COMPARISION OF VARIOUS INVESTMENT ALTERNATIVES

By

Sai Sudha.K

CONTENTS

• Objectives

• Definition of investment

• Objective of an investor

• Investment alternatives

1. Financial assets

2. Real assets

• How do investors invest?

• Most preferred investment option

OBJECTIVESOBJECTIVES

• To understand in depth about different investment avenues available

in India.

• To find out how investors get information about the various

financial instruments.

• The type of financial instruments, they would prefer to invest.

• The rate of return they would likely to earn from the investment.

• The risks involved in various investments

INVESTMENT• Investment refers to putting money into something with the

expectation of profit. • The future benefits derived from an investment are known as

‘returns’1. Giving loan: with an expectation to get the principal back

along with the interest at a future date2. Buying gold: with an expectation of appreciation in its value in

future3. Buying an insurance plan: for various benefits derivable in

future &/or in case of an eventuality4. Buying shares of companies: for dividend &/ or capital

appreciation.

Objectives of an investor

• Maximization of return

• Minimization of risk

INVESTMENT ALTERNATIVES

• FINANCIAL ASSETS

– Bank Fixed deposits

– Insurance policies

– National Saving Certificate (NSC)

– Public Provident Fund (PPF)

– Stock Market

– Mutual Funds

– Private Equity

– Non Resident Ordinary (NRO) funds

• REAL ASSETS– Real estate– Precious objects

The three golden rules for all investors are:• Invest early• Invest regularly• Invest for long term and not short term

FINANCIAL ASSETS

• Bank Fixed Deposits (FD)Fixed Deposit or FD accrues 8.5% of yearly profits, depending on the bank's tenure and guidelines, which makes it's widely sought after safe and secure investment alternative.

• Insurance

It involves pooling funds from many insured entities to pay for the losses that some may incur. The insured entities are therefore protected from risk for a fee, with the fee being dependent upon the frequency and severity of the event occurring.

• National Saving Certificate (NSC)

It is subsidized and supported by government of India as is a secure investment technique with a lock in tenure of 6 years. There is no utmost limit in this investment option while the lowest amount is estimated as Rs 100.

• Public Provident Fund (PPF)Like NSC, Public Provident Fund (PPF) is also supported by the Indian government. An investment of minimum Rs 500 and maximum Rs 70, 000 is required to be deposited in a fiscal year.

• Investments in Stock MarketInvesting in share market yields higher profits. stock market to some extent cannot be considered as the safest investment options..

• Mutual funds: It is a type of collective investment scheme that

pools money from many investors and invests typically in investment securities (stocks, bonds, short-term money market instruments, other mutual funds, other securities, and/or commodities such as precious metals)

• Private Equity : It refers to a type of investment aimed at gaining

significant, or even complete, control of a company in the hopes of earning high return.

• Non Resident Ordinary (NRO) funds:

Investing in domestic (NRO) is one the best investment alternatives for NRI’s who wish to deposit their income accrued abroad and maintain it in Indian rupees.

REAL ASSETS• Real estate investment

involves the commitment of funds to property with an aim to generate income through rental or lease and to achieve capital appreciation.

• Art as an investment avenue has been considered an interesting and profitable alternative, but it is also extremely risky.

GOLD INVESTMENT

• Of all the precious metals, gold is the most popular as an investment. Investors generally buy gold as a hedge or safe haven against any economic, political, social, or fiat currency crises

OTHER INVESTMENT ALTERNATIVES

• Company fixed deposits

• Bonds and Debentures

• Derivatives

• Commodities Market

number of people friend's suggestion

newspapers/magazines

self decision

television

brokers/agents

others

Thank you