PPT

1. FINANCIAL
SECTORS

2. TYPES OF SECTORS
6/8/2023 2
Insurance
Bank/FD,
PPF
Real Estate
Share market,
Mutual funds
Post office
Gold

3. Introduction: Share Market
 The term stock market refers to several exchanges
in which shares of publicly held companies are
bought and sold. Such financial activities are
conducted through formal exchanges and via over-
the-counter (OTC) marketplaces that operate under
a defined set of regulations.
 Both “stock market” and “stock exchange” are
often used interchangeably. Traders in the stock
market buy or sell shares on one or more of the
stock exchanges that are part of the overall stock
market.
 Certainly! The share market, also known as the
stock market or equity market, is a marketplace
where shares or stocks of publicly traded
companies are bought and sold. It provides a
platform for companies to raise capital and for
investors to buy ownership stakes in those
companies.

4. Pros of the Share Market:
 Investment Opportunities: The share market provides
individuals and institutional investors with
opportunities to invest in a wide range of companies.
Investors can diversify their portfolios and potentially
earn returns through capital appreciation and
dividends.
 Liquidity: The share market offers liquidity, allowing
investors to buy and sell shares relatively easily. This
liquidity provides investors with the ability to convert
their investments into cash quickly, making it a
flexible investment avenue.

5. Cons of the Share Market:
 Systemic Risk: The financial sector is interconnected,
and disruptions or failures in one part can have ripple
effects throughout the entire system. Financial crises,
such as the global financial crisis of 2008, highlighted
the systemic risks inherent in the financial sector,
which can negatively impact the overall economy.
 Speculation and Market Manipulation: The share
market can attract speculators who aim to profit from
short-term price movements rather than long-term
investment. Speculative trading can contribute to
market instability and create an environment
vulnerable to manipulation and fraud.

6. Introduction: Mutual Funds
 A mutual fund is a financial vehicle that pools
assets from shareholders to invest in securities
like stocks, bonds, money market instruments,
and other assets. Mutual funds are operated by
professional money managers, who allocate the
fund's assets and attempt to produce capital
gains or income for the fund's investors. A
mutual fund's portfolio is structured and
maintained to match the investment objectives
stated in its prospectus.
 Mutual funds give small or individual investors
access to professionally managed portfolios of
equities, bonds, and other securities. Each
shareholder, therefore, participates
proportionally in the gains or losses of the fund.

7. Pros of the Mutual Funds:
 Diversification: Mutual funds typically invest in a wide
range of securities across different asset classes,
sectors, and geographies. This diversification helps
spread the investment risk and reduces the impact of
the poor performance of any single investment. By
investing in a mutual fund, investors gain access to a
diversified portfolio that would be difficult to replicate
with a small investment amount.
 Accessibility: Mutual funds are easily accessible to
individual investors. They usually have low
investment minimums, allowing investors to start
with a small amount of money. This makes them
suitable for investors with limited capital or those
who want to invest regularly through systematic
investment plans (SIPs).

8. Cons of the Mutual Funds:
 Market Risk: Mutual funds are subject to market risk,
meaning the value of the investments in the fund can
fluctuate based on market conditions. If the overall
market or specific sectors perform poorly, it can
negatively impact the value of the mutual fund. While
diversification helps mitigate risk, it does not
guarantee against losses.
 Potential for Underperformance: Not all mutual funds
outperform their benchmarks or generate higher
returns than the market. Some mutual funds may
underperform due to factors such as high expenses,
poor stock selection, or unfavorable market
conditions. Investors should carefully evaluate the
track record and performance of a mutual fund before
investing.

9. Introduction: Investing in Gold
 Gold is a precious metal that has been valued for its
rarity, durability, and aesthetic appeal for centuries. It
is also considered a potential investment option.
 Gold ETFs (Exchanged Traded Funds) is similar to
buying physical gold but the only difference is you
don’t actually buy the physical gold. You don’t have to
go through the hassles of storing the physical gold,
instead, the gold bought is stored in Demat (paper)
format. On the other hand, gold funds deal with
investing in gold mining companies.

10. Pros of the Investing in Gold:
 Inflation Hedge: Gold is often seen as a hedge
against inflation. During periods of inflation, the
purchasing power of fiat currencies may decline, but
the value of gold may rise. As a tangible asset, gold
has been used to preserve wealth over the long term
and protect against the erosion of purchasing power.
 Store of Value: Gold has maintained its value over
time and has been regarded as a store of value for
centuries. It has been used as a medium of exchange
and a store of wealth throughout history. Investing in
gold can provide a tangible asset that retains its
value, even in uncertain economic conditions.

