{"id":24972,"date":"2022-06-01T06:43:13","date_gmt":"2022-06-01T06:43:13","guid":{"rendered":"https:\/\/www.5paisa.com\/finschool\/?post_type=markets&#038;p=24972"},"modified":"2024-08-02T16:57:02","modified_gmt":"2024-08-02T11:27:02","slug":"stock-market-investments","status":"publish","type":"markets","link":"https:\/\/www.5paisa.com\/finschool\/course\/investment-analysis-course\/stock-market-investments\/","title":{"rendered":"Learn About Stock Market &#038; Investments"},"content":{"rendered":"\t\t<div data-elementor-type=\"wp-post\" data-elementor-id=\"24972\" class=\"elementor elementor-24972\">\n\t\t\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-46e0638 elementor-section-full_width tab_container elementor-section-height-default elementor-section-height-default\" data-id=\"46e0638\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div 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data-widget_type=\"shortcode.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<div class=\"elementor-shortcode\">\t<script>\n\t\tjQuery(document).ready(function(){\n\t\t\tjQuery(\"#post_chapters a[href*='\" + location.pathname + \"']\")\n\t\t\t\t.addClass(\"current\")\n\t\t\t\t.attr(\"aria-current\", \"page\");\n\t\t})\n\t<\/script>\n\t<div class=\"desktop_chapters\"><div id=\"post_chapters\"><div class=\"post_chapters-heading\">Chapters<\/div><ul><li><i class=\"fa fa-chevron-right\" aria-hidden=\"true\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/investment-analysis-course\/stock-market-investments\/\">Stock Market & Investments<\/a><\/li><li><i class=\"fa fa-chevron-right\" aria-hidden=\"true\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/investment-analysis-course\/risk-in-stock-market\/\">Risk In Stock Market<\/a><\/li><li><i class=\"fa fa-chevron-right\" aria-hidden=\"true\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/investment-analysis-course\/measurement-of-risk\/\">Measurement of Risk<\/a><\/li><li><i class=\"fa fa-chevron-right\" aria-hidden=\"true\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/investment-analysis-course\/risk-expected-return\/\">Risk & Expected Return<\/a><\/li><li><i class=\"fa fa-chevron-right\" aria-hidden=\"true\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/investment-analysis-course\/risk-return-relationship\/\">Risk & Return Relationship<\/a><\/li><li><i class=\"fa fa-chevron-right\" aria-hidden=\"true\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/investment-analysis-course\/market-analysis-its-impact-on-prices\/\">Market Analysis & Its Impact On Prices<\/a><\/li><li><i class=\"fa fa-chevron-right\" aria-hidden=\"true\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/investment-analysis-course\/industry-analysis\/\">Industry Analysis<\/a><\/li><li><i class=\"fa fa-chevron-right\" aria-hidden=\"true\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/investment-analysis-course\/company-analysis\/\">Company Analysis<\/a><\/li><li><i class=\"fa fa-chevron-right\" aria-hidden=\"true\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/investment-analysis-course\/capital-asset-pricing-model\/\">Capital Asset Pricing Model<\/a><\/li><\/ul><\/div><\/div><div class=\"chapters_toggle\"><a href=\"#\" id=\"open_chapters\" aria-label=\"View chapters\"><span>View Chapters<\/span>&nbsp;&nbsp;&nbsp;<i class=\"fa fa-chevron-right\" aria-hidden=\"true\"><\/i><\/a><a href=\"#\" id=\"close_chapters\" style=\"display:none;\" aria-label=\"Hide chapters\"><span>Hide Chapters<\/span>&nbsp;&nbsp;&nbsp;<i class=\"fa fa-chevron-right\" 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  \n                                                                <i class=\"far fa-edit\"><\/i>                                                            \n                                                            <span class=\"eael-tab-title title-after-icon\" >Study<\/span>                            \n                                                    <\/li>\n                                            <li id=\"slides\" class=\" eael-tab-item-trigger