The document discusses money management and different investment options. It begins with an executive summary that outlines various forms of investments like bonds, stocks, certificates, and Exchange Traded Funds (ETFs). It then discusses how the 1990s stock market downturn led many investors to seek lower risk investments in things like government bonds and ETFs. The rest of the document discusses analyzing individual investment situations and profiles based on factors like character, lifestyle, time horizon, and objectives to determine the best investment options. It provides the author's own analysis as an example.
Basics of Wealth and Investment ManagementKamran Yousaf
Investing requires planning goals and determining one's investment style and risk tolerance. Goals may include retirement, a house down payment, or a child's education. The amount one can invest regularly and time horizon must be considered. Investment style depends on how much risk an individual is comfortable with, such as tolerating short-term price fluctuations or potential downsides. Carefully planning goals and understanding one's risk tolerance are essential for successful long-term investing.
1. The document discusses various investment avenues available to investors, including stocks, bonds, mutual funds, real estate, and more. It notes that investors have different objectives like safety, liquidity, and returns.
2. High net worth individuals are described as proactive in managing their investments and using diversification strategies. They look to new investment options and shift between asset classes like equities and fixed income based on market trends.
3. Emerging investment avenues for wealthy investors include managed funds, real estate, collectibles, precious metals, commodities, and alternative investments. Financial advisors must understand clients' special needs around tax planning, estate planning, education, and risk appetite.
This document summarizes an investors' awareness program presented by Suman Kundu of Alliance Financial Services Ltd. It discusses various topics for investors such as savings and investment objectives, how age affects asset allocation, and investment wisdom. It provides information on different investment avenues including capital markets, banking products, insurance, and government savings schemes. The presentation emphasizes the importance of investing rather than just saving, being an investor rather than trader, and investing in fundamentally strong companies. It provides tips for selecting companies to invest in such as looking at management, growth potential, and environment, as well as things to be aware of like not over-relying on comfort factors or a single sector.
This document defines and discusses key concepts related to investments including direct investing, investment analysis, portfolio management, and money markets. It defines direct investment as investing in controlling interests of foreign businesses. Investment analysis evaluates investments for profitability and risk, while portfolio management determines optimal investment mixes. The document also defines money markets as markets for short-term financial instruments like treasury bills, certificates of deposit, commercial paper, repurchase agreements, and corporate bonds. It explains that money markets are used for short-term borrowing and lending.
The document reports on various investment avenues, including financial assets like debt instruments (bonds, bank deposits, mutual funds), equity (shares, equity mutual funds), and non-financial assets like real estate and gold. It discusses different types of bonds like government bonds, corporate bonds, convertible bonds, and junk bonds. It also covers equity investments, stock markets, and mutual funds. Real estate, gold, and other tangible assets are also mentioned as investment options.
Different investment avenues and its practical impactnehapanchal67
This document discusses different investment avenues and their practical impact. It begins by defining investment and outlining the objectives of investment as maximizing return, minimizing risk, and hedging against inflation. It then categorizes investments into ownership, lending, and cash equivalents. Several specific investment avenues are described, including money market instruments, options related to equity shares, and miscellaneous options like real estate, antiques, gold, and mutual funds. The document concludes by noting the practical impact of investments depends on factors like age, income, and risk tolerance. Diversification is important for balancing risk and return.
Basics of Wealth and Investment ManagementKamran Yousaf
Investing requires planning goals and determining one's investment style and risk tolerance. Goals may include retirement, a house down payment, or a child's education. The amount one can invest regularly and time horizon must be considered. Investment style depends on how much risk an individual is comfortable with, such as tolerating short-term price fluctuations or potential downsides. Carefully planning goals and understanding one's risk tolerance are essential for successful long-term investing.
1. The document discusses various investment avenues available to investors, including stocks, bonds, mutual funds, real estate, and more. It notes that investors have different objectives like safety, liquidity, and returns.
2. High net worth individuals are described as proactive in managing their investments and using diversification strategies. They look to new investment options and shift between asset classes like equities and fixed income based on market trends.
3. Emerging investment avenues for wealthy investors include managed funds, real estate, collectibles, precious metals, commodities, and alternative investments. Financial advisors must understand clients' special needs around tax planning, estate planning, education, and risk appetite.
This document summarizes an investors' awareness program presented by Suman Kundu of Alliance Financial Services Ltd. It discusses various topics for investors such as savings and investment objectives, how age affects asset allocation, and investment wisdom. It provides information on different investment avenues including capital markets, banking products, insurance, and government savings schemes. The presentation emphasizes the importance of investing rather than just saving, being an investor rather than trader, and investing in fundamentally strong companies. It provides tips for selecting companies to invest in such as looking at management, growth potential, and environment, as well as things to be aware of like not over-relying on comfort factors or a single sector.
This document defines and discusses key concepts related to investments including direct investing, investment analysis, portfolio management, and money markets. It defines direct investment as investing in controlling interests of foreign businesses. Investment analysis evaluates investments for profitability and risk, while portfolio management determines optimal investment mixes. The document also defines money markets as markets for short-term financial instruments like treasury bills, certificates of deposit, commercial paper, repurchase agreements, and corporate bonds. It explains that money markets are used for short-term borrowing and lending.
The document reports on various investment avenues, including financial assets like debt instruments (bonds, bank deposits, mutual funds), equity (shares, equity mutual funds), and non-financial assets like real estate and gold. It discusses different types of bonds like government bonds, corporate bonds, convertible bonds, and junk bonds. It also covers equity investments, stock markets, and mutual funds. Real estate, gold, and other tangible assets are also mentioned as investment options.
Different investment avenues and its practical impactnehapanchal67
This document discusses different investment avenues and their practical impact. It begins by defining investment and outlining the objectives of investment as maximizing return, minimizing risk, and hedging against inflation. It then categorizes investments into ownership, lending, and cash equivalents. Several specific investment avenues are described, including money market instruments, options related to equity shares, and miscellaneous options like real estate, antiques, gold, and mutual funds. The document concludes by noting the practical impact of investments depends on factors like age, income, and risk tolerance. Diversification is important for balancing risk and return.
Saving refers to consuming less in the present to consume more in the future. It involves deferring consumption and storing resources in some asset form. Savings can be used for unexpected expenses, education, or large purchases. Islam encourages saving but cautions against wastefulness. Savings can be converted into investments which generate income or appreciation over time. Common types of investments include equity, real estate, stocks, and gold. Islamic investment guidelines require profit/loss sharing and prohibit interest/debt. Participation involves the financier partnering in a project according to agreed-upon contract terms. Savings can be invested using diminishing participation, where the entrepreneur gradually pays off the financier.
The document discusses various investment alternatives and the investment process. It begins by defining investment and differentiating investment from speculation. It then discusses factors that make investments important like retirement planning, taxation, and inflation. The document outlines popular investment avenues in India like shares, bonds, mutual funds, insurance policies, and real estate. It also describes the stages of the investment process as developing an investment policy, analyzing investments, valuing securities, and constructing an investment portfolio. Key features of investment programs discussed include safety, liquidity, income stability, and appreciation.
