World Markets can be defined as markets of the world encompassing all the markets of Asia, Europe, Americas, Australia and Africa. It can be stated that world markets have become more integrated as a result of globalization. The world market is common point where all the markets of the world converge. Hence emerges the concept of world supply or world demand or global supply and demand. World supply and demand are heavily influenced by the export and import of the developed vis-à-vis the developing countries. World markets play a key role in the development prospects of many countries of the world as the fluctuations originated there translates into supply and demand conditions in the home country. This can have adverse effects on home producers and consumers of various goods and services. An example would be the world prices of crude oil which wreaked havoc in many developing countries. World markets can also imply the world stock markets such as those present in the countries of the world as also internationally acclaimed stock exchanges such as the NASDAQ.
America Market
America Market is one among the free market system in the world. Find detailed on America Market along with market indicators.
European Market
European Market has become more integrated with the inception of the European Union (EU) in 1992. EU Single Market truly indicates the free movement of people, goods, services and capital across the member countries.
Germany Market
Germany Market is a highly developed market in the world. The market in Germany is generally based upon the doctrine of Social market Economy. Find more on Germany Market.
Japanese Market
In Japanese Market, the best performers are banking, insurance, real estate, retailing, automobiles and telecommunications sector.
Singapore Market
Spain Market
UK Market
Mexican Market
Netherlands Market
Asian Market
Australia Market
Belgium Market
Boston Market
Brazil Market
China Market
Eastern Market
France Market
Global Market
Hong Kong Market
Indian Market
Italian Market
Korean Market
Wednesday, January 5, 2011
Unit trust
Unit trust is a special kind of pooled investment, which is formed under a trust deed. Unit trust helps to bring together individuals with same investment objectives in the similar platform of financial transaction.
A unit trust is formed when investors invest their savings to form the trust and it gets dissolved when investors withdraw money from it. By participating in a unit trust, investors accrue greater benefits from their investments than what they would have earned from direct investment in company shares. Investment in unit trust comes with higher financial security and greater economies of scale. Investment schemes like unit trusts encourage investors to participate in equity, derivatives, debt, and money markets. Be it a regular income growth or capital growth, unit trust takes care of all types of investment objectives. Unit trusts are preferred due to their easy affordability, and excellent liquidity.
Features of unit trusts
Unit trusts are characterized by following features:
1. These are open-ended schemes of investment
2. Each unit trust scheme comes with distinct set of investment objective
3. These trusts are designed as per the financial limitations of investors
4. Investors investing in unit trusts have ownership in the trust assets
5. Unit trust is managed by a fund manager, who maintains the trust and tries to improve profit level
Unit trusts can be categorized into two different units as follows:
1. Accumulation units are those that accumulate interest and dividend within the trust and add value to the trusts fund.
2. Distribution or income units on the other hand, distribute dividend or interest among the unit holders on a previously fixed date.
3. Creation and cancellation prices of a unit trust do not match with the offer price and bid price at all times. Profit that is earned from the difference between creation and cancellation prices of unite trusts is termed
A unit trust is formed when investors invest their savings to form the trust and it gets dissolved when investors withdraw money from it. By participating in a unit trust, investors accrue greater benefits from their investments than what they would have earned from direct investment in company shares. Investment in unit trust comes with higher financial security and greater economies of scale. Investment schemes like unit trusts encourage investors to participate in equity, derivatives, debt, and money markets. Be it a regular income growth or capital growth, unit trust takes care of all types of investment objectives. Unit trusts are preferred due to their easy affordability, and excellent liquidity.
Features of unit trusts
Unit trusts are characterized by following features:
1. These are open-ended schemes of investment
2. Each unit trust scheme comes with distinct set of investment objective
3. These trusts are designed as per the financial limitations of investors
4. Investors investing in unit trusts have ownership in the trust assets
5. Unit trust is managed by a fund manager, who maintains the trust and tries to improve profit level
Unit trusts can be categorized into two different units as follows:
1. Accumulation units are those that accumulate interest and dividend within the trust and add value to the trusts fund.
2. Distribution or income units on the other hand, distribute dividend or interest among the unit holders on a previously fixed date.
3. Creation and cancellation prices of a unit trust do not match with the offer price and bid price at all times. Profit that is earned from the difference between creation and cancellation prices of unite trusts is termed
Real Estate Investment, Real Estate Investing
Real estate investment involves the commitment of funds to property with an aim to generate income through rental or lease and to achieve capital appreciation. Real estate refers to immovable property, such as land, and everything else that is permanently attached to it, such as buildings. When a person acquires real estate, s/he also acquires a set of rights, including possession, control and transfer rights.
Understanding real estate investment is crucial because it usually involves a substantial investment and a long-term one. Moreover , the real estate market can be unpredictable. This is particularly important when one goes beyond buying a home to actually 'investing' in real estate. There are a number of ways in which an investor can participate in the real estate market.
