Fsd Investment Avanus

8/7/2019 Fsd Investment Avanus

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AAssignment on

Investment Avenue

Submitted to submitted by

Ram Sangawa sir Pallavi Mathur


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INVESTMENT

Definition

1. In finance, the purchase of a financial product or other item of value with an

expectation of favourable future returns. In general terms, investment means the use

money in the hope of making more money.

2. In business, the purchase by a producer of a physical good, such as durable

equipment or inventory, in the hope of improving future business.

Investment Objective

The options for investing our savings are continually increasing, yet every single

investment vehicle can be easily categorized according to three fundamental

characteristics - safety, income and growth - which also correspond to types of

investor objectives. While it is possible for an investor to have more than one of

these objectives, the success of one must come at the expense of others. Let'sexamine these three types of objectives, the investments that are used to achieve

them and the ways in which investors can incorporate them in devising a strategy.

Safety

Perhaps there is truth to the axiom that there is no such thing as a completely safe

and secure investment. Yet we can get close to ultimate safety for our investment

funds through the purchase of government -issued securities in stable economic

systems, or through the purchase of the highest quality corporate bonds issued by

the economy's top companies. Such securities are arguably the best means of

preserving principal while receiving a specified rate of return.

The safest investments are usually found in the money market and include such


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securities as Treasury bills (T-bills), certificates of deposit (CD), commercial paper or

bankers' acceptance slips; or in the fixed income (bond) market in the form of

municipal and other government bonds, and in corporate bonds. The securities listed

above are ordered according to the typical spectrum of increasing risk and, in turn,

increasing potential yield. To compensate for their higher risk, corporate bonds

return a greater yield than T-bills.

It is important to realize that there's an enormous range of relative risk within the

bond market. At one end are government and high-grade corporate bonds, which are

considered some of the safest investments around; at the other end are junk bonds,

which have a lower investment grade and may have more risk than some of the

more speculative stocks. In other words, it's incorrect to think that corporate bonds

are always safe, but most instruments from the money market can be consideredvery safe.

Income

The safest investments are also the ones that are likely to have the lowest rate of

income return, or yield. Investors must inevitably sacrifice a degree of safety if they

want to increase their yields. This is the inverse relationship between safety and

yield: as yield increases, safety generally goes down, and vice versa.

Most investors, even the most conservative-minded ones, want some level of income

generation in their portfoli os, even if it's just to keep up with the economy's rate of

inflation. But maximizing income return can be an overarching principle for a

portfolio, especially for individuals who require a fi xed sum from their portfolio every

month. A retired person who requires a certain amount of money every month is well

served by holding reasonably safe assets that provide funds over and above other

income-generating assets, such as pension plans, for example.

Growth of Capital

This discussion has thus far been concerned only with safety and yield as investing

objectives, and has not considered the potential of other assets to provide a rate of

return from an increase in value, often referred to as a capital gain. Capital gains are

entirely different from yield in that they are only realized when the security is sold for


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a price that is higher than the price at which it was originally purc hased. Selling at a

lower price is referred to as a capital loss. Therefore, investors seeking capital gains

are likely not those who need a fixed, ongoing source of investment returns from

their portfolio, but rather those who seek the possibility of long er-term growth.

Growth of capital is most closely associated with the purchase of common stock,

particularly growth securities, which offer low yields but considerable opportunity for

increase in value. For this reason, common stock generally ranks among the most

speculative of investments as their return depends on what will happen in an

unpredictable future. Blue-chip stocks, by contrast, can potentially offer the best of all

worlds by possessing reasonable safety, modest income and potential for growth in

capital generated by long-term increases in corporate revenues and earnings as the

company matures. Yet rarely is any common stock able to provide the near-absolutesafety and income-generation of government bonds.

It is also important to note that capital gains offer potential tax advantages by virtue

of their lower tax rate in most jurisdictions. Funds that are garnered t hrough common

stock offerings, for example, are often geared toward the growth plans of small

companies, a process that is extremely important for the growth of the overall

economy. In order to encourage investments in these areas, governments choose to

tax capital gains at a lower rate than income. Such systems serve to encourage

entrepreneurship and the founding of new businesses that help the economy grow.

Secondary Objectives

Tax Minimization

An investor may pursue certain investments in order to adopt tax minimization as

part of his or her investment strategy. A highly-paid executive, for example, may

want to seek investments with favourable tax treatment in order to lessen his or her

overall income tax burden. Making contributions to an IRA or other tax-sheltered

retirement plan, such as a 401(k), can be an effective tax minimization strategy.


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Marketability / Liquidity

Many of the investments we have discussed are reasonably illiquid, which means

they cannot be immediately sold and easily converted into cash. Achieving a degree

of liquidity, however, requires the sacrifice of a certain level of income or potential forcapital gains.

Common stock is often considered the most liquid of investments, since it can

usually be sold within a day or two of the decision to sell. Bonds can also be fairly

marketable, but some bonds are highly illiquid, or non-tradable, possessing a fi xed

term. Similarly, money market instruments may only be redeemable at the precise

date at which the fixed term ends. If an investor seeks liquidity, money market assets

and non-tradable bonds aren't likely to be held in his or her portfolio.

