Presentation_IF - Investment Options

8/8/2019 Presentation_IF - Investment Options

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INVESTMENT OPTIONS

Presented ByGroup No: 5

Bharti Mulchandani (017)

Hemlata Kain (028)

Jetal Talreja (030)

Pallavi Basu (061)

Shweta Gaitonde (085)


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EQUITY INVESTMENTS


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Equity Investment

Buying and holding of shares of stock on a stock market

Acquisition of equity (ownership) participation in a private

(unlisted) company or a startup company

Venture capital investing

The equities held by private individuals are often heldvia mutual funds or other forms of collective investment

scheme.


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Investment in Stock Markets

A public market for the trading of company

stock (shares) and derivatives at an agreed price

Stocks????

Types of stocks:

Common Stocks

Preferred Stocks

Factors affecting stock prices:

Health of economy

Market trends

Financial Reports

How Stock Market works???


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Advantages of Stock Market Investments

The chance to gain profit instantaneously.

Convenience of investment and maintaining account.

Trends shows that stocks have remained ahead of inflation.

Stocks can be an excellent choice for retirement vehicles.

Disadvantages of Stock Market Investments

Stocks are volatile investments.

Better ball game for wealthier investors.

Not a good choice of investment for retired people.

High brokerage charges


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Investment in Mutual Funds

The Mutual Funds are one of the best financial instruments

offered to the public by the finance corporations.

The Mutual Funds are collective investments, and use thatmoney as investment in various stocks, bonds, and other

securities to earn interest and disburse dividends.


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Mutual Funds Schemes

Open-ended Mutual funds Schemes: It offers to sell its

shares (units) continuously to investors either in retail or in

bulk without a limit on the number shares.

Close-ended Mutual funds Schemes: It offers to sell its

shares (units) continuously to investors either in retail or in

bulk with a limit on the number shares.


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How does Mutual Fund Institution earn?

Mutual funds have diversified investments spread in calculated

proportions amongst securities of various economic sectors.

Mutual funds get their earnings in two ways.

First is the most organic way, which is the dividend theyget on the securities they hold.

Second is by the redemption of their shares by investors

will be at a discount to the current NAVs (net asset values).


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Advantages of Mutual Funds

Flexibility

Affordability

Liquidity

Diversification

Professional Management

Potential of return

Low Costs

Regulated for investor protection


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Disadvantages of Mutual Funds

Hidden Fees

Mutual funds are subject to market risks


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INVESTMENT IN GOLD DEPOSIT

SCHEMES


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Investment in Gold Deposit Schemes

Controlled by SBI-started in1991

Minimum amount pegged at 500 gms

Gold checked for purity-certificate issued

Earn interest in form of gold

Scheme attractive in terms of tax perspective

Investment in gold - high returns


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Advantages and Disadvantage

Scheme is seeing success especially in Gujarat.

Investment in gold has many benefits.

Low risks

Indestructible.

Universal standard.

Appreciates in value.

It also has some disadvantages-

sometimes given at higher price.

People decide on the basis of share markets.


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INVESTMENT IN REAL ESTATE


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Investment in Real Estate

Huge potential-especially in IT/ITES. Annual profits can be as high as 100%.

In residential sector there is housing shortage.

Main thrust due to customer friendly banks and other reasons.

FDI allowed in sectors like Hotel development tourism etc.

Various conditions to be fulfilled for foreign investment.

Various other property acts also needs to be followed.

Indian institutions raising funds to invest in real estate

Combined investments can go upto $ 1.5 billion. Various considerations

Entry load of of 10 15 %.

Its not as liquid.


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BANK FIXED DEPOSITS


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What are Bank FDs?

Term Deposits-

certain amount of money deposited in bank forspecified time period with a fixed ROI

Minimum maturity period may vary anything from 5 days to

more than 5 years

A higher ROI than savings bank a/c

ROI 4 to 11% depending on maturity period of FD and

amount invested

Common savings scheme for average investor


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Disadvantages

Low returns: Low risk instruments

Lock ups: Deposit will be locked up for a fixed duration .

