ANALYSIS OF INVESTMENT DECISIONS Submitted By

Project submitted in partial fulfillment for the award of degree of MASTER OF B S!"ESS A#M!"!STRAT!O" B$

#E%&ARAT!O" I hereby declare that this r!"ect re !rt titled A"A&'S!S OF !"(ESTME"T #E%!S!O"S submitted by me t! the De artme#t !$ ))))))) is a b!#a$ide %!r& u#derta&e# by me a#d it is #!t submitted t! a#y !ther '#i(ersity !r I#stituti!# $!r the a%ard !$ a#y de)ree di l!ma * certi$icate !r ublished a#y time be$!re+

ABST-ACT
The r!"ect .ANANLYSIS OF INVESTMENT O/TIONS0 )i(es the brie$ idea re)ardi#) the (ari!us i#(estme#t ! ti!#s that are re(aili#) i# the $i#a#cial mar&ets i# I#dia+ 1ith l!ts !$ i#(estme#t ! ti!#s li&e ba#&s2 Fi3ed De !sits2 4!(er#me#t b!#ds2 st!c& mar&et2 real estate2 )!ld a#d mutual $u#ds the c!mm!# i#(est!r e#ds u m!re c!#$used tha# e(er+ Each a#d e(ery i#(estme#t ! ti!# has its !%# merits a#d demerits+ This r!"ect I ha(e discussed ab!ut $e% i#(estme#t ! ti!#s a(ailable+ A#y i#(est!r be$!re i#(esti#) sh!uld ta&e i#t! c!#siderati!# tae sa$ety2 li5uidity2 retur#s2 e#try*e3it barriers a#d ta3 e$$icie#cy arameters+ 1e #eed t! e(aluate each i#(estme#t ! ti!# !# the ab!(e6me#ti!#ed basis a#d the# i#(est m!#ey+ T!day i#(est!r $aces t!! much c!#$usi!# i# a#aly7i#) the (ari!us i#(estme#t ! ti!#s a(ailable a#d the# selecti#) the best suitable !#e+ I# the rese#t r!"ect2 i#(estme#t ! ti!#s are c!m ared !# the basis !$ retur#s as %ell as !# the arameters li&e sa$ety2 li5uidity2 term h!ldi#) etc+ thus assisti#) the i#(est!r as a )uide $!r i#(estme#t ur !se+

AC9NO1LED4EMENT
I %!uld li&e t! )i(e s ecial ac&#!%led)eme#t t! :::: $!r his c!#siste#t su m!ti(ati!#+ I am )rate$ul t! :::::2 Ass!ciate r!$ess!r i# $i#a#ce2 :::::2 $!r his tech#ical e3 ertise2 ad(ice a#d e3celle#t )uida#ce+ ;e #!t !#ly )a(e my r!"ect a scru ul!us critical readi#)2 but added ma#y e3am les a#d ideas t! im r!(e it+ I am i#debted t! my !ther $aculty members %h! )a(e time a#d a)ai# re(ie%ed ! ti!#s !$ this r!"ect a#d r!(ide ma#y (aluable c!mme#ts+ I %!uld li&e t! e3 ress my a reciati!# t!%ards my $rie#ds $!r their e#c!ura)eme#t a#d su thr!u)h!ut this r!"ect+ A $i#al %!rd !$ tha#&s )!es t! e(ery!#e else %h! made this r!"ect !ssible+ Y!ur c!#tributi!#s ha(e bee# m!st a reciated+ !rt !rt a#d

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TABLE OF CONTENETS
CONTENTS List !$ tables List !$ Fi)ures C;A/TE-61 1+INT-OD'CTION ,+OB@ECTIVE OF T;E ST'DY 8+MET;ODOLO4Y <+LIMITATIONS OF T;E ST'DY C;A/TE-6, C+INT-OD'CTION TO INVESTMENT DECISIONS =+TY/ES OF INVESTMENT OF O/TIONS C;A/TE-68 >+ALL ABO'T ED'ITY INVESTMENT ?+ALL ABO'T BONDS INVESTMENT A+ALL ABO'T 4OLD INVESTMENT 1B+ALL ABO'T M'T'ALF'ND INVESTMENT 11+ALL ABO'T -EAL ESTATE INVESTMENT 1,+ALL ABO'T LIFE INS'-ANCE INVESTMENT C;A/TE-6< 18+/E-FO-MANCE ANALYSIS OF -ET'-NS C;A/TE-6C 1<+FINDIN4S OF T;E ST'DY 1C+CONCL'SION 1=+BIBLIO4-A/;Y C> =, =< <> 1C ,1 ,> 81 8> <1 1, 18 ? A 1B 11 /A4E NO+ = >

LIST OF TABLES
TABLE 1+ B!#d -ati#) ,+ Asset 4rid 8+ /arameters Table /A4E NO+ ,8 CA =1

LIST OF FI4'-ES
FI4'-ES 1+ Se#se3 Chart ,+ BSE 1BB Chart 8+ BSE ,BB Chart <+ BSE CBB Chart C+ 4!ld Chart =+ E5uity Ta3 Sa(i#) Chart >+ E5uity Bala#ced Chart /A4E NO+ <> <? <A CB C1 C, C8

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INT-OD'CTION TO INVESTMENTS
There are ma#y di$$ere#t de$i#iti!#s !$ %hat Ei#(estme#tF a#d Ei#(esti#)F actually mea#s+ O#e !$ the sim lest %ays !$ describi#) it is usi#) y!ur m!#ey t! try a#d ma&e m!re m!#ey+ This ca# ha e# i# ma#y di$$ere#t %ays+ All i#(est!rs are di$$ere#t+ The c!mm!# $act!r is that y!u %!uld li&e t! i#(est m!#ey t! aim t! ma&e it )r!% !r t! recei(e a re)ular i#c!me $r!m it+ 1e %!uld li&e t! sh!% y!u that ch!!si#) the m!st suitable i#(estme#t $!r y!u d!es #!t #eed t! be di$$icult+ All y!u #eed is the ri)ht hel al!#) the %ay+ The act c!mmitti#) m!#ey !r ca ital t! a# e#dea(!r %ith the e3 ectati!# !$ !btai#i#) a# additi!#al i#c!me !r r!$it is &#!%# as i#(estme#t+ I#(esti#) mea#s utti#) y!ur m!#ey t! %!r& $!r y!u+

OB@ECTIVE OF T;E ST'DY

The rimary !b"ecti(e !$ the r!"ect is t! ma&e a# a#alysis !$ (ari!us i#(estme#t decisi!#+ The aim is t! c!m are the retur#s )i(e# by (ari!us i#(estme#t decisi!#+ T! cater the di$$ere#t #eeds !$ i#(est!r2 these ! ti!#s are als! c!m ared !# the basis !$ (ari!us arameters li&e sa$ety2 li5uidity2 ris&2 e#try*e3it barriers2 etc+ The r!"ect %!r& %as u#derta&e# i# !rder t! ha(e a reas!#able u#dersta#di#) ab!ut the

i#(estme#t i#dustry+ The r!"ect %!r& i#cludes &#!%i#) ab!ut the i#(estme#t DECISIONS li&e e5uity2 b!#d2 real estate2 )!ld a#d mutual $u#d+ All i#(estme#t DECISIONS are discussed %ith their ty es2 %!r&i#)s a#d retur#s+

MET;ODOLO4Y
E5uities2 B!#ds2 -eal Estate2 4!ld2 Mutual Fu#ds a#d Li$e I#sura#ce %ere ide#ti$ied as ma"!r ty es !$ i#(estme#t decisi!#+ The rimary data $!r the r!"ect re)ardi#) i#(estme#t a#d (ari!us i#(estme#t DECISIONS %ere c!llected thr!u)h+ The sec!#dary date $!r the r!"ect re)ardi#) i#(estme#t a#d (ari!us i#(estme#t DECISIONS %ere c!llected $r!m %ebsites2 te3tb!!&s a#d ma)a7i#es+ The# the a(era)es !$ retur#s !(er a eri!d !$ C years are c!#sidered $!r the ur !se !$

c!m aris!# !$ i#(estme#t ! ti!#s+ The#2 critical a#alysis is made !# certai# arameters li&e retur#s2 sa$ety2 li5uidity2 etc+ 4i(i#) %ei)hta)e t! the di$$ere#t ty e !$ #eeds !$ the i#(est!rs a#d the# multi lyi#) the same %ith the (alues assi)#ed d!es this+

1B

LIMITATIONS OF T;E ST'DY

The study %as limited t! !#ly si3 i#(estme#t ! ti!#s+ M!st !$ the i#$!rmati!# c!llected is sec!#dary data+ The data is c!m ared a#d a#aly7ed !# the basis !$ er$!rma#ce !$ the i#(estme#t ! ti!#s !(er the ast $i(e years+ 1hile c!#sideri#) the retur#s $r!m mutual $u#ds !#ly t! a#aly7ed+ er$!rmi#) schemes %ere

It %as (ery di$$icult t! !btai# the date re)ardi#) the retur#s yielded by real estate a#d he#ce a(era)es %ere ta&e#+

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INVESTMENT DECISIONS I#tr!ducti!#

These days alm!st e(ery!#e is i#(esti#) i# s!methi#)G e(e# i$ itFs a sa(i#)s acc!u#t at the l!cal ba#& !r a chec&i#) acc!u#t the ear#s i#terest !r the h!me they b!u)ht t! li(e i#+ ;!%e(er2 ma#y e! le are !(er%helmed %he# they bei#) t! c!#sider the c!#ce t !$ i#(esti#)2 let al!#e the lau#dry list !$ ch!ices $!r i#(estme#t (ehicles+ E(e# th!u)h it may seem the e(ery!#e a#d their br!thers &#!%s e3actly %h!2 %hat a#d %he# t! i#(est i# s! they ca# ma&e &illi#)2 lease d!#Ft be $!!led+ Ma"!rities !$ i#(est!r ty ically "um !# the latest i#(estme#t ba#d%a)!# a#d r!bably d!#Ft &#!% as much ab!ut %hatFs !ut there as y!u thi#&+ Be$!re y!u ca# c!#$ide#tly ch!!se a# i#(estme#t ath that %ill hel y!u achie(e y!ur ers!#al )!als a#d !b"ecti(es2 itFs (itally im !rta#t that y!u u#dersta#d the basics ab!ut the ty es !$ i#(estme#ts a(ailable+ 9#!%led)e is y!ur str!#)est ally %he# it c!mes t! %eedi#) !ut bad i#(estme#t ad(ice a#d is crucial t! success$ul i#(esti#) %hether y!u )! at it al!#e !r use a r!$essi!#al+ The i#(estme#t ! ti!# be$!re y!u are ma#y+ /ic& the ri)ht i#(estme#t t!!l based !# the ris& r!$ile2 circumsta#ce2 time a(ailable etc+ i$ y!u $eel the mar&et (!latility is s!methi#)2 %hich y!u ca# li(e %ith the# buy st!c&s+ I$ y!u d! #!t %a#t ris&2 the (!latility a#d sim ly desire s!me i#c!me2 the# y!u sh!uld c!#sider $i3ed i#c!me securities+ ;!%e(er2 remember that ris& a#d retur#s are directly r! !rti!#al t! each !ther+ ;i)her the ris&2 hi)her the retur#s+

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TY/ES OF INVESTMENT O/TIONS

A brie$ re(ie% !$ di$$ere#t i#(estme#t ! ti!#s is )i(e# bel!%H

E5uitiesH I#(estme#t i# shares !$ c!m a#ies is i#(esti#) i# e5uities+

St!c&s ca# be br!u)ht*s!ld $r!m the e3cha#)es Isec!#dary mar&etJ !r (ia I/OFs K I#itial /ublic O$$eri#)s I rimary mar&etJ+ St!c&s are the best l!#)6term i#(estme#t ! ti!#s %herei# the mar&et (!latility a#d the resulta#t ris& !$ l!sses2 i$ )i(e# e#!u)h time2 are miti)ated by the )e#eral u %ard m!me#tum !$ the ec!#!my+ There are t%! streams !$ re(e#ue )e#erati!# $r!m this $r!m !$ i#(estme#t+

1+Di(ide#dH /eri!dic ayme#ts made !ut !$ the c!m a#yFs r!$its are termed as di(ide#ds+ ,+4r!%thH The rice !$ the st!c& a reciates c!mme#surate t! the )r!%th !sted by the
c!m a#y resulti#) i# ca ital a reciati!#+ O# a# a(era)e a# i#(estme#t i# e5uities i# I#dia has a retur# !$ ,CL+ 4!!d !rt$!li! ma#a)eme#t2 recise timi#) may e#sure a retur# !$ <BL !r m!re+ /ic&i#) the ri)ht st!c& at the ri)ht time %!uld )uara#tee that y!ur ca ital )ai#s i+e+ )r!%th i# mar&et (alue !$ st!c& !ssessi!#s2 %ill rise+

B!#dsH It is a $i3ed i#c!me IdebtJ i#strume#t issued $!r a eri!d !$ m!re tha# !#e year %ith the
ur !se !$ raisi#) ca ital+ The ce#tral !r state )!(er#me#t2 c!r !rati!#s a#d similar i#stituti!#s sell b!#ds+ A b!#d is )e#erally a r!mise t! re ay the ri#ci al al!#) %ith $i3ed rate !$ i#terest !# a s eci$ied date2 called as the maturity date+ Other $i3ed i#c!me i#strume#ts i#clude ba#& de !sits2 debe#tures2 re$ere#ce shares etc+ The a(era)e rate !$ retur# !# b!#d a#d securities i# I#dia has bee# ar!u#d 1B618L +a+

Mutual Fu#dH These are ! e# a#d cl!se6e#ded $u#ds ! erated by a# i#(estme#t c!m a#y2
%hich raises m!#ey $r!m the ublic a#d i#(ests i# a )r!u !$ assets2 i# acc!rda#ce %ith a stated set !$ !b"ecti(es+ It is a substitute $!r th!se %h! are u#able t! i#(est directly i# e5uities !r debt because !$ res!urce2 time !r &#!%led)e c!#strai#ts+ Be#e$its i#clude di(ersi$icati!# a#d r!$essi!#al m!#ey ma#a)eme#t+ Shares are issued a#d redeemed !# dema#d2 based !# the $u#s

18

#et asset (alue2 %hich is determi#ed at the e#d !$ each tradi#) sessi!#+ The a(era)e rate !$ retur# as a c!mbi#ati!# !$ all mutual $u#ds ut t!)ether is #!t $i3ed but is )e#erally m!re tha# %hat ear# is $i3ed de !sits+ ;!%e(er2 each mutual $u#d %ill ha(e its !%# a(era)e rate !$ retur# based !# se(eral schemes that they ha(e $l!ated+ I# the rece#t ast2 Mutual Fu#s ha(e )i(e# a retur# !$ 1? K 8CL+

-eal EstateH F!r the bul& !$ i#(est!rs the m!st im !rta#t asset i# their !rt$!li! is a reside#tial
h!use+ I# additi!# t! a reside#tial h!use2 the m!re a$$lue#t i#(est!rs are li&ely t! be i#terested i# either a)ricultural la#d !r may be i# semi6urba# la#d a#d the c!mmercial r! erty+

/reci!us /r!"ectsH /reci!us !b"ects are items that are )e#erally small i# si7e but hi)hly
(aluable i# m!#etary terms+ S!me im !rta#t reci!us !b"ects are li&e the )!ld2 sil(er2 reci!us st!#es a#d als! the u#i5ue art !b"ects+

Li$e i#sura#ceH I# br!ad se#se2 li$e i#sura#ce may be re(ie%ed as a# i#(estme#t+ I#sura#ce
remiums re rese#t the sacri$ice a#d the assured the sum the be#e$its+ The im !rta#t ty es !$ i#sura#ce !licies i# I#dia areH E#d!%me#t assura#ce !licy+ M!#ey bac& !licy+ 1h!le li$e !licy+ Term assura#ce !licy+ '#it6li#&ed i#sura#ce la#+

