Investment Management

1. Investment
Management
By: Lilian B. Salan

2. Investment management is the
professional management of
various securities (shares, bonds
and other securities)
and assets (e.g., real estate) in
order to meet specified
investment goals for the benefit of
the investors.

3. Investors may be institutions
(insurance companies, pension funds,
corporations, charities, educational
establishments etc.) or private
investors (both directly via
investment contracts and more
commonly via collective investment
schemes e.g. mutual
funds or exchange-traded funds).

4. 'Bank Deposits'
Money placed into a banking
institution for safekeeping. Bank
deposits are made to deposit
accounts at a banking institution,
such as savings accounts, checking
accounts and money market
accounts.

5. Insurance is a form of risk
management primarily used
to hedge against the risk of a
contingent, uncertain loss.
Insurance is defined as the
equitable transfer of the risk of a
loss, from one entity to another, in
exchange for payment.

6. 'Real Estate'
Land plus anything permanently
fixed to it, including buildings,
sheds and other items attached to
the structure.

7. Corporate security
aims at protecting Knowledge
assets, whether in the form of
physical entities or intellectual
(tangible and intangible)
property.

8. Stock market or equity market
is a public entity (a loose network of
economic transactions, not a physical
facility or discrete entity) for the
trading of company stock (shares)
and derivatives at an agreed price;
these are securities listed on a stock
exchange as well as those only traded
privately.

9. Investing in the Stock Market
A share of stock is evidence of a
fractional ownership in a corporation.
Buying a share of common stock is in
fact buying a share of a business. An
individual who owns shares in, say,
Petron or PLDT has an ownership
interest in that company and is called
a stockholder or shareholder.

10. Philippine Government
Securities (locally referred to as "GS")
are theunconditional debt obligations
of the Republic of the Philippines.
These are all denominated in the
local currency, the Philippine peso.
The securities are issued by the
Republic through its fiscal agent, the
Bureau of Treasury.

11. Problem in Investment
Whether you make or lose money in the
stock market depends on how well your
investments perform. All investing
involves risk. Investors who lose money
just because the market “went down”
can’t blame their stockbrokers.
But if you lose money because of fraud or
abuse by an investment professional, you
may be able to recover your related
losses.

12. RISKS IN
INVESTMENT

13. Risk is an inherent part of investing.
Generally, investors must take
greater risks to achieve greater
returns. Those who do not tolerate
risk very well have a relatively smaller
chance of making high earnings than
do those with a higher tolerance for
risk.

14. There are various types of risk
Personal Risks
This category of risk deals with the
personal level of investing. The
investor is likely to have more control
over this type of risk compared to
others.

15. Timing risk is the risk of buying the right
security at the wrong time. It also refers
to selling the right security at the wrong
time. For example, there is the chance
that a few days after you sell a stock it
will go up several dollars in value. There
is no surefire way to time the market.

16. Tenure risk is the risk of losing money
while holding onto a security. During
the period of holding, markets may go
down, inflation may worsen, or a
company may go bankrupt. There is
always the possibility of loss on the
company-wide level, too.

17. Company Risks
There are two common risks on the company-wide
level. The first, financial risk, is the danger that a
corporation will not be able to repay its debts. This
has a great affect on its bonds, which finance the
company's assets. The more assets financed by
debts (i.e., bonds and money market instruments),
the greater the risk. Studying financial risk involves
looking at a company's management, its
leadership style, and its credit history.

18. Management risk is the risk that a
company's management may run the
company so poorly that it is unable to
grow in value or pay dividends to its
shareholders. This greatly affects the
value of its stock and the attractiveness
of all the securities it issues to
investors.

19. Market Risks
Fluctuation in the market as a whole
may be caused by the following risks:
Market risk is the chance that the entire
market will decline, thus affecting the
prices and values of securities. Market
risk, in turn, is influenced by outside
factors such as embargoes and interest
rate changes.

20. Liquidity risk is
the risk that an
investment, when
converted to
cash, will
experience loss in
its value.

21. Interest rate risk is the risk that interest
rates will rise, resulting in a current
investment's loss of value. A
bondholder, for example, may hold a
bond earning 6% interest and then see
rates on that type of bond climb to 7%.

22. Inflation risk is the
danger that the dollars
one invests will buy less
in the future because
prices of consumer
goods rise. When the
rate of inflation rises,
investments have less
purchasing power.

23. Exchange rate
risk is the chance
that a nation's
currency will lose
value when
exchanged for
foreign currencies.

24. Reinvestment risk is the danger
that reinvested money will fetch
returns lower than those earned
before reinvestment. Individuals
with dividend-reinvestment plans
are a group subject to this risk.
Bondholders are another.

25. National and International
Risks
National and world events can
profoundly affect investment
markets.

26. Economic risk is the danger that
the economy as a whole will
perform poorly. When the whole
economy experiences a
downturn, it affects stock prices,
the job market, and the prices of
consumer products.

27. Industry risk is the chance that a
specific industry will perform poorly.
When problems plague one industry,
they affect the individual businesses
involved as well as the securities issued
by those businesses. They may also
cross over into other industries. For
example, after a national downturn in
auto sales, the steel industry may
suffer financially.

28. Tax risk is the danger that rising
taxes will make investing less
attractive. In general, nations with
relatively low tax rates, such as the
United States, are popular places
for entrepreneurial activities.

29. Businesses that are taxed heavily
have less money available for
research, expansion, and even
dividend payments. Taxes are also
levied on capital gains, dividends and
interest. Investors continually seek
investments that provide the greatest
net after-tax returns.

30. Political risk is the danger that
government legislation will have an
adverse affect on investment. This can
be in the form of high taxes,
prohibitive licensing, or the
appointment of individuals whose
policies interfere with investment
growth.

31. Political risks include wars,
changes in government
leadership, and politically
motivated embargoes.

32. References:
http://en.wikipedia.org/wiki/Investment_management
http://www.investopedia.com/terms/b/bank-deposits.asp
http://en.wikipedia.org/wiki/Insurance
http://www.prestigeadvisors.com/Investment_Risk.htm
http://www.investorwords.com/4057/real_estate.html