Paper on Investment Analysis


Added on  2019-09-26

7 Pages1325 Words158 Views

IntroductionIn this present paper, we will try to analyze the various investment tools used making theinvestment to meet the financial goals of Mr. X. On the basis of the analysis, we will recommendinvestment tools which will help him in sound decision making to meet the financial goals. The investment is defined as procurement of funds to achieve the financial goals and objectives.The funds are invested in enhancing the investor's wealth. The investment is classified into twosegments: Real and financial investment. The real investment includes tangible assets such asmachinery, factories, lands and others. The financial investments include intangible assets suchas bonds, stocks, and others. The investment management cycle is used to manage theinvestments and hedge the risk to get high returns. Analysis of investment toolsThe investment management tools are defined as tools which act as a vehicle to invest money fora particular period of time. There are two investment avenues which include financial and non-financial assets. The financial assets include debt and equity. The non-financial assets includereal estate and gold investment. There are mainly four types of investment which includefinancial securities, non-securitized financial securities, mutual fund scheme and real estate.Following are the analysis of major investment tools on the basis of risk, returns, maturity andothers.1.Financial securitiesThe financial securities include equity shares, preference shares, convertible debentures,non-convertible debentures, public sector bonds, saving certificates, and money-market

securities. The securities are mainly divided into two markets namely debt and equity.The debt includes long-term loan which is mainly issues by a government agency. Theseare fixed income instrument, and it is related to the government body, so the riskinvolved with the bonds are very low. The equity investment instrument includescommon stock, buying preferred stock, private equity and others (Alcock et al, 2013).The equity stock deals in the stock market, so the risk involved with an equity stock ishigh because it deals with the shares.2.Non-securitized financial securitiesThe non-securitized financial securities include bank deposits, post office deposit,company fixed deposits, provident fund schemes, national saving schemes and lifeinsurance. What the risk involves in bank deposit is very low but the returns aremoderate, and other non-financial securities are also having low risk and the returns arealso average.3.Mutual fund schemeThe mutual fund is a mechanism in which polling of investment by a number of investorsis managed by professional fund managers who are known as portfolio managers. Therisk is moderate because it is managed by portfolio managers. It included open-ended andclosed-ended funds (Yogo et al, 2016).4.Real estateThe real estate investment is mainly done by pooling huge amount of funds for long term.There is always a possibility of appreciation in investment because land value is notdepreciated with a span of time.

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