Investment Avenue Final Report1

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A Project Report on

INVESTMENT AVENUE

Master of Business Administration

JIET SCHOOL OF MANAGEMENT

JIET Universe, N. H. No.65, Pali Road, Mogra, Jodhpur-342 002 (Raj.)

Tel: 0291-2868152/53, E-mail: [email protected] Web: www.jietjodhpur.com

Submitted to: Submitted by:

MR.R.P.SANGWA VARSHA LOHIA

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INVESTMENT AVENUEIntroduction

Savings form an important part of the economy of any nation. With the savings invested in

various options available to the people, the money acts as the driver for growth of the country.

Indian financial scene too presents a plethora of avenues to the investors. Though certainly not

the best or deepest of markets in the world, it has reasonable options for an ordinary man to

invest his savings. The money you earn is partly spent and the rest saved for meeting future

expenses. Instead of keeping the savings idle you may like to use savings in order to get return

on it in the future. This is called Investment. One needs to invest to and earn return on your idle

resources and generate a specified sum of money for a specific goal in life and make a provision

for an uncertain future One of the important reasons why one needs to invest wisely is to meet

the cost ofInflation. Inflation is the rate at which the cost of living increases.

The cost of living is simply what it costs to buy the goods and services you need to live. Inflation

causes money to lose value because it will not buy the same amount of a good or service in the

future as it does now or did in the past. The sooner one starts investing the better. By investing

early you allow your investments more time to grow, whereby the concept of compounding

increases your income, by accumulating the principal and the interest or dividend earned on it,

year after year. The three golden rules for all investors are:

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Invest early

Invest regularly

Invest for long term and not short term

This project will also help to understand the investors facet before investing in any of the

investment tools and thus to scrutinize the important aspects for the investors before investing

that further helped in analyzing the relation between the features of the products and the

investors requirements.

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INVESTMENT AVENUES IN INDIA

There are a large number of investment instruments available today.

To make our lives easier we would classify or group them under 4 main types of investment

avenues. We shall name and briefly describe them.

1. Financial securities: These investment instruments are freely tradable and negotiable. These

would include equity shares, preference shares, convertible debentures, non-convertible

debentures, public sector bonds, savings certificates, gilt-edged securities and money market

securities.

2. Non-securitized financial securities: These investment instruments are not tradable,

transferable nor negotiable. And would include bank deposits, post office deposits, company

fixed deposits, provident fund schemes, national savings schemes and life insurance.

3. Mutual fund schemes: If an investor does not directly want to invest in the markets, he/she

could buy units/shares in a mutual fund scheme. These schemes are mainly growth (or equity)

oriented, income (or debt) oriented or balanced (i.e. both growth and debt) schemes.

4.Real assets: Real assets are physical investments, which would include real estate, gold &

silver, precious stones, rare coins & stamps and art objects.

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The following are the main characteristics features of investments are:

1. Return :- All investments are characterized by the expectation of a return. In fact,

investments are made with the primary objective of deriving a return. The return may be received

in the form of yield plus capital appreciation. The difference between the sale price & the

purchase price is capital appreciation. The dividend or interest received from the investment is

the yield. Different types of investments promise different rates of return. The return from an

investment depends upon the nature of investment, the maturity period & a host of other factors.

2 .Risk :- Risk is inherent in any investment. The risk may relate to loss of capital, delay in

repayment of capital, nonpayment of interest, or variability of returns. While some investments

like government securities & bank deposits are almost risk less, others are more risky. The risk ofan investment depends on the following factors.

1. The longer the maturity period, the longer is the risk.

2. The lower the credit worthiness of the borrower, the higher is the risk .

3. The risk varies with the nature of investment. Investments in ownership securities like

equity share carry higher risk compared to investments in debt instrument like debentures

& bonds.

3. Safety :- The safety of an investment implies the certainty of return of capital without loss of

money or time. Safety is another features which an investors desire for his investments. Every

investor expects to get back his capital on maturity without loss & without delay.

4. Liquidity :- An investment, which is easily saleable, or marketable without loss of money &

without loss of time is said to possess liquidity. Some investments like company deposits, bank

deposits, P.O. deposits, NSC, NSS etc. are not marketable. Some investment instrument like

preference shares & debentures are marketable, but there are no buyers in many cases & hence

their liquidity is negligible. Equity shares of companies listed on stock exchanges are easily

marketable through the stock exchanges.

An investor generally prefers liquidity for his investment, safety of his funds, a good

return with minimum risk or minimization of risk & maximization of return.

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Objectives of Investment

The purpose of the study was to determine the saving behavior and investment preferences of

customers. Customer perception will provide a way to accurately measure how the customersthink about the products and services provided by the company. Todays trying economic

conditions have forced difficult decisions for companies. Most are making conservative decisions

that reflect a survival mode in the business operations. During these difficult times, understanding

what customers on an ongoing basis is critical for survival. Executives need a 3rd party

understanding on where customer loyalties stand. More than ever management needs ongoing

feedback from the customers, partners and employees in order to continue to innovate and grow.

The main objective of the project is to find out the needs of current and future customers. For this

report ,customer perception and awareness level will be measured in many important areas like:-

To understand all about different investment avenues available in India

To find out how the investors get information about the various financial instrument

To find out how the investor wants to invest i.e. on his own or through a broker.

To find out the saving habits of the different customers and the amount they invest in

various financial instruments.

In which type of financial instrument they like to invest.

How long they prefer to keep their money invested.

What is the return that they expect from the investment.

What are the various factors that they consider before investing.

To find out the risk profile of the investor.

To give a recommendation to the investors that where they should invest.

To give a suggestion to my company where our fund lacks in the market & how it should

be rectified.

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The Emerging Investment Avenues

High Net worth Individuals [HNIs] or wealthy investors are proactive in portfolio management, riskmanagement, consolidation financial assets and use of diversification strategies as actively as

large institutions. HNIs are proactive in identifying new investment options and take inputs from

professional advisors in volatile market conditions.

HNIs are dynamic in modifying their asset allocation and were among the first investors to move

from equities to fixed income during 2001-2002 period of downturn in equity markets. They

shifted back to equities when they identified favorable market trends.

Needs of wealthy investors

Wealthy investors being aware of the emerging investment opportunities use sophisticated

investment strategies such as:-

Leveraging on the professional advisors capability to analyse market trends and make

appropriate investments

Searching for innovative products to enhance value

Diversifying across various types of assets

Investing across emerging geographies

Consolidating financial information and assets

Investment products and avenues

Managed products: Managed product service is the most popular investment strategy

adopted by wealthy investors globally

Real Estate: Wealthy investors have found this asset class very attractive and have

invested directly in real estate and indirectly through real estate investment trusts.

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Art and passion: Wealthy investors also have their investment in art, wine, antiques, and

collectibles

Precious Metals: Gold and other precious metals are attractive investment options to

balance the asset allocation

Commodities: Wealthy investors have turned to commodities to offset the lower returns

from fixed income securities.

Alternative investments: Hedge funds and Private equity investments such as venture

funds are becoming increasingly popular with wealthy investors to reduce the investment

risks related to stock market fluctuations. This is because these instruments have low

correlation with equity asset class performance. Investment in non correlated assets, such

as commodities helps to improve diversification of the portfolio amidst volatile market

conditions.

