INVESTMENT

Group Members
1. Elita Almeida
2.Sangeeta Bandekar
3. Nainaz Bi
4. Aniksha Braganza
5. Asleema D’Costa
6. Jonlen DeSa
Presentation Path
 

Meaning of Investment
Speculation and Gambling
Objectives of Investment
Features of Investment
Needs of Investment
Types of Investments
Types of Investors
Comparative study on types of investment
Investment Avenues 
Investment Process
Conclusion
 
INVESTMENT
Definition
In finance, the purchase of a financial product or other
item of value with an expectation of favorable future
returns.

Meaning
 Investment is the employment of funds on assets with the aim of earning income
or capital appreciation
 Investment has two attributes namely time and risk.
 Present consumption is sacrificed to get a return in future.
SPECULATION
Speculation means taking up the business
risk in the hope of getting short term gain.

Speculation essentially involves buying

and selling activities with the expectation
of getting profit from the price
fluctuations.
Gambling and Investment
A gamble is usually a very short term
investment in a game or chance
Gambling is different from speculation
and investment
The time horizon involved in gambling is
shorter than speculation and investment
 OBJECTIVES OF INVESTMENT

1.Return
 Rate of Return defined as the total income that the
investor receives during the holding period.
 Stated semi-annually or annually.
 Return =
End period value – Beginning period value + Dividend
___________________________________________
Beginning period value
For Ex. If a particular share is purchased in 1998 at Rs.50,
disposed at Rs.60 in 1999 and the dividend yield is
Rs.5, then the return would be calculated as;
2. Risk
 Related with the probability of actual return
 Investment risk is as important as measuring its expected rate of
return.

3. Liquidity
 Marketability of the investment.
 Depends on the marketing and trading facility

4. Hedge against Inflation

 The return rate should be higher than the rate of inflation.

5. Safety
 Investment avenues should be under the legal and regulatory
framework.
 Approval of law itself adds a flavour of safety.
 FEATURES OF INVESTMENT
1. Safety of Principal-
• The safety sought in investment is not absolute or
complete.
• Diversify the securities.
• Limiting investment.
• Holding different media at the same time.

2. Adequate liquidity and collateral value-

• An investment is a liquid asset.
• Every investor must have a sound portfolio.

3. Stability of income-
• Security of Principal
• An investor must consider stability of monetary income
and stability of purchasing power of income.
4 Capital growth-
Principle of capital appreciation.
Seeking “Growth Stocks”

5 Tax benefits-
Tax status costly to the investors.

6 Purchasing power stability

Objective of receiving greater units of future
funds.
Investor has to maintain purchasing power
stability.
 NEED OF INVESTMENT
 To keep the value of your money from
inflation.

 To get a good return from your ideal money.

 To satisfy your future financial goals

 Provideenough money for meeting uncertain

future needs
Types of Investments
 Autonomous Investment

 Investment

 Financial Investment

 Real Investment Planned Investment

 Unplanned Investment

 Gross Investment

 Net Investment
 Types of investors
A. Individual investors
Individual investors purchase securities in their individual capacity. They
have surplus money and are interested in investing the same in the
corporate sector.

1. Conservative investors: Conservative investors tend to be risk averse.

2. Moderately Conservative: Moderately conservative investors are willing

to take on some amount of risk.

3. Moderately Aggressive: Moderately aggressive investors usually have

similar investment objectives as aggressive investors.
 Aggressive: Aggressive investors commonly do most of their investing
in the stock market which is highly risky.

 Active investors: Active investors, are those who have achieved

significant wealth, or earned well, during their own lifetime.

 Emotional investors: Emotional - easily attracted to fashionable

investments.

 Busy investors: Busy investors - these investors need to be involved

with the markets

 Casual investors: Casual investors - a laid-back attitude to investment,

these individuals are often hardworking and involved with work or
family.
 B. Institutional investors

 Institutional investors are investment agencies with surplus

money to invest in securities.

 Institutional investors are of two types:

 Private
 Public
 a. Private Investors
Commercial Banks: A commercial bank is one
which transacts the business of banking such as
the accepting deposit for the purpose of lending.

Insurance Company: Insurance is a form of risk

management primary used to hedge against the
risk of a contingent, uncertain loss.

Charitable Trusts: A legal arrangement where

by real or personal property is placed in trust for
the benefit of a charity
b . Public Investors
 IDBI: IDBI plays a very important role as an
institutional investor and assists all types of industrial
concerns engaged in the manufacture, processing,
mining by investing in these industries as per their
requirements.

 (U.T.I) :The Unit Trust of India is a statutory public

sector investment institution established under the Unit
Trust of India Act, 1963.

