Professional Documents
Culture Documents
INVESTMENTS
An Investment is a commitment of funds made in the expectation of some positive rate of return. Investors expectations:
1. 2. 3. 4. 5. 6. Security of Original Capital Tax Efficiency Life Cover Income High Returns Safety
MUTUAL FUNDS
Mutual Funds are essentially investment vehicles where people with similar investment objective come together to pool their money and then invest accordingly . Features: Number of available options Diversification Professional Management Potential of Returns
CONVERTIBLE BONDS
A type of bond that can be converted into shares of stock in the issuing company, usually at some pre-announced ratio. From the issuer's perspective, the key benefit of raising money by selling convertible bonds is a reduced cash interest payment.
TYPES OF BONDS
Exchangeable (XB) are bonds which may be exchanged into shares other than those of the issuer. Strictly speaking, they are not convertibles, but they share certain common evaluation characteristics. Mandatory convertibles are short duration securitiesgenerally with yields higher than found on the underlying common shares that are mandatorily convertible upon maturity into a fixed number of common shares. Mandatory exchangeable are short duration securitiesgenerally with yields higher than found on the underlying common shares that are mandatorily exchangeable upon maturity into a fixed number of common shares. ADVANTAGES: Tax advantages. Lower fixed-rate borrowing costs.
KEY AREAS IN WHICH REAL ESTATE FUNDS MAY POSITIVELY IMPACT INDIAS REAL ESTATE SECTOR
(1) enhancing liquidity of the sector; (2) institutionalization: enhanced competition with institutional investors competing in a bigger way with the unorganized sector for market dominance. (3) greater acceptability for real estate as an investment asset class; (i) opportunities to retail investors to participate in the real estate sector; and (ii) asset diversification to corporate investors. (4) improve sector transparency.
Risks/Liquidity
Returns
Taxation
Suitability
Good for very low risk investors and those in the nil or low tax brackets. Good for very low risk investors and those in the nil or low tax brackets. Good tax saving investment option.
Since returns are taxable, the posttax returns will be still lower. Interest is taxfree.
PPF
Low risk with very low liquidity (15-year lockin period. Partial withdrawal allowed after 6 years).
NSC
assured returns.
Not very attractive vis--vis other options like 5-year Bank FDs.
Equity
No Long Term Capital Gain Tax and 10% Short Term Capital Gains Tax. Tax free returns. .
ULIPs
Low to High Risk depending on the investment option i.e. Pure Debt or Mixed or Pure Equity. Low Liquidity (3-5 years lock-in period). Variable risk and variable liquidity depending on the type and location of property.
Not an attractive option due to high charges, low flexibility and low diversification.
Real Estate
High initial investment ,high transactions costs like registration brokerage etc.; and cannot be partly liquidated.. Not an attractive investment option.
Gold
Low long-term risk. But hedge against volatile in short term. inflation. So High Liquidity. returns could be around inflation levels.
No tax advantages.