Characteristics of wealthy investor

The wealthy investor of today is:-

Young, educated and knowledgeable

Well informed about global trends

Willing to take risks

Demanding and quality conscious

Performance oriented in taking decisions and less loyal

Techno savvy and seeks information from various sources

Smart in looking for the best deal Not attracted by traditional status symbols that do not add value

Hands on in checking investments, making deals and getting personally involved

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Special needs of wealthy investors

The strategies and characteristics of wealthy investors has led to financial institutions innovating

and expanding their product range to meet the growing demands of such investors.

A financial advisor should keep in mind the following special needs and expectations of the

wealthy clients:-

Demand broader range of services and skills: Wealthy clients not only are on the look out

for multiple investment avenues, unlike other clients, but are also ready to face the risks

associated with newer products.

Net worth and goals need to be matched and assets need to be planned tax effectively:

Since wealthy investors have surplus funds that can be passed on to the next generationsand also come into the high tax paying category, investors need to advice them on the

best methods to transfer their assets after death as well as on the best tax saving

investments.

Estate planning and tax planning: In-depth knowledge about tools of estate planning such

as wills, trusts, and power of attorney is necessary. It is also important to know the

succession rules and tax rules to do effective tax planning resulting in minimal/no tax on

transfer of assets.

Educate the client: Educating the client on various and different types of investment

avenues that will suit him the best will prove very beneficial for the financial advisor.

Wealthy clients, especially those who are self made, may assume that if they can make

wealth in one industry they can manage their own portfolio as well. In such cases it is best

to educate the client about the best investment options rather than trying to push a

product; because if one is trying to push a product, the client is unlikely to get interested

since he/she will be having enough people chasing him/her for investments.

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1).SAVING BANK ACCOUNT

Savings Bank Accounts are meant to promote the habit of saving among the citizens while

allowing them to use their funds when required. The main advantage of Savings Bank Account is

its high liquidity and safety. On top of that Savings Bank Account earn moderate interest too. The

rate of interest is decided and periodically reviewed by the Government of India. Presently, the

rate of interest is 3.5% compounded half yearly.

Savings Bank Account can be opened in the name of an individual or in joint names of the

depositors. Savings Bank Accounts can also be opened and operated by the minors provided

they have completed ten years of age. Accounts by Hindu Undivided Families (HUF) not

engaged in any trading or business activity, can be opened in the name of the Karta of the HUF.

The minimum balance to be maintained in an ordinary savings bank account varies from bank to

bank. It is less in case of public sector banks and comparatively higher in case of private banks.

In most of the public sector banks, minimum balance to be maintained is Rs. 100. In accounts

where cheque books are issued, a minimum balance of Rs. 500/- has to be maintained. ForPension Savings Accounts, minimum balance to be maintained is Rs. 5/- without cheque facility

and Rs. 250/- with cheque facility.

Things to Consider While Opening a Savings Account

It is advisable to seek the following information from bank before opening the account:

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Minimum balance requirements.

Penal provisions in case the balance falls below the minimum stipulated amount

Penalty in case of return of cheques issued or instruments sent on collection.

Collection facilities etc. offered and charges applicable.

Details of charges, if any for issue of cheque books and limits fixed on number of

withdrawals, cash drawings, etc.

Document Required For Opening a Savings Account

Two passport size photographs

Proof of residence i.e. Passport/driving license/Gas / Telephone / Electricity Bill/ Ration

card/voters identity card

An introduction of the person from an existing account holder.

PAN number / Declaration in form no.60 or 61 as per the Income Tax Act 1961.

Bank savings accounts are a critical part of everybody's financial picture. If you need a safe place

to keep money, a bank savings account is often a good choice. Heres a quick review of what

savings accounts are and why you might want to have a bank savings account.

Characteristics

The minimum amount to open an account in a nationalized bank is Rs 100. If cheque books are

also issued, the minimum balance of Rs 500 has to be maintained. However in some private or

foreign bank the minimum balance is Rs 500 or more and can be up Rs. 10,000. One cheque

book is issued to a customer at a time.

A Savings account can be opened either individually or jointly with another individual. In a joint

account only the sign of one account holder is needed to write a cheque. But at the time of

closing an account, the sign of the both the account holders are needed.

Advantages

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It's much safer to keep your money at a bank than to keep a large amount of cash in your home.

Bank deposits are fairly safe because banks are subject to control of the Reserve Bank of India

with regard to several policy and operational parameters. The federal Government insures your

money. Saving Bank account does not have any fixed period for deposit. The depositor can take

money from his account by writing a cheque to somebody else or submitting a cheque directly.

Now most of the banks offer various facilities such as ATM card, credit card etc. Through

debit/ATM card one can take money from any of the ATM centres of the particular bank which will

be open 24 hours a day. Through credit card one can avail shopping facilities from any shop

which accept the credit card. And many of the banks also give internet banking facility through

with one do the transactions like withdrawals, deposits, statement of account etc.

Return

The interest rate of savings bank account in India varies between 2.5% and 4%. In Savings Bank

account, bank follows the simple interest method. The rate of interest may change from time to

time according to the rules of Reserve Bank of India. One can withdraw his/her money by

submitting a cheque in the bank and details of the account, i.e the Money deposited, withdrawn

along with the dates and the balance, is recorded in a passbook.

Tax Benefit

No tax benifit

2).FIXED DEPOSIT

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A fixed deposit is meant for those investors who want to deposit a lump sum of money for a fixed

period; say for a minimum period of 15 days to five years and above, thereby earning a higher

rate of interest in return. Investor gets a lump sum (principal + interest) at the maturity of the

deposit.

Bank fixed deposits are one of the most common savings scheme open to an average investor.

Fixed deposits also give a higher rate of interest than a savings bank account. The facilities vary

from bank to bank. Some of the facilities offered by banks are overdraft (loan) facility on the

amount deposited, premature withdrawal before maturity period (which involves a loss of interest)

etc. Bank deposits are fairly safer because banks are subject to control of the Reserve Bank of

India.

CHARACTERISTICS

Bank deposits are fairly safe because banks are subject to control of the Reserve Bank of India

(RBI) with regard to several policy and operational parameters. The banks are free to offer

varying interests in fixed deposits of different maturities. Interest is compounded once a quarter,

leading to a somewhat higher effective rate.

The minimum deposit amount varies with each bank. It can range from as low as Rs. 100

to an unlimited amount with some banks. Deposits can be made in multiples of Rs. 100/-.

Before opening a FD account, try to check the rates of interest for different banks for

different periods. It is advisable to keep the amount in five or ten small deposits instead of

making one big deposit. In case of any premature withdrawal of partial amount, then only

one or two deposit need be prematurely encashed. The loss sustained in interest will,

thus, be less than if one big deposit were to be encashed. Check deposit receipts carefully

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to see that all particulars have been properly and accurately filled in. The thing to consider

before investing in an FD is the rate of interest and the inflation rate. A high inflation rate

can simply chip away your real returns.

Advantages and Disadvantages

Also known as term deposits, a fixed deposit account is an arrangement between a

banking institution and its client to deposit a certain amount of money for an agreed period

of time. The money deposited cannot be withdrawn before the expiry of the period that theclient enters with the bank to accept his deposit. In return, the depositor will earn interest

and the principal amount will be refunded at the end of the agreed period.

