[0:00]Hello students, today in this video we will discuss the meaning, definition, characteristics and objectives of investment. So let's start, first we will see what is investment. Why are you going to study investment? Or what is the meaning of studying all this paper of risk and securities? Actually, what happens is that if any person has extra money, that is, after deducting all his expenses, he has some savings. So that person wants that his savings should not remain as much as they are, that is, if you have ₹100 in savings, you would never want your ₹100 savings to remain ₹100 forever. You would always want that my ₹100 savings should be doubled or more than ₹100, that is, you would want some addition to it. To get that addition, you have to do some work, and actually, to double that ₹100, whatever work you do, wherever you invest that ₹100, so that your money doubles or you get extra money, that is what we call investment. And every person wants to double or increase their savings. This is your investment. Now what is the problem that we are studying this? Because you do not want to keep your savings as they are. You want to make it extra, for that you need to know what are the ways through which we can do these things, what alternatives do we have, and if we want to invest in this way, what should be my objective? Why do we want to do it, what are the reasons behind it? How many options do we have? What should we keep in mind while opting for those options? What kind of alternatives are available? All these things need to be analyzed. And for this reason, we are going to study all this. Is it clear? So if we talk about investment in simple language, then investment means what? Investing your money. You will also see your parents, if they are salaried persons, even if they are salaried persons, then also, after deducting all their expenses from their salary, whatever savings they have left, they would not keep it at home. What would they do? If it is in a bank account, even then they would want to buy FD, buy PPF, invest in RD. Some parents would invest in shares, mutual funds, etc. in such options. Why? Because they want that their remaining money should not always remain the same, it should increase. To increase it, they would opt for any of these methods and make their money extra. Actually, that is investment. And you see in practical life too, everyone is investing. Right?
[2:37]So what is investment? We define investment as the commitment of current financial resources in order to achieve higher gains in the future. Right? So investment means what? Commitment of funds. There is a commitment of ₹100.
[3:26]What is the commitment? It will be invested in such a way, in such a place, that in the future you will get income. How do you get income in a normal way? You go and give service, you work, and in return for work, you get income. Here what is happening? The income you earned, that income, that money itself will give you more extra income. You don't need to do anything. You don't need to do any service. You don't need to give any time. You don't need to do your work that you need to sit for 6 to 8, 6 to 9. No, you don't need to do any work. Your remaining money, that money will give you income.
[5:27]So that is investment. And you would see in your life, you would also see your family members, that they invest in PPF, RD, etc., and they get interest. Right?
[7:16]Now we talk about features, nature or characteristics of investment. So what are the characteristics of investment? See, the most important characteristic of investment is return. Right? What does return mean? Something should come back to you. You invested money somewhere. Now, wherever you invested that money, you should get something from there, some return should come. So the most important nature or the most important characteristic is that when you invest, you get a return. Whenever you give service, what do you get in return? You get salary, right? Similarly, when you put money to work, when you employ funds, you definitely get a return. So return actually is what? Investments are made with the primary objective of deriving a return. The dividend or interest received from the investment is the yield. Now, actually, what we get in return, what do we get? Either we get interest, or we get dividend, or sometimes we get some retirement benefits, we can get it in any form. So what we get is called yield. Actually, this is what return is, this is my income, this is our yield. Whatever dividend or interest you receive, that is your yield. Now you invest in PPF, you invest in PPF, Public Provident Fund. You invest in PPF, every year you keep putting a little money in that account every month, quarterly, whatever you want to do. After 15 years, what will happen? You will get a heavy amount.
