Investment Options Evaluation
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Questions and Answers

What is the trade-off between when considering a product with a lock-in period?

  • Tax deduction and returns
  • Liquidity and tax deduction (correct)
  • Returns and convenience
  • Liquidity and convenience
  • Why is real estate considered a popular asset class?

  • Because it is a common expense for individuals (correct)
  • Because it is a convenient investment
  • Because it provides high returns
  • Because it is a liquid asset
  • What is a key aspect to consider when evaluating the liquidity of an investment?

  • The minimum investment required
  • The potential for capital appreciation
  • The ease of liquidating part of the investment (correct)
  • The overall safety of the investment
  • What is an important consideration when evaluating an investment product?

    <p>Both the investor's situation and the product's features</p> Signup and view all the answers

    What is the primary purpose of investing, according to the definition of investments?

    <p>To get some returns from investment</p> Signup and view all the answers

    What can affect the liquidity of an investment?

    <p>The lock-in period of the investment</p> Signup and view all the answers

    What is a characteristic of real estate investments?

    <p>They are often purchased for self-occupation</p> Signup and view all the answers

    What is a trade-off to consider when investing?

    <p>Liquidity vs. returns</p> Signup and view all the answers

    What is a benefit of considering multiple factors when evaluating an investment product?

    <p>It leads to a more informed decision</p> Signup and view all the answers

    Why might an investment have a lock-in period?

    <p>To encourage long-term investing</p> Signup and view all the answers

    What are the four broad asset categories or asset classes?

    <p>Real estate, Commodities, Equity and Fixed income</p> Signup and view all the answers

    What is a consideration when evaluating the convenience of an investment?

    <p>The ticket size of the investment</p> Signup and view all the answers

    What can reduce the returns on an investment?

    <p>A penalty for early withdrawal</p> Signup and view all the answers

    What should be considered when evaluating the tax implications of an investment?

    <p>The taxability of earnings</p> Signup and view all the answers

    What is an important factor to consider while evaluating an investment option?

    <p>All of the above</p> Signup and view all the answers

    Why is it necessary to consider taxability of income while investing?

    <p>Because it affects the net returns on investment</p> Signup and view all the answers

    What is the significance of minimum investment amount in investment decisions?

    <p>It is a key factor in investment selection</p> Signup and view all the answers

    Why is it important to consider tax deductions while investing?

    <p>Because it increases the return on investment</p> Signup and view all the answers

    What happens if an investor sells an investment before the maturity period?

    <p>The investment returns become taxable</p> Signup and view all the answers

    What is the significance of convenience in investment options?

    <p>It makes investing and tracking easier</p> Signup and view all the answers

    Why is it important to consider multiple factors while evaluating an investment option?

    <p>Because each factor has a unique impact on the investment</p> Signup and view all the answers

    What should an investor avoid while selecting an investment option?

    <p>Considering only the minimum investment amount</p> Signup and view all the answers

    Study Notes

    Investment Evaluation Factors

    • Convenience: ability to invest, withdraw, and monitor investment value
    • Ticket size: minimum investment amount required, varying from ₹50 to ₹1 crore or more
    • Taxability of income: considering taxation of earnings and its impact on returns
    • Tax deduction: availability of deductions on investments, effectively increasing returns

    Safety and Liquidity

    • Safety: ensuring capital investment and income security
    • Risks involved in understanding investment safety
    • Liquidity: ease of converting investments to cash, varying across categories and products
    • Divisibility: possibility of partial liquidation or need for full sale
    • Operational features: lock-in periods, penalties, and exit charges affecting liquidity

    Returns and Asset Classes

    • Returns: current income (periodic) and capital appreciation (capital gains)
    • Asset classes: categorizing investments based on similar characteristics
    • Four broad categories: Real Estate, Commodities, Equity, and Fixed Income
    • Real Estate: most popular asset class, often considered an expense rather than an investment

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    Description

    Evaluating investment opportunities based on convenience, ticket size, and other factors. Learn about the key considerations for investing in different avenues.

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