presentation_if - investment options
TRANSCRIPT
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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