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ALL ABO'T ED'ITY INVESTMENT

St!c&s are i#(estme#ts that re rese#t !%#ershi 666 !r e5uity 666 i# a c!r !rati!#+ 1he# y!u buy st!c&s2 y!u ha(e a# !%#ershi share 666 h!%e(er small 666 i# that c!r !rati!# a#d are e#titled t! art !$ that c!r !rati!#Fs ear#i#)s a#d assets+ St!c& i#(est!rs 666 called shareh!lders !r st!c&h!lders 666 ma&e m!#ey %he# the st!c& i#creases i# (alue !r %he# the c!m a#y the issued the st!c& ays di(ide#ds2 !r a !rti!# !$ its r!$its2 t! its shareh!lders+ S!me c!m a#ies are ri(ately held2 %hich mea#s the shares are a(ailable t! a limited #umber !$ e! le2 such as the c!m a#yFs $!u#ders2 its em l!yees2 a#d i#(est!rs %h! $u#d its de(el! me#t+ Other c!m a#ies are ublicly traded2 %hich mea#s their shares are a(ailable t! a#y i#(est!r %h! %a#ts t! buy them+

The I/O
A c!m a#y may decided t! sell st!c& t! the ublic $!r a #umber !$ reas!#s such as r!(idi#) li5uidity $!r its !ri)i#al i#(est!r !r raisi#) m!#ey+ The $irst time a c!m a#y issues st!c& is the i#itial ublic !$$eri#) II/OJ2 a#d the c!m a#y recei(es the r!ceeds $r!m that sale+ A$ter that2 shares !$ the st!c& are treaded2 !r br!u)ht a#d s!ld !# the securities mar&ets am!#) i#(est!rs2 but the c!r !rati!# )ets #! additi!#al i#c!me+ The rice !$ the st!c& m!(es u !r d!%# de e#di#) !# h!% much i#(est!rs are %illi#) t! ay $!r it+ Occasi!#ally2 a c!m a#y %ill issue additi!#al shares !$ its st!c&s2 called a sec!#dary !$$eri#)2 t! raise additi!#al ca ital+

Ty es O$ St!c&s
1ith th!usa#ds !$ di$$ere#t st!c&s tradi#) !# '+S+ a#d i#ter#ati!#al securities mar&ets2 there are st!c&s t! suit e(ery i#(est!r a#d t! c!m leme#t e(ery !rt$!li!+ F!r e3am le2 s!me st!c&s stress )r!%th2 %hile !thers r!(ide i#c!me+ S!me st!c&s $l!urished duri#) b!!m time2 %hile !thers may hel i#sulate y!ur !rt$!li!Fs (alue a)ai#st turbule#t !r de ressed mar&ets+ S!me st!c&s are ricey2 %hile !thers are c!m arati(ely i#e3 e#si(e+ A#d s!me st!c&s are i#here#tly (!latile2 %hile !thers te#d t! be m!re stable i# (alue+

1C

4r!%th M I#c!me
S!me st!c&s are c!#sidered )r!%th i#(estme#ts2 %hile !thers are c!#sidered (alue i#(estme#ts+ Fr!m a# i#(esti#) ers ecti(e2 the best e(ide#ce !$ )r!%th is a# i#creasi#) rice !(er time+ St!c&s !$ c!m a#ies that rei#(est their ear#i#)s rather tha# ayi#) them !ut as di(ide#ds are !$te# c!#sidered !te#tial )r!%th i#(estme#ts+ S! are st!c&s !$ y!u#)2 5uic&ly e3 a#di#) c!m a#ies+ Value st!c&s2 i# c!#trast2 are the st!c&s !$ c!m a#ies that r!blems2 ha(e bee# u#der er$!rmi#) their !te#tial2 !r are !ut !$ $a(!r %ith i#(est!rs+ As result2 their rices te#d t! be l!%er tha# seems "usti$ied2 th!u)h they may still be ayi#) di(ide#ds+ I#(est!rs %h! see& !ut (alue st!c&s e3 ect them t! sta)e a c!mebac&+

Mar&et Ca itali7ati!#
O#e !$ the mai# %ays t! cate)!ri7e st!c&s is by their mar&et ca itali7ati!#2 s!metimes &#!%# as mar&et (alue+ Mar&et ca itali7ati!# Imar&et ca J is calculated by multi lyi#) a c!m a#yFs curre#t st!c& rice by the #umber !$ its e3isti#) shares+ F!r e3am le2 a st!c& %ith a curre#t mar&et (alue !$ N8B a share a#d a hu#dred milli!# shares !$ e3isti#) st!c& %!uld ha(e a mar&et ca !$ N8 billi!#+

/*E rati!
A ! ular i#dicat!r !$ a st!c&Fs )r!%th !te#tial is its rice6t!6ear#i#)s rati!2 !r /*E K !r multi le K ca# hel y!u )au)e the rice !$ a st!c& i# relati!# t! its ear#i#)s+ F!r i#sta#ce2 a st!c& %ith a /*E !$ ,B is tradi#) at a rice ,B times hi)her tha# its ear#i#)s+ A l!% /*E may be a si)# that a c!m a#y is a !!r i#(estme#t ris& a#d that its ear#i#)s are d!%#+ But it may als! i#dicate that the mar&et u#der(alues a c!m a#y because its st!c& rice d!es#Ft re$lect its ear#i#)s !te#tial+ Similarly2 a st!c& %ith a hi)h /*E may li(e u t! i#(est!r e3 ectati!#s !$ c!#ti#ui#) )r!%th2 !r it may be !(er(alued+

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I#(est!r dema#d
/e! le buy a st!c& %he# they belie(e itFs a )!!d i#(estme#t2 dri(i#) the st!c& rice u + But i$ e! le thi#& a c!m a#yFs !utl!!& is !!r a#d either d!#Ft i#(est !r sell shares they already !%#2 the st!c& rice %ill $all+ I# e$$ect2 i#(est!r e3 ectati!#s determi#e the rice !$ a st!c&+ F!r e3am le2 i$ l!ts !$ i#(est!rs buy st!c& A2 its rice %ill be dri(e# u + The st!c& bec!mes m!re (aluable because there is dema#d $!r it+ But the re(erse is als! true+ I$ a l!t !$ i#(est!rs sell st!c& O2 its rice %ill lummet+ The $urther the st!c& rice $alls2 the m!re i#(est!rs sell it !$$2 dri(i#) the rice d!%# e(e# m!re+

The Di(ide#ds
The risi#) st!c& rice a#d re)ular di(ide#ds that re%ard i#(est!rs a#d )i(e them c!#$ide#ce are tied directly t! the $i#a#cial health !$ the c!m a#y+ Di(ide#ds2 li&e ear#i#)s2 !$te# ha(e a direct i#$lue#ce !# st!c& rices+ 1he# di(ide#ds are i#creased2 the messa)e is that the c!m a#y is r!s eri#)+ This i# tur# stimulates )reater rice !site messa)e a#d c!#clude that the e#thusiasm $!r the st!c&2 e#c!ura)i#) m!re i#(est!rs t! buy2 a#d ri(i#) the st!c&Fs u %ard+ 1he# di(ide#ds are cut2 i#(est!rs recei(e the ! st!c&Fs rice+ C!m a#ies &#!%# as leaders i# their i#dustries %ith si)#i$ica#t mar&et share a#d #ame rec!)#iti!# te#d t! mai#tai# m!re stable (alues tha# #e%er2 y!u#)er2 smaller2 !r re)i!#al c!m etit!rs+

c!m a#yFs $uture r!s ects ha(e dimmed+ O#e ty ical c!#se5ue#ce is a# immediate dr! i# the

Ear#i#)s a#d /er$!rma#ce

I#(est!r e#thusiasm $!r a st!c& ca# s!metimes ta&e !# a m!me#tum !$ its !%#2 dri(i#) rices u i#de e#de#t !$ a c!m a#yFs actual $i#a#cial !utl!!&+ Similarly2 disi#terest ca# dri(e rices d!%#+ But t! a lar)e e3te#t2 i#(est!rs base their e3 ectati!#s !# a c!m a#yFs sales a#d ear#i#)s as e(ide#ce !$ its curre#t stre#)th a#d $uture !te#tial+ 1he# a c!m a#yFs ear#i#)s are u 2 i#(est!r c!#$ide#ce i#creases a#d the rice !$ the st!c& usually rises+ I$ the c!m a#y is liAsi# ) m!#eyP!r #!t ma&i#) as much as a#tici ated 66 the st!c& rice usually $alls2 s!metimes ra idly+

1>

I#tri#sic Value
A c!m a#yFs i#tri#sic (alue2 !r u#derlyi#) (alue2 is cl!sely tied t! its r!s ects $!r $uture success a#d i#creased ear#i#)s+ F!r that reas!#2 a c!m a#yFs $uture as %ell as its curre#t assets c!#tributes t! the (alue !$ its st!c&+ Y!u ca# calculate i#tri#sic (alue by $i)uri#) the assets a c!m a#y e3 ects t! recei(e i# the $uture a#d subtracti#) its l!#)6term debt+ These assets may i#clude r!$its2 the !te#tial $!r i#creased e$$icie#cy2 a#d the r!ceeds $r!m the sale !$ #e% c!m a#y st!c&+ The !te#tial $!r #e% shares a$$ects a c!m a#yFs i#tri#sic (alue because !$$eri#) #e% shares all!%s the c!m a#y t! raise m!re m!#ey+ A#alysts l!!&i#) at i#tri#sic (alue di(ide a c!m a#yFs estimated $uture ear#i#)s by the #umber !$ it s e3isti#) shares t! determi#e %hether a st!c&Fs curre#t rice is a bar)ai#+ This measure all!%s i#(est!rs t! ma&e decisi!#s based !# a c!m a#yFs $uture !te#tial i#de e#de#t !$ sh!rt6 term e#thusiasm !r mar&et hy e+

St!c& S lits
I$ a st!c&Fs rice i#creases dramatically the issui#) c!m a#y may s lit the st!c& t! bri#) the rice er share d!%# t! a le(el that stimulates m!re tradi#)+ F!r e3am le2 a st!c& selli#) at N1BB a share may be s lit , $!r 1 d!ubli#) the #umber !$ e3isti#) shares a#d cutti#) the rice i# hal$+ The s lit d!es#Ft cha#)e the (alue !$ y!ur i#(estme#t2 at least i#itially+ I$ y!u had 1BB shares %he# the rice %as N1BB a share2 y!uFll ha(e ,BB shares %!rth NCB a share a$ter the s lit+ Either %ay2 thatFs N1BBBB+ But i$ the rice er share m!(es bac& t!%ard the re6s lit rice2 as it may d! y!ur i#(estme#t %ill i#crease i# (alue+ F!r e3am le i$ the rice )!es u t! N>C a share y!ur st!c& %ill be %!rth N1CBBB2 a CBL i#crease+ I#(est!rs %h! h!ld a st!c& !(er ma#y years2 thr!u)h a #umber !$ s lits2 may e#d u %ith a substa#tial i#(estme#t e(e# i$ the rice er share dr! s $!r a time+ A st!c& may be s lit , $!r 12 8 $!r 12 !r e(e# 1B $!r 1 i$ the c!m a#y %ishes2 th!u)h , $!r 1 is the m!st c!mm!#+

1?

St!c& -esearch a#d E(aluati!#

Be$!re i#(esti#) i# a st!c&2 its im !rta#t t! research the issui#) c!m a#y a#d u#dersta#d h!% the i#(estme#t is li&ely t! er$!rm2 $!r e3am le2 y!uFll %a#t t! &#!% ahead !$ time %hether y!u sh!uld a#tici ate a hi)h de)ree !$ (!latility2 !r m!re stable sl!%er )r!%th+ A )!!d lace t! start is the c!m a#yFs 1B & re !rt2 %hich it must $ile %ith the Securities a#d E3cha#)e C!mmissi!# ISECJ each year+ Its e3tremely detailed a#d 5uite dry2 but it is thr!u)h+ Y!uFll %a#t t! ay atte#ti!# t! the $!!t#!tes as %ell as the mai# te3t2 si#ce they !$te# r!(ide hi#ts !$ !te#tial r!blems+

C!m a#y Ne%s a#d -e !rts

C!m a#ies are re5uired by la% t! &ee shareh!lders u t! date !# h!% the busi#ess is d!i#)+ S!me !$ that i#$!rmati!# is r!(ided i# the $irmFs a##ual re !rt2 %hich summari7es the er$!rma#ce is als! c!m a#yFs ! erati!#s $!r i#di(idual i#(est!rs+ A summary !$ curre#t r!(ided i# the c!m a#yFs 5uarterly re !rts+

Buyi#) a#d Selli#) St!c&

T! buy !r sell a st!c& y!u usually ha(e t! )! thr!u)h a br!&er+ 4e#erally the m!re )uida#ce y!u %a#t $r!m y!ur br!&er the hi)her the br!&erFs $ee+ S!me br!&ers usually called $ull6ser(ice br!&ers r!(ide a ra#)e !$ ser(ice bey!#d $illi#) buy a#d sell !rders $!r clie#ts such as researchi#) i#(estme#ts a#d hel i#) y!u de(el! l!#) a#d sh!rt6term i#(estme#t )!als+ Disc!u#t br!&ers carry !ut tra#sacti!#s $!r clie#ts at l!%er $ees tha# $ull6ser(ice br!&ers but ty ically !$$er m!re limited ser(ices+ A#d $!r e3 erie#ced i#(est!rs %h! trade !$te# a#d i# lar)e bl!c&s !$ st!c& there are dee 6disc!u#t br!&ers %h!se c!mmissi!#s are e(e# l!%er+ O#li#e Tradi#) is the chea est %ay t! trade st!c&s+ O#li#e br!&era)e $irms !$$er substa#tial disc!u#ts %hile )i(i#) y!u $ast access t! y!ur acc!u#ts thr!u)h their 1eb Sites+ Y!u ca# research st!c&s trac& i#(estme#ts a#d y!u t! trade be$!re a#d a$ter #!rmal mar&et h!urs+ M!st !$ t!dayFs leadi#) $ull6ser(ice a#d disc!u#t br!&era)e $irm ma&e !#li#e tradi#) a(ailable t! their cust!mers+ O#li#e tradi#) is a# e3tremely c!st6e$$ecti(e ! ti!# $!r i#de e#de#t i#(est!rs %ith a s!lid strate)y %h! are %illi#) t! u#derta&e their !%# research+ ;!%e(er the ease !$ ma&i#) trades a#d the abse#ce !$ ad(ice may tem t s!me i#(est!rs t! trade i# a#d !ut !$ st!c&s t!! 5uic&ly a#d ma)#i$y the !ssibility !$ l!c&i#) i# sh!rt6term l!sses+ 1A

V!latility
O#e !$ the ris&s y!uFll #eed t! la# $!r as a st!c& i#(est!r is (!latility+ V!latility is the s eed %ith %hich a# i#(estme#t )ai#s !r l!ses (alue+ The m!re (!latile a# i#(estme#t is the m!re y!u ca# !te#tially ma&e !r l!se i# the sh!rt term+

Ma#a)i#) -is&
O#e thi#) $!r certai#H Y!ur st!c& i#(estme#t %ill dr! i# (alue at s!me !i#t+ ThatFs %hat ris& is all ab!ut+ 9#!%i#) h!% t! t!lerate ris& a#d a(!id selli#) y!ur st!c&s !$$ i# a a#ic is all art !$ a smart i#(estme#t strate)y+ Setti#) realistic )!als all!cati#) a#d di(ersi$yi#) y!ur assets a r! riately a#d ta&i#) a l!#)6 term (ie% ca# hel !$$set ma#y !$ the ris&s !$ i#(esti#) i# st!c&s+ E(e# the m!st s eculati(e st!c& i#(estme#t %ith its di(ersi$ied !rt$!li!+ !te#tial $!r lar)e )ai#s may lay a# im !rta#t r!le i# a %ell6

