Assignment

Topic-Financial Sectors

Made by-Hemangi Srivastava

 SHARE MARKET
This Photo by Unknown Author is
licensed under CC BY-NC

• The share market is a platform where buyers and sellers come

together to trade on publicly listed shares during specific hours
of the day. People often use the terms ‘share market’ and
‘stock market’ interchangeably. However, the key difference
between the two lies in the fact that while the former is used
to trade only shares, the latter allows you to trade various
financial securities such as bonds, derivatives, forex etc.
• The principal stock exchanges in India are the National Stock
Exchange (NSE) and the Bombay Stock Exchange (BSE).
 Pros and cons of share market

PROS CONS
• Grow with economy • Risk
• Stay ahead of inflation • Stockholders of broke companies get paid last
• Easy to buy
• Takes time to research
• Don't need a lot of money to start
investing • Taxes on profitable stock sales

• Income from price appreciation and • Emotional ups and downs

dividends
• Competing with institutional and professional
• Liquidity investors
 mutual funds
• A mutual fund is a company that pools money from
many investors and invests the money in securities
such as stocks, bonds, and short-term debt. The
combined holdings of the mutual fund are known as its
portfolio. Investors buy shares in mutual funds. Each
share represents an investor’s part ownership in the
fund and the income it generates. Most mutual funds
fall into one of four main categories – money market
funds, bond funds, stock funds, and target date funds.
Each type has different features, risks, and rewards.
• Index funds are mutual funds that aim to replicate the performance of a market
benchmark or index. For example, an S&P 500 index fund tracks that index by holding
the 500 companies in the same proportions.
 Pros and cons

PROS CONS
• Diversification • Potential for loss
• Small investment • Cost
amounts • Tax implications
• Professional money
management.
• Liquidity:
 gold
A gold fund is a type of investment fund that holds assets related to
gold. The two most common types of gold funds are those holding
physical gold bullion, gold futures contracts, or gold mining
companies.Gold funds are popular investment vehicles among
investors who wish to hedge against perceived inflation risks. They are
also frequently held by so-called "gold bugs"—investors who are
particularly bullish on the prospects of goal.
Investors interested in increasing their exposure to gold have many
options to choose from. For example, a popular gold fund that invests
directly in gold futures contracts is the SPDR Gold Trust.
Pros and cons of gold
 Bank/fd
A fixed deposit (FD), also known as a term deposit or time deposit, is a safe
investment option offered by banks and other financial institutions. It allows you
to deposit a lump sum of money at a fixed interest rate for a predetermined
amount of time and earn assured returns. A fixed deposit may be a current or
non-current asset for accounting purposes. Fixed deposits invested in banks for
less than one year are current assets. Fixed deposits invested in banks for
longer than one year are non-current assets. A current asset is any asset that
will provide an economic benefit within one year
 PROS AND CONS

PROS CONS
• Low risk • Low rate of return
• FDs are not associated with market movement; hence, • The returns in an FD are guaranteed but
there is low risk. FDs provide guaranteed returns and the FD rates are low as compared to
are a preferred choice for individuals who have a low-
other market-linked investments.
risk appetite.
• 2. Fixed tenure
• 2. Penalty on pre-mature withdrawal
• An FD scheme has a minimum tenure of six months • If you withdraw the FD before its maturity
and a maximum duration of five years. This means date, you will have to pay a penalty
your money will be safeguarded and you will earn charge. You could also get a low interest
returns on it. on your FD if you break it before the date
• 4. Flexible interest rate payout options of maturity.
• 3. No complete tax exemption
 ppf
The Public Provident Fund (PPF) is a savings-cum-tax-saving instrument
in India, introduced by the National Savings Institute of the Ministry of
Finance in 1968. The scheme's main objective is to mobilize small
savings by offering an investment with reasonable returns combined
with income tax benefits.
Investing your idle money in a PPF account can prove beneficial in the
long run as the scheme is backed by government and offers stable
returns. You can start saving via PPF and build a corpus which can be
used post-retirement as well as for a future goal.
 Pros and cons

PROS CONS
1. Tax benefits: One of the significant advantages of investing in a 1. Limited investment amount: The maximum annual
PPF is the tax benefits it offers. Contributions made to the PPF are investment limit in a PPF account is Rs. 1.5 lakh. While
eligible for deductions under Section 80C of the Income Tax Act, up this is beneficial for tax planning purposes, it may not
to a maximum limit of Rs. 1.5 lakh per financial year. Furthermore, be sufficient for individuals with higher disposable
the interest earned and the final maturity amount are both tax- incomes or those looking to create a larger
exempt, making it an attractive option for tax-conscious individuals. investment portfolio.
2. Attractive interest rates: The PPF offers relatively high-interest 2. Fixed interest rate revisions: Although the interest
rates compared to other fixed-income investments. The interest rate
rate offered by the PPF is generally attractive, it is
is revised by the government every quarter, and historically, it has
subject to revision by the government every quarter.
been higher than the prevailing inflation rate. This feature ensures
that the PPF helps investors combat the erosive effects of inflation
Fluctuations in interest rates can impact the overall
and grow their savings over time. returns, especially if the rates fall significantly during
the investment period.
3. Long-term savings and compounding
3. Lack of liquidity
 Real estate
Real estate is defined as the land and any permanent structures, like a home, or
improvements attached to the land, whether natural or man-made.
Real estate is a form of real property. It differs from personal property, which is not
permanently attached to the land, such as vehicles, boats, jewelry, furniture, and farm
equipment. Real property includes the land and additions to the land plus the rights
inherent to its ownership and usage.
Real Estate Agent
A real estate agent is a licensed professional who arranges real estate transactions,
matching buyers and sellers and acting as their representatives in negotiations.
 Post office
The Post Office savings bank is the oldest and by far the largest
banking system in the country, serving the investment need of both
urban and rural clientele. These services are offered as an agency
service for the Ministry of Finance, Government of India.
•Postal banking is common in other countries but wasn't seen in the United States for
decades until 2021 when the USPS started offering some banking services in certain
locations.
•Advocates believe that bringing it back could make low-cost banking services
available to low-income Americans.High fees and account minimums often prevent
people from opening accounts.
 PROS AND CONS

PROS CONS
• • Lower Returns Compared to Market-Linked
• Low Risk: Given the government guarantee, the risk of losing Investments
principal is minimal. • Limited Growth Potential: The returns from post office
• .Attractive Interest Rates schemes are generally lower compared to equity-based
investments, such as mutual funds or stocks, which can
• Competitive Returns: Post office schemes often offer offer higher returns over the long term.
competitive interest rates compared to traditional bank savings
accounts. • 2. Inflation Risk
• .Tax Benefits • Erosion of Value: The fixed returns on post office schemes
may not always keep pace with inflation, potentially
• Tax Deductions: Investments in certain post office schemes,
eroding the real value of the investment over time.
such as the Public Provident Fund (PPF) and National Savings
•
Certificate (NSC), qualify for tax deductions under Section 80C 3. Liquidity Constraints
of the Income Tax Act.
 insurance
Insurance is a contract, represented by a policy, in which a policyholder
receives financial protection or reimbursement against losses from an
insurance company. The company pools clients’ risks to make payments
more affordable for the insured. Most people have some insurance: for
their car, their house, their healthcare, or their life.
Insurance policies hedge against financial losses resulting from accidents,
injury, or property damage. Insurance also helps cover costs associated
with liability (legal responsibility) for damage or injury caused to a third
party
 Pros and cons

PROS CONS
• Liquidity Options • Lower Returns Compared
• Asset Protection to Other Investments

• Forced Savings • Complexity

• Tax Benefits • High Costs