FINANCIAL SECTORS

Financial sector is set of institutions,

instruments, markets, as well as the
legal and regulatory framework that
permit transactions to be made by
extending credit.
This sector comprises a broad range of
industries which includes insurance
companies, real estate firms, share
markets etc..
 SHARE MARKET
• Share market is a platform where
buyers and sellers come together
to trade on publicly listed shares.
• Shares are issued or traded
• Types of share markets- primary
share markets and secondary
share markets
• Shares, bonds, mutual funds,
derivatives are traded in share
market.
PROS AND CONS OF SHARE MARKET
PROS
• Very convenient
• Higher liquidity
• Regulatory framework
• Higher returns in shorter
period of time
• Acquire ownership
• Right to vote
• Regulatory environment
CONS
• Overexposed to risk
• Share market might crash
• Returns are never guaranteed
• Market prices are risky and
volatile
• Prices can be erratic, rising and
declining quickly
• Inflation risk
 MUTUAL FUNDS
• Mutual fund is a pool of money
managed by a professional fund
manager.
• It is a trust that collects money from a
number of investors who share
common investment objective.
• Mutual funds Invest in equities,
bonds, money market instruments
and other securities.
• Stock funds, bond funds, money
market fund, target date funds are the
types of mutual funds.
PROS AND CONS OF MUTUAL FUNDS
PROS
• Very easy to buy and sell
• Offers the flexibility to invest
in smaller amounts
• Liquidity- redeem units at
any point of time
• Mutual funds are suitable
for any kind of financial
goals
CONS
• Mutual funds may charge
entry and exit load
• Diversification might cause
lower profits
• Both short-term and long-
term capital gains are
taxable
• Mutual funds returns are
never guaranteed
 GOLD
• A gold fund is a type of Investment
fund that holds assets related to
gold.
• Gold funds are pooled investment
vehicles which often take the form
of mutual funds.
• The two most common types of
gold funds are those holding
physical gold bullion, gold futures
contracts.
• Gold is a very popular investment.
PROS AND CONS OF GOLD
PROS
• Gold in physical form
provides financial security
• No paper work involved
• No Demat account is
required for buying gold
• There will be always profit,
as gold rate is always
increasing
CONS
• High risk regarding theft or
burglary
• No offers will be there like
investing in funds or digital
mode
• Complexity of adding an
asset
• Fear based decision making
 BANKS
• Bank is a financial institution deals
with money related activities.
• Bank is a financial intermediary which
accepts the deposits and makes loans.
• Other roles of banks are transfer of
funds, credit deposits and foreign
exchange services.
• Types of banks- central
bank, cooperative banks, commercial
banks, regional rural banks etc..
PROS AND CONS OF BANKS
PROS
• Banks accounts can help to
access credit
• Banks provide safety to
public wealth
• Banks encourage savings
among general public
• Makes online transfers
easy, use of cheques, ATM's,
bank drafts, etc..
CONS
• There is a risk of bankruptcy
• Risk of online frauds
like hacking passwords , one
time passwords etc..
• Banks charge high rate of
interest for loans and offer
low amount on savings
account
• Some bank accounts always
require minimum balance
PUBLIC PROVIDENT FUND (PPF)
• Public provident fund is introduced in
India in 1968.
• The main objective of PPF is to mobilize
small savings in the form of investment
with a return on it.
• It is also called as savings-cum-tax
savings investment.
• They have guaranteed returns.
• The minimum investment amount
is Rs.500, the maximum is Rs. 1.5 lakh.
PROS AND CONS OF PPF's
PROS
• PPF's offer high-interest
rates
• Creation of wealth
• Offers tax-free interest
income
• Offers tax benefits under
section 80C
• Allows partial withdrawal,
loan facility
CONS
• The lock-in period is long term
which is 15 years
• Joint accounts are not permitted
• NRI's cannot open PPF account
• Interest rate is unstable and
interest rate is low
• PPF lacks in liquidity
• Focuses on small amounts
 REAL ESTATE
• Real estate is real property that
consists of land and improvements
• It includes buildings, fixtures,
roads, structures and utility system
• A company that buys, sells and
rents properties is known as
"real estate company"
• Types of real estate companies are-
residential real estate, commercial
real estate, industrial real estate or
for special purposes like
schools, libraries etc..
PROS AND CONS OF REAL ESTATE
PROS
• Real estate has unique tax
benefits
• Real estate provides a
steady cash flow
• Real estate provides great
returns
• Real estate builds equity
and provides hedge against
inflation
• Protection against inflation
CONS
• Real estate takes lot of time
• Real estate is a long –term
investment
• Real estate benefits don’t
apply always
• Real estate has unique risks
• Maintenance cost
• Professional help required
• Less liquidity
POST OFFICE
• The post office savings bank is the
oldest and the largest banking
system in the country.
• It serves the investment need of
both urban and rural clients.
• These services are offered as
an agency services for the Ministry of
Finance, Government of India.
• It has lower risk with steady income.
• Offers number of savings plans-
NSC,KVP, time deposit accounts, etc..
PROS AND CONS OF POST OFFICE
PROS CONS

• Low minimum amount • Fee is charged for premature

which is Rs.1000 withdrawal
• Post office ensures high • Most services rendered are
interest rates not online
• Allows to withdraw FD • Interest payout is only
before maturity annually
• Tax saving benefits under • Loans tend to have a very
section 80C high default rate
INSURANCE
• Insurance is a way to manage risk.
• It is purchasing protection against
unexpected financial losses.
• Insurance is basically dividend into 2
types - life insurance and
general insurance
• General insurance is furtherly
divided into fire insurance, marine
insurance, travel
insurance, automobile insurance,
etc..
PROS AND CONS OF INSURANCE
PROS
• Insurance acts as a protection
against fire, robbery, etc..
• Insurance replaces income
• Recovers the cost of damages
• Protects against liabilities
• Providing security
• Encourage savings
CONS
• Insurance amount is paid slowly
sometimes
• There are many limitations
• Insurance may be expensive
sometimes
• Insurance does not cover every
type of loss
• Adds some expenses with the
amount