 I.F.C.I.) :The primary role of IFCI is to provide ‘direct

financial assistance’ on medium and long term basis to
industrial projects in the corporate and co-operative
sectors.
Investment avenue

LIFE INSURANCE POLICY (LIC)

 Life insurance is a contract for payment of a sum of

money to the person assured on the happening of event
insured against.

PUBLIC PROVIDENT FUND SCHEME

 It is a long term, government backed small saving scheme

of the Central Government.
 Interest is calculated on the lowest balance between the
fifth day and the last day of the calendar month and is
credited to the account on 31st march every year.
 NATIONAL SAVINGS
CERTIFICATE
National Savings Certificate is available for
purchase or issue of at all Post Offices in India.
There is no maximum limit for purchase of the
certificate.

MUTUAL FUND
open ended schemes
close ended schemes
FIXED DEPOSITS
 Itrefers to a savings account or certificate of deposit
that pays a fixed rate of interest until a given maturity
date.

 EQUITY LINKED SAVING SCHEME (ELSS)

 Equity Linked Saving Scheme is a kind of mutual fund

like diversified equity funds with tax benefits.

 Itis a mutual fund that has to invest a minimum of 80%

in equity shares. The balance 20% can be in debt,
money market instruments, cash or even more equity.
INFRASTRUCTURE BONDS
The infrastructure bonds will have maturity of
10 years and lock-in period of 5 years.
investment decisions in the infrastructure bonds
are affected by Inflation and Interest rates

EQUITY SHARES
Investing in equities is a good long term options
as the returns on equity over a long time horizon
are generally higher than most other investment
avenues.
 National Savings Certificate
National Savings Certificate is available for
purchase or issue of at all Post Offices in India.
There is no maximum limit for purchase of the
certificate.

Mutual Fund
open ended schemes
close ended schemes
DEBENTURES
Itis a written instrument acknowledging a
debt under the common seal of the
company

GOLD
Investors generally buy gold as a hedge or
safe haven against any economic,
political, social or fiat currency crisis.
INVESTMENT PROCESS
1.Investment Policy
The investor formulates the policy for
systematic functioning. Its essential
ingredients are:

1.Investible Funds-Availability of funds ie

savings or borrowings for investment.

2.Objectives-Main objective of investment is to

earn return, need for regular income &
liquidity.

3.Knowledge-Investor should have adequate

knowledge of investment alternatives,
avenues, risk associated, returns, operations
of stock exchanges and brokers.
2.Security Analysis
 Once the investment policy is formulated, then
the securities have to be scrutinized through:

1.Market analysis-GDP & inflation growth are

reflected in stock prices. Stock prices fluctuate
in short run, but move in trends in the long
run.

2.Industry Analysis-Industries contribute a lot of

output as well as to the economic growth.

3.Company analysis- it helps the investor make

better decisions. Co’s earnings, profitability,
operating efficiency, capital structure & mgmt
must b screened.
3.Investment Valuation

Valuation helps the investor determine the return

and risk expected from the investment. There are
2 values:

1.Intrinsic Value-It is measured through the book

value of the share & P/E ratio.

2. Future Value- It is measured using Trend

analysis.
4. Portfolio Construction
 A portfolio is a combination of securities. It is made
in such a way to meet the investors goals &
objectives.

1. Diversification-Its main objective is to reduce risk.

There are several ways to diversify the portfolio:
 Debt
& Equity Diversification
 Company Diversification

2.Selection-Based on the diversification level & the

various analysis, the security is selected. Funds are
allocated to the selected securities & the construction
of portfolio is sealed.
5.Portfolio Evaluation

The portfolio has to be managed efficiently. It

consists of 2 steps:

1.Appraisal- The stocks have to be appraised. It

warns the loss & steps can be taken to prevent
the loss.

2.Revision-Revision depends on the result of the

appraisal. The low yielding risky securities are
replaced with high yielding less risk securities.
 CONCLUSION

 Investment is the employment of funds

on assets or other securities with the aim
of earning income or capital appreciation.
Investments have 3 attributes namely
time, return and risk.

 Investorsshould take proper precautions

while investing in any avenues
 BIBLIOGRAPHY
References 
 Security analysis and portfolio management- Punithavathy
Pandian
 Business Finance- N.G. Kale
 Investment and Securities Market in India- VA. Avadhani
 Securities Analysis and Portfolio Management- Donald. E.
Kisher and Ronald J. Jordan
 Investment Management- V.K. Bhalla

 
Websites 
 www.sharetipsinfo.com
 www.younginvestor.com
 www.ameritrade.com
 www. moneycentral.msn.com
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