There are many advantages and disadvantages of this type of account. The interest

percentage is high when compared with other deposits such as saving bank account and

current Bank account. This makes it a better investment when compared to other bank

accounts such as savings accounts. Further, like every other asset, current account

deposits increase your net worth and in case of need, you can use it as collateral to

acquire debt financing such as a loan.

Among the notable disadvantages is that you cannot withdraw the deposited money not

until at the expiry of the agreed period of time. This is the even when a very pressing need

arises which makes it inflexible.

Money saved in fixed deposit account is mostly affected by inflation savings. If this is the

case then most depositors tend to lose because inflation is a common phenomenon in

everyday life. For instance, if you are entitled to 10% interest rate and inflation rate moves

to 15%, you are losing money which would not be the case when you invest your money is

other investment tools and channels. Even with the involvement of Federal Reserve

authorities to ease the swings in inflation rates, this has failed to trickle down to the

individual banking institutions while others apply the regulations partially.

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If you opt for an early withdrawal, you may be penalized which may lead to lose of money.

You will have no alternative other than to forfeit up to your six months deposits which are a

large sum of money. While many depositors would not want to forfeit their earnings, many

will prefer to leave the money earn interest until it reaches its maturity period. You may

then be forced to seek for alternative financing and yet you have your cash in the form of

frozen investments.

Your locked finances may make you miss an opportunity to invest because your cash

savings are tied up. Take for example a one off investment opportunity that comes your

way which may call for your urgent attention to grab it, your financial ability will be

completely watered down and such situations will necessitate you to borrow using the

deposit as collateral. This will make you incur unnecessary borrowing costs such as

insurance charges, legal costs and insurance which can be avoided could by having more

liquid deposits.

Returns

The rate of interest for Bank Fixed Deposits varies between 4 and 11 per cent, depending on the

maturity period (duration) of the FD and the amount invested. Interest rate also varies between

each bank. A Bank FD does not provide regular interest income, but a lump-sum amount on its

maturity. Some banks have facility to pay interest every quarter or every month, but the interestpaid may be at a discounted rate in case of monthly interest. The Interest payable on Fixed

Deposit can also be transferred to Savings Bank or Current account of the customer. The deposit

period can vary from 15, 30 or 45 days to 3, 6 months, 1 year, 1.5 years to 10 years.

TAX BENEFIT

Rates, got a boost when the Indian government announced in 2006 that, bank fixed deposits

booked by an individual/HUF for 5 years and up to Rs. One Lac or Rs. 100,00/- will be eligible forexemption. This exemption would be under section 80C of the income tax act 1961, provided the

investor makes necessary declarations. This is the same section where we take exemption for

life insurance policies, Mutual Funds, etc. The fixed deposits which were giving interest rates up

to 14% or more a decade back have recently slump to around 10%. However, as soon as the

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announcement from income tax department came, fixed deposit again became darling of the

investors.

3).SHARES AND SECURITIES

Shares are the best investment available over a long period of time. The growth of share prices

comfortably out-paces inflation most years because the best share prices represent the growth in

earnings of the best companies. Although the stock market is seen as "high risk" this depends

very much on timing and the sort of shares you invest in. It is possible to invest in shares with

very little risk if you are willing to put in a great deal of effort in learning the art of investment and

doing ample research.

Shares have acquired a high-risk reputation because the majority of people only participate in the

stock market during bull markets, buying at or near historic high prices in the belief that past

returns may by a good indicator of future results. Those that buy just before a crash do not

appreciate share valuations and upside potential v/s downside risk. In fact such considerations

actually bore them and many newcomers choose to trade shares in a highly speculative fashion,

making the stock market into little more than a casino. The rewards are great, but the penalty for

laziness is also great. Those that buy on "hot tips" and rely on the opinions of others, without any

knowledge of what they are doing are often those who suffer the greatest loss.

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A "share" is nothing more, and nothing less than a partial ownership of a business. If you look at

shares investment as the partial purchase of businesses, you are already half way to becoming a

successful investor (the other half is to get some idea of what a business is worth, economically,

and hence to be able to value a share). If you think of shares as part ownership of businesses

you have a substantial advantage over those who think of them only as abstract pieces of paper

with a randomly fluctuating price tag.

Direct share investment is not suitable for everyone, many simply do not have the time or the

inclination to research a portfolio adequately, and will be exposed to the greatest dangers when

they do take the plunge and buy something. Managed funds are available that give returns

roughly in line with market averages (if you take into account tax and trading expenses) and

these are by far a superior investment for those that do not wish to make investment their

profession. Shares, as a whole, are not highly speculative investments with a low probability of

success. The chances of making money in shares over all but the shortest time frames are

excellent, however you need more than just money and a desire to succeed in order to invest

successfully. No one should be afraid of the stock market, it does not crash without reason at any

random time. If you choose to ignore stocks out of fear of a market downturn, you ignore the best

investment that there is.

Characteristics of common shares

A vote at annual meetings and receive regular financial statements of the company.

An opportunity to share in the profit of the company, capital gains (losses) and dividends

because buying common stock represents a decision to give up some measure of safety

in favor of prospects for greater return. If the company does poorly, some or all of the

investment of common share holder can be lost.

common share holders also can claim on the company's assets, in case of dissolution.

Sometimes common shareholders are offered privileges to buy additional shares directly

from the company, often bellowing market price without paying commission and the rights

of either exercising them to buy more shares or of selling them on the market. This right

usually is expired in 3 weeks.

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The company might also issue common share with warrants to attract new buyers.

Warrants allow the owner to buy shares of the issuing company at a set price, usually

below the going price rate within a specified time period and they can be may be

detached and sold separately.

Common may be split by the company by exchanging each share for several shares.

Characteristics of prefer shares

Preferred shares issued by company also representing limited ownership in a

corporation/company. Some investors choose preferred shares over common shares because

of their lower risk and greater assurance of regular income known as dividends.

Part ownership in the company with no voting right

A set dividend rate.

Most preferred shares are cumulative. If the company does not pay the dividends due

each quarter, the unpaid dividends accumulated in arrears and must be paid before

any common shares dividends are paid. Usually, unpaid dividends usually causes the

market price of the shares to drop.

Some preferred shares are redeemable giving the issuer the right to redeem them at a

future date. Some prefer shares are convertible giving the investor the option to convert the shares

into other stock of the company at a specified price and within a certain period.

Advantages of Common Shares

Common stock has the potential for delivering very large gains, unlike bonds, Certificates

of Deposit, or some other alternatives. Annual returns-on-investment (ROIs) of over 100%

have occurred on a somewhat regular basis.

The potential loss from stock purchased with cash is limited to the total amount of the

initial investment. This is considerably better than that of some leveraged transactions,

where the maximum loss can well exceed the total of the funds invested.

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Stocks offer limited legal liability. Passive stockholders (those who take no active part in

the running of the company) are protected against any liability stemming from the

companys actions beyond their financial investment in the company.

Most stocks are very liquid; in other words, they can be bought and sold quickly at a fair

price.

Although past performance is not a guarantee of future performance, stocks have

historically offered very high returns in relation to other investments.

