Investment and Portfolio Management Quiz

Study Notes

Investment Concepts

Investments are assets acquired to generate income or appreciation over time.
Appreciation is defined as an increase in the value of an asset.
The primary intent behind purchasing an investment is to build future wealth rather than immediate consumption.

Definition of Investment

Investment involves allocating money with the expectation of profit or an additional income source.
Investments create assets intended for financial growth, aiding in income shortages, retirement savings, loan repayments, or tuition fees.

Portfolio Management

Defined as the strategy of selecting an investment policy that balances risk and return effectively.
Involves managing various assets like bonds, shares, cash, and mutual funds for maximum profitability within a designated timeframe.
Can be conducted under the guidance of portfolio managers for effective money management.

Objectives of Investment

To Keep Money Safe:
- Capital preservation ensures hard-earned money retains its value over time.
- Safe investments include fixed deposits, government bonds, and savings accounts, often yielding lower returns.
To Help Money Grow:
- Long-term capital appreciation aims to build a substantial financial corpus.
- Higher-return investments entail real estate, mutual funds, commodities, and equities, albeit with higher risk.
To Earn a Steady Stream of Income:
- Investments can provide consistent secondary or primary income, like fixed deposits with regular interest payments or dividend-paying stocks.
- These sources aid in meeting daily expenses during retirement or supplementing income during the working years.
To Minimize the Burden of Tax:
- Tax benefits from certain investments can reduce taxable income, contributing to lower tax liabilities.
- Qualifying options include Unit Linked Insurance Plans (ULIPs), Public Provident Fund (PPF), and Equity Linked Savings Schemes (ELSS).
To Save up for Retirement:
- Establishing a retirement fund is crucial for financial security in later years when employment may not be sustainable.
- Investing wisely during working years helps ensure adequate funds are available post-retirement.
To Meet Financial Goals:
- Investments can ease the pursuit of both short-term and long-term financial objectives without excessive stress.
- Certain financial instruments offer short lock-in periods and high liquidity, making them suitable for short-term savings.

Description

Test your knowledge on Investment and Portfolio Management within the context of the Philippines. This quiz covers key concepts such as investment instruments, local financial markets, and the regulatory environment that influences investment decisions. Prepare to enhance your understanding of how economic factors affect investment practices.