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The size, skills and success enable us to offer first class, personal services in financial planning, wealth creation and wealth preservation strategies, while at the same time assuring that are a progressive use in long way to go.Suppose a man borrows money to invest. He will have to pay interest on the loan. But he expects profit from this investment. He must compare the rate of interest he has to pay to the rate of profit that he expects to obtain. Obviously, the rate of return or profit must at least be equal to the rate of interest; otherwise no investment will be made. So long as the expected rate of profit exceeds the rate of interest, investments will continue to be made. The yield expected from a new unit of capital is called the marginal efficiency of capital. This marginal efficiency of capital must never fall below the current rate of interest, if investment is to be worthwhile.
The rate of interest does not quickly change. Hence, the inducement to invest, by and large, depends on the marginal efficiency of capital. If the business expectations are good or if the marginal efficiency of capital is high, more investments will be made in spite of high rates of interest. On the contrary, a depression, or bleak prospects of profits, will discourage investment, even if the prevailing rate of interest is low. Thus, fluctuations in investment are mainly due to the fluctuations in the marginal efficiency of capital. There are some other factors that affect investment. For instance, if a firm has excess capacity and can easily handle increased future demand, it will not go in for further investment to increase its capital equipment.
Risk : Most people would like to get the best out of an investment. With every kind of investment there is some risk involved and knowing a few risks would help you manage the risks better.1. Inflation risk is your deposit keeping up with inflation. You may invest in a savings account, or certificate of deposit or bonds. When there is inflation in the economy your deposit is worth less than what you imagined it would be.
2. Principal risk is a loss in the initial amount you invested. For example you buy stocks worth Rs5000 and the stock value has fallen and you find no other option but to sell rather than lose further.
3. Interest Rate risk is the fluctuation of the price of stocks or bonds due to a fluctuation in the rates of interest.
4. Market risk is the factors outside the control of companies like changes in the economy, government policy or market trade.
5. Credit risk is when you invest in bonds and the company is unable to make interest. They return your entire principal. Then your investment has not yielded returns.
Duration Duration is as important a factor as risk in evaluating your investment. Duration is the time within which investors can get back their investments. Duration and risk determine the investment returns. Duration can be short term or long term and fixed or managed (by investor). Liquidity Any asset that you own, be it property, stock, bonds etc. can be converted into cash. Money in the form of cash is the most liquid asset. In case you cannot convert your bond to cash within the term then your asset is illiquid.
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3 Asset Management Financial services offer asset management for individuals who cannot or prefer not to manage their own assets in the form of cash, property, bonds, and stocks. Fortunately, financial services are able to handle asset management competently.
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