eael-tab-nav-item\" aria-selected=\"false\" data-tab=\"2\" role=\"tab\" tabindex=\"-1\" aria-controls=\"slides-tab\" aria-expanded=\"false\">\n                            \n                                                                <i class=\"fas fa-book-open\"><\/i>                                                            \n                                                            <span class=\"eael-tab-title title-after-icon\" >Slides<\/span>                            \n                                                    <\/li>\n                                            <li id=\"videos\" class=\" eael-tab-item-trigger eael-tab-nav-item\" aria-selected=\"false\" data-tab=\"3\" role=\"tab\" tabindex=\"-1\" aria-controls=\"videos-tab\" aria-expanded=\"false\">\n                            \n                                                                <i class=\"far fa-eye\"><\/i>                                                            \n                                                            <span class=\"eael-tab-title title-after-icon\" >Videos<\/span>                            \n                                                    <\/li>\n                    \n                                  <\/ul>\n            <\/div>\n            \n            <div class=\"eael-tabs-content\">\n\t\t        \n                    <div id=\"study-tab\" class=\"clearfix eael-tab-content-item active-default\" data-title-link=\"study-tab\">\n\t\t\t\t        <p><div class='white' style='background:rgb(255, 255, 255); border:solid 0px rgb(255, 255, 255); border-radius:0px; padding:0px 0px 0px 1px;'>\n<div id='text_slider' class='owl-carousel sa_owl_theme owl-pagination-true' data-slider-id='text_slider' style='visibility: visible;visibility:visible;'>\n<div id='text_slider_slide01' class='sa_hover_container' data-hash='Introduction' style='padding:4.9% 5%; margin:0px 0%; background-color:rgb(255, 255, 255); min-height:400px; '><h2 style=\"text-align: left\"><strong>1.1 Introduction-<\/strong><strong><b>\u00a0The Marketplace for Shares<\/b><\/strong><\/h2>\r\n<p><img fetchpriority=\"high\" decoding=\"async\" class=\"aligncenter wp-image-77217 size-full\" src=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Introduction.png\" alt=\"Introduction The Market Place where shares are Traded\" width=\"1919\" height=\"1257\" srcset=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Introduction.png 1919w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Introduction-300x197.png 300w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Introduction-1024x671.png 1024w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Introduction-768x503.png 768w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Introduction-1536x1006.png 1536w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Introduction-50x33.png 50w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Introduction-100x66.png 100w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Introduction-150x98.png 150w\" sizes=\"(max-width: 1919px) 100vw, 1919px\" \/><\/p>\r\n<p>&nbsp;<\/p>\r\n<h4><strong><b>Why Shares Need a Market<\/b><\/strong><\/h4>\r\n<p>Like any other commodity, shares need a marketplace in which buyers and sellers can meet. Without it investors would struggle to find counterparties to trade with. In addition to ensuring liquidity, fair valuation, and transparency, the stock market also provides a platform that is thoroughly organized.<\/p>\r\n<h4><strong><b>Two Different Types of Markets <\/b><\/strong><\/h4>\r\n<ul>\r\n<li>Primary Market \u2013 This is when a company issues shares for the very first time.<\/li>\r\n<li>Secondary Market \u2013 Where existing shares are traded between investors.<\/li>\r\n<\/ul>\r\n<h3><strong><b>The Primary Market<\/b><\/strong><\/h3>\r\n<p><strong><b>IPOs (Initial Public Offerings)<\/b><\/strong><\/p>\r\n<p>The most common way for companies to raise capital is through an IPO. Take, for example, the landmark IPO of India\u2019s Mamaearth in November 2023\u00a0that drew huge interest from investors.