3. INVESTING BASICS: THE IMPORTANCE OF
STARTING EARLY
Ramesh—age 25
Assumes a 7% return
Invests $4,500 a year for 10
years
Total invested is $45,000
Has $62,174 by age 35
Stops contributing at age 35
He has $337,445 at age 60
Suresh—age 25
Waits 10 years to start investing
Invests $4,500 for 25 years
Total invested is $112,500
He has $284,621 at age 60
6. BANK ACCOUNTS
TYPES OF BANK ACCOUNTS
SAVINGS BANK ACCOUNTS
CURRENT ACCOUNTS
FIXED DEPOSIT ACCOUNT
RECCURING ACCOUNT
7. FIXED DEPOSIT ACCOUNT
• Fixed deposit is meant for fixed period
1.
• Money is deposited for fixed period six months, one
year, five year , ten year2.
• Rate of interest varies from time to time3.
• Rate of interest is high in fixed deposit on surplus funds4.
8. RECCURING DEPOSIT
• Recurring deposit is meant for future savings
1.
• It is opened by individuals who save at regular
intervals and earn higher rate of interest at fixed
rate
2.
• The rate of interest is higher3.
• It provides loan facility4.
9. PPF
• PPF is the short name for Public Provident
Fund1.
• Public Provident Fund scheme is a savings-
cum-tax-saving instrument in India2.
• Gives you tax benefits and decent returns3.
10. INVESTMENT AND RETURNS FOR PPF
• A minimum yearly deposit of Rs 500 and a
maximum of Rs 100000 can be invested.
1.
• The amount can be invested either in
installments or lump sum payment.
2.
• The current interest rate decided by the
government is 8.80% p.a3.
• The minimum tenure of the PPF account is 15
years
4.
11. GOVERNMENT BONDS
Bond issued by government is called government bond
Money raised is used to finance public works
In return the govt pays a fixed rate of interest to the investor
Govt Bonds are usually denominated in the country’s own currency
A bond is a type of investment that represents a loan between a
borrower and a lender.
Type of debt which a company/govt undertakes
12. ADVANTAGES AND DISADVANTAGES
ADVANTAGES DISADVANTAGES
Risk free bonds Generates low interest
No anticipation and anxiety Long duration
Some bonds are exempted
from Income Tax
Limitations on redeeming
the bond early
14. INVESTMENT OPTIONS FOR GOLD
Physical Gold
Gold exchange-traded products
•Exchange traded funds
• Closed end funds
• Exchange traded Notes
Gold price variation over 10 years
15.
16. WHAT IS STOCK MARKET??
For an investor,
Stocks shares in a company
certificate of ownership of a corporation
For a company,
One of the most important sources to raise money
Public entity for the trading of company stock and derivatives at an
agreed price
17. BENEFITS OF STOCK MARKET INVESTMENT
High potential returns
Time value of money
Diversification
Tax deferral
Transparency
Easy review & research
Dividends
22. MUTUAL FUNDS
What is a Mutual Fund?
Mutual fund is a mechanism for pooling the resources by issuing units
to the investors and investing funds in securities in accordance with
objectives as disclosed in offer document.
23. CONCEPT
A Mutual Fund is a trust that pools the savings of a number of investors
who share a common financial goal.
The money thus collected is then invested in capital market instruments
such as shares, debentures and other securities.
The income earned through these investments and the capital
appreciation realized are shared by its unit holders in proportion to the
number of units owned by them.
Thus a Mutual Fund is the most suitable investment for the common
man as it offers an opportunity to invest in a diversified, professionally
managed basket of securities at a relatively low cost.
26. ADVANTAGES OF MUTUAL FUNDS
Professional Management
Diversification
Convenient Administration
Return Potential
Low Costs
Liquidity
Transparency
Flexibility
Choice of schemes
Tax benefits
Well regulated
27. TYPES OF SCHEMES
By Structure
• Open Ended Schemes
• Close Ended Schemes
• Interval Schemes
By Investment Objectives
• Growth Schemes
• Income Schemes
• Balance Schemes
• Money Market Schemes
Other Schemes
• Tax Saving Schemes
Special Schemes
• Index Schemes
• Sector Specific Schemes
28. FREQUENTLY USED TERMS
Net Asset Value (NAV)
Net Asset Value is the market value of the assets of the scheme minus
its liabilities. The per unit NAV is the net asset value of the scheme
divided by the number of units outstanding on the Valuation Date.
Sale Price
Is the price you pay when you invest in a scheme. Also called Offer
Price. It may include a sales load.
Repurchase Price
Is the price at which a close-ended scheme repurchases its units and it
may include a back-end load. This is also called Bid Price.
Contd…
29. FREQUENTLY USED TERMS
Redemption Price
Is the price at which open-ended schemes repurchase their units and
close-ended schemes redeem their units on maturity. Such prices are
NAV related.
Sales Load
Is a charge collected by a scheme when it sells the units. Also
called, ‘Front-end’ load. Schemes that do not charge a load are called
‘No Load’ schemes.
Repurchase or ‘Back-end’ Load
Is a charge collected by a scheme when it buys back the units from the
unit holders.
32. RECOMMENDATIONS
BEFORE AFTER
SECTOR RETURN SECTOR RETURN
BANK 31200 BANK F.D 27125
BANK F.D 27125 PPF 5040
STOCK MARKET 33000 MUTUAL FUND 33000
MUTUAL FUND 11000 STOCK MARKET 22000
OTHERS 5250 METAL 5500
- - OTHERS 16500
TOTAL 107575 TOTAL 110195