Conclusion

As we have seen from each of the five objectives discussed above, the advantages

of one often comes at the expense of the benefits of another. If an investor desires

growth, for instance, he or she must often sacrifice some income and safety.

Therefore, most portfolios will be guided by one pre -eminent objective, with all other

potential objectives occupying less significant weight in the overall scheme.

Choosing a single strategic objective and assigning weightings to all other possible

objectives is a process that depends on such factors as the investor's temperament,

his or her stage of life, marital status, family situation, and so forth. Out of the

multitude of possibilities out there, each investor is sure to find an appropriate mix of

investment opportunities. You need only be concerned with spending the appropriate

amount of time and effort in finding, studying and deciding on the opportunities that

match your objectives.


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Mutual fund

A mutual fund is a professionally managed type of collective investment scheme

that pools money from many investors and invests typically in investment securities(stocks, bonds, short-term money market instruments, other mutual funds, other

securities, and/or commodities such as precious metals). The mutual fund will have a

fund manager that trades (buys and sells) the fund's investments in accordance with

the fund's investment objective. In the U.S., a fund registered with the Securities and

Exchange Commission (SEC) under both SEC and Internal Revenue Service (IRS)

rules must distribute nearly all of its net income and net realized gains from the sale

of securities (if any) to its investors at least annually. Most funds are overseen by a

board of directors or trustees (if the U.S. fund is organized as a t rust as theycommonly are) which is charged with ensuring the fund is managed appropriately by

its investment adviser and other service organizations and vendors, all in the best

interests of the fund's investors.

Usage, investment objectives

Since the Investment Company Act of 1940, a mutual fund is one of three basic

types of investment companies available in the United States.

Mutual funds may invest in many kinds of securities (subject to its investment

objective as set forth in the fund's prospectus, which is the legal document under

SEC laws which offers the funds for sale and contains a wealth of information about

the fund). The most common securities purchased are "cash" or money market

instruments, stocks, bonds, other mutual fund shares and more exotic instruments

such as derivatives like forwards, futures, options and swaps. Some funds'

investment objectives define the type of investments in which the fund invests. For

example, the fund's objective might state "...the fund will seek capital appreciation by

investing primarily in listed equity securities (stocks) of U.S. companies with any

market capitalization range." This would be "stock" fund or a "domestic/US stock"

fund since it stated U.S. companies. A fund may invest primarily in the shares of a

particular industry or market sector, such as technology, utilities or financial services.

These are known as specialty or sector funds. Bond funds can vary according to risk


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Example- high-yield junk bonds or investment-grade corporate bonds, type of issuers

Example- government agencies, corporations, or municipalities, or maturity of the

bonds (short- or long-term). Both stock and bond funds can invest in primarily U.S.

securities (domestic funds), both U.S. and foreign securities (global funds), or

primarily foreign securities (international funds). Since fund names i n the past may

not have provided a prospective investor a good indication of the type of fund it was,

the SEC issued a rule under the '40 Act which aims to better align fund names with

the primary types of investments in which the fund invests, commonly called the

"name rule". Thus, under this rule, a fund must invest under normal circumstances in

at least 80% of the securities referenced in its name. For example, the "ABC New

Jersey Tax Free Bond Fund" would generally have to invest, under normal

circumstances, at least 80% of its assets in tax-exempt bonds issued by the state of

New Jersey and its political subdivisions. Some fund names are not associated with

specific securities so the name rule has less relevance in those situations. For

example, the "ABC Freedom Fund" is such that its name does not imply a specific

investment style or objective. Lastly, an index fund strives to match the performance

of a particular market index, such as the S&P 500 Index. In such a fund, the fund

would invest in securities and likely specific derivates such as S&P 500 stock index

futures in order to most closely match the performance of that index.

Most mutual funds' investment portfolios are continually monitored by one or more

employees within the sponsoring investment adviser or management company,

typically called a portfolio manager and their assistants, who invest the funds assets

in accordance with its investment objective and trade securities in relation to any net

inflows or outflows of investor capital (if applicable), as well as the ongoing

performance of investments appropriate for the fund. A mutual fund is advised by the

investment adviser under an advisory contract which generally is subject to renewal

annually.

Mutual funds are subject to a special set of regulatory, accounting, and tax rules. In

the U.S., unlike most other types of business entities, they are not taxed on their

income as long as they distribute 90% of it to their shareholders and the funds meet

certain diversification requirements in the Internal Revenue Code. Also, the type of

income they earn is often unchanged as it passes thr ough to the shareholders.


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Mutual fund distributions of tax-free municipal bond income are tax -free to the

shareholder. Taxable distributions can be either ordinary income or capital gains,

depending on how the fund earned those distributions. Net losses are not distributed

or passed through to fund investors.

Some of the many benefits of investing in mu tual funds are:

1. Easy to buy and sell.

2. Investments can be made in lump sum or periodic payments (easy on the pocket

3. Mutual fund industry in India is very well regulated and transparent .

4. Professional management saves time and costs.

5. Diversification helps to protect from downside risk .

6. Rupee cost averaging helps profit from small regular investments .

Types of mutual funds

Open-end fund-

The term mutual fund is the common name for what is classified as an open-end

investment company by the SEC. Being open-ended means that, at the end of every

day, the fund continually issues new shares to investors buying into the fund and

must stand ready to buy back shares from investors redeeming their shares at the

then current net asset value per share.

