MEANING OF INVESTMENT, FEATURES AND IMPORTANCE OF INVESTMENTS

•     MEANING OF INVESTMENT, FEATURES AND IMPORTANCE OF INVESTMENTS
SECURITY ANALYSIS AND PORTFOLIO  MANAGEMENT

   PRINCIPLES OF INVESMTNET MGMT

•     FUNDAMENTAL OF INVESTMENT

Ø  MEANING OF INVESTMENT

•     INVESTING IS THE ACT OF COMMITTING MONEY OR CAPITAL TO AN A BUSINESS ,PROJECT,REAL ESTATE ETC WITH THE EXPECTATION OF OBTAINING ADDITIONAL INCOME OR PROFIT.

•     INVESTMENT IS THE COMMITMENT OF FUNDS WITH LONG TERM TIME FRAMEWORK THE OBJECTIVE BEING ADDITIONAL INCOME TO REGULAR RECEIPT AND GROWTH IN THE VALUE OF THE FUNDS OF AN INVESTOR

•     INVESTMENT IS PART OF THE SAVING OF INDIVIDUALS WHICH FLOW INTO THE CAPITAL MARKET EITHER DIRECTLY OR THROUGH INSTITUTIONS THEY MAY BE DIVIDED IN NEW OR SECOND HAND FINANCING

Ø  FINANCIAL AND ECONOMIC MEANING OF INVESTMENT

•     FINANCIAL AND ECONOMIC MEANING OF INVESTMENT ARE DIFFERENT AND MUST BE UNDERSTOOD IN TERMS OF CAPITAL.

•     FINANCIAL INVESTMENT ARE THE ALLOCATION OF MONETARY RESOURCES RANGING FROM RISK FREE TO RISKY INVESTMENTS WITH THE EXPECTATION OF A GOOD RETURN THAT VARIES WITH THE RISK.THE INVESTOR HAS TO TRADE OFF BETWEEN RISK AND RETURN.

•     THE ECONOMIST UNDERSTANDS THE TERM INVESTMENT AS NET ADDITIONS TO THE ECONOMY’S CAPITAL STOCK WHICH CONSISTS OF GOODS AND SERVICES THAT ARE USED IN THE PRODUCTION OF  OTHER GOODS AND SERVICES. INVESTMENT IS INTERPRETED AS FORMATION OF NEW AND PRODUCTIVE CAPITAL IN THE FORM OF NEW CONSTRUCTION,NEW PRODUCER’S DURABLE EQUIPMENT SUCH AS PALNT MACHINERY INCLUDING INVENTORIES AND HUMAN CAPITAL

•     REAL AND FINANCIAL ASSETS

1.       REAL ASSETS:-ARE USED TO PRODUCE GOODS OR SERVICES. THEY ARE TANGIBLE ASSETS THAT HAVE A PHYSICAL FORM

2.       FINANCIAL ASSETS:- ARE ALSO CALLED PAPER SECURITIES BECAUSE THEY DEAL WITH CLAIMS GENERATED ON THE ISSUER.. FOR EXAMPLE SHARES DEBENTURES,BONDS ,FIXED DEPOSITS

3.       COMMODITY ARE A NEW FORM OF INVESTMENT IN INDIA. EXAMPLES ARE WHEAT,SUGAR,CEREALS ,COTTON CRUDE OIL AND FOREIGN CURRENCY. A NATIONAL COMMODITY AND DERIVATIVE EXCHANGE LTD HAS BEEN SET UP IN INDIA IN 2003 AS A PUBLIC LIMITED COMPANY TO TRANSACT IN  COMMODITIES.

•     MEANING OF INVESTMENT

•     INVESTMENT IS A CONSCIOUS ACT OF INDIVIDUAL OR ANY ENTITY THAT INVOLVES DEPLOYMENT OF MONEY IN SECURITIES OR ASSETS ISSUED BY ANY FINANCIAL INSTITUTIONS WITH A VIEW TO OBTAIN THE TARGET RETURN OVER A SPECIFIED PERIOD OF TIME.

•     TARGET RETURN ON INVESTMENT INCLUDE:-

1.       INCREASE IN THE VALUE OF THE SECURITIES OR ASSETS OR

2.       REGUALR INCOME

•     ESSENTIAL FEATURES OF INVESMENT

1.       SAFETY OF PRINCIPAL

2.       RETURN

3.       RISK

4.       LIQUIDITY

5.       STABLE INCOME

6.       CAPITAL GROWTH

7.       TAX IMPLICATIONS

8.       STABILITY OF PURCHASING POWER

9.       LEGALITY

•     IMPORTANCE OF INVESTMENT

1.        BEATING OF INFLATION:-BY MAKING INVESTMENT KEEP ROTATING IN THE MARKET AND KEEP THE INFLATION CONSTANT

2.       FOR MEETING FUTURE REQUIREMENTS

3.       SAVING FOR RETIREMENT SAVINGS

4.       PUTTING YOUR MONEY WORK

5.       FINANCIAL RESOURCE

6.       TAX SAVING

7.       REGULAR INCOME

•     INVESTMENT AVENUE

•     DIRECT INVESTMENT AVENUE

•     FIXED PRINCIPAL INVESTMENT:

1.       CASH

2.       SAVING ACCOUNT

3.       SAVING CERTIFICATE

4.       GOVT BONDS

5.       CORPORATE BONDS AND DEBENTURES

•     VARIABLE PRINCIPAL SECURITIES

1.       EQUITY SHARES

2.       CONVERTIBLES AND DEBENTURES

3.       PREFERENCE SHARES

• INDIRECT INVESTMENT AVENUE

1.       PENSION FUNDS

2.       PROVIDENT FUNDS

3.       INSURANCE

4.       INVESTMENT COMPANIES

5.       MUTUAL FUNDS AND UTI

•     NON SECURITY INVESTMENT

1.       REAL ESTATE

2.       MORTGAGES

3.       COMMODITIES

4.       ART,ANTIQUES AND OTHER VALUABLES