investment basics for the young investors

Investment Basics

What is Investment?

The money you earn is partly spent and the rest saved for meeting future expenses. Instead of keeping the savings idle you may like to use savings in order to get return on it in the future. This is called Investment.


Why should one invest?

One needs to invest to:
• earn return on your idle resources
• generate a specified sum of money for a specific goal in life
• make a provision for an uncertain future

One of the important reasons why one needs to invest wisely is to meet the cost of Inflation. Inflation is the rate at which the cost of living increases The cost of living is simply what it costs to buy the goods and services you need to live. Inflation causes money to lose value because it will not buy the same amount of a good or a service in the future as it does now or did in the past. For example, if there was a 6% inflation rate for the next 20 years, a Rs. 100 purchase today would cost Rs. 321 in 20 years. This is why it is important to consider inflation as a factor in any long-term investment strategy. Remember to look at an investment's 'real' rate of return, which is the return after inflation. The aim of investments should be to provide a return above the inflation rate to ensure that the investment does not decrease in value. For example, if the annual inflation rate is 6%, then the investment will need to earn more than 6% to ensure it increases in value. If the after-tax return on your investment is less than the inflation rate, then your assets have actually decreased in value; that is, they won't buy as much today as they did last year.


When to start Investing?

The sooner one starts investing the better. By investing early you allow your investments more time to grow, whereby the concept of compounding (as we shall see later) increases your income, by accumulating the principal and the interest or dividend earned on it, year after year. The three golden rules for all investors are:
• Invest early
• Invest regularly
• Invest for long term and not short term


What care should one take while investing?

Before making any investment, one must ensure to:

1.obtain written documents explaining the investment
2.read and understand such documents
3.verify the legitimacy of the investment
4.find out the costs and benefits associated with the investment
5.assess the risk-return profile of the investment
6.know the liquidity and safety aspects of the investment
7.ascertain if it is appropriate for your specific goals
8.compare these details with other investment opportunities available
9.examine if it fits in with other investments you are considering or you
have already made
10. deal only through an authorised intermediary
11. seek all clarifications about the intermediary and the investment
12. explore the options available to you if something were to go wrong,
and then, if satisfied, make the investment.

These are called the Twelve Important Steps to Investing.


What is meant by Interest?

When we borrow money, we are expected to pay for using it - this is known as Interest. Interest is an amount charged to the borrower for the privilege of using the lender's money. Interest is usually calculated as a percentage of the principal balance (the amount of money borrowed). The percentage rate may be fixed for the life of the loan, or it may be variable, depending on the terms of the loan.


What factors determine interest rates?

When we talk of interest rates, there are different types of interest rates -rates that banks offer to their depositors, rates that they lend to their borrowers,the rate at whichtheGovernment borrows in the Bond/Government Securities market, rates offered to investors in small savings schemes like NSC, PPF, rates at which companies issue fixed deposits etc. The factors which govern these interest rates are mostly economy related and are commonly referred to as macroeconomic factors. Some of these factors are:
• Demand for money
• Level of Government borrowings
• Supply of money
• Inflation rate
• The Reserve Bank of India and the Government policies which determine some of the variables mentioned above


What are various options available for investment?

One may invest in:
• Physical assets
and/or
• Financial assets

like real estate, gold/jewellery, commodities etc. such as fixed deposits with banks, small saving instrume nts with post offices, insurance/provident/pension fund etc. or securities market related instruments like shares, bonds, debentures etc.


What are various Short-term financial options available for investment?

Broadly speaking, savings bank account, money market/liquid funds and fixed deposits with banks may be considered as short-term financial investment options:

Savings Bank Account is often the first banking product people use, which offers low interest (4%-5% p.a.), making them only marginally better than fixed deposits.

Money Market or Liquid Fundsare a specialized form of mutual funds that invest in extremely short-term fixed income instruments and thereby provide easy liquidity. Unlike most mutual funds, money market funds are primarily oriented towards protecting your capital and then, aim to maximise returns. Money market funds usually yield better returns than savings accounts, but lower than bank fixed deposits. Fixed Deposits with Banksare also referred to as term deposits and minimum investment period for bank FDs is 30 days. Fixed Deposits with banks are for investors with low risk appetite, and may be considered for 6-12 months investment period as normally interest on less than 6 months bank FDs is likely to be lower than money market fund returns.


