Investment Management
INTRODUCTION TO INVESTMENT MANAGEMENT
The Concept of Investment: □ An investment is the current commitment of funds for a period of time in order to derive future benefits. □ Investing involves making a sacrifice in the present consumption in the hope of deriving benefits in the future. □ Every investment decision has two aspects;
Risks and Returns: □ Every investor looks to be compensated for; i) Time the funds are committed ii) The expected rate of inflation iii) The uncertainty about the future □ Investment management is the process by which resources (money) are managed. The resources may be referred to as assets □ The investor is usually confronted with a number of investment avenues which can be classified as; i) Financial securities / financial assets ii) Non-securitized financial investments iii) Mutual fund schemes iv) Real Assets / Physical Assets □ A combination of different investments or assets creates a portfolio of assets
1. Financial Securities: These represent a financial investment that is transferable and/ negotiable. □ The major financial securities available are; a) Equity shares (common stock) b) Preference shares (preference stock) c) Debentures (corporate bonds) d) Savings certificates e) Gilt edge securities f) Money market securities
2. Non-Securitized Financial Instruments. These represent a financial investment that is not transferable or negotiable.
The major non-securitized financial investments available include; a) Bank Deposits b) Post Office Deposits c) Providend Fund Schemes d) National Savings Schemes (e.g. NSSF) e) Life Insurance
3. Mutual Fund Schemes: □ These represent a collective investment device □ Instead of directly buying financial securities, the investor buys shares (units) of various schemes floated by mutual funds
The Concept of Investment: □ An investment is the current commitment of funds for a period of time in order to derive future benefits. □ Investing involves making a sacrifice in the present consumption in the hope of deriving benefits in the future. □ Every investment decision has two aspects;
Risks and Returns: □ Every investor looks to be compensated for; i) Time the funds are committed ii) The expected rate of inflation iii) The uncertainty about the future □ Investment management is the process by which resources (money) are managed. The resources may be referred to as assets □ The investor is usually confronted with a number of investment avenues which can be classified as; i) Financial securities / financial assets ii) Non-securitized financial investments iii) Mutual fund schemes iv) Real Assets / Physical Assets □ A combination of different investments or assets creates a portfolio of assets
1. Financial Securities: These represent a financial investment that is transferable and/ negotiable. □ The major financial securities available are; a) Equity shares (common stock) b) Preference shares (preference stock) c) Debentures (corporate bonds) d) Savings certificates e) Gilt edge securities f) Money market securities
2. Non-Securitized Financial Instruments. These represent a financial investment that is not transferable or negotiable.
The major non-securitized financial investments available include; a) Bank Deposits b) Post Office Deposits c) Providend Fund Schemes d) National Savings Schemes (e.g. NSSF) e) Life Insurance
3. Mutual Fund Schemes: □ These represent a collective investment device □ Instead of directly buying financial securities, the investor buys shares (units) of various schemes floated by mutual funds