Mutual funds must be structured as corporations or trusts, such as business trusts,

and any corporation or trust will be classified by the SEC as an investment company

if it issues securities and primarily invests in non-government securities. An

investment company will be classified by the SEC as an open -end investment

company if they do not issue undivided interests in specified securities and if they

issue redeemable securities. Registered investment companies that are not UITs or

open-end investment companies are closed-end funds.


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Closed-end funds

Closed-end funds are like open end except they are more like a company which sells

its shares a single time to the public under an initial public offering or "IPO".

Subsequently, the fund's shares trade with buyers and sellers of shares in the

secondary market at a market-determined price (which is likely not equal to net asset

value) such as on the New York or American Stock Exchange. Except for some

special transactions, the fund cannot continue to grow in size by attracting more

investor capital like an open-end fund may.

Mutual funds vs. other investments

Mutual funds offer several advantages over investing in individual stocks. For

example, the transaction costs are divided among all the mutual fund shareholders,

which allows for cost-effective diversification. Investors may also benefit by having a

third party (professional fund managers) apply expertise and dedicate time to

manage and research investment options, although there is dispute over whether

professional fund managers can, on average, outperform simple index funds that

mimic public indexes. Yet, the Wall Street Journal reported that Separately Managed

Accounts (SMA) performed better than mutual funds in 22 of 25 categories from

2006 to 2008. This included beating mutual funds performance in 2008, a tough year

in which the global stock market lost US$21 trillion in value. In the story, Morningstar,

Inc said SMAs outperformed mutual funds in 25 of 36 stock and bond market

categories. Whether actively managed or passively indexed, mutual funds are not

immune to risks. They share the same risks associated with the investments made. If

the fund invests primarily in stocks, it is usually subject to the same ups and downs

and risks as the stock market.

Top 10mutual funds companies

The Indian economy is starting to become quite resilient and has also bounced back

rather robustly from the recent global economic recession --even though a good

portion of the world is still struggling to get back on track. Additionally, many of the


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foreign investors are beginning to invest in India's stock market which is starting to

grow as well. Because there are so many different mutual fund enterprises in India, it

can be quite difficult to name some of the Top 10 Indian Mutual funds currently in

existence.

1. HDFC Mutual Fund

HDFC mutual fund was approved originally by the SEBI in June of 2000. It offers in

Balance Funds, Equity Funds and also Debt Funds. In the last few years, HDFC

Mutual Fund has been witnessing significant growth.

2. Tata Mutual Fund

Deutche Bank and ABN AMRO Bank., NV are some of the custodians for Tata

Mutual Fund. Because of the reputation of these companies, the fact that they are

apart of it speaks volumes about Tata's reliability. It's commonly believed that Tata

Asset Management Ltd. is one of the rapidly growing management firms within India.

Also, the AMC for Tata Mutual Fund is consistently performing well and also

provides great returns for its many investors.

3. SBI Mutual Fund

SBI or State bank of India is one of India's largest banks and the mutual fund division

is sponsored by SBI bank. SBI Mutual Fund always has had an amazing record of

providing wealth for most of its many members.

4. Reliance Mutual Fund (RMF)

Reliance Mutual Fund is a part of the industrial giant Ambani group's Reliance and is

contentiously one of the quickest growing mutual funds in India.

5. DSP's Black Rock Mutual Fund

DSP's Black Rock Investment Manager's Ltd. Pvt. manages the investments for DSP

Black Rock Mutual Fund. This company is known for it's well seasoned and


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experienced investment professionals who retain huge varieties of analytical tools in

order to consistently and successful add lots of value for client portfolio.

6. Kotak Mutual Fund

Kotak Mahindra Bank Ltd. sponsors KMF and has also emerged as one of the best

and fastest growing banks in India.

7. Principal Mutual Fund

PMF has been thriving successfully for many years now. Their principal goal is to

mobilize savings made from the public, provide investment expertise for people and

also to achieve the highest possible returns for its members.

8. Sundaram's BNP Paribas Mutual Fund

This mutual fund's investments are amazingly well done. Sundaram Asset

Management is the major sponsor for the fund. Sundaram is one of the many trusted

financial companies in the entire country.

9. Templeton Mutual Fund

Frank Templeton is a very well known mutual fund within the country and has over

thirty-three different locations throughout the country and also has assets that are

worth more than Rs. 35000 crores and also have over twenty-three lakh investors.

10. Birla Sun's Life Mutual Fund

This mutual fund is currently a joint venture with Aditya Birla Group and also Sun Life

Financial. Thankfully, Sun Life has been one of the leading financial organizations

that provide a huge range of protection.