What are various Long-term financial options available for investment?

Post Office Savings Schemes, Public Provident Fund, Company Fixed Deposits, Bonds and Debentures, Mutual Funds etc.

Post Office Savings: Post Office Monthly Income Scheme is a low risk saving instrument, which can be availed through any post office. It provides an interest rate of 8% per annum, which is paid monthly. Minimum amount, which can be invested, is Rs. 1,000/- and additional investment in multiplesof 1,000/-.Maximum amount is Rs. 3,00,000/- (if Single) or Rs. 6,00,000/- (if held Jointly) during a year. It has a maturity period of 6 years. A bonus of 10% is paid at the time of maturity. Premature withdrawal is permitted if deposit is more than one year old. A deduction of 5% is levied from the principal amount if withdrawn prematurely; the 10% bonus is also denied.

Public Provident Fund: A long term savings instrument with a maturity of 15 years and interest payable at 8% per annum compounded annually. A PPF account can be opened through a nationalized bank at anytime during the year and is open all through the year for depositing money. Tax benefits can be availed for the amount invested and interest accrued is tax-free. A withdrawal is permissible every year from the seventh financial year of the date of opening of the account and the amount of withdrawal will be limited to 50% of the balance at credit at the end of the 4th year immediately preceding the year in which the amount is withdrawn or at the end of the preceding year whichever is lower the amount of loan if any.

Company Fixed Deposits: These are short-term (six months) to medium-term (three to five years) borrowings by companies at a fixed rate of interest which is payable monthly, quarterly, semi-annually or annually. They can also be cumulative fixed deposits where the entire principal alongwith the interest is paid at the end of the loan period. The rate of interest varies between 6-9% per annum for company FDs. The interest received is after deduction of taxes.

Bonds : It is a fixed income (debt) instrument issued for a period of
more than one year with the purpose of raising capital. The central or state government, corporations and similar institutions sell bonds. A bond is generally a promise to repay the principal along with a fixed rate of interest on a specified date, called the Maturity Date.

Mutual Funds: These are funds operated by an investment company which raises money from the public and invests in a group of assets
(shares, debentures etc.), in accordance with a stated set of objectives. It is a substitute for those who are unable to invest directly in equities or debt because of resource, time or knowledge constraints. Benefits include professional money management, buying in small amounts and diversification. Mutual fund units are issued and redeemed by the Fund Management Company based on the fund's net asset value (NAV), which is determined at the end of each trading session. NAV is calculated as the value of all the shares held by the fund, minus expenses, divided by the number of units issued. Mutual Funds are usually long term investment vehicle though there some categories of mutual funds, such as money market mutual funds which are short term instruments.


What is meant by a Stock Exchange?

The Securities Contract (Regulation) Act, 1956 [SCRA] defines ‘Stock Exchange' as any body of individuals, whether incorporated or not,
constituted for the purpose of assisting, regulating or controlling the business of buying, selling or dealing in securities. Stock exchange could be a regional stock exchange whose area of operation/jurisdiction is specified at the time of its recognition or national exchanges, which are permitted to have nationwide trading since inception. NSE was incorporated as a national stock exchange.


What is an ‘Equity' Share?

Total equity capital of a company is divided into equal units of small denominations, each called a share. For example, in a company the total equity capital of Rs 2,00,00,000 is divided into 20,00,000 units of Rs 10 each. Each such unit of Rs 10 is called a Share. Thus, the company then is said to have 20,00,000 equity shares of Rs 10 each. The holders of such shares are members of the company and have voting rights.


What is a ‘Debt Instrument'?

Debt instrument represents a contract whereby one party lends money to another on pre-determined terms with regards to rate and periodicity of interest, repayment of principal amount by the borrower to the lender. In the Indian securities markets, the term ‘bond' is used for debt instruments issued by the Central and State governments and public sector organizations and the term ‘debenture' is used for instruments issued by private corporate sector.