,B

All ABO'T BONDS INVESTMENT

;a(e y!u e(er6b!rr!%ed m!#eyQ O$ c!urse y!u ha(e %hether %e hit !ur are#ts u $!r a $e% buc&s t! buy ca#dy as childre# !r as&ed the ba#& $!r a m!rt)a)e m!st !$ us ha(e b!rr!%ed m!#ey at s!me !i#t i# !ur li(es+ @ust as e! le #eed m!#ey s! d! c!m a#ies a#d )!(er#me#ts+ A c!m a#y #eeds $u#ds t! e3 a#d i#t! #e% mar&ets2 %hile )!(er#me#ts #eed m!#ey $!r e(erythi#) $r!m i#$rastructure t! s!cial r!)rams+ The r!blem lar)e !r)a#i7ati!#s ru# i#t! is that they ty ically #eed $ar m!re m!#ey tha# the a(era)e ba#& ca# r!(ide+ The s!luti!# is t! raise m!#ey by issui#) b!#ds I!r !ther debt i#strume#tsJ t! a ublic mar&et+ Th!usa#ds !$ i#(est!rs the# each le#d a !rti!# !$ the ca ital #eeded+ -eally a b!#d is #!thi#) m!re tha# a l!a# $!r %hich y!u are the le#der+ The !r)a#i7ati!# that sells a b!#d is &#!%# as the issuer+ Y!ur ca# thi#& !$ a b!#d as a# IO' )i(e# by a b!rr!%er Ithe issuerJ t! a le#der Ithe i#(est!rJ+ O$ c!urse2 #!b!dy %!uld l!a# his !r her hard6ear#ed m!#ey $!r #!thi#)+ The issuer !$ a b!#d must ay the i#(est!r s!methi#) e3tra $!r the ri(ile)e !$ usi#) his !r her m!#ey+ This Ee3traF c!mes i# the $!rm !$ i#terest ayme#ts2 %hich are made at a redetermi#ed rate a#d schedule+ The i#terest rate is !$te# re$erred t! as the c!u !#+ The date !# %hich the issuer has t! re ay the am!u#t b!rr!%ed I&#!%# as $ace (alueJ is called the maturity date+ B!#ds are &#!%# as $i3ed6 i#c!me securities because y!u &#!% the e3act am!u#t !$ cash y!uFll )et bac& i$ y!u h!ld the security u#til maturity+ F!r e3am le2 say y!u buy a b!#d %ith a $ace (alue !$ N1BBB a c!u !# !$ ?L a#d a maturity !$ 1B years+ This mea#s y!uFll recei(e a t!tal !$ N?B IN1BBBR?LJ !$ i#terest er year $!r the #e3t 1B years+ Actually because m!st b!#ds ay i#terest semi6a##ually y!uFll recei(e t%! ayme#ts !$ N<B a year $!r 1B years+ 1he# the b!#d matures a$ter a decade2 y!uFll )et y!ur N1BBB bac&+

Face Value * /ar Value

The $ace (alue Ials! &#!%# as the ar (alue !r ri#ci alJ is the am!u#t !$ m!#ey a h!lder %ill )et bac& !#ce a b!#d matures+ Ne%ly issued b!#d usually sells at the ar (alue+ C!r !rate b!#ds #!rmally ha(e a ar (alue !$ N1BBB but this am!u#t ca# be much )reater $!r )!(er#me#t b!#ds+ ,1

1hat c!#$uses ma#y e! le is that the ar (alue is #!t the rice !$ the b!#d+ A b!#dFs rice $luctuates thr!u)h!ut its li$e i# res !#se t! a #umber !$ (ariables Im!re !# this laterJ+ 1he# a b!#d trades at a rice ab!(e the $ace (alue2 it is said t! be selli#) a remium+ 1he# a b!#d sells bel!% $ace (alue it is said t! be selli#) at a disc!u#t+

C!u !# IThe I#terest -ateJ

The c!u !# is the am!u#t the b!#dh!lder %ill recei(e as i#terest ayme#ts+ ItFs called a Ec!u !#F because s!metimes there are hysical c!u !#s !# the b!#d that y!u tear !$$ a#d redeem $!r i#terest+ ;!%e(er this %as m!re c!mm!# i# the ast+ N!%adays rec!rds are m!re li&ely t! &e t electr!#ically+ As re(i!usly me#ti!#ed m!st b!#ds ay i#terest e(ery si3 m!#ths but itFs !ssible $!r them t! ay m!#thly2 5uarterly !r a##ually+ The c!u !# is e3 ressed as a erce#ta)e !$ the ar (alue+ I$ a b!#d ays a c!u !# !$ 1BL a#d its ar (alue is N1BBB the# itFll ay L1BB !$ i#terest a year+ A rate that stays as a $i3ed erce#ta)e !$ the ar (alue li&e this is a $i3ed6rate b!#d+ A#!ther !ssibility is a# ad"ustable i#terest ayme#t &#!%# as a $l!ati#)6rate b!#d+ I# this case the i#terest rate is tied t! mar&et rates thr!u)h a# i#de3 such as the rate !# Treasury bills+ Y!u mi)ht thi#& i#(est!rs %ill ay m!re $!r a hi)h c!u !# tha# $!r a l!% c!u !#+ All thi#)s bei#) e5ual a l!%er c!u !# mea#s that the rice !$ the b!#d %ill $luctuate m!re+

Maturity
The maturity date is the date i# the $uture !# %hich the i#(est!rFs ri#ci al %ill be re aid+ Maturities ca# ra#)e $r!m as little as !#e day t! as l!#) as ,B years Ith!u)h terms !$ 1BB years ha(e bee# issuedJ+ A b!#d that matures i# !#e year is much m!re redictable a#d thus less ris&y tha# a b!#d that matures i# ,B years+ There$!re i# )e#eral the l!#)er the time t! maturity the hi)her the i#terest rate+ Als! all thi#)s bei#) e5ual a l!#)er6term b!#d %ill $luctuate m!re tha# a sh!rter6term b!#d+

Issuer
The issuer !$ a b!#d is a crucial $act!r t! c!#sider2 as the issuers stability is y!ur mai# assura#ce !$ )etti#) aid bac&+ F!r e3am le2 the '+S )!(er#me#t is $ar m!re secure tha# a#y c!r !rati!#+ Its de$ault ris& Ithe cha#ce !$ the debt #!t bei#) aid bac&J is e3tremely small K s! small that '+S ,,

)!(er#me#t securities are &#!%# as ris&6$ree assets+ The reas!# behi#d this is that a )!(er#me#t %ill al%ays be bale t! bri#) i# $uture re(e#ue thr!u)h ta3ati!#+ A c!m a#y !# the !ther ha#d must c!#ti#ue t! ma&e r!$its2 %hich is $ar $r!m )uara#teed+ This added ris& mea#s c!r !rate b!#d must !$$er a hi)her yield i# !rder t! e#tire i#(est!rs K this is the ris& * retur# trade!$$ i# acti!#+ The b!#d rati#) system hel s i#(est!rs determi#e a c!m a#yFs credit ris&+ Thi#& !$ a b!#d rati#) as the re !rt card $!r a c!m a#yFs credit rati#)+ Blue6chi $irms2 %hich are sa$er i#(estme#ts2 ha(e a hi)h rati#)2 %hile ris&y c!m a#ies ha(e t! l!% rati#)+ The chart bel!% illustrates the di$$ere#t b!#d rati#) scales $r!m the ma"!r rati#) a)e#cies i# the '+S+ M!!dyFs Sta#dard a#d /!!rs a#d Fitch -ati#)s+

B!#d -ati#) M!!dyFs SM/ * Fitch

Aaa Aa A Baa Ba2 B Caa*Ca*C C AAA AA A BBB BB2 B CCC*CC*C D

4rade
I#(estme#t I#(estme#t I#(estme#t I#(estme#t @u#& @u#& @u#&

-is&
;i)hest Duality ;i)h Duality Str!#) Medium 4rade S eculati(e ;i)hly S eculati(e I# De$ault

N!tice that i$ the c!m a#y $alls bel!% a certai# credit rati#)2 its )rade cha#)es $r!m i#(estme#t 5uality t! "u#& status+ @u#& b!#ds are a tly #amedH they are the debt !$ c!m a#ies i# s!me s!rt !$ $i#a#cial di$$iculty+ Because they are s! ris&y2 they ha(e t! !$$er much hi)her yields tha# a#y !ther debt+ This bri#)s u a# im !rta#t !i#tH #!t all b!#ds are i#here#tly sa$er tha# st!c&s+ Certai# ty es !$ b!#ds ca# be "ust ris&y2 i$ #!t ris&ier2 tha# st!c&s+

Yield t! Maturity
O$ c!urse2 these matters are al%ays m!re c!m licated i# real li$e+ 1he# b!#d i#(est!r re$ers t! yield2 maturity IYMTJ+ YTM is m!re ad(a#ced yield calculati!# that sh!% the i#terest ayme#t y!u %ill recei(e Ia#d assumes that y!u %ill rei#(est the i#terest ayme#t at the same rate as the

,8

curre#t yield !# the b!#dJ lus a#y )ai# Ii$ y!u urchased at disc!u#tJ !r l!ss Ii$ y!u urchased at a remiumJ+ 9#!%i#) h!% t! calculate YTM is#Ft im !rta#t ri)ht #!%+ I# $act2 the calculati!# is rather s! histicated a#d bey!#d the sc! e !$ this tut!rial+ The &ey !i#t here is that YTM is m!re accurate a#d e#ables y!u t! c!m are b!#d %ith di$$ere#t maturities c!u !#s+

The li#& bet%ee# /rice a#d yield

The relati!#shi !$ yield t! rice ca# be summari7ed as $!ll!%sH %he# rice )!es u 2 )!es d!%# a#d (ice (ersa+ Tech#ically2 y!uFd say the b!#ds a#d its yield are i#(ersely related+ ;ereFs a c!mm!#ly as&ed 5uesti!#H ;!% ca# hi)h yield a#d hi)h rices b!th be )!!d %he# they ca#Ft ha e# at the same timeQ The a#s%er de e#ds !# y!ur !i#t !$ (ie%+ I$ y!u are a b!#d buyer2 y!u %a#t hi)h yields+ A buyer %a#ts t! ay N?BB $!r the N12BBB b!#d2 %hich )i(es the b!#d2 a hi)h yield !$ 1,+CL+ O# the !ther ha#d2 i$ y!u already !%# a b!#d2 y!uF(e l!c&ed i# y!ur i#terest rate2 s! y!u h! e the rice !$ the b!#d )!es u + This ca# cash !ut by selli#) y!ur b!#d i# the $uture+

/rice i# the Mar&et

S! $ar %eF(e discussed the $act!rs !$ $ace (alue2 c!u !#2 maturity2 issuers a#d yield+ All i$ these characteristics !$ a b!#d lay a r!le i# its rice2 ;!%e(er2 the $act!r that i#$lue#ces a b!#d m!re tha# a#y !ther is the le(el !$ re(aili#) i#terest rates i# the ec!#!my+ 1he# i#terest rates rise2 the rices !$ b!#ds i# the mar&et $all2 thereby raisi#) the yield !$ !lder b!#ds a#d bri#)i#) them i#t! li#e %ith #e%er b!#ds bei#) issued %ith hi)her c!u !#s+ 1he# i#terest rates $all the rices !$ b!#ds i# the mar&et rise2 thereby l!%eri#) the yield !$ the !lder b!#ds a#d bri#)i#) them i#t! li#e %ith #e%er b!#ds bei#) issued %ith l!%er c!u !#s+

Di$$ere#t Ty es !$ B!#ds 4!(er#me#t B!#ds

I# )e#eral2 $i3ed6i#c!me securities are classi$ied acc!rdi#) t! the le#)th !$ time be$!re maturity+ These are the three mai# cate)!riesH Bill K debt securities maturi#) i# less tha# !#e year2

,<

N!tes K debt securities maturi#) i# !#e t! 1B years+ B!#ds 6 debt securities maturi#) i# m!re tha# 1B years+

Mu#ici al B!#ds
Mu#ici al b!#ds2 &#!%# as .mu#is02 are the #e3t r!)ressi!# i# terms !$ ris&+ Cities d!#Ft )! ba#&ru t that !$te#2 but it ca# ha e#+ The ma"!r ad(a#ta)e t! mu#is is that the retur#s are $ree $r!m $ederal ta3+ Furtherm!re2 l!cal )!(er#me#ts %ill s!metimes ma&e their debt #!#6ta3able $!r reside#ts2 thus ma&i#) s!me mu#ici al b!#ds c!m letely ta36$ree+ Because !$ these ta3 sa(i#)s2 the yield !# a mu#i a usually l!%er tha# that !$ a ta3able b!#d+ De e#di#) !# y!ur ers!#al situati!#2 a mu#i ca# be )reat i#(estme#t !# a# i#(estme#t !# a# a$ter6ta3 basis+

C!r !rate B!#ds

A c!m a#y ca# issued b!#ds "ust as it ca# issue st!c&+ Lar)e c!r !rati!#s ha(e a l!t !$ $le3ibility as t! h!% much debt they ca# issueH the limit is %hate(er the mar&et %ill bear+ 4e#erally2 a sh!rt6term c!r !rate b!#d is less tha# $i(e yearsS i#termediate is $i(e t! 1, years2 a#d l!#) term is !(er 1, years+ C!r !rate b!#ds are characteri7ed by hi)her yi?eld because there is a hi)her ris& !$ a c!m a#y de$aulti#) tha# a )!(er#me#t+ The u side is that they ca# als! be the m!st re%ardi#) $i3ed6 i#c!me i#(estme#ts because !$ the ris& the i#(est!r must ta&e !#+ The c!m a#yFs credit 5uality is (ery im !rta#tH the hi)her the 5uality2 the l!%er the i#terest rate the i#(est!r recei(es+ Other (ariati!#s !# c!r !rate b!#ds i#clude c!#(ertible b!#ds2 %hich the h!lder ca# c!#(ert i#t! st!c&2 a#d callable b!#ds2 %hich all!% the c!m a#y t! redeem a# issue ri!r t! maturity+

-is&s
As %ith a#y i#(estme#t2 there are ris&s i#here#t i# buyi#) e(e# the m!st hi)hly related b!#ds+ F!r e3am le2 y!ur b!#d i#(estme#t may be called2 !r redeemed by the issuer2 be$!re the maturity date+ Ec!#!mic d!%#tur#s a#d !!r ma#a)eme#t !# the art !$ the b!#d issuer ca# als! #e)ati(ely a$$ect y!ur b!#d i#(estme#t+ These ris&s ca# be di$$icult t! a#tici ate2 but lear#i#) h!% t! better rec!)#i7e the %ar#i#) si)#s a#d &#!%i#) h!% t! res !#d %ill hel y!u succeed as a b!#d i#(est!r+

,C

ALL ABO'T 4OLD INVESTMENT

4!ld is the !ldest reci!us metal &#!%# t! ma#+ There$!re2 it is a timely sub"ect $!r se(eral reas!#s+ It is the ! i#i!# !$ the m!re !b"ecti(e mar&et e3 erts that the traditi!#al i#(estme#t (ehicles !$ st!c&s a#d b!#ds are i# the areas !$ their all6time hi)hs a#d may due $!r a se(ere c!rrecti!#+ 1hy )!ld is .)!!d as !ld0 is a# i#tri)ui#) 5uesti!#+ ;!%e(er2 %e thi#& that the m!re ra)matic a#cie#t E)y tia#s %ere erha s m!re accurate i# !bser(i#) that )!ldFs (alue %as a $u#cti!# !$ its leasi#) hysical characteristics its scarcity+

1O-LD 4ODL IND'ST-Y

4!ld is rimarily m!#etary asset a#d artly a c!mm!dity+ The 4!ld mar&et is hi)hly li5uid a#d )!ld held by ce#tral ba#&s2 !ther ma"!r i#stituti!#s a#d retail @e%eler &ee c!mi#) bac& t! the mar&et+ Ec!#!mic $!rces that determi#e the rice !$ )!ld are di$$ere#t $r!m2 a#d i# ma#y cases ! !sed t! the $!rces that i#$lue#ce m!st $i#a#cial assets+

I#dia# is the %!rldFs lar)est )!ld c!#sumer %ith a# a##ual dema#d !$ ?BB t!#s+

1!rld 4!ld Mar&ets

/hysical 6 L!#d!#2 Ourich2 Ista#bul2 Dubai2 Si#)a !re2 ;!#) 9!#)2 Mumbai+ Futures K NYME: i# Ne% Y!r&2 TOCOM i# T!&y!+ I#dia# 4!ld Mar&et 4!ld is (alued i# I#dia as a sa(i#)s a#d i#(estme#t (ehicle a#d is the sec!#d re$erred i#(estme#t a$ter ba#& de !sits+ I#dia is the %!rldFs lar)est c!#sumer !$ )!ld i# "e%eler as i#(estme#t+ I# @uly 1AA> the -BI auth!ri7ed the c!mmercial ba#&s t! im !rt )!ld $!r sale !r l!a# t! "e%elers a#d e3 !rter+ At rese#t2 18 ba#&s are acti(e i# the im !rt !$ )!ld+ This reduced the dis arity bet%ee# i#ter#ati!#al a#d d!mestic rices !$ )!ld $r!m C> erce#t duri#) 1A?= t! 1AA1 t! ?+C erce#t i# ,BB1+ The )!ld h!ardi#) te#de#cy is %ell i#)rai#ed i# I#dia# s!ciety+