Stocks offer two ways for their owners to benefit, by capital gains and with dividends. As

previously stated, each share of stock represents partial ownership in a company. If the

company becomes more valuable, so will the ownership interest represented by each

share of stock. This appreciation of the stocks value is known as a capital gain. In

addition, if the company earns more profits than it needs to support its maintenance and

growth, it may elect to distribute the excess to its owners, the shareholders. The periodic

distributions of profits are called dividend payments.

Disadvantages of Common Shares

Since common stock represents ownership of a business, stockholders are the last to get

paid, like all other owners. A company must first pay its employees, suppliers, creditors,

maintain its facilities and pay its taxes. Any money left can then be distributed among itsowners.

While shareholders are company owners, they do not enjoy all of the rights and privileges

that the owners of privately held companies do. For example, they cannot normally walk in

and demand to review in detail the companys books.

Investors in a company may not know all that there is to know about the company. This

limited information can sometimes cause investment decision-making to be difficult.

Stock prices tend to be volatile. Prices can be erratic, rising and declining quickly. Such

declines often cause investors to panic and sell, which actually only serves to lock in their

losses.

Stock values can sometimes change for no apparent reason, which can be quite

frustrating for the investor who is trying to anticipate the stocks behavior based on the

actual performance of the company.

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Advantages of Preference Shares

Helpful in raising long term capital for a company

There is no need to mortgage property on these shares.

Redeemable preference shares have the added advantages of repayment of capital

whenever there is surplus in the company.

Rate of return is guaranteed.

Disadvantages of Preference Shares

Permanent burden on the company to pay a fixed rate of dividend before paying anything

on the other shares.

Not advantageous to investors from the point of view of control and management as

preferences shares do not carry voting rights.

Compared to other fixed interest bearing securities such as debentures, usually the cost of

raising the preference share capital is higher.

4).National Savings Certificate

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National Savings Certificate, popularly known as NSC, is a time-tested tax saving instrument that

combines adequate returns with high safety. NSCs are an instrument for facilitating long-termsavings. A large chunk of middle class families use NSCs for saving on their tax, getting double

benefits. They not only save tax on their hard-earned income but also make an investment which

are sure to give good and safe returns.

Characteristics

NSCs are issued in denominations of Rs 100, Rs 500, Rs 1,000, Rs 5,000 and Rs 10,000 for a

maturity period of 6 years. There is no prescribed upper limit on investment.

Individuals, singly or jointly or on behalf of minors and trust can purchase a NSC by applying to

the Post Office through a representative or an agent.

One person can be nominated for certificates of denomination of Rs. 100- and more than one

person can be nominated for higher denominations.The certificates are easily transferable from

one person to another through the post office. There is a nominal fee for registering the transfer.

They can also be transferred from one post office to another.

One can take a loan against the NSC by pledging it to the RBI or a scheduled bank or a co-

operative society, a corporation or a government company, a housing finance company approved

by the National Housing Bank etc with the permission of the concerned post master.

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Though premature encashment is not possible under normal course, under sub-rule (1) of rule

16 it is possible after the expiry of three years from the date of purchase of certificate.

Tax benefits are available on amounts invested in NSC under section 88, and exemption can be

claimed under section 80L for interest accrued on the NSC. Interest accrued for any year can betreated as fresh investment in NSC for that year and tax benefits can be claimed under section

88.

Denominations and Limit

National Savings Certificates are available in the denominations of Rs. 100 Rs 500, Rs. 1000,

Rs. 5000, & Rs. 10,000. There is no maximum limit on the purchase of the certificates. So it is for

you to decide how much you want to put in the NSCs. This is of course a huge benefit for you

can decide as much as your budget allows.

Maturity

Period of maturity of a certificate is six years. Presently interest paid is 8 % per annum half yearly

compounded. Maturity value of a certificate of any other denomination is at proportionate rate.

Premature encashment of the certificate is not permissible except at a discount in the case of

death of the holder(s), forfeiture by a pledge and when ordered by a court of law.

Tax Benefits

Interest accrued on the certificates every year is liable to income tax but deemed to have been

reinvested. Income Tax rebate is available on the amount invested and interest accruing under

Section 88 of Income Tax Act, as amended from time to time. Income tax relief is also available

on the interest earned as per limits fixed vide section 80L of Income Tax, as amended from timeto time.

Return

It is having a high interest rate at 8% compounded half yearly. Post maturity interest will be paid

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for a maximum period of 24 months at the rate applicable to individual savings account. A

Rs1000 denomination certificate will increase to Rs. 1601 on completion of 6 years.

Interest rates for the NSC Certificate of Rs 1000

Year Rate of Interest

1 year Rs 81.60

2 year Rs 88.30

3 year Rs 95.50

4 years Rs103.30

5 years Rs 111.70

6 years Rs 120.80

Advantages

Tax benefits are available on amounts invested in NSC under section 88, and exemption can be cla

the NSC. Interest accrued for any year can be treated as fresh investment in NSC for that year and

NSCs can be transferred from one person to another through the post office on the payment of a pre

one post office to another. The scheme has the backing of the Government of India so there are no ri

5).POSTAL SAVING DEPOSIT

Post Office Monthly Income Scheme

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Interest rate of 8% per annum payable monthly.

Maturity period is 6 years.

Minimum investment amount is Rs.1000/- or in multiple thereof.

Maximum amount is Rs. 3 lacs in single account and Rs. 6 lacs in a joint account.

Account can be opened by an individual, two/three adults jointly and a minor through a

guardian.

A minor having attained 10 years of age can open an account in his/her own name directly.

Non-Resident Indian / HUF cannot open the Account.

Minor has a separate limit of investment of Rs. 3 lacs and the same is not clubbed with the

limit of guardian.

A separate account is opened for each deposit.

Any number of accounts can be opened subject to the maximum prescribed limit. Facility of automatic credit of monthly interest to saving account if accounts are at the same

post office.

Facility of premature closure of account after one year @ 3.50% discount.

No deduction of 3.5% if account is closed on completion of three years.

Facility of reinvestment on maturity of an account.

Interest not with-drawan does not carry any interest.

Maturity proceeds not drawn are eligible to saving account interest rate for a maximum

period of two years.

Account is transferable from one post office to any Post office in India free of cost.

Nomination facility available.

Rebate under section 80 C not admissible.

Interest income is taxable, but no TDS

Only scheme in Post office where monthly interest is payable.

Most suitable scheme for senior citizens and for those who need regular monthly income.

Deposits are exempt from Wealth Tax.

Why should you invest in Post Office Schemes

These schemes are offered by the Government of India.

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Safe, secure and risk-free investment options.

No Tax Deduction at Source (TDS).

Nomination facility is available.

Nomination can be changed at any time

The instruments are transferable to any Post Office anywhere in India.

Attractive rates of interest.

POST OFFICE SAVINGS BANK

Minimum amount Rs20/- in case of non- cheque account, Rs.500/- in case of cheque

account.

Minimum balance of Rs.500/- is to be maintained for a cheque account.

Account is opened with cash only.

Maximum balance permissible Rs. 1,00,000/- in a single account and 2,00,000/- in Joint

account.

Two/Three adults, individuals, minor through guardian.

A Minor having 10 years of age can also open an account directly.

One individual account and one joint account can only be opened at a post office.

