Principles of investment

(Project)

Sowjanya Sampathkumar

FYBFM

Roll no - 50

Why should we invest?One of the most compelling reasons for you to invest is the

prospect of not having to work your entire life! Bottom line, there are only two ways to make money: by working and/or by having

your assets work for you. 

If you keep your money in your back pocket instead of investing it, your money doesn't work for you and you will never have more

money than what you save. By investing your money, you are getting your money to generate more money by earning interest

on what you put away or by buying and selling assets that increase in value. 

It really doesn't matter how you do it. Whether you invest in stocks, bonds, mutual funds, options and futures, precious

metals, real estate, the objective is the same: to make investments that will generate more cash for you in the future.

Property Why to invest in real estate

property-High Tangible Asset ValueAttractive and Stable Income ReturnReliable returnInflation HedgingThe Bottom LineDiversificationTax benefits

The rates of a property in Kharghar are minimum starting at Rs.7000 per sq.feet. So with Rs. 1,00,00,000 (i.e. 20% of 5,00,00,000) we could easily invest in a 3 bedroom apartment which would approximately be 1428 sq.feet.

The prices per sq.feet are rising rapidly and would prove to be very high in the following years as the features available around the city are in abundance as follows

Kharghar is a node of the city of Navi Mumbai in Maharashtra, India. It is developed and maintained by CIDCO and is a less than one hour drive from the heart of Mumbai city.

It is planned as a polycentric new town with a series of nodal concentrations along mass-transport corridors. Encircled by lush green mountains from all sides, Kharghar in Navi Mumbai is no less than a hill station in the rains.

Kharghar has one of the most prestigious educational institutions of India viz. National Institute of Fashion Technology (NIFT)

It also houses the important Tata Memorial Hospital (Cancer Research Institute).

There are a number of premium residential projects sprung up in Kharghar. Due to Hexblox like residential projects and upcoming metro project Kharghar is one of the posh area of Navi Mumbai which can be considered as Colaba of Mumbai.

CIDCO also built an 18-hole golf course opposite Central Park in Kharghar .The much awaited Central Park in Sector 23 is being planned on the concept of London's Central Park and will span around 80 hectares and cover three sectors. It also attempts to put Navi Mumbai on international map. ISCKON has commenced construction of their temple at the start of the Central Park. It is believed this will be the biggest ISCKON temple in India.

Siemens India Ltd. has an office in Kharghar .Marathon Realty Group has recently announced the development of Mini-SEZ of Panvel very close to the proposed Navi Mumbai International Airport.

Kharghar also has skywalk to facilitate hindrance free movement between Kharghar railway station & city node.

Precious Metals- gold

Gold prices over a month span

Gold prices over the past decades.

Famed investor Warren Buffett describes the dynamics of this phenomenon best when he talks about gold: "Gold is a way of going long on fear, and it has been a pretty good way of going long on fear from time to time. But you really have to hope people become more afraid in a year or two years than they are now. And if they become more afraid, you make money; if they become less afraid, you lose money. But the gold itself doesn't produce anything."

Gold prices generally rise when sentiments on the economy and the financial markets are bearish or there is uncertainty over future trends

Thus, if you had invested Rs 1 lakh in gold in September 2008, it would have fetched Rs 2.3 lakh in September 2011.

Amarsingh Deo, head of Commodities & Currencies Research at Aditya Birla Money, says gold has been supported by a sharp increase in demand, mainly for investment, and the global economic situation, especially the debt crisis in Europe. In spite of the relentless rise in prices, gold is behaving like a Giffen good, one whose demand rises with prices.

Keeping the following factors and the price fluctuation of the gold over a long time period it is very much preferable to invest in it. So thus by spending 1,25,00,000 (25% of 5,00,00,000) in this metal commodity at this time where the gold rate is approx to Rs.27960 per 24 karat/ 10g we would be getting nearly 4500 grams of gold dated now.

If you invest in physical bars and coins of gold, silver and platinum, you'd also be wise to buy a safe and insure your mini Fort Knox, and that type of security will cut into your gains.

Many holders of gold store it in form of bullion coins or bars as a hedge against inflation or other economic disruptions.

Equity6 most important points on why to invest in shares:

1. You’re not buying shares; you’re buying a company.2. The only reason you buy a share is because the company is making a

profit.3. If you buy a share when the company isn’t making a profit, then you’re

not investing; you’re speculating.4. A share’s price is dependent on the company, which in turn is

dependent on its environment, which includes its customer base, its industry, the general economy, and politics.

5. If you have no idea about the prospects of a company, and sometimes even if you think you do, always use stop-loss orders.

6. Even if your philosophy is ‘buy and hold for the long term’, continue to monitor your shares and consider selling them if they’re not appreciating or if general economic conditions have changed.