Real Estate Investment: Rental
One can opt for real estate investment with an aim to rent the property out to a tenant. The owner (landlord) earns a continuous stream of rent from the tenant, but is responsible for paying the mortgage, taxes and any costs associated with maintaining the property. The owner also benefits from capital appreciation (a rise in the value of the property over time). The landlord runs the risk of not finding a tenant and could suffer negative monthly cash flows, with mortgage payments and maintenance expenses still to be borne. As compared to owning stocks and bonds, rental real estate requires a significant amount time and effort to be devoted by the landlord.
Real Estate Investment Groups
Real estate investment groups are similar to small mutual funds. They are set up for rental properties. While an investor may own one or more units, a professionally managed company acquires, builds, maintains and lets out all the units on the properties in exchange for a percentage of the monthly rent.
Real Estate Trading
Real estate traders hold properties for only a short span of time (less than four months), aiming to sell them at a profit. This process is called flipping properties. Investors aim at purchasing significantly undervalued or very hot properties. Such owners may or may not invest money into improving the property before putting it back on sale. A bear market could result in substantial losses for a real estate trader, since the investment is large.
Resources
Listings of available REO properties are a great starting point to exploring available real estate investment opportunities.
Real Estate Investment Trusts (REITs)
A real estate investment trust (REIT) is a corporation that invests in real estate. REITs trade on major exchanges. A REIT uses investors' money to acquire and operate properties.
The benefits of REITs are:
* REITs provide fairly regular income.
* Investors gain exposure to non-residential investments (like malls and office buildings).
* REITs are highly liquid.
* REITs are required by law to distribute 90% of their taxable income in the form of dividends to shareholders.
Before making a choice regarding the kind of real estate participation, an investor must evaluate his/her investment capacity and risk appetite.
Understanding real estate investment is crucial because it usually involves a substantial investment and a long-term one. Moreover , the real estate market can be unpredictable. This is particularly important when one goes beyond buying a home to actually 'investing' in real estate. There are a number of ways in which an investor can participate in the real estate market.
Real Estate Investment: Rental
One can opt for real estate investment with an aim to rent the property out to a tenant. The owner (landlord) earns a continuous stream of rent from the tenant, but is responsible for paying the mortgage, taxes and any costs associated with maintaining the property. The owner also benefits from capital appreciation (a rise in the value of the property over time). The landlord runs the risk of not finding a tenant and could suffer negative monthly cash flows, with mortgage payments and maintenance expenses still to be borne. As compared to owning stocks and bonds, rental real estate requires a significant amount time and effort to be devoted by the landlord.
Real Estate Investment Groups
Real estate investment groups are similar to small mutual funds. They are set up for rental properties. While an investor may own one or more units, a professionally managed company acquires, builds, maintains and lets out all the units on the properties in exchange for a percentage of the monthly rent.
Real Estate Trading
Real estate traders hold properties for only a short span of time (less than four months), aiming to sell them at a profit. This process is called flipping properties. Investors aim at purchasing significantly undervalued or very hot properties. Such owners may or may not invest money into improving the property before putting it back on sale. A bear market could result in substantial losses for a real estate trader, since the investment is large.
Resources
Listings of available REO properties are a great starting point to exploring available real estate investment opportunities.
Real Estate Investment Trusts (REITs)
A real estate investment trust (REIT) is a corporation that invests in real estate. REITs trade on major exchanges. A REIT uses investors' money to acquire and operate properties.
The benefits of REITs are:
* REITs provide fairly regular income.
* Investors gain exposure to non-residential investments (like malls and office buildings).
* REITs are highly liquid.
* REITs are required by law to distribute 90% of their taxable income in the form of dividends to shareholders.
Before making a choice regarding the kind of real estate participation, an investor must evaluate his/her investment capacity and risk appetite.
Pension, Pensions
A pension is defined as a private or government fund, from which benefits or allowances are paid to a person upon his or her retirement from service or when s/he is unemployed due to disability.
In various public or private employment-based pension plans, the employer regularly contributes a percentage of the employee’s earnings to an individual plan account made in the employee’s name. Employee contributions, if required, are also credited to the pension plan account.
Often, pensions are paid if and only if the employee attains a certain age or if s/he completes a certain length of service.
Pension: Types of pension plans
Pension plans became popular in the US after WW II, when the freeze on wages prohibited an increase in workers’ compensation. Pension plans can be divided into two categories:
· Defined benefit plans: This type of pension plan defines the benefit for an employee upon his or her retirement. The benefits are calculated by taking into account the employee’s pay, years of service, age of retirement, and other factors. In the United States, the average salary over the last five years determines the pension amount. In the UK, pension benefits are indexed for inflation. Pensions can also contain social security contribution, as determined by government regulations.
Defined contribution plans: A defined contribution plan is generally defined as a plan for providing an individual account for each employee, and benefits for which s/he contributes to the account. The contribution may be invested in the stock market, the returns of which are given to the employee upon retirement. Typical examples of such pension plans are the 401K and Individual Retirement Accounts (IRA).
There is also a hybrid plan, which combines the features of both pension plans. This plan is usually used as a pension benefit plan for tax, accounting and regulatory purposes. Hybrid plans are more flexible and portable than traditional pension plans, where the employee’s balance grows by a defined rate of interest and employer contribution.