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Fixed Deposits (FDs)

A fixed deposit account allows you to deposit your money for a set period of time,

thereby earning you a higher rate of interest in return. Fixed deposits also give you a

higher rate of interest than a savings bank account. Any investment portfolio should

comprise the right mix of safe, moderate and risky investments. While mutual funds

and stocks are the preferred contenders for moderate and risky investments, fixed

deposits, government bonds etc. are considered safe investments. Fixed deposits

have been particularly popular among a large section of investors in India as a safe

investment option for a long period. With fixed deposits or FDs as they are popularly

known, a person can invest an amount for a fixed duration. The banks give interest

rates depending on this loan amount and the tenure of deposit.

Commercial Papers

Commercial Paper (CP) is an unsecured money market instrument issued in the

form of a promissory note. It was introduced in India in 1990 with a view to enable

highly rated corporate borrowers/ to diversify their sources of short -term borrowings

and to provide an additional instrument to investors. Subsequently, primary dealers

and satellite dealers were also permitted to issue CP to enable them to meet theirshort-term funding requirements for their operations. CP can be issued in

denominations of Rs.5 lakh or multiples thereof. Amount invested by a single

investor should not be less than Rs.5 lakh (face value). It wi ll be issued foe a

duration of 30/45/60/90/120/180/270/364 days. Only a scheduled bank can act as an

Issuing and Paying Agent IPA for issuance of CP.


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National savings Certificate

National Savings Certificate (NSC) is a fixed interest, long term instrument for

investment. NSCs are issued by the Department of Post, Government of India. Since

they are backed by the Government of India, NSCs are a practically risk free avenue

of investment. They can be bought from authorized post offices. NSCs have a

maturity of 6 years. They offer a rate of return of 8% per annum. This interest is

calculated every six months, and is merged with the principal. That is, the interest is

reinvested, and is paid along with the principal at the time of maturity. For every Rs.

100 invested, you receive Rs. 160.10 at maturity.

NSCs qualify for investment under Section 80C of the Income Tax Act (IT Act). Even

the interest earned every year qualifies under Sec 80C. This means that investmentsin NSCs and the interest earned on it every year, uptoRs. 1 Lakh, are deductible

from the income of the investor. There is no tax deducted at source (TDS).

Features of NSC

Minimum investment Rs. 500/- No maximum limit.

Rate of interest 8% compounded half yearly.

Rs. 1000/- grow to Rs. 1601/- in six years.

Two adults, Individuals, and minor through guardian can purchase.

Companies, Trusts, Societies and any other Institutions not eligible to purchase.

Non-resident Indian/HUF cannot purchase.

No pre-mature encashment.

Annual interest earned is deemed to be reinvested and qualifies for tax rebate for

first 5 years under section 80 C of Income Tax Act.

Maturity proceeds not drawn are eligible to Post Office Savings account interest for

a maximum period of two years.

Facility of reinvestment on maturity.

Certificate can be pledged as security against a loan to banks/ Govt. Institutions.

Facility of encashment of certificates through banks.

Certificates are encashable any Post office in India before maturity by way of

transfer to desired post office.

Certificates are transferable from one Post office to any Post office.


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Certificates are transferable from one person to another person before maturity.

Duplicate Certificate can be issued for lost, stolen, destroyed, mutilated or defaced

certificate.

Nomination facility available.

Facility of purchase/payment to the holde r of Power of attorney.

Tax Saving instrument - Rebate admissible under section 80 C of Income Tax Act.

Interest income is taxable but no TDS

Deposits are exempt from Wealth tax.

Debenture

A debenture is similar to a bond except the securitization conditions are different. A

debenture is generally unsecured in the sense that there are no liens or pledges on

specific assets. It is defined as a certificate of agreement of loans which is given

under the company's stamp and carries an undertaking that the debenture holder will

get a fixed return (fixed on the basis of interest rates) and the principal amount

whenever the debenture matures.

In finance, a debenture is a long-term debt instrument used by governments and

large companies to obtain funds. The advantage of debentures to the issuer is they

leave specific assets burden free, and thereby leave them open for subsequent

financing. Debentures are generally freely transferrable by the debenture holder.

Debenture holders have no voting rights and the interest given to them is a charge

against profit.


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Bonds

A Bond is simply an 'IOU' in which an investor agrees to lend money to a company

or government in exchange for a predetermined interest rate. If a business wants to

expand, one of its options is to borrow money from individual investors. Thecompany issues bonds at different interest rates and sells them to the public.

Investors purchase them with the understanding that the company will pay back their

original principal with some interest that is due by a set date (this is known as the

"maturity"). The interest a bondholder earns depends on the strength of the

corporation.

For example, a blue chip is more stable and has a lower risk of defaulting on its

debt. Sometimes some big companies issue bonds and they may only pay 7%

interest, but some other small companies may pay you 10%. A general rule of thumb

when investing in bonds is that "the higher the interest rate, the riskier the bond."


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REAL ESTATES

Real estate has traditionally been an avenue for considerable investment per se,

and an investment opportunity for high networth individuals (HNIs), financial

institutions as well as individuals looking at parking their money in viable alternatives

such as equities, bullion and properties.

Money invested in real estate, for income and capital growth, provides stable and

predictable returns similar to bonds offering a regular return on investment, if the

property is rented, as well as capital appreciation.

Of course, like all other investment options, real estate too has certain risks attached

to it, and they are quite different from the ones involved in other investment avenues.Real estate investment opportunities can broadly be categorised into the re sidential,

commercial office space and retail sectors.