What is a Derivative?

Derivative is a product whose value is derived from the value of one or more basic variables, called underlying. The underlying asset can be equity, index, foreign exchange (forex), commodity or any other asset. Derivative products initially emerged as hedging devices against fluctuations in commodity prices and commodity-linked derivatives remained the sole form of such products for almost three hundred years. The financial derivatives came into spotlight in post-1970 period due to growing instability in the financial markets. However, since their emergence, these products have become very popular and by 1990s, they accounted for about two- thirds of total transactions in derivative products.


What is a Mutual Fund?

A MutualFund is a body corporate registered with SEBI (Securities Exchange Board of India) that pools money from individuals/corporate investors and invests the same in a variety of different financial instruments or securities such as equity shares, Government securities, Bonds, debentures etc. Mutual funds can thus be considered as financial intermediaries in the investment business that collect funds from the public and invest on behalf of the investors. Mutual funds issue units to the investors. The appreciation of the portfolio or securities in which the mutual fund has invested the money leads to an appreciation in the value of the units held by investors. The investment objectives outlined by a Mutual Fund in its prospectus are binding on the Mutual Fund scheme. The investment objectives specify the class of securities a Mutual Fund can invest in. Mutual Funds invest in various asset classes like equity, bonds, debentures, commercial paper and government securities. The schemes offered by mutual funds vary from fund to fund. Some are pure equity schemes; others are a mix of equity and bonds. Investors are also given the option of getting dividends, which are declared periodically by the mutual fund, or to participate only in the capital appreciation of the scheme.


What is an Index?

An Index shows how a specified portfolio of share prices are moving in order to give an indication of market trends. It is a basket of securities and the average price movement of the basket of securities indicates the index movement, whether upwards or downwards.


What is a Depository?

A depository is like a bank wherein the deposits are securities (viz. shares, debentures, bonds, government securities, units etc.) in electronic form.


What is Dematerialization?

Dematerialization is the process by which physical certificates of an investor are converted to an equivalent number of securities in electronic form and credited to the investor's account with his Depository Participant (DP).
Regards
himanshu
9995596684

Naxalism -The Next big Challenge For India

Next big challenge for India is to tackle the problems of Naxalism and other related internal disturbances including insurgency. It includes the group of naxallites, insurgents and racial fights.
As described by our honorable prime minister Dr. Manmohan Singh that Naxalism is going to be the next big threat to “the target of India : 2020”. We have also seen its sparks in Lalgarh , West Bengal in the recent months. The way Naxal activism and related violence has been recurring with increasing frequency lately has really become a cause of serious concern for not only the integrity and security, but also the general well-being of this country. While neighbouring Nepal is witnessing a reconciliation with the Naxals (Maoists), as reflected in latter’s participation in the new govern-
ment, India continues to be a victim of their gory ways. India is
still groping in the darkness to size up the real problem and come out with a suitable response
in the form of a well-coordinated strategy to break this wild and intractable stallion called
Naxalism.

It has spread its tentacles to 170 districts in 15 states in February 2005, affecting about 40 per cent of the
geographical area of the country and 35 per cent of its population. With the objective of establishing a ‘Compact Revolutionary Zone’ as
typified by the Red Corridor, extending from the boondocks of North Bihar to the
underdeveloped hinterland of Jharkhand, Orissa, Chhattisgarh, Andhra Pradesh, Maharashtra
and Karnataka, in the heart of India, the Naxals aim to use the same, reportedly, for eventual
seizure of the State Power leading to subsequent establishment of the Maoist State.
Be it the activism of Salwa Judum in Chhattisgarh, the attack on Jehanabad jail (resulting in
freeing of about 340 prisoners and their leader Ajay Kanu) in Bihar, attack on Chandra Babu Naidu the heinous killing of Sunil
Mahato, the JMM Member of Parliament or the recent attack on a police camp in Bastar killing
about 56 policemen, Naxals have been evincing greater precision, penetration, organization and
audacity in striking their chosen targets at will. They have also attacked many such symbols of
state authority, mostly police, as witnessed in their incursions in Koraput in Orissa, Madhubani
in Bihar, Giridih and Bokaro in Jharkhand and in Karnataka, killing hundreds of policemen and looting firearms and money.

