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    Chapter 2 Investment Alternatives

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    sharktale2828
    This document outlines various investment alternatives categorized into deposits, government savings schemes, money market instruments, bonds, equity shares, stock market classifications, mutual funds, insurance products, retirement products, real estate, precious objects, and financial derivatives. It provides details on each category including examples and considerations. The major trends in investments are described as globalization, information/computer networks, financial engineering, and securitization.

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    Chapter 2 Investment Alternatives

    Uploaded by

    sharktale2828
    198 views19 pages
    This document outlines various investment alternatives categorized into deposits, government savings schemes, money market instruments, bonds, equity shares, stock market classifications, mutual funds, insurance products, retirement products, real estate, precious objects, and financial derivatives. It provides details on each category including examples and considerations. The major trends in investments are described as globalization, information/computer networks, financial engineering, and securitization.

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    Chapter 2 Investment Alternatives

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    This document outlines various investment alternatives categorized into deposits, government savings schemes, money market instruments, bonds, equity shares, stock market classifications, mutual funds, insurance products, retirement products, real estate, precious objects, and financial derivatives. It provides details on each category including examples and considerations. The major trends in investments are described as globalization, information/computer networks, financial engineering, and securitization.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    198 views19 pages

    Chapter 2 Investment Alternatives

    Uploaded by

    sharktale2828
    This document outlines various investment alternatives categorized into deposits, government savings schemes, money market instruments, bonds, equity shares, stock market classifications, mutual funds, insurance products, retirement products, real estate, precious objects, and financial derivatives. It provides details on each category including examples and considerations. The major trends in investments are described as globalization, information/computer networks, financial engineering, and securitization.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    of 19

    Chapter 2

    INVESTMENT ALTERNATIVES Choices Galore

    Major Trends in the Investment Environment


    Globalisation Information and Computer Networks Financial Engineering Securitisation

    Outline
    Deposits
    Government Savings Schemes

    Money Market Instruments


    Bonds or Debentures Equity Shares

    Mutual Fund Schemes


    Insurance Products Retirement Products Precious Objects Financial Derivatives

    Deposits
    Bank Deposits
    Post Office Savings Account Post Office Time Deposits Post Office Monthly Income Scheme Company Fixed Deposits

    Government Savings Schemes


    Public Provident Fund Schemes Senior Citizens Saving Scheme National Savings Certificate

    Money Market Instruments


    Treasury Bills
    Commercial Paper Certificate of Deposit Call Money Market Repos Collateralised Borrowing and Lending Obligations

    Bonds or Debentures
    Central Government Securities

    State Development Loans


    Public Sector Undertaking Bonds

    Private Sector Debentures


    Preference Shares

    Equity Shares
    Terminology Rights of Equity Shareholders Stock Market Classification Peter Lynchs Classification Nature of Equity Shares

    Stock Market Classification

    Blue-chip Shares
    Growth Shares Income Shares Cyclical Shares

    Peter Lynchs Classification


    Slow Growers
    Stalwarts Fast Growers Cyclicals Turnarounds Asset Plays

    Mutual Fund Schemes


    Schemes Galore
    I.

    Equity Schemes Diversified equity schemes Index schemes Sectoral schemes Tax planning schemes Hybrid (Balanced) Schemes Equity-oriented schemes Debt-oriented schemes Variable asset allocation schemes Debt Schemes Gilt schemes Mixed schemes Floating rate debt schemes Cash (liquid) schemes

    II.

    III.

    Mutual Fund Regulation

    Filing of Offer Document with SEBI


    No Guaranteed Returns

    NAV Published Regularly


    Investment Are Subject to Restrictions

    Costs Are Subject to Certain Ceilings

    Pros and Cons of Mutual Funds


    Pros
    Diversification Professional management Liquidity Tax advantages Comprehensive regulation Transparency

    Cons
    Expenses Lack of thrill

    Insurance Products
    Term Assurance Plans
    Traditional Investment- Oriented Plans

    Money Back Plan


    Endowment Plan Whole Life Plan Childrens Plan Unit Linked Insurance Plans

    Riders
    Tax Breaks Considerations in Choosing a Policy

    Retirement Products

    Mandatory Retirement Schemes

    Employees Provident Fund Scheme, 1952


    Employees Pension Scheme, 1995 New Pension Scheme

    Voluntary Retirement Schemes

    Immediate Annuity
    Deferred Annuity

    Real Estate
    For the bulk of the investors, the most important asset in their portfolio is a residential house. In addition to a residential house, the more affluent investors are likely to be interested in the following types of real estate. Semi-urban land A second house Commercial property Agricultural land Time share in a holiday resort

    Historically, real estate in India has been financially the most rewarding asset class. The pros and cons of investing in real estate are as follows:

    Pros and Cons of Real Estate


    Pros
    Rental yield (or saving) Attractive capital appreciation

    Cons
    Large ticket size Legal disputes

    Psychic pleasure
    Low risk Tax benefits

    Illiquid markets
    High spread and commissions Maintenance effort

    Precious Objects
    Gold and Silver
    Precious Stones

    Art Objects

    Financial Derivatives
    A derivative is an instruments whose value depends on the value of some underlying asset.

    Futures A futures contract is an agreement between two parties to exchange an asset for cash at a predetermined future date for a price that is specified today. Options An option gives its owner the right to buy or sell an underlying asset on or before a given date at a predetermined price.

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