financial baiscs
TRANSCRIPT
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FINANCIAL BASICS
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What is Investment
Investment means putting yourmoney to work to earn more money
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Drivers of Investment
Objective
Risk Appetite
Time Horizon
Taxation
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Why should People Invest ?
Achieve Financial goals in life
Provision for an uncertain future
To meet Inflation
Earn return on idle resource
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Early investing
Why early investing?
Time to Grow
Concept of Compounding
Accumulation of Principal & Dividend
WHEN TO START INVESTING ?
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Invest early
Invest regularly
Invest for long term and not short term
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Investment options available in the Market
o Goldo Real Estateo Shareso Equityo Mutual Fundo Public Provident Fundo Government Bond & Securitieso National Savings Certificateo Post Office Savings Schemeo Insuranceo Banks Savings account & Fixed deposits
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Gold
Commodities like gold are a hedge against inflation.
Gold is a storehouse of value. When uncertaintyafflicts global markets, investors prefer to take refugein gold because in times of inflation (i.e. fall inpurchasing power), gold prevents erosion in thevalue of the purchasing power
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Real Estate
Real estate investment is traditionally consideredto be an effective hedge against inflation
High capital is required , Not for the smallinvestor
Liquidity is an issue
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Equity
Ownership in a companyListed and traded on marketsInvestment return depends on future profitability ofthe companyHigh growth and high liquidityHistorical return and risk are highest amongstinvestment optionsNot for the risk averse investorMore than the money, it involves investing a lot oftime and effort, which is beyond most lay investors
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Bonds
Bonds are long-term debt securities issued byGovernment of India or any of state Governments orundertakings owned by them or by developmentfinancial institutions
The two major categories of Bonds areGovernment BondsCorporate Bonds
They are meant especially for investors withrelatively less appetite for risk.
Bonds are suitable for regular income purposes
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Fixed Deposits
A specific sum of money deposited in a financialinstitution for a fixed term earning a pre-agreed
interest rate.
A Fixed Deposit is like loaning the bank yourmoney. In return, they pay you interest.
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Public Provident FundThis is a 15 year deposit product of government offeredthrough banks. Thereafter this can be extended by aperiod of five-five years
Current interest rate is 8%
Tax benefit under section 80C of income tax 1961 areavailable
Both interest receipts and withdrawal of principalexempt from tax
Limited liquidity is available. Investors can draw up-to50% of their 4 th year balances, from the 7 th yearonwards
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National Savings Certificate (NSC)
o Scheme maintained by the Govt. and sold through Post
Offices
o Denominations of Rs. 100, 500, 1000, 5000 and 10,000o Can be purchased singly or jointly and also for minors
o Lock-in period of 6 years
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Kisan Vikas Patra & Indra Vikas Patra
Instruments with fixed interest issued by centralgovernment.
Sold by post offices
Investor identity is protected
Investment in cash is possible
Interest is taxable
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