In analysing real estate as an investment avenue, a realistic assessment of the risks

to future cash flow, resulting from lease expiry, has become essential today. And, as

such the compensation for such risks is now more closely linked to income

performance.

The projections of market players and industry analysts in this respect are worth

noting. They now consider A-grade commercial office and the retail segment of

realty, with a projected yield of 11-12 per cent a year, a more lucrative option than

residential properties, with an estimated return of 5 -7 per cent a year.

These returns/ yields from different categories of properties typically depend on

location, quality of infrastructure and reputation / credibility of the developers etc.

Watch out for...

The projections of market players and industry analysts in this respect are worth

noting. They now consider A-grade commercial office and the retail segment of

realty, with a projected yield of 11-12 per cent a year, a more lucrative option than

residential properties, with an estimated return of 5 -7 per se cannot sell some units


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or a certain part of one's property (as one can do in the case of equities, debts or

even mutual funds) in case of an urgent need of funds.

Further, the maturity period of a realty investment is uncertain. Apart from all this, the

investor has to verify the property title, particularly if the investment is made in India.Industry experts believe that only persons with deeper pockets and a long -term

investment horizon should invest in properties. They say from a long-term financial

return perspective, it is advisable to invest in higher-grade commercial properties.

Returns from the property market are comparable with that of certain equity and

index funds in the long term. Any investor looking for balancing his portfolio can now

look at the real estate sector as a secure means of investment with a certain degree

of volatility and risk. A right tenant, location, segmental categories of real estate and

individual risk preferences will henceforth prove to be the key indicators in achieving

the target yields from realty investments.

The proposed introduction of REMF (real estate mutual fund) and REIT (real estate

investment trust) are likely to boost realty investments among small investors. This

will also allow small investors to enter the real estate market with contribution as low

as Rs 10,000.

There is also a demand by - as well as need for - different market players in the

sector to gradually relax norms for foreign direct investment in it. Higher foreign

investments mean higher standards/ quality of infrastructure and, hence, a marked

change in the entire market scenario in terms of competition and professionalism of

market participants.

The investor profile

The two most active investor segments are HNIs and financial institutions. And both

these segments are particularly active in commercial real estate. While institutions

such as HDFC and ICICI show preference to investments in commercial properties,

HNIs evince interest in parking their money in residential as well as commercial

properties.


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The third category of investors - non-resident Indians - has a clear bias towards

investing in residential properties rather than commercial properties.

This can be attributed to emotional attachment or/and the tendency to guarantee

future security. As the formalities and the necessary documentation for purchasingimmovable properties other than agricultural and plantation properties are quite

simple and the rental income is freely repatriable outside the country, NRIs are

increasing their exposure to real estate.

FDIs in realty form a small portion of the total investments as there are restrictions

such as a minimum lock-in period of three years, a minimum of 25 acres of property

to be developed and conditional exit.

Besides these conditions, foreign investors have to deal with a number of

government departments and interpret many complex laws/ bylaws. All said and

done, the government's decision to allow FDI in the real estate sector is a step in the

right direction.

REIT is close to being introduced in India. But what is important is that, like most

other novel financial instruments, this new concept too needs to be accepted without

too many problems, except those expected to be encountered in the teething time.

REIT will be structured as a company dedicated to owning and, in most cases,

operating income-producing real estate, such as apartments, shopping centres,

offices and warehouses. Thus, a REIT will be a company that buys, develops,

manages and sells real estate assets and allows participants to invest in a

professionally managed portfolio of properties. Some will also be engaged in

financing realty.

Further, REITs are pass-through entities or companies that are able to distribute the

majority of income cash flows to investors, without taxation, at the corporate level. Its

main purpose will be to pass the profits to the investor in as intact manner as

possible. Hence, initially, the REIT business activities will be restricted to generation

of the rental income.


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The investor's role is the key in situations where the interests of the seller and those

of the buyer do not match. For example, if the seller is keen to sell the property and

the identified occupier intends to lease the property, between them, the deal will

never be fructified. However, an investor can have competitive yields by buying the

property and leasing it out to the occupier. `

Understanding real estate

There are many ways to invest. But the investor should be prudent enough to select

a proper area, which is safe and secure with assured reasona ble returns. Few years

ago, bank deposits, stocks, mutual funds, insurance policies and bullion, were the

most opted field. With increased business, globalization of economy has unfolded

many more areas. Investment has become very complex, which has led to the

emergence of specialized investment advisers.

Bank deposits, insurance policies and mutual funds have become unattractive

because of low returns and failure of many companies. Stock market is always

unpredictable. These investment avenues are for short -term investments, and need

close monitoring too. These days, real estate has emerged as a safe and high

yielding investment opportunity. Investment in real estate is a long-term investment

and needs considerable amounts.

The yield in the realty market has to be calculated on the capital invested and annual

rental returns, less property tax, income tax and annual maintenance charges. This

return varies according to the type of property. There are certain determining factors,

which play a crucial part in t he property investment.

Investment in real estate needs higher amounts and the minimum entry level will be

in multiples of lakhs, for residential, and much more for office and commercial space.