,=

D!mestic c!#sum ti!# is dictated by m!#s!!#2 har(est a#d marria)e seas!#+ I#dia# "e%ellery !$$ ta&es is se#siti(e t! rice i#crease a#d e(e# m!re s! t! (!latility+ I# the cities )!ld is $aci#) c!m etiti!# $r!m the st!c& mar&et a#d a %ide ra#)e !$ c!#sumer )!!ds+ Facilities $!r re$i#i#)2 assayi#)2 ma&i#) them i#t! sta#dard bars i# I#dia2 as c!m ared t! the rest !$ the %!rld2 are i#si)#i$ica#t2 b!th 5ualitati(ely+

;!% )!ld stac&s u as i#(estme#t ! ti!#

4!ld a#d sil(er ha(e bee# ! ular i# I#dia because hist!rically these acted as a )!!d hed)e a)ai#st i#$lati!#+ I# that se#se these metals ha(e bee# m!re attracti(e tha# ba#& de !sits !r )ilt6 ed)ed securities+ Des ite rece#t hiccu s2 )!ld is a# im !rta#t a#d ! ular i#(estme#t $!r ma#y reas!#sH I# ma#y c!u#tries )!ld remai#s a# i#te)ral art !$ s!cial a#d reli)i!us cust!ms2 besides bei#) the basic $!rm !$ sa(i#)+ Sha&es eare called it Ethe sai#t6seduci#) )!ldF+ Su erstiti!# ab!ut the heali#) !%ers !$ )!ld ersists+ Ayur(edic medici#e i# I#dia rec!mme#ds )!ld !%der a#d ills $!r ma#y ailme#ts+ 4!ld is i#destructible+ It d!es #!t tar#ish a#d is als! #!t c!rr!ded by acid6e3ce t by a mi3ture !$ #itric a#d hydr!chl!ric acids+ 4!ld is s! malleable that !#e !u#ce !$ the metal ca# be beate# i#t! a sheet c!(eri#) #early a hu#dred s5uare $eet+ 4!ld is s! ductile that !#e !u#ce !$ it ca# be dra%# i#t! $i$ty miles !$ thi# )!ld %ire+ 4!ld is a# e3celle#t c!#duct!r !$ electricityS a micr!sc! ic circuit !$ li5uid )!ld E ri#tedF !# a ceramic stri sa(es miles !$ %iri#) i# a c!m uter+ 4!ld is s! hi)hly (alued that a si#)le smu))ler ca# carry )!ld %!rth -s+CB la&h u#der#eath his shirt+ 4!ld is s! de#se that all the AB2BBB t!#es estimated t! ha(e bee# mi#ed thr!u)h hist!ry c!uld be tra#s !rted by !#e si#)le m!der# su er ta#&er+ Fi#ally2 )!ld is scam6$ree+ S! $ar2 there ha(e bee# #! Mu#dra6ty e !r Mehta6ty e scams i# )!ld+

,>

Thus the lure !$ this yell!% metal c!#ti#ues+ O#e the !ther ha#d2 it is i#teresti#) t! #!te that a art $r!m its aesthetic a eal )!ld has #! i#tri#sic (alue+ Y!u ca##!t eat it2 dri#& it2 !r e(e# smell it+ This as ect !$ )!ld c!m elled ;e#ry F!rd2 the $!u#der !$ F!rd M!t!rs2 t! c!#clude that E)!ld is the m!st useless thi#) i# the %!rld+F

1hy /e! le Buy 4!ld

IAJ I#dustrial a licati!#s ta&e ad(a#ta)e !$ )!ldFs hi)h resista#ce t! c!rr!si!#2 its malleability2 hi)h electrical c!#ducti(ity a#d its ability t! adhere $irmly t! !ther metals+ There is a %ide ra#)e !$ i#dustries $r!m electr!#ic c!m !#e#ts t! !rcelai#2 %hich use )!ld+ De#tistry is a# im !rta#t user !$ )!ld+ The "e%ellery i#dustry is a#!ther+ IBJ Ac5uisiti!# !$ )!ld because !$ its l!#)6 r!(e# ability t! retai# (alue a#d t! a reciate i# (alue+ ICJ /urchases by the ce#tral ba#&s a#d i#ter#ati!#al m!#etary !r)a#i7ati!#s li&e the I#ter#ati!#al M!#etary Fu#d IIMFJ+

I#(estme#t O ti!#s
There has bee# a shi$t i# dema#d $r!m "e%ellery I!r#ame#tati!#J t! c!i#s a#d bars Ii#(estme#tsJ+ C!i#s c!st less %he# c!m ared t! "e%ellery I%hich has additi!#al ma&i#) char)esJ+ Assayed2 certi$ied c!i#s a#d bars are a(ailable thr!u)h auth!ri7ed ba#&s+ Dema#d $!r "e%ellery remai#s str!#) i# traditi!#al circles th!u)h )!ld6 lated "e%ellery is als! bec!mi#) ! ular+ 4!ld $uturesH -i)ht #!%2 >CL !$ I#dia#s dema#d is $!r "e%ellery2 the rest is $!r c!i#s a#d bars+ I#(est!rs ca# als! dabble i# )!ld $uturesS %ith demat deli(ery !# st!c& e3cha#)es+ This is l!% c!st a#d hysical deli(ery is at B+AAC urity+ 4!ld $utures tradi#) cl!c&ed a rece#t tur#!(er !$ -s<2 8BB cr!re+ 4!ld ETFsH M!re s! histicated i#(estme#t r!ducts %ill c!me+ O#e !ssibility is e3cha#)e traded $u#ds IETFsJ %here )!ld is the u#derlyi#) asset+ I#(est!rs ca# trade ETF u#its %ith real time 5u!tes+ 4!ld ETF is l!#) !(erdue2 says Na(ee# 9umar2 ;ead !$ Fi#a#cial I#itiati(es2 1!rld 4!ld C!u#cil+ 4!ld ETFs c!uld be lau#ched s!!#S it is a a%aiti#) cleara#ce $r!m the Fi#a#ce Mi#istry+

,?

1!rld%ide m!re tha# =BB e3cha#)e listed structured r!ducts based !# )!ld are a(ailable+ Street trac& a# ETF !%#ed by the 1!rld 4!ld C!u#cil is listed !# the NYSE+ C!mm!dity br!&ers li&e 9!ta& are !$$eri#) ca ital r!tected b!#dsS these are ! e# $!r a s eci$ic eri!d Iusually !#e yearJ %ith )!ld as the u#derlyi#) asset+ O# a reciati!# r!$it is shared a#d i$ the rice $alls the ca ital is sa$e+

4!ld Ba#&i#)
I#dia# "e%elers !$$er )!ld accumulati!# la#+ M!#ey ca# be de !sited !# a re)ular basis a#d "e%eler c!#(erts i#t! )!ld at re(aili#) rices+ I#terest is ear#ed duri#) the $i3ed eri!d !$ te#ure !$ i#(estme#t+ O# redem ti!#2 the c!r us is c!#(erted i#t! )!ld c!i#s+ This is li&e a $!rced structure sa(i#) scheme+

,A

ALL ABO'T M'T'AL F'ND INVESTMENT

A Mutual Fu#d is a# e#tity that !!ls the m!#ey !$ ma#y i#(est!rsPits '#it6;!lders 66 t! i#(est i# di$$ere#t securities+ I#(estme#ts may be i# shares2 debt securities2 m!#ey mar&et securities !r a c!mbi#ati!# !$ these+ Th!se securities are r!$essi!#ally ma#a)ed !# behal$ !$ the '#it6;!lder a#d each i#(est!r h!ld a r!6rata share !$ the !rt$!li! i+e+ e#titled t! a#y r!$its %he# the securities are s!ld but sub"ect t! a#y l!sses i# (alue as %ell+ Mutual Fu#ds a#d sell st!c&s2 b!#ds !r !ther securities+ A Fu#d raises m!#ey t! ma&e its urchases2 &#!%# as its u#derlyi#) i#(estme#ts by selli#) shares i# the $u#d+ Ear#i#)s the $u#d reali7es !# its i#(estme#t !rt$!li!2 a$ter the tradi#) c!sts a#d e3 e#ses !$ ma#a)i#) a#d admi#isteri#) the $u#d are subtracted are aid !ut t! the $u#ds shareh!lders+

Mutual Fu#d Set '

A Mutual Fu#d is set u i# the $!rm !$ a trust2 %hich has S !#s!r2 Trustees2 Asset Ma#a)eme#t C!m a#y IAMCJ2 a#d cust!dia#+ The trust is established by a s !#s!r !r m!re tha# !#e s !#s!r %h! is li&e r!m!ter !$ a c!m a#y+ The trustees !$ the mutual $u#d h!ld its r! erty $!r the be#e$it !$ the u#it h!lders+ Asset Ma#a)eme#t C!m a#y IAMCJ a r!(ed by SEBI ma#a)es the $u#ds by ma&i#) i#(estme#ts i# (ari!us ty es !$ securities+ Cust!dia#2 %h! is re)istered %ith SEBI2 h!lds the securities !$ (ari!us schemes !$ the $u#d i# its cust!dy+ The trustees are i#(ested %ith the )e#eral !%er !$ su eri#te#de#ce a#d directi!# !(er AMC+ They m!#it!r the er$!rma#ce a#d c!m lia#ce !$ SEBI -e)ulati!#s by the mutual $u#d+ SEBI -e)ulati!#s re5uire that at least t%! thirds !$ the direct!rs !$ Trustee C!m a#y !r b!ard !$ trustee must be i#de e#de#t+ I+e+ they sh!uld #!t be ass!ciated %ith the s !#s!rs+ Als! CBL !$ the direct!rs !$ ANC must be i#de e#de#t+ All mutual $u#ds are re5uired t! be re)istered %ith SEBI be$!re they lau#ch a#y scheme+ ;!%e(er2 '#it Trust !$ I#dia I'TIJ is #!t re)istered %ith SEBI Ias !# @a#uary 1C2 ,BB,J+

Ty es !$ Fu#ds
St!c& $u#ds als! called e5uity $u#ds6 i#(est rimarily i# st!c&s+ B!#d $u#ds i#(est rimarily i# c!r !rate !r )!(er#me#t b!#ds

8B

Bala#ced $u#ds i#(est i# b!th st!c&s a#d b!#ds+ M!#ey mar&et $u#ds ma&e sh!rt6term i#(estme#t a#d try t! &ee their share (alue $i3ed at N1 a share+

E(ery $u#d i# each cate)!ry has a rice &#!%# as its #et asset (alue INAVJ a#d each NAV di$$ers based !# the (alue !$ the $u#ds h!ldi#)s a#d the #umber !$ shares i#(est!rs !%#+ The rice cha#)es !#ce a day2 at a < m EST2 %he# the mar&ets cl!se $!r the day+ All tra#sacti!#s $!r the day K buys a#d sells Kare e3ecuted at that rice+

Schemes Acc!rdi#) t! Maturity /eri!d

A mutual $u#d scheme ca# be classi$ied i#t! ! e#6e#ded scheme !r cl!se6e#ded scheme de e#di#) !# its maturity eri!d+

O e# KE#ded Fu#d*Scheme
A# ! e#6e#ded $u#d !r scheme is !#e that is a(ailable $!r subscri ti!# a#d re urchase !#e c!#ti#u!us basis+ These schemes d! #!t ha(e a $i3ed maturity eri!d+ I#(est!rs ca# c!#(e#ie#tly buy a#d sell u#its at Net Asset Value INAVJ related rices2 %hich are declared !# a daily basis+ The &ey $eature !$ O e#6E#d Schemes is li5uidity+

Cl!se6E#ded Fu#d * Scheme

A Cl!se6E#ded Fu#d !r Scheme has a sti ulated maturity eri!d e+)+ C6> years+ The $u#d is ! e# $!r subscri ti!# !#ly duri#) a s eci$ied eri!d at the time !$ lau#ch !$ the scheme+ I#(est!rs ca# i#(est i# the scheme at the time !$ the i#itial ublic issue a#d therea$ter they ca# buy !r sell the u#its !$ the scheme !# the st!c& e3cha#)es %here the u#its are listed+ I# !rder t! r!(ide a# e3it r!ute t! the i#(est!rs2 s!me cl!se6e#ded $u#ds )i(e a# ! ti!# !$ selli#) bac& the u#its t! the mutual $u#d thr!u)h eri!dic re urchase at NAV related rices+ SEBI -e)ulati!#s sti ulate that at least !#e !$ the t%! e3it r!utes is r!(ided t! the i#(est!r i+e+ either re urchase $acility !r thr!u)h listi#) !# st!c& e3cha#)es+ These mutual $u#ds schemes discl!se NAV )e#erally !# %ee&ly basis+

81

Schemes acc!rdi#) t! I#(estme#t Ob"ecti(e

A Scheme ca# als! be classi$ied a )r!%th scheme2 i#c!me scheme !r bala#ced scheme c!#sideri#) its i#(estme#t !b"ecti(e+ Such schemes may be ! e#6e#ded !r cl!se6e#ded schemes as described earlier+ Such schemes may be classi$ied mai#ly as $!ll!%s+

4r!%th * E5uity Orie#ted Scheme

The aim !$ )r!%th $u#ds is t! r!(ide ca ital a reciati!# !(er the medium t! l!#)6term+ Such schemes #!rmally i#(est a ma"!r art !$ their c!r us i# e5uities+ Such $u#ds ha(e c!m arati(ely hi)h ris&s+ These schemes r!(ide di$$ere#t ! ti!#s t! the i#(est!rs li&e di(ide#d ! ti!#2 ca ital a reciati!# etc+ A#d the i#(est!rs may ch!!se a# ! ti!# de e#di#) !# their re$ere#ce+ The i#(est!rs must i#dicate the ! ti!# i# the a licati!# $!rm+ The mutual $u#ds als! all!% the i#(est!rs t! cha#)e the ! ti!#s at a later date+ 4r!%th schemes are )!!d $!r i#(est!rs ha(i#) a l!#)6term !utl!!& see&i#) a reciati!# !(er a eri!d !$ time+

I#c!me *Debt Orie#ted Scheme

The aim !$ i#c!me $u#ds is t! r!(ide re)ular a#d steady i#c!me t! i#(est!rs+ Such schemes )e#erally i#(est i# $i3ed i#c!me securities such as b!#ds2 c!r !rate debe#tures2 4!(er#me#t securities a#d m!#ey mar&et i#strume#ts+ Such $u#ds are less ris&y c!m ared t! e5uity schemes+ These $u#ds are #!t a$$ected because !$ $luctuati!#s i# e5uity mar&ets+ ;!%e(er ! !rtu#ities !$ ca ital a reciati!# are als! limited i# such $u#ds+ The NAVs !$ such $u#ds are a$$ected because !$ cha#)e i# i#terest rates i# the c!u#try+ I$ the i#terest rates $all2 NAVs !$ such $u#ds are li&ely t! i#crease i# the sh!rt ru# a#d (ice (ersa+ ;!%e(er l!#) term i#(est!rs may #!t b!ther ab!ut these $luctuati!#s+

Bala#ced Fu#d
The aim !$ bala#ced $u#ds is t! r!(ide b!th )r!%th a#d re)ular i#c!me as such schemes i#(est b!th i# e5uities a#d $i3ed i#c!me securities i# the r! !rti!# i#dicated i# their !$$er d!cume#ts+ These are a r! riate $!r i#(est!rs l!!&i#) $!r m!derate )r!%th+ They )e#erally i#(est <BL6 =BL i# e5uity a#d debt i#strume#ts+ These $u#ds are als! a$$ected because !$ $luctuati!#s i#

8,

share rices i# the st!c& mar&ets+ ;!%e(er2 NAVs !$ such $u#ds are li&ely t! be less (!latile c!m ared t! ure e5uity $u#ds+

