paper presentation about wide space in avenues portfolio diversification's pros and cons

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PRESENTATION
On…………………….at.....................................................
By
MUJEEB RAHIMAN KATTALI MUJEEB RAHIMAN KATTALI
CHAKKUPARAMMAL-HOUSE ASST.PROF.IN COMMERCE
K V KAV-POST, PULIKKAL-VIA PMS CUC ANDROTH
MALAPPURAM-DIST U T OF LAKSHADWEEP
KERALA-673637 PIN-682551

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WIDE SPACE OF INVESTMENT AVENUES AVAILABLE IN INDIA
WITH PROS AND CONS
Abstract
This paper addresses the view about the investment avenues available in India with
the pros and cons. The term investment means use of money in the hope of making more money or it is
the employment of fund on asset with the aim of earning income or capital appreciation. Financial
investment is the allocation of money of assets that are expected to yield some gain over a period of time.
Besides this, the author is pointed out the best options for investment avenues available in India
in modern context. It is considered much wider; they are public provident fund, mutual fund,
equity share, real estate, bullions, bonds, securities, etc. Each investment avenues are their own
merits and demerits they are also noted here.
OBJECTIVES
 To analyze various innovative investment avenues available in India.
 To point out the pros and cons of certain investment avenues.
INTRODUCTION
Investment is the employment of fund on asset with the aim of earning income or
capital appreciation. In general term, investment means use of money in the hope of
making more money. In finance, investment means the purchase of a financial product or
other item of value with an expectation of favorable future return.
Financial investment is the allocation of money of assets that are expected to yield
some gain over a period of time. It is an exchange of financial dilemma such as stock and
bonds for money. They are expected to yield return and experience capital growth over the
year.
According to Sharp ‘‘Investment is sacrifice of certain present value for some
uncertain future value’’.

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The people invest money become they need of financial security. They are analyzing
the best way to attain financial security. It is to save and invest money for a long period of
time to have a financial stability in future, according to typical thinking of the most of the
people, if you need more money you need to work more. But is that bunch of money going
to be pleasurable if you don’t have the time to enjoy it. You can’t have a dose of yours to
work every day for you smooth expansion of money lead to an expansion of your working
time. Investment is making your money work for you, maximizing you earning potential to
know more about the best investment options in India.
BEST INVESTMENT OPTIONS IN INDIA
Investment
Option
Maximum
amount
Minimum
amount
Minimum investment period
Public provident
fund
150000/- 500/- 15years
Mutual fund No limit As low as 500 Only applicable in case of close- ended and ELSS
scheme
Equity
&Preference
shares
No limit No limit Not applicable in this case
Real estate
investment
No limit No limit Not applicable in this case
Bullions No limit Variable Not applicable in this case
Post office
monthly income
account scheme
single
450000/- 1500/- 5 years
Company fixed
deposit
No limit As low as
2000/-
12 months
Initial public
offerings
No limit No limit Not applicable in this case
Unit linked
Insurance plan
No limit 100000/-for
plans 45 years
and below
45years or below
Bonds No limit variable variable

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1. Public Provident Fund
It is the safest and secured long term investment product amongst the best investment
option in India. It is totally tax free under the income tax Act sec 88. PPF earn as an interest
rate of 12 percent per year. The individuals and Hindu undivided families can participate in
this scheme. The maximum limit per annum for the deposit is Rs150000/-. The interest
accumulated in deposit. Under PPF account opened in bank as per post office. The money
get locked for the time of 15 years and you can earn compound interest from this account
the only drawback of this PPF account is you are only allowed to withdraw your
investment at the end of 6th year . In case you need money, you can take a loan on the
balance of PPF account.
2. Mutual Fund
Mutual fund is the form of collective investment. It is a trust that pools the savings of a
number of investors who share a common financial goal. It is supposed to be the best mode
of investment in the capital market. Since they are very cost beneficial and simple and do
not require an investor. The mutual funds are mainly classified in to open-ended scheme
and closed-ended scheme. The open-ended scheme offers its units on a continuous basis
and accepts funds from investors continuously. But closed-ended funds have a fixed
maturity period.
Pros:
 Professional management-experienced expert team for fund forecasting
 Diversification of portfolio possible
 Convenient administration
 Return potential
 Low costs
 Liquidity
 Transparency
 flexibility