Transforming themselves into a modern guerilla force, Naxals, today, are equipped with
sophisticated weapons and communication system. With the formation of a united outfit
namely CPI (Maoist) along with the raising of an armed wing i.e. People’s Liberation Guerrilla
Army through the merger of Maoist Communist Centre (MCC) and People’s War Group
(PWG), the Naxal Movement has not only succeeded in getting over the problem of sanguinary

infighting amongst them, but the Movement has also witnessed a shift in focus and strategy.
Today, they are not only logistically better organized and better trained, they are also better
motivated and better led.

Some keyboard Shortcuts-Reaaly Helpful

General Keyboard Shortcuts, General Keyboard Shortcuts

General Keyboard Shortcuts
CTRL+C (Copy)
CTRL+X (Cut)
CTRL+V (Paste)
CTRL+Z (Undo)
DELETE (Delete)
SHIFT+DELETE (Delete the selected item permanently without placing the item in the Recycle Bin)
CTRL while dragging an item (Copy the selected item)
CTRL+SHIFT while dragging an item (Create a shortcut to the selected item)
F2 key (Rename the selected item)
CTRL+RIGHT ARROW (Move the insertion point to the beginning of the next word)
CTRL+LEFT ARROW (Move the insertion point to the beginning of the previous word)
CTRL+DOWN ARROW (Move the insertion point to the beginning of the next paragraph)
CTRL+UP ARROW (Move the insertion point to the beginning of the previous paragraph)
CTRL+SHIFT with any of the arrow keys (Highlight a block of text)
SHIFT with any of the arrow keys (Select more than one item in a window or on the desktop, or select text in a document)
CTRL+A (Select all)
F3 key (Search for a file or a folder)
ALT+ENTER (View the properties for the selected item)
ALT+F4 (Close the active item, or quit the active program)
ALT+ENTER (Display the properties of the selected object)
ALT+SPACEBAR (Open the shortcut menu for the active window)
CTRL+F4 (Close the active document in programs that enable you to have multiple documents open simultaneously)
ALT+TAB (Switch between the open items)
ALT+ESC (Cycle through items in the order that they had been opened)
F6 key (Cycle through the screen elements in a window or on the desktop)
F4 key (Display the Address bar list in My Computer or Windows Explorer)
SHIFT+F10 (Display the shortcut menu for the selected item)
ALT+SPACEBAR (Display the System menu for the active window)
CTRL+ESC (Display the Start menu)
ALT+Underlined letter in a menu name (Display the corresponding menu)
Underlined letter in a command name on an open menu (Perform the corresponding command)
F10 key (Activate the menu bar in the active program)
RIGHT ARROW (Open the next menu to the right, or open a submenu)
LEFT ARROW (Open the next menu to the left, or close a submenu)
F5 key (Update the active window)
BACKSPACE (View the folder one level up in My Computer or Windows Explorer)
ESC (Cancel the current task)
SHIFT when you insert a CD-ROM into the CD-ROM drive (Prevent the CD-ROM from automatically playing)
Dialog Box Keyboard Shortcuts
CTRL+TAB (Move forward through the tabs)
CTRL+SHIFT+TAB (Move backward through the tabs)
TAB (Move forward through the options)
SHIFT+TAB (Move backward through the options)
ALT+Underlined letter (Perform the corresponding command or select the corresponding option)
ENTER (Perform the command for the active option or button)
SPACEBAR (Select or clear the check box if the active option is a check box)
Arrow keys (Select a button if the active option is a group of option buttons)
F1 key (Display Help)
F4 key (Display the items in the active list)
BACKSPACE (Open a folder one level up if a folder is selected in the Save As or Open dialog box)
Microsoft Natural Keyboard Shortcuts
Windows Logo (Display or hide the Start menu)
Windows Logo+BREAK (Display the System Properties dialog box)
Windows Logo+D (Display the desktop)
Windows Logo+M (Minimize all of the windows)
Windows Logo+SHIFT+M (Restore the minimized windows)
Windows Logo+E (Open My Computer)
Windows Logo+F (Search for a file or a folder)
CTRL+Windows Logo+F (Search for computers)
Windows Logo+F1 (Display Windows Help)
