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(06 Hours) : Concepts of Investment - Financial and Non - Financial Forms of Investment

This document provides an introduction to investment concepts including: 1) It defines financial and non-financial forms of investment and discusses the objectives of financial investment. 2) It explains different investment methods including security investments like stocks, bonds, and mutual funds as well as non-security investments like deposits, real estate, and life insurance. 3) It discusses sources of investment information including economic indicators, financial advisors, and news sources.

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Brahmanand Shet
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200 views15 pages

(06 Hours) : Concepts of Investment - Financial and Non - Financial Forms of Investment

This document provides an introduction to investment concepts including: 1) It defines financial and non-financial forms of investment and discusses the objectives of financial investment. 2) It explains different investment methods including security investments like stocks, bonds, and mutual funds as well as non-security investments like deposits, real estate, and life insurance. 3) It discusses sources of investment information including economic indicators, financial advisors, and news sources.

Uploaded by

Brahmanand Shet
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 PPT, PDF, TXT or read online on Scribd
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MODULE 1

(06 Hours)
Introduction: Concepts of investment—
 Financial and Non –financial forms of investment—
Objectives of financial investment.
 Investment methods—Security and non—security forms of
investment –sources of investment information –
 Investment Instruments
Introduction
Investment in various types of assets is an interesting activity
that attracts people from all walks of life irrespective of their
occupation, economic status, education and family
background. The investor who is having extra cash could
invest it in securities (or) in any other assets like gold (or) real
estate (or) Could simply deposit it in his bank A/c.
The Companies that have extra income may like to invest their
money in the extension of the existing (or) undertake new
venture.
MEANING: Investment is the sacrifice of certain Present value
for the uncertain future reward. Investment is the employment
of funds on assets with aim of earning income (or) Capital
appreciation.

Attributes of investment : Risk & Time.

Layman’s view on investment: means some monetary


commitment.
Economic view on investment: Present consumption is sacrificed
to get a return in the future.
Concepts of Investment:
 Speculation:  Gambling and
Speculation investment:
means taking up the A gamble is usually a very
business risk in the hope of short term investment in a
getting Short term gain. game (or) a chance.
Speculation essentially Gambling is different from
involves buying and selling speculation and investment.
activities with the The time horizon involved
expectation of getting profit in gambling is shorter than
from the price fluctuations. speculation and investment.
 Speculation: People gamble as a Way to
Speculation is short term entertain themselves,
oriented. earning income would be
the secondary factor. Risks
in gambling is different
from the risk of the
investment. But in the
investment there is an
analysis of risk and return.
Differences b/w Investor (vs.) Speculator.
Basis: Investor: Speculator:

∆ Time Horizon Plans for a longer oPlans for a very


time horizon. Short period .
Holding period
Assumes moderate
∆ Risk varies from few
risk.
days to months.
oWilling to
Moderate rate of undertake high risk.
∆Return return associated with
oHigh returns for
limited risk.
assuming high risk.
oUses borrowed
Uses his own funds funds to supplement
∆Funds and avoids borrowed his personnel
funds. resources.
Investment Process.

Investment Portfolio Portfolio evaluation


Analysis Valuation
Policy Construction

Investible Fund
Objectives. Market. Appraisal.
Intrinsic Value. Diversification
Knowledge. Industry. Revision.
Future Value. Selection and
Company. allocation.
Investment objectives:

The main investment objectives are increasing the rate of return and reducing
the risk. other objectives like safety liquidity and hedge against inflation can be
considered as subsidiary objectives.

Return 

Return =Capital appreciation &


dividend/Purchase Price * 100
Minimization of risk

Liquidity

Hedge against inflation

Safety.
Financial & Non Financial Forms of
investment

Non Financial Forms of


Financial Forms of
investment:
investment:
The real assets always find a place
Equity Shares, Bonds, Debentures,
in the Portfolio. They are Gold,
Indra vikas Patras (IVP’s) Kiran
Silver, Arts, Property etc.
vikas Patras, Government
Securities, and Money market These are non-financial investment.
Securities yield fixed income.
Features of an Investment
Programme:
 Safety of Principal.

 Adequate Liquidity.

 Stability of income.

 Capital Growth.

 Tax benefits.
Investment Methods:

Security Form of investment: Non Security Form of investment:


Equity Shares. o Deposits
Preference Shares. oPPF’s
Debentures.
oNSC’s
Bonds.
oNSS
IVP’s & KVP’s.
oLife insurance
Government Securities.
oMutual Funds.
Money market instruments etc.,
oReal Estate
oArts etc.,
 Deposits :
Include
@ Bank deposits.
@ Post office deposits.
@ NBFC deposits.
Sources of Investment Information:

This is how people in the movies used to gather investment information.


Now, we may hear from a friend or broker, see a news item on television, or
read an article in the newspaper. How can we analyze investment
information, and how can we make sure our sources are credible?

Your best source of information is your financial adviser. If you have


developed an investment plan based on your financial situation, your
capacity for risk, and your investment objectives, your advisor is the best
person to help you execute your plan. But, to get the right answers, you have
to ask the right questions, and that requires attention to several economic
indicators.
Economic indicators like GNP, General Price level (inflation), GDP,
SENSEX, NIFTY,Unemployment etc.,
Investment Instruments.
Thank you

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