2. What is Investment
Investment is the employment of funds with
the aim of achieving additional income or
growth in value.
Essential Quality- Waiting for Reward.
Commitment of resources- To accrue future
benefits.
Long term Commitment
5. Investor’s point of view-
Supplier of Capital
Commitment of a person’s fund
To derive Future income-
Interest, Dividends, Rent, Premiums, Pensions
benefits, Appreciation of value of principle capital
Not important- use of money
Considered to be transfers of financial assets
6. Economic Investment
Net Additions to the economy’s capital stock.
( goods and services ) are Economic
Investments
Thus Investment implies formation of new
and productive capital in the form of new
things
Inventories and human capital are included in
investment
8. Investments v/s Speculation
Particulars Investment Speculation
Time Horizon Long term ( > 12 months) Short term ( one day)
Risk Limited High risk
Return Consistent and moderate High profits/ gains
Use of funds Own funds through savings Own or borrowed funds
Safety, liquidity, profitability, information, judgment,
Decisions
stability, performance hunches, beliefs
9. Investment and Gambling
Particulars Investment Gambling
Time Horizon Long term ( > 12 months) Short term (few hours)
Risk Limited High risk
Return Consistent and moderate High profits/ gains
Planning Planned Unplanned
Use of funds Own funds through savings Own or borrowed funds
Tips, rumors, hunches,
Decisions Scientific analysis, nature of risk
beliefs
11. Objective of Investment
Good Rate of Return
Reduced risk
Liquidity in time of emergency
Safety of funds
Hedge against inflation
Money in future
12. Favorable Factors
To function effectively- favorable
environment Is must.
Business Activities are marked by- Social
economic and political considerations.
Economic and Political factors are important.
There are four main considerations.
13. Main Favorable factors
Legal Safeguards
Stable Currency
Factors
Existence of F.I and F.S
Form of business organization
Choice of Investment
14. Investment Media
Direct Investment alternatives-
Fixed principal incentives Indirect Investment Alternatives-
• Cash • Pension Funds
• Saving accounts • Provident Funds
• Saving certificates • Insurance
• Government bonds • Investment Companies
• Corporate bonds and • Unit trust of India
debentures
Variable Principle Securities- Non- Securities Investments-
• Equity Shares • Real Estate
• Convertible Debentures • Mortgages
• Preference • Commodities
• Securities • Art, Antique and other Variable
15. Features of investment
program
Safety of principal
Liquidity
Income stability
Appreciation and PP Stability
Legality and Freedom From Care
Tangibility
16. Investment Policy
Investment Policy
Investment Analysis
Valuation of Securities
Portfolio Construction
17. Submitted to
• Mrs. Navneet Kaur Bhatiya
Submitted by
• Anjali Patel
• Gopal Uikey
• Lokendra Ankaley
Notes de l'éditeur
Investment is not as simple as defined. It have been categorized by financial experts and economists.Its even confused with Speculation or gambling. Investment is the employment of funds with the aim of achieving additional income or growth in value.The most essential quality of investment is that, it always involves waiting for a rewards.It involves commitment of resources which has been put away from present consumption in the hope that some benefits will be accrued in future.Thus we can say that It alwaysinvolves long term commitment.
Invesment in allocation of monetory resources to assets that are expected to yield some gain or positive return over a given period of time.These assets range from safe investment to risky investment
From the point of view of investors who is doing a financial investment, he is supplier of Capital. It’s a commitment of person’s fund to derive future income in the form of- Interest, Dividends, Rent, Premiums, Pensions benefits, Appreciation of value of principle capitalFor financial investors its not important whether money is invested for productive use or to buy a second hand instrument such as- shares from stock exchange.Most financial investments are considered to be transfer of financial assets from one person to another
The nature of investment in finacial sense differrs from its use in the economic sense. To the economist- investments means the net additions to the economy’s capital Stock which consist of goods and services that are used in the production of other goods and servicesThus Investment implies formation of new and productive capital in the form of new constructions, new producers, durable equipments such as plants and equipements. Inventories and human capital are included in investmentAlthough both investments are related to each other, we in general consider Financial investment and not economic.