Personal finance and wealth management project reportMuhammed Ikram
1. The document provides details of a family's personal financial plan as of March 31, 2011. The family consists of Mr. Khan, who works in a bank earning Rs. 1,200,000 annually, Mrs. Khan who earns Rs. 600,000 annually, and their 15-year old son Salman.
2. The family owns assets including a flat worth Rs. 30 lakhs, two cars worth Rs. 8 lakhs and Rs. 3 lakhs, an investment plot worth Rs. 2 lakhs, shares worth Rs. 1 lakh that pay Rs. 2,000 in dividends annually, and the plot pays Rs. 50,000 in annual rent.
This document is an attempt to create financial literacy among salaried professionals who have begun their professional career. The intent of the document is to emphasize financial planning and create awareness about various asset classes. The sample financial plan is also available in excel format for you to experiment your financial needs. If your are interested in the excel based plan, please send an email to me.
Should you need any clarification/help, just send an email.
Happy learning!
Everyone wants to be more financially secure, but don't know the basics of how to get there. This presentation is a roadmap with seven simple rules for financial success. It is part of a series of seminars offered by Saunders Learning Group on personal money management. You can now view the presentation here, order the Family Financial Freedom book from any of the ebook sites for iPhone, iPad, Kindle, Nook, Kobo reader etc. contact me at floyd.saunders@yahoo.com for a copy of the presentation or more information on how to get seminar materials.
This document discusses various savings and investment options. It defines savings as income kept aside for future use. The main objectives of savings are reducing economic insecurity, helping during emergencies or inability to work, and becoming a source of income. Good saving plans have characteristics like safety, return, convenience, liquidity, and tax benefits. Common savings options discussed include provident funds (PF), voluntary savings through banks and post offices, insurance, bonds, and investments in shares, debentures, jewellery and property. Life insurance provides protection for dependents. General insurance covers risks like motor, fire, and personal accidents. Bonds are issued by governments and corporations to borrow money. Investments allow building assets and securing one
The document discusses personal financial planning and the Indian financial system. It provides an overview of various financial instruments and markets in India including money markets, debt markets, equity markets, and derivatives markets. It also discusses various financial intermediaries, regulators, and the relationship between the financial system and the broader economy. Various investment approaches and options available to different income categories are presented along with a case study on financial planning for a high-income individual.
Government securities are a type of investment issued by central, state, and semi-government authorities. There are two main types: promissory notes and stock certificates. Promissory notes are registered promises of the government that pay half-yearly interest and are highly liquid. Stock certificates cannot be transferred and investors keep them until maturity, with major purchasers being insurance and provident funds. Government securities have characteristics like low interest rates but are very safe investments with no risk of default. The Reserve Bank of India plays a key role in purchasing, selling, and maintaining price stability of these securities in the narrow government securities market.
This document provides an overview of financial planning and investing. It explains that financial planning can help achieve life goals and outlines the importance of having a plan. It also discusses key investing concepts like risk, return, diversification and different asset classes. The document notes that financial advisers can help create suitable investment portfolios and administer them over the long term. Overall, the summary emphasizes that financial planning and investing are important for working towards financial goals at different life stages.
Many alternative investments have limited regulations and complex natures, so they can be unsuitable for novice investors. High net worth or institutional investors are most likely to hold interests in alternative investments.
The document discusses the need for financial education due to the deterioration of personal finances and proliferation of complex financial products. It outlines basics of savings and investments, choosing the right investment options including asset allocation strategies. It also discusses various savings, investment, protection and borrowing related financial products and the advantages of financial education and investor protection mechanisms.
This document provides an overview of the "Prosperity System" developed by Invesco and Ellen Rogin. It outlines a 5-step process: 1) Create a vision for your life and finances. 2) Understand your current financial situation. 3) Design a customized plan to meet your goals. 4) Take action to implement the plan. 5) Enjoy the journey and find ways to give back. The document notes some tools and factors to consider in each step, such as creating a net worth statement, choosing investments based on risk tolerance, and automating savings. It emphasizes the importance of regular investing, perspective on spending vs saving for the future, and maintaining a sense of gratitude.
Financial planning involves identifying an individual's financial needs and goals over time and developing a strategy to meet those needs and goals. The key objectives of financial planning are to identify monetary requirements, prioritize financial needs, assess one's current financial position, plan savings and investments to achieve goals, and optimize returns through diversification. Systematic investment plans (SIPs) allow regular investing of small amounts in mutual funds and are an effective way to benefit from rupee cost averaging and the power of compounding returns over the long term. Insurance provides protection from life's uncertainties and ensures one's dependents are provided for in times of need.
Investment Strategies To Grow Your IncomeCurtis Rose
While it’s wise to have a concern for increasing your assets, you may also wish to focus on using your investments to augment your income.
For example, if you inherited a valuable piece of artwork worth $1 million, you could hang it on your wall and increase your assets by $1 million. However, that picture on your wall does little to help you pay your expenses.
Investment strategies that focus on growing assets will generally result in greater wealth over the long-term, but it’s also possible to generate a significant income via the proper investment channels.
Investment strategies that focus on income make more sense as you near retirement age. With income-producing investments, you can lower your risk. This might be especially important to you if you’re too close to retirement to have the time to recover from significant asset loss.
Also, once you’re retired, you’ll want a reliable and consistent source of income.
Investment involves deploying funds with the expectation of earning a return. Return is variable and uncertain, with the level of risk associated with the potential return. The main objectives of investment are to maximize return for a given level of risk, minimize risk for a given level of return, and hedge against inflation. Investments can be grouped into ownership, lending, and cash equivalents. Different individuals choose different investment avenues depending on factors like their age, income, risk tolerance, and goals.
The document provides an overview of investments, including definitions, characteristics, objectives, and importance. It discusses that investments involve committing funds over time for return. The main characteristics are return, risk, safety, and liquidity. Common objectives include safety of capital, income generation, capital growth, tax minimization, and marketability. The document outlines both personal and professional importance of investments, such as saving for retirement, making money work for you, and careers like investment bankers, security analysts, and portfolio managers.
Investors' perception towards investment avenuesshafaq arif
The document summarizes the findings of an investor perception study. It found that investors consider factors like safety, liquidity, income stability, and appreciation when investing. Common investment avenues in India are regulated by organizations like SEBI, IRDA, and AMFI. The study aimed to understand investors' needs, preferred investment options and durations. It analyzed demographics like age, occupation, income level, and investment purposes. The conclusion is that investors seek to utilize surplus funds in favorable investment plans for short and long-term returns while avoiding risky options due to risk tolerance factors.
This document discusses the fundamentals of investment, including definitions, principles, asset types, and considerations. It defines investment as a monetary asset purchased to generate future income or appreciation. The 5 basic principles are to diversify investments, start early to benefit from compound interest, understand that higher risk means higher potential returns, maintain investments during market slumps, and buy low and sell high. Main asset types include fixed income securities, shares, unit investment trusts, mutual funds, and property. Key considerations for investment include objectives, life stage, funds availability, risk tolerance, investment horizon, taxes, performance, and diversification. It also introduces variable universal life insurance as a new alternative investment option.