<\/p>\r\n<p><strong><b>Rights<\/b><\/strong><strong><b>\u00a0issue<\/b><\/strong><\/p>\r\n<p>Firms can also obtain finance by offering extra shares to existing shareholders in a rights issue. This allows loyal investors to buy more shares at a lower price.<\/p>\r\n<p><strong><b>Private Placements<\/b><\/strong><\/p>\r\n<p>Shares are sold in a private placement selectively to institutional investors like mutual funds, insurance companies or pension funds. It is a quicker method and is often used by firms that wish to avoid the complicated nature of a public issue.<\/p>\r\n<h3><strong><b>The Secondary Market <\/b><\/strong><\/h3>\r\n<p><strong><b>Trading Daily<\/b><\/strong><\/p>\r\n<p>Shares are sold and then traded on the secondary market. Here investors trade with one another. For example Zomato shares are actively traded on NSE and BSE and Tesla shares are traded on NASDAQ.<\/p>\r\n<p><strong><b>Price Discovery<\/b><\/strong><\/p>\r\n<p>Prices on the secondary market are determined by demand and supply, the performance of the company, and the macroeconomic environment. Commodity prices go up and down with scarcity; stock prices go up and down with sentiment and news.<\/p>\r\n<h4><strong><b>Stock Exchanges \u2013 The Organised Bazaar<\/b><\/strong><\/h4>\r\n<p><strong><b>What is <\/b><\/strong><strong><b>Stock Exchange <\/b><\/strong><\/p>\r\n<p>A stock exchange is an organized and regulated marketplace \u2014 today largely electronic \u2014 where securities such as shares, bonds, and derivatives are listed and traded. Companies list their shares here, and registered brokers execute trades on behalf of investors through automated order-matching systems. Physical trading floors have mostly been phased out; NSE and BSE, for example, operate primarily electronically<\/p>\r\n<p><strong><b>Functions of Stock Exchange <\/b><\/strong><\/p>\r\n<ul>\r\n<li><b><\/b><strong><b>Transparency &#8211; <\/b><\/strong>All trades are recorded and transparent.<\/li>\r\n<li><b><\/b><strong><b>Fair Valuation <\/b><\/strong>\u2013 Prices reflect collective market sentiment<\/li>\r\n<li><b><\/b><strong><b>Liquidity \u2013<\/b><\/strong>Investors can buy or sell immediately without having to find buyers themselves.<\/li>\r\n<li><b><\/b><strong><b>Regulation \u2013<\/b><\/strong>Only licensed and financially backed brokers are allowed to trade, and this is to protect investors.<\/li>\r\n<\/ul>\r\n<p><strong><b>Examples of Major Exchanges<\/b><\/strong><\/p>\r\n<ul>\r\n<li><b><\/b><strong><b>National Stock Exchange (NSE): <\/b><\/strong>India&#8217;s biggest exchange, handling tens of millions of trades daily across its segments (exact figures vary by year and are published in NSE&#8217;s own trading statistics).<\/li>\r\n<li><b><\/b><strong><b>Bombay Stock Exchange (BSE) <\/b><\/strong>\u2013 Asia\u2019s oldest and still very active exchange.<\/li>\r\n<li><b><\/b><strong><b>New York Stock Exchange (NYSE) \u2013<\/b><\/strong>The largest in the world based on market capitalisation.<\/li>\r\n<li><b><\/b><strong><b>NASDAQ \u2013<\/b><\/strong>Known for its tech stocks, such as Apple, Microsoft, and Tesla.<\/li>\r\n<\/ul>\r\n<p><strong><b>Why Do Stock Exchanges Matte<\/b><\/strong><strong><b>r?<\/b><\/strong><\/p>\r\n<p>Without exchanges selling shares would be cumbersome you would need to find a buyer yourself. To solve this, exchanges pool thousands of buyers and sellers, which ensures instant liquidity.<\/p><\/div>\n<div id='text_slider_slide02' class='sa_hover_container' data-hash='Investments-Meaning' style='padding:4.9% 5%; margin:0px 0%; background-color:rgb(255, 255, 255); min-height:400px; '><h2 style=\"text-align: left\"><strong>1.2 Investments Meaning<\/strong><\/h2>\r\n<p><img decoding=\"async\" class=\"aligncenter wp-image-77218 size-full\" src=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Investments-Meaning.png\" alt=\"Investments Meaning\" width=\"1785\" height=\"1477\" srcset=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Investments-Meaning.png 1785w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Investments-Meaning-300x248.png 300w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Investments-Meaning-1024x847.png 