Where to invest - June 2015
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Transcript of Where to invest - June 2015
1
Where to Invest?
2
I don’t know where to invest some extra
money I have. What do you suggest? Which
is the best investment?
Oh, there are many options. You
choose what is best for you..
3
Property
Gold / Silver
Bank or Post office deposits
Share market
Mutual FundsInsurance
plans
4
Buy house / apartment or Land Earn rent income Or can be used to live and enjoy the
comforts
Property
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The good and bad about property
Advantages
Asset Value will go up Can earn regular income Can live in better comfort
Disadvantages Small amount investments
not possible. Will have to take loans
Not easy to sell Maintenance is expensive Pay tax on rent and sale
gains
6
Fixed deposit in bank, Post office or companies
Earn fixed regular interest incomes Can be assured of a fixed value at maturity Interest income is taxable Can be converted to cash fairly easily
Fixed Deposit
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The Good and bad about fixed deposits
Advantages
Earn regular income Low risk hence stability in
wealth Easy to liquidate and
convert to cash
Disadvantages
Interest rate can fluctuate (in 1990s > 12%, in early 2000s <8%, now about 9%)
Interest is Taxable Not completely risk free
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A company when it needs money for expansion or other business needs, raises money from people willing to invest
Those who invest become joint owners of the business
If business does very well then profits to all the shareholders (owners) can be high
At the same time, losses in the business will also be borne by the joint owners (shareholders)
When companies issue share for the first time it is called IPO (initial public offering)
Shareholders can choose to buy and sell their shares within themselves in the share (secondary) market through demat and trading account
Share market
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The Good and bad about share market investing
Advantages
Very easy to Buy and Sell Can make high returns Good companies can grow a
lot in value over a long period of time
Can earn regular dividends Mostly earnings are tax free
Disadvantages
Risk of even losing invested amount in short term
Dividends are not regular or guaranteed
Need demat and trading a/c to operate
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Invest indirectly in stock and bond market Invest in a fund, fund manager will choose
which stock to buy or sell and when Expertise and research enabled investing Small amounts can be invested Regular investments possible Regular and easy withdrawal also possible Tax efficiency
Mutual Funds
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The Good and bad about Mutual Funds
Advantages Very easy to invest and redeem.
Online free portals available Experts research before
investing Small amounts can be invested
Disadvantages
Fund managers cost money – charge fees
No guarantee of dividends or returns
No control over which stock is bought or when
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Actually insurance is only to protect against risk
But some policies like endowment, ULIP, money back policies also provide investment options
Forced saving is a good feature Long term returns are less than
most other options Tax benefits both at the time of
investing and maturity
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The Good and bad about Insurance
Advantages
Secures your life Some policies also give
returns Tax benefits
Disadvantages
High premium on high Sum Assured
Returns may be lesser than even inflation (endowment)
ULIP returns linked to share markets – hence no guarantee
High costs
14
Gold and Silver are types of commodities
Protection against inflation Invest in physical form, through
mutual funds or through exchanges like MCX, etc.
Price volatility – no guaranteed returns
Gold / Silver
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The Good and bad about commodities
Advantages
Inflation protection Low entry capital Easy to invest
Disadvantages
Earnings not assured Safekeeping costs money Taxable returns
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But with so many options it is so confusing.
What is the best ?
Well, the best investment gives High
returns for no risk, comes free and is very
easy to buy and sell and is not taxable.
Unfortunately, there is not such option at all….
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Then what to do? My friends
are all suggesting
different things?
Will you go to the medical shop and ask for the best medicine
available? Or just because your friend is taking a medicine will
you take the same medicine? NO.
Why take such risks with your hard earned money
then?
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Yes, that I agree. What to do then?
Though there is no best investment, you can find what is most suitable for you. This will depend on what you want to use the money for and what will
give you peace – your life goals and risk tolerance..
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Life goals, risk tolerance… wow, what are these?
They should be the guiding light to your
investments. Understand them
well with the help of a professional
unbiased adviser. Invest in what will
make YOU live a rich life and not someone
else !
20
Happy Investing
Did this make sense to you? Did you learn a bit or two?
Can you take a minute to give your valuable feedback on the link here
please. Thanks in anticipation.
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