The document discusses the importance of taking responsibility for one's financial future and security by committing to goals and taking action. It emphasizes that financial goals are not achieved by chance, but rather through discipline and following a process. The first step is to identify the most important goals and priorities, whether that be increasing income, minimizing taxes, or growing one's net worth, and then work towards them one at a time through a planned process rather than trying to solve all financial needs at once.
The document provides an overview of various investment avenues available in the current financial year. It discusses key concepts like inflation, risk profiling of investors, and strategies for robust investment and financial planning. The objectives are to understand different asset classes and products, and elicit an in-depth coverage of major investment avenues and their performance over the past couple of years to arrive at an optimal asset allocation keeping in mind risk appetite and investment goals. Key investment avenues discussed include equity, debt, mutual funds, real estate, commodities, and more.
The document discusses investment processes and types of investments. It describes investment as using capital to generate returns over time by taking some risk. The main reasons for investing include earning returns on idle resources, saving for specific goals, and protecting against inflation. It recommends investing early, regularly, and for the long-term. The types of investments mentioned include stocks, bonds, mutual funds, real estate, precious metals, money markets, and commodities. Key participants in the investment process are governments, businesses, and individuals.
Saving refers to consuming less in the present to consume more in the future. It involves deferring consumption and storing resources in some asset form. Savings can be used for unexpected expenses, education, or large purchases. Islam encourages saving but cautions against wastefulness. Savings can be converted into investments which generate income or appreciation over time. Common types of investments include equity, real estate, stocks, and gold. Islamic investment guidelines require profit/loss sharing and prohibit interest/debt. Participation involves the financier partnering in a project according to agreed-upon contract terms. Savings can be invested using diminishing participation, where the entrepreneur gradually pays off the financier.
The document discusses various investment alternatives and the investment process. It begins by defining investment and differentiating investment from speculation. It then discusses factors that make investments important like retirement planning, taxation, and inflation. The document outlines popular investment avenues in India like shares, bonds, mutual funds, insurance policies, and real estate. It also describes the stages of the investment process as developing an investment policy, analyzing investments, valuing securities, and constructing an investment portfolio. Key features of investment programs discussed include safety, liquidity, income stability, and appreciation.
Personal finance and wealth management project reportMuhammed Ikram
1. The document provides details of a family's personal financial plan as of March 31, 2011. The family consists of Mr. Khan, who works in a bank earning Rs. 1,200,000 annually, Mrs. Khan who earns Rs. 600,000 annually, and their 15-year old son Salman.
2. The family owns assets including a flat worth Rs. 30 lakhs, two cars worth Rs. 8 lakhs and Rs. 3 lakhs, an investment plot worth Rs. 2 lakhs, shares worth Rs. 1 lakh that pay Rs. 2,000 in dividends annually, and the plot pays Rs. 50,000 in annual rent.
This document is an attempt to create financial literacy among salaried professionals who have begun their professional career. The intent of the document is to emphasize financial planning and create awareness about various asset classes. The sample financial plan is also available in excel format for you to experiment your financial needs. If your are interested in the excel based plan, please send an email to me.
Should you need any clarification/help, just send an email.
Happy learning!
Everyone wants to be more financially secure, but don't know the basics of how to get there. This presentation is a roadmap with seven simple rules for financial success. It is part of a series of seminars offered by Saunders Learning Group on personal money management. You can now view the presentation here, order the Family Financial Freedom book from any of the ebook sites for iPhone, iPad, Kindle, Nook, Kobo reader etc. contact me at floyd.saunders@yahoo.com for a copy of the presentation or more information on how to get seminar materials.
This document discusses various savings and investment options. It defines savings as income kept aside for future use. The main objectives of savings are reducing economic insecurity, helping during emergencies or inability to work, and becoming a source of income. Good saving plans have characteristics like safety, return, convenience, liquidity, and tax benefits. Common savings options discussed include provident funds (PF), voluntary savings through banks and post offices, insurance, bonds, and investments in shares, debentures, jewellery and property. Life insurance provides protection for dependents. General insurance covers risks like motor, fire, and personal accidents. Bonds are issued by governments and corporations to borrow money. Investments allow building assets and securing one
The document discusses personal financial planning and the Indian financial system. It provides an overview of various financial instruments and markets in India including money markets, debt markets, equity markets, and derivatives markets. It also discusses various financial intermediaries, regulators, and the relationship between the financial system and the broader economy. Various investment approaches and options available to different income categories are presented along with a case study on financial planning for a high-income individual.
Government securities are a type of investment issued by central, state, and semi-government authorities. There are two main types: promissory notes and stock certificates. Promissory notes are registered promises of the government that pay half-yearly interest and are highly liquid. Stock certificates cannot be transferred and investors keep them until maturity, with major purchasers being insurance and provident funds. Government securities have characteristics like low interest rates but are very safe investments with no risk of default. The Reserve Bank of India plays a key role in purchasing, selling, and maintaining price stability of these securities in the narrow government securities market.
This document provides an overview of financial planning and investing. It explains that financial planning can help achieve life goals and outlines the importance of having a plan. It also discusses key investing concepts like risk, return, diversification and different asset classes. The document notes that financial advisers can help create suitable investment portfolios and administer them over the long term. Overall, the summary emphasizes that financial planning and investing are important for working towards financial goals at different life stages.
Many alternative investments have limited regulations and complex natures, so they can be unsuitable for novice investors. High net worth or institutional investors are most likely to hold interests in alternative investments.
The document discusses the need for financial education due to the deterioration of personal finances and proliferation of complex financial products. It outlines basics of savings and investments, choosing the right investment options including asset allocation strategies. It also discusses various savings, investment, protection and borrowing related financial products and the advantages of financial education and investor protection mechanisms.
This document provides an overview of the "Prosperity System" developed by Invesco and Ellen Rogin. It outlines a 5-step process: 1) Create a vision for your life and finances. 2) Understand your current financial situation. 3) Design a customized plan to meet your goals. 4) Take action to implement the plan. 5) Enjoy the journey and find ways to give back. The document notes some tools and factors to consider in each step, such as creating a net worth statement, choosing investments based on risk tolerance, and automating savings. It emphasizes the importance of regular investing, perspective on spending vs saving for the future, and maintaining a sense of gratitude.
Financial planning involves identifying an individual's financial needs and goals over time and developing a strategy to meet those needs and goals. The key objectives of financial planning are to identify monetary requirements, prioritize financial needs, assess one's current financial position, plan savings and investments to achieve goals, and optimize returns through diversification. Systematic investment plans (SIPs) allow regular investing of small amounts in mutual funds and are an effective way to benefit from rupee cost averaging and the power of compounding returns over the long term. Insurance provides protection from life's uncertainties and ensures one's dependents are provided for in times of need.
