VARIOUS

INVESTMENT
POLICIES
 REAL ESTATE
MERITS
• Steady Income
• Long Term Financial Security
• Hedge against Inflation

DEMERITS
• Real Estate Has Low Liquidity
• Real Estate Requires Management and Maintenance
• Real Estate Creates Liabilities
• Real estate markets have significant inefficiencies
• Taxes
• Heavy Investment is needed
 MUTUAL FUNDS
MERITS
• Diversification..
• Affordability
• Advanced portfolio management
• Risk reduction (safety)
DEMERITS
• No Control Over Portfolio
• Fees and Expenses
• Over-diversification.
• Fluctuations
• Tax benefits
• No liquidity
 GOLD
MERITS
• Gold is a hedge against inflation
• Liquidity
• Diversification
• Holds its value over a long period of time
• Most desired commodity
DEMERITS
• Gold is not a passive investment
• Gold is difficult to store
• Price correction can lead to losses
• No tax benefits
• Fluctuations
 SHARE MARKET
MERITS
• Return on Investment
• Diversification
• Tenure is flexible
DEMERITS
• Subject to Higher Risk
• Time-Consuming Investment
• Tax Benefits
• No liquidity
• Terms and Conditions
• Lots of Knowledge Required
 BANKING SECTOR
MERITS
• Security
• Assured Returns
• Flexible Maturity
• Can raise money anytime
DEMERITS
• A problem of Rising NPA’s
• The rise of Competition in Banking Sector
• Availability of Borrowing Alternative
• Lower rate of Interest.
• Growth opportunities are less
• Surrender Charges
 INSURANCE
MERITS
• Life insurance provides an infusion of cash for dealing with the adverse
financial consequences of the insured’s death.
• Life insurance enjoys favorable tax treatment unlike any other financial
instrument.
DEMERITS
• Policyholders forego some current expenditure to pay policy premiums.
Moreover, life insurance is typically purchased for the benefit of others
and usually only indirectly for the insured person.
• Cash surrender values are usually less than the premiums paid in the first
several policy years and sometimes a policy owner may not recover the
premiums paid if the policy is surrendered.
• Tricky Terms and conditions
 GOVERNMENT BONDS
MERITS
• Bonds offer safety of principal and periodic interest income, which is the
product of the stated interest rate or coupon rate and the principal or face
value of the bond
• Bonds are ideal investments for retirees who depend on the interest
income for their living expenses and who cannot afford to lose any of their
savings
DEMERITS
• Bond prices rise when rates fall and fall when rates rise. Your bond
portfolio could suffer market price losses in a rising rate environment.
• Bond market volatility could affect the prices of individual bonds,
regardless of the issuers' underlying fundamentals.
• Lower Rate of return
 PPF
MERITS
• Tax-free earnings upon maturity
• Guaranteed returns as set by the government every year
• Complete capital protection
• Facility to make partial withdrawals and loans
• Easy to open an account from banks or post offices
• Loan opportunities
DEMERITS
• Interest rate may not be able to beat inflation
• Lock-in period of 15 years
• NRIs and HUFs cannot open an account
• Only one account allowed for every citizen
• Limit to Invest
 POST OFFICE ACCOUNTS
MERITS
• Deposits and withdrawals can be done through any electronic mode in
CBS post offices
• Inter Post Office transactions can be done between CBS post offices.
• A Single account can be converted into joint and vice versa
• Customers can transfer the balance in their account from one post office
to another following a transfer
DEMERITS
• They are not digitised
• Linked to place of investment
• Low Returns