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Features of an Investment Programme

1. Safety of Principal: For this the investor should carefully review the

economic and industry trends before choosing the types of investment and also

diversify assets by industry, geographically, by mgt, by financial type and by

maturities.

2. Liquidity:This will be ensured by buying a proportion of readily saleable

securities out of total portfolio eg. cash, FDs, and Units.

3. Income Stability: Regularity of income at a consistent rate is necessary in

any investment pattern. Also the income should be adequate after ta.

. !ppreciation and Purc"asing Po#er Stability: !nvestors should "udge

price level inflation, eplore the possibility of gain and loss in the investments

available to them, limitations of personal and family considerations. They should

also try to forecast which securities will possibly appreciate.

$. Legality and Freedom from %are: All investments should be approved by law.

&. 'angibility: !ntangible securities have many times lost their value due to price

level inflation, confiscatory laws or social collapse. #ome investors prefer to $eep a

part of their wealthy invested in tangible properties li$e building, machinery,

precious metals and land. %owever, tangible property doesn&t yield any income

apart from the direct satisfaction of possession or property.

(. 'a) *enefits

+. %oncealability

'"e Investment process ,Stages in Investment-

I- Investment Policy:

' !t determines and involves personal financial affairs and ob"ective before

ma$ing investments.

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' !nvestor has to see that he should be able to create an emergency fund, an

element of liquidity and quic$ convertibility of securities into cash.

' !dentify investment assets and consider the various features of investment

II. Investment !nalysis(

After arranging a logical order of the types of investments required

in the portfolio the net step is to analy)e the securities available

for investment. !nvestor must ma$e a comparative analysis of the

type of industry, $ind of security and fied v*s variable return

securities.

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+rimary concern is to form beliefs regarding future behaviour of prices andthe epected returns and association ris$.

III. aluation of Securities:

- !nvestment value is the present worth to the owners of future benefits from

investments.

- omparison of value with the current mar$et price of the asset allows a

determination of the relative attractiveness of the as set.

- -ach asset should be valued on its individual merit. Finally the portfolio

should be constructed.

I. Portfolio %onstruction

This require a $nowledge of the different aspects of securities i.e. safety and

growth of principal, liquidity of assets after ta$ing into account the stage

involving investment timing, selection of investment, allocation of savings todifferent investments and feedbac$ of portfolio.