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Investment:

Investment is the commitment of the funds to one or more


assets that will be held over some future time period.
Investment is the current commitment of the money for a period
of time to derive future payment that will compensate the
investor for 1) the time the funds are committed 2) expected rate
of inflation 3) the uncertainty of future payment.
Characteristics of the Investment/Attributes to be Considered:
Return
Risk
Safety
Liquidity
Hedge against Inflation
Tax Shelter
Convenience




Various Forms of the Investment
Corporate Securities
Equity Share
Preference Share
Debentures
Corporate Bonds
Commercial Papers
Repos and Reverse Repos
Certificate of Deposits
Deposit in Banks and Non- Banking Companies
Mutual Funds and Other Investment Companies
Post Office Deposit






Life Insurance Policies
Provident Fund Schemes
Government Securities:
Treasury Bills
Government Bonds
Derivatives
Real Estate
Art and Antiques
Foreign Currency Investments
Metals and Stones

Source of Investment Uncertainties:
Economic Specific Factor
Industry Specific Factor
Company Specific Factor
Economic Specific Factors:
Growth Rate of National Income
Inflation
Interest Rates
Government Revenue, Expenditure and Deficits
Exchange Rate
Infrastructure
Natural Circumstances
Political and Economical Policies
Norms of Regulatory Authorities
Dependency on Foreign Countries
International Financial Environment




Approaches to the Investment Decision Making
Fundamental Approach
Technical Approach
Psychological Approach
Academic Approach
Eclectic Approach
Approaches of the Investment
Aggressive Approach
Conservative Approach
Balanced Approach
CAPITAL MARKET
PRIMARY MARKET SECONDARY MARKET
MARKET
Public
Corporate
Existing Stockholders
Other Entities

Stock & Shares
Debentures
Units
Bonds
Warrants
Collective Investment
Instruments
Venture Capital Funds
Global Depository Receipts

Merchant Bankers
Underwriter
Portfolio Manager
Debenture Trustees
Bankers to an Issue
Registrars to an Issue
Share Transfer Agents
Rating Agencies

INSTRUMENTS
MARKET

Recognized Stock
Exchanges
Spot Market



Stock & Shares
Debentures
Units
Bonds
Futures and Options
Derivatives





Stock Brokers
Sub Brokers

INSTRUMENTS
SOURCE OF FUNDS

Individuals
Businesses
Public Sector Entities

MARKET
PARTICIPATNTS
Individuals
Mutual Funds
UTI
Banks
NBFCs
Dev. Institutions
Firms
Foreign Investors
Corporate
LIC
Others


OTHERS
Securities Depositories
Custodians of Securities


SELF REGULATORY
ORGANISATIONS
AMFI
AMBI
ACAI
etc.

INTERMEDIARIES INTERMEDIARIES
Investment Process:
Investment Objective

Investment Strategy

Selection of Securities

Portfolio Construction

Portfolio Evaluation

Portfolio Revision




Common Error in Investment Management
Inadequate Comprehension of Return and Risk
Inappropriate Formulation of Investment Policy
Naive Extrapolation of the Past
Haphazard Decision Making
Untimely Entries and Exit
High Costs
Over Diversification or Under Diversifications
Wrong Attitude towards Losses and Profits
Qualities for Successful Investing
Contrary Thinking
Patience
Diversify
Flexibility and Openness
Decisiveness