Investment Strategies To Grow Your IncomeCurtis Rose
While it’s wise to have a concern for increasing your assets, you may also wish to focus on using your investments to augment your income.
For example, if you inherited a valuable piece of artwork worth $1 million, you could hang it on your wall and increase your assets by $1 million. However, that picture on your wall does little to help you pay your expenses.
Investment strategies that focus on growing assets will generally result in greater wealth over the long-term, but it’s also possible to generate a significant income via the proper investment channels.
Investment strategies that focus on income make more sense as you near retirement age. With income-producing investments, you can lower your risk. This might be especially important to you if you’re too close to retirement to have the time to recover from significant asset loss.
Also, once you’re retired, you’ll want a reliable and consistent source of income.
Investment involves deploying funds with the expectation of earning a return. Return is variable and uncertain, with the level of risk associated with the potential return. The main objectives of investment are to maximize return for a given level of risk, minimize risk for a given level of return, and hedge against inflation. Investments can be grouped into ownership, lending, and cash equivalents. Different individuals choose different investment avenues depending on factors like their age, income, risk tolerance, and goals.
The document provides an overview of investments, including definitions, characteristics, objectives, and importance. It discusses that investments involve committing funds over time for return. The main characteristics are return, risk, safety, and liquidity. Common objectives include safety of capital, income generation, capital growth, tax minimization, and marketability. The document outlines both personal and professional importance of investments, such as saving for retirement, making money work for you, and careers like investment bankers, security analysts, and portfolio managers.
Investors' perception towards investment avenuesshafaq arif
The document summarizes the findings of an investor perception study. It found that investors consider factors like safety, liquidity, income stability, and appreciation when investing. Common investment avenues in India are regulated by organizations like SEBI, IRDA, and AMFI. The study aimed to understand investors' needs, preferred investment options and durations. It analyzed demographics like age, occupation, income level, and investment purposes. The conclusion is that investors seek to utilize surplus funds in favorable investment plans for short and long-term returns while avoiding risky options due to risk tolerance factors.
This document discusses the fundamentals of investment, including definitions, principles, asset types, and considerations. It defines investment as a monetary asset purchased to generate future income or appreciation. The 5 basic principles are to diversify investments, start early to benefit from compound interest, understand that higher risk means higher potential returns, maintain investments during market slumps, and buy low and sell high. Main asset types include fixed income securities, shares, unit investment trusts, mutual funds, and property. Key considerations for investment include objectives, life stage, funds availability, risk tolerance, investment horizon, taxes, performance, and diversification. It also introduces variable universal life insurance as a new alternative investment option.
The document discusses the importance of taking responsibility for one's financial future and security by committing to goals and taking action. It emphasizes that financial goals are not achieved by chance, but rather through discipline and following a process. The first step is to identify the most important goals and priorities, whether that be increasing income, minimizing taxes, or growing one's net worth, and then work towards them one at a time through a planned process rather than trying to solve all financial needs at once.
The document provides an overview of various investment avenues available in the current financial year. It discusses key concepts like inflation, risk profiling of investors, and strategies for robust investment and financial planning. The objectives are to understand different asset classes and products, and elicit an in-depth coverage of major investment avenues and their performance over the past couple of years to arrive at an optimal asset allocation keeping in mind risk appetite and investment goals. Key investment avenues discussed include equity, debt, mutual funds, real estate, commodities, and more.
The document discusses investment processes and types of investments. It describes investment as using capital to generate returns over time by taking some risk. The main reasons for investing include earning returns on idle resources, saving for specific goals, and protecting against inflation. It recommends investing early, regularly, and for the long-term. The types of investments mentioned include stocks, bonds, mutual funds, real estate, precious metals, money markets, and commodities. Key participants in the investment process are governments, businesses, and individuals.
This document provides an introduction to investing and key concepts like risk and return. It explains that balancing risk and return is important for achieving financial goals. While higher risk investments offer potential for greater returns, they also carry more uncertainty. The document advocates diversifying investments across different asset classes like stocks, bonds, property and cash to reduce risk. It provides data showing how various asset classes have performed over time, with higher risk assets generally providing higher average returns but also more variability in returns. The key is choosing an appropriate mix of assets based on an individual's risk tolerance and time horizon.
The document provides an overview of the investment process. It discusses what investment is, why one should invest, when to start investing, what care to take while investing, various types of investments, the investment cycle, client profiling, objective and risk analysis, economic and market analysis, and asset allocation and investment selection and implementation. The key steps in the investment process include understanding investment and risk tolerance, setting goals, diversifying assets, regularly monitoring performance, and rebalancing as needed.
Mutual Funds (MF) are a great way to invest.The current scene,however, might not be very easy on the MF industry yet for long term investment these are an ideal option. Before investing any one would want to know how mutual funds work. Now, if you ask this from a finance professional, mostly, you’ll get answers that raise even more doubts because the clarifications are full of financial jargon In simple words, you will be more confused than before.Investors who have little clue about mutual fund will always tell you that they are full of risk and will discourage you from investing. However, having said that, I do feel that before plugging in your money you need to watch out for a few points.
Fixed Deposits and Mutual funds- Final Research ProjectDivyansh Kaushik
This research paper speaks about the changing perception of the investors from fixed deposits to mutual funds. The paper was done to see the benefits of both these investment ways and finding out the best and the most popular among the students and people.
This document provides an overview of the investment process. It discusses what investment is, why people need to invest, and when to start investing. The key points are:
- Investment involves using capital to generate a safe return over time by putting money into assets that promise a return. It requires taking some risk.
- People need to invest to earn returns on idle resources, save for specific goals, and prepare for an uncertain future. Investing helps combat inflation.
- The sooner one starts investing, the more time investments have to grow through compounding. The golden rules are to invest early, regularly, and for the long term.
- Before investing, one should understand the investment, costs, risks
1. The document discusses various topics related to security analysis and portfolio management including different types of financial markets and investment instruments, risk and return associated with investments, and the difference between investment and speculation.
2. It provides learning objectives about understanding financial markets and instruments, analyzing risk and return, and preparing financial plans for individual investors.
3. The document also covers various other topics such as inflation and interest rates, the power of compounding returns, what constitutes an investment, and how to select investments that match an investor's goals and risk tolerance.
A comprehensive guide book on Savings and InvestmentDeepika Jha
Lean the following with this guidebook -
1. Key differences between Saving and Investment
2. Basics of Investment Planning
3. Financial Plan - Concepts & factors for Success
4. How to plan for your life-stage
Dato’ Yau is a chartered accountant and has more than 30 years experience in auditing, corporate finance and general management. Prior to joining Tropicana as the Group Chief Executive Officer, he was with Hong Leong Industries Bhd where he served as group managing director since September 2011 and prior to that, he was Sunway Holdings Bhd managing director since April 2001. He has also served well in various Sunway Group Berhad.
