TRIO-FEST ‘2009

INVESTMENT
AVENUES-I

I.BBA ( 2009-2012 BATCH)

M.M.E.S WOMEN’S COLLEGE OF ARTS &
SCIENCE
MELVISHARAM- 632509
 I.BBA ( 2009-2012 BATCH)
# AAMINA SHARIFA # A. ANITHA
# SAIDA FATHIMA # B. CHITRA
# SULTHANA # K.BHUVANESHWARI
# RABIYA ANJUM # SHAJITHA
# K. ELAKKIYA # NAZIYA SAMREEN
# ALMAS BANU # J. SHARMILA DEVI
# FOUZIYA ANJUM # NADIYA
# LOGANAYAGI # C.SARANYA
# D. BHUVANESHWARI # M.INDHUMATHY
# R.POORANI # B.SINDHUPRIYA
# S.GAYATHRI # M.GEETHA
# S.ISHWARYA # S.DIVYA
# R.NITHYA # R.AISHWARYA
# P.LAVANYA # E. MALA
# R. NITHYA # THASMIYA FIRTOUSE
Introduction
Investment –What does it mean?

In finance, investment means the use money in

the hope of making more money by purchasing
a financial product.

In business, Investment refers to purchase by a 

producer of a physical good such as durable
equipment  or inventory, in the hope of
improving future business.
 Saving Vs Investment

Savings is accumulating your money;

Investing is making that money work
to earn more money.

The rate of returns and risk for

savings are often lower when
compared to investment. .
 Why to invest
 Beat Inflation
 Improve standard of living
 Create wealth for the future.
 Buy a car/ Purchase a house
 Send your children for higher education
 Go for a holiday
 Plan for a comfortable retirement in the
future.
 Avail Tax benefits
 When to invest
 Start early and retire rich
 Invest regularly

 Invest in time but never try to time

the market.
 Be patient -the longer the investment

horizon, the lesser is the risk and

greater are the returns.
Factors influencing Investments
 Your goals and needs
 Your age at the time of investment

 Your income at the time of investment

 Your Time horizon

 Liquidity – how fast can you convert your

assets into cash?

 Tolerance for risk – how much risk are

you willing to take?

 Investment Avenues
 Real Estate
 Gold
 Fixed Deposits
 Shares
 Mutual Funds
 Insurance
 Bonds
REAL ESTATE- LOCATION IS THE
KEY
Investment in Real Estate Includes

 Investment on Prime Property

( Commercial Area)
 Investment in Non-Prime Property

( Residential Area)
 ADVANTAGES IN
REAL ESTATE INVESTMENT
 The cost of paying a mortgage is usually lower than rental
payments, and you can choose the amount of payments.
 Real estate investment is one business that tends to gain value
over time
 A house itself is a heritage to your children who will inherit it and
with the help of the house in order to make other investments or
have money in troubled times.
 Feeling of safety, personal development and confidence in the
future.
 It creates a greater sense of belonging to where you live.
 Continuous Cash Flow from Rental Income
 During inflation rental value of the area will increase.
 In addition, you can do things like grow your own garden and
decorate the space as you like.
 DISADVANTAGES IN
REAL ESTATE INVESTMENT
 Payment of a mortgage over a long
period of time, is not the same as
buying on spot.
 Payment of property taxes and other
taxes.
 We incurred other expenses such as
insurance and maintenance of the
property.
 Points considered before you
before you seal the deal
 Before entering into any sort of
contractual agreement, make sure
the seller has legal and clear title.
 Do not pay the seller more than the
appraisal.
 Ensure that the land is out of any
flood zone.
 Survey the land properly.
GOLD AS AN INVESTMENT OPTION
GOLD INVESTMENT OPTIONS
 Physical Gold – Bars
 Physical Gold – Coins
 Gold savings accounts
 Gold chits
 Gold Fixed deposit schemes
 I-gold
 Jewels
 Gold Mining shares
 REASONS FOR INVESTMENT IN GOLD
 Gold is an integral part of social and religious customs
 Gold has aesthetic appeal
 Gold is a Global currency
 Gold has long proven ability to retain value and appreciate
in value.
 Gold is readily available in a standardized form
 Gold Investments Are Very Liquid And Marketable
 Gold Metal Investments Can diversify your portfolio to
minimize risks and maximize returns
 Gold is secure and safe investment option , and will be in
your possession
 Gold Investment Options are several. The individual can pick
the option which suits his risk levels, trading strategies, and
precious metal preferences
 Last but not the least, Investments in Gold not just an
investment, it’s a form of insurance too.
WHY FIXED DEPOSITS ?
 Fixed deposits

 Fixed deposits in banks

 Company Fixed deposits
 ADVANTAGES OF FIXED
DEPOSITS IN BANKS
 Very secure and safest investment method

 Earn fixed interest rates for their entire tenure, which is usually
compounded quarterly.

 Popular way of investing money for retirees. FD gives senior

citizens the highest rate of interest. It depends upon the banks.

 Maximum of Rs.100,000 for 5 years are eligible for tax deductions

under section 80 C of income tax act,

 The interest % is high when compare with other deposits like SB

(Saving Bank A/C) & Current A/C.