6).MUTUAL FUND

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Mutual fund is a pool of money collected from investors and is invested according to stated

investment objectives Mutual fund investors are like shareholders and they own the fund. Mutual

fund investors are not lenders or deposit holders in a mutual fund. Everybody else associated with

a mutual fund is a service provider, who earns a fee. The money in the mutual fund belongs to the

investors and nobody else. Mutual funds invest in marketable securities according to the

investment objective. The value of the investments can go up or down, changing the value of the

investors holdings.NAV of a mutual fund fluctuates with market price movements. The market

value of the investors funds is also called as net assets. Investors hold a proportionate share of thefund in the mutual fund. New investors come in and old investors can exit, at prices related to net

asset value per unit.

Mutual Fund Industry in India

Mutual Fund is an instrument of investing money. Nowadays, bank rates have fallen down and are

generally below the inflation rate. Therefore, keeping large amounts of money in bank is not a wise

option, as option, as in real terms the value of money decreases over a period of time. One of the

options is to invest the money in stock market. But a common investor is not informed and

competent enough to understand

the intricacies of stock market. This is where mutual funds come to the rescue. A mutual fund is a

group of investors operating through a fund manager to purchase a diverse portfolio of stocks or

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in a mutual fund, investors can purchase stocks or bonds with much lower trading costs than if they

tried to do it on their own. Also, one doesn't have to figure out which stocks or bonds to buy. But the

biggest advantage of mutual funds is diversification. Diversification means spreading out money

across many different types of investments. When one investment is down another might be up.

Diversification of investment holdings reduces the risk tremendously.

In 1963, the government of India took the initiative by passing the UTI act, under which the Unit

Trust of India (UTI) was set-up as a statutory body. The designated role of UTI was to set up a

Mutual Fund. UTIs first scheme, called. In 1987 the other public sector institutions set up their

Mutual Funds. In 1992, government allowed the private sector players to set-up their funds. In 1994

the foreign Mutual Funds arrives in Indian market. In 2001 there is a crisis in UTI and in 2003 UTI

splits up into UTI1and UTI 2. The history of Indian Mutual Fund industry can be explained easily by

various phases.

Advantages

Professional Management

Mutual Funds provide the services of experienced and skilled professionals backed by a

dedicated investment research team that analyses the performance and prospects of

companies and selects suitable investments to achieve the objectives of the scheme.

Diversification

Mutual Funds invest in a number of companies across a broad cross-section of industries and

sectors. This diversification reduces the risk because seldom do all stocks decline at the same

time and in the same proportion. You achieve this diversification through a Mutual Fund with far

less money than you can do on your own.

Convenient Administration

Investing in a Mutual Fund reduces paperwork and helps you avoid many problems such as bad

deliveries, delayed payments and follow up with brokers and companies. Mutual Funds save

your time and make investing easy and convenient.

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Return Potential

Over a medium to long-term, Mutual Funds have the potential to provide a higher return as they

invest in a diversified basket of selected securities.

Low Costs

Mutual Funds are a relatively less expensive way to invest compared to directly investing in the

capital markets because the benefits of scale in brokerage, custodial and other fees translate

into lower costs for investors.

Liquidity

In open-end schemes, the investor gets the money back promptly at net asset value related

prices from the Mutual Fund. In closed-end schemes, the units can be sold on a stock exchange

at the prevailing market price or the investor can avail of the facility of direct repurchase at NAV

related prices by the Mutual Fund.

Transparency

You get regular information on the value of your investment in addition to disclosure on the

specific investments made by your scheme, the proportion invested in each class of assets and

the fund manager's investment strategy and outlook.

Flexibility

Through features such as regular investment plans, regular withdrawal plans and dividend

reinvestment plans, you can systematically invest or withdraw funds according to your needsand convenience.

Affordability

Investors individually may lack sufficient funds to invest in high-grade stocks. A mutual fund

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because of its large corpus allows even a small investor to take the benefit of its investment

strategy.

Choice of Schemes

Mutual Funds offer a family of schemes to suit your varying needs over a lifetime.

Well Regulated

All Mutual Funds are registered with SEBI and they function within the provisions of strict

regulations designed to protect the interests of investors. The operations of Mutual Funds are

regularly monitored by SEBI.

Disadvantages

Professional Management:

Some funds doesnt perform in neither the market, as their management is not dynamic

enough to explore the available opportunity in the market, thus many investors debate over

whether or not the so called professionals are any better than mutual fund or investor himself, for

picking up stocks.

Costs:

The biggest source of AMC income is generally from the entry & exit load which they charge

from investors, at the time of purchase. The mutual fund industries are thus charging extra cost

under layers of jargon.

Dilution:

Because funds have small holdings across different companies, high returns from a few

investments often don't make much difference on the overall return. Dilution is also the result of a

successful fund getting too big. When money pours into funds that have had strong success, the

manager often has trouble finding a good investment for all the new money.

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Taxes:

When making decisions about your money, fund managers don't consider your personal

tax situation. For example, when a fund manager sells a security, a capital-gain tax is triggered,

which affects how profitable the individual is from the sale. It might have been more advantageous

for the individual to defer the capital gains liability.

Tax Benefit

Evaluating performance of a tax saving mutual fund

The basic criteria for an investor to bear in mind before opting for a tax saving mutual fund is the

current performance of that specific fund. Performance is significant constraint, through which a

fund attracts prospective investors before they consider it for investing. Generally the performance

of all the major equity related investments are considered on the basis of 3-5 year of its investment

period. While analyzing the performance of a fund emphasis should be laid on premium and

consistency of the fund in the market.

Another important aspect to consider is the amount of returns that the fund offers in comparison to

other tax saving funds. Decent returns can be attained by following an aggressive investment

approach. Identify the most rewarding tax saving funds which have rewarded its investors on per

unit of risk taken by them and opt for it. Also look for other hidden expenses such as fund

manager's income, marketing expenses, managing expenses, etc.The expenditure of investing in a

mutual fund is calculated by the expense ratio which signifies the proportion of the fund's assets

that go towards the expenses of maintaining the fund.

Popular Tax saving mutual funds in India

SBI Mutual Funds

Prudential ICICI

Franklin Templeton Mutual Fund India

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Standard Chartered Mutual fund India

Bajaj Capital.

Risk & Return on Mutual Funds

A mutual fund pools money from a large number of investors and buys stocks from a large number

of companies. Investing in mutual funds does not have the same level of high return as investing in

stocks does, but it carries significantly less risk.Risk and return for a mutual fund depends on the

type of fund. Small-capitalization funds typically own stocks of companies with less than $1 billion

in market capitalization. These funds can generate high returns but at high risk. Mid-cap funds

invest in companies with median capitalization between $1 billion and $8 billion. Large-cap funds

invest in companies with market capitalization of $8 billion or more. These funds tend to focus on

income from dividends, which can mean a stable if not spectacular return. Value funds invest in

stocks that are undervalued, while growth funds invest in stocks that have high potential to grow.

Value and growth funds tend be associated with higher returns and higher risk, compared with

other types of funds, such as balanced funds, which contain both stocks and bonds.

An example of large-cap index funds is the Vanguard 500 Index fund, which invests in companies

in the Standard & Poor's 500 Index. The performance of the fund will mimic its index's performance.