11. Cons of the Investing In Gold:
 Limited Industrial Use: Gold is primarily considered a
store of value rather than an industrial commodity. Its
use in industries is limited compared to other metals
like copper or silver. Therefore, gold prices may not be
directly influenced by industrial demand, which can
make its price movements more reliant on investor
sentiment and macroeconomic factors.
 Storage and Insurance Costs: Investing in physical
gold, such as bullion or coins, requires storage and
insurance. These costs can eat into investment
returns, particularly for those who choose to keep
gold at secure storage facilities or through custodial
services. These costs should be considered when
evaluating the overall investment performance of gold.

12. Introduction: Investing in Fixed Deposits
 A fixed deposit means that the money cannot be
withdrawn before maturity unlike a recurring
deposit or a demand deposit. Due to this
limitation, some banks offer additional services to
FD holders such as loans against FD certificates at
competitive interest rates. Banks may offer lesser
interest rates under uncertain economic
conditions. The tenure of an FD can vary from 7,
15 or 45 days to 1.5 years and can be as high as 10
years.
 Fixed deposits, also known as term deposits or
certificates of deposit (CDs), are financial
instruments offered by banks and financial
institutions where individuals can deposit a fixed
sum of money for a specified period at a
predetermined interest rate.

13. Pros of the Investing in FixedDeposits:
 Capital Preservation: Fixed deposits offer capital
preservation as they protect the invested amount
from market fluctuations. Regardless of how the
financial markets perform, the principal amount
remains secure, making it an attractive option for
conservative investors seeking stability and
predictability.
 Fixed and Assured Returns: Unlike many other
investment options, fixed deposits offer a fixed
interest rate for the entire deposit period. This allows
investors to know exactly how much they will earn at
maturity. It provides a predictable income stream and
can be useful for financial planning and budgeting
purposes.

14. Cons of the Investing in Fixed Deposits:
 Lack of Liquidity: Fixed deposits have a
predetermined lock-in period during which the
invested amount cannot be withdrawn without
incurring penalties. This lack of liquidity makes fixed
deposits less suitable for investors who may need
immediate access to their funds or for those seeking
flexibility in managing their investments.
 Opportunity Cost: Investing in fixed deposits may
mean missing out on potential higher returns that
could be achieved through other investment options,
such as equity markets or real estate. Depending on
the investment horizon and risk appetite, investors
should consider whether the lower returns of fixed
deposits align with their financial goals.

15. Introduction: PublicProvident Fund
 The Public Provident Fund (PPF) is a savings-cum-tax-
saving instrument in India, introduced by the National
Savings Institute of the Ministry of Finance in 1968.
The main objective of the scheme is to mobilize small
savings by offering an investment with reasonable
returns combined with income tax benefits.The
scheme is fully guaranteed by the Central Government.
Balance in the PPF account is not subject to
attachment under any order or decree of court under
the Government Savings Banks Act, 1873. However
Income Tax & other Government authorities can attach
the account for recovering tax dues.
 A PPF account has a lock-in period of 15 years on
investment, before which funds cannot be withdrawn
completely. An investor can choose to extend this
tenure by 5 years after the lock-in period is over if
required.

16. Pros of the Public ProvidentFund:
 Guaranteed Returns: PPF offers guaranteed returns
as it is backed by the government of India. The
interest rate on PPF is determined by the government
and is generally higher than other fixed-income
instruments. The interest rate is revised periodically
but remains fixed for each specific investment period.
 Long-Term Investment: PPF encourages long-term
savings and disciplined investing. The maturity
period of a PPF account is 15 years, providing
individuals with a forced savings discipline.
Additionally, the account can be extended in blocks
of five years after maturity, allowing for continued tax
benefits and compounding of interest.

17. Cons of the PublicProvident Fund:
 Low Liquidity: Although partial withdrawals are
allowed, the amount that can be withdrawn from a
PPF account is subject to certain restrictions. The
withdrawal limit is capped at a specific percentage of
the balance at the end of the previous year. This
limited liquidity may not meet the needs of
individuals with more immediate financial
requirements.
 Fixed Interest Rate: The interest rate on PPF is fixed
and revised periodically by the government. While
this fixed rate provides stability and predictability, it
may not keep up with inflation or market interest
rates. In times of higher inflation, the real returns on
PPF may be relatively lower.

18. Introduction: Investing In post Office
 Post office is one of the oldest organizations in India which
started way back during the British era in Oct 1854, initially
focusing only on delivering mail (post) and later started
providing an array of other financial services i.e., Banking,
Insurance & Investments.
 The biggest advantage of these schemes is their sovereign
guarantee i.e., it is backed by the government. Some of the post
office savings schemes also offer tax-savings benefits U/S 80C of
the Income Tax Act.
 A post office investment scheme is designed to help you accrue
good investment returns. This scheme has a holding period of 5
years and provides an annual interest rate ranging from 4 to 8
per cent. With it, you can avail of a fixed monthly income. You
can help with this scheme at any of the post offices located
across the country.