[9:00]Along with that, you will get the interest that you paid for 15 years, that interest accumulated, that plus the money you paid, that is, you will get a heavy fund in total. So what is this? This is yield, we got a return, something extra came to us from the money we invested. That is your yield. So return may be received in the form of yield plus capital appreciation. Sometimes what happens is that the return we get, that is, what I have invested, apart from the income that comes every time, interest, that will come. Plus, what I have invested, that will also be added and I will get extra. For example, let's take shares as an example. Suppose today you bought a company's share for ₹100. So you invested ₹100. And in return, what did you get? You got a share. Now, in return, what will you get? Whenever the company declares a dividend, you will get a dividend on that ₹100, on that one share you bought. You will get a dividend every time. This is your return. Now what happened? After a long time, you thought that I don't want this share anymore. You went to sell it. So that ₹100 share that you bought, today it is selling for ₹1000 in the market. So when you went to sell it today, how much did you get? You got ₹1000. A ₹100 thing, appreciating in capital, you got ₹1000. Right? Plus, you kept receiving dividends before. So dividend plus capital appreciation, you got both. So return sometimes is in the form of yield, meaning interest, dividend, etc., and sometimes what do you get in addition to that? You also get extra money from what you invested, that also comes after adding. So return = Capital Gain + Yield (interest, dividend, etc.). Then, what is the second characteristic of investment? If you are investing, what else will you have with it? Risk. Risk is also a very important factor. What does this risk mean? Risk means loss. You are afraid that the amount you invested might be lost. When we are going to invest somewhere like this, we are going to invest money in such a place, where we are afraid that if I invested ₹100, it may be possible that instead of ₹100, I will get ₹80 back. Right? So this fear of losing my principal amount, or getting a lower return than expected, that is called risk. So whenever you invest, the risk factor is always there. In some investments, the risk factor is very low, minimal risk. In some places, the risk factor is higher, maximum risk.
[12:05]So actually we have to understand that risk factor, what kind of investment we are going to make, and how much risk is involved in it. And it is said that if you take more risk, there are more chances of getting more returns. Whenever there is a higher chance of losing, it is said that, 'Invest, we'll see.' You have the capacity to bear losses. So if there is a profit, it's a big profit, and if it's lost, everything is lost. So if you take more risk, there are chances of getting more profit and more returns. But at the same time, some people play in a safe zone, they don't want to take any risk. For example, we invest in government securities, we buy FD. There you know that my money will not be lost, there is no risk. Whatever is invested, that much will be received, and we will also get a fixed return. So what is this? You have to analyze the risk. Whenever you invest, the risk factor remains there. Next is liquidity. Liquidity in the sense means how liquid it is, that is, what is its convertibility to cash? So refers to an investment ready to convert into cash position. Now, suppose you invested in PPF. You had some money, you chose what type of investment? You thought that we will open a PPF account with this ₹100 extra that I have, and we will put ₹100 every time in PPF. Here what happened? Here the cash positioning is very low, meaning your money is going, but the return you will get, that is, when you want it back in cash, you will get it after 15 years, because there is a time period, 15 years. Right? So cash, the liquidity, the convertibility to cash, is at a slow speed, right? So it is said that what is liquidity? Liquidity means what? An investment should be such that it is easily realizable, saleable, or marketable. You invested in shares, you know it is very quickly convertible into cash. You go to the stock market, immediately sell the share, your share is sold. You immediately got cash. So its liquidity is high. So when you invest, liquidity also matters a lot. What is its cash positioning? How quickly it will convert into cash? It is available immediately in cash form. So whenever you invest, many investments are such that they give you the option of very quick convertibility into cash, right?
[14:41]Apart from this, there is another thing in investment, that is what? Tax Shelter. Whatever investment you make, in every investment, you get some tax benefits. Actually, what does tax shelter mean? It means making such a financial arrangement that you don't have to pay tax or you have to pay less tax. So the government provides income tax deductions for investment in different schemes.