This type of fund is appropriate for long-term investment, with small short-term returns but stable

long-term growth.

Statistics

A mutual fund's fact sheet often contains information on risk versus return as represented by four

statistics: alpha, beta, standard deviation and the Sharpe Ratio. Beta indicates a fund's past price

volatility in relation to a standard stock market index, like the S&P 500. Beta typically ranges

between 0.85 to 1.05 for stock funds. Other, more aggressive funds might have higher values of

beta. Alpha measures the fund's expected return based on its beta. A positive alpha means a fund

returns more than what is expected, given its beta. A negative alpha indicates that the fund returnsless than expected, based on the beta. The Sharpe Ratio measures risk-adjusted performance.

The higher the ratio, the better.

Standard deviation measures the variability of actual returns in comparison with historical data. The

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higher the standard deviation, the more volatile the fund.

Risk Identification

There are many risks associated with investing in mutual funds, which must be taken into account

when choosing a fund. The stock market tends to move in cycles, and if the market declines, thereis a good chance the value of your fund will drop too. Funds that invest in foreign stock markets,

such as Vanguard Emerging Markets, tend to be riskier than funds based on the U.S. market.

Other types of risks involve the political and economic conditions in countries where the fund

invests, currency risk, income risk, manager risk and inflation risk.

Diversification

A diversified mix of mutual funds reduces risk. In his book "New Guide to Financial Independence,"

Charles Schwab recommends a mixture of growth funds, income funds, international funds and,

most important, index funds. In any given year, only one in five mutual funds outperforms the

market, while index funds aim to match the market.

Considerations

If you do not want to deal with the risks associated with mutual funds, you can choose money

market funds, which have a stable share price, unlike a stock or bond mutual fund. Your return will

be much less than what you can expect from mutual funds, but your risk is minimized.

7).REAL STATE

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Real estate has several unique characteristics that affect its value. There are economic

characteristics and physical characteristics. Real estate is a product to be purchased but it is

different from anything else due to the characteristics that will be discussed here.

The economic characteristics that influence value are scarcity, improvements, permanence and

area preference. Scarcity is simply demonstrated in the saying, "They aren't making any more."

The supply of land has a ceiling and cannot be produced more than what exists today. This value

of this supply however, is influenced by other characteristics.

Improvements, such as buildings on one parcel of land may have an effect on the value of

neighboring parcels or the entire community. If a large company builds in a certain depressed

neighborhood, the value of living their will probably increase because of the introduction of jobs.This value would impact on neighboring communities, thus increasing value in some ways to the

real estate in these areas.

Permanence has to do with the infrastructure. As buildings, houses or other structures are

demolished, the infrastructure, such as sewers, drainage, electricity, and water remain intact.

Permanence effects real estate, or the type of infrastructure. If you buy a piece of land in an area

with no utilities, drainage or paved streets, it will most likely be worth less than a parcel of land that

has this infrastructure intact and developed.

Area preference refers to the choices of the people in any given area. This is usually referred to by

most people when they talk about real estate as, "location, location, location." The location of a

preferred area, for whatever reasons, is what makes values of homes higher. Conversely, the

location of a nonpreferred area, for whatever reason, is what makes the values of homes less.

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8000 square foot brand new homes on the coast of Long Island's, East Hampton will be worth

much more due to their area preference, over an area with 1200 square foot starter homes in the

middle of Long Island, located next to a garbage dump.

The physical characteristics of land represent its indestructible nature, immobility and

nonhomogeneity. Working backwards, we'll start with nonhomogeneity. This simply points out that

no two parcels are the same. Two pieces of land may be very similiar, but every single parcel is

different geographically because each parcel is located in a different spot. This includes two lots

right next to each other. It is important to remember that parcels are created by subdividing land, so

as one large parcel of 20 acres is subdivided, each individual lot becomes its own separate piece of

land.

Land cannot be moved, therefore it is immobile. Even when soil is torn from the ground, the part of

the Earth's surface will always remain. It is important here to note how this physical characteristic

affects real estate law and markets. Immobility of land is the reason why real estate laws and

markets are local in nature.

The indestructibility of land simply means that it is durable and cannot be destroyed. It can be

damaged by storms and other disasters, but it remains and weathers the changing times and will

always be there. This is a main reason why land is talked about as being a sound investment.

So the basic characteristics of real estate include scarcity, improvements to the land, permanence,

area preference, nonhomogeneity, indestructibility and immobility. Please note there is a big

difference between land and real estate. Land is the the part of the earths surface, subsurface and

air above it. Real estate is anything that becomes attached to land. So when you're looking for

investments, it is important to note the infrastructure of the area, the surrounding neighborhood and

the preferences of the area or...location, location, location!

ADVANTAGES AND DISADVANTAGES

There are many advantages and disadvantages of investing in real estate. One of the advantages

of investing in real estate is; real estate is an investment that can give you income for the rest of

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advantage of investing in properties is you can use a lot of leverage to acquire them. There are

many ways you can buy properties without using your own money. One way of doing this is seller

financing. Seller financing is when you agree to pay the seller over time the down payment and the

rest you get from the bank.

One last advantage of investing in real estate is real estate has intrinsic value to it. A stock that you

buy can lose 99% of its value but it is almost impossible to buy a property and it loses 99% of its

value. One disadvantage of investing in properties is if you buy a property and can't make the

mortgage payments you can lose the property and damage your credit. Another disadvantage of

investing in properties is, as an investor you depend on a lot of people to do their part. If the people

you are renting out to do not pay their rent you will have to use their security money and find new

people quickly or it can eat up your profits.

One last disadvantage of investing in properties is the cost it takes to maintain or repair. Many

times when you think you're done with a property something can break or needs to be replaced.

Investing in properties does have its advantages and disadvantages. If you use the information you

read here you will have some idea of what the advantages and disadvantages are.

There are many different types of investment real estate: rental houses, apartments, vacant land,

commercial buildings, industrial, shopping centers or warehouses. They all offer big tax incentives

for investors who understand those benefits. Many people believe that depreciation is the best real

estate tax deduction of all. The IRS REQUIRES real estate investors to depreciate their investment

properties.

Depreciation is a "paper loss" required for estimated wear, tear and obsolescence. However, land

value is not depreciable. This applies to 100% of the money invested in buying vacant land and that

part of the property value apportioned to land on an improved property. (That is, land with a

building on it).

Condominiums do not have a land element and 100% of the purchase price can be depreciated.

Residential income property is depreciated over 27.5 years on a straight-line basis.Commercial property is depreciated over 39 years, also on a straight-line basis.

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CURRENT TRENDS

With property boom spreading in all directions, real estate in India is touching new heights.

However, the growth also depends on the policies adopted by the government to facilitate

investments mainly in the economic and industrial sector. The new stand adopted by Indian

government regarding foreign direct investment (FDI) policies has encouraged an increasing

number of countries to invest in Indian Properties.

India has displaced US as the second-most favored destination for FDI in the world. As theinvestment scenario in India changes, India which has attracted more than three times foreign

investment at US$ 7.96 billion during the first half of 2005-06 fiscal, as against US$ 2.38 billion

during the corresponding period of 2004-05, making India amongst the "dominant host countries"

for FDI in Asia and the Pacific (APAC).