Windows Logo+ L (Lock the keyboard)
Windows Logo+R (Open the Run dialog box)
Windows Logo+U (Open Utility Manager)
Accessibility Keyboard Shortcuts
Right SHIFT for eight seconds (Switch FilterKeys either on or off)
Left ALT+left SHIFT+PRINT SCREEN (Switch High Contrast either on or off)
Left ALT+left SHIFT+NUM LOCK (Switch the MouseKeys either on or off)
SHIFT five times (Switch the StickyKeys either on or off)
NUM LOCK for five seconds (Switch the ToggleKeys either on or off)
Windows Logo +U (Open Utility Manager)
Windows Explorer Keyboard Shortcuts
END (Display the bottom of the active window)
HOME (Display the top of the active window)
NUM LOCK+Asterisk sign (*) (Display all of the subfolders that are under the selected folder)
NUM LOCK+Plus sign (+) (Display the contents of the selected folder)
NUM LOCK+Minus sign (-) (Collapse the selected folder)
LEFT ARROW (Collapse the current selection if it is expanded, or select the parent folder)
RIGHT ARROW (Display the current selection if it is collapsed, or select the first subfolder)
Shortcut Keys for Character Map
After you double-click a character on the grid of characters, you can move through the grid by using the keyboard shortcuts:
RIGHT ARROW (Move to the right or to the beginning of the next line)
LEFT ARROW (Move to the left or to the end of the previous line)
UP ARROW (Move up one row)
DOWN ARROW (Move down one row)
PAGE UP (Move up one screen at a time)
PAGE DOWN (Move down one screen at a time)
HOME (Move to the beginning of the line)
END (Move to the end of the line)
CTRL+HOME (Move to the first character)
CTRL+END (Move to the last character)
SPACEBAR (Switch between Enlarged and Normal mode when a character is selected)
Microsoft Management Console (MMC) Main Window Keyboard Shortcuts
CTRL+O (Open a saved console)
CTRL+N (Open a new console)
CTRL+S (Save the open console)
CTRL+M (Add or remove a console item)
CTRL+W (Open a new window)
F5 key (Update the content of all console windows)
ALT+SPACEBAR (Display the MMC window menu)
ALT+F4 (Close the console)
ALT+A (Display the Action menu)
ALT+V (Display the View menu)
ALT+F (Display the File menu)
ALT+O (Display the Favorites menu)
MMC Console Window Keyboard Shortcuts
CTRL+P (Print the current page or active pane)
ALT+Minus sign (-) (Display the window menu for the active console window)
SHIFT+F10 (Display the Action shortcut menu for the selected item)
F1 key (Open the Help topic, if any, for the selected item)
F5 key (Update the content of all console windows)
CTRL+F10 (Maximize the active console window)
CTRL+F5 (Restore the active console window)
ALT+ENTER (Display the Properties dialog box, if any, for the selected item)
F2 key (Rename the selected item)
CTRL+F4 (Close the active console window. When a console has only one console window, this shortcut closes the console)
Remote Desktop Connection Navigation
CTRL+ALT+END (Open the Microsoft Windows NT Security dialog box)
ALT+PAGE UP (Switch between programs from left to right)
ALT+PAGE DOWN (Switch between programs from right to left)
ALT+INSERT (Cycle through the programs in most recently used order)
ALT+HOME (Display the Start menu)
CTRL+ALT+BREAK (Switch the client computer between a window and a full screen)
ALT+DELETE (Display the Windows menu)
CTRL+ALT+Minus sign (-) (Place a snapshot of the active window in the client on the Terminal server clipboard and provide the same functionality as pressing PRINT SCREEN on a local computer.)
CTRL+ALT+Plus sign (+) (Place a snapshot of the entire client window area on the Terminal server clipboard and provide the same functionality as pressing ALT+PRINT SCREEN on a local computer.)
Microsoft Internet Explorer Navigation
CTRL+B (Open the Organize Favorites dialog box)
CTRL+E (Open the Search bar)
CTRL+F (Start the Find utility)
CTRL+H (Open the History bar)
CTRL+I (Open the Favorites bar)
CTRL+L (Open the Open dialog box)
CTRL+N (Start another instance of the browser with the same Web address)
CTRL+O (Open the Open dialog box, the same as CTRL+L)
CTRL+P (Open the Print dialog box)
CTRL+R (Update the current Web page)
CTRL+W (Close the current window)

