MUTUAL FUND

Definition of mutual fund :

 Financepractice defines Mutual fund as "Mutual fund is a fund collected and pooled together to invest in equity market and debt market instruments to disseminate the profit or loss to the investor".

     

          Investing in good investment opportunities to earn high return is a great idea, Many of us don't think. There are many investment options like bonds, fixed deposits, post office savings, savings account deposits. These are safe investment zones where risk does not exist. Many of these investment options give flat return, Investor can almost expect the exact rate of return in all most all the cases. No prior experience is required to take a decision to invest.

What is mutual fund ?

           Equity shares can give returns that the investor didn't even expected. But identifying the right equity share at right circumstances at good price levels to enter in is the key for earning good returns, Many calculations follow this, Mutual funds is a good platform for those who can't workout all this stuff related to equity market and debt market but wants to invest and achieve the desired earning by taking some risk. Mutual funds are the funds managed by asset management companies, These companies collect funds from investors and pooled together invest in equity shares and debt market instruments, the return whether it is profit or loss should be transferred to investor. 

       The risk associated with one fund is not same for all funds, The kind of portfolio one mutual fund possess is key to know the risk it possesses and the return it yields to satisfy the investor earning appetite.

STOCK MARKET

What is stock market ?

                 
                   Stock market is a place where listed company shares will get traded. It is a  platform where buyers of stocks meet sellers, sellers meet buyers of stocks. It is one of the best place for fast growing companies to fund their business growth by accumulating funds from general public through Initial public offer . Once the issue is subscribed and necessary formalities are completed Securities exchange board of India will allot a particular date to get listed in the stock market on which the company wants to list. After listing the company shares start trading in the stock market.

                    Investors invest their funds in equities in stock market to earn profits from the price difference of equity. To trade in the stock market investor needs to open trading and demat account in a broking house. Sellers who purchased the stock through Initial public offer place sale order at the price at which they want to sell and buyers place orders at the price at which they want to buy. If both the prices meet together then a transaction exists between both of them, the seller exchange the share ownership with  money and the buyer exchange money with share ownership. The place at which this exchange happens is called stock exchange. All these transactions happen through Internet. Some traders sell and buy shares at market price, which is decided by demand and supply of that particular equity in the stock market. 

                    Many Kinds of investors trade in stock market, Individual investors, domestic institutional investors, foreign institutional investors, governments(central, state), asset management companies, and foreign investors. In India the first stock exchange was established in 1875 called as Native share and stock brokers association. It is now called as Bombay stock exchange, it is placed in Dalal street, Bombay. Many stock exchanges were started in India after 1875, as of now more than 12 stock exchanges are available in India. National stock exchange of India limited and Bombay stock  exchange are the most popular exchanges in India, most of the exchange related activities happen in these two exchanges, which are available for access to entire India. 

INVESTMENT OPTIONS

                     In today's less income growth and highly increasing cost of living economy, one has to know how to use his/her savings or idle funds to generate higher returns. Availability of too many options and no clear idea about these choices is creating a hostile situation for the investor to choose the best among the available lot. Through this article you will learn what are all the investment options available, their features and how they help you gain good returns.

                       Investment in equity shares involves high risk due to direct relation between economic conditions and company performance with stock market. Stock markets are volatile in nature any drastic negative changes in the financial world leads to  heavy losses to the investor, however selecting the right company share at right time with long term investment perspective will give huge profits to the investor. Especially investing in blue chip company stocks for long term helps to gain good returns. To secure investment from unanticipated turn of market events investor must update himself with information  relating to the company stock in which he/she invested  and stock market related news.

IPO : INITIAL PUBLIC OFFER

         Great ideas can't get great success until they flourish the real potential of it's capability. To flourish the real potential of small and medium size companies they require capital. These companies can borrow money from various sources, through debentures, bank lending, getting more funds from share holders and public borrowing through Initial public offer.

       
          An INITIAL PUBLIC OFFER - is issued to raise capital from the general public for the first time by issuing company prospectus. Initial public offering is to raise capital by existing smaller, larger, medium business houses who wants to expand its business operations. This is one way of raising low cost capital needed to the firms. The issuing costs are very high. When an issue is issued and subscribed, the company allots the shares to the applied investor as per the rules given in the prospectus. Once the shares are allotted the company will get listed in the stock market of that country. Then onwards the company's stock will starts trading in the stock market.  

BONDS

            

                       Bonds are the safest investment avenues compared to investment in shares and other investment options. Bonds are one of the kind instruments by which Governments and Corporates borrow money from subscribers, by issuing an instrument known as the Bond. The issuer of the Bond offer to pay a fixed rate of return , known as a coupon rate (interest rate), up to the date of maturity, and the interest will be paid by the issuer at regular intervals or annually as decided by the issuer. How ever the interest rate offered by issuer is governed by several factors, which include the current economic conditions, the risk associated with the Bond, and quality of the issuing authority.  

                        Bonds are categorized in to two, they are bonds issued by Government, Bonds issued by firms.

                       

                        As far as risk concerned the bonds issued by Government are regarded as risk free,

HOW RUPEE VALUE DEPRECIATION AFFECT THE INDIVIDUALS

                                 

                    Rupee value depreciation impacts the economy in terms of cost and income. Yes, It impacts individuals expenditure, growth and income. Decrease of rupee value attributes to higher spending for the same product or service.  I will explain this through a simple example, if  You are a buyer of imported branded clothes or electronic gadgets or decorative items you have to pay more for the product which you are purchasing now compared to earlier price, it is not because of increase in price of the product it is because of decrease in the value of rupee.