Sect!r s eci$ic Fu#ds*Tschemes

These are the $u#ds*schemes2 %hich i#(est i# the securities !$ !#ly th!se sect!rs !r i#dustries as s eci$ied i# the !$$er d!cume#ts+ E+)+ /harmaceuticals2 S!$t%are2 Fast M!(i#) C!#sumer 4!!ds IFMC4J2 /etr!leum st!c&s etc+ the retur#s i# these $u#ds are de e#de#t !# the er$!rma#ce !$ the res ecti(e sect!rs*i#dustries+ 1hile these $u#ds may )i(e hi)her retur#s2 they are m!re ris&y c!m ared t! di(ersi$ied $u#ds+ I#(est!rs #eed t! &ee a %atch !# the er$!rma#ce !$ th!se sect!rs*i#dustries a#d must e3it at a# a r! riate time+ They may als! see& ad(ice !$ a# e3 ert+

Ta3 Sa(i#) Schemes

These schemes !$$er ta3 rebates t! the i#(est!rs u#der s eci$ic r!(isi!#s !$ the I#c!me Ta3 Act2 1A=1 as the 4!(er#me#t O$$ers Ta3 I#ce#ti(es $!r i#(estme#t i# s eci$ied a(e#ues+ E+)+ E5uity Li#&ed Sa(i#)s Schemes IELSSJ+ /e#si!# schemes lau#ched by the mutual $u#ds als! !$$er ta3 be#e$it+ These schemes are )r!%th !rie#ted a#d i#(est re6d!mi#a#tly i# e5uities+ Their )r!%th ! !rtu#ities a#d ris&s ass!ciated are li&e a#y e5uity6!rie#ted scheme+

The A eal !$ Mutual Fu#ds

Mutual Fu#ds sim li$y %hat y!u may $i#d m!st c!m licated ab!ut i#(esti#)P$i)uri#) !ut %hat t! buy a#d %he# t! sell t! meet y!ur articular )!als !r !b"ecti(es+ F!r e3am le2 i$ y!u are see&i#) )r!%th by i#(esti#) i# blue chi st!c&s2 there are a %ide (ariety !$ $u#ds t! ch!se $r!m that ursui#) recisely this strate)y+ T! ch!se the $u#d that %ill hel y!u meet a s eci$ic )!al2 y!u ca# c!m are its l!#)6term er$!rma#ce K !(er C !r 1B years K t! !ther $u#ds %ith similar !b"ecti(es lear# ab!ut %h!m the ma#a)er is a#d h!% the $u#d is ru# a#d chec& !ut its $ee structure+ Y!u ca# use the $u#ds r!s ectus2 i#$!rmati!# !# the $u#d c!m a#yFs 1eb Sites a#d r!$essiB!#al ad(ice+ Mutual $u#ds ca# hel y!u di(ersi$y y!ur !rt$!li! !r s read !ut the m!#ey y!u ha(e t! i#(est t! meet di$$ere#t )!als+ O#e %ay t! di(ersi$y is t! ch!se $u#ds %ith di$$ere#t !b"ecti(es ali)#ed %ith y!ur !%#2 !r re rese#ti#) di$$ere#t se)me#ts !$ the mar&et+ F!r e3am le2 y!u mi)ht buy a blue6chi $u#d2 a small c!m a#y )r!%th $u#d2 a# i#ter#ati!#al st!c& $u#d a#d a )!(er#me#t $u#d+ 88

Di(ersi$icati!#
M!st e3 ert a)rees that itFs m!re e$$ecti(e t! i#(est i# a (ariety !$ st!c&s a#d b!#ds tha# t! de e#d !# a str!#) er$!rma#ce !$ "ust !#e !r t%! securities+ But di(ersi$yi#) ca# be a challe#)e because buyi#) a !rt$!li! !$ i#di(idual st!c&s a#d b!#ds ca# be e3 e#si(e+ A#d &#!%i#) %hat t! buy K a#d %he# K ta&e# time a#d c!#ce#trati!#+ Mutual $u#ds ca# !$$er s!luti!#+ 1he# y!u ut m!#ey i# t! a $u#d2 itFs !!led %ith m!#ey $r!m !ther i#(est!rs t! create much )reater buyi#) !%er tha# y!u build a di(ersi$ied !rt$!li!+ Si#ce a $u#d may !%# hu#dreds !$ di$$ere#t securities2 its success is#Ft de e#de#t !# h!% !#e !r t%! h!ldi#) d!+

I#(estme#t !b"ecti(es
T! achie(e its i#(estme#t !b"ecti(e K %hether it is l!#) K term )r!%th !r ca ital reser(ati!# !r a#ythi#) i# bet%ee# K the $u#dFs ma#a)er i#(ests i# securities he !r she belie(es %ill r!(ide the result the $u#d see&s+ T! ide#ti$y th!se securities2 a $u#dFs research sta$$ !$te# uses %hatFs &#!%# as a b!tt!m K u style2 %hich i#(!l(es a detailed a#alysis !$ the i#di(idual c!m a#ies issui#) the securities+ 1he# the !b"ect is smallK c!m a#y )r!%th !r the $!cus is !# emer)i#) mar&ets2 the r!cess ca# be m!re di$$icult because thereFs limited i#$!rmati!# a(ailable+ Y!u may ch!!se mutual $u#ds %ith s eci$ic i#(estme#t !b"ecti(es t! r!u#d !ut y!ur !rt$!li! !$ i#di(idual h!ldi#)s+ Or y!u may ch!!se a #umber !$ mutual $u#ds %ith di$$ere#t !b"ecti(es creati#) a di(ersi$ied !rt$!li! i# that %ay+

/r!$essi!#al ma#a)eme#t
A#!ther reas!# i#(est!rs are attracted t! mutual $u#ds is that each $u#d has a r!$essi!#al ma#a)er %h! sets its i#(estme#t buyi#) style a#d directs the &ey buy a#d sell decisi!#s+ A buyi#) style de$i#es the articular i#(estme#ts !r ty es !$ i#(estme#ts a $u#d ma&es $r!m the !!l that may be a r! riate $!r meeti#) its !b"ecti(e+ F!r e3am le2 i# see&i#) l!#)6term ca ital a reciati!#2 s!me e5uity $u#d ma#a)ers stress (alue i#(estme#ts2 %hich mea# they buy st!c&s %h!se rices are l!%er tha# mi)ht be e3 ected+ Others stress )r!%th i#(estme#tsS !$te# y!u#)er2 dy#amic c!m a#ies the ma#a)er belie(es %ill bec!me ma"!r layers i# their i#dustry !r i# the ec!#!my as a %h!le+ 8<

S!me e3 erts belie(e that a $u#dFs ma#a)er has a ma"!r r!le i# determi#i#) the results a $u#d achie(es+ They ad(ise that y!u c!#$irm that a success$ul ma#a)er is still %ith the $u#d be$!re y!u i#(est a#d that y!u c!#sider selli#) y!ur shares i$ that ma#a)er lea(es+

-ei#(estme#t
Bei#) able t! rei#(est y!ur distributi!#s t! buy additi!#al shares is a#!ther ad(a#ta)e !$ i#(esti#) i# mutual $u#ds+ Y!u ca# ch!!se that ! ti!# %he# y!u ! e# a #e% acc!u#t2 !r at a#y time %hile y!u !%# shares+ A#d !$ c!urse y!u als! ha(e the ! ti!# t! recei(e y!ur distributi!#s i$ y!u #eed the i#c!me the $u#d %!uld r!(ide+ By i#(esti#) re)ularly2 y!u build the i#(estme#t base !# %hich $uture ear#i#)s %ill be able t! accumulate2 a r!cess &#!%# as c!m !u#di#)+ The m!re y!u ha(e i#(ested2 the )reater y!uFre !te#tial $!r $uture )r!%th+ A#d because the $u#d ha#dles the r!cess2 r!lli#) !(er distributi!#s i#t! #e% shares as they are aid2 y!u d!#Ft ha(e t! bud)et $!r i#(esti#) !r remember t! %rite the chec&+

-is&
There is al%ays the ris& that a mutual $u#d %!#t meet its i#(estme#t !b"ecti(e !r r!(ide the retur# y!u are see&i#)+ A#d s!me $u#ds are by de$i#iti!#2 ris&ier tha# !thers+ F!r e3am le a $u#d that i#(ests i# small #e% c!m a#ies6%hether $!r )r!%th !r (alue Ke3 !ses y!u t! the ris& that the c!m a#ies %ill #!t er$!rm as %ell as the $u#d ma#a)er e3 ects+ A#d i# mar&et d!%#tur#s2 $alli#) rices $!r a $u#ds u#derlyi#) i#(estme#t may r!duce a l!ss rather tha# a )ai# $!r the $u#d+

Sh!rt6Term 4ai#s
Each time a mutual $u#d sells a# i#(estme#t $!r m!re tha# the $u#d aid t! buy it2 the $u#d reali7es a ca ital )ai#+ A#d th!se )ai#s are assed al!#) t! the $u#ds i#(est!rs i# r! !rti!# t! the #umber !$ shares i# the $u#d that i#(est!r !%#s+ M!st acti(ely ma#a)ed $u#ds d!#Ft %ait m!re tha# a year be$!re selli#) i#(estme#ts+ That mea#s that a#y r!$it !# the sale is a sh!rt6term ca ital )ai#2 %hich is ta3ed at y!ur re)ular ta3 rate+ A#d si#ce a $u#d ty ically d!es#Ft %ithh!ld ta3ed !# y!ur behal$2 as a# em l!yer d!es2 y!u must c!me u %ith the am!u#t y!ur !%e $r!m !ther s!urces i$ y!u d!#Ft %a#t t! sell shares6at a !te#tial additi!#al )ai# K t! raise the m!#ey y!u !%e+ 8C

ALL ABO'T -EAL ESTAES INVESTMENT

Be$!re the st!c& mar&et a#d mutual $u#ds became ! ular laces $!r e! le t! ut their

i#(estme#t d!llars2 i#(esti#) i# real estate %as e3tremely h!me %e buy a#d li(e i# is !$te# !ur bi))est i#(estme#t+

! ular+ 1e still mai#tai# that

i#(esti#) i# real estate is #!t "ust $!r la#d bar!#s !r the rich a#d $am!us+ As a matter !$ $act2 the

Flyi#) hi)h !# the %i#)s !$ b!!mi#) real estate2 r! erty i# I#dia has bec!me a dream $!r e(ery !te#tial i#(est!r l!!&i#) $!r%ard t! di) r!$its+ All are eyei#) I#dia# r! erty mar&et $!r a %ide (ariety !$ reas!#s ItFs e(er )r!%i#) ec!#!my2 %hich is !# a c!#ti#u!us rise %ith ?+1 erce#t i#crease %it#essed i# the last $i#a#cial year+ The b!!m i# ec!#!my i#creases urchasi#) !%er !$ its e! le a#d creates dema#d $!r real estate sect!r O#ce y!u ha(e made the decisi!# t! bec!me a h!me!%#er2 it usually mea#s y!u %ill ha(e t! b!rr!% the lar)est am!u#t y!u ha(e e(er b!rr!%ed t! urchase s!methi#)+ This reali7ati!# may ma&e y!u %a#t t! bury y!ur head i# the sa#d a#d si)# !# the d!tted li#e2 but y!u sh!uld#Ft+ F!r m!st e! le2 this is the lar)est urchase they %ill e(er ma&e duri#) their li$etime2 a#d this ma&es it all the m!re im !rta#t t! )ather as much &#!%led)e as !ssible ab!ut %hat theyFre )etti#) i#t!+ 1e )i(e y!u the i#$!rmati!# y!u #eed2 i#cludi#) ma&i#) the decisi!# !# %hether2 %he# a#d %hat y!u sh!uld urchaseS $i#di#) the ty es !$ m!rt)a)es a#d $i#a#ci#) a(ailableS ha#dli#) the cl!si#)S a#d &#!%i#) %hat y!uFll #eed %he# its time t! sell y!ur h!me+ 1e als! e3 lai# the i#c!me ta3 c!#se5ue#ces a#d asset r!tecti!# ad(a#ta)es !$ h!me !%#ershi + Y!u ca# als! use real estate2 %hether la#d !r buildi#) strictly as i#(estme#t (ehicles2 a#d de e#di#) !# y!ur i#di(idual situati!#2 y!u ca# d! it !# a )ra#d !r smaller scale+ LetFs l!!& at the %!rld !$ real estate a#d the i#(esti#) ! ti!#s a(ailable+

8=

 ;!me as a# I#(estme#tH O%i#) a h!me is the m!st c!mm!# $!rm !$ real estate i#(esti#)+ Let us sh!% y!u h!% y!ur h!me is #!t "ust the lace y!u li(e2 but its als! erha s y!ur lar)est a#d sa$est i#(estme#t as %ell+ I#(estme#t -eal EstateH The i# a#d !uts !$ i#(esti#) i# real estate a#d %hether itFs the ri)ht i#(estme#t (ehicle $!r y!u+ 1hether y!u are thi#&i#) i# terms !$ re#ti#) !ut y!ur $irst h!me %he# y!u m!(e !# t! a bi))er !#e !r i#(esti#) i# a buildi#) $ull !$ a artme#ts %e %ill e3 lai# %hat y!u #eed t! &#!%+

-eal Estate M /r! erty

'sually2 the $irst thi#) y!u l!!& at %he# y!u urchase a h!me is the desi)# a#d the lay!ut+ But i$ y!u l!!& at the h!use as a# i#(estme#t2 it c!uld r!(e (ery lucrati(e years d!%# the r!ad+ F!r the ma"!rity !$ us2 buyi#) a h!me %ill be the lar)est si#)le i#(estme#t %e ma&e i# !ur li$etime+ -eal estate i#(esti#) d!es#Ft "ust mea# !ssibilities+ 1he# buyi#) r! erty $!r the ur !se !$ i#(esti#)2 the m!st im !rta#t $act!r t! c!#sider is the l!cati!#+ '#li&e !ther i#(estme#ts2 real estate is dramatically a$$ected by the c!#diti!# !$ the immediate area surr!u#di#) the r! erty a#d !ther l!cal $act!rs+ Se(eral $act!rs #eed t! be c!#sidered %he# assessi#) the (alue !$ real estate+ This i#cludes the a)e a#d c!#diti!# !$ the h!me2 im r!(eme#ts that ha(e bee# made2 rece#t sales i# the #ei)hb!rh!!d2 cha#)es t! 7!#i#) re)ulati!#s etc+ Y!u ha(e t! l!!& at the !te#tial i#c!me a h!use ca# r!duce a#d h!% it c!m ares t! !thers h!uses i# the area+ urchasi#) a h!use6 it ca# i#clude (acati!# h!mes2 c!mmercial r!s erities2 la#d Ib!th de(el! ed a#d u#de(el! edJ2 c!#d!mi#iums a#d ma#y !ther

Ob"ecti(es a#d -is&s

-eal estate i#(esti#) all!%s the i#(est!r t! tar)et his !r her !b"ecti(es+ F!r e3am le2 i$ y!ur !b"ecti(e is ca ital a reciati!#2 the# buyi#) a r!misi#) iece !$ r! erty i# a #ei)hb!rh!!d %ith )reat !te#tial %ill hel y!u achie(e this+ O# the !ther ha#d i$ %hat y!u see& is i#c!me the# buyi#) a re#tal r! erty ca# hel r!(ide re)ular i#c!me+

8>

There are si)#i$ica#t ris&s i#(!l(ed i# h!ldi#) real estate+ /r! erty ta3es mai#te#a#ce e3 e#ses a#d re air c!sts are "ust s!me !$ the c!sts !$ h!ldi#) the asset+ Furtherm!re real estate is c!#sidered t! be (ery illi5uid K it ca# s!metimes be hard t! $i#d a buyer i$ y!u #eed t! sell the r! erty 5uic&ly+

;!% t! Buy !r Sell it+

-eal estate is alm!st e3clusi(ely b!u)ht thr!u)h real estate a)e#ts !r br!&ers their c!m e#sati!# usually is a erce#ta)e !$ the urchase rice !$ the r! erty+ -eal estate ca# als! be urchased directly> $r!m the !%#er2 %ith!ut the assista#ce !$ a third arty+ I$ y!u $i#d buyi#) r! erty t!! e3 e#si(e2 the# c!#sider i#(esti#) i# real estate i#(estme#t trusts I-EITsJ %hich are discussed i# the #e3t secti!#+ LetFs ta&e a l!!& at the di$$ere#t ty es !$ i#(estme#t real estate y!u mi)ht c!#tem late !%i#)+

Fi3er6' ers
Y!u ca# ma&e m!#ey thr!u)h i#(esti#) i# real estate i$ y!u buy h!uses2 c!#d!mi#iums2 buildi#)s etc+2 %hich #eed s!me %!r& at a bar)ai# rice a#d $i3 them u + Y!u ca# r!bably sell the real estate $!r a hi)her rice tha# y!u aid a#d ma&e a r!$it+ ;!%e(er2 d!#Ft u#derestimate the %!r&2 time a#d m!#ey that )!es i#t! buyi#)2 re airi#) a#d selli#) a h!me %he# y!u are determi#i#) %hether it %ill be r!$itable $!r y!u t! i#(est+ Als! remember that di$$ere#t ta3 rules %ill a ly t! the urchase a#d sale !$ a h!me i$ it is #!t y!ur ri#ci al reside#ce+

-e#tal /r! erty

Y!u ca# buy real estate $!r re#tal ur !ses a#d recei(e a# i#c!me stream $r!m re#ters+ Y!u may als! be able t! e(e#tually sell the r! erty $!r m!re tha# y!u b!u)ht it $!r a#d ma&e a )!!d r!$it+ Alth!u)h2 d!#Ft $!r)et that y!u %ill #!% be a la#dl!rd %h! may ha(e t! deal %ith #!# ayi#) te#a#ts a#d destructi(e te#a#ts+ E(e# i$ y!u ha(e the %!rlds best te#a#ts2 y!u still ha(e t! deal %ith u &ee !$ the r! erty a#d a#y r!blems that c!me u + S!me i#(est!rs hire a r! erty ma#a)er !r ma#a)eme#t c!m a#y t! ma#a)e their i#(estme#t real estate+ This is $i#e but d!#Ft $!r)et t! $act!r i# the ma#a)eme#t $ees %he# y!u are calculati#) y!ur r!$it $r!m the i#(estme#t+

8?