The sale of property requires a long time to find a suitable purchaser and comply

with the legal requirements. Further, the appreciation of capital value of the land is

slow but certain and stable, unlike in stocks and shares.

The realty investment calls for more discretion and involves complicated process like

title verification, land use according to local laws, floor area ratio, restriction on sale


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for some period, and many more laws, rules, etc, depending upon the political

environment.

Uncertain tax rules and rates, which vary every year, need to be considered.

Property tax is an annual commitment which is being increased every year by self-assessment or capital based assessment. Rental income also attracts income tax to

be paid annually; sale of property attracts capital gains and purchase invites stamp

duty and registration charges. Property tax and stamp duty vary from state to state.

As stated earlier, the type of property is also very important. It may be residential,

commercial or office space. The demand and supply position of each sector needs to

be carefully examined. Real estate sector offers two types of returns.

This is monthly form of returns in the form of rentals, or the returns on the lease

amount invested in bank, securities or in business. The other type is returns on sale

of the property. The amount to be invested also depends on the mode of returns

expected. Generally, leasing of property is attractive only for business people.

Lease amount does not attract interest. While commercial property and office space

yield high returns to the extent of 15%, residential property yields about 8%.

ASK Real Estate Special Opportunities Fund - Portfolio I (ASK Realty Fund) is areal-estate private equity fund floated by ASK Investment Holdings (of the ASK

group which is into wealth management). This fund, which seeks to collect about Rs

500 crore, would predominantly invest in residential real-estate projects in the top

seven cities in the country.


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Objective

The fund, open only for resident Indians, aims at providing diversification across

various regions and business segments within real -estate without the hassles of

owning and maintaining such estate. It would seek to provide compounded annualreturns of 25 per cent over the five-year tenure of the fund.

Fund details

The realty fund has a minimum ticket size of Rs 25 lakh, with additional investment

allowed in multiples of Rs 5 lakh. The fund has a drawdown period of 24 months; in

other words it would gradually deploy funds in projects across this period. There is

an entry load of 2 per cent for investments up to Rs 5 crore.

Can't sell your home? Rent it!

Some of the unique features of the fund include staggered collection of funds to ease

the burden of investors and also avoid unnecessary holding of cash by the fund. The

fund would collect 20 per cent on application and the remaining (over every quarter

or half-year) amount over the next two years.

Further, even as the there is a lock -in period, the fund would provide a liquidity

window at the end of three years to allow investors to cash-out 10 per cent of their

capital contribution. This provides an opportunity for those investors looking at

liquidity. The fund would not also make any reinvestments. In other words, once a

project is complete, the fund would return t he distributable surplus to investors (in the

form of dividend or capital gains) and would not redeploy the same.

Strategy

ASK Realty Fund has chosen Mumbai, Bangalore, Chennai, Pune, Delhi, Hyderabadand Kolkata (in that order) to deploy its funds. According to the management, the

fund does not see much opportunity at the "land buying" stage as enough land has

been aggregated by developers in the last two -three years.


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The fund, therefore, sees opportunities at the development stage in those residential

projects where the plan approvals are in place and the construction is about to start.

Another key strategy of the fund is to enter projects at "asset level" rather than

"holding company level". That is, the fund would invest only in specific projects and

not in a real-estate company.

This strategy, according to the fund, would provide easier exit opportunities, as such

projects are self-liquidating once the units are sold; investing in a company would

entail waiting for right exit opportunities such as exit at the time of an IPO.

The fund would not look at investments in special economic zones or townships as

these tend to have longer gestation and would not suit the fun d%u2019s five-year

tenure. As to its strategy of concentrating in residential projects only in the top cities,

the management feels that 50 per cent of the top spends in infrastructure under the

Jawaharlal Nehru National Urban Renewal Mission would be in t hese top seven

cities.

More India business stories

Further, given the talent pool available in these cities, creation of jobs on an

economic revival can be expected to be faster in these cities. The fund also prefers

to invest in projects of developers in these cities, whose capabilities, quality of work

and scale may be far superior to builders in smaller towns.

Deployment of funds

While 70 per cent of the funds would be deployed in r esidential projects of the nature

mentioned above, the fund may also invest the remaining 30 per cent in completed

fixed-income generating office space. The fund will not invest in commercial space

that is under construction or not occupied.

This investment is expected to deliver more regular returns over the tenure of the

fund. The fund may also explore more specific opportunities such as redevelopment

projects by housing societies (such as those in Mumbai) or sale and leaseback of old

buildings located in Central Business Districts, after some renovation is carried out.


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Such renovation may be done with a view to improve the working

conditions/amenities in the building, thereby improving rental yields.

Heres an insight into investment avenues for NRIs in the present market situation. For risk -

averse investors, traditional fixed income products such as Foreign Currency Non Resident

(FCNR) fixed deposits and Non Resident External (NRE) fixed deposits are the safest bet.

While FCNR account can be opened in f oreign currency, the NRE deposit account is

maintained only in Indian rupee. It is advisable to invest in fixed deposits in INR as rupee is

expected to appreciate in medium to long term. If someone wants to avoid currency risk

then he may invest in FCNR account. Yield is higher than that prevailing in their home

country, says Mukesh Gupta, director of Wealth care Securities. For starters, you can

maintain your FCNR fixed deposit account for a minimum period of 12 months and upto a

maximum period of 60 months. FCNR accounts are non-taxable in India.