19. Pros of the Investing in Post office:
 Fixed and Assured Returns: Post office schemes
often provide fixed and assured returns. The interest
rates are predetermined and remain fixed for the
entire investment period. This predictability can be
beneficial for individuals seeking stable returns.
 Accessibility and Convenience: Post offices are
widely accessible, with numerous branches located
in various areas. This accessibility makes it
convenient for individuals to open accounts and
invest in post office schemes. It is particularly useful
for individuals who may not have access to or prefer
not to use traditional banking services.

20. Cons of the Investing in Post office:
 Limited Flexibility: Post office schemes often come
with certain restrictions and limitations. For example,
premature withdrawals or closures may attract
penalties or loss of interest. The lock-in periods for
some schemes can be long, limiting the flexibility to
access funds when needed.
 Lack of Liquidity: Post office schemes may lack
liquidity, especially during the lock-in period.
Investors may not be able to withdraw the invested
amount or access funds easily, making it less
suitable for individuals with short-term liquidity
needs.

21. Introduction: Investing In Real Estate
 The real estate sector is a vital component of the
global economy, encompassing a wide range of
activities related to the sale, purchase, development,
and management of properties. This sector includes
residential, commercial, industrial, and agricultural
real estate, as well as infrastructure projects such as
roads, bridges, and airports.
 Investing in real estate can be a lucrative opportunity
for individuals and businesses alike, with potential
benefits including steady income streams, capital
gains, tax advantages, and portfolio diversification.
However, there are also risks and challenges
associated with this sector that investors should
carefully consider before making any decisions.

22. Pros of the Investing in Real Estate:
 Cash Flow and Rental Income: Real estate
investments can generate ongoing cash flow through
rental income. By renting out properties, investors
can earn a steady stream of income, which can
provide financial stability and potentially cover
mortgage payments, maintenance costs, and
generate additional profits.
 Tangible Asset and Diversification: Real estate is a
tangible asset that can provide a sense of security
and stability. It is a physical property that can be
seen and touched, making it a valuable addition to an
investment portfolio. Real estate investments also
offer diversification benefits, as they often have low
correlations with other asset classes such as stocks
and bonds.

23. Cons of the Investing in Real Estate:
 Market Volatility and Risk: Real estate markets can
be subject to volatility and fluctuations. Economic
downturns, changes in interest rates, and local
market conditions can impact property values. Real
estate investments carry various risks, such as
changes in rental demand, property damage, or
unexpected expenses.
 Management and Maintenance: Owning and
managing real estate properties can be time-
consuming and require active involvement.
Landlords need to handle tenant-related matters,
property maintenance, repairs, and other
administrative tasks. If properties are not managed
properly, it can lead to additional expenses and
potential difficulties.

24. Introduction: Insurance
 Insurance is a form of risk management that
involves transferring the risk of potential loss from
an individual or entity to an insurance company.
 The insured pays a premium to the insurer in
exchange for financial protection against specific
risks, such as property damage, illness, or death.
 Many insurance policy types are available, and
virtually any individual or business can find an
insurance company willing to insure them—for a
price. Common personal insurance policy types
are auto, health, homeowners, and life insurance.
Most individuals in the United States have at least
one of these types of insurance, and car insurance
is required by state law.

25. Pros of the Insurance:
 Financial Protection: Insurance provides financial
protection against various risks and uncertainties. It
can cover a wide range of areas, including health,
life, property, liability, business, and more. Having
insurance coverage can help mitigate the financial
impact of accidents, illnesses, damages, or liabilities,
allowing individuals and businesses to recover and
rebuild.
 Peace of Mind: Insurance offers peace of mind by
reducing uncertainties and providing a safety net.
Knowing that insurance coverage is in place can
alleviate worries and anxieties associated with
potential risks. This sense of security allows
individuals to focus on their daily lives, knowing that
they have protection in case of adverse events.

26. Cons of the Insurance:
 Cost of Premiums: Insurance coverage comes at a
cost, typically in the form of premiums. Policyholders
must pay regular premium payments to maintain
coverage. Depending on the type of insurance and
the level of coverage, premiums can vary
significantly and may be a financial burden for some
individuals or businesses.
 Coverage Limitations and Exclusions: Insurance
policies often come with limitations, exclusions, and
deductibles. Certain risks or events may not be
covered, or coverage may be subject to specific
conditions. Policyholders must carefully review the
terms and conditions of their insurance policies to
understand the extent of coverage.

27. THANK YOU