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Index
* Investing 5w's &1 H
* Equity
* Fixed Deposit
* Gold
* Real Estate
* Comparative Analysis in terms of return ( Eq/FD/Gold)
* Conclusion
Q&A
INVESTOR PSHYCOLOGY FOR TRADING INSTRUMENTS
Investing!!! 5W's and 1H
"How"to invest?- “How”- We all know how to invest, as we all have invested something for a better some thing.The point is, if you really think about it, you do a lot of investing, all the time. Maybe not in stocks but in life itself.
“When”The old Wall Street saying that you have heard forever: buy low, sell high. Bingo. That's exactly what you would do for anything else. Buy something for a low price, cheap, on discount, get your value from it, and sell it at a profit.
“Who”- Every individual who intends to make money should invest
“Why”- Investing is a way to grow money and for a secure future
“ What”- N number of investing alternatives are there like commodities, stocks, antiques, SIP etc
Equity:-
Equity is an investment avenue which is able to offer the highest possible returns but is very risky as there are huge probabilities of investors even losing some part of the invested capital too
Why?? a)They provide the highest potential returns
b)Stocks can give multiple returns on investment that no other asset class can match
c) Alternative options galore
d)dividend stocks for long term and enjoy the dividends
Fixed Deposits:-
Fixed deposits are a high-interest-yielding Term deposit and offered by banks in India. The most popular form of Term deposits is Fixed Deposits, while other forms of term Deposits are Recurring Deposit and Flexi Fixed Deposits (the later is actually a combination of Demand deposit and Fixed deposit).
Why???a) Safety
b) Regular Income
c) Saves Tax
Gold:-
There are a number of distinctive qualities that separate gold from the rest of the c commodities complex, such as its role in central banks reserve asset management and the outstanding physical and chemical properties that make it ideal for use in technological application.
Why???a) long-term store of value b)Gold has historically been an excellent hedge against inflation
c)Unlike paper currency, coins or other assets, gold has maintained its value throughout the ages.
Real Estate investment trust
A security that sells like a stock on the major exchanges and invests in real estate directly, either through properties or mortgages. REITs receive special tax considerations and typically offer investors high yields, as well as a highly liquid method of investing in real estate.
Why??? a)It’s safe (as houses)
b)It’s easy to get started
c)It’s easier to research than stocks and shares
d)Different strokes for different folks
YEAR FD RATE
FD VALUE SENSEX
SENSEX RETURNS
SENSEX VALUE
GOLD GOLD RETURNS
GOLD VALUE
10000.00 129 10000 1159 10000
1980-81 7.50% 10750.00 173 34% 13411 1522 31% 13132
1981-82 8.00% 11610.00 218 26% 16899 1719 13% 14832
1982-83 8.00% 12538.80 212 -3% 16434 1723 0% 14866
1983-84 8.00% 13541.90 245 16% 18992 1858 8% 16031
1984-85 8.00% 14625.26 354 44% 27442 1984 7% 17118
1985-86 8.50% 15868.40 574 62% 44496 2125 7% 18335
1986-87 8.50% 17217.22 510 -11% 39535 2323 9% 20043
1987-88 9.00% 18766.77 398 -22% 30853 3082 33% 26592
1988-89 9.00% 20455.78 714 79% 55349 3175 3% 27394
1989-90 9.00% 22296.80 781 9% 60543 3229 2% 27860
FOR 1ST DECACDE
IF SOME ONE HAS INVESTED 10,000 IN 1980 IN 3 DIFFRENT ALTERNATIVES
IN 1990THE RETURNS ON FD ON AVERAGE OF 8.35% AMOUNT WILL BE 22300
THE RETURNS ON SENSEX ON AVERAGE OF 24% AMOUNT WILL BE 60500
THE RETURNS ON GOLD ON AVERAGE OF 9% AMOUNT WILL BE 27860
YEAR FD RATE
FD VALUE
SENSEX
SENSEX RETURNS
SENSEX VALUE
GOLD GOLD RETURNS
GOLD VALUE
10000.00 781 10000 3229 10000
1990-91 9.00% 10900.00 1168 50% 14955 3452 7% 10691
1991-92 12.00% 12208.00 4285 267% 54866 4298 25% 13311
1992-93 11.00% 13550.88 2281 -47% 29206 4104 -5% 12710
1993-94 10.00% 14905.97 3779 66% 48387 4532 10% 14035
1994-95 11.00% 16545.62 3261 -14% 41754 4667 3% 14453
1995-96 12.00% 18531.10 3367 3% 43111 4958 6% 15355
1996-97 11.00% 20569.52 3361 0% 43035 5071 2% 15705
1997-98 10.50% 22729.32 3893 16% 49846 4347 -14% 13462
1998-99 9.00% 24774.96 3740 -4% 47887 4268 -2% 13218
1999-2000 8.50% 26880.83 5001 34% 64033 4394 3% 13608
FOR 2ND DECACDE
IF SOME ONE HAS INVESTED 10,000 IN 1990 IN 3 DIFFRENT ALTERNATIVES
IN 1990THE RETURNS ON FD ON AVERAGE OF 10.40% AMOUNT WILL BE 22300
THE RETURNS ON SENSEX ON AVERAGE OF 37% AMOUNT WILL BE 64033
THE RETURNS ON GOLD ON AVERAGE OF 4% AMOUNT WILL BE13600
YEAR FD RATE
FD VALUE
SENSEX SENSEX RETURNS
SENSEX VALUE
GOLD GOLD RETURNS
GOLD VALUE
10000.00 5001 10000 4394 10000
2000-01 8.50% 10850.00 3604 -28% 7207 4474 2% 10182
2001-02 7.50% 11663.75 3469 -4% 6937 4579 2% 10421
2002-03 4.25% 12159.46 3049 -12% 6097 5332 16% 12135
2003-04 4.00% 12645.84 5591 83% 11180 5719 7% 13015
2004-05 5.25% 13309.74 6493 16% 12983 6145 7% 13985
2005-06 6.00% 14108.33 11280 74% 22555 6901 12% 15706
2006-07 6.60% 15039.48 13072 16% 26139 9240 34% 21029
2007-08 4.67% 15741.82 15644 20% 31282 9996 8% 22749
2008-09 8.06% 17010.61 9708 -38% 19412 12890 29% 29335
2009-10 3.81% 17658.72 17527 81% 35047 15766 22% 35881
FOR 3R DECACDE
IF SOME ONE HAS INVESTED 10,000 IN 2000 IN 3 DIFFRENT ALTERNATIVES
IN 2010THE RETURNS ON FD ON AVERAGE OF 5.86% AMOUNT WILL BE 17650
THE RETURNS ON SENSEX ON AVERAGE OF 21% AMOUNT WILL BE 35047
THE RETURNS ON GOLD ON AVERAGE OF 14% AMOUNT WILL BE 35880
1981-1990 1991-2000 2001-2010 2011-20140.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
40.00%
8.35%
10.40%
5.86%
8.88%
24.00%
37.00%
21.00%
7.00%9.00%
4.00%
14.00%
17.00%
FD RATE
SENSX RETURNS
GOLD RETURNS
Going through the chart & overall calculations ,if equal investment of 10000 is considered in all the three alternatives of investment, the return in the previous years was maximum in sensex, then in Gold and was least in FDAs per the analysis, sensex can be ranked as top most investment alternative, than Gold and lastly FD. Along with the above fact and figures the major support goes with the sensex ( equities) as it is less risk associated and due time dividends can also be minted.Where as on comparing Gold & FD's although return wise Gold is strong but at the same time highly volatile and risk is there. While with the fixed deposits the risk associated is nill and the returns are well assured.