2. Commitment of money that is expected to
generate additional money
Investment is commitment of fund to one or
more assets that is held over some future time
period. Whatever be the perspective, investment
is important to improve the future welfare.
Investment can be made to intangible assets
like marketable securities or to real assets like
gold, real estate etc. More securities or to real
assets like gold, real estate etc.
3. The professional management of assets, such as
real estate, and securities, such as equities, bond
and other debt instruments, is called investment
management.
Investment management services are sought by
investors, which could be companies, banks,
insurance firms or individuals, with the purpose of
meeting stated financial goals.
4. It can be grouped into four major categories:
Money market securities: Short term with
maturities of one year or less.
Debt securities: Fixed income with maturities
greater than one year.
Equity securities: Long term securities that do
not mature.
Derivative securities: Securities deriving value
from other securities involving transactions
completed at a future date.
5. 5
Investments in capital markets are in
various financial instruments.
These instruments may be of various
category with different characteristics.
It includes shares, bonds, debentures or
any marketable securities of a like nature
of any company, Govt.securities or semi-
Government bodies.
6. 6
Security analysis in both traditional sense
and modern sense involves the projection of
future dividend, or earnings flows, forecast of
the share price in the future and estimating
the intrinsic value of a security based on the
forecast of earnings or dividends.
In addition to above, the modern approach
includes risk and return analysis for the
securities.
7. 7
A combination of such securities with different
risk-return characteristics will constitute the
portfolio of the investors.
A portfolio is a combination of various assets
and/or instruments of investments.
8. 8
Portfolio analysis includes portfolio construction,
selection of securities, revision of portfolio,
evaluation and monitoring of the performance of
the portfolio.
All these are part of the subject of portfolio
management which is a dynamic concept ,subject
to daily and hourly changes based on the
information flows and a host of economic and
non-economic forces operating in the country on
the markets and securities.
9. 9
It is for a longer time horizon.
It requires moderate risk.
It’s objective is to get a
moderate return with a limited
risk.
It considers fundamental
factors and evaluate the
performance of the company
regularly.
Investor uses his own funds
and avoid borrowed funds.
It is for a short period of time.
It requires higher risk.
It’s objective is to get high
returns along with higher risk.
It considers inside information,
hearsays and market behavior.
Speculator uses borrowed
funds to supplement his
personal resources.
10. An investor is a person or entity
who invests money in various asset
classes for financial gain. Investors
can be individuals or companies that
purchase equity, debt securities,
currency, real estate and commodity
derivatives to generate income
streams, capital appreciation or both.
12. 12
Asset allocation refers to the strategy of
dividing your total investment portfolio among
various asset classes, such as stocks, bonds
and money market securities. Essentially,
asset allocation is an organized and effective
method of diversification
13. 13
INVESTMENT ACTIVITY
(ACQUISITION OF ASSETS)
CASH
BANK DEPOSITS
P.F./LIC
PENSION
POST OFFICE
CERTIFICATES
&
DEPOSITS
INVESTOR
SAVER
SHARES, BONDS,
GOVT. SECURITIES,
MUTUAL FUNDS,
CURRENCIES
1. FINANCIAL ASSETS 2. PHYSICAL ASSETS
NEW
ISSUE
MARKET
3. MARKETABLE
ASSETS
SECONDARY
MARKET
HOUSE
LAND
BUILDINGS
FLATS
GOLD
SILVER
OTHER METALS
CONSUMER
DURABLES
14. 14
Income
AgeBirth & Education Earning Years Retirement
Phase I Phase II Phase III
22 yrs 60 yrs
Marriage
Child birth
Child’s Education
Child’s Marriage
Housing
22 yrs 38 yrs Over 25 - 30 yrs
Having a Financial
Goal is primary to
starting a
Investment Plan.
16. 16
Mid Twenties
10%
5%
20%
65%
REAL ESTATE
CASH
BONDS
STOCKS
Late Thirties to Early Forties
10%
5%
30%
55%
REA L ESTA TE
CA SH
B ONDS
STOCKS
Mid Fifties
13%
5%
38%
44%
REAL ESTATE
CASH
BONDS
STOCKS
Late Sixties and beyond
15%
10%
50%
25%
REAL ESTATE
CASH
BONDS
STOCKS
17. Equity& Preference shares
Bonds & Debentures
Bank Deposits
Post office Deposits
Employees Provident fund
Public Provident fund
Company Deposits
Currencies (FOREX)
Money Market Securities
Mutual funds
Real Estate
Gold
Insurance
18. Total equity capital of a company is
divided into equal units of small
denominations, each called a share. For
example, in a company the total equity
capital of Rs 2,00,00,000 is divided into
20,00,000 units of Rs 10 each. Each
such unit of Rs 10 is called a Share.
19. Primary Market is a place where new
offerings by Companies are made either
as an Initial Public Offering (IPO)
&Following Public Offering(FPO).
Secondary Market is a market where
securities are traded after being initially
offered to the public in the Primary
Market and/or listed on the Stock
Exchange.
20. Stock exchange is that place where trading of
shares is done in terms of sale and purchase.
There are 25 stock exchanges in the India .
BSE is oldest stock Exchange in Asia. It was
started at 1875.Parameter is SENSEX.
NSE is the first online stock exchange in India.
It was started at 1992.Parameter is NIFTY.
MCX-SX is New stock Exchange in India. It was
started at Feb 2013.Parameter is SX-40.