This document provides an overview of investment options in India and discusses the need for investment planning. It summarizes various investment options like stocks, bonds, real estate, gold, and mutual funds. It states that an investor should evaluate investments based on parameters like safety, liquidity, returns, entry/exit barriers, and tax efficiency. The document then discusses the introduction to investments, need and importance of studying investments, scope of the study, objectives of the study, methodology, limitations of the study, and provides a profile of ICICI Bank.
This document discusses various investment strategies and asset classes for growing wealth over the long term, including equities, property, bonds, asset allocation funds, and the benefits of each. It emphasizes that investing for growth requires having exposure to growth assets like equities and property through a portfolio in order to beat inflation. It also stresses the importance of patience, planning, diversification, and a long-term perspective to achieve the best returns when investing.
The document discusses savings and investing through mutual funds. It states that savings should be invested to earn returns higher than inflation to preserve purchasing power for future expenses. Traditional savings options like bank deposits offer low risk but also low returns. Mutual funds allow investing small amounts and provide convenience, higher potential returns, tax benefits, and professional fund management to diversify risk. The document outlines how mutual funds work, their advantages over other investment options, and how investors can get started in mutual funds.
The document discusses savings and investing through mutual funds. It states that savings should be invested to earn returns higher than inflation to preserve purchasing power for future expenses. Traditional savings options like bank deposits offer low risk but also low returns. Mutual funds allow investing small amounts and provide convenience, diversification, professional fund management, and tax benefits. By investing regularly through SIP, mutual funds can generate higher returns than traditional savings tools while also helping investors meet financial goals like child's education, marriage, or buying a home or car.
This document introduces some key concepts about investments including:
1) The reasons for investing include earning returns on idle resources, generating funds for specific goals, and providing for an uncertain future.
2) There are three main types of investments - economic, financial, and general investments.
3) Some important characteristics of investments are potential returns, risk level, safety, and liquidity.
4) There are several important reasons for individuals to invest, such as retirement planning, tax benefits, inflation protection, and income generation.
This document provides an introduction to mutual funds, including what they are, their history, types of mutual funds, and how to choose one. It discusses that mutual funds allow investors to pool money and invest in a portfolio managed by professionals. The key benefits are diversification and ease of use, but risks include market volatility and fees. The document then covers the history of mutual funds dating back to the 18th century and their growth in popularity in the 20th century. It also outlines various types of mutual funds and important factors to consider when selecting a mutual fund, such as investment goals, risk tolerance, fund performance, and expenses.
An Intro to the Financial Services IndustryEric Tachibana
The Financial Service Industry is one of the most attractive industries to target if you are a consultant. However, when selling into, or delivering for, Financial Services Institutions (FSIs), it is useful to have some understanding of how FSI business models work, and the unique requirements that drive their IT strategies.This deck is a living document that hopes to act as a primer for consultants who need to support FSI clients, but who may not have prior experience in the sector.
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1. The document discusses various investment principles and strategies for making good investment decisions with practical examples. It defines different types of investments like stocks, bonds, mutual funds, and real estate.
2. Key principles for investors include starting early, diversifying investments, taking advantage of employer retirement plans and tax benefits, and using low-risk long-term strategies. Discipline, patience, and understanding risk/return are important characteristics for successful investors.
3. The document provides examples of calculating investment values like net present value, share price valuation, and treasury bill face value to illustrate making good investment decisions.
Similar to Yasser Al Mimar-Money Management and Stocks Analysis (20)
Yasser Al Mimar-Money Management and Stocks Analysis
1. Page 1
Money Management
Yasser Al Mimar 10 December 2011
Executive Summary
Most businesses rely on capital and investments to initiate and grow their
businesses. These businesses rely on different sources of capital income in undertaking their
business needs. Some of the common forms of investment include bonds, stocks,
certificates and Exchange Traded Funds. During the 1990’s several stock exchanges faced
financial problems causing major losses to investors. The bubble burst as the bear run that
affected the stock markets such as the NYSE (New York State Exchange) and other major
stock exchanges. As a result, many investors shied away from the market and opted for low
risk investments with good returns. Most of these investors turned to government bonds,
certificates and private or corporate bonds from reputable firms (Madura, 2008, p.13). This
trend led to the emergence of special funds which allowed small investors to pool funds and
investment in a number of securities or stocks. These funds are managed by fund managers
which became popular with huge companies like insurance firms and banks. However the
costs of managing these funds were high and some investors looked for other options to
invest. This led to the emergence of Exchange Traded Funds (ETFs), which allowed investors
to put their money on investment funds to be traded on stock exchanges (Abner, 2010). ETF
investment funds incorporate an array of assets such as stocks, commodities or bonds and
trades at a price close to the net value of these combined investments. For the many years
it has been in existence, EFT’s have been successful with current stock markets due to its
flexibility and low risk.
2. Page 2
Introduction
The art of investing is very difficult and challenging and many a times, people
find it difficult to invest. Several investment options are available to potential
investors interested in making profits. Investing is a risky venture and many people
prefer to invest in low risk investments. As a result, many investment banks and
firms have opted to create investment options for different investors in the market.
Investment decisions are based on the type of investment, time horizon and risk
tolerance. These factors are widely considered by novice and experts in the process
of making investment decisions. During the early 1990’s several investment options
were availed to investors who were interested in low risk investments. Professional
financial analysts and advisers devised ways of accommodating these low risk
investors. Therefore, funds were created to allow small investors interested to pool
their resources into investment options that were flexible and less risky to invest.
Hedge funds, unit trusts and ETF’s were introduced alongside traditional stock
trading markets and other investment options. This essay is going to analyze the
different types of investments funds available to a potential investor.
Individual Analysis
Everybody needs and desires change in every stage of his/her lives and we
should know where we’ve invested our money and is it worth or not. Furthermore,
we have to make sure that our current financial investments are geared to all our
future needs and objectives; consequently, we will be able to manage our own
situation. I would say, if you do not care about where your money is going to be
invested, no one else will. In the contrast, all investors have differing attitudes
towards risk. When it comes to start investing, we should consider our risk profile or
tolerance carefully, including how comfortable we are with the possibility of losing
money, or that returns on our investments could vary widely from year to year.
Analyse your own situation and risk profile
Most people invest for capital growth to build their wealth over time and
protect themselves against inflation. Furthermore, many retired people live off the
income from their investments (e.g. dividends from shares and rent from property).
3. Page 3
Fixed interest products such as bonds and hybrids offer a potentially regular income
stream.
As result, in 2009 I have made up my mind and planned to invest in
properties in Dubai. Actually, I was looking to know which investments might be
appropriate for my save for a down payment and build my wealth, and may generate
more profits for the average investor than investing in the stock market. Therefore I
made my decision and bought 2BDR apartment at $140,000.00 in Dubai and the
apartment has been rent at $1350 per month as step to have more income resource.