Commodity

A commodity exchange is a market organized to allow for the selling and buying of

commodities. Commodities, which are hard goods, as opposed to services, may be bought

and sold on a commodity exchange in three types of markets: cash, futures and options.

Cocoa, corn, crude oil, and gold are a few examples of commodities traded on a commodity

exchange. A commodity exchange is considered to be ess entially public because anybody

may trade through its member firms. The commodity exchange itself regulates the trading

practices of its members while prices on a commodity exchange are determined by supply

and demand. A commodity exchange provides the rules, procedures, and physical for

commodity trading, oversees trading practices, and gathers and disseminates marketplace

information. Commodity exchange transactions take place on the commodity exchange floor,

in what is called a pit, and must be affected within certain time limits. Floor traders, floor

brokers and futures commissions merchants working on the floor of a commodity exchange

must be registered by the SEC.


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SEC stands for the United States Securities and Exchange Commission. The SEC is

a federal commission that resulted from the the Securities Act of 1933 and the

Securities Exchange Act of 1934 enacted by Congress after the great depression.

The Trust Indenture Act of 1939, the Investment Company Act of 1940, Investment

Advisers Act of 1940, and the Sarbanes-Oxley Act of 2002 also give the SEC the

authority to govern the securities markets. The SEC implements those acts/laws by

issuing rules (a.k.a. SEC rules) that must be followed by security market participants

in order to be compliant. The main purpose of the SEC is to regulate the securities

industry and protect investors against fraudulent investment related practices. To

that end, the SEC carries out several functions. First, the SEC promotes

transparency by requiring public companies to register with the SEC and disclose

information relevant to potential investors. The SEC further requires any public

company to provide information about its business, and risk associated with

investing in their company. The SEC also monitors the Financial Accounting

Standards Board (FASB) to promote accuracy in accounting reporting. All of this is

handled by the SEC's division of corporate finance. Second, the SEC overs ees many

aspects of the investment world including securities exchanges, brokers, investment

advisors, mutual funds, and rating agencies. This is handled by the SEC's division of

trading and markets and the SEC's division of investment management. Third, the

SEC is responsible for enforcing securities laws. The SEC prosecutes breaches to

those laws. This is handled by the division of enforcement. The president of the

United States is responsible for appointing five commissioners, one of which will be

the chairman of the SEC, to carry out the mission of the SEC. Once appointed, those

commissioners are in charge of the SEC on a staggered five -year term.

Commodity exchange

Definition

Open and organized marketplace where ownership titles to standardized quantities

or volumes of certain commodities (at a specified price and to be delivered on a

specified date) are traded by its members. Although samples of the commodities are

physically examined and graded, physical delivery of the commodity rarely occurs

because the delivery contracts are usually exchanged or closed out (traded out)


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before their expiration date. Commodity exchanges are divided roughly into three

main types: metals exchanges, fuels exchanges, and soft (agricultural) commodity

exchanges. Other exchanges deal in currencies and commodity indices. Also called

commodity futures market or commodity market.

Bullion

Definition

Gold, silver, platinum, or palladium, in the form of bars or ingots. Some central

banks use bullion for settlement of international debt, and some investors

purchase bullion as a hedge against inflation.

Oxford English Dictionary

The OED lists a number of meanings, but these include: -

y Gold and silver in the lump, as distinguished from coin or manufactured

articles, also applied to coined or manufactured gold and silver when

considered simply with reference to its value as raw material.

y Precious metal in the mass.

y

Solid gold or silver (as opposed to showy imitations).y Impure gold or silver.

y Melting house or mint. "Place of exchange".

y Any metal in the lump.

Gold

A very ductile and malleable, brilliant yellow precious metal that is resistant to air and

water corrosion.

It is a precious metal that is very soft when pure (24 Kt.). Gold is the most malleable

and ductile (able to be made into wire) metal. Gold is alloyed (mixed with other


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metals, usually silver and copper) to make it less expensive and harder. The purity of

gold jewellery is measured in karats. Some countries hallmark gold with a three -digit

number that indicates the parts per thousand of gold. In this system, "750" means

750/1000 gold (equal to 18K); "500" means 500/1000 gold (equal to 12K). Alloyed

gold comes in many colours.

Uses of gold

Gold has been prized by people since the earliest times for making statues and icons

and also for jewellery to adorn their bodies. Intricately sculptured art objects and

adornment jewellery have been uncovered in the Sumerian royal Tombs in southern

Iraq and the tombs of Egyptian kings. Significant buildings and religious temples and

statues have been covered with thinly beaten sheets of gold. Due to its rarity, goldhas long been considered a symbol of the wealth and power of its possessor.

In 2001, it was estimated that 2870 tons of gold were produced worldwide. About 80

percent of that gold production was used to make jewellery, the majority of which

was sold in India, Europe and the United States of America. Gold jewellery is

universally popular, loved for its lustrous yellow colour and untarnishing character. In

many Asian countries, such as India, Thailand, and China, gold is important to

religious ceremonies and social occasions, such as the Chinese New Year andHindu marriages in India.

