Inflation is something that eats away the value of money over time. And to protect the value of money, one must invest. Of course, investment is not just an ordinary day to day task, but one which requires the understanding of the factors and principals governing the type of investment.
30th October, 17, the Corporate Interface Team organized a session of Mutual Funds with Mr. Prateek Tiwari, Assistant Vice-President, Sales and Cluster Head, HDFC AMC as the guest speaker. With a profound experience of 20 years in corporate sector, Mr. Prateek Tiwari shared with the students the types of assets and wealth management concepts. Assets are of four types viz., Real Estate, Equity (& Commodity), Gold and Bonds. While real estate requires huge initial investments to begin with, they also have the disadvantage of least liquidity as compared to other assets. Gold in turn offers no utility to the average person and hence is a stagnant source of investment. Bonds are the safest means to invest money in return of a fixed rate of interest. However, Equity (& Commodity) market are one such means where the amount of returns depends on the underlying asset. Investment in shares, preference shares, convertible shares, commodities are the financial instruments of the Share Market.
What do Indian people do with their money? Well as per the figures of 2015-16, the following pie chart describes the average investment pattern of most Indian people.
Equity are safe to invest and generate money, of course, one must understand their behavior before taking the plunge.
To add context to the subject matter, Mr. Prateek Tiwari cited various examples for the financial world to give a better understanding to the students. Sir discussed about how the sub-prime crises took shape, and how the American Economy helped Warren Buffet become the world’s richest investor with the help of Equity market.
With the world moving towards fast paced growth and entrepreneurs coming up with market disruption ideas, Sir elaborated on how new theories of economics is shaping the world. Mental accounting and Nudge theory are the driving concepts of companies such as Visa and Master Card. Uber is based on Share Economy and WhatsApp earns profits on the need of people to share instantly. The world is witnessing the 4th Industrial Revolution of Internet of Things. The technology driving major companies to change the way they work and make money.
In such a fast paced world of rapidly changing forces driving the money, it is important to ensure that the common man is not left behind to protect himself against the fluctuating nature of money. While inflation eats away a value of money each year, there’s little a man can do to ensure financial stability. One such way of doing so is to invest in Equity and its derivatives (commodities, debentures, shares, etc..).
With Q&A session giving the students an opportunity to clear any doubts, the students felt contended and privileged by the presence of Mr. Prateek Tiwari. The knowledge shared by the speaker will surely help students gain a better understanding of the nature of Equity and its derivatives.