/lease remember that re#tal real estate is sub"ect t! di$$ere#t ta3 rules tha# the h!me y!u reside i#+ y!u may be able t! ta&e ta3 deducti!#s $!r l!sses2 ca ital e3 e#diture a#d de reciati!# i$ y!u meet certai# re5uireme#ts2 but !ther deducti!#s s eci$ic t! ri#ci le reside#ce may #!t be a(ailable t! y!u+

'#im r!(ed La#d

'#im r!(ed la#d is di$$icult i#(estme#t t! ma&e a r!$it i#+ '#less y!u ma#a)e t! buy a iece !$ la#d that is e3tremely desirable at a )!!d rice a#d are certai# that it is #!t barred $r!m r!$itable use $!r the #ei)hb!rh!!d it is l!cated i# Ibecause !$ 7!#i#) !r !ther issuesJ2 it %ill r!bably c!st y!u m!re t! !%# the r! erty tha# y!u %ill e(er ma&e selli#) it+ I-emember y!u %ill still ha(e t! ay r! erty ta3es a#d %ill als! li&ely i#cur !ther u &ee c!sts !# the la#d a#d y!u %!#Ft be recei(i#) a#y i#c!me $r!m re#tsJ+ I$ y!u ha(e s!me s!rt !$ i#side sc!! !# a iece !$ la#d I$!r e3am le the ers!# i# the h!use !# the l!t #e3t t! the la#d is a %ealthy recluse a#d d!es #!t %a#t the r! erty built u !# s! y!u ca# #ame y!ur rice t! sell it t! himJ !r la# !# de(el! i#) it y!ursel$ Ibuildi#) y!u h!me !# a iece !$ r! erty #e3t t! a la&eJ2 i# that case it may be a )!!d i#(estme#t+

Sec!#d ;!mes
Sec!#d ;!mes !r (acati!# h!mes sh!uld be urchased rimarily $!r (acati!# ur !ses #!t i#(estme#t ur !ses+ M!st e! le e#d u %ith a l!ss !# their (acati!# h!me r! erties because e(e# i$ y!u ca# ma#a)e t! re#t the h!me2 the c!sts !$ !%#i#) the h!me alm!st al%ays e3ceed the re#tal i#c!me it bri#) i#+

8A

ALL ABO'T LIFE INS'-ANCE INVESTMENT

Li$e I#sura#ce is i#c!me r!tecti!# i# the e(e#t !$ y!ur death+ The ers!# y!u #ame2 as y!ur be#e$iciary %ill recei(e r!ceeds $r!m a# i#sura#ce c!m a#y t! !$$set the i#c!me l!st as a result !$ y!ur death+ Y!u ca# thi#& !$ li$e i#sura#ce as a m!rbid $r!m !$ )ambli#)H i$ y!u li(ed l!#)er tha# the i#sura#ce c!m a#y e3 ected y!u t! the# y!u %!uld .l!se0 the bet+ But i$ y!u died early2 the# y!u %!uld .%i#0 because the i#sura#ce c!m a#y %!uld ha(e t! ay !ut y!ur be#e$iciary+ I#surers I!r u#der%ritersJ l!!& care$ully at decades %!rth !$ data t! try t! redict e3actly h!% l!#) y!u %ill li(e+ I#sura#ce u#der%riters classi$y i#di(iduals based !# their hei)ht2 %ei)ht2 li$estyle Ii+e+ %hether !r ! #!t they sm!&eJ a#d medical hist!ry Ii+e+ i$ they ha(e had a#y seri!us health c!m licati!#sJ+ All these (ariables %ill determi#e %hat rate class cate)!ry a ers!# $its i#t!+ This d!es#Ft mea# that sm!&ers a#d e! le %h! ha(e had seri!us health r!blems ca#Ft be i#sured2 it "ust mea#s theyFll ay di$$ere#t remiums+ There are t%! (ery c!mm!# &i#ds !$ li$e i#sura#ce term li$e a#d erma#e#t li$e+ Term li$e i#sura#ce is usually $!r a relati(ely sh!rt eri!d !$ time2 %hereas a erma#e#t li$e !licy is !#e that y!u ay i#t! thr!u)h!ut y!ur e#tire li$e+ These ayme#ts are usually $i3ed $r!m the time y!u urchase y!ur !licy+ Basically2 the y!u#)er y!u are %he# y!u si)#6u $!r this ty e !$ i#sura#ce2 the chea er y!ur m!#thly ayme#ts %ill be+

Need $!r li$e i#sura#ce

-is&s a#d u#certai#ties are art !$ li$eFs )reat ad(e#ture K accide#t2 ill#ess2 the$t #atural disaster K theyFre all built i#t! the %!r&i#) !$ the '#i(erse2 %aiti#) t! ha e#+ I#sura#ce the# is ma#Fs a#s%er t! the (a)aries !$ li$e+ I$ y!u ca##!t beat ma#6made a#d #atural calamities2 %ell at least be re ared $!r them a#d their a$termath+

<B

Ty es !$ li$e I#sura#ce
M!st !$ the r!ducts !$$ered by I#dia# Li$e i#surers are de(el! ed a#d structured ar!u#d these .basic0 !licies a#d are usually a# e3te#si!# !r a c!mbi#ati!# !$ these !licies+ S!2 the di$$ere#t ty es !$ i#sura#ce !licies are

Term I#sura#ce /!licy

A term i#sura#ce !licy is a ure ris& c!(er $!r a s eci$ied eri!d !$ time+ 1hat this mea#s is that the sum assured is ayable !#ly i$ the !licyh!lder ides %ithi# the !licy term+ F!r i#sta#ce2 i$ a ers!# buys -s+, la&h !licy $!r 1B6years eri!dQ 1ell2 the# he is #!t e#titled t! a#y ayme#tS the i#sura#ce c!m a#y &ee s the e#tire remium aid duri#) the 1B6year eri!d+ 1hat i$ he sur(i(es the 1B6year eri!dQ 1ell2 the# he is #!t e#titled t! a#y ayme#tS the i#sura#ce c!m a#y &ee s the e#tire remium aid duri#) the 1B6year eri!d+ S!2 there is #! eleme#t !$ sa(i#)s !r i#(estme#t i# such a !licy+ It is a 1BB erce#t ris& c!(er+ It sim ly mea#s that a ers!# ays a certai# remium t! r!tect his $amily a)ai#st his sudde# death+ ;e $!r$eits the am!u#t i$ he !utli(es the eri!d !$ the !licy+ This e3 lai#s %hy the Term I#sura#ce /!licy c!mes at the l!%est c!st+

E#d!%me#t /!licy
C!mbi#i#) ris& c!(er %ith $i#a#cial sa(i#)s2 a# e#d!%me#t !licy is the m!st ! ular !licies i# the %!rld !$ li$e i#sura#ce+ I# a# E#d!%me#t /!licy2 the sum assured is ayable e(e# i$ the i#sured sur(i(es the !licy term+ I$ the i#sured dies duri#) the te#ure !$ the !licy2 the i#sura#ce $irm has t! ay the sum assured "ust as a#y !ther ure ris& c!(er+ A ure e#d!%me#t !licy is als! a $!rm !$ $i#a#cial sa(i#) %hereby i$ the ers!# c!(ered remai#s ali(e bey!#d the te#ure !$ the !licyS he )ets bac& the sum assured %ith s!me !ther i#(estme#t be#e$its+

<1

I# additi!# t! the basic !licy2 i#surers !$$er (ari!us be#e$its such as d!uble e#d!%me#t a#d marria)e * educati!# e#d!%me#t la#s+ The c!st !$ such a !licy is sli)htly hi)her but %!rth its (alue+

1h!le Li$e /!licy

This As the #ame su))ests2 a 1h!le Li$e /!licy is a# i#sura#ce c!(er a)ai#st death2 irres ecti(e !$ %he# it ha e#s+ '#der this la#2 the !licyh!lder ays re)ular remiums u#til his death2 $!ll!%i#) %hich the m!#ey is ha#ded !(er t! his $amily+ !licy2 h!%e(er $ails t! address the additi!#al #eeds !$ the i#sured duri#) his !st6 retireme#t years+ It d!es#Ft ta&e i#t! acc!u#t a ers!#Fs i#creasi#) #eeds either+ 1hile the i#sured buys the !licy at y!u#) a)e2 his re5uireme#ts i#crease !(er time+ By the time he dies2 the (alue !$ the sum assured is t!! l!% t! meet his $amilyFs #eeds+ As a result !$ these dra%bac&s2 i#sura#ce $irms #!% !$$er either a m!di$ied 1h!le Li$e /!licy !r c!mbi#e i# %ith a#!ther ty e !licy+

M!#ey Bac& /!licy

These !licies are structured t! r!(ide sums re5uired as a#tici ated e3 e#ses Imarria)e2 educati!# etcJ !(er a sti ulated eri!d !$ time+ 1ith i#$lati!# bec!mi#) a bi) issue2 c!m a#ies ha(e reali7ed that s!metimes the m!#ey (alue !$ the !licy is er!ded+ That is %hy %ith K r!$it !licies are als! bei#) i#tr!duced t! !$$set s!me !$ the l!sses i#curred !# acc!u#t !$ i#$lati!#+ A !rti!# !$ the sum assured is ayable at re)ular i#ter(als+ O# sur(i(al the remai#der !$ the sum assured is ayable+ I# case !$ death2 the $ull sum assured is ayable t! the i#sured+ The remium is ayable $!r a articular eri!d !$ time+

<,

'NIT6li#&ed i#sura#ce
Bima /lus is a u#it6li#&ed e#d!%me#t la#+ The la# is a(ailable !(er a durati!# !$ 1B years+ /remium ca# be aid either yearly2 hal$6yearly2 !r at !#e sh!t+ The remium is used t! urchase u#its i# a $u#d !$ !#eUs ch!ice2 a$ter the #ecessary deducti!#s+ The (alue !$ the u#its (aries %ith the i#(estme#t er$!rma#ce !$ the assets i# the $u#d+ I#(estme#ts ca# be made i# !#e !$ three ty es !$ $u#dsH Secured $u#d2 %hich i#(ests red!mi#a#tly i# debt a#d m!#ey mar&et i#strume#tsS -is& $u#d2 i# %hich the tilt is t!%ards e5uitiesS a#d a Bala#ced Fu#d2 a ble#d !$ the t%!+ S%itchi#) bet%ee# $u#ds is all!%ed t%ice duri#) the !licy term2 sub"ect t! the c!#diti!# that they are at least t%! years a art+ Char)es $!r s%itchi#) are , er ce#t !$ the $u#dUs cash (alue+ *hat the beneficiar$ recei+es depends on when the death of the polic$holder occurs, I$ death !ccurs %ithi# the $irst si3 m!#ths !$ the !licy2 the ay!ut is 8B er ce#t !$ the sum assured lus the cash (alue !$ the u#its+ Bet%ee# m!#ths se(e# a#d 1, !$ the !licy2 the ay!ut is =B er ce#t !$ the sum assured lus cash (alue !$ u#its+ A$ter $irst year2 the sum assured a#d cash (alue !$ the u#its is aid+ Duri#) the 1Bth year2 1BC er ce#t !$ the sum assured a#d cash (alue !$ u#its is aid !ut+ I$ death !ccurs due t! a# accide#t2 a sum e5ual t! the sum assured2 !(er a#d ab!(e the be#e$it me#ti!#ed ab!(e is aid+ O# sur(i(al u t! maturity2 the !licyh!lder %ill recei(e C er ce#t !$ the sum assured lus the cash (alue !$ the u#its+ As is the case %ith u#it6li#&ed la#s2 this la#2 t!!2 c!mes %ith a set !$ char)es+ This i#cludes a le(el a##ual m!rtality char)e2 the 5ua#tum !$ %hich is a $u#cti!# !$ the !licyh!lderUs e#try a)eS accide#t be#e$it char)e at -s+B+CB er th!usa#d sum assuredS a##ual admi#istrati(e a#d c!mmissi!# char)esS a#d a $u#d ma#a)eme#t char)e+ O# surre#deri#) the !licy2 the cash (alue !$ the u#its2 sub"ect t! certai# deducti!#s that de e#d !# the year surre#dered2 is aid !ut t! the !licyh!lder+

<8

<<

A##uities a#d /e#si!#

I# a##uity2 the i#surer a)rees t! ay the i#sured a sti ulated sum !$ m!#ey eri!dically+ The ur !se !$ a# a##uity is t! r!tect a)ai#st ris& as %ell as r!(ide m!#ey i# the $!rm !$ e#si!# at re)ular i#ter(als+ O(er the years2 i#surers ha(e added (ari!us $eatures t! basic i#sura#ce !licies i# !rder t! address s eci$ic #eeds !$ a cr!ss secti!# !$ e! le+

Ob"ecti(es a#d -is&s

N! matter %h! y!u are2 !#e be#e$it !$ li$e i#sura#ce is the eace !$ mi#d it )i(es y!u+ I$ a#ythi#) ha e#s t! y!u2 y!ur be#e$iciary %ill recei(e a chec& i# a matter !$ days+ Li$e I#sura#ce ca# als! be used t! c!(er a#y debts !r liabilities y!u lea(e behi#d+ The ba#& d!es#Ft "ust %rite !$$ y!ur m!rt)a)e !#ce y!u ass a%ay K these ayme#ts must be made !r y!ur h!use may be li5uidated+ Li$e I#sura#ce ca# als! create a# i#herita#ce $!r y!ur heirs !r it ca# be used t! lea(e a le)acy i$ itFs ut t!%ard d!#ati!#s t! charitable !r)a#i7ati!#s+ M!st li$e i#sura#ce !licies carry relati(ely little ris& because i#sura#ce c!m a#ies are usually stable a#d hea(ily re)ulated by the )!(er#me#t+ I# .cash (alue0 !licies y!u are all!%ed t! i#(est y!u !licy i# st!c&2 b!#d !r m!#ey mar&et $u#ds+ I# these ty es !$ !licies the (alue !$ y!ur i#sura#ce de e#ds !# the er$!rma#ce !$ th!se $u#ds+