1024w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Investments-Meaning-768x635.png 768w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Investments-Meaning-1536x1271.png 1536w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Investments-Meaning-50x41.png 50w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Investments-Meaning-100x83.png 100w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Investments-Meaning-150x124.png 150w\" sizes=\"(max-width: 1785px) 100vw, 1785px\" \/><\/p>\r\n<p>Investment is simply putting money or resources today expecting to get returns in future. This is the postponement of current consumption in an effort to build up wealth or productive capacity. There are many ways to invest in India from gold, property, stock markets and government schemes.<\/p>\r\n<p><strong><b>\u00a0Investment in Financial Assets<\/b><\/strong><\/p>\r\n<p>Investment is the purchase of goods that are not consumed today but are used in the future to create wealth. In finance, an investment is an asset or item bought with the hope that it will produce income or appreciate in the future.\u00a0For instance:<\/p>\r\n<ul>\r\n<li>Investing in Infosys shares on the NSE is a financial investment for dividends and capital gains.<\/li>\r\n<li>Fixed deposits of State Bank of India offer\u00a0low-risk interest income.<\/li>\r\n<\/ul>\r\n<p><strong><b>Investment in Real Assets<\/b><\/strong><\/p>\r\n<p>Indians also put money into the real assets very heavily:<\/p>\r\n<ul>\r\n<li>Gold has been a traditional choice, but Gold ETFs are a modern alternative.<\/li>\r\n<li>Real estate in cities like Bengaluru or Pune is a long-term investment that can provide rental income and appreciation.<\/li>\r\n<\/ul>\r\n<p><strong><b>Balance of risk\/reward<\/b><\/strong><\/p>\r\n<p>All investments are somewhere on the risk-return spectrum.<\/p>\r\n<ul>\r\n<li>RBI bonds are low risk like other government securities.<\/li>\r\n<li>Equity investments in start-ups or IPOs like Zomato\u2019s IPO in 2021, come with higher risk but also potentially higher returns.<\/li>\r\n<\/ul>\r\n<p><strong><b>Economics of investment<\/b><\/strong><\/p>\r\n<p><strong>Real\u00a0Investment<\/strong><\/p>\r\n<p>Economists define investment as the purchase or development of real assets that will be used in future production. Examples in India include: Delhi-Mumbai Industrial Corridor (DMIC), metro rail projects, and solar parks in Rajasthan \u2014 large infrastructure projects contributing to productive capacity.<\/p>\r\n<p>Separately, economists also recognize human capital investment spending on education, training, and skills that raises future productivity, even though it isn&#8217;t physical capital. Example: the Skill India Mission, which invests in training and education rather than physical infrastructure.<\/p>\r\n<h4><strong>Gross Domestic Product and National Income<\/strong><\/h4>\r\n<p><strong><b>Investment is a big part of GDP:<\/b><\/strong><\/p>\r\n<p>GDP=C+I+G+NX<\/p>\r\n<p>Where I is investment. For example, India&#8217;s efforts to build renewable energy projects such as solar parks in Rajasthan are\u00a0real investment.<\/p>\r\n<ul>\r\n<li><strong>Gross Investment \u2013 total expenditure on new capital goods.<\/strong><\/li>\r\n<li><strong>Net Investment \u2013 gross investment less depreciation<\/strong><\/li>\r\n<\/ul>\r\n<p>If India constructs new metros worth \u20b950,000 crore but the existing infrastructure depreciates by \u20b910,000 crore, the net investment is \u20b940,000 crore.<\/p>\r\n<p><strong><b>Investment &amp; Business Management<\/b><\/strong><\/p>\r\n<p><strong><b>Capital investment decisions<\/b><\/strong><\/p>\r\n<p>In business management, investment decisions are known as Capital Budgeting. Managers assess if projects add value.<\/p>\r\n<p><strong><b>Example:<\/b><\/strong><\/p>\r\n<ul>\r\n<li>Tata Motors\u2019 decision to invest in EV plants in Pune is a capital budgeting decision based on the anticipated demand for electric vehicles.<\/li>\r\n<li>Infosys\u2019s investment in AI-enabled platforms is an intangible investment in technology.