Ever thought of how this small word Investment has turned to a big terminology in the financial world? The whole financial world revolves around this word. On a day-to-day basis, we hear this make so-and-so investment and earn suitable return. Let’s try to understand the concept of Investing.
Investment in its simplest form is basically to put or to devote something in expectation of something in future. Investment can be any form, this can be investment of time, investment of money, and so on. For example, when we say parents invest their time and money on their kids, so what does this actually mean? This simply implies to parents who make the investment in terms of money by providing their kids quality education which can help them in future to establish and earn successfully and Investment of time in making them a good human being in future. So expecting something in return in future by making some contribution at present is what actually Investing is all about.
In the financial world, investing is all about investment of money. Investing money in suitable financial vehicles from the list of all available financial avenues and expecting reasonable return in future is termed as Investment. Investment core lies with the expectation of return which can be in the form of income or appreciation of price. With every investment, there comes a risk along with return, so risk and return in any investment go hand in hand. In simple terms, low risk investment provides low returns and high risk investment gives higher returns.
Based on the risk profile, the financial spectrum has varied products that ranges from bonds and certificate of deposits at the lower end of the spectrum with low risk profile to stocks at riskier profile and derivatives at the riskiest and at the higher end of the financial spectrum.
The first answer that comes from common set of investors, when asked about what particular investment vehicles are considered while making investments? The investments are mostly in safer avenues, such as bonds or a combination of stocks, bonds, and cash in their investment portfolios, some using individual securities while others use exchange-traded funds or mutual funds to set up their asset allocations.
However, stock market is subjected to volatility and this impacts the price levels of the stocks and subsequently the return on investments. As volatile as the stock market can be, many investors have been looking into safer ways to invest their money. So, alternative investments have become increasingly popular. Many investors are turning towards alternative investment vehicles and focusing on improving their returns. However, investments under alternative investments are typically open only to high net worth individuals (HNIs) and institutional investors, such as hedge funds and private equity funds. Alternative investments can give you greater diversification and improve your risk-reward profile, but they also require getting expertise to understand them.
Avenues, such as art, antiques, hedge funds, Venture Capital private equity funds, and P2P lending, Real estate comes under the category of alternative investments. Each of these alternative investments has a different ticket size, risk, mode of investing, and regulatory framework.
Some of the alternative investments are as under:
Alternative investment is a universe in itself. With diversification as its underlying element, it is gaining popularity among retail investors as well. It is no more the arena of the wealthy investors only. Investing hard earned money on any type financial asset requires proper study of that particular vehicle, along with it one should consider few points like risk involved, return expected and does that particular investment meets up with the particular goal for which that investment is made for? While this asset class is sure to provide diversification, it does require expertise in selection and sound judgement-backed investment. Without thorough research or study of market trends, investing in them can be a risky bet.
Investing hard earned money on any type financial asset requires proper study of that particular vehicle, along with it one should consider few points like risk involved, return expected, and does that particular investment meets up with the particular goal for which that investment is made for? If your investment in particular financial vehicle satisfies the required points, then it’s worth making any investment and earn significant return in future.
India’s GDP growth slowed to a five-year low of 6.8% in FY19 and it is expected the government may unveil measures while presenting the Budget 2019 to get the economy back on track. Most experts are of the opinion that government could focus more on infrastructure and rural spending, which are key areas to bring growth back on track. They also expect the government to take measures to create job opportunities.
Ms. Nirmala Sitharaman will present the first budget of second term of the Modi government on July 5, 2019. Despite the Modi government's announcement of some tax relief in the interim Budget in February, there are expectations that the finance minister may announce some more relief on the income tax front on Friday but not much expectations is set.
Consumption with its discretionary being will play the role of the real game changer Investment with infra spending on roads, ports, airports, and so on, being the major driver for GDP growth.
Stocks that can be included in the portfolio keeping Budget 2019 in line:
The last interim budget before the term of Modi government coming to an end is creating a lot of buzz among all the sections. Lok Sabha elections are scheduled in the next quarter as the incumbent government will complete its five-year tenure in May. The budget before the upcoming elections is all set to be presented by the Finance Minister Mr. Arun Jaitley on February 1, 2019. Investors are expecting certain big announcements from the interim budget. With the next elections due in coming months, the present government will definitely try to come up with strong announcements that can significantly impact the strong vote bank. The budget speech will include a vision plan for the next three to five years.
In a recent speech, Finance Minister Mr. Arun Jaitley clearly gave a hint that the Interim Budget of 2019 would encompass several big–ticket reforms. Some of the key expectations from the interim budget 2019 are:
Income Tax Exemption Threshold Expected to Double
One of the biggest expectation from the budget is the Income Tax (IT) exemption limit. As per the report published by the news agency IANS, the IT exemption threshold is expected to double from INR. 2.5 Lakhs to INR. 5 Lakhs. Decision pertaining to the reinstatement of the tax free-status for medical expenses and the travel allowances is well on card for this budget. A decision may also be taken to lower the highest personal IT rate from the existing 30% to 25%.
Strong Focus on Healthcare
With the Modi government's strong focus on introducing new healthcare projects for the poor segment, some strong announcements are well expected from this budget in this line. The government may offer increased tax exemptions towards healthcare and preventive checkups under Section 80D of the Income Tax Act.
Focus on Rural Economy with Focus on Farm Loan Waiver
It will be no surprise if we say this interim budget will be more of a farmer–oriented budget. Ever since the Congress party announced a series of loan waivers in Madhya Pradesh, Chhattisgarh, and Rajasthan after coming to power, the segment continues to remain the main focus for the BJP-led NDA government. The government is expected to increase agricultural credit flow by 10% or INR. 1 Lakh Cr., increasing the total credit target to INR. 12 Lakhs Cr. The budget is expected to provide quick loans to farmers at lower interest rates. The government is also expected to announce monetary benefits and concessions for small and marginal farmers.
Boosting Real Estate
The expectation of the real estate sector in India from the Union Budget 2019 is extremely high this time. There are expectations that the government may give the infrastructure status to the real estate sector as this will be extremely beneficial in many ways. This will go a long way in bringing down the interest rates on home loans, project and development costs, and most importantly make affordable housing for everyone. With strong focus on Housing For All by 2022 (Pradhan Mantri Awas Yojana), the government may come up with some extreme measures to get the real estate sector in India back on track.
In our point of view, this Interim Budget will be more focused on the above points with the rural segment catching the most attention along with Income Tax slab revision. However, there will be some other expectations from this interim budget.