What are the basics of Investment?
The money you earn is partly spent and the rest saved, for meeting the future expenses. If you keep your savings idle its nominal value remains the same but real value decreases by prevailing inflation. This can be defined by the following formula: Instead of keeping the savings idle, you park it somewhere to get a return on this c
apital in the future. This is called an investment. There are various avenues for investment.You may invest in the bank deposits, postal deposits,real estate, jewelry, paintings, life insurance, tax savings schemes likes PPF/NSC or stock market related instruments called securities like shares, debentures, bonds, etc. However, the return from each investment option depends on the associated risk. The riskier the investment, the higher will be the return. For instance, stock market related investments are risky, but makes you earn more returns than other modes of investment.
apital in the future. This is called an investment. There are various avenues for investment.You may invest in the bank deposits, postal deposits,real estate, jewelry, paintings, life insurance, tax savings schemes likes PPF/NSC or stock market related instruments called securities like shares, debentures, bonds, etc. However, the return from each investment option depends on the associated risk. The riskier the investment, the higher will be the return. For instance, stock market related investments are risky, but makes you earn more returns than other modes of investment.What are the benefits of investing in the stock market?
Stock Market investments offer you benefits like easy liquidity, flexibility of amounts invested/disinvested, reasonable returns and a regulatory framework to safeguard your rights. Shares are the most popular form of stock market investments due to their higher potential for capital growth.
Real rate of return = Nominal rate of return - InflationIn the long run it is empirically found that investment in equities gives maximum return.
What is a share?
A Share or stock is a document issued by a company,which entitles its holder to be one of the owners of the company. A share is directly issued by a company through IPO or can be purchased from the stock market. By owning a share you can earn a portion of the company's profit called dividend. Also, by buying and selling the shares you get capital gain. So, your return is the dividend plus the capital gain. However, you also run a risk of making a capital loss if you have sold the share at a price below your buying price.
What is a company?
A company 
basically means a group of persons associated together for achieving some objectives. The term company means a company formed and registered under the Indian Companies Act 1956.As company is a voluntary association of persons its capital is divisible into parts which are known as shares with limited liabilities. A company exists only in contemplation of law and it has no physical existence.“A stock broker isOne who invests other people’s money until its all gone”Woody Allen,American FilmMakerPRESENT VALUE OF RS 1 LAKH (INVESTED IN 1992)Mode of Investment Value of Rs1 Lakh RemarksBank Fixed Deposit Rs. 3,79,535 Calculated on the basis of prevailing average different bank rates in 1992-97 (11 per cent), in 1997-2002 (11.5 per cent) and in 2002- 08 (5.5 per cent) SBI-MF Magnum Rs. 4,89,300 Mutual Fund Scheme started in 1993 Tax Gain (1993)
basically means a group of persons associated together for achieving some objectives. The term company means a company formed and registered under the Indian Companies Act 1956.As company is a voluntary association of persons its capital is divisible into parts which are known as shares with limited liabilities. A company exists only in contemplation of law and it has no physical existence.“A stock broker isOne who invests other people’s money until its all gone”Woody Allen,American FilmMakerPRESENT VALUE OF RS 1 LAKH (INVESTED IN 1992)Mode of Investment Value of Rs1 Lakh RemarksBank Fixed Deposit Rs. 3,79,535 Calculated on the basis of prevailing average different bank rates in 1992-97 (11 per cent), in 1997-2002 (11.5 per cent) and in 2002- 08 (5.5 per cent) SBI-MF Magnum Rs. 4,89,300 Mutual Fund Scheme started in 1993 Tax Gain (1993)
Gold Rs. 2,61,000 In January 1992, the price of gold was Rs.4,200 per 10 gram and in January 2008 the price of gold isRs.11,000 per 10 gram Property Rs. 5,00,000 In 1992, the rate of real to Rs.7,14,000 estate in Nariman Point Mumbai was Rs.7,000 per sqft and in January 2008 the rate of same property was Rs.35,000 to 50,000 per sqftSensex Rs.10,30,346 In January 15, 1992 Sensex was at 2020 and on January 07, 2008 Sensex was at 20813(Values are calculated on the basis of prevalent average rate in case of property and gold while value for the mutual funds is calculated on the basis of returns/dividend given by the bank)
What is a company's legal identity?
A company is considered as a juristic person with a perpetual succession and a common seal. Its life does not depend upon the life of its members, who can change from time to time. On registration, a company acquires a personality distinct from its members.A company can sue and be sued in its own name. It can institute and defend suits and other legal proceedings in its own name.A company has limited liability. The privilege of limited liability for business debts is one of the principal advantages of doing business in the corporate form. In a company limited by shares, liability of the members is limited to the unpaid value of the shares, whereas in a company limited by guarantee, liability of members is limited to such amount as the member may undertake to contribute to the assets of company in the event of it being wound up.
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