;!% t! Buy !r Sell it

There are th!usa#ds !$ i#sura#ce br!&ers a#d ba#&s acr!ss N!rth America+ 9ee i# mi#d that y!u %ill usually ha(e t! ay a c!mmissi!# $!r the sales ers!#

Stre#)ths
Li$e i#sura#ce r!(ides e3celle#t eace !$ mi#d K it eases c!#cer#s ab!ut %hat %ill ha e# t! y!ur l!(ed !#es i$ y!u die sudde#ly+ A li$e i#sura#ce !licy is a relati(ely l!% ris& i#(estme#t

<C

1ea&#esses
I$ y!u li(e a l!#) li$e2 y!ur $amily li&ely %!#Ft )et the $ull (alue !ut !$ y!ur !licy+ Cash (alue $u#ds ca# $luctuate de e#di#) !# the $i#a#cial mar&ets+

Three Mai# 'ses

I#c!me /r!tecti!# Ca ital A reciati!# Ta36De$erred Sa(i#)s+

-eality Chec&
1hatFs the (erdictQ D! y!u ha(e the time2 disci li#e a#d $i#a#cial a%are#ess t! ta&e char)e !$ y!ur $i#a#ces a#d #!t c!u#t !# the l!%ly retur#s $r!m e#d!%me#t la#sQ D! y!u %a#t abs!lutely certai#ty i# y!ur i#(estme#tsQ I$ the a#s%er t! the $irst 5uesti!# is a E#!F a#d the sec!#d a EyesF2 y!ur ! ti!#s %ill be se(erely limited+ There are a $e% e#d!%me#t la#s that !$$er )uara#teed retur#s a#d the best it )ets is ab!ut = erce#t+ I$ !# the !ther ha#d2 y!u are %illi#) t! ta&e calculated ris&s2 y!u ca# certai#ly d! better tha# that %ith a mi3 !$ !st !$$ice schemes a#d ba#& de !sits at the (ery l!%6ris& e#d !$ the s ectrum t! e5uity $u#ds a#d st!c& s at the !ther e#d2 %ith debt $u#ds a#d bala#ced $u#ds $eaturi#) s!me%here i# the middle+ Fi#e y!ur c!m$!rt le(el a#d y!u %ill &#!% i$ i#sura#ce la#s ca# d!uble u y!ur i#(estme#ts $!r y!u+

<=

/E-FO-MANCE ANALYSIS OF -ET'-NS E5uity retur#s at a )la#ce

I$ %e ha(e a l!!& at e5uity retur#s !$ the ast > years it is li&e thisH

SENSE:
YEA,BBB ,BB1 ,BB, ,BB8 ,BB< ,BBC ,BB= ,BB> ,BB? INDIE:R 8A>, 8,=, 88>> C?8? ==B, A8A> 18>?= 18AB? ,B8,8 ABSOL'TE C;AN4E B 6>1B 11C ,<=1 >=< ,>AC <8?A 1,, =<1C /E-CENTA4E C;AN4E ILJ B 61>+?? 8+C, >,+?? 18+B? <,+8< <=+>B B+?? 81+C>

25000 20000 15000 10000 5000 0 2000

2001

2002

2003

2004

2005

2006

2007

2008

<>

BSE1BB
YEA,BBB ,BB1 ,BB, ,BB8 ,BB< ,BBC ,BB= ,BB> ,BB? INDE: ,B8, 1CCA 1==< 8B>= 8C?B <AC8 =A?, >B,= A18, ABSOL'TE C;AN4E B 6<>> 1B> 1<1, CB= 18>8 ,B,A << ,1B= /E-CENTA4E C;AN4E ILJ B 6,8+8? =+?? ?<+>< 1=+<= 8?+8, <B+A= B+=C ,8+B=

10000 9000 8000 7000 6000 5000 4000 3000 2000 1000 0 2000 2001 2002 2003 2004 2005 2006 2007 2008

<?

BSE,BB
YEA,BBB ,BB1 ,BB, ,BB8 ,BB< ,BBC ,BB= ,BB> ,BB? INDE:R <8> 8<B 8A< >== ??< 11?= 1=CC 1==, ,1=B ABSOL'TE C;AN4E B 6AC C8 8>, 11? 8BB <=A > <A? /E-CENTA4E C;AN4E ILJ B 6,1+A= 1C+C< A<+<1 1C+== 88+?= 8A+C< B+<, ,8+BC

2500 2000 1500 1000 500 0 2000

2001

2002

2003

2004

2005

2006

2007

2008

<A

BSECBB
YEA,BBB ,BB1 ,BB, ,BB8 ,BB< ,BBC ,BB= ,BB> ,BB? INDE:R 18B< 1BBC 11>= ,8=? ,>>A 8>AC C,=? C,AC =??8 ABSOL'TE C;AN4E B 6,AA 1>1 11A, <18 1B1= 1<>8 ,C 1C?? /E-CENTA4E C;AN4E ILJ B 6,,+A8 1>+B1 1B1+,B 1>+<= 8=+C= 8?+?= B+<> ,8+B>

8000 7000 6000 5000 4000 3000 2000 1000 0 2000

2001

2002

2003

2004

2005

2006

2007

2008

CB

B!#ds retur#s at a )la#ce

I$ %e ha(e a l!!& at the a(era)e retur#2 %hich the ce#tral )!(er#me#t securities ha(e )i(e# !(er a eri!d !$ !#e year2 it is A+11L+ N!% i$ %e l!!& at the a(era)e retur#2 %hich the state )!(er#me#t securities ha(e )i(e# !(er a eri!d !$ !#e year2 it is A+,?L+

4!ld retur#s at a )la#ce

.4!ld shi#es %he# e(erythi#) else $alls a art0 )!es a# !ld ada)e+ True2 the )litter is bac&+ Duri#) the CBs )!ld a reciated mar)i#ally+ The #e3t decade2 1A=B61A>B2 it m!(ed $r!m N8C t! N<B a#d bet%ee# 1A>B61A?B came the massi(e rise $r!m N<B t! N=1<2 a %h! tre#d !$ )!ld rices i# I#dia i# the last $e% years is )i(e# i# the $!ll!%i#) table+ YEA,BBB ,BB1 ,BB, ,BB8 ,BB< ,BBC ,BB= ,BB> ,BB?
1200 1000 800 600 400 200 0 2000 2001 2002 2003 2004 2005 2006 2007 2008

i#) 1<B>L+ The

/-ICE INJR ,>, ,>? 8<= <1< <8? C1> C1> =8= AAC

ABSOL'TE C;AN4E 6 = =? =? ,< >A >A 11A 8CA

/E-CENTA4E C;AN4E ILJ 6 ,+,B ,<+<= 1A+=C C+>A 1?+B8 1?+B8 ,8+B1 8=+B?

R/rice i#dicates December e#d rices !$ that articular year

Mutual Fu#ds retur# at a )la#ce

ED'ITY TA: SAVIN4 NAV 1 Y, Y8 Y-

C1

Ma)#um Ta3 4ai#

<>+>

1B>+>B

A8+<B

11,+8B

/ri#ci al Ta3 Sa(i#)s

><+=B

A1+,B

CA+8B

>8+>B

;DFC Ta3 Sa(er

18?+CB

1B<+=B

?8+=B

A1+=B

140 120 100 80 60 40 20 0

NAV

1 YR

2 YR

3 YR

MAGNUM TAX GAIN HDFC TAX SAVER

PRINCIPAL TAX GAIN

C,

ED'ITY BALANCED Ma)#um Bala#ced

NAV

1 Y-

, Y-

, Y-

8,+<B 9!ta& Bala#ced ;DFC /rude#tial

><+=B

C8+<B

=8+>B

,8+?B A=+8B

>1+1B =1+?B

<A+1B <,+AB

C,+?B CC+AB

100 80 60 40 20 0 NAV 1 YR 2 YR 3 YR

MAGNUM BALANCED HDFC PRUDENCE

KOTAK BALANCED

C8

-eal Estate -etur#s

-eal Estate i#dustry i# I#dia has c!me !$ a)e a#d c!m etes %ith !ther i#(estme#t ! ti!#s i# the structured mar&ets+ C!mmercial real estate c!#ti#ues t! be a desirable i#(estme#t ! ti!# i# I#dia+ O# a# a(era)e the retur#s $r!m re#tal i#c!me !# a# i#(estme#t i# c!mmercial r! erty i# metr!s is ar!u#d 1B+CL2 %hich is the hi)hest i# the %!rld+ I# case !$ !ther i#(estme#t ! !rtu#ities li&e ba#& de !sits a#d b!#ds2 the retur#s are i# the ra#)e !$ C+CL 6 =+CL+ ly "ust ab!ut matches dema#d i# -e"u(e#ated dema#ded si#ce early ,BB< has led t! the $irmi#) u !$ real estate mar&ets acr!ss the three sect!rs K c!mmercial2 reside#tial a#d retail+ The su (alues+ Fr!m a tech#ical su alm!st all metr!s ar!u#d the c!u#try+ There has bee# a# u %ard ressure !# the real estate ers ecti(e2 r!bust dema#d a#d u %ard rices are hel i#) re(i(e i#(estme#t a#d s eculati(e i#terest i# real estate a#d this is bei#) $urther aided by e3cess m!#ey ly2 st!c& mar&et )ai#s a#d !licy cha#)es i# $a(!r !$ the real estate sect!r+

I#(estme#t Yield
I#creasi#) dema#d $r!m the IT*ITES a#d B/O sect!r has led t! a r!3imately ,BL 6 <BL i#crease i# ca ital (alues $!r !$$ice s ace i# the last 1,61? m!#ths acr!ss ma"!r metr!s i# I#dia+ 4rade6A !$$ice r! erty #et yields ha(e c!me d!%# $r!m 1,L 61CL i# ,BB8 a#d curre#tly a(era)e ar!u#d 1B+CL 6 11L +a+ The $all i# yields has resulted $r!m decreasi#) i#terest rates a#d i#creasi#) a etite $r!m i#(est!rs+ This has i# tur# resulted $r!m abu#da#t li5uidity ! ti!#s a(ailable c!u led %ith the acce tability !$ real estate as a c!#(e#ti!#al class !$ asset+ L!%er i#terest rates2 easy a(ailability !$ h!usi#) $i#a#ce2 escalati#) salaries a#d "!b r!s ects ha(e bee# le#di#) bu!ya#cy t! the reside#tial sect!r+ The #et yields Ia$ter acc!u#ti#) $!r all !ut)!i#)sJ !# reside#tial r! erty are curre#tly at <L 6 =L +a+ ;!%e(er2 these i#(estme#ts ha(e be#e$ited $r!m the im r!(i#) reside#tial ca ital (alues+ As such2 i#(est!r ca# c!u#t !# !te#tial ca ital )ai#s t! im r!(e their !(erall retur#s+ Ca ital (alues i# the reside#tial sect!r ha(e rise# by ab!ut ,CL 6 <BL +a+ i# the last 1C K 1? m!#ths+ The retail mar&et i# I#dia has bee# )r!%i#) due t! i#creasi#) dema#d $r!m retailers2 hi)her dis !sable i#c!mes a#d dearth !$ 5uality s ace as !# date+ Th!u)h the #et yields !# retail r! erty ha(e re)istered a $all $r!m 1BL 6 18L +a+ re !rted earlier t! AL 6 1B+CL +a+ curre#tly2 the ca ital a reciati!# i# this sect!r is cl!se t! ,BL <BL +a+ ;!%e(er2 the ris&s ass!ciated %ith this sect!r are hi)her as retailers are r!#e t! cyclical cha#)es ty ical !$ a busi#ess cycle+ Cha#)i#) c!#sumer C< sych!)ra hics

c!mbi#ed %ith i#creasi#) dis !sable i#c!mes %ill e#sure $urther )r!%th !$ the retail sect!r i# I#dia+

Li$e I#sura#ce retur#s at a )la#ce

Li$e I#sura#ce as .I#(estme#t0 I#sura#ce is a# attracti(e ! ti!# $!r i#(estme#t+ 1hile m!st e! le rec!)#i7e the ris& hed)i#) a#d ta3 sa(i#) !te#tial !$ i#sura#ce2 ma#y are #!t a a%are !$ its ad(a#ta)es as a# i#(estme#t ! ti!# as %ell+ I#sura#ce r!ducts yield m!re c!m ared t! re)ular i#(estme#t ! ti!#s a#d this is besides the added i#ce#ti(es Ib!#usesJ !$$ered by i#surers+ Y!u ca##!t c!m are a# i#sura#ce r!duct %ith !ther i#(estme#t schemes $!r the sim le reas!# that it !$$ers $i#a#cial r!tecti!# $r!m ris&s s!methi#) that is missi#) i# #!#6i#sura#ce r!ducts+ I# $act2 the remium y!u ay $!r a# i#sura#ce !licy is a# i#(estme#t a)ai#st ris&+ Thus2 be$!re c!m ari#) %ith !ther schemes2 y!u must acce t that a art !$ the t!tal am!u#t i#(ested i# li$e i#sura#ce )!es t!%ards r!(idi#) $!r the ris& c!(er2 %hile the rest is used $!r sa(i#)s+ I# li$e i#sura#ce e3ce t $!r term i#sura#ce2 u#li&e #!#6li$e r!ducts y!u )et maturity be#e$its !# sur(i(al at the e#d !$ the term+ I# !ther %!rds2 i$ y!u ta&e a li$e i#sura#ce !licy $!r ,B years a#d sur(i(e a#d sur(i(e the term2 the am!u#t i#(ested as remium i# the !licy %ill c!me bac& t! y!u %ith added retur#s+ I# the u#$!rtu#ate e(e#t !$ death %ithi# the te#ure !$ the !licy the $amily !$ the deceased %ill recei(e the sum assured+ N!% let us c!m are i#sura#ce as a# i#(estme#t ! ti!#s+ I$ y!u i#(est IN- 1BBBB i# //F2 y!ur m!#ey )r!%s t! -s+1BACB at A+CL i#terest !(er a year+ But i# this case2 the access t! y!ur $u#ds %ill be limited+ O#e ca# %ithdra% CBL !$ the i#itial de !sit !#ly a$ter < years+ The same am!u#t !$ -s+1BBBB ca# )i(e y!u a# i#sura#ce c!(er !$ u t! a r!3imately -s+C K 11 la&h Ide e#di#) u !# the la#2 a)e a#d medical c!#diti!# !$ the li$e i#sured etcJ a#d this am!u#t ca# bec!me immediately a(ailable t! the #!mi#ee !$ the !licyh!lder !# death+ Thus i#sura#ce is a u#i5ue i#(estme#t a(e#ue that deli(ers s!u?#d retur#s i# additi!# t! r!tecti!#+

CC

Li$e I#sura#ce as .Ta3 /la##i#)0

I#sura#ce ser(es as a# e3celle#t ta3 sa(i#) mecha#ism t!!+ The 4!(er#me#t !$ I#dia has !$$ered ta3 i#ce#ti(es t! li$e i#sura#ce r!ducts i# !rder t! $acilitate the $l!% !$ $u#ds i#t! r!ducti(e assets+ '#der secti!# ?? !$ i#c!me ta3 act 1A=12 a# i#di(idual is e#titled t! a rebate !$ ,BL !# the a##ual remium ayable !# his*her a#d li$e !$ his*her childre# !r adult childre#+

C=

FINDIN4S OF T;E ST'DY

E(aluati#) a# i#(estme#t ! ti!# is #e(er a# attem t t! ru# d!%# the crede#tials !$ !ther i#strume#ts i# the bl!c&+ -ather the aim is t! u#c!(er %ays t! ma&e the sce#e m!re ersuasi(e a#d m!re rati!#al+ Mutual $u#ds are a# ideal i#(estme#t i# m!re %ays tha# !#e+ A$ter a #umber !$ i#(esti)ati!# a#d bac& seat s5uabbli#) !(er the latest bud)et2 i#(est!rs ha(e $i#ally started as&i#) $!r the ri)ht i#(estme#t i#strume#t that truly $its his #eeds+ At the bac&dr! !$ this u#certai#ty I am tryi#) t! si7e u the de ts+ A#d breadth !$ be#e$its !$ si3 i#(estme#t i#strume#ts i# this secti!# !$ tri))eri#) th!u)hts+ Aba#d!#i#) the mar&eti#) tric&s2 I stretched !ut my a#alysis %ith a ra#&i#) scale !$ 1B as a $u#dame#tal $i)ure cru#chi#) e3ercise+ 4radually2 I ha(e ide#ti$ied a#d cate)!ri7ed all the i#(estme#t re5uireme#ts i#t! three br!ad heads t! sei7e the $la%s i#t! r!cedure+ A#d i# a remar&able $i#di#)2 mutual $u#ds a ears t! act as a treat t! all emb!dies i#(estme#t at its best a#d %idely addresses the sa(i#)s c!m !#e#t !$ sa$ety t! suite y!ur i#c!me t!lera#ce+