The task of investing involves the tasks of analysing the individual portfolio
and risks associated with a specific person. In the analysis of the individual portfolio
includes analysing the character, lifestyle, time horizon and the objectives of the
investor. These factors depend on the type of investment in which an individual
chooses. The task of choosing the best class of investment in terms of ETFs or
investment funds to choose from is very challenging. Below are some of the
important factors to consider
Character: I weary of investing in the stock market due to the fluctuations that the
stock market that could easily wipe out my investments. I used to invest in savings
accounts but due to the poor economic conditions globally and inflation money
saved in the bank account depreciated. However, as I mentioned above I have been
for the idea of buying property in Dubai, UAE (saving for the long‐term (Kristof,
2010). The first characteristic of a good investment in properties would be the
intrinsic value of the property. Actually, the investment property is bought at a price
that is lower than the real intrinsic value so that upon purchase, a profit has already
been made.
On the other hand, we should ask ourselves how long we plan to keep the property.
If the intention is long term, we will need to consider expenses relative to the
investment property such as repairs, maintenance and taxes. Therefore we should
choose properties that offer income greater than the expense needed for
maintenance. So for this reason I have bought in Dubai due to tax‐free living (no
property tax) and I am paying just for maintenance which cost around $6000 per
year.
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I have chosen Dubai as place because the location of the property is the primary
characteristic that will determine its feasibility and profitability as an investment
property. I would to strongly go with steadily increasing income and a positive
outcome.
Lifestyle: As an employed person, I live a good lifestyle within my means and this
ensures that I spend most of my earnings with good savings to spare. Most of my
savings are utilized in buying stocks in 2007 and I have an apartment mortgage with
a 4 year repayment period. This makes it difficult to save and make investment plans
since there is little disposable income to contemplate saving.
Time Horizon: we know the investing in property is an ideal way to preserve an asset
base, grow wealth and hedge against inflation, consequently, the higher our share in
the property, the higher our income and expenses. BUT, it’s important to understand
not only our investment goals, but exactly what the investment goal time horizon is,
since each investment property will generate revenue at a different rate of return
and cycle. I tend to invest for the long term because it takes long for me save a
colossal amount of money to invest. Time horizon is usually very crucial in selecting
the type of investment product suited for a particular individual. According to
successful investors like Warren Buffet and Jim Rogers recommend people to invest
for the long term. I believe, the longer the time horizon, the more inevitable, the
success of the investment. Statistics from different fund managers and stockbrokers
show that investments from different sectors require at least 3 years for the
investments to reap benefits (Greenwood, 2006, p.32). Nowadays, the current
investment is very challenging and thus it is important to invest in emerging markets.
The emerging markets of Asia and Africa are good investment grounds for any astute
or upcoming investor.
Objectives: Analysis of the best investment to undertake is very challenging, an
investor has to analyse his/her objectives. In the analysis of personal objectives, an
individual has to be realistic and come up with a mix of investment options that suit
him/her. In my case, I tend to invest for the moderate term since my main goal is to
secure the apartment that has a mortgage and build an investment portfolio for the
moderate ‐ long term purpose (Laffie, 2005, p.115). Also, I am planning to enrol with
5. Page 5
short term investing which have a low amount of risk and are of a high quality. Such
investments can come in many forms including cash, stocks and gold
Investment Options Analysis
As I have pointed out, we should carefully consider investment objectives,
risks factors and charges and expenses before engage with any investment. All
investments contain risk, including loss of principal, so diversification does not
eliminate the risk of experiencing investment losses. Furthermore, we need to create
a budget that fit with our live, and from my perspective, everyone needs a budget,
regardless of age, life stage, or whether we think we've "made it" or not. I would say,
making investment decisions is a difficult and challenging task for most of us and
investors especially novice investors. Consequently, it is prudent for one to analyse
all the investment options and products available in the market. Through analysis of
the different products and options, the investor has the opportunity to choose the
best investment option to choose from. Diversity in income is considered as a major
factor to enhance our resources as fairly straight forward of backup our investment
inside our retirement plans. Below is the analysis of different investment options
from which a potential can invest in
Portfolio of Funds and ETF
Both Mutual Funds and ETF’s are investment products made up of a basket of
underlying stocks. The notion since the beginning of mutual funds over 80 years ago
was that investors needed a simple way to invest in a diverse basket of stocks in one
easy step. Another way to think about this is what if instead of selecting mutual
funds in our 401k, we were required to pick the individual stocks on our own?
Whereas, the last few years back, exchange‐traded funds, have replaced mutual
funds as the hottest packaged investment products on Wall Street. Therefore and as
positive step to know what we should follow, I believe each investor and even me
needs regularly to review investment portfolio once it is established, by reviewing
the investments we can check if it meet our goals and act early to rectify them if they
are underperforming.
To reflect analyse our own situation and risk profile on new investment, I
would start with ETF (exchange‐traded fund) than mutual funds because ETF allow
6. Page 6
me to build a low‐cost and diversified portfolio just as easily as I can buy an
individual stock. Furthermore, ETFs are bought and sold during the day by
professional traders. That means the value of the ETF is constantly updated every
second during every trading day as the shares are bought and sold by other
investors, this in turn, will help me to know where I stand and when I can move out.
ETF Analysis
An exchange‐traded fund is an investment company that offers investors a
proportionate share in a portfolio of stocks, bonds, or other securities. In addition its
offer investors, including those of moderate means, the opportunity to purchase
shares in a diversified pool of securities at a competitive price. Most ETFs attempt to
achieve the same investment return as that of a particular market index, such as the
Dow Jones Industrial Average, Standard & Poor’s 500 Index, or the NASDAQ
Composite Index. The most recent data (from Dow Jones and the U.S. investment
group Blackrock) show that ETFs grew by 30% in 2010 to a staggering 1.5 trillion
Swiss Francs of assets under management, and are expected to reach 2 trillion in
2012 (David Costa, The Portable Private Banker, P45) and ETFs are becoming more
popular even among retail investors and have several key differences from index
mutual funds.
As an index investment, ETFs have grown because of low cost, ease of use and
transparency and diversity, so we need to manage our plan and build a distinct and
7. Page 7
diversified portfolio and drive it in right way to receive best ROI, return of
investment.
Asset Allocation
Our asset allocation is our portfolio's blend of stocks, bonds and cash. So
finding the best asset mix is crucial if we are planning to meet our investment goals
and to ensure we're achieving our desired level of diversification. Most researches and
financial advisers agree that setting up the right asset mix is more important than
choosing great investments. The first thing to consider is our present financial
situation and how much we can afford to invest. In this regard, my plan should be
depend on several factors, including:
o My investment goals.
o My investment time frame. (How many years to invest )
o My risk tolerance (attitude to risk and reward).
Base on that, if I start looking at my asset allocation I need to include the
dividing an investment portfolio among different asset categories, such as stocks,
bonds, and cash, and I believe the process of determining which mix of assets to hold
in my portfolio is a very essential one and is playing major role. In this regard, driving
asset allocation towards best way at any given point in my life, should check the time
horizon (my investment time frame) and my ability to tolerate risk (ability and
willingness to lose some or all of our original investment in exchange for greater
potential returns)
In my own situation I have $50,000.00 in saving and I would use these moneys to
manage my asset classes that I am planning to involve into as follows.