Loss of flexibility to access funds as needed.

Can break the FD if needed, but will likely have to pay somepenalty

Tax treatment: Unlike other investment options such as stocks

or mutual funds, interest income earned from FDs will be

taxable.


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Before opening a FD a/c

Check the financial position of the bank

Check the ROI of different banks offered for different periods

Instead of putting a large sum in one deposit, keep the amt. in

5-10 small deposits Check the Inflation rate a high inflation rate can chip away

the real returns


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INSURANCE POLICIES


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Why Insurance?

Uncertainty and unpredictability of future

Wise guess and make deductions in insurance schemes

A big way planning of our life

Instrument to hedge against the future contingencies of life,health and general issues

Payment of premium to insurance company

Insurance company ensures the financial reimbursement of the

perceived losses


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How to choose an Insurance company?

Affordability- Low insurance rate and less premium

Accessibility- The reach to customers Online services

Optional insurance benefits along with the basic benefits

Tax benefits- Savings in large part of the tax payments.


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Policies

Over 150 policies are available- Some of them:

Life Insurance

Property Insurance

Health Insurance Auto Insurance

Travel Insurance

Credit Insurance

Insurance at amusement points


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NATIONAL SAVINGSCERTIFICATES


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What are NSCs?

Certificates issued by Department of Post and GOI available at

all post office counters.

Scheme specially designed for salaried class, businessmen and

allIT assesses.

Combines the growth in money with reductions in tax liability

Issued in denominations of Rs 100, Rs 500, Rs 1000, Rs 5000,

Rs 10000 for a maturity period of 6 yrs.


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Advantages of NSCs

Long term safe-savings option for the investor

Backing of GOI so no risks associated

Guaranteed ROI of 8%

Tax rebate of 20% up to Rs. 12000 can be availed No upper limit of investment

Loan against NSC can be availed by applying to RBI or any

finance company approved by National Housing Bank


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Disadvantages of NSCs

There is no liquidity. The investment remains fixed for a

period of 6 years.

The rate of return is quite less. You can get more returns if the

same amount is invested in other avenues. Although you get a tax rebate in the year of investment, the

interest earned is taxable.


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How to start?

Any individual or on behalf of minors or trust can purchase

NSCs by applying through Post Office or any agent

Payments Cash, Cheque, DDs, raising a debit in savings a/c

Certificates are easily transferable to another person byregistering with a nominal fees

Pre-mature encashment- After the expiry of 3 years from the

date of purchase of the certificate


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PUBLIC PROVIDENT FUND


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About PPF Scheme

Statutory Scheme of Central GOI established in 1968

Can be opened and operated in any post office, any

nationalized banks in India and is transferable from bank to

post office Can deposit a min. amt. of Rs. 500 and the multiples of Rs. 5

up to a max. of Rs. 70,000 in a FY

Non- deposition of the min. amt in a FY results in the closure

of a/c

Deposited amt. can be withdrawn after 15 yrs.


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About PPF Scheme

A max. of 12 deposits subjected to a max. of 2 in one month isallowed in a FY

A resident Indian of any age can open a PPF a/c

NRIs cannot open a PPF a/c

A minor can operate PPF a/c only through a guardian


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Benefits of PPF

Amt. deposited in a FY can be considered as a Tax Saving

Investment

Deduction from Income under Section 80C ofIT Act allowed

up to Rs. 1,00,000 Interest is credited every year@ 8.5% p.a.

Deposit is exempted under Wealth Tax

Depositor can nominate anybody to get the balance in PPF

after his death The deposit in PPF can be held even after maturity earning the

same ROI for the next yrs.


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Disadvantages of PPF

Locking period of 15 yrs.

Pre-mature withdrawal is not allowed, however withdrawal of

50% of the available balance is allowed after the 7th year

onwards. On event of death of the depositor legal hires cannot continue

the a/c.

Pre-mature closure of PPF is allowed only on the event of

death of the depositor.


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Thank You

Documents

Presentation_IF - Investment Options