Social Entrepreneurship - A Revolutionary Idea

Social entrepreneurship is all about the effective application of entrepreneur skills and involvement of people at the grassroot level to address the social challenges. It exhibits the change in economic and social status of common people by unifying the business principles with social ventures.
Social entrepreneurs fill the space left by the social and economic disparities. In many countries-particularly in Europe and South America – they have tended to work with more closely with public organizations at both the national and local level.
The chief merit of social entrepreneurship is that it neither needs a large capital nor intensive labour. But social entrepreneurs play a vital role in the developing and underdeveloped countries. The burning example is that of a contemporary great social entrepreneur Mohammad Younus, founder and manager of Gramin Bank in Bangladesh. He founded the Bank to help the common people socially and economically. It is a growing family of social venture business.
Youth social entrepreneurship is another vital increasingly common approach to engaging youth voice in solving social problems. Youth organizations and programs promote these efforts through a variety of incentives to young people.

Naxalism- Next big challenge for India

Next big challenge India is to tackle the problems of Naxalism and other related internal disturbances including insurgency. It includes the group of naxallites, insurgents and racial fights.
As described by our honorable prime minister Dr. Manmohan Singh that Naxalism is going to be the next big threat to “the target of India : 2020”. We have also seen its sparks in Lalgarh , West Bengal in the recent months. The way Naxal activism and related violence has been recurring with increasing frequency lately has really become a cause of serious concern for not only the integrity and security, but also the general well-being of this country. While neighbouring Nepal is witnessing a reconciliation with the Naxals (Maoists), as reflected in latter’s participation in the new govern-
ment, India continues to be a victim of their gory ways. India is
still groping in the darkness to size up the real problem and come out with a suitable response
in the form of a well-coordinated strategy to break this wild and intractable stallion called
Naxalism.

It has spread its tentacles to 170 districts in 15 states in February 2005, affecting about 40 per cent of the
geographical area of the country and 35 per cent of its population. With the objective of establishing a ‘Compact Revolutionary Zone’ as
typified by the Red Corridor, extending from the boondocks of North Bihar to the
underdeveloped hinterland of Jharkhand, Orissa, Chhattisgarh, Andhra Pradesh, Maharashtra
and Karnataka, in the heart of India, the Naxals aim to use the same, reportedly, for eventual
seizure of the State Power leading to subsequent establishment of the Maoist State.
Be it the activism of Salwa Judum in Chhattisgarh, the attack on Jehanabad jail (resulting in
freeing of about 340 prisoners and their leader Ajay Kanu) in Bihar, attack on Chandra Babu Naidu the heinous killing of Sunil
Mahato, the JMM Member of Parliament or the recent attack on a police camp in Bastar killing
about 56 policemen, Naxals have been evincing greater precision, penetration, organization and
audacity in striking their chosen targets at will. They have also attacked many such symbols of
state authority, mostly police, as witnessed in their incursions in Koraput in Orissa, Madhubani
in Bihar, Giridih and Bokaro in Jharkhand and in Karnataka, killing hundreds of policemen and looting firearms and money.

Transforming themselves into a modern guerilla force, Naxals, today, are equipped with
sophisticated weapons and communication system. With the formation of a united outfit
namely CPI (Maoist) along with the raising of an armed wing i.e. People’s Liberation Guerrilla
Army through the merger of Maoist Communist Centre (MCC) and People’s War Group
(PWG), the Naxal Movement has not only succeeded in getting over the problem of sanguinary

infighting amongst them, but the Movement has also witnessed a shift in focus and strategy.
Today, they are not only logistically better organized and better trained, they are also better
motivated and better led.