Investors find a meeting place in the market where investors as suppliers and investors as users of long term funds come to trade.
Market behavior information, judgement on movements in the stock market, hunches- guesses and beliefs- intutions
Long life- We know that Trends today shows longer life expectancy. So A proportion of earnings should be kept as savings. And these savings must be invested, to generate adequate future returns for retirement years. Because savings do not increase wealth as such…Taxation- one of the crucial factors, that introduces compulsions element of savings. In our country we have varied tax benefits of different saving schemes like- PF, Insurance etc.Interest rates- its another important thing for sound investment plan. All investments varies in intereste rates depending on Risk and returns benefits. Investor should Maintain a portfolio with varied risk and return. ( depending on individual capacity and individual tendency )Inflation- every developing economy have inflation. Interst rate should adjust inflation rate, taxation effects and safety of principle should be assured.Income- invesment are given more importance today because of more employement opportunities in india, increasing the income. And thus people want more investment to have even more income.
As we all know All the things are effected by environment, even investments market is influenced by environmental factors. For investment market to function effectively favorable environment is must. .All the business activities have influence of social environment, economic environment and even political considerations..
There are four main factors that influence investments.Legal safeguards- A stable government that have adequate level of safeguards encourages investments, because investors get assurance of protection of their contractual and property rights.2. Stable Currency- A well organized monetary system with definite planning and proper policy is a necessary to an investment market. Most investments are payable in country currency ( bank deposits, shares and life insurance). Proper monetary policy should neither promote acute inflationary pressure nor prepare for deflation model3. Existence of Financial institution and services- the presence of financial institution and services encourages savings, direct them to productive uses and helps the investment market go grow.4. Forms of Business orgnizations- organizations which are permanent in existence aid savings and investments. Public ltd companies are treated best by investors.Orgn that have ltd liablity for share holders- investors are comfortable to invest. Egs- venture capital, public ltd company.5. Choice of investments- today variety of instruments are available, thus investors have lots of choices depending on Risk and Return expectation… and therefore they choose accordingly to invest instead of just keeping in a saving account in bank
By investment media we mean mediums or sources of investment1- direct investment- where we invest directly and choose the investment option. Egs- bank accounts…2- indirect- where we invest in some sources but the final investment are made by them. Here are links of investments. Egs- venture capital- llp, general partneres3- variable principle securities- it is where various principles are applicable on carried sources.. Here the returns wilvarry a lot depending on the market or environmental factors.4- non securities investments are where we invest in tangilbe assets- its gives a feel of satisfaction… as we own and could see it too.
Safety of principal- review economic and industry trend before choosing choice of investment. Diversification should be considered on the basis of- industry, geographically, management, financial types and maturities.2. Liquidity- minimum liquidity is required to meet emergencies. Investors should keep a small amount in cash or fd.3. Income stability- regularity of income at a consistent rate is imp and that too it should be adequate after tax deductions. (dividends are tax free)4. Appreciation and purchasing power stability- investor shou.d balance portfolio to fight against purchasing power instability. And also Analyse the inflation and economic cycle to get the best out of all opportunities and safeguard himself from threats5. Legality and freedom from care- all investment should be approved by law. To take care of investment one has to always keep an eye on all the factors of investments, its always good to invest in in securities like- LIC saving certificates. Diversify funds by- safety, stability and liquidity.6. Tangibility- intangible securities may lost their value due to price level inflation, laws or social collapse.Tangible assets might not yield an income apart from direct satisfaction of possession or property. So individual have to chose according to his personal interest.
1. Investment policies- 1st stage- preparation of investment policy stage. Identify investments assets and consider various features of investments.(emergency fund for liquidity to convert to cash)2. When portfolio is finalized the next stage is to analyze the securities available for investment. He must made comparative analysis of types of industries, kind of security and fixed v/s variable securities.3. Valuation of securities- 3rd step is perhaps the most important consideration of valuation of investments. Investment= present value of future benefit from investment. Thus investors identifies the relative attractiveness of the asset, and thus make the portfolio4. Portfolio construction- require knowledge of different aspect of securities- safety and growth of principal, liquidity of assets, investment timings, selection of investment allocation of saving to different investments
