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Unit 8: Investments

This document discusses different types of investments and factors to consider when selecting investments. It describes investments such as savings accounts, fixed deposits, property purchases, stock market shares, and treasury bills. For each investment type, it provides details on potential returns, risks, liquidity, and other benefits. The overall document serves as an introduction to common investment options and factors for individuals to consider when managing their investments.

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Shaqeeb Ahamed 11A
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57 views

Unit 8: Investments

This document discusses different types of investments and factors to consider when selecting investments. It describes investments such as savings accounts, fixed deposits, property purchases, stock market shares, and treasury bills. For each investment type, it provides details on potential returns, risks, liquidity, and other benefits. The overall document serves as an introduction to common investment options and factors for individuals to consider when managing their investments.

Uploaded by

Shaqeeb Ahamed 11A
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Unit 8

INVESTMENTS
Introduction to investment

Factors to be considered when selecting


an investment method.

Different types of investment methods.

Returns from different types investment


Introduction to Investment

• Investment means any individual


investing a certain amount from his/
her earned income as savings in an
effective method with an expectation
of earning an economic return.
Factors to be considered when
selecting an investment method
• The aim of investment.
• The risk from investment
• The return from the investment
1. Depositing money in a savings
account
• Earning an interest income on deposits
• Ability to earn an additional return through gifts or
lotteries
2) Opening a fixed deposit
account

• Earning a relatively higher interest rate compared to a


savings account.
• Ability to withdraw money at maturity or if required,
before maturity.
• Ability to obtain a loan by providing the fixed deposit
certificate as a collateral.
• Being a safe investment method.
3) Purchasing properties
• Ability to utilize properties by being an owner of
properties.
• Ability to earn an income by renting, by leasing or by
mortgaging properties.
• Ability to sell properties and obtain cash, if money is
required.
• Ability to earn capital gains by selling the properties at a
higher price than the purchased price.
• Ability to present as a collateral when obtaining a loan
amount.
4) Investing in shares

• Purchasing the shares of companies is an investment .


These affairs are implemented through the share market.
Shares can be bought either when a company makes a
primary share issue directly to the general public or when
an existing share holder of a company is selling his shares
in the secondary market. The gains received are called
“dividends” Ordinary shares are significant among
various kinds of shares issued by a company
Ordinary shares.

• A particular kind of shares issued to the public by a


public limited company in order to accumulate the capital
requirements is known as “Ordinary Shares”.
Benefits received by investing in
ordinary shares

• Receive dividends
• Earn capital gains by selling at a higher price than the
purchased price
• Sell ordinary shares at any time and obtain cash
• Present as a collateral when obtaining loans
• Appoint directors by using the vote
• Contribute to the decision making of a company by being
appointed as a director.
Share Market Investment

• The Colombo stock exchange has been established in


order to implement share transactions in Sri Lanka. Only
registered companies are involved in this market. The
affairs of the share market are operated by the Colombo
Stock Exchange. Further, these affairs are monitored and
previewed by Securities and Exchange Commission of
Sri Lanka
5) Investing in treasury bills
• Treasury bills are short term instruments issued by the
Central Bank of Sri Lanka on behalf of the government in
order to fulfill short term financial needs of the
government.
• The Central Bank of Sri Lanka firstly issues Treasury
Bills to the registered primary dealers.
• An investor will be able to purchase Treasury Bills from
these primary dealers. Often licensed commercial banks
act as primary dealers.
• Treasury Bills are issued with maturity periods of three
months, six months and one year.
Benefits received by
investing in treasury bills.

• Ability to earn an interest income at a fixed rate


• Ability to convert into cash at any time
• A full guarantee from the government is given
that the invested money will be paid back

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