BASICS OF INVESTMENTS

 What
 Why
 Government’s Role
 Options
 Terminologies
 Characteristics
 Risk
 Compounding
 Strategies
 WHAT IS INVESTMENT?
“the current commitment (read sacrifice) of resources
for a period of time in the expectation of receiving future
resources greater than the current outlay”
It is DIFFERENT from SAVINGS

 Resources :
 Time

 Knowledge

 Health

 Money
 Why Investment?
 Better Future of Self and Family
 Manage future Risks
 Remain Healthy, Wealthy and Wise
 Achieve specific Financial Goals
 Retirement Planning
 Children Education, Well-being and
Establishment
 Lifestyle Upgradation
 Add you own Goals – It is a MUST to have
clear GOALS!!!
 With Goals also comes Timeline
 Government’s Role

 Your growth ==> Your country’s growth

 Government needs Money (Tax)
 Be wise - reduce your tax burden (Liability)
 Understand all options to save Taxes
 Section 80C - Save Tax on Income by Investing
 There are others too –
 EXPLORE... READ... INVEST

 OPTIONS – Tax Saving


 Employee Provident Fund

 Public Provident Fund
 Tax Saving Fixed Deposits / Recurring Deposits
 Life Insurance Policies
 Equity Linked Saving Schemes (Mutual Funds)
 National Pension Scheme
 National Saving Certificates
 Medical Insurance Premium – Company Provided
 Donations
 List present in your Form 16 / Declaration form
 OPTIONS – Non Tax Saving


 Fixed Deposits / Recurring Deposits

 Mutual Funds
 Property
 Precious Metal – Gold, Silver, Platinum, Diamond
 Equity (Share Markets)
 TERMINOLOGY
 Assets, Liabilities
 Balance Sheet
 Account Statement
 Liquidity
 Lock-In Period
 Returns – Annualized, CAGR
 Capital
 Rate of Interest
 Inflation
 Maturity
 Premium
 Equity - Shares
 Dividend Yield
 Mutual Funds
 SIP
 CHARACTERISTICS
 Returns
 nature of investment
 maturity period
 host of other factors
 Risk
 Loss of capital
 Delay in repayment
 Non-payment of interest
 Variability in returns
 Liquidity – easy to convert into Real Money
 Tax Shelter
 Initial tax benefit
 Continuing tax benefit
 Terminal tax benefit
 RISK
 Every person has Different Risk Appetite
 Risk bearing capacity = Function of Assets and
Liabilities


 Each investor tries to maximise his wealth by

chosing the optimum combination of risk and
expected return in accordance with his
preference and capacity
THE MAGIC OF COMPOUNDING
THE MAGIC OF COMPOUNDING
  STRATEGIES
 Maximize return
 Minimize risk
 Hedge against inflation
 Savings kept as a cash are barren( unproductive ) - Don't earn
anything
 Loses its value due to rise in prices, since inflation erodes the
value of money
 If the investment can not earn as much as the rise in prices, the
real rate of return would be negative
 Actual return realized from an investment may different from the
expected return – risk
 Government securities- low risk [practically risk free]
 Debentures and preference shares - medium risk
 Equity shares- high risk
 Read Read Read
 Learn Learn Learn

 Grow Grow Grow