 You can keep FD with "Time base and Money base" schemes, for
example 2 years deposits or 5 years deposits / up to
Rs.50,00,000/- or Rs.10,00,00,000/-
Disadvantages of Fixed deposit
Investment

 The interest earned on fixed

deposits is fully taxable and is added
to the annual income of the
individual
 Rising inflation can wipe out the
interest benefits of FDs
Precautions to be taken in Fixed
Deposit Investment
 Company fixed deposits are not considered as
safe as fixed deposits from leading banks and
financial institutions regulated by the RBI. So, if a
company runs into losses or goes bankrupt the
money invested into its fixed deposit can be lost.
 The interest rates offered on fixed deposit vary
greatly with banks and tenures. Whether the
interest rate is compounded quarterly or monthly
will determine how much a person earns from his
fixed deposit.
 Banks will impose a penalty if you break your
fixed deposit before the maturity period. Make
sure you get the facts right about this thing.
Fixed Deposit Interest Rates in
Banks - Below ONE Year as on
16/3/2009
Indian Banks - Public
Sector
Fixed Deposit Interest Rates in
Banks - ONE year - FIVE years
 Company Fixed Deposits
Fixed deposits in companies that earn a fixed rate of return over a
period of time are called Company Fixed Deposits. Financial
institutions and Non Banking Finance Companies (NBFCs ) also
accept such deposits. Deposits thus mobilised are governed by
the Companies Act under Section 58A.

These deposits are unsecured, i.e., if the company defaults, the

investor cannot sell the company to recover his capital, thus
making them a risky investment option. Some of the options
available are: 

 Monthly income deposits, where interest is paid every month. 

 Quarterly income deposits, where interest is paid once every
quarter. 
 Cumulative deposits, where interest is accumulated and paid along
with the principal at the time of maturity. 
 Recurring deposits, similar to the recurring deposits of banks.

NBFCs suffer from a credibility crisis. So be absolutely sure to

check the credit rating. AAA rating is the safest. According to latest
RBI guidelines, NBFCs and companies cannot offer more than 14
per cent interest on public deposits.
Why Mutual Funds make
sense?
 WHAT IS MUTUAL FUND?
A Mutual Fund is a body corporate registered with the
Securities and Exchange Board of India (SEBI) that pools up the
money from individual / corporate investors and invests the
same on behalf of the investors /unit holders, in equity shares,
Government securities, Bonds, Call money markets etc., and
distributes the profits. In other words, a mutual fund allows an
investor to indirectly take a position in a basket of assets.

Unit Trust of India is the first Mutual Fund set up under a

separate act, UTI Act in 1963, and started its operations in
1964 with the issue of units under the scheme US-64.

Securities Exchange Board of India (SEBI) is the regulatory

body for all the mutual funds mentioned above. All the mutual
funds must get registered with SEBI. The only exception is the
UTI, since it is a corporation formed under a separate Act of
Parliament.
 Brief History
 1964-UTI
 1987- Public Sector banks, Insurance
Companies
-SBI, Canbank, PNB LIC, GIC
 1993- Private Sector
 Kothari Pioneer ( later merged with
Franklin Templeton), J P Morgan, Morgan
Stanley, George Soros and Capital
International
MUTUAL FUND CYCLE
Advantages of Mutual Fund
 Professional Management
 Diversification of portfolio
 Flexibility in selection and redemption
 Low costs
 Transparency
 Tax benefits
 Liquidity
 Well regulated
 Choice of schemes
 Convenient to buy through mail, phone or internet
 Types of Mutual Fund Schemes
 By Structure
 Open-Ended – anytime enter/exit
 Close-Ended Schemes – listed on exchange, redemption after
period of scheme is over.
 By Investment Objective
 Equity (Growth) – only in Stocks – Long Term (3 years or more)
 Debt (Income) – only in Fixed Income Securities (3-10 months)
 Liquid/Money Market (including gilt) – Short-term Money Market
(Govt.)
 Balanced/Hybrid – Stocks + Fixed Income Securities (1-3 years)
 Other Schemes
 Tax Saving Schemes
 Special Schemes
 ULIP
How to select a Fund?
 Investing Checklist :

 Draw up your asset allocation

 Financial goals & Time frame (Are you investing for
retirement? A child’s education? Or for current income? )
 Risk Taking Capacity
 Identify funds that fall into your Buy List
 Obtain and read the offer documents
 Match your objectives
 In terms of equity share and bond weightings, downside
risk protection, tax benefits offered, dividend payout
policy, sector focus
 Investing Checklist-contd.
 Check out past performance
 Performance of various funds with similar objectives for at
least 3-5 years (managed well and provides consistent
returns)
 Think hard about investing in sector funds
 For relatively aggressive investors
 Close touch with developments in sector, review portfolio
regularly
 Look for `load' costs
 Management fees, annual expenses of the fund and sales
loads
 Does the fund change fund managers often?
 Look for size and credentials
 Asset size less than Rs. 25 Crores
 Investing Checklist -Contd.
 Diversify, but not too much
 Invest regularly, choose the S-I-P
 MF- an integral part of your savings and
wealth-building plan.
 Portfolio Decision
 The right asset allocation
 Age = % in debt instruments
 Reality= different financial position, different
allocation
 Younger= Riskier
 Investing Checklist –Contd.
 Selecting the right fund/s
 Based on scheme’s investment
philosophy
 Long-term, appetite for risk, beat
inflation– equity funds best

