deposits). you’re left just “sitting at home” and hoping that your portfolio adviser makes good investment decisions 3. Disadvantages of Investing in Mutual Funds: Disadvantages of Investing in Mutual Funds: 1. in fact. Lack of control – investors cannot directly influence which securities the fund manager should invest in.000 to start. 4. this fact makes mutual funds a low to medium risk investment instrument 2. thus. this could significantly affect your expected returns 4. thereby accessing the growth potential of stocks tempered with the presence of secure fixed-income instruments Advantages of Investing in Mutual Funds: 1.