Page 103 - DMGT515_PERSONAL_FINANCIAL_PLANNING

Personal Financial Planning

Notes instruments such as shares, debentures and other securities. The income earned through
these investments and the capital appreciation realised are shared by its unit holders in
proportion to the number of units owned by them. Thus, a mutual fund is the most
suitable investment for the common man as it offers an opportunity to invest in a
diversified, professionally managed basket of securities at a relatively low cost.
Mutual funds have proved to be an attractive investment for many investors, the world
over, since they provide them a mixture of liquidity, return and safety in accordance with
their performance. Further, the investor obtains these benefits without having to directly
a diversified portfolio, which is handled by specialists. The interests of various investors
are generally protected through mutual funds. As individual investors, they may not hold
much clout in companies whose shares they hold, but by being part of institutional investors
like mutual funds, their bargaining power is enhanced.

5.7 Keyword

Mutual Funds: A mutual fund is a trust that pools the savings of a number of investors who
share a common financial goal.

5.8 Review Questions

1. Describe various types of investment vehicles in India.
2. Explain the significance of investment vehicles in personal financial planning.

3. What are the various types of small savings scheme operating in India?
4. Explain the various types of fixed income instruments operating in Indian financial market.
5. Discuss the concept of mutual funds.
6. Which investment vehicles will you perceive consider for your retirement? Explain using
reasons.
7. Explain the use/purpose of following:
a. PPF
b. NSC

c. Kisan Vikas Patra
d. Post Office monthly savings scheme

Answers: Self Assessment

1. True 2. False
3. False 4. True

5. False 6. mutual fund
7. diversified, professionally managed 8. Load Fund
9. Asset Management Companies (AMCs) 10. Fixed-income

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