The positive outlook of Indian government is the key factor behind the sudden rise of the Indian

Real Estate sector - the second largest employer after agriculture in India. This budding sector is

today witnessing development in all area such as - residential, retail and commercial in metros of

India such as Mumbai, Delhi & NCR, Kolkata and Chennai. Easier access to bank loans and higher

earnings are some of the pivotal reasons behind the sudden jump in Indian real estate.

Why Invest In Indian Real Estate?

Flying high on the wings of booming real estate, property in India has become a dream for every

potential investor looking forward to dig profits. All are eyeing Indian property market for a wide

variety of reasons:

Its ever growing economy which is on a continuous rise with 8.1 percent increase witnessed

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in the last financial year. The boom in economy increases purchasing power of its people

and creates demand for real estate sector.

India is going to produce an estimated 2 million new graduates from various Indian

universities during this year, creating demand for 100 million square feet of office and

industrial space.

Presence of a large number of Fortune 500 and other reputed companies will attract more

companies to initiate their operational bases in India thus creating more demand for

corporate space.

Real estate investments in India yield huge dividends. 70 percent of foreign investors in

India are making profits and another 12 percent are breaking even.

Apart from IT, ITES and Business Process Outsourcing (BPO) India has shown its expertise

in sectors like auto-components, chemicals, apparels, pharmaceuticals and jewellery where

it can match the best in the world. These positive attributes of India is definitely going to

attract more foreign investors in the near future.

The relaxed FDI rules implemented by India last year has invited more foreign investors and real

estate in India is seemingly the most lucrative ground at present. The revised investor friendly

policies allowed foreigners to own property, and dropped the minimum size for housing estates built

with foreign capital to 25 acres (10 hectares) from 100 acres (40 hectares). With this sudden

change in investment policies, the overseas firms can now put up commercial buildings as long as

the projects surpass 50,000 square meters (538,200 square feet) of floor space.

Indian real estate sector is on boom and this is the right time to invest in property in India to reap

the highest rewards.

Tax benefits

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If you are a "real estate professional" who meets certain time requirements and who "materially

participates" in managing your investment property, you are allowed almost unlimited income tax-

deductions from your investment property.

Time requirement

If you spend at least 750 hours per year, or more than half of your working hours, involved in real

estate activities, you probably qualify as a "real estate professional."

There does not appear to be any clear IRS ruling on a semi-retired person with no occupation but

real estate to which they devote say, 200 hours a year.

Full-time real estate brokers, realty sales agents, property managers, builders, contractors and

leasing agents are examples of qualified real estate professionals.

However, the tax law excludes real estate attorneys and mortgage brokers from qualifying. Unless,

one must assume, they spend more than 50% of their working hours investing in real estate. This

would include managing, buying and selling real estate.

If you invest in real estate but do not qualify as a "real estate professional" , you are limited to a

maximum annual $25,000 realty investment property loss deduction against their ordinary taxable

income. This is called the passive loss restriction. This "loss" includes the paper loss created by

depreciation.

Another catch. If your annual adjusted income exceeds $100,000, the $25,000 loss deduction

gradually phases out. At the $150,000 adjusted income level, the allowable tax loss deduction goes

to zero.

Any undeducted real estate investment tax loss is "suspended" for future use, such as at the time

the property is sold at a profit. Then you may subtract the unused suspended tax loss from your

capital gain to lower the taxable profit. See below.

Material participation requirement

Participation is critical. You can hire a professional property manager and still meet the material

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participation requirement, and claim the unlimited tax deductions as a professional.

Day-to-day operating details, such as collecting rents, evicting tenants and unclogging toilets, can

be delegated to this manager.

But, you must make the major decisions, such as setting rents, approving major expenses andqualifying new tenants. Remember of course the time requirement.

Depreciation of personal property such as appliances

Personal property used in operating the property, such as appliances, is depreciated over shorter

periods, typically five to 10 years. Even automobiles and trucks used in the investment operation

can be depreciated over their useful lives.

First-year 100% deduction

There is also the new first-year 100 percent tax deduction for up to $100,000 of business

equipment purchased. This would include appliances. Sorry but you can't buy a brand new

Mercedes and deduct 100% of the cost from your taxes in the first year. But there are special rules

for work vehicles, such as trucks. Ask your CPA for more details.

Depreciation is a non-cash deduction

It reduces taxable income from the investment property. But, in contrast to property taxes,

mortgage interest, utilities, insurance and repairs, it doesn't require any cash outlay. The

depreciation expense deduction can result in a positive cash flow property becoming a loss maker

for tax purposes.

Most investment properties go up in value every year, but on paper their value is going down.

Unfortunately, unused tax losses from investment properties cannot be carried back to prior tax

years to claim a tax refund.

IRS Notice 88-94 allows use of suspended passive activity tax losses (assuming you do NOT

qualify as a professional with material participation) from realty investment assets to offset profits

from the sale of the property. The tax result is that you can use suspended property losses on an

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total basis, rather than property-by-property.

Recapture of depreciation benefits

The maximum capital gains tax rate was reduced to 15 percent in 2003 for assets owned more

than 12 months. (If held for less than 12 months gains are taxed as ordinary income.)

However, the IRS requires that you "recapture" the tax saving from your income tax at a special 25

percent depreciation "recapture" tax rate when the property is sold. This apply whether or not you

qualify as a "real estate professional."

Example of recapture

Suppose you bought an investment property for $500,000 and deducted $150,000 of

depreciation during your ownership years.That means your book value (also called "adjusted cost basis") declined to $350,000. Then you

sold for $650,000.Your capital gain is therefore $300,000 ($650,000 minus $350,000).Of that $300,000 capital gain, the $150,000 depreciation deducted will be "recaptured" and taxed

at the 25 percent special federal tax rate.The $150,000 remainder of your capital gain will be taxed at the new 15 percent maximum tax

rate.

8).CURRENCY

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Definition

An exchange of currencies, where an investor will exchange a specific amount of one currency

for another currency which can be invested at a higherinterest rate.

Any form ofmoney that is in publiccirculation. Currency includes both hard money(coins)and soft money ( paper money). Typically currency refers to money that is legally

designated as such by the governing body, but in some cultures currency can refer to any

objectthat has aperceived value and can be exchanged for other objects.

Characteristics

The money market is a market for financial assets that are close substitutes for money. It is a

market for overnight short-term funds and instruments having a maturity period of one or less

than one year. It is not a place (like the Stock market), but an activity conducted by telephone.

The money market constitutes a very important segment of the Indian financial system.

The characteristics of the money market are:

1. It is not a single market but a collection of markets for several instruments

2. It is wholesale market of short term debt instruments

3. Its principal feature is honor where the creditworthiness of the participants is important.

4. The main players are: Reserve bank of India (RBI), Discount and Finance House of India

(DFHI), mutual funds, banks, corporate investor, non-banking finance companies (NBFCs), state

governments, provident funds, Primary dealers. Securities Trading Corporation of India (STCI),

public sector undertaking (PSUs), non-resident Indians and overseas corporate bodies.

5. It is a need based market wherein the demand and supply of money shape the market.

Functions of the CurrencyMarket:

A currency market is generally expected to perform three broad functions:

1. Provide a balancing mechanism to even out the demand for and supply of short term funds

2. Provide a focal point for central bank intervention for influencing liquidity and general level of

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interest rates in the economy.