/rimary Needs
The basic re5uireme#ts a# i#(est!r l!!&s $!r i# a# i#(estme#t are sa$ety2 retur#s a#d li5uidity+ A$ter the 'S6=< $iasc!2 ma#y e! le are c!#$used %hether t! i#(est i# a#y )!(er#me#t bac&ed $i#a#cial i#stituti!#s+ M!st !$ them are #!% tra#s$erri#) their m!#ey t! ba#& FDUs2 %hich acc!rdi#) t! them is !#e !$ the sa$est i#(estme#t ! ti!#s+ Ma#y state that E I d!#Ft mi#d )etti#) l!% retur#s2 but I sh!uld be sure t! recei(e themF+

Sec!#dary Needs
A#cillary re5uireme#ts $!r a# i#(estme#t are abse#ce !$ e#try barrier2 ta3 e$$icie#tly a#d cash $l!% e$$ecti(e#ess+ I# a# attem t t! e#c!ura)e real estate !r the h!usi#) busi#ess i# the c!u#try a l!t !$ ta3 s!a s ha(e bee# )i(e# t! this sect!r+ A ta3 ayer ca# claim the deducti!# !$ u t! -s+1+C la&h er year !# the i#terest ayable !# the $u#ds b!rr!%ed $!r the urchase !$ the h!use !r $!r c!#structi!#+ C!mi#) t! mutual $u#ds2 th!u)h the di(ide#ds are bei#) ta3ed iA# the ha#ds !$ the i#(est!r this year2 there is a#!ther r!ute t! sa(e t! ta3 K the )r!%th ! ti!# !r the systematic %ithdra%al la#s+ I# the case !$ l!#e term ca ital )ai# ta32 !#e has the ! ti!# !$ either ayi#) ,BL ta3 %ith i#de3ati!# be#e$its !r a $lat rate !$ 1BL+ A art $r!m )!!d ta3 s!a s C>

mutual $u#ds als! e#"!y the be#e$its !$ e#try barriers i+e+ u#li&e i# b!#ds2 a#y ers!# #eed #!t ha(e t! %ait $!r a# issue t! be ! e# t! i#(est i# a mutual $u#d2 i#stead ca# e#ter a#ytime he %ishes t! d! s!+ O#e may thi#& that %ith s! ma#y ad(a#ta)es mutual $u#s #eed hu)e i#(estme#t t! start !$$2 but !#e ca# start i#(esti#) i# mutual $u#ds %ith a #!mi#al am!u#t !$ -s+CBB*6 i# case !$ systematic i#(estme#t la#+

Tertiary Needs
The st!c& mar&et is !#e !$ the ! ti!#s $!r i#(esti#) y!ur m!#ey+ St!c&s are u#matched t! a#y !ther i#(estme#t t!!l+ They are the best %ay t! ma&e m!#ey a#d stay ahead !$ i#$lati!# !(er time+ This is ideal i$ y!u ha(e l!#)6term i#(estme#t )!als+ 1he# y!u buy st!c& i# a c!m a#y a#d i$ they )! ba#&ru t the# the st!c& %ill #!t be the %!rth the rice y!u aid $!r it+ These thi#) d! ha e#2 )ut i$ i#(est %ith r! er strate)ies y!u %ill usually c!me !ut a %i##er+ F!r e+)+ I$ s!me!#e had i#(ested -s+1 la&h i# the e5uity mar&et ,, years bac&2 the thi#) %!uld ha(e a reciated t! -s+,C la&hs t!day+ A#!ther classic e3am le is the I#$!sys st!c& %here i# i$ !#e had i#(ested -s+1BBBB i# @u#e 1AA82 %he# it came !ut %ith its maide# I/O2 y!ur h!ldi#) %!uld be %!rth m!re tha# -s+?C la&hs+ O(er the same eri!d debt has )e#erated a# a##ual retur# !$ 1,L %hereas )!ld 8+<L a#d real estate2 th!u)h it )a(e 1BL duri#) this eri!d it c!#ti#ued t! be b!))ed %ith r!blems relati#) (aluati!#2 li5uidity2 sale r!ceeds etc+ a#!ther )!!d ! ti!# is the systematic i#(estme#t la# ISI/J i# the mutual $u#ds+ This is $eature i# m!st !$ the mutual $u#ds s eci$ically desi)#ed $!r th!se %h! are i#terested i# buildi#) %ealth !(er l!#)6term a#d la#s a better $uture $!r themsel(es a#d their $amily+ There are three ma"!r be#e$its !$ SI/+ They are be#e$it !$ c!m !u#di#) ru ee c!st a(era)i#) a#d c!#(i#ce+ 1ith c!st a(era)i#) !#e #eed #!t %!rry ab!ut the rice !$ the u#it2 i#stead "ust i#(est re)ularly !(er a l!#)6term eri!d+ This a r!ach tur#s the !dds i# y!ur $a(!r !(er the l!#)6term eri!d+ I#deed the last c!u le !$ years %ere bad $!r the mutual $u#d i#dustry+ ;!%e(er as the sayi#) )!es Ee(ery dar& cl!ud has a sil(er li#i#)F s! the same is ha e#i#) t! mutual $u#d i#dustry+ 1ith m!st !$ AMCFs c!mi#) u %ith i##!(ati(e r!ducts t! beat the dra%bac&s !$ %hat they $aced i# the ast2 de$i#itely the i#dustry %ill ta&e a #e% hi)h $r!m here+ F!r a better u#dersta#di#)2 a$ter a thr!u)h a#alysis !ur i# h!use research team has 5ua#ti$ied the i#(estme#t ! ti!#s2 as $i)ures s ea& l!uder tha# %!rds+ 1ith the hel !$ the asset )rid !#e ca# easily ma&e

C?

a ch!ice !$ i#(estme#t+ A care$ul l!!& at th!se $i)ures bel!% re$lects that i#(esti#) i# mutual sta#d at a# ad(a#ta)e !(er the !thers+ E5uity ,+88 ,+<, 1+CB !$ =+,C B!#ds 1+AB 1+88 ,+<= C+=A 4!ld ,+88 1+=C 1+,> C+,C -eal Estate ,+C< B+A< 1+<1 <+?A E5uity MF ,+A1 ,+=C ,+,B >+>= Debt MF ,+=< ,+8, ,+8B >+,=

/rimary Needs Sec!#dary Needs Tertiary Needs Value S eci$ic I#strume#t

/r!cedure $!ll!%ed
Firstly2 the rimary re5uireme#ts ha(e bee# br!adly classi$ied i#t! three i+e+ Basic -e5uireme#ts2 A#cillary -e5uireme#ts a#d /!rt$!li! Fit+ These ha(e bee# $urther classi$ied i#t! /rimary #eeds2 Sa$ety retur#s a#d Li5uidity+ Sec!#dary #eeds K ta3 e$$icie#cy2 e#try barriers a#d cash $l!% e$$ecti(e#ess+ Tertiary #eeds K l!#) term )!als a#d h!ldi#)s*li5uidati!# c!st+ The rimary sec!#dary a#d tertiary #eeds ha(e bee# assi)#ed <BL2 8BL2 8BL res ecti(ely a#d each !$ the subcate)!ries ha(e als! bee# assi)#ed i#di(idual %ei)hts+ These ra#&s are multi lied %ith res ecti(e %ei)hts each cate)!ry a#d i# tur# the sum !$ these are multi lied %ith by the %ei)hts assi)#ed t! the rimary re5uireme#ts+ F!r sa$ety as the arameter2 i# c!m aris!# %ith mutual $u#ds e5uity is ra#&ed the l!%est because !$ the ris& it carries %ith it+ M!st !$ the scri ts are mar&et dri(e#+ A#ythi#) !r a#y!#e ca# a$$ect the mar&et+ O# the !ther ha#d b!#ds are ra#&ed the hi)hest because they are )!(er#me#t bac&ed+ C!#trast e5uity is ra#&ed the hi)hest $!r retur#s2 as it is !#e !$ the best i#(estme#t ! ti!#s t! )i(e )!!d retur#s+ B!#d are rated the l!%est because !$ the assured retur#s r!mised by the )!(er#me#t+ B!th !$ them ay ar!u#d ?L 6 AL !$ a##ual retur#s+

CA

F!r li5uidity mutual $u#ds a#d )!ld are ra#&ed the hi)hest as these ca# be c!#(erted i#t! cash immediately as a#d %he# the i#(est!r %ishes t! d! s!+ ;!%e(er that is #!t the case %ith the real estate !r //F acc!u#t as the $!rmer is #!t easy t! dis !se a#d the later has a l!c& i# eri!d !$ 1C years+ E(e# i# case !$ e#try barrier2 e5uity a#d mutual $u#ds are ra#&ed the hi)hest at they ca# be b!u)ht at a#y !i#t !$ time %ith mi#imal i#(estme#t+ But2 it s is #!t the same %ith the real estate2 si#ce y!u ca##!t buy the la#d y!u %ish t! u#til a#d u#less there is s!me!#e %ishi#) t! sell it+ Ta&i#) i#t! c!#siderati!# the ta3 a#)le !$ a# i#(estme#t2 the# the m!st ad(a#ta)e!us are the real estate a#d e5uity mutual $u#ds+ I# case !$ real estate2 a ma3imum am!u#t !$ -s+1+C la&hs is all!%ed as deducti!# $!r the i#terest aid $!r the l!a# ta&e# t! either buy a h!use !r c!#struct it+ E(e# i# case !$ mutual $u#ds2 i$ the u#its are held $!r m!re tha# a year2 !#ly 1BL !$ the ca ital a reciati!# is ta3ed a#d #!t at the ea& rates+ Ba#& FDFs are the %r!#) ch!ice i$ !#e is l!!&i#) $!r the ta3 as ect because2 $irstly the am!u#t !$ i#terest aid is less a#d sec!#dly TDS is a licable+ There are a $e% ! ti!#s2 %hich meet !ur l!#)6term )!als+ The systematic i#(estme#t la#2 a s ecial $eature i# mutual $u#ds is the best ! ti!# t! meet y!ur l!#)6term re5uireme#ts $!r the same mutual $u#ds has the hi)hest sc!re i# the asset )rid+ The same thi#) is e(e# a licable t! the real estate2 as there is a hi)h !ssibility !$ a reciati!# !(er time a#d e(ery cha#ces !$ de reciati!#+ Ba#& FDFs are ra#&ed the least because the ca ital a reciati!# is #!t hu)e+

=B

I#(estme#t Needs Sa$ety -etur#s Li5uidity E#try barrier Ta3

1ei)ht ILJ <B <B ,B =B ,B

E5uity , ? > A 8 ? < C

B!#ds > < < C = 8 C A

4!ld > C ? C 8 A = 8

-eal Estate ? C , 1 A < A ,

E5uity MF C ? > ? > ? A >

Debt MF > C A > ? A > ?

E$$icie#cy Cash Fl!% ,B E$$ecti(e#ess L!#) Term <B 4!als ;!ldi#) Li5uidati!# c!st * =B

N!teH A K i#dicates hi)hest !siti(e (alue !# a arameter a#d 1 K i#dicates the l!%est !siti(e (alue !# a arameter+

=1

CONCL'SION
There are se(eral i#(estme#ts t! ch!!se $r!m these i#clude e5uities2 debt2 real estate a#d )!ld+ Each class !$ assets has its eculiarities+ At a#y i#sta#t2 s!me !$ th!se assets %ill !$$er )!!d retur#s2 %hile !thers %ill be l!sers+ M!st i#(est!rs i# search !$ e3tra!rdi#ary i#(estme#ts try hard t! $i#d a si#)le asset+ S!me l!!& $!r the #e3t i#$!sys2 !ther buys real estate !r )!ld+ Ma#y !$ them de !sit their sa(i#)s i# the /ublic /r!(ide#t Fu#d I//FJ !r !st !$$ice de !sits2 !thers lum $!r debt mutual $u#ds+ Very $e% buy acr!ss all asset classes !r di(ersi$y %ithi# a# asset class+ There$!re it has bee# %idely said that .D!#Ft ut all y!ur e))s i# !#e bas&et0+ The idea is t! create a !rt$!li! that i#cludes multi le i#(estme#ts i# !rder t! reduce ris&+ Thi#)s cha#)ed i# early may ,BB= si#ce the# the st!c& mar&et m!(ed u m!re tha# >BL2 %hile ma#y st!c&s ha(e m!(ed m!re+ -eal estate rices are als! s%i#)i#) u 2 alth!u)h it is di$$icult t! ma i# this $ra)me#ted mar&et+ 4!ld a#d Sil(er rices ha(e s urted+ B!#ds c!#ti#ue t! )i(e reas!#able retur#s but it is #! l!#)er leads i# the c!m arati(e ra#&i#)s+ -i)ht #!% e5uity l!!&s the best bet2 %ith real state c!mi#) i# sec!#d+ The 5uesti!# is h!% l!#) %ill this lastQ I$ it is a sh!rt6term he#!me#!#2 )!i#) thr!u)h the hassle !$ s%itchi#) !(er $r!m debt may #!t be %!rth it+ I$ itFs a l!#)6term situati!#2 assets sh!uld be m!(ed i#t! e5uity a#d real estate+ This may be l!#)6term situati!#+ The retur#s $r!m the mar&et %ill be )!!d as l!#) as r!$itability i#creases+ im r!(e $urther+ Si#ce the ec!#!my is "ust )etti#) i#t! rec!(ery m!de2 that c!uld h!ld ush u the (alue !$ $ar6$lu#) true $!r se(eral years+ -eal estate (alues2 es ecially i# suburba# areas !r small t!%#s c!uld The im r!(eme#t i# r!ad #et%!r&s %ill de(el! me#t+ There is als! s!me attem t t! ame#d te#a#cy la%s a#d li$t urba# ceili#)s2 %hich ha(e stu#ted the real estate mar&et+ My )ut $eeli#) is that a lar)e %ei)hta)e i# e5uity a#d i# real estate %ill ay !$$ duri#) ,BB>6 ,BB?+ But d!#Ft e3it debt !r sell !$$ y!ur )!ld+ Try a#d buy m!re i# the %ay !$ e5uity a#d research real estate ! ti!#s i# small t!%#s*suburbs+ -e)ardless !$ y!ur mea#s !$ meth!d2 &ee i# mi#d that there is #! )e#eric di(ersi$icati!# m!del that %ill meet the #eeds !$ e(ery i#(est!r+ Y!ur ers!#al time h!ri7!#2 ris& t!lera#ce2

=,

i#(estme#t )!als2 $i#a#cial mea#s2 a#d le(el !$ i#(estme#t e3 erie#ce %ill lay a lar)e r!le i# dictati#) y!ur i#(estme#t e3 erie#ce %ill lay a lar)e r!le i# dictati#) y!ur i#(estme#t mi3+ Start by $i)uri#) !ut the mi3 !$ st!c&2 b!#ds a#d cash that %ill be re5uired t! meet y!ur #eeds+ Fr!m there determi#e e3actly %hich i#(estme#ts t! i# c!m leti#) the mi32 substituti#) traditi!#al assets $!r alter#ati(es as #eeded+

=8

BIBLIO4-A/;Y 1ebsites
www,bseindia,com www,mutualfundsindia,com www,crisil,com www,gold,org,com www,mone$control,com www,in+estopedia,com www,licofindia,com

Te3t B!!&s
I#(estme#t A#alysis a#d /!rt$!li! Ma#a)eme#t I#(estme#ts Security A#alysis a#d /!rt$!li! Ma#a)eme#t 6 /rasa##a Cha#dra 6 Shar e M Ale3a#der 6 Fischer M @!rda#

Ma)a7i#es
Busi#ess %!rld Busi#ess T!day

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