FINANCIAL SECTOR

Presented by : Vanshika Goyal

 Topic
Topic 1: Share Market Topic 4: Insurance

Topic 2: Mutual Fund Topic 5: Provident Fund

Topic 3: Bank Topic 6: Post Office

Topic 7: Gold
Topic 8: Real Estate
 Share Market
A stock market or equity market is a public entity for the trading of company stock
(shares) and derivatives at an agreed price.
Financing a company through sales of stock in a company is known as EQUITY
FINANCING.
When you own a share of stock, you are a part owner in the company with a claim
(however small it may be) on every asset and every penny in earnings.
Share Market enables individual to increase personal wealth via dividend received
from investment or proceed from selling of stocks.
 Share Market
ADVANTAGES
• Potential for High Returns: Investing in the stock
market can offer the opportunity for significant
returns, especially over the long term.
• Liquidity: they can be easily bought or sold.
• Ownership Stake: Buying stocks means you have a
partial ownership stake in the company, giving you
voting rights and a share of profits through
dividends.
• Hedge against Inflation: Historically, stocks have
provided a potential hedge against inflation,
preserving purchasing power.
DISADVANTAGES
• Risk of Loss: Stock prices can be highly volatile,
and there's a risk of losing part or all of your
investment.
• Market Uncertainty: Stock prices can be
influenced by various factors leading to
unpredictability.
• Time and Research: Successful investing requires
time and effort to stay informed about the market.
• Emotional Investing: Emotional reactions to
market fluctuations can lead to impulsive
decisions and losses.
 Mutual Fund
Common pool of funds contributed by investors and invested in accordance to the
objectives.
How does a Mutual Fund Work?
 Mutual Funds
ADVANTAGES
• Professional Management: Mutual funds are
managed by experienced professionals who saves
investor time and effort.
• Accessibility: Mutual funds are accessible to both
small and large investors, allowing individuals to
participate in markets they might not have access to
on their own.
• Liquidity: Investors can easily buy or sell mutual
fund shares at the current net asset value (NAV) on
any business day.
• Affordability: Mutual funds typically have low
minimum investment requirements, making them
affordable for many people.
DISADVANTAGES
• Fees and Expenses: Mutual funds charge fees,
including management fees, administrative expenses,
and other costs, which can reduce overall returns.
• Market Risk: Mutual funds are subject to market
fluctuations, and the value of the fund can go up or
down.
• Tax Implications: Gains realized by the mutual fund
can lead to taxable events for investors..
• No Individual Control: Investors have no direct
control over the fund's holdings, and decisions made
by the fund manager may not align with individual
preferences.
 BANK
A BANK is an institution whose debts are widely accepted in settlement of other
people's debt to each other.
It accepts public deposits and provides short-medium-long term loans to its
customers for consumption purposes.
Examples of Business Banking
• Loans, credit, savings accounts, and checking accounts are all available
through business banking, and they are all suited to the needs of the company.
• Banks can provide services in corporate, retail, and investment banking all
under one roof.
 Bank
ADVANTAGES
• Safety: Bank deposits are safe because they are often
insured by government agencies, protecting your
money from loss up to a certain limit.
• Liquidity: You can easily access your money when
needed, making bank deposits a convenient way to
store funds.
• Interest Earnings: Most bank deposits offer interest,
allowing your money to grow over time.
• Diversification: By spreading your funds across
different types of bank deposits, you can reduce risk
and enhance your financial stability.
DISADVANTAGES
• Low Returns: Bank deposit interest rates are usually
lower compared to other investment options, limiting
potential earnings.
• Inflation Risk: If the inflation rate is higher than the
interest rate, the purchasing power of your money
may decrease over time.
• Penalties and Fees: Some bank deposits may come
with penalties for early withdrawals or maintenance
fees, affecting your overall returns.
• Opportunity Cost: By tying up your funds in bank
deposits, you may miss out on potentially higher
returns from riskier but more profitable investments
 Insurance
A Insurance is generally defined as a contract which is also called a policy.
An insurance policy as a form of protection from any unexpected loss or damage.

Functions of Insurance:
• They ensure the protection of the family.
• They are risk-sharing policies.
• They prevent the damages that can come from
loss.
• It provides capital.
• It’s known for improving efficiency.
 Insurance
ADVANTAGES
• Financial protection: Insurance provides coverage
against unexpected events, such as accidents, illnesses,
natural disasters, or property damage.
• Risk management: Insurance can help them focus on
their core activities without constantly worrying about
unforeseen events.
• Peace of mind: Knowing that you have insurance
coverage can provide a sense of security and reduce
stress, as you have a safety net in case of emergencies.
• Legal requirements: In some cases, insurance is
mandatory by law.
DISADVANTAGES
• Cost: Insurance premiums can be expensive, and
paying them regularly might be a financial burden for
some individuals or businesses, especially if they
don't end up needing to make a claim.
• Coverage limitations: Insurance policies reduce the
amount of compensation or may not cover specific
situations.
• Claims processing complexity: Filing an insurance
claim can sometimes be a complicated process,
involving paperwork, documentation, and
negotiations with the insurance company.
• Insurance fraud
 Provident Fund
Employees’ Provident Fund Organisation (EPFO) was established by an act of
Parliament of India, to provide social security to workers working in India.

