Ø
Life insurance
o Many
life insurance products apart from an insurance cover have a savings
o Component,
o Ex:
participating endowment,
o Participating
whole life, where investment risk is borne by insurance company on behalf of the policyholders and
the returns earned are shared with the
policyholders in the form of bonuses.
Ø
Bank deposit
o
Bank deposits are products where an individual
has to invest a lump sum amount for a fixed tenure at a fixed rate of interest
decided at the time of making the deposit.
o
There are three types of bank deposits-
§
traditional deposits
§
Cumulative de posits
§
Recurring deposits;
Ø
Mutual fund
o Mutual
funds provide risk diversification
o Managed
by asset management companies (AMCs),
o Brings
people with a common objective together. Money collected from these people is
o Invested
on their behalf and the returns are shared back amongst them.
o Provides
regular income & capital appreciation.
o The buying and selling of shares is done through
brokerage houses on the two stock exchanges in India-
§
Bombay stock exchange (BSE) and the
§
National
stock exchange (NSE).
o
Equity shares provide three types of income to
the investor dividend income.
o
Bonus share& capital appreciation.
o
An investor can also incur a capital loss on
equity investments.
o
Investors can incur capital loses in equity, if
shares are bought at a higher price and
sold at a lower price due to poor financial performance of the company.