21.
22. An investment company that pools money
from its unit holders and invests that money
into a variety of securities, including stocks,
bonds, and money-market instruments.
This represents a way of investing money
into a professionally managed and diversified
pool of securities that hopefully will provide
a good return on unit holders' money.
More than 25 Mutual funds Companies(AMC) in India
Best Schemes(Equity, ElSS, Growth,Liquidity,Gold ETF)
Best Plan (SIP,STP)
24. Formula
= Net Value of Assets / Number of
Units Outstanding.
25. A derivative is a financial instrument whose
return is derived from the return on another
instrument.
Derivative is a product whose value is derived
from the value of one or more basic variables,
called bases (underlying asset, index, or
reference rate), in a contractual manner.
Derivatives can be in the form of futures,
options Froward and swaps.
Derivatives are used to minimize the risk of
loss resulting from fluctuations in the value of
the underlying assets (hedging).
28. Index name Composition Index futures
available
CNX Nifty 50 stocks Yes
CNX IT 20 stocks Yes
BANK Nifty 12 stocks Yes
Nifty Midcap 50 50 stocks Yes
CNX Nifty Junior 50 stocks No
CNX Defty 50 stocks No
CNX 100 100 stocks No
CNX Midcap 100 stocks No
CNX 500 500 stocks No
29. Commodity markets are markets where the
raw or primary products are exchanged.
Commodities are traded on regulated
commodity exchanges
They are bought and sold in standardized
contracts
30. Forward Market Commission(FMC) is the chief
regulator of forwards and futures markets in India
Headquartered at Mumbai
Monitored under The Ministry of Consumer Affairs,
Food and Public Distribution (India)
Forward Contract Regulation Act 1952
31. Multi commodity Exchange, Mumbai
National commodities and derivatives
exchange, Mumbai
National Spot Exchange, Mumbai
National Multi commodity Exchange of India,
Ahmedabad
32. NSE was the first exchange to have received
an in-principle approval from SEBI for setting
up currency derivative segment.
The exchange launched its currency futures
trading platform on 29th August, 2008.
Currency Options was introduced on October
29, 2010.
35. 1.Financial securities:
These investment instruments are freely
tradable and negotiable. These would include
equity shares, preference shares, convertible
debentures, non-convertible debentures, public
sector bonds, savings certificates, gilt-edged
securities and money market securities.
2.Non-securitized financial securities:
These investment instruments are not
tradable, transferable nor negotiable. And would
include bank deposits, post office deposits,
company fixed deposits, provident fund
schemes, national savings schemes and life
insurance.
36. 3. Real assets:
Real assets are physical investments,
which would include real estate, gold & silver,
precious stones, rare coins & stamps and art
objects.
4.Mutual fund schemes:
These schemes are mainly growth (or
equity) oriented, income (or debt) oriented or
balanced (i.e. both growth and debt)
schemes.
37. The most common instruments in
which people invest are stocks, bonds and
forex. Portfolio diversification can be
achieved through alternative
investments. Investments made into
assets that do not fall under one of the
three traditional asset types (cash, stocks
and bonds) are called alternative
investments.
38. Futures: Futures are standardized contracts for
the sale and purchase of a commodity on a
specified date and at a predetermined price.
Futures can be used to trade currencies and
commodities (such as oil and agro products).
Options: Options are similar to futures. The only
difference is that the holder of an options
contract is under no obligation to buy or sell the
underlying asset.
ETFs: Exchange traded funds (ETFs) hold assets
such as stocks, bonds, commodities and precious
metals. These ETFs are traded on the stock
exchange. The most common ETFs used as
alternative investments are gold and oil.
39. Hedged funds: Hedge funds invest in a broad
range of investment options, including stocks,
debt and commodities. They often aim at
offsetting potential losses in the markets they
invest in. They use methods, such as short
selling, to hedge their investments.
Real Estate: This investment option involves
buying and selling immovable property, such as
land and buildings. This investment yields rental
income as well as capital appreciation.
Gold: Gold is a defensive investment and
becomes more popular during periods of
prolonged economic and political upheavals.
40. Diversify an investor’s portfolio.
Reduce risks.
Offer good profit generating opportunities.
41. 41
RISK : Risk is inherent in any investment. This risk may relate to
loss or delay in repayment of the principal capital or loss or non-
payment of interest or variability of returns. While some
investments are almost risk less like Govt.securities or bank
deposits, others are more risky.
RETURN: Return differs amongst different instruments. The most
important factor influencing return is risk. Normally, the higher the
risk ,the higher is the return.
42. ASSET RISK RETURN
Cash Investments
( Bank accounts)
Low Low
Debt Investments
(Bonds, Debenture)
Moderate Moderate
Equities (stocks) High High
Mutual Funds Low to High Low to High
Real Estate High High
Derivatives Very High Very High
45. Example 1
◦ An initial investment of Rs10,000 is made.
One year later, the value of the investment
has risen to Rs12,500. The return on the
investment is
Example 2
◦ An investment initially costs RS 5,000. Three
months later, the investment is sold for Rs
6,000. The return on the investment per
three months is
%25100
10000
1000012500
r
%20100
5000
50006000
r
46. Systematic Risk
Market Risk
Interest rate Risk
Inflation or Purchasing power risk
Unsystematic Risk
Business Risk
Credit Risk
Political Risk
Exchange Rate Risk