 TRAPS TO AVOID
 IPO Blur
 Begin with existing schemes (proven
track record) and then new schemes
 Avoid Market Timing
 MF Comparison
 Absolute returns
 % difference of NAV
 Diversified Equity with Sector Funds– NO
 Benchmark returns
 SEBI directs
 Fund's returns compared to its benchmark
 Time period
 Equal to time for which you plan to invest
 Equity- compare for 5 years, Debt- for 6 months
 Market conditions
 Proved its mettle in bear market
 Buying Mutual Funds
 Contacting the Asset Management Company directly
 Web Site
 Request for agent
 Agents/Brokers
 Locate one on AMFI site
 Financial planners
 Bajaj Capital etc.
 Insurance agents
 Banks
 Net-Banking
 Phone-Banking
 ATMs
 Online Trading Account
 ICICI Direct
 Motilal Oswal, Indiabulls- Send agents
 Keeping Track…
 Filling up an application form and
writing out a cheque= end of the
story… NO!
 Periodically evaluate performance of
your funds
 Fact sheets and Newsletters
 Websites
 Newspapers
 Professional advisor
 Warning Signals
 Fund's management changes
 Performance slips compared to similar funds.
 Fund's expense ratios climb
 Beta, a technical measure of risk, also climbs.
 Independent rating services reduce their ratings of
the fund.
 It merges into another fund.
 Change in management style or a change in the
objective of the fund.
 SEBI GUIDELINES
- Very detailed guidelines for
disclosures in offer document, offer
period, investment guidelines etc.
 NAV to be declared everyday for open-
ended, every week for closed ended
 Disclose on website, AMFI, newspapers
 Half-yearly results, annual reports
 Select Benchmark depending on scheme
and compare
 Net Asset Value
Net Asset Value is the asset less liabilities. In case of
calculation of Mutual Fund scheme, Net asset value per unit
is calculated.Net Asset Value per unit in Mutual Fund
Scheme is per share market value of Mutual fund scheme.
Net Asset Value = Total Fund Value / Number of units
outstanding
Total Fund Value = Market value of fund investment+ other
current assets+ Deposits - Current liabilities except
capital,Reserves and P& L account.
This Net Asset Value (NAV) helps to know the performance
of Mutual Fund.The value of NAV changes on daily basis
and are updated daily. The updated value can be seen from
Company website, AMFI website, Investor service centers
and daily business news papers. The NAV can also be
subscribed and obtained through e-mail and SMS.
 List of Mutual fund companies in
India as on 2008.
Sl.No Company URL
1. AIG Investments http://www.aiggig.co.in
2 Association of MF in India http://www.amfiindia.com
3 ABN Amro http://www.abnamro.co.in/investmentser
vices/investment_products/mutual_funds.
html
4 Benchmark Funds http://www.benchmarkfunds.com
5 Birla Sunlife http://www.birlasunlife.com
6 Bank of Baroda
http://www.bobmf.com
7 Computer Age Mgmt Services http://www.camsonline.com

8 Canara Robeco http://www.canbankmutual.com

9 DBS Cholamandalam http://www.dbscholamutual.com
 List of Mutual fund companies-
contd.
Sl.No. Company URL

10 Deutsche Bank http://www.deutschemutual.com

11 DSP Merrill Lynch http://www.dspmlmutualfund.com
12 Escorts http://www.escotsmutual.com
13 Fidelity http://www.fidelity.co.in
14 Franklin Templeton http://www.franktempletonindia.com
15 HDFC http://www.hdfcfund.com
16 HSBC http://www.hsbcinvestments.co.in
17 ING Vysa http://www.ingvysamf.com
18 J M Mutual http://www.jmmutual.com
19 JPMorgan http://www.jpmorganmf.com
 List of Mutual fund companies- contd.

Sl.No. Company URL

20 Kotak http://www.kotakmutual.com
21 LIC Mutual Funds
http://www.licmutual.com
22 Religare Mutual Funds http://www.religaremf.com
23 Morgan Stanley http://indiamf.morganstanley.com/
24 Principal http://www.principalindia.com
25 Prudential ICICI http://www.icicipruamc.com/
26 Quantum http://www.quantumc.com
27 Reliance http://www.reliancemutual.com
28 Sahara http://www.saharamutual.com
29 State Bank of India http://www.sebi.gov.in
30 Standard Chartered http://www.standardcharterdmf.com
 List of Mutual fund companies- contd
Sl.No. Company URL

31 Sundaram BNP Paribas http://www.sundarambnpparibas.in

32 TATA http://www.tatamutualfund.com
33 Taurus http://www.taurusmutualfund.com
34 UTI
http://www.utimf.com
35 ICI http://www.ici.org
36 PIMCO http://www.pimco.com

37 Vanguard http://www.vanguard.com
THANK YOU