TYPES

Statutory Recognised Public

Unrecognised
Provident Provident Provident
Provident
Fund Fund Fund
Fund
 Provident fund
ADVANTAGES
• Retirement savings: Provident funds encourage
individuals to save money for their retirement,
ensuring they have a financial cushion when they stop
working.
• Employer contributions: Many provident funds
effectively boost the retirement savings of the
employees.
• Tax benefits: Provident fund often qualify for tax
deductions, which can reduce the tax burden for both
employees and employers.
• Long-term savings discipline By the provident fund,
individuals develop a habit of saving, which can be
beneficial for their financial discipline.
DISADVANTAGES
• Lack of flexibility: Generally, withdrawals from a
provident fund are allowed only at retirement limiting
the accessibility of the funds during emergencies or
urgent financial needs.
• Early withdrawal penalties: If an individual decides to
withdraw funds, there may be penalties or tax
implications.
• Market risks: Depending on the investment strategy
of the provident fund, the value of the fund can be
subject to market fluctuations and economic
conditions, potentially affecting the final retirement
savings.
 Post Office
India Post is a government-operated postal system in India, part of the Department
of Post under the Ministry of Communications.
India Post Payments Bank (IPPB) was launched by the Prime Minister in 2018 with
100% equity owned by the Government of India.
The bank has been set up with the vision to build the most accessible, affordable
and trusted bank for the common man in India.
Channels for delivery services include:
• Counter operations
• ATMs/micro-ATMs
• Doorstep, mobile and internet banking
• Pre-paid instruments such as mobile wallets, PoS, MPoS, etc.
 Post Office
ADVANTAGES
• Expansion of Rural Banking: IPPB helps reinvigorate the
postal system, at the same time expanding Rural Banking
through its wide network of branches across India.
• Social & Financial Inclusion: IPPB acts as a catalyst for
social and financial inclusion through the vast network of
post offices throughout the nation.
• Employment: IPPB generates employment opportunities
for more than 3500 banking professionals, who will be
engaged in propagating financial literacy across the
country.
• Credibility: It doesn't require to gain the trust of
customers
DISADVANTAGES
• Low Awareness: Due to low financial and digital
literacy among rural masses, they might be
discouraged to opt for formal financial services under
IPPB.
• Strict Regulation: Given the severe restrictions
imposed by the RBI on how it can employ its funds,
the odds seem to be stacked against the IPPB at the
moment.
• User Charges: To generate revenues, it plans to charge
fees on money transfers and other financial services
which may act as a disincentive for rural customers.
• Competition: The IPPB is also likely to face stiff
competition from private companies already given
Payment Bank licenses.
 GOLD
Gold has been a symbol of wealth and prosperity. Investing in gold has been one of the
earliest ways of portfolio diversification. Even today, gold is considered a smart choice to
hedge portfolios and for protection from market fluctuations.
The easiest way to invest in gold is to buy gold coins, bullion or jewellery.
An alternative to physical gold investments is digital gold investments.
We can start digital gold investments with as little as Rs 10!
Gold mutual funds invest in stocks of gold companies, physical gold and other gold
investments. Through investments in these assets, you can diversify your gold investment.
 Gold
ADVANTAGES
• Diversification: Gold can be a hedge against economic
downturns and market volatility, providing
diversification to your investment portfolio.
• Store of value: Gold has historically retained its value
over time, acting as a reliable store of wealth.
• Inflation hedge: Gold often performs well during periods
of high inflation, preserving purchasing power.
• Global demand: There is a steady demand for gold in
various industries, including jewelry, technology, and
central banks, which can support its price.
DISADVANTAGES
• No income generation: Gold doesn't pay dividends or
interest, so it may not generate passive income like
other investments.
• Volatility: While it can be a hedge against volatility,
gold itself can experience price fluctuations.
• Storage and security: Keeping physical gold requires
secure storage and protection, which can incur
additional costs.
• Limited industrial use: The demand for gold in
industries can fluctuate, impacting its price.
 Real Estate
Real estate is considered real property that includes land and anything permanently attached to it or built on it, whether
natural or man-made.
Types of Real Estate

• Residential real estate: Any property used for residential purposes. Examples include single-family homes, condos,
cooperatives, duplexes, townhouses, and multifamily residences.
• Commercial real estate: Any property used exclusively for business purposes, such as apartment complexes, gas stations,
grocery stores, hospitals, hotels, offices, parking facilities, restaurants, shopping centers, stores, and theaters.
• Industrial real estate: Any property used for manufacturing, production, distribution, storage, and research and
development.
• Land: Includes undeveloped property, vacant land, and agricultural lands such as farms, orchards, ranches, and
timberland.
 Real Estate
ADVANTAGES
• Potential for Appreciation: Real estate values can
increase over time, allowing investors to build equity and
potentially earn a profit when selling.
• Passive Income: Rental properties can generate a steady
stream of rental income, providing a passive source of
cash flow.
• Diversification: Real estate can be a valuable addition to
a diversified investment portfolio, reducing overall risk.
• Tangible Asset: Unlike stocks or bonds, real estate is a
physical asset that you can see and touch.
DISADVANTAGES
• Illiquidity: Real estate is not as easily converted to
cash as stocks or other investments, making it less
liquid.
• Upfront Costs: Purchasing real estate often requires a
substantial initial investment, including down
payment, closing costs, and potential renovation
expenses.
• Market Volatility: Real estate markets can experience
fluctuations, and economic downturns can affect
property values.
• Management Responsibilities: If you own rental
properties, you'll need to deal with tenant issues,
property maintenance, and other management tasks.