[15:20]So the government has given a deduction of 80s. In Chapter 6A, under section 80, a deduction has been given, from 80C to 80U. So in that, like the deduction of 80C, 80CCC, these deductions are basically very high in investment. That if you invest money in PPF, then the income coming from it will be exempted, you will not have to pay tax. You are investing in RD, you are investing in FD, that is, they have not mostly, in some FDs you get it, in some FDs you don't. It depends on company to company, which ones come in that exemptions list. But like LIC, in LIC also you get it in 80C. The premium you are paying for insurance, so this LIC is also an investment, money is being invested, later you will get a lot of return. So the premium you are paying in that, you will also get an exemption on that. So in investment, there are many options to save tax, and the government brings many investment schemes in which it says that if you invest money here, then it is an investment, so income will definitely be received, but along with that, you will also get tax relief. So these investments are also tax shelters. Not all, but many investments give you this opportunity. Now we talk about investment objectives. What are the investment objectives? That is, if you are going to invest, why do you invest? What is your reason behind investing? So, see, the main objective of the entire investment is to minimize risk. The future is uncertain, we all know that. Today I have ₹100, but in the future, the things I need will not be available for ₹100. We need that this ₹100 that I have extra should be used in such a way that it becomes enough for whatever I need in the future, right? And the future is completely uncertain. So to avoid future problems, you have to keep making money, right? It doesn't work like this, that I work today, money comes, I spend it, and the work is done. No, we need to save for the future. Those savings are not kept at home. Those savings are invested in such a place that the savings double, or you get some extra addition from them. So the main objective of investment is to minimize risk. That whatever future risk is there, that is, the future is uncertain, anything can happen, so you can minimize that risk. Simultaneously, what is there? Maximize the expected return. You always want to make such an investment. The objective of investment is always this, that we should invest money in such a place that my risk factor is less, my money should not sink, there should be less chances of sinking, right? My future uncertainties should be less, right? We should be able to reduce the risk. And from that money, we should get maximum income. And to assure that you are in a safe zone. Your money is safe, you are safe, and whenever you want, your money will have liquidity. Meaning, you will be able to convert it into cash whenever you want. Meaning, today I need money, and I have invested money somewhere, so I can immediately sell it and get cash today if I need cash. So liquidity should be there. This is the main objective of investment. To secure your future, to earn money from money, to earn more, to maintain safety, the money invested should increase, every time some income should come from it, this is the main objective. So if we analyze these things and put them in points, then my first objective is what? Income Generation. What does income generation mean? That you would want to invest money in such a place, whether you invest in PPF, whether you invest in FD, whether you invest in RD, whether you invest in the share market, whether you invest in mutual funds, whether you invest in SIP, systematic investment plan, you invest money in any such place from where you keep getting income. Income should be generated. Your current income should increase, you should get income. It's not like that, that money is invested but income is not being generated. So that money is useless, right? Later also you will get something, that is not necessary. Many times there are also such investments which do not give you any income currently, they will give it all at once in the future. But sometimes people want that you should also get current income. Some income should keep coming to you every time from that money.
[19:26]Its many options are there, MIS etc. These all are what? These all keep generating income for you. Short term FDs etc. these all keep generating income for you. So one of my investment objectives is what? That our income should be generated, some income should come to us. As we earn money by doing service, similarly we should earn money from this money. Income generation is our main objective. Second is what? Capital preservation, meaning safety of capital. The money that is invested, that money should be safe. It's not like that if I invested ₹100, then I won't get my ₹100 back. No, the objective of investing is that my capital, the money I invested, that is called capital. So the money I invested, my capital, should be preserved, it should be safe, there should be safety in it, at least that much should remain. Apart from that, I should get additional. So capital preservation is also an objective. And one more thing I want to tell you, this investment objective varies from investor to investor. Because there are so many options for investment, that it depends on which investor wants to take what kind of option. For example, as I am an investor, I don't want to take any risk. I always want a safe zone. So my main objective can be what? That whatever money I invest should always be preserved, safe. Income may be less, but my money should be safe. On the other hand, there are some investors who take risks. And they want that they should get maximum income. Right? So for that, their objective will change. So what it means is that investment objectives also vary from investor to investor. What kind of motive do you have, what kind of investor are you, according to that, your objective changes. But overall, the objective that goes is this only. That either people want to increase income, they want to keep the money they have invested safe, they want capital appreciation, meaning capital growth. ₹100 invested should become ₹150. ₹100 should become ₹200. The income that has to come should keep coming. Interest should come, dividend should come, whatever has to come, let it come. But the capital that is invested should also increase. So capital appreciation is also a main objective of investors. And today, if we talk about it, then maximum people invest for tax reduction.
