Basics of Investment

1. P R E P A R E D B Y
M R . R A H U L B E R R Y
INVESTMENT

2. MEANING
 Commitment of funds.
 Expectation of positive rate of return.
 Possibility of variation in the actual return is known
as investment risk.

3. MEANING
INVESTMENT
FINANCIAL
INVESTMENT
ECONOMIC
INVESTMENT

4. FINANCIAL INVESTMENT
 Investment in shares, debentures, insurance etc.
 Future income in form of interest, premium,
dividends & pension.
 Appreciation in the value of capital.
 Generates financial assets.

5. ECONOMIC INVESTMENT
 Addition to the economy’s capital stock.
 Goods and Services used in the production of other
goods.
 Investment in plant, machinery, stock.
 Generates physical assets.

6. INVESTMENT ATTRIBUTES
 RETURN: Yield+ Capital Appreciation.
 RISK: Longer maturity period, larger risk.
 LIQUIDITY: Easily saleable and marketable.
 TAX SHELTER
 SAFETY

7. INVESTMENT ALTERNATIVES
Investment
Avenues
Equity
Shares
Money Market
Instruments
Life Insurance
Policies
Precious
Objects
Non-
marketable
Financial
Assets
Bonds
Mutual Fund
Schemes
Real Estate
Financial
Derivatives

8. INVESTMENT VS. SPECULATION
PLANNING LONG SHORT
HORIZON
• RISK MODERATE HIGH
DISPOSITION
• RETURN MODEST HIGH
EXPECTATION
• BASIS FOR FUNDAMENTAL TECHNICAL
DECISIONS
• LEVERAGE NO HIGH

9. GAMBLING
 Taking higher artificial risk.
 Higher return.
 Thrill and excitement.
 Unplanned and non scientific.
 Based on tips and rumours.
 Example: Horse race, Lottery, Card Games