Portfolio Management
Different Types Of Secured Investments Plan, And Types Of Analysis
G R O U P M E M B E R S
HITESH DESHWAL 21
AVI GANATRA
25
VIKAS GUPTA 27 USHA MISTRY 45 ANKITA MODI 46 ROHAN POLEKAR 59
TOPICS TO BE COVERED
Debenture
Bonds
Difference Between Debenture And Bonds Unit Linked Investment Plan (ULIP)
Equity Link Saving Scheme(ELSS)
Technical Analysis Fundamental Analysis
Difference Between Technical Analysis &
Fundamental Analysis
INTRODUCTION
Life is full of surprises, and even more so when it comes to finances. A person having a good income today may face financial crisis in future. To avoid these unforeseen financial crises everyone invests in different instruments that can fetch extra income. Debentures and bonds are two such options that can be taken for good returns on ones investment with safety of funds.
DEBENTURES
Debentures are issued by a company to raise short to medium term loan needed for expenses or for expansions. Just like equities these can be transferred to anyone, but does not give right of voting in the companys general meetings.
Debentures are simply loans taken by the companies and do not provide the ownership in the company. These are unsecured loans as company is not bound to return the principal amount on the maturity.
BONDS
Bonds are actual contract notes issued by the borrower to pay interest at regular intervals and return the principal on the maturity of the bond. These bonds are issued by the companies for their expenses and future expansions. The bonds are also issued by the government for its expenses.
A bond is seen as loan taken by a borrower from the investor so unlike equity share it does not give stake in the company but he is seen as a lender. These bonds are redeemed at a definite time. These are secured loans and can yield low to medium interest rate.
TYPES OF BONDS
Government Bonds
Bills Notes
Bonds
Municipal Bonds Corporate Bonds
Zero-Coupon Bonds
DIFFERENCE BETWEEN BONDS & DEBENTURES
Risk Factor Priority at the time of repayment Interest rate on the investment Due period of interests Issuing authority Convertibility
UNIT LINKED INSURANCE PLAN (ULIP)
According to IRDA,
ULIP is an abbreviation for Unit Linked Insurance Policy. A ULIP is a life insurance policy which provides a combination of risk cover and investment. The dynamics of the capital market have a direct bearing on the performance of the ULIPs Remember that in a unit linked policy; the investment risk is generally borne by the investor.
WHY INVEST IN ULIPS
Combination of investment + insurance.
Long-term, systematic and goal-based investment. Automatic asset allocation/Diversification in several asset classes.
Flexibility and transparency. Switching funds at no extra cost. Tax benefits under Section 80c of the Income Tax Act.
EXAMPLE
we present the following Generic Benefit Illustration we found for the SBI Life - Smart ULIP on the SBI Life website. The insured is a 40-year old male, premium is Rs. 50,000 annually and the policy term is 10 years, with premium payable for 5 years.
ILLUSTRATION:
Policy Policy Annual Amt SA Related Fund Mgt Mortality Admin Year Premium Allocation Invested Charges Charges Charges Charges Charge Pre. Total Charges Fund Addn to Service Fund Value at Tax end of (if any)# year 1,081 633 704 651 734 508 542 3,844 8,551 13,653 19,323 25,470 27,474 29,642 42,281 94,061 150,183 212,549 280,168 302,211 326,057 Surrender Value
1 2 3 4 5 6 7
50,000 50,000 50,000 50,000 50,000
7,500 2,500 2,500 2,500 2,500
41,727 47,242 47,242 47,242 47,242
720 720 720 720 720 720 720
1,250 1,250 1,250
626 1,343 2,120 2,962 3,897 4,203 4,534
386 325 237 124
2,982 3,638 4,327 3,806 4,617 4,923 5,254
33,824 82,773 136,666 208,298 280,168 302,211 326,057
8
9 10
720
720 720
4,891
5,278 5,697
5,611
5,998 6,417
578
618 661
31,987
34,524 37,269
351,855
379,763 409,954
351,855
379,763 409,954
#: This figure denotes the 10% growth in the fund value.
Popularity In India
Features of an ELSS Plan
o Tax saving investment instrument.
o Invested in equity and equity related instruments. o Take high risk and looking for high returns.
o Investments up to INR 1,00,000 made in ELSS in a financial year qualify for deduction from taxable income.
o 3 year lock-in period.
o Long term capital gains earned on investments from ELSS are tax free. o o Dividends earned from ELSS plan are tax free.
ELSS OPTIONS
GROWTH
DIVIDEND
DIVIDEND RECEIVED
DIVIDEND REINVESTMENT
Performance of ELSS Funds
Table 1: The Top 5 performing funds for the past 5 years Scheme Name 6 Months 1 Year 2 Years 3 Years 5 Years Since Inception 18.2%
SBI MAGNUM TAX GAIN FUNDGROWTH
HDFC TAX SAVER - GROWTH
13.6%
77.1%
-1.1%
5.2%
26.1%
22.7%
99.5%
8.7%
8.8%
23.6%
32.2%
SUNDARAM BNP PARIBAS TAXSAVER OPEN ENDED- GROWTH
8.2%
66.7%
3.4%
10.9%
23.3%
22.2%
ICICI PRUDENTIAL TAX PLAN GROWTH
FT INDIA TAXSHIELD- GROWTH
26.9%
115.7%
9.2%
8.6%
20.4%
26.6%
16.2%
76.0%
4.7%
9.1%
20.0%
30.0%
Fundamental Analysis
Fundamental analysis is a method of evaluating securities by attempting to measure the intrinsic value of a stock. Fundamental analysts study everything from the overall economy and industry conditions to the financial condition and management of companies.
Technical analysis
Technical analysis is the evaluation of securities by means of studying statistics generated by market activity, such as past prices and volume. Technical analysts do not attempt to measure a security's intrinsic value but instead use stock charts to identify patterns and trends that may suggest what a stock will do in the future.
Difference between Technical and Fundamental Analysis
Charts vs. Financial Statements Time Horizon Trading Versus Investing The Critics
Can They Co-Exist?
THANK YOU