[23:05]You will see that we take many investment options because we want to get tax exemption. Now I have savings, I have more money. But I know that for this extra money, I will have to pay tax to the government. Now, the tax I have paid to the government, I will not get its direct benefit. Yes, I will get indirect benefit. Roads are being built, development is happening, schools are opening, colleges. I will get indirect benefit, but directly, I have paid the money, I will not get direct benefit from it. So what does the investor want? That my money should be invested in such a place from where I get benefit, and I don't have to pay tax. My money should not go to the government. So for that, they want to invest. And why is it so? Because the government itself gives many options, where it says that if you invest money here, you will get an exemption, you will get tax relief. And it is for this reason that you should remember that you might think, why, why does the government say that don't pay us tax, we will give you exemption, you invest, you will get exemption. Because there are two objectives of investment. You are looking at it that my money is being invested somewhere. And I will get income. But where you have invested money, that person needed money. Due to your investment, he gets money. For him it is a liability, for you it is an investment, but for that particular entity where you invested money, it is a liability. It needs funding. Suppose you bought NSC, National Saving Certificates. You bought NSC. So the government says that buy NSC, you will get a deduction, you will not have to pay tax.
[25:04]So you will invest in NSC to save tax. Now, actually, what happened? You invested your money in NSC to save tax. Interest will also come, income will also come, you are happy, you invested. But on the other hand, what happened to the government? The government got as much investment in NSC. The government got that much money all at once. By getting that much money all at once, the government is able to allocate that fund. And it is able to utilize it properly. It is able to invest it somewhere. For 10 years, 15 years, you got the money. The government got the money. Now, after utilizing it, it gives you back the money with interest. So it wants that money should come in this particular area. For this reason, many such investment opportunities are there where tax exemption is given, and for this reason, exemption is given. Being an investor, we want such opportunities where we get exemption. And we also invest many times for this reason, that we can save tax. So these are the main objectives of your investment. And I have always said that investor to investor objectives change. I am a person who doesn't want income, I don't want capital appreciation, I just want to invest money in such a place where I get an exemption. So I opted for 80D. I invested money in health insurance, and in other places. Why? Because I just want to save tax. To save tax, I made different investments, right? So these all are what? These all are investment objectives. One more objective that is the last is what? To meet the financial goals. So sometimes the objective of investment is what? To meet out, to achieve their financial goals, right? To achieve it, in the sense, what happened? That every time, every investor has a different objective, right? So sometimes some investors are such who think that for education, I have to invest money in such a place that when our child grows up, at the time of his education, I have enough funding so that we can invest money in it. So they will choose such an investment option which will give them funds till their child grows up. Some people's goal is that they have to marry their daughters. So at such time periods, they need funds, right? So in this way, to meet different financial goals, funding is also needed, and for that purpose also, people invest. And for this, many schemes come, which give you investment options keeping the financial goals in mind, that for such a time period, you will get this much fund. For such a time period, you will get this much fund. In this also, there are many LIC schemes, like money-back schemes. LIC's money-back. So these schemes are what? These all give you funding that your goals, your financial goals, where you are going to need money, till that time, your fund will accumulate and you will get it. So this is also an objective of investing, that whatever your financial goals are, whatever your objectives are, that I need this much funding at this time, to meet that, you invest. So I hope you understood. Wish you all the best. Thank you so much.
