CHAPTER 7 : INVESTMENT PLANNING (Types of Investments ( Investment in…
CHAPTER 7 : INVESTMENT PLANNING
means the commitment of current resources/money with the expectation of receiving a larger amount of resources in the future.
Investment in Savings Account
Joint Savings Account
Savings account for associations, societies and clubs
Individual Savings Account
The depositor can earn interests or can participate in profit sharing with the bank.
- It is encouraged to have two savings accounts: one to meet daily expenses while another is for wealth accumulation. Investment in savings account is necessary for better retirement.
- A savings account can be use to meet the unexpected use of cash, to buy short term assets, or to go for vacation.
Types of Investments
Investment in shares
Investment in bonds
Investment in fixed deposits account or time deposits.
Investment in real properties
Investment in savings account
Investment in unit trust
Investment in Fixed Deposit or Time Deposits
this investment has better returns than a savings account. The fixed period can be 1,2,3.........or 60 months. The interest is fixed at the time the deposit is taken. The interest rate for more than 12 months can be negotiated between customer and the bank.
Can be opened by :-
Individuals aged 18 years and above & including non-residents of Msia (external acc)
Associations and clubs.
Investment in Shares
Common stock is the type of stock that is sold to the public. A company that needs long-term financing can issue common stock to get the fund. The common stockholders are also known as the owners of the company. Entitle the owner certain voting privilleges and sharing the profits.
Two types of account
Central Depository System (CDS)
is an electronic acc maintained by the Malaysian Central Depository (MCD). The CDS acc will record whatever stocks you have bought and when you sell the stocks will be debited from your CDS account.
, A CDS account alone will not allow you to buy and sell stocks. You will need to open trading acc with any of registered stockbrokers with the Bursa Malaysia.
Types of Common Shares
are shares issued by companies that concentrate on research and development or are issued by a company that has posted superior earnings growth. The stock is expected to provide above average price appreciation. The characteristics are these companies either do not pay dividends or pay very small dividends. Rather than paying dividends , growth comp retains and reinvest the earnings in the comp. The share price is more volatile compared to blue chips. Issued by small and medium-sized comp that are traded otc than on stock exchange.
are shares that have high dividend yields. These issues have a long and sustained record of regularly paying higher-than-average dividends. It is ideal for those who seek a relatively safe and high level of current income from their investment capital.
Blue Chip Shares
are share issued by leaders in a particular industry and frequently set the standards by which other firms are measured or share that have exhibited a record of solid performance over time. Large or well established firms issue blue chip stocks. The shares are stable in price and have increasing earnings from year to year, pay dividends consistently and have a high market capitalization.