<\/li>\r\n<\/ul>\r\n<p><strong><b>Active vs. Passive Investing <\/b><\/strong><\/p>\r\n<ul>\r\n<li><strong><b>Passive Investments<\/b><\/strong>\u2013 buying and holding securities for long-term profit, with minimal ongoing management, e.g. index mutual funds or bonds.<\/li>\r\n<li><strong><b>Active Investments<\/b><\/strong>\u2013 frequently buying and selling securities to try to outperform the market, requiring hands-on research and decision-making, e.g. actively managed equity funds or individual stock-picking.<\/li>\r\n<\/ul>\r\n<p>For example, a fund manager running an actively managed equity fund \u00a0such as SBI Bluechip Fund or HDFC Flexi Cap Fund \u00a0frequently buys and sells stocks in an effort to outperform a benchmark index.<\/p>\r\n<h3 dir=\"ltr\">Stock vs. Flow\u00a0<\/h3>\r\n<p dir=\"ltr\">Imagine a bathtub filling with water.<\/p>\r\n<ul dir=\"ltr\">\r\n<li><strong>Flow<\/strong> = how much water pours in per minute (a rate, measured over time). This is Investment. Example: how much India spends building highways this year under Bharatmala.<\/li>\r\n<li><strong>Stock<\/strong> = how much water is sitting in the tub right now, at one moment. This is Capital. Example: the total number of highways, factories, and IT parks that already exist as of today.<\/li>\r\n<\/ul>\r\n<p dir=\"ltr\"><strong>Investment adds to Capital.<\/strong> Every year&#8217;s investment (flow) piles up over time to become the capital stock (a snapshot). Just like every minute of water flowing in adds to the total water level in the tub.<\/p>\r\n<h3 dir=\"ltr\">What decides how much a firm invests?<\/h3>\r\n<p dir=\"ltr\">Two things mainly:<\/p>\r\n<p dir=\"ltr\"><strong>a) Income (Y)<\/strong> \u2014 When people\/businesses earn more, they spend more \u2014 on homes, cars, appliances, machinery. More income \u2192 more investment. Simple as that.<\/p>\r\n<p dir=\"ltr\"><strong>b) Interest rate (r)<\/strong> \u2014 This is the &#8220;price&#8221; of using money. When interest rates go up, borrowing money becomes expensive, so people\/firms invest less. Example: when RBI hiked repo rates in 2023, home loans got costlier, so fewer people bought homes \u2192 residential investment fell.<\/p>\r\n<p dir=\"ltr\">So: Investment = a function of Income and Interest rate. Higher income \u2192 more investment. Higher interest rate \u2192 less investment.<\/p>\r\n<h3 dir=\"ltr\">The tricky part: Opportunity Cost of Capital<\/h3>\r\n<p dir=\"ltr\">Here&#8217;s the part that confuses people. What if a company doesn&#8217;t even borrow money \u2014 it just uses cash it already has? Does the interest rate still matter?<\/p>\r\n<p dir=\"ltr\"><strong>Yes \u2014 and here&#8217;s the simple way to see why.<\/strong><\/p>\r\n<p dir=\"ltr\">Imagine you have \u20b91 lakh in savings. You&#8217;re thinking of using it to buy a food cart to start a small business.<\/p>\r\n<p dir=\"ltr\"><strong>Now ask:<\/strong> what else could you do with that \u20b91 lakh?<\/p>\r\n<ul>\r\n<li dir=\"ltr\">You could just put it in a fixed deposit and earn, say, 7% interest \u2014 risk-free, no effort.<\/li>\r\n<li dir=\"ltr\">So if your food cart business is only going to earn you 5% profit a year, you&#8217;re actually losing out by starting the business \u2014 you would have been better off just keeping the money in the bank.<\/li>\r\n<\/ul>\r\n<p dir=\"ltr\">This is opportunity cost: even though you didn&#8217;t &#8220;pay&#8221; any interest to anyone, you still gave up the interest you could have earned. That giving-up is a real cost, even though no cash left your pocket for it.<\/p>\r\n<h4 dir=\"ltr\">Why this matters<\/h4>\r\n<p dir=\"ltr\">This is why interest rates affect investment decisions even for companies that are cash-rich and don&#8217;t need to borrow at all:<\/p>\r\n<ul dir=\"ltr\">\r\n<li>If interest rates are high, the &#8220;bar&#8221; your own money needs to clear before it&#8217;s worth investing goes up.<\/li>\r\n<li>If a project&#8217;s expected profit is lower than what you&#8217;d earn just parking the money safely, it&#8217;s not worth doing \u2014 even with your own funds.