What do you mean by investment?

The money you earn is partly spent and the rest saved for meeting future expenses. Instead of
keeping the savings idle you may like to use savings in order to get return on it in the future. This
is called Investment.

Why one need investment?

One needs to invest to:

• earn return on your idle resources

• generate a specified sum of money for a specific goal in life
• make a provision for an uncertain future

One of the important reasons why one needs to invest wisely is to meet the cost of Inflation.
Inflation is the rate at which the cost of living increases. The cost of living is simply what it costs
to buy the goods and services you need to live. Inflation causes money to lose value because it
will not buy the same amount of a good or a service in the future as it does now or did in the
past.

For example, if there was a 6% inflation rate for the next 20 years, a Rs. 100 purchase today
would cost Rs. 321 in 20 years. This is why it is important to consider inflation as a factor in any
long-term investment strategy. Remember to look at an investment's 'real' rate of return, which is
the return after inflation. The aim of investments should be to provide a return above the
inflation rate to ensure that the investment does not decrease in value. For example, if the annual
inflation rate is 6%, then the investment will need to earn more than 6% to ensure it increases in
value. If the after-tax return on your investment is less than the inflation rate, then your assets
have actually decreased in value; that is, they won't buy as much today as they did last year.

Points to remember before investment?

1. BEGIN WITH A BUDGET.

2 DECIDE TO FOLLOW THE BUDGET

3. PRIORITIZE YOUR EXPENDITURES.

4. PAY THE LORD FIRST

5. PAY BILLS ON TIME.

6. GET OUT OF DEBT AS SOON AS POSSIBLE.

7. PLAN FOR EMERGENCIES.

8. HAVE SOME FUN.

9. IF YOU HAVE A FAMILY, INVOLVE THEM.

Total monthly income : 40000 per month

Total expenses: 15000 per month

Family status: Single

Financial goals: Self dependent

List of financial service organizations

There are many options available to invest money. Though, some options are already discussed
in other sections, here you can check different investment options as per your risk appetite.

Basically, type of investment depends on the need and time horizon. If you want to invest for
retirement purpose, there will be different options to invest, that has been covered in Retirement
Planning section, and if you want to invest for some other purpose like to buy a luxury car after
certain number of years, there would be different technique to invest your money.
If you want to know, where you should invest your money or what are the investment options
available, then here you will come to know about different savings and investment options

you have. To invest your money, you have to understand your

requirements and decide which options are suitable for you and your needs. One thing you must
do while investing is to invest in different instruments and make a diversified portfolio. Have a
look at the number of basic options you have to make an investment and to grow your money.
Least Risk Investments:
• Savings Account (Rs 5000 per month)
• Fixed Deposits (Certificate of Deposit) (Rs 5000 per month)
• Government Bonds (Rs 500 per month)
• PPF (Public Provident Fund) (Rs 1500 per month)
• Various Post Office Schemes – NSC, KVP, MIS (Rs 1500 per month)
Moderate Risk Investments:
• Company Deposits (Rs 1000 per month)
• Mutual Funds (Rs 500 per month)
• ULIPs ( NOT ANY)
• Gold (ACCORDING TO NEED)
• Property (Rs 5000 per month)
High Risk Investments:
• Stock Market Trading (Rs 2000 per month)
• Forex Trading (not any)
Business Investments:
• Consultancy Business (not any)

Basic Steps to help you manage your expenses and budget

Below are the basic steps that you should follow to manage your expenses and save money:
1. Check out your daily expenses. ( 500 per day)
2. Make a note of 1 month spending. through
3. Try to figure out which expenses you can reduce or eliminate.
4. Find other ways to save money. ( BY INVESTING IN VARIOUS
OPTIONS)
5. Check for your liabilities and loans and try to pay-off your loans.
6. Before paying-off, put some money into your savings account to meet unexpected
expenses.
7. Open a new savings account to save money.
8. Plan to invest some part of income for your retirement.
9. Separate your wants from your needs.
10. Now pay-off your loans and liabilities.
Basic reasons of investing in various options
Investment Safety Securit Liquidit Tax Rate of Remark
s y y saving return
Iiiiiii
Banking iihbshvb YES Penalty Locke 8-10% Over
sector on d for 5 c.p.a draft
closure years facility
Post office YES YES Penalty Locke 8-10% Loan
on d for 5 compounde facility
closure years d annually
Govt bond YES YES Tradebl Locke 6-8% c.p.a Capital
e option d for 5 gain
years
Mutual YES YES Any Locke 15-18% Controle
funds time d for 1 c.p.a d by sebi
surrende years
r option
Real state …… NO Demand Option 25-40% Risk
… supply of c.p.a factor
option short
and
long
term
Gold …… NO Any Option 20-30% Risk
… time of c.p.a factor
surrende short
r option and
long
term
Unit …… NO Penalty .Maturity 15-18% Risk
linked … on Amount is
also compounde factor
investment closure Ta d annually
product