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Investment Planning & Management

Chapter I

Financial Planning

1.1

Need for Financial or Investment Planning

1.2

What is Investment Planning or Financial Planning

1.3

Objectives of Financial Planning

1.4

Six Steps of Investment Planning

1.5

The Benefits of Financial Planning

1.6

Steps in the Planning Process

1.7

The Financial Planning Process

1.7.1	Analyse and Evaluate Data
1.7.2	Implement the Plan

1.8

Common Mistakes in Planning

Summing Up

Self-assessment

Chapter II

Financial Needs and Need Analysis
2.1	Financial Needs and Need Analysis
2.2	Childhood Stage
2.3	Young Unmarried Stage
2.4	Young Married Stage
2.5	Young Married with Children
2.6	Married with Older Children
2.7	Pre-retirement Phase
2.8	Retirement Phase
2.9	Savings and Investment
	Summing Up
	Self-assessment

Chapter III

Personal Financial Activities and Steps
3.1	Prelude to Financial Planning - The First Step
3.2	The Second Step of Financial Planning
3.3	Setting Financial Goals
3.4	The Third Step in Personal Financial Planning
	Summing Up
	Self-assessment

Chapter IV

Networth and Cash Flow
4.1	What is Networth
4.2	Networth Calculations - A Case Study
4.3	Cash Flow
4.4	Cash Flow Calculations
	Summing Up
	Self-assessment

Chapter V

The Investment Decision Framework

5.1

Investment Attributes

5.2

Rate of Return

5.3

Risk

5.3.1

Risk Appetite

5.4

Marketability

5.5

Tax Shelter

5.6

Convenience

5.7

Investment Products

5.8

Investment Opportunities

5.8.1	Equity Shares or Stocks
5.8.2	Fixed Income Securities
5.8.3	Deposits in Banks/Companies
5.8.4	Tax Sheltered Saving Schemes
5.8.5	Mutual Funds
5.8.6	Real Assets

Summing Up

Self-assessment

Chapter VI

Financial Planning Strategies

6.1

The Concept of Compounding

6.2

Starting Early

6.3

Realistic Expectations

6.4

The Asset Allocation

6.5

The Portfolio

6.5.1	An Aggressive Portfolio
6.5.2	A Conservative Portfolio
6.5.3	Need for an Investment Portfolio
6.5.4	Asset Mix
6.5.5	Selection of Securities

Summing Up

Self-assessment

Chapter VII

The Mathematics of Investment
7.1	Returns
7.2	Holding Period Return (HRR)
7.3	Time Value of Money
7.4	Compounding
7.5	Annuity
	Summing Up
	Self-assessment

Chapter VIII

Risk

8.1

Protection against Risk

8.2

Sources of Investment Risk

8.2.1	Business Risk
8.2.2	Inflation Risk
8.2.3	Interest Rate Risk
8.2.4	Market Risk
8.2.5	Financial Risk
8.2.6	Liquidity Risk
8.2.7	Maturity Risk
8.2.8	Call Risk

8.3

Systematic and Unsystematic Risk

Summing Up

Self-assessment

Chapter IX

The Investment Decision Framework

9.1

Fundamental Approach

9.2

Psychological Approach

9.3

Factors to be avoided in Investment Planning

9.3.1	Casual Approach
9.3.2	Expecting Unrealistic Returns
9.3.3	Cursory Decision Making

9.4

Consider the Time Value of Money

Summing Up

Self-assessment

Chapter X

The Financial Markets

10.1

Types of Financial Markets

10.2

Functions of the Financial System

10.2	Storing Purchasing Power
10.2	Credit Function
10.2	Liquidity Function
10.2	Risk Function
10.2	Policy Function

10.3

Money Market and Capital Market

10.3	Money Market
10.3	Capital Market

10.4

Primary and Secondary Market

10.5

Products Available in the Secondary Market

10.6

Money Market

10.7

Features of Money Market

10.8

Objectives of Money Market

10.9

Call Money Market

10.10

Commercial Bills Market or Discount Market

10.11

Treasury Bill Market

10.11.1

Mechanics of Treasury Bills

10.12

Commercial Paper

Summing Up

Self-assessment

Chapter XI

Equity Markets

11.1

Stock Exchange

11.2

Electronic Trading

11.3

The Trading System

11.3.1	Broker
11.3.2	Contract Note
11.3.3	Settlement Cycle
11.3.4	Rolling Settlement

11.4

What an Investor Should Know

11.4.1	Book Closure and Record Date
11.4.2	Bonus Shares
11.4.3	Share Split
11.4.4	Buy Back
11.4.5	Market Index

11.5

IPOs

11.6

Book Building

11.6.1

The Process of Book Building

Summing Up

Self-assessment

Chapter XII

Bonds Debentures –Fixed Income Securities

12.1

Par Value/Coupon/Maturity Period

12.2

Types of Bonds

12.3

Principles of Interest Rates

12.4

Yield

12.4	Yield to Maturity (YTM)

12.5

Bond Valuation

12.5	Bond Value With Semi Annual Interest

12.6

Bond Price Theorems

12.7

Approximate YTM of a Bond

12.8

Valuation of Equity Shares

12.8.1	Dividend Discount Model
12.8.2	Discounted Earnings Model

Summing Up

Self-assessment

Chapter XIII

Regulation of Financial Markets

13.1

SEBI

13.2

SEBI Objectives

13.3

SEBI Functions

13.3	Regulatory Functions
13.3	Development Functions

Summing Up

Self-assessment

Chapter XIV

Financial Statement Analysis

14.1

Types of Ratios

14.2

Liquidity Ratios

14.2.1	Current Ratio
14.2.2	Quick Ratio

14.3

Leverage Ratios

14.3.1	Debt Equity Ratio
14.3.2	Debt Asset Ratio

14.4

Interest Coverage Ratio

14.5

Turnover Ratios

14.5.1	Inventory Turnover Ratio
14.5.2	Receivables Turnover Ratio
14.5.3	Fixed Assets Turnover Ratio

14.6

Profitability Ratios

14.6.1	Gross Profit Ratio
14.6.2	Net Profit Ratio
14.6.3	Return on Investment
14.6.4	Return on Equity

14.7

Valuation Ratios

14.7.1	Price Earning Ratio
14.7.2	Yield

14.8

Problems of Financial Statement Analysis

14.9

Balance Sheet of ABC CORPORATION as on March 31, 1999

14.10

Income Statement For The Year Ending March 31, 1999 of ABC Corp.

14.11

Computation of Ratios of ABC Corp.

Summing Up

Self-assessment

Chapter XV

Mutual Funds

15.1

Mutual Fund

15.2

Advantages of Mutual Fund

15.2.1	Diversification
15.2.2	Professional Management
15.2.3	Liquidity
15.2.4	Tax Advantage
15.2.5	Assured Allotments
15.2.6	Regulations

15.3

Structure of Mutual Fund

15.4

Net Asset Value

15.5

Different Types of Mutual Fund Schemes

15.5.1	Open-ended Fund/ Scheme
15.5.2	Close-ended Fund/ Scheme
15.5.3	Schemes according to Investment Objectives

15.6

The Investment Procedure

15.7

An Offer Document

15.8

Performance of Mutual Funds

Summing Up

Self-assessment

Chapter XVI

Retirement Planning
16.1	The Case
16.2	The Plan
	Summing Up
	Self-assessment

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