<\/li>\r\n<\/ul>\r\n<p><strong><b>Examples of Modern Investments in India<\/b><\/strong><\/p>\r\n<ul>\r\n<li><b><\/b><strong><b>Real investment in infrastructure:<\/b><\/strong>\u00a0Adani Group\u2019s investment in renewable energy projects.<\/li>\r\n<li><b><\/b><strong><b>Intangible investment in technology<\/b><\/strong>\u2013 Reliance Jio\u2019s investment in 5G network.<\/li>\r\n<li><b><\/b><strong><b>LIC IPO 2022<\/b><\/strong>\u2013 investment opportunity for retail investors.<\/li>\r\n<li><b><\/b><strong><b>Government Sovereign Gold Bonds (SGBs)<\/b><\/strong>&#8211; Financial instruments with interest and gold price appreciation.<\/li>\r\n<li><b><\/b><strong><b>Venture capital investments <\/b><\/strong>in high-risk, high-return startups such as Zepto (quick-commerce) and Sarvam AI (AI\/deeptech), which remain privately held and VC-backed as of 2025\u201326.<\/li>\r\n<\/ul><\/div>\n<div id='text_slider_slide03' class='sa_hover_container' data-hash='Types-of-Investment' style='padding:4.9% 5%; margin:0px 0%; background-color:rgb(255, 255, 255); min-height:400px; '><h2 style=\"text-align: left\"><strong>1.3 Types of Investment<\/strong><\/h2>\r\n<p><img decoding=\"async\" class=\"aligncenter wp-image-77219 size-full\" src=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Types-of-Investments.png\" alt=\"Types of Investments\" width=\"1999\" height=\"1786\" srcset=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Types-of-Investments.png 1999w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Types-of-Investments-300x268.png 300w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Types-of-Investments-1024x915.png 1024w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Types-of-Investments-768x686.png 768w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Types-of-Investments-1536x1372.png 1536w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Types-of-Investments-50x45.png 50w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Types-of-Investments-100x89.png 100w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Types-of-Investments-150x134.png 150w\" sizes=\"(max-width: 1999px) 100vw, 1999px\" \/><\/p>\r\n<p>Investment can be of various types .<\/p>\r\n<p>It can be financial investment in shares , bonds , etc . It can be physical investment in property or gold . Every type of investment has a degree of risk and a potential return. The investment landscape in India has rapidly evolved in recent years, introducing new instruments such as digital gold, sovereign bonds and startup equity to the traditional options.<\/p>\r\n<h3><strong><b>Financial<\/b><\/strong><strong><b>\u00a0<\/b><\/strong><strong><b>Investment<\/b><\/strong><\/h3>\r\n<p><strong><b>Shares and equities<\/b><\/strong><\/p>\r\n<ul>\r\n<li>One of the most usual forms of investing is to buy shares of companies quoted on stock exchanges.<\/li>\r\n<li>However, investors would buy shares of Infosys or HDFC Bank in NSE looking forward to dividends and capital appreciation.<\/li>\r\n<li>IPOs such as LIC in 2022 or Zomato in 2021 offered retail investors an opportunity to directly participate in equity markets.<\/li>\r\n<\/ul>\r\n<p><strong><b>Bonds and Debt Securities<\/b><\/strong><\/p>\r\n<ul>\r\n<li>Bonds are debt securities that pay interest at regular intervals.<\/li>\r\n<li>India Government Sovereign Gold Bonds (SGBs) track gold prices, and pay 2.5% interest annually too.<\/li>\r\n<li>Investors can earn a predictable return from corporate bonds issued by companies like NTPC or Reliance Industries.<\/li>\r\n<\/ul>\r\n<p><strong><b>Foreign Currency Bonds<\/b><\/strong><\/p>\r\n<p>Indian investors are shifting to foreign currency bonds for global market exposure.<\/p>\r\n<p style=\"text-align: left\"><strong><b>Example:\u00a0 <\/b><\/strong>Indian companies such as Reliance Industries and State Bank of India have issued USD-denominated bonds in international markets, and firms also raise funds via External Commercial Borrowings (ECBs) in foreign currency. Here, the Indian issuer bears the currency risk, since repayment is owed in a foreign currency while revenues are largely earned in rupees.