Name – Shivam TIwari

Batch – february, 2016

Assignment on – What is new investor? Can a investor become a new investor by

reinvesting? Explain.

Introduction:

First of all, the questions arise i.e. what is investor and investment?

An individual who provides (or invests) money or resources to any enterprises, such as
corporations, banks etc., with the expectation of financial or other gain is popularly known as
investor. We deposit our money in saving account of any nationalised bank for a certain
period of time and bank imposes interest at regular intervals so that interest which is credited
to your account in the form of interest amounts to financial and other gain. Investor is neither
a speculator (who takes on high risks for high rewards) nor a gambler (who takes on the risk
of total loss for out of proportion rewards) but one whose primary objectives are protection of
the original investment (the principal), a steady income, and capital appreciation.

Now, what does investment mean?

According to me, investment means and includes:-

1. Money committed or property acquired for future income.

2.There are two main classes of investment mentioned as below:-

(1) Fixed income investment such as bonds, fixed deposits, preference shares, and (2)
Variable income investment such as business ownership (equities), or property ownership. In
economics, investment means creation of capital or goods capable of producing other goods
or services.

Expenditure on education and health is recognized as an investment in human capital, and

research and development in intellectual capital. Return on investment (ROI) is a key
measure of an organization's performance. The process of investment starts with providing
money to an organization/ enterprise by an investor and ends when he/ she (investor) attains
his/her expectation of having financial gain (i.e. return or dividend)
Now let’s see what is an actual concept behind “New Investor” –

Term “New Investor” Consists of new + investor. Investor is already mentioned previously.
Now here word new defines novelty meaning thereby whether the
company/organisation/enterprise etc. is same or different for an investor while investing.

If an investor invests in a particular company afterward if he again invests in same company

he will be treated as an investor but if he would have invested in the different company, he
would be treated as “NEW INVESTOR”. This is because of the DEMAT account, he posses,
cannot have the transaction of money for two different company in that single DEMAT
account. To become a NEW INVESTOR, it is mandatory to have an different DEMAT
account in a different to that of former one.

Same case is with banking companies. Depositor deposit money in a bank (say corp. bank) he
has been given an account (saving/ current) and then he starts getting interest on that
principal amount but if he wishes to be a new depositor he should open his account in
different bank.

Concluding Remark:

So here comes the answer i.e. Yes, an investor can become a new investor by reinvesting but
subject to certain conditions i.e. –

 Company should be different for an investor, in this case for both the companies, his
capacity will be of new investor.
 New investor concept also lie in the case when an investor invests in an company and
its subordinate/ subsidiary company.

Reference: book reading and online study