TIME HORIZON: I may need the total amount invested and the investment revenue
from this account within the next five ‐seven years (Moderate)
RISK TOLERANCE: if the return from this account was negative over a year, thus
generating paper financial losses in the short run, I would prefer to continue to
support my initial investment strategy. So I am planning for Low tolerate risk.
CURRENT INCOME: I will cover and support my current expenses without using this
saving account.
8. Page 8
I would go with core‐satellite system and use it to drive my asset or investment and I
believe, managers can actively trade ETFs as elements of the satellite to gain alpha
returns. In fact, some managers invest exclusively in ETFs.. In order to create a
suitable portfolio, it is important to determine the extent to which we are an
aggressive, moderate or conservative investor. Actually I am not planning to build
funds for retirement and may be willing to assume greater risk due to longer time
horizon. I am planning to invest within the next five to seven years and create a mix
of different asset categories that can provide the potential for satisfying returns at a
level of volatility that is comfortable for me in this period of time – I believe as my
life situation and market conditions change, I like making any necessary adjustments
to my investment mix myself.
Base on that, I need to divide my saving money among the broad asset classes is
more important than choosing the specific funds within those classes. Past
performance is no guarantee of future results.
I believe, diversification will helps me offset the volatility (and potential losses) of a
single investment and take greater advantage of the strengths of several asset
classes working together. I am not saying the diversification is guarantee, because
there is no guarantee against loss!!
The table below shows how all of these asset classes and a portfolio I built using
more efficient asset allocation which might come together in an all‐ETF and by
choosing the moderate risk tolerance
From my perspective, i‐Shares ETF’cover a good broad range of sectors, in a
sufficiently targeted allocation to allow me or any investor to strategically allocate
his or her portfolio.
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Allocation ETF Ticker YTD NAV YTD Return % Amount
Invested
25% iShares Dow Jones US IYW 0.54 1.14 $10000
Technology
15% iShares Russell 2000 Index IWN 1.39 ‐0.48 $5000
10% Vanguard MSCI Europe ETF VGK 5.22 ‐14.14 $2500
10% iShares MSCI EAFE Index EFA 3.32 $2500
15% iShares Barclays 3‐7 Year IEI 8.10 7.99 $10000
Treasury Bond
15% Vanguard Short‐Term Govt Bd Idx VGSH 1.49 1.42 $10000
ETF
5% Lyxor ETF Euro Cash EuroMTS LYCSH:SW 0.71 ‐ $5000
Eonia Investable
5% iShares Gold Trust 14.39 15.64 $5000
All of these ETF’s above have been around for a while, which means that there is
some history to look at, for instance IYW the fund invests at least 90% of assets in
securities of the index and in depositary. I have checked the Average Annual Total
returns for IYW for Five years ended 04/30/11 and found as follows:‐
NAV (Net Asset value) = 34.38%
Market: 34.48%
Index = 37.21%
Total Return: 18.80
Price/E = 17.73
Price/B = 4.28
ROE = 11.81%
Market Cap $1.32 Billion
Dividend Growth Rate for 5 Years = 47.58%
(TER) Total expense ratio = 0.47%
10. Page 10
Growth sectors like tech are traditionally associated with high price‐to‐earnings
ratios (P/E). At a primary level, a basket of stocks in an ETF is worth the present value
of the earnings of the companies in the fund. So, high P/E ratios signal that investors
are willing to pay more for those earnings based on the belief that earnings will grow
I would give a comparison below to clear the picture about my decision to select IYW
ETF
The Technology Select SPDR (NYSEArca: XLK), iShares Dow Jones U.S. Technology ETF
(NYSEArca: IYW) have P/E ratios of 17.73 and 15.6, respectively, compared to SPY’s
13.0. The Vanguard Information Technology ETF (NYSEArca: VGT) has a slightly
higher P/E of 13.7.
Importantly, Microsoft, IBM, Apple and Google represent a significant chunk of each
ETF’s holdings, and it’s these that are driving the overall P/E ratios on funds such as
XLK and IYW and VGT
IYW also shows the greatest concentration, with top 10 firms making up 63.1 percent of the
fund compared to 54.8 percent for VGT. This means IWY holds more of Apple, IBM,
Microsoft and Google than XLK and VGT. In the end, IYW’s tilt toward larger firms may
translate to less growth and less volatility.
Source: Bloomberg
Another example is i‐Shares Russell 2000‐IWM that I have selected for investment.
The Russell 2000 index, the most widely used benchmark for small‐cap stocks, has trounced
its 2007 record highs, rising 24% over the past 12 months. It focuses on companies whose
earnings are expected to grow at an above‐average rate relative to the market. Top holdings
include tech companies such as TIBCO Software (TIBX) and Rackspace Hostings (RAX), as well
as Decker Outdoors (DECK).
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Dividend = 1.19
Index = 37.21%
Total Return 5 Years: ‐0.98%
Price/E = 23.00
Price/B = 3.21
Net profit=1,446.70%
Year on year, growth in dividends per share increased 18.67% while earnings per share
excluding extraordinary items fell by 44.82%. The positive trend in dividend payments is
noteworthy since only some companies in the Misc. Financial Services industry pay a
dividend. Additionally when measured on a five year annualized basis, both dividend per
share and earnings per share growth ranked in‐line with the industry average relative to its
peers
We can see now, the ability to pay cash dividends is a positive factor in assessing the
underlying health of a company and the quality of its earnings. This is particularly pertinent
in light of the complexity of corporate accounting and numerous recent examples of
“earnings management”, including occasionally fraudulent earnings manipulation
So there are many fundamental measures by which to judge the relative value of an ETF, and
the portfolio Price‐to‐Earnings ratio (P/E) is one that is frequently mentioned. There are
several researches that show that buying stocks at low P/E ratios will tend to generate
higher returns than buying at high P/E ratios, this does not mean that you can assume that
an ETF is an attractive investment because it sports a low P/E ratio. In addition, P/E found on
an ETF will not be exactly the same as the P/E of the index. This discrepancy is due to the
fees charged on an ETF, along with the fact that ETFs are traded on the stock market.
Cost efficiency:‐ I believe, stocks bought at low price/earnings ratios afford higher
earnings yields than stocks bought at higher ratios of price‐to‐earnings as well as the
ETF, in the contrast, ETFs are offered through the stock market without a front‐end
load. Only the normal transaction costs of securities transactions are charged
compared with actively managed funds. Base on that, therefore, ETF’s will allow an
investor or even me to build a cost‐effective strategically allocated portfolio which
takes advantage of the diversification opportunities across asset classes and sectors
I can conclude that ETFs are cost effective for investors to invest in comparison to
other managed funds. This is because the fund manager does not take his time to
conduct analysis as compared to other investment options such as active investment
funds. For this reason I have decided to invest in the ETF instead of mutual funds due
to the ability of ETF to leverage itself, thereby increasing profits (and losses
consequently) when the price moves in the right direction. Furthermore, I can buy
and sell options on Exchange Traded Funds, allowing me to use leverage as well. Mutual
does not allowed.
