Financial Market Management

Topic: Basics of Investment

POWER POINT PRESENTATION

BY: ROLL NO 1 TO 7
X E
 What is Investment to us ?

The money we earn by any source is partly spent by

us on our needs and wants. The part of it saved may
be used of future needs. Instead of keeping these
savings idle we may like to use it in some way, which
would help us earn money in the form of interest or
returns.
 Why and When to Invest ?

Generate
Earn an an income
income on for a goal
our idle Early
in our life
resources

WHY
WHEN
Make To earn Long
Regularly
provision above the term
for an inflation
undecided of the
future economy
 ANY SECURITY MEASURES FOR MY MONEY ?

1. Receive written documents explaining the investment

2. Read and understand such documents
3. Always verify the legitimacy of documents
4. Find the costs and benefits associated
5. Assess the risk-return profile
6. Understand the liquidity and safety aspects
7. Decide if it is appropriate for our goals
8. Compare with other options available
9. Examine with previously made investments
10. Deal only through authorized personnel
11. Seek clarifications about intermediary and investment
12. Always explore new options available
What is interest and what determines it ?

Interest is an amount charged to the borrower for the

privilege of using the lender’s money. The borrowers
and lenders could be any two entities or persons
amongst whom the transaction is taking place.
Factors that determine it:
 Demand for money
 Level of government borrowings
 Supply of money
 Inflation rate
 Policies of the RBI and the government
 Where to invest ?

Physical assets Financial assets

Real estate, jewellery of FD with banks, PPF, Shares,

gold or silver and any other bonds, insurance and any
commodities. other investment.
Short term investment:

Savings Banking Account:

• Offers low interest rates (4%-5%).
• It is a Banking tool used by many.
• Only marginally profitable,

Liquid Funds:
• Specialized form of mutual funds, for protecting capital.
• Comparatively yield a better return.
• Easy liquidity of funds.

FD with banks:
• They are for the investors with a low risk appetite.
• Only for a period of 6-12 months.
• Returns vary with the time period of investment.
Long term investment:

Post Office Savings:

• Low-risk instrument with 8% interest.
• Maturity period is of 6 years.
• Premature withdrawal is allowed with deductions.

PPF:
• Maturity is after 15 years with 8% interest.
• Interest incurred is tax-free.
• Withdrawal is permissible after 7 years upto 50% only.

Company FD:
• Borrowings are at a fixed interest.
• Can be paid monthly, quarterly ,annually etc.
• Interest rate varies between 6% - 9%
Other options for long term investment include:

Bonds:
• Only issued for more than a period of 1 year.
• Has a main purpose of raising funds.
• A bond is paid on its Maturity Date.

Mutual funds:
• Funds are raised from the public by an intermediary.
• Beneficial for those who lack knowledge about the
market.
• Mutual fund units can be redeemed by NAV.
 Other concepts to know:

• A body or individuals regulating or controlling

securities.
Stock
exchange • The jurisdiction may vary from region to region .

• Each company’s capital is divided into small

denominations called shares.
Share • Owner of such is called a Share Holder.

• This is a contract between two parties regarding rate,

time period, repayment etc.
Debt
Instrument • In India, the term ‘bond’ is used for the same.
 Continued..

• This is a product whose value is determined from the value

of one or more basic variables called as underlying.
• This underlying asset could be equity, index, forex etc.
Derivative

• This is body registered with the SEBI that pools money from
the public and invests in different schemes across all
sectors.
Mutual • This can be considered as a financial intermediary and is
Funds beneficial for those who lack knowledge about the market.
 Further more:

• This is a method to show how a specified portfolio of share prices are

moving to show market trends.
Index • It helps to understand the average price movement.

• This is like a bank wherein the deposits are securities in electronic form.
Depository

• This is a process where physical certificates are issued and converted into
securities in electronic form.
Dematerialization • This is credited in the investors account with his ‘Depository Participant’
 Credits:

 Roll no 1 - Aarushi Ratan

 Roll no 2- Aaryan Gaur
 Roll no 3- Abhinivesh Mitra
 Roll no 4- Aditya Padhi
 Roll no 5- Anika Desai
 Roll no 6- Anushri Rao
 Roll no 7- Aryan Rae