Trio-fest ‘2009

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 # SAIDA FATHIMA # SULTHANA # RABIYA ANJUM # K. ELAKKIYA # ALMAS BANU # FOUZIYA ANJUM # LOGANAYAGI # D. BHUVANESHWARI # R.POORANI # S.GAYATHRI # # # #

S.ISHWARYA R.NITHYA P.LAVANYA R. NITHYA

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# A. ANITHA B. CHITRA # K.BHUVANESHWARI SHAJITHA NAZIYA SAMREEN J. SHARMILA DEVI NADIYA C.SARANYA M.INDHUMATHY # B.SINDHUPRIYA M.GEETHA

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S.DIVYA R.AISHWARYA E. MALA THASMIYA FIRTOUSE

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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       

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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.

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Real estate investment is one business that tends to gain value over time

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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.

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Feeling of safety, personal development and confidence in the future.

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It creates a greater sense of belonging to where you live.

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Continuous Cash Flow from Rental Income

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During inflation rental value of the area will increase.

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In addition, you can do things like grow your own garden and decorate the space as you like.

DISADVANTAGES IN REAL ESTATE INVESTMENT 

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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 

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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         

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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

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

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Popular way of investing money for retirees. FD gives senior citizens the highest rate of interest. It depends upon the banks.

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Maximum of Rs.100,000 for 5 years are eligible for tax deductions under section 80 C of income tax act,

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The interest % is high when compare with other deposits like SB (Saving Bank A/C) & Current A/C.

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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 

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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 

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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  

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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  

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By Investment Objective    

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Open-Ended – anytime enter/exit Close-Ended Schemes – listed on exchange, redemption after period of scheme is over. 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 :

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Draw up your asset allocation 

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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 

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Think hard about investing in sector funds  

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For relatively aggressive investors Close touch with developments in sector, review portfolio regularly

Look for `load' costs 

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Performance of various funds with similar objectives for at least 3-5 years (managed well and provides consistent returns)

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 

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MF- an integral part of your savings and wealth-building plan.

Portfolio Decision The right asset allocation  

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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

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TRAPS TO AVOID  IPO Blur  Begin with existing schemes (proven track record) and then new schemes  Avoid Market Timing

MF Comparison 

Absolute returns  

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Benchmark returns  

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SEBI directs Fund's returns compared to its benchmark

Time period  

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% difference of NAV Diversified Equity with Sector Funds– NO

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 

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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… 

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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     

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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. 

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NAV to be declared everyday for openended, 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

7

Computer Age Mgmt Services http://www.camsonline.com

8

Canara Robeco

http://www.canbankmutual.com

9

DBS Cholamandalam

http://www.dbscholamutual.com

http://www.bobmf.com

List of Mutual fund companiescontd. 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

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

http://www.licmutual.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

35

ICI

http://www.ici.org

36

PIMCO

http://www.pimco.com

37

Vanguard

http://www.vanguard.com

http://www.utimf.com

THANK YOU