THEORY OF INVESTMENTS:

Cash keeping idle: cash that kept in storage that doesn’t meant the savings unless it will be earn something to us. For that we have to invest that in some safer manner. So it will yield some money to us which makes our future in better way.

The reason to invest:
………….to face the future with uncertainty
……………to meet the cost of inflation
………………to achieve the specific goal in life
………………..to lead sophisticated way


Three golden rule for investing:
Invest early.
Invest regularly.
Invest for long term and not for short term.

The various type of investment:
Physical assets: we can invest in physical assets such as real estate, gold, commodities etc.
Financial assets: Investment on financial assets means investing in fixed deposits with banks and post office, provident funds, pension funds and mutual funds.
The most important thing is Securities market such as share trading, mutual funds.

What is meant by share:

The total capital of a company is divided into small units and each is called a share. For an example if the capital of a company is one lakh then it will be divided into ten thousand shares with the face value of rupees ten. On buying the number of the shares we want , we became the share holder of that company. A share holder has a right to vote in the election that happened within the management of that particular company. The price of the share which we bought for the face value of ten, will increase on the basis of the company performance, so that there may arise demand for the shares of that particular company.

Apart from the share value increasing, the company will give dividend to the share holders, which is nothing but a percentage in the annual profit of that company. The percentage of dividend vary with company to company. So the wise thing is buying the shares of best performing company.