Concept and relation between saving & investment at the macro level Investment objectives and avenues Factors affecting savings& investments in India

1. Concept Of Saving
&Investment
- Ajita Bansal

2. Concept Of Saving
 Saving is income not spent, or deferred consumption. Methods of saving include putting
money aside in, for example, a deposit account, a pension account, an investment fund,
or as cash.
 Saving also involves reducing expenditures, such as recurring costs. In terms of
personal finance, saving generally specifies low-risk preservation of money, as in a
deposit account, versus investment, wherein risk is a lot higher; in economics more
broadly, it refers to any income not used for immediate consumption. Saving does not
automatically Include interest.
 Saving differs from savings. The former refers to the act of not consuming one's assets,
whereas the latter refers to either multiple opportunities to reduce costs; or one's assets
in the form of cash. Saving refers to an activity occurring over time, a flow variable,
whereas savings refers to something that exists at any one time, a stock variable. This
distinction is often misunderstood, and even professional economists and investment
professionals will often refer to "saving" as "savings”

3. Concept Of Investment
 An investment is an asset or item acquired with the goal of generating income or appreciation.
Appreciation refers to an increase in the value of an asset over time. When an individual
purchases a good as an investment, the intent is not to consume the good but rather to use it in
the future to create wealth.
 An investment always concerns the outlay of some capital today—time, effort, money, or an
asset—in hopes of a greater payoff in the future than what was originally put in.
 For example, an investor may purchase a monetary asset now with the idea that the asset will
provide income in the future or will later be sold at a higher price for a profit
 The act of investing has the goal of generating income and increasing value over time. An
investment can refer to any mechanism used for generating future income. This includes the
purchase of bonds, stocks, or real estate property, among other examples. Additionally,
purchasing a property that can be used to produce goods can be considered an investment.

4. Types Of Investment
• Within a country or a nation, economic growth is related to investments. When
companies and other entities engage in sound business investment practices, it
typically results in economic growth.
Economic Investments
• An investment bank provides a variety of services to individuals and businesses,
including many services that are designed to assist individuals and businesses in the
process of increasing their wealth.
Investment Vehicles
• Speculation is a distinct activity from investing. Investing involves the purchase of
assets with the intent of holding them for the long term, while speculation involves
attempting to capitalize on market inefficiencies for short-term profit.
• Ownership is generally not a goal of speculators, while investors often look to build
the number of assets in their portfolios over time
Investing vs. Speculation

7.  The basic problem is that economists define savings and investment in two different ways. First, there is the
definition used for the national product accounts in which saving is equal by definition to investment. Let's look at that
first. Let's say that there is no government and no imports or exports then we can say that there are two things to do
with income (Y), consume (C) or invest (I).
 Y=C+I
 We then define savings as income that is not consumed S=Y-C so it follows that
 S=Y-C=I,
 Savings equal investment. Personally, I don't like this approach since it substitutes identities and tautologies for real
economic thinking but let's put that aside for the movement and turn to some real economics.
 Saving is income that is not consumed so far so good. Savings, however, does not automatically become investment. I
would define investment as the production of capital goods, goods used for producing other goods.
 One of the great difficulties in a modern economy is that savers are not the same people as investors. It's the job of
the financial sector to bridge the gap between savers and investors--to transform savings into investment. The gap can
be bridged more or less effectively. In the old Soviet Union, for example, there was lots of savings but investments
were so poor that much of that saving was wasted. It can also happen that people want to save but not enough people
want to invest - this is the problem we are having right now and one reason why interest rates are so low. A glut of
savings and a dearth of investment.

8. Avenues of investing money in India
Stocks
Public Provident Fund
Recurring Deposits
Mutual Funds
Fixed Deposits
Employee Provident Fund
National Pension Scheme

9. Factors Affecting Savings & Investment
Growth in population
Technological Developments.
Capital Accumulation.
Wage Rate.
Tax Structure.
Profitability and investment opportunities

10. Example of Saving &Investments
 Savings comprise the amount of money left over after spending.
 People may save for various life goals or aspirations such as retirement, a child's college education, the down
payment for a home or car, a vacation
 There are three main types of investments: Stocks. Bonds. Cash equivalent...
 Examples include:
I ) Savings accounts.(A savings account is a bank account at a retail bank. Common features include a limited
number of withdrawals, a lack of cheque and linked debit card facilities, limited transfer options, and the inability to
be overdrawn.)
ii) Money market accounts. (A money market account or money market deposit account is a deposit account that
pays interest based on current interest rates in the money markets.)
iii) Certificates of deposit (CDs) (A certificate of deposit is a time deposit, a financial product commonly sold by
banks, thrift institutions, and credit unions. CDs differ from savings accounts in that the CD has a specific, fixed term
and usually, a fixed interest rate. )