Investment

Investment Environment
What is Investment? Investment means conversion of cash or money into a monetary asset or a claim on future money for a return. Investment is the parking at least one year in an investment avenue to get return in the future.
There are some financial instruments to invest the money. The investor can buy or sell securities i.e financial instruments according to his choice.
The financial instruments may be creditorship securities or ownership securities.
There is a market Tu to buy or sell the securities. The market may be money market or capital market. Only through the market we can buy or sell securities.

  • Creditorship Securities
Creditor ship securities include public debt instruments, private debt instruments and special debt instruments.

Public debt instruments are debt instrumnets which are issued by the Governmet for long and short periods. These instruments are risk free instruments. 

Private debt instruments are debt instruments which are issued by the Private sector business firms incorporated under the Indian Companies Act, 1956. These instruments are generally secured by a mortgage on fixed assets of the company. 

Special debt instruments are debt instruments which are issued by the Public Sectir Units (PSU) for long term and short term. In long term, the instruments are issued in the form if bonds and in short term the instruments are issued in the form of certificate of deposit. In this type of instruments tax incentivesare given to the investors. 

  • Ownership Securities
Ownership Securities are called 'Equities' because the investor incmvest in ownership securities will get the right to share the future prospects and residual profits. Ownership Securities an be acquired directly or indirectly through a hybrid instrument called preference shares.  Preference shares are less popular instrument. It combines the features of debt as well as equity this us why preference shares called 'hybrid security'.  A presence share holder gets preference over equity share holder with regard of dividend, redemption, participation, etc. 

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