\u00a0<\/p>\r\n<p><strong><b>Derivatives and Contingent Claims<\/b><\/strong><\/p>\r\n<ul>\r\n<li>Derivatives such as futures and options are based on underlying assets. But derivatives do not necessarily generate positive cash flows.<\/li>\r\n<li>Traders on the NSE derivatives segment buy Nifty futures or Bank Nifty options to speculate or hedge risk.<\/li>\r\n<li>Not traditional investments, but thoroughly studied because they are based on the prices of equities or commodities.<\/li>\r\n<\/ul>\r\n<h3><strong><b>Indirect Investments through Intermediaries<\/b><\/strong><\/h3>\r\n<p>A large number of Indians buy assets through intermediaries rather than directly.<\/p>\r\n<ul>\r\n<li><b><\/b><strong><b>Mutual Funds \u2013<\/b><\/strong>For example, SBI Bluechip Fund collects money from thousands of investors and invests in diversified equity portfolios.<\/li>\r\n<li><b><\/b><strong><b>Pension Funds \u2013 <\/b><\/strong>People can invest in National Pension System (NPS) for retirement and get tax benefits.<\/li>\r\n<li><b><\/b><strong><b>Insurance linked Investments \u2013 <\/b><\/strong>ULIPs (Unit Linked Insurance Plans) \u2013 These are a combination of insurance and equity\/debt investments.<\/li>\r\n<\/ul>\r\n<p>They act as middlemen, and offer professional management and diversification . This means less risk for individual investors .<\/p>\r\n<p><strong><b>Difference Between Saving and Investment<\/b><\/strong><\/p>\r\n<ul>\r\n<li><strong>Savings<\/strong> \u2013 Money put away in safe instruments e.g. bank deposits. The State Bank of India\u2019s fixed deposit of \u20b91 lakh earns guaranteed interest.<\/li>\r\n<li><strong>Investing<\/strong> \u2013 Putting money into assets such as shares or property, where the value can go up and down. Example: Capital risk but potential of bigger returns by buying shares in DLF real estate.<\/li>\r\n<\/ul>\r\n<p>Technically, deposits are savings, but banks often market deposit accounts as &#8216;investment accounts&#8217;. Investments are risky (you can lose your capital). Saving is not (the only risk is inflation, which devalues it).<\/p>\r\n<p><strong><b>Examples from Modern India<\/b><\/strong><\/p>\r\n<ul>\r\n<li><strong>Equity<\/strong> \u2013 Retail investors buy into Adani Enterprises after its push into renewable energy.<\/li>\r\n<li><strong>Debt<\/strong> \u2013 Invest in RBI Floating Rate Savings Bonds (2020) for regular income.<\/li>\r\n<li><strong>Mutual Funds \u2013<\/strong> SIPs (Systematic Investment Plans) in funds like HDFC Balanced Advantage Fund.<\/li>\r\n<li>Instead of buying physical gold, you can buy <strong>digital gold<\/strong> through Paytm or PhonePe.<\/li>\r\n<li><strong>Startups-<\/strong> Angel and early-stage investors invest in companies such as Skyroot Aerospace (space-tech) or Sarvam AI, looking for long-term capital gains if the company scales or eventually lists.<\/li>\r\n<\/ul>\r\n<p><strong><b>\u00a0<\/b><\/strong><\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p><\/div>\n<\/div>\n<\/div>\n<script type='text\/javascript'>\n\tjQuery(document).ready(function() {\n\t\tjQuery('#text_slider').owlCarousel({\n\t\t\titems : 1,\n\t\t\tsmartSpeed : 400,\n\t\t\tautoplay : false,\n\t\t\tautoplayHoverPause : false,\n\t\t\tsmartSpeed : 400,\n\t\t\tfluidSpeed : 400,\n\t\t\tautoplaySpeed : 400,\n\t\t\tnavSpeed : 400,\n\t\t\tdotsSpeed : 400,\n\t\t\tdotsEach : 1,\n\t\t\tloop : false,\n\t\t\tnav : true,\n\t\t\tnavText : ['Previous','Next'],\n\t\t\tdots : true,\n\t\t\tresponsiveRefreshRate : 200,\n\t\t\tslideBy : 1,\n\t\t\tmergeFit : true,\n\t\t\tautoHeight : true,\n\t\t\tmouseDrag : false,\n\t\t\ttouchDrag : true\n\t\t});\n\t\tjQuery('#text_slider').css('visibility', 'visible');\n\t\tvar owl_goto = jQuery('#text_slider');\n\t\tjQuery('.text_slider_goto1').click(function(event){\n\t\t\towl_goto.trigger('to.owl.carousel', 0);\n\t\t});\n\t\tjQuery('.text_slider_goto2').click(function(event){\n\t\t\towl_goto.trigger('to.owl.carousel', 