12. Page 12
I would add also, the management fees for ETFs are low compared to other
investment options with fees standing from 0.15% to 0.90 % (Shen, 2000, p.104). For
instance, a look at the FTSE RAFI ETF, it has a low maintenance fee of 0.55% per
annum same as the i‐shares Morningstar Large Core Fund ETF. Regular fees make
ETFs less attractive as it is witnessed by the DAX 30 which was a long term
investment and thus it erodes profits. As a result, various ETFs have low
management fees and are cheaper for an investor to maintain an ETF compared to
active investment funds such as unit trust of hedge funds (Ferri, 2011).
With low management fees, a good performance and underlying index principle, and
a track record of efficient management, this is a good core holding and a viable
alternative to an ETF. However, being a mutual fund and not an ETF, it will not be
accessible for investors outside the U.S
If I would include the fees in portfolio, such as, Vanguard funds we will see the fees
in the portfolio of ETF’s are lower than the fees in the portfolio of Vanguard funds—
by 0.05% per year. This alone does not tell us that the ETF portfolio will be more
attractive, of course. There are small differences between the ETF’s and mutual
funds over time but we hope that the total portfolio will look essentially equivalent
Returns: ETF portfolio has generated an average annual return that beats the mutual
fund portfolio by 0.13% per year. The most important factor in undertaking an
investment is based on returns on the invested funds. Different investment options
do not guarantee good returns but ETFs allow good returns on invested funds. For
example, the (PXH) PowerShares FTSE RAFI US 1000 and the ComStage Stoxx Europe
600 has one of the best market returns. The ComStage Stoxx Europe 600 luxury
goods based ETF returned an average of 41.87% per annum. Thus it is important to
conclude that ETFs and investment funds return good investment results (Shleifer,
2002).
In this regard, the inherent and explicit diversification reduces risk, so I have chosen
different classes’ asset to protect overall investment returns. That is, while one
element of the portfolio is performing poorly, some other investment may be doing
well
Transparency: As we know many mutual funds are financial meatloaf: I don’t quite
know what’s in them. They’re required to disclose their holdings only four times per
year, and the reports are already out of date when they’re released. I have chosen
ETF, because ETFs publish complete lists of their holdings on their websites, updated
daily. This makes it far easier for me as investor to compare funds, track it and
decide which ones suit their needs.
Investment in the ETF and investment funds markets is very challenging but it
is important to invest in growing markets. For instance, the Asian and Latin American
markets are growing at a rapid base and as a result, an investor should target ETFs
and funds which target these markets (Ryan, 2009). Based on the assessment of the
factors above, it is prudent to conclude that investing in ETF or investment funds
based products is the best investment decision for any investor. Moreover, other
13. Page 13
investment products offer little returns compared to ETFs while some of them have
become risky for investment. For instance, government bonds offered by some
European countries are not safe since these countries have likely chances of default.
Time Factor: ‐ Time factor is one of the most crucial factors to watch out while
investing. Looking at the Swiss market, we witness that the some mutual funds have
been performing very well compared to some ETFs. Therefore, it not easy to
conclude that mutual funds are better than ETFs or vice‐versa, the most important
factor is tracking these investments over a suggested period of time (Ferri, 2011). A
look at ComStage Stoxx Europe 600 ETF Household goods based product we notice
that this ETF tracks household goods stocks in the Swiss market. This ETF has
performed well over the past two years returning 40.2% compared to the ComStage
Stoxx Europe 600 Food & beverages ETF which returned only 24.1% as witnessed by
table 1 in the appendix. In comparison to the United States of America where there
is a mid cap fund that has returned over 41.87%. This performance is better than the
ETF based investment option in Switzerland (Wagner, 2008). This mutual fund is
known as the JB holdings fund and it has invested in different segments based on a
selected benchmark. A list of investments in the JB holdings fund is shown by table 2
in the appendix. Based on the analysis of the different ETFs and funds, it is difficult to
choose the best investment option by solely choosing and ETF or fund based
investment (Madura, 2008). The best investment decision to undertake when
investing in an ETF or fund is to analyse the industry or benchmark used in
implementing the fund or ETF product. Time factor is also very important since most
ETFs or funds take a minimum of three years for the investment to make marginal
gains
Timing and analysis of good investment options is necessary in choosing the best
investment market (Brennan, 2004). Timing is very important since with time new
and upcoming markets are growing and playing catch up to more traditional markets
of Europe and the United States
For sure somebody will ask, why I focus on i‐shares family? I would say, the top
twenty ETF’s from the i‐Shares family have generated annual average returns
between 20% and 50% per year over the past five years. In the same time even if the
expected future return is very high, we must be careful about how much risk we are
carrying when we start invest. Morningstar said it wouldn’t use a star rating on ETF
model portfolios. Instead, it will classify the portfolios it tracks and rank them based
on disclosed historical performance and its own analysis of their investment
strategies, a spokeswoman said.
14. Page 14
Conclusion
Investing is a very crucial task that requires patience and expertise for an individual
or organization. Due to the complexity in the task of investing, several experienced
and professional individuals have emerged in the investments field. Numerous
investment products and options are available currently compared to the past. Most
of these products have been designed to make the task of investing easy and
rewarding. For instance, ETF offer us the exposure to all major investment styles.
Allowing us to choose the one with the best investment prospects at the time, and
to change the amount we have invested in different areas whenever we want. We
would say, ETFs can offer investors broad diversification through a single product
choice instead of taking company specific risk with individual stocks and bonds.
In order to create a solid investment base and start drive your investment plan
towards right direction you need to build up the portfolio and manage the element
of timing into your investment plan
A portfolio is essentially the sum of all of our different investments. Building a winning
portfolio is dependent on a number of factors, but it is important to remember that your
portfolio should be designed according to your needs and goals. For that reason, your ideal
portfolio may not be the same as another investor's and you must carefully study your
finances and your options and your asset allocation in order to be successful.
To be a successful investor you need two main things ‐ the knowledge and the right
trading platform
15. Page 15
References
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London: Taylor & Francis.
David Costa (2011). The Portable Private Banker, Investing Efficiently through Funds
and ETFs.
Bernstein, P., 2002. A Primer on Exchange‐Traded Funds: CPAs Should Know the
Difference between ETFs and Mutual Funds. Journal of Accountancy, 193(1), p.94‐98.
Bernstein, W., 2002. The four pillars of investing: Lessons for building a winning
investment strategy. London: Penguin Publishers.
Tweedy Browne Company LLC(n.d), The High Dividend Yield Return Advantage.
Tweedy Browne Company LLC(PDF)
Brennan, J. and McCave, M., 2004. Straight Talk on Investing: What You Need to
Know. New York, NY: Springer.
Brookings Papers on Economic Activity, 1(1), p.87.
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investing: Morningstar's guide to building wealth and winning in the market.
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nnual_report/sg/i21.pdf [Accessed 02/12/2011]
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