FINANCIAL

SECTORS
 CONTENTS

 Introduction to financial sector

 Types of financial sector
1. Share market
2. Mutual funds
3. Gold
4. Bank/FD
5. PPF
6. Real estate
7. Post office
8. insurance
 INTRODUCTION TO FINANCIAL
SECTORS
 The financial sector is a section of the economy made up of firms and institutions that
provide financial services to commercial and retail customers. This sector comprises a broad
range of industries including banks, investment companies, insurance companies, and real estate
firms.
 Types of financial sector:-
1. Share market
2. Mutual funds
3. Gold
4. Bank/FD
5. PPF
6. Real estate
7. Post office
8. insurance
 SHARE MARKET
 The share market is a platform where buyers and sellers come together to trade on
publicly listed shares during specific hours of the day.
 People often use the terms ‘share market’ and ‘stock market’ interchangeably.
 However, the key difference between the two lies in the fact that while the former
is used to trade only shares, the latter allows you to trade various financial
securities such as bonds, derivatives, forex etc.
 The principal stock exchanges in India are the National Stock Exchange (NSE)
and the Bombay Stock Exchange (BSE).
 PROS & CONS OF SHARE MARKET
PROS • CONS

• Grow with economy • Risk

• Stay ahead of inflation • Stockholders of broke companies get paid

last
• Easy to buy
• Takes time to research
• Don't need a lot of money to start investing
• Taxes on profitable stock sales
• Income from price appreciation and
dividends • Emotional ups and downs

• Liquidity
 MUTUAL FUNDS
 A 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 a
common investment objective and invests the same in equities, bonds,
money market instruments and/or other securities. And the income / gains
generated from this collective investment is distributed proportionately
amongst the investors after deducting applicable expenses and levies, by
calculating a scheme’s “Net Asset Value” or NAV.
 Simply put, the money pooled in by a large number of investors is what
makes up a Mutual Fund.
PROS & CONS OF MUTUAL FUNDS
PROS • CONS

• Liquidity • High Costs Associated

• Portfolio Diversification • Diversification of Funds

• Professional Management • Fluctuating Returns

• Cost Benefits from Scale

• Low-Cost Investment Scheme

• Cost-Efficiency

• Tax-Savings

• Transparency
 GOLD
 A gold fund is a type of investment fund that holds assets related to
gold. The two most common types of gold funds are those holding
physical gold bullion, gold futures contracts, or gold mining companies.
Gold funds are popular investment vehicles among investors who wish to
hedge against perceived inflation risks.
 PROS & CONS OF INVESTING IN
GOLD
PROS CONS

• Inflation Hedge • Storage of the Physical Gold

• Security of Value • Not A Passive Income Asset

• Portfolio Diversification • Premium and taxes

• Simplicity • Gold Has A Terrible Historical Return

• Hedge Against a Disaster

 BANK/FD
 Banks offer a number of investment options, including insured products
like certificates of deposit, money market accounts and savings bonds, as
well as more volatile choices like stock and bond mutual funds. Choosing
the right options for your needs can allow your money to grow without
undue risk.
  In a Fixed Deposit, you put a lump sum in your bank for a fixed tenure
at an agreed rate of interest. At the end of the tenure, you receive the
amount you have invested plus compound interest. FDs are also called
term deposits. Interest rates.
PROS & CONS OF BANK/FD
PROS CONS

• Low risk • Low rate of return

• Fixed tenure • Penalty on pre-mature withdrawal

• Loan against an FD • No complete tax exemption

• Flexible interest rate payout options

 PUBLIC PROVIDENT

FUND
Public Provident Fund (PPF) was introduced in India in 1968 with the objective to
mobilise small savings in the form of investment, coupled with a return on it. It
can also be called a savings-cum-tax savings investment vehicle that enables one
to build a retirement corpus while saving on annual taxes. Anyone looking for a
safe investment option to save taxes and earn guaranteed returns should 
open a PPF account.
 PROS AND CONS OF PPF
• PROS CONS

• The Safest Plan • Interest Rate is Unstable

• Great Returns • Lengthy Tenure

• Compound Returns • Interest on the Lowest Amount Only

• No Tax on Interest Earned • Lacks in Liquidity

• Flexible Investment

• No tax on Maturity Amount

• Online Maintenance

• Free of Stock Market Influence

 REAL ESTATE
 Real estate investing refers to the purchase of property as an
investment to generate income rather than using it as a primary
residence. In simple terms, it can be understood as any land, building,
infrastructure and other tangible property which is usually immovable but
transferable.
PROS AND CONS OF REAL ESTATE

PROS CONS

• Sense of Security • Professional help required

• Generates Cash Flow • Time Commitment

• Home Loan Tax Benefit • Maintenance Cost

• Simple and Controlled • Less liquidity

• Property Appreciation • Property Tax

 POST OFFICE
 The post-office term deposit (POTD) is similar to a bank fixed deposit,
where you save money for a definite time period, earning a
guaranteed return through the tenure of the deposit. At the end of the
deposit's tenure, the maturity amount comprises the capital deposited and
the interest it earns.
PROS AND CONS OF POST OFFICE
PROS CONS

• Low Minimum Amount • The maximum tenure of a post office FD is

five years, and you cannot opt for a longer
• High Interest Rates  tenure.
• If you opt for a premature withdrawal, you
• Premature Withdrawal may be charged a fee.
• Most services rendered are not online, and
this may be a disadvantage to many.
• Banks offer more flexible tenures of FDs
than post office FDs, offering only tenures
of 1, 2, 3 and 5 years.
• Interest payout is only annually, whichever
tenure you choose.
 INSURANCE
 Insurance coverage can be defined as a contract in the form of a financial
protection policy. This policy covers the monetary risks of an individual due to
unpredictable contingencies. The insured is the policyholder whereas the insurer
is the insurance-providing company/the insurance carrier/the underwriter. The
insurers provide financial coverage or reimbursement in many cases to the
policyholder.
 The policyholder pays a certain amount called ‘premium’ to the insurance
company against which the latter provides insurance cover. The insurer assures
that it shall cover the policyholder’s losses subject to certain terms and conditions.
Premium payment decides the assured sum for insurance coverage or ‘policy
limit’.
PROS AND CONS OF INSURANCE
PROS CONS

• Perfect cover for your family after you are • Tricky terms and conditions
gone
• Lengthy legal formalities
• Benefit of compensation
• Potential crime incidents
• Tax Benefits

• Financial support post retirement

THANK YOU