Integrated Research Dissertation

By A.Ritesh kumar DM-05-001

A STUDY ON INVESTMENT OPPORTUNITIES OTHER THAN STOCK MARKET

Contents:
Chapter 1: a. Abstract b. Introduction c. Objectives d. Limitation Chapter 2: Different types of investments Chapter 3: Returns on different investments Chapter 4: Finding and Suggestions Chapter 5: Conclusion

Synopsis

A study on investment opportunities what else is available other than stock market Introduction: There are different investment opportunities other than stock market where one can provide high returns with minimum risk. The project is all about to work on these options and come out with a best investment alternative other than stock market. NEED FOR THE STUDY: To know the investment options where it can provide better returns other than stock market. To provide the investment options by different stastical and financial models where better returns can be generated. OBJECTIVE: To understand different types of investments. To create different investment models which will fetch better returns.

METHODOLOGY: By collecting secondary data from stocks, banks, insurance companies, mutual fund investments.

OUTCOME: Investment option which is an alternative to stock market which gives you a good return with low risk.

Introduction:
Investment refers to the concept of deferred consumption, which involves purchasing an asset, giving a loan or keeping funds in a bank account with the aim of generating future returns. Various investment options are available, offering differing riskreward tradeoffs. An understanding of the core concepts and a thorough analysis of the options can help an investor create a portfolio that maximizes returns while minimizing risk exposure.

Why Do People Save & Invest Money?

Saving and investing money is a stepping stone to managing spending habits and preparing for future expenses. Most people recognize the need to put money away for events or circumstances that may come up down the road.

Manage Personal Finances

1. People save and invest money to manage their personal finances. According to the FDIC, improperly managing money and overspending takes away from priorities such as long-term savings. Creating a savings and investment plan allows people to properly control their finances.

Retirement
2. People save and invest money to supplement their retirement income. Retirement accounts allow investors to deposit a portion of their income into investments that may achieve a projected rate of return until the person reaches retirement age. Once the person retires, he can use his savings to pay for living expenses.

DIFFERENT TYPES OF INVESTMENTS

You can invest your money in different types of Investment instruments. These instruments can be financial or non-financial in nature. There are many factors that affect your choice of investment. Millions of Indians buy fixed deposits, post office savings certificates, stocks, bonds or mutual funds, purchase gold, silver, or make similar investments. They all have a reasons for investing their money. Some people want to supplement their retirement income when they reach the age of 60, while others want to become millionaires before the age of 40.

Financial Instruments
Equities Equities are a type of security that represents the ownership in a company. Equities are traded (bought and sold) in stock markets. Alternatively, they can be purchased via the Initial Public Offering (IPO) route, i.e. directly from the company. Investing in equities is a good long-term investment option as the returns on equities over a long time horizon are generally higher than most other investment avenues. However, along with the possibility of greater returns comes greater risk.

Mutual funds A mutual fund allows a group of people to pool their money together and have it professionally managed, in keeping with a predetermined investment objective. This investment avenue is popular because of its cost-efficiency, risk-diversification, professional management and sound regulation. You can invest as little as Rs. 1,000 per month in a mutual fund. There are various general and thematic mutual funds to choose from and the risk and return possibilities vary accordingly.

Bonds Bonds are fixed income instruments which are issued for the purpose of raising capital. Both private entities, such as companies, financial institutions, and the central or state government and other government institutions use this instrument as a means of garnering funds. Bonds issued by the Government carry the lowest level of risk but could deliver fair returns.

Deposits Investing in bank or post-office deposits is a very common way of securing surplus funds. These instruments are at the low end of the risk-return spectrum.

Cash equivalents These are relatively safe and highly liquid investment options. Treasury bills and money market funds are cash equivalents.

Non-financial Instruments
Real estate With the ever-increasing cost of land, real estate has come up as a profitable investment proposition.

Gold
The 'yellow metal' is a preferred investment option, particularly when markets are volatile. Today, beyond physical gold, a number of products which derive their value from the price of gold are available for investment. These include gold futures and gold exchange traded funds.

DIFFERENT TYPE OF INVESTORS

Just as there are different types of investments, there are also different types of investors. Depending on your investment knowledge, income level and stage in life, you could find yourself investing aggressively or conservatively, and as your investment knowledge grows, and your goals and means change, you may move from one type of investing to the other. Below are the different investor descriptions and sample asset allocation charts which show how investment portfolios could be structured among the three main asset categories cash, fixed income and growth to best meet an investors needs. (Note that these examples are suggestions only and will not suit every investor. For help in structuring your investment portfolio, call us at CDSPI Advisory Services to speak with a certified financial planner.)

RISK
What are the different types of risks? There a number of differing types of risk that can affect your investments. While some of these risks can be reduced through a number of avenues - some of them simply have to be accepted and planned for in any investment decision. On a macro (large scale) level there are two main types of risk, these are systematic risk and unsystematic risk.

Systematic risk is the risk that cannot be reduced or predicted in any manner and it is almost impossible to predict or protect yourself against this type of risk. Examples of this type of risk include interest rate increases or government legislation changes. The smartest way to account for this risk, is to simply acknowledge that this type of risk will occur and plan for your investment to be affected by it. Unsystematic risk is risk that is specific to an assets features and can usually be eliminated through a process called diversification. Examples of this type of risk include employee strikes or management decision changes.

No investment is risk-free. Some investment risks may be particular to the investment itself or to the particular asset class. Others may be much broader, for example relating to the country of investment or the economy in general.

How to minimize risk?

Diversify your portfolio. Your portfolio comprises all of your investments. The most efficient way to lessen the financial risk of "having all your eggs in one basket" is to spread the "eggs" out. Choose a strategy to diversify. There are financial charts based on risk and age (for retirement funds) that will help you to know how to diversify and what types of investments to purchase. You can also invest across asset classes. See Resources for a link of different strategies.

 Rebalance your portfolio. Mark a day on your calendar each year to "re-balance" your portfolio. Investments go up and down, unpredictably, despite forecasts. Each year, you'll need to reallocate how much you have invested in your different investments, in order to follow your chart and stay on target.