FINANCIAL BASICS

What is Investment

Investment means putting your money to work to earn more money

Drivers of Investment
Objective Risk Appetite

Time Horizon
Taxation

Why should People Invest ?

Achieve Financial goals in life
Provision for an uncertain future To meet Inflation Earn return on idle resource

WHEN TO START INVESTING ?

Early investing Why early investing?

Time to Grow
Concept of Compounding Accumulation of Principal & Dividend

 Invest early Invest regularly Invest for long term and not short term

Investment options available in the Market

o o o o o o o o o o o Gold Real Estate Shares Equity Mutual Fund Public Provident Fund Government Bond & Securities National Savings Certificate Post Office Savings Scheme Insurance Banks Savings account & Fixed deposits

Gold
Commodities like gold are a hedge against inflation. Gold is a storehouse of value. When uncertainty afflicts global markets, investors prefer to take refuge in gold because in times of inflation (i.e. fall in purchasing power), gold prevents erosion in the value of the purchasing power

Real Estate
Real estate investment is traditionally considered to be an effective hedge against inflation High capital is required , Not for the small investor Liquidity is an issue

Equity
Ownership in a company Listed and traded on markets Investment return depends on future profitability of the company High growth and high liquidity Historical return and risk are highest amongst investment options Not for the risk averse investor More than the money, it involves investing a lot of time and effort, which is beyond most lay investors

Bonds
Bonds are long-term debt securities issued by Government of India or any of state Governments or undertakings owned by them or by development financial institutions The two major categories of Bonds are Government Bonds Corporate Bonds They are meant especially for investors with relatively less appetite for risk. Bonds are suitable for regular income purposes

Fixed Deposits
A specific sum of money deposited in a financial institution for a fixed term earning a pre-agreed interest rate. A Fixed Deposit is like loaning the bank your money. In return, they pay you interest.

Public Provident Fund

This is a 15 year deposit product of government offered through banks. Thereafter this can be extended by a period of five-five years Current interest rate is 8% Tax benefit under section 80C of income tax 1961 are available Both interest receipts and withdrawal of principal exempt from tax Limited liquidity is available. Investors can draw up-to 50% of their 4th year balances, from the 7th year onwards

National Savings Certificate (NSC)

o Scheme maintained by the Govt. and sold through Post
Offices o Denominations of Rs. 100, 500, 1000, 5000 and 10,000

o Can be purchased singly or jointly and also for minors

o Lock-in period of 6 years

Kisan Vikas Patra & Indra Vikas Patra

Instruments with fixed interest issued by central government. Sold by post offices

Investor identity is protected

Investment in cash is possible Interest is taxable