Presentation 5

Financial sectors
By Sarthak Kumar
Sri Guru Tegh Bahadur Institute of Management and
Information Technology
Financial sector
• The financial sector comprises

institutions, markets, and
services that facilitate the flow of
money and capital, providing
essential financial products and
services to individuals,
businesses, and governments to
support economic activities and
manage financial risks.
• These are sectors where the inbound
as well
as outbound transactions of
money take place and also
help in increasing the cash flow
of the economy
•
•
Types of financial sectors
1. Share market
2. Mutual funds
3. Gold
4. Bank/FD
5. PPF
6. Real estate
7. Post office
8. Insurance
•
SHARE MARKET
• The share market, or stock market, is a platform where
shares of
publicly listed companies are traded. It is a crucial part of
the
economy, allowing companies to raise capital and investors
to buy
a stake in a company.
• Key Players: Individual Investors, Institutional Investors,
Stock Exchanges,Brokers NSE & BSE
• How it Works: Companies list shares, investors buy/sell
shares, pricesfluctuate based on demand and supply.
Investing in Share Market: Pros and Cons
Pros: Cons:
• High potential returns • Volatility and risk
• Liquidity • Requires market knowledge
• Diversification options
• Susceptible to economic
• Ownership in companies changes
• • Potential for loss
•
MUTUAL FUNDS
• A mutual fund collects money from investors and invests it in
stocks, bonds, money market instruments, or other assets
according to predefined investment objectives.
• Professional Management: Fund managers make investment
decisions based on research and analysis.
• Diversification: Investors benefit from a diversified portfolio,
reducing risk compared to investing in individual securities.
• Liquidity: Investors can buy or sell mutual fund units at the fund's
net asset value (NAV) on any business day.
• Variety of Funds: Different types of mutual funds cater to various
investment goals and risk appetites, such as equity funds, debt
funds, balanced funds, and index funds.
•
Investing in Mutual Funds: Pros and Cons
Pros: Cons:
Professional management Management fees
Diversification Less control over investments
Affordable for individual Potential for lower returns
investors Market risk
Liquidity •
•
GOLD
• Gold is a precious metal that holds significant cultural,
industrial, and economic value worldwide. As an
investment asset, gold is valued for its intrinsic qualities
such as durability, scarcity, and aesthetic appeal.
• Gold serves as a hedge against inflation and economic
uncertainty. It is often viewed as a safe haven during
times of geopolitical instability or market volatility.
• Investors can access gold through physical forms like
bullion (bars or coins), as well as financial products such
as gold-backed exchange-traded funds (ETFs) or futures
contracts.
•
Investing in Gold: Pros and Cons
Pros Cons
Hedge against inflation No regular income (e.g.,
Tangible asset dividends)
Safe-haven during economic Storage costs
instability Market fluctuations
• Low returns compared to
other investments
•
BANK/FD
• A Fixed Deposit (FD) is a financial instrument provided
by banks where an investor deposits a sum of money
for a specified period, earning a fixed rate of interest.
• Fixed Tenure: FDs have a fixed maturity period,
ranging from a few days to several years.
• Fixed Interest Rate: The interest rate is fixed at the
time of deposit and remains constant throughout the
tenure.
• Safety: FDs are generally considered safe investments
as they are backed by the issuing bank.
•
Investing in Bank/Fixed Deposits (FD): Pros and
Cons
Pros: Cons:
• Guaranteed returns • Lower returns compared to
• Low risk other investments
• Easy to understand • Lock-in period
• Fixed tenure
• Inflation impact
•
• Early withdrawal penalties
•
PUBLIC PROVIDENT FUND (PPF)
• PPF is a government-backed investment scheme that allows

individuals to deposit funds for a fixed term while earning a fixed
rate of interest.
• accounts have a maturity period of 15 years, which can be
extended in blocks of 5 years after maturity.t he interest rate on
PPF is set by the government and is compounded annually.
• Tax Benefits: Contributions to PPF qualify for tax deductions under
Section 80C of the Income Tax Act, up to a 1.5L per annum.
• Safety: PPF is backed by the government, ensuring capital
protection and stable returns.
• Withdrawal and Loans: Partial withdrawals are allowed after a
specified period, and loans can be availed against PPF balances.
•
Investing in Public Provident Fund (PPF): Pros and
Cons
Pros: Cons:
•Tax benefits • Long lock-in period (15 years)
• Low liquidity
•Government-backed security
• Contribution limits
•Attractive interest rates • Fixed interest rates
•Long-term savings •
REAL ESTATE
• Real estate refers to property consisting of land and buildings,
along with natural resources, Real estate investments can
include residential (houses, apartments), commercial (office
buildings, retail spaces), industrial (factories, warehouses),
and land (undeveloped or agricultural).
• Investment Objectives:
1. Capital Appreciation: Real estate values can appreciate over
time, providing potential for capital gains.
2. Rental Income: Properties can generate rental income from
tenants, offering a steady cash flow.
3. Portfolio Diversification: Real estate can diversify an
investment portfolio, reducing overall risk.
•
Investing in Real Estate: Pros and Cons
Pros: Cons:
• Potential for appreciation • High initial investment
• Rental income • liquidity
• Tangible asset • Maintenance costs
• Tax benefits • Market fluctuations
POST OFFICE
• Post Office Savings Schemes refer to various deposit
schemes offered by postal department providing
individuals with secure and government-backed
savings options.
• Accessibility: Post Offices are widely accessible,
especially in rural areas, making these schemes
accessible to a broader population.
• Interest Rates: Rates are set by the government and
typically competitive compared to other fixed-income
investments.
Investing in Post Office Savings: Pros and Cons
Pros: Cons:
• Government-backed • Limited liquidity
• Lower returns compared to market-
• Variety of schemes linked investments
• Attractive interest rates • Contribution limits
• Tax benefits • Fixed interest rates
• •
INSURANCE
• Insurance is a contract between an insurer (insurance
company) and a policyholder (individual or entity),
where the insurer agrees to provide financial
protection against specified risks in exchange for
premium payments.
• Financial product providing risk management through
compensation for specific loss.
• Protects against financial loss from unforeseen events
•
Investing in Insurance: Pros and Cons
Pros: Cons:
• Risk protection • No investment returns (for pure
insurance)
• Tax benefits • Complex terms and conditions
• Provides peace of mind • Premium costs
• Diverse policies • Limited liquidity
•
THANK YOU

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Financial sectors

• The financial sector comprises

• PPF is a government-backed investment scheme that allows

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