INVESTMENT

Group Members
1.

Elita Almeida
2.Sangeeta Bandekar
3. Nainaz Bi
4. Aniksha Braganza
5. Asleema DCosta
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
Investment Avenues
Investment Process
Conclusion

of investment

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 PrincipalThe 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 growthPrinciple of capital appreciation.

Seeking Growth Stocks
5 Tax benefitsTax 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
Provide

your future financial goals

enough money for meeting uncertain

future needs

Types of Investments
Autonomous

Investment

Investment
Financial
Real

Investment

Investment Planned Investment

Unplanned
Gross
Net

Investment

Investment

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.

LIFE INSURANCE POLICY (LIC)

Investment avenue
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
National Savings Certificate is available for
CERTIFICATE

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
It

refers 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.

It

is 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.

The

infrastructure bonds will have maturity of

10 years and lock-inBONDS
period of 5 years.
INFRASTRUCTURE
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

It is 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. Cos 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.

Investors

should 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