Hindustan Unilever Limited (HUL) is an Indian consumer goods company based in Mumbai, Maharashtra. It is owned by Anglo-Dutch company. Unilever which owns a 67% controlling share in HUL. HUL's products include foods, beverages, cleaning agents and personal care products.

HUL was established in 1933 as Lever Brothers India Limited and, in 1956, became known as Hindustan Lever Limited, as a result of a merger between Lever Brothers, Hindustan Vanaspati Mfg. Co. Ltd. and United Traders Ltd. It is headquartered in Mumbai. The company was renamed in June 2007[as “Hindustan Unilever Limited”.

The Most Trusted Brands from HUL in the top 100 list (their rankings in brackets) are: Clinic Plus , Lifebuoy , Fair & Lovely , Rin , Surf Excel , Lux , Pepsodent , Closeup , Pond’s , Sunsilk ,

Dove , Vim , Pears. Surf Excel EasywashTRESemmé, Clinic Plus, Comfort, Bru Exotica Guatemala, Closeup and many more.

The company has a distribution channel of 6.3 million outlets and owns 35 major Indian brands.

It is also said that the prices of HUL shares are going to rise up really well, as an analyst pointed out that with the monsoon season being in full swing the farmers back there in the villagers are experiencing heavy liquidity as the crops have had a good yield and have given them huge profits. And as HUL products are very common among every corner in India it is said that the prices of the shares are going to boom up soon as the consumption level of the products are going to increase in the future coming period.Over the years HULs market performance has given the investors a reason to further invest more in the company’s shares.

So by looking at all the dimensions of HUL , today’s rate of a share is Rs.615 , so by investing 1,25,00,000(25% of 5,00,00,000) I would get 20,325 shares of HUL. Further the value of the share would be increasing as HUL has most of the times been in a bullish market. And accordingly I could plan it either as a long term or a short term investment.

Mutual fundsA mutual fund is a type of professionally managed collective investment vehicle that pools money from many investors to purchase securities. .

Hedge funds are not considered a type of (unregistered) mutual fund. While they are another type of collective investment vehicle, they are not governed by the Investment Company Act of 1940 and are not required to register with the Securities and Exchange Commission.

Mutual funds have advantages compared to direct investing in individual securities.

 These include:

Increased diversification Daily liquidity Professional investment management Ability to participate in investments that may be available only

to larger investors Ease of comparison

Mutual funds have disadvantages as well, which include:[4]

Fees Less control over timing of recognition of gains Less predictable income No opportunity to customize

Investment Objective

The investment objective of the Scheme is to generate long-term capital growth from a diversified and actively managed portfolio of equity and equity related securities The Scheme will invest in a range of companies, with a bias towards large & medium market capitalization companies.

BNP Paribas Equity Fund (G)The scheme is ranked 1 in Large Cap category by Crisil.

Scheme details

Fund Type Open-Ended

Investment Plan Growth

Launch date Sep 03, 2004

Benchmark CNX NIFTY

Asset Size (Rs cr) 118.72 (Jun-30-2013)

Minimum Investment

Rs.5000

Fund Manager Shreyash Devalkar

BNP PARIBAS equity fund is placed first in the large cap market followed by UTI mutual fund and Birla sunlife.

So hence investing Rs. 1,00,00,000 in BNP PARIBAS mutual fund of this scheme will help us in huge profits as it has been ranked as the best by the top analysts.

Life insurance policies

Life insurance solely can’t be bought as an investment.

Life insurance premiums, depending upon the policy selected, include the costs of - 1) death-benefit coverage 2) built-in investment returns (average 8.0% to 9.5% post-tax)3) significant overheads, including commissions. 

This implies that if you buy insurance solely as an investment, you are incurring costs that you would not incur in alternate investment options. 

It is, however, important to insure your life if you’re financial needs and profile so require. Use our Are You Adequately Insured planning tool to find out if you need life insurance, and if yes, how much. 

Life insurance is a contract between an insured and an insurer or assurer, where the insurer promises to pay a designated beneficiary a sum of money (the "benefits") upon the death of the insured person. Depending on the contract, other events such as terminal illness or critical illness may also trigger payment. The policy holder typically pays a premium, either

regularly or as a lump sum. Other expenses (such as funeral expenses) are also sometimes included in the benefits.

Chart of a life insurance.

So investing in life insurance is mandatory as it is very essential to. Life insurance not just is an investment but an essential uses of money.

Life Insurance Corporation of India (LIC)It has been stated as the Best Insurance Company in India dominating the market since then it established in market. In other word, It is the synonyms of Insurance in India, most important they have best settlement ratio.

So investing Rs 50,00,000 in LIC as a life insurance policy would be appropriate.