World Gold Markets

y London as the great clearing house

y New York as the home of futures trading

y Zurich as a physical turntable

y Istanbul, Dubai, Singapore and Hong Kong as doorways to important

consuming regions.

y Tokyo where TOCOM sets the mood of Japan

y Mumbai under India's liberalized gold regime


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India in World Gold Industry

(Rounded Figures) India (In Tons) World (In Tons) % Share

Total Stocks 13000 145000 9

Central Bank holding 400 28000 1.4

Annual Production 2 2600 0.08

Annual Recycling 100-300 1100-1200 13

Annual Demand 800 3700 22Annual Imports 600

Annual Exports 60


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10 year history of market price for silver

How to Invest In Silver

There are numerous ways in which you may invest or trade in silver, these include:

Silver Bullion Bars

The traditional method of investing in silver is to buy a silver bullion bar, these can

vary in size from 1oz to 1000oz in weight. In some countries it is possible to

purchase bullion bars over the counter at high street banks, Switzerland and

Liechtenstein are examples of countries which provide this service. Many people

simply use a home safe to store these bullion bars, although others will use a safe

deposit box at a bank or place in storage with a dealer.

Silver Coins

Investment in silver coins is a relatively new form of trading, as mentioned previouslyit was only in the second half of the 20th century that the value of the metal used

exceeded the currency value of the coins themselves. If silver coin trading is more

your thing, and I am sure that its fun, you must learn the differences between 'fine

silver' and 'junk silver'. The latter is not junk, just simply silver which isn't entirely

pure, just like gold rings are often alloys. Both have a value, dependant on the

1990 4.06 383 94.3

2000 4.95 279 56.4

2005 7.31 444 60.8

2009 14.67 972 66.3

2010 (thru October 13) 24.38 1379 56.6


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weight of the pure silver. An example of 'junk silver' are American coins from pre -

1964 (up to 1970 for half dollar coins), these coins will weigh 25 grams per $1 of face

value. They are 90% pure, so each $1 worth of coins consists 22.5g of silver. 'Junk

coins' can also come in the form of sterling silver, which were once found in Britain

and its colonial countries such as Canada and Australia. British coins contained

92.5% silver, all dating before 1919, whilst Canada produced coins made of 80%

silver between 1920-1967.

Silver Rounds

Some dedicated investors use .999 fine silver rounds, a cross between a coin and

bars, although these have no status as legal tender. They are popular amongst

many as they can be struck in a custom design (such as a corporate logo).

Exchange-traded silver funds

There are a number of major funds which hold significant silver reserves, allowing

you to invest in the price of silver without ever having to physically touch the product

itself. You are of course buying units in holding company of the reserve, hopefully for

a price which reflects the value of their assets. Major ones include the iShares Silver

Trust and ETFS Silver Trust. You should be able to buy into these funds through

your regular stock broker.

Platinum

Platinum is one of the most expensive and famous precious metals that is in demand

today. It is expensive because it only has a limited supply. They can only produce

about 7 million ounces of platinum over a year and industrial companies need it for

industrial purposes.

Unlike before, more and more people are investing in platinum for they believe

platinum is a good investment. There are ways on investing in platinum the coin, bar

and ETF. If you have big money and wanted to invest and buy platinum then you

should purchase the bar type or ETF so you won't be juggling too many coins.


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The coin has 2 types the platinum investor and the collectible type. If you want to

invest in platinum and you only have a limited amount in your budget then I suggest

you purchase the coin type or maybe try your hand at an ETF. This platinum

investment is the same with the bar type. The prices vary daily, depending on the

supply and demand of the platinum.

Platinum investment has 2 types the Physical platinum investment and the Non-

physical platinum investment.

Physical platinum investment means owning a precious metal such as purchasing

bar or platinum coins. If you want to invest purely on platinum then you should buy

the platinum investor coin rather than the collectible. For collectible c oins are more

expensive than the other one. Wafers and bars are also sold with very little premium

but are not always available like the coins.

Non-physical platinum investment, you could invest in platinum through holding

shares in platinum mining firms or by buying into platinum based ETFs. It can be

quicker to do, but you have to trust that the company has the assets it claims it does.

If you want to invest in collectible coins you should be prepare your pockets. For

collectible coins are much more expensive than their face value. Also when you buy

that kind of coins you need to check its:

Condition, see to it that the coin has no dent and scratches if the coin you want to

buy is brand new. Also check that it is not worn out for its market value will go

downhill.

Age, checking the age of the coins or how old the coin or when it was minted is also

important for the older the coin the more expensive it is.

Rarity, The rareness of the coins is also one of the important points you need to look.

For if your coin is considered as one of the rarest then its value will sour.

Investing in platinum is a good choice but you need to be careful for not all who

invest in the field succeed. You need to study and know more about platinum as an


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investment, and not only that you also have to know how to choose which

investment in the platinum field is a good choice that will suit you best.

Investing is not as easy as you think it is, for you are not investing small amounts in

precious metals. So you need to be cautious and if you want you could ask help fromyour trusted friends that are into this kind of investment.

Fsd Investment Avanus

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