1);\n\t\t});\n\t\tjQuery('.text_slider_goto3').click(function(event){\n\t\t\towl_goto.trigger('to.owl.carousel', 2);\n\t\t});\n\t\tvar resize_24470 = jQuery('.owl-carousel');\n\t\tresize_24470.on('initialized.owl.carousel', function(e) {\n\t\t\tif (typeof(Event) === 'function') {\n\t\t\t\twindow.dispatchEvent(new Event('resize'));\n\t\t\t} else {\n\t\t\t\tvar evt = window.document.createEvent('UIEvents');\n\t\t\t\tevt.initUIEvent('resize', true, false, window, 0);\n\t\t\t\twindow.dispatchEvent(evt);\n\t\t\t}\n\t\t});\n\t});\n<\/script>\n<\/p>                    <\/div>\n\t\t        \n                    <div id=\"slides-tab\" class=\"clearfix eael-tab-content-item \" data-title-link=\"slides-tab\">\n\t\t\t\t        <p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-11528 size-full\" src=\"http:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/coming-soon-person-g8026473a8_1920-removebg-preview.png\" alt=\"\" width=\"612\" height=\"408\" srcset=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/coming-soon-person-g8026473a8_1920-removebg-preview.png 612w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/coming-soon-person-g8026473a8_1920-removebg-preview-300x200.png 300w\" sizes=\"(max-width: 612px) 100vw, 612px\" \/><\/p>                    <\/div>\n\t\t        \n                    <div id=\"videos-tab\" class=\"clearfix eael-tab-content-item \" data-title-link=\"videos-tab\">\n\t\t\t\t        <p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-11528 size-full\" src=\"http:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/coming-soon-person-g8026473a8_1920-removebg-preview.png\" alt=\"\" width=\"612\" height=\"408\" srcset=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/coming-soon-person-g8026473a8_1920-removebg-preview.png 612w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/coming-soon-person-g8026473a8_1920-removebg-preview-300x200.png 300w\" sizes=\"(max-width: 612px) 100vw, 612px\" \/><\/p>                    <\/div>\n\t\t                    <\/div>\n        <\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"<p>Study Slides Videos 1.1 Introduction Like several other goods which require a market place for buyer and sellers to come together; shares too need a bazaar where they can be sold and bought. The bazaars where shares are sold are either primary market or secondary market. Primary market refers to the business done through Initial &#8230; <a title=\"Learn About Stock Market &#038; Investments\" class=\"read-more\" href=\"https:\/\/www.5paisa.com\/finschool\/course\/investment-analysis-course\/stock-market-investments\/\" aria-label=\"Read more about Learn About Stock Market &#038; Investments\">Read more<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"parent":16695,"menu_order":1,"comment_status":"closed","ping_status":"closed","template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[],"class_list":["post-24972","markets","type-markets","status-publish","format-standard","hentry"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.5paisa.com\/finschool\/wp-json\/wp\/v2\/markets\/24972","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.5paisa.com\/finschool\/wp-json\/wp\/v2\/markets"}],"about":[{"href":"https:\/\/www.5paisa.com\/finschool\/wp-json\/wp\/v2\/types\/markets"}],"author":[{"embeddable":true,"href":"https:\/\/www.5paisa.com\/finschool\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.5paisa.com\/finschool\/wp-json\/wp\/v2\/comments?post=24972"}],"version-history":[{"count":10,"href":"https:\/\/www.5paisa.com\/finschool\/wp-json\/wp\/v2\/markets\/24972\/revisions"}],"predecessor-version":[{"id":59603,"href":"https:\/\/www.5paisa.com\/finschool\/wp-json\/wp\/v2\/markets\/24972\/revisions\/59603"}],"up":[{"embeddable":true,"href":"https:\/\/www.5paisa.com\/finschool\/wp-json\/wp\/v2\/markets\/16695"}],"wp:attachment":[{"href":"https:\/\/www.5paisa.com\/finschool\/wp-json\/wp\/v2\/media?parent=24972"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.5paisa.com\/finschool\/wp-json\/wp\/v2\/categories?post=24972"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}