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Cons:
 No guarantee
 The diversification penalty
 Cost oriented
 High expense ratios and sales charge
3. Direct Equity or share purchase
Equity share are commonly referred to common stock or ordinary share. Even though
the words share and stock are interchangeably used, there is a difference between them.
The share capital of a company is divided in to a number of small units of equal value called
shares. These shares do not carry any preferential right in respect of dividend or
repayment of capital. The dividend of preferencial share holders are fixed, but in the case of
equity share holders are varies according to the profit earned by the company. The equity
share holders are the owners and they get the face value of the share at last even in the case
of liquidation of the company. But preference shares have the preferencial right also.
Pros:
 Potential for profit
 Hedge against inflation
 Share in the growth
 Tax advantage
Cons:
 Risk oriented
 Limited liability
4. Real estate
Real estate investment has been a lot of capital appreciation over the last a few years.
The investments up on the land, residential, commercial and industrial buildings are the
avenues of real estate. All wealthy people keep part of their wealth in the form of real
estate.

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Pros:
 Steady flow of income
 Growth oriented
 Availing physical property right
Cons:
 High risk oriented
 Government laws and policies
 Tax levied things
5. Investing in Bullions
Investing in precious metals like Gold, Silver, Platinum and Palladium. These metals
attract a lot of interest worldwide for their value, especially as a long term or short term
investment. Gold is one of the oldest and evergreen investment products. Gold has been
considered as a form of investment and as a best hedge against inflation.
Pros:
 Potential for high return
 Hedge against inflation
 Guaranteed return
Cons:
 Risk oriented
 Dynamic pricing fixation
6. Post office saving scheme
This is the best investment option in India that ensures the highest return. There is a
monthly income plan of post office saving scheme and it is very suitable for retired people
with regular income requirements. The interest up on this investment is quiet low. This
investment hasn’t any risk related factors.

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7. Life Insurance
Life insurance is a contract for payment of sum of money by the insurer to the insured
for the consideration of premium on happening of an event (death) or after the expiry of
certain period. Life insurance reducing the financial suffering and also a method of savings
Pros:
 Protection against risk
 Easy payment
 Liquidity
 Tax relief
Cons:
 Legal actions
 Steady returns
8. Bond Investments
Bonds are debt securities. The debt securities are issued by the government and public
organization are called bonds, when such securities are issued by the corporate in private
sector they are called debenture. Bond is a long term contract in which the bond holders
lend money to a company. In return, the company promises to pay the bond owners a
series of interest, known as coupon payment until the bond matured. Investing in bond can
be one of the best investment option, provide a high rate of return on investment. The
bonds that are under the regulation of government.
Pros:
 Income predictability
 Diversification
 Safety
 choice

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Cons:
 low coupon amount
 fluctuating due to discount and premium
CONCLUSION
Investment is the employment of funds with the intention of earning return through
the mode of dividend, interest and capital appreciation. Every investor is likely to safety,
security and liquidity for their investment. So that they are diversifying the portfolios in to
different avenues such as public provident fund ,mutual fund, equity shares and preference
shares ,real estate ,bullions, life insurance, bonds and like that. Each avenue has its own
pros and cons also mentioned in the paper. Some of them are risk oriented and others are
low risk oriented. The investor has his own mind of view for choosing, selecting and
investing in these avenues.
BIBLIOGRAPHY
1. Dr.Abdul Assis Koroth (2016). Security Analysis and Portfolio Management,Calicut
University Central Co-operative Stores LTD.
2. Punithavathy Pandian. (2012). Security Analysis and Portfolio Management, Vikas
Publishing House.
3. Kevin,S. (2006). Security Analysis and Portfolio Management. DPH New Delhi-
110002.
4. Avadhani V A (1999). Security Analysis and Portfolio Management. The Indian Journal
for commerce, 2 (l), 31-38.
5. Donald E Fischer& Ronald J Jordan.(1975). Security Analysis and Portfolio
Management, Tata Mcgrow Publication New Delhi-110002.
6. Kevin,S. (2003). Portfolio Management. DPH New Delhi-110002.