investment

When we use savings in order to get return on it in future. This is called

investment.

Why should one invest?

To earn return on resources
To generate specified sum of money for future
For uncertain future
[19:16, 28/11/2023] Sasi: When to start investing?
Invest early , regularly and for long term

What care should one take while investing?

Obtain written document.

Read and understand them.

Verify the legality of the investment.

Find out costs and benefit.

Assess risk-return profile.

Know the liquidity.

Compare the details with earlier investment.

Deal only through an authorised intermediary.

What are the various options available for investment?
Physical assets - real estate, gold , commodities etc.
Financial assets - FD, post offices, insurance, provident, pension fund
What are various short-term financial options available for investment?
Saving bank account
First banking product people use

Offers low interest (4-5%)

Money market or liquid funds

Specialised form of mutual funds.

Invest in short term fixed income instrument.

Provide easy liquidity.

Give better returns than saving accounts

Fixed deposit with banks

Also referred - Term deposit

Minimum investment period - 30 days

For Low risk appetite investor

What are various long-term financial options available for investment?

Post office savings
Low risk saving instrument

Can be availed through any post office.

Interest rate -8% per annum paid monthly

Minimum amount - ₹1000

Maximum amount -₹3,00,000

Maturity period - 6 years

10% bonus on completion

But 5% deduction if withdrawn prematurely

Public provident fund

Long term saving instrument

Maturity - 15 years

Interest - 8% per annum compounded annually

can be opened through a nationalized bank.

Tax benefits can be availed.

Company fixed deposit

Borrowing by company for short term to medium term at a fixed rate of interest.

Interest varies between 6 -9%

Interest received after deduction of tax

Bonds
Debt instrument

A promise to repay the principal along with fixed rate of interest on a specified
date (maturity date).

Purpose - raising capital

Issued by central or state government

Mutual funds
Operated by an investment company.

Raise money from public and invest in group of assets.

Substitute for doors who lack resources, time and knowledge about investing .
 Types of Investments
Today, investment is mostly associated with financial instruments that allow
individuals or businesses to raise and deploy capital to firms. These firms then
rake that capital and use it for growth or profit-generating activities.

While the universe of investments is a vast one, here are the most common types of
investments:

Stocks
A buyer of a company's stock becomes a fractional owner of that company. Owners of
a company's stock are known as its shareholders and can participate in its growth
and success through appreciation in the stock price and regular dividends paid out
of the company's profits.
Bonds
Bonds are debt obligations of entities, such as governments, municipalities, and
corporations. Buying a bond implies that you hold a share of an entity's debt and
are entitled to receive periodic interest payments and the return of the bond's
face value when it matures.

Funds
Funds are pooled instruments managed by investment managers that enable investors
to invest in stocks, bonds, preferred shares, commodities, etc.
Investment Trusts
Trusts are another type of pooled investment. Real Estate Investment Trusts (REITs)
are one of the most popular in this category. REITs invest in commercial or
residential properties and pay regular distributions to their investors from the
rental income received from these properties.
Options and Other Derivatives
Derivatives are financial instruments that derive their value from another
instrument, such as a stock or index.
Commodities
Commodities include metals, oil, grain, and animal products, as well as financial
instruments and currencies
The Bottom Line
Investing is the act of distributing resources into something to generate income or
gain profits. The type of investment you choose might likely depend on you what you
seek to gain and how sensitive you are to risk. Assuming little risk generally
yields lower returns and vice versa for assuming high risk. Investments can be made
in stocks, bonds, real estate, precious metals, and more. Investing can be made
with money, assets, cryptocurrency, or other mediums of exchange.

There are different types of investment vehicles, such as stocks, bonds, mutual
funds, and real estate, each carrying different levels of risks and rewards.
What Is a Long-Term Investment?
A long-term investment, on the other hand, is any asset you hold for more than one
year. Most investors hold long-term investments for several years as part of a
longer-term strategy for their portfolio.
What Is a Short-Term Investment?
A short-term investment is any asset you hold for one year or less. Most investors
hold short-term investments for no more than a few months at a time, sometimes even
buying and reselling within weeks or days