3. Provide reasonable access to suppliers and users of short term funds to fulfill their borrowings

and investment requirements at an efficient market clearing price.

Besides the above functions, a well functioning money market facilitates the development of a

market for longer term securities. The interest rates for extremely short term use of money serve

as a benchmark for longer term financial instruments.

Advantages

An efficient money market benefits a number of players. It provides a stable source of funds to

banks in addition to deposits allowing alternative financing structures and competition. It allows

banks to manage risks arising from interest rate fluctuations and to manage the maturity

structure of their assets and liabilities.

A developed inter-bank market provides the basis for growth and liquidity in the money including

the secondary market for commercial paper and treasury bills.

An efficient money market encourages the development of non-bank intermediaries thus

increasing the competition for funds. Savers get a wide array of savings instruments to choose

from and invest their savings.

A liquid money market provides an effective source of long term finance to borrowers. Large

borrowers can lower the cost of raising funds and manage short term funding or surplus

efficiently.

A liquid and vibrant money market is necessary for the development of a capital market, foreign

exchange market, and market in derivative instruments. The money market supports the long

term debt market by increasing the liquidity of securities. The existence of an efficient money

market is a precondition for the development of a government securities market and a forward

foreign exchange market.

Trading in forwards, swaps, and futures is also supported by a liquid money market as the

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certainty of prompt cash settlement is essential for such transactions. The government can

achieve better pricing on its debt as it provides access to a wide range of buyers. It facilitates the

government market borrowing.

Monetary control through indirect methods (repos and open market operations) is more effective

if the money market is liquid. In such a market response to the central banks policy actions are

both faster and less subject to distortion.

The average turnover of the money market in India is over Rs 40,000 crore daily. This is more

than 3 per cent of the total money supply in the Indian economy and 6 percent of the total funds

that commercial banks have let out to the system. This implies that 2 per cent of the annual GDP

of India gets traded in the money market in just one day. Even though the money market is manytimes larger than the capital market, it is not even a fraction of the daily trading in developed

markets.

9).Antiques

An antique is a work of art, including a piece of furniture, a decorative object which, according to

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some experts must be at least 100 years old. The value of an antique depends upon certain

parameters including its authenticity, beauty, age, rarity and condition. Traditionally speaking, an

antique also means objects preceding the the mass production of objects in the 1830's; It can

also include anything very old, a relic or an object of ancient times or the bygone era.

Time Vs Authenticity

Though age is an important factor in determining whether an object is an antique or not, but

authenticity is the most important element. An antique is an authentic piece, made in olden times

and place in which those pieces were in vogue and constructed with authentic tools and

methods.

Authenticity is a more important aspect in deciding if something is an antique because it, not

age, determines the actual value of a piece. Any object that is in original condition is far morevaluable than a piece that has been altered. Refinishing, relining, repairing, resilvering, regilding

or replacing an antique diminishes its value.

Few Examples of Antiques

Antique furniture

Antique jewellery

Antique Collectibles Antique Automobiles

Antique Metals

Antique kitchenware

An antique (Latin: antiquus; old) is an old collectible item. It is collected or desirable

because of its age (see definition), beauty, rarity, condition, utility, personal emotional

connection, and/or other unique features. It is an object that represents a previous era or

time period in human society. It is common practise to define "antique", as applying to

objects at least 100 years old. Collectables are, generally speaking, the possible antiques

of the future and generally less than 100 years old.

Antiques are usually objects which show some degree of craftsmanship, or a certain

attention to design such as a desk or an early automobile. They are most often bought at

antique shops, or passed down as an estate. Some valuable antiques can be bought from

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antique dealers and auction services or purchased online through websites and online

auctions. Antique dealers are often members of national trade associations, many of

which belong to CINOA, a confederation of art and antique associations across 21

countries, representing 5000 dealers.

Definition

The definition of antique varies from source to source, product to product, and year to year.

However, some time-tested definitions ofantique deserve consideration, such as the following:

1. "An item which is at least 100 years old and is collected or desirable due to rarity,

condition, utility, or some other unique feature. Motor vehicles, power tools and other

items subject to vigorous use in contrast, may be considered antiques in the US if older

than 50 years, and some electronic gadgets of more recent vintage may be considered

antiques. Another general rule of thumb is 75 years for most objects to becomeantiques."[citation needed]

2. "Any piece of furniture or decorative object or the like produced in a former period and

valuable because of its beauty or rarity." [citation needed]

In the United States, the 1930 Smoot-Hawley Tariff Act defined an antique as "works of art

(except rugs and carpets made after the year 1700), collections in illustration of the progress of

the arts, works in bronze, marble, terra cotta, parian, pottery or porcelain, artistic antiquities and

objects of ornamental character or educational value which shall have been produced prior to the

year 1830."[citation needed] 1830 was roughly the beginning of mass production in the US and 100

years older than 1930 Smoot-Hawley Tariff Act.

These definitions allow people to make a distinction between genuine antique pieces, vintage

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items, and collectible objects.

The alternative term antiquities commonly refers to the remains of ancient art and everyday

items from antiquity, which themselves are often archaeological artifacts.

The term antiquarian refers to a person interested in antiquities, or things of the past.

Antiquing

Antiquing" is the act of shopping, identifying, negotiating, or bargaining for antiques. Items can

be bought for personal use, gifts, and in the case of brokers and dealers, profit. Antiquing is

performed at garage sales, estate sales, resort towns, antiques districts, collectives, and

international auction houses.

10).ART AND PAINTING

Today, we find that an increasing number of individuals are looking at alternative investments,

which provide them with a diversification away from a particular asset class. People are willing to

invest and looking for areas other than the stock market for investing. Investing in the vintage

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wine, coins, stamps and Art, is now an indulgence which gives them an opportunity to cash in on

their hobbies, without having the level of expertise that is required for other direct investments.

Art is being incorporated into the investor's overall asset allocation decision. The art scene

around the world is growing significantly. With more and more investors looking at art as an

alternative asset class and a store of a long term value, average annual art valuations have

outpaced average annual stock market valuations by more than three times since 2000.

Now this market is much stronger. In terms of returns one can see the market price has gone up

four to five times, in some cases ten times in the past four years. With a sharp rise in the value of

art and a comparatively disappointing performance in the stock markets and the real estate,

individuals with money are now tapping Art as an alternate investment avenue.

This is the reason why Citigroup and others are buying paintings as an investment for their very

important private-banking clients. Wealthy clients who switch to art collection, as a way of

diversifying investments, can find it an unexpectedly pleasurable experience. Unlike incase of

stocks and shares, investors can literally admire their expensive investment.

Risk

"Art" is not everyone's cup of tea. It varies to great extent depending on public tastes and other

factors. Hence, they are considered to be high risk, speculative investments. Also art cannot be

resold quickly for a profit. In other words, it is not a very liquid investment to earn reasonable

amount of profit; one might have to stay invested very long period of time. One should be careful

while making investment in this asset class. Art is illiquid; it needs maintenance, storage,

security, and it doesn't give dividends, bonuses or income.

Guidelines for investing in Art

Educate yourself by reading all relevant data you find on y

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