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102.'' It is not easy for an investor to invest in any investment as there are many investment constraints.'' Explain .
The Mutual Fund Industry in India has now reached the crossroads and is facing fierce competition from other investment avenues available to the investors . On many investments, there is a sovereign guarantee with assured returns , besides tax benefits for some of the instruments . However, SEBI regulation do not permit Mutual Funds ot guarantee any type of assured returns to their investors under any category of schemes . This disparity puts Mutual Funds at a disadvantegeous position . Incidentally , returns on the small savings instruments is low and just sufficient to cover inflation. In other words, on low risk instruments , the real rate of returns is almost nil or at time even negative , whereas in Mutual Funds, if the risk is moderate , returns are much better . In the last couple of years , the market is getting more matured and regulated . It is not easy for an investor to invest in any investment as there are many investment constraints . As such a lot of research is required by an investment management in choosing the appropriate investments and designing a unit that will meet the investment objectives of the investor subject to his constraints.
Ans: An investors operates under certain constraints that are mentioned below:
- Liquidity
- Age
- Need for Regular Income
- Time Horizon
- Risk Tolerance
- Tax Liability
The challenge in investment management, therefore, lies in choosing the appropriate investment and designing a unit that will meet the investment objectives of the investor subject to his constraints . To take on this challenge , the first step will be to get acquainted with the different types of investment that are available in our financial market.