Pensions are wonderful methods to lead a comfortable and secure life after work. Regular income is guaranteed with benefits, ensuring that you do not need to rely on anyone else for your everyday needs. To achieve maximum returns on a pension account, it is always advisable to seek the expert, unbiased opinion of a registered financial advisor.
In various public or private employment-based pension plans, the employer regularly contributes a percentage of the employee’s earnings to an individual plan account made in the employee’s name. Employee contributions, if required, are also credited to the pension plan account.
Often, pensions are paid if and only if the employee attains a certain age or if s/he completes a certain length of service.
Pension: Types of pension plans
Pension plans became popular in the US after WW II, when the freeze on wages prohibited an increase in workers’ compensation. Pension plans can be divided into two categories:
· Defined benefit plans: This type of pension plan defines the benefit for an employee upon his or her retirement. The benefits are calculated by taking into account the employee’s pay, years of service, age of retirement, and other factors. In the United States, the average salary over the last five years determines the pension amount. In the UK, pension benefits are indexed for inflation. Pensions can also contain social security contribution, as determined by government regulations.
Defined contribution plans: A defined contribution plan is generally defined as a plan for providing an individual account for each employee, and benefits for which s/he contributes to the account. The contribution may be invested in the stock market, the returns of which are given to the employee upon retirement. Typical examples of such pension plans are the 401K and Individual Retirement Accounts (IRA).
There is also a hybrid plan, which combines the features of both pension plans. This plan is usually used as a pension benefit plan for tax, accounting and regulatory purposes. Hybrid plans are more flexible and portable than traditional pension plans, where the employee’s balance grows by a defined rate of interest and employer contribution.
Pensions are wonderful methods to lead a comfortable and secure life after work. Regular income is guaranteed with benefits, ensuring that you do not need to rely on anyone else for your everyday needs. To achieve maximum returns on a pension account, it is always advisable to seek the expert, unbiased opinion of a registered financial advisor.
Options and Futures
Options and futures are the two most common forms of derivatives that are traded at organized exchanges. Derivatives are financial instruments that derive their value from the underlying asset.
Options: Options are those financial instruments that provide its holders the right to trade the underlying asset at a predetermined price. A ‘call’ option gives a trader the right to buy the underlying asset at a given price. A ‘put’ option gives a trader the right to sell the underlying asset at a given price. This given price is known as the ‘strike price.’ The owner of an option has the right, but not the obligation, to buy or sell an asset.
Futures: These refer to contracts to buy or sell an asset on or prior to a specified date in the future at a predeterminedprice. Buying a futures contract would mean that you have agreed to pay a predetermined price for the underlying asset at a futuredate. Similarly, selling a futures contract would mean that you have agreed to transfer the underlying asset to the buyer at a specified price at a future date. Currency, indices and commodities are some popular underlying assets on which the futures contracts are available. The difference between the price of the underlying asset in the spot market (market for immediatedelivery) and the futures market is called 'basis.' The price of the asset in the futures market is typically higher than the spot price on account of factors such as interest cost, insurance and inflation. Hence, the ‘basis’ is usually negative.
How are Options and Futures Traded?
Since options and futures are forms of derivatives, their values change according to changes in the value of the underlying asset. Options and futures are the most common type of exchange traded derivatives. These are traded on organized exchanges and can be bought or sold the way stocks are traded on a stock exchange. In contrast, over the counter (OTC) derivatives, such asforwards and swaps, are not bought or sold through exchanges.
Benefits of Options and Futures
The benefits of options and futures are:
* Hedging: Options and futures are hedging tools, used especially in a bearish market.
* Low transaction costs: They give investors the same exposure with lower transaction cost than other debt instruments.
* Standardized contract: Options and futures are exchange traded. Hence, their pricing and volume transacted are transparent.
* High liquidity: Buyers and sellers of options and futures can be found easily.
Risks of Options and Futures
The risks associated with options and futures are:
* Counterparty risk: This refers to the owner of the contract refusing to buy or sell the asset as agreed.
* Market risk: This refers to the risk of adverse price movements resulting in losses.
Options: Options are those financial instruments that provide its holders the right to trade the underlying asset at a predetermined price. A ‘call’ option gives a trader the right to buy the underlying asset at a given price. A ‘put’ option gives a trader the right to sell the underlying asset at a given price. This given price is known as the ‘strike price.’ The owner of an option has the right, but not the obligation, to buy or sell an asset.
Futures: These refer to contracts to buy or sell an asset on or prior to a specified date in the future at a predeterminedprice. Buying a futures contract would mean that you have agreed to pay a predetermined price for the underlying asset at a futuredate. Similarly, selling a futures contract would mean that you have agreed to transfer the underlying asset to the buyer at a specified price at a future date. Currency, indices and commodities are some popular underlying assets on which the futures contracts are available. The difference between the price of the underlying asset in the spot market (market for immediatedelivery) and the futures market is called 'basis.' The price of the asset in the futures market is typically higher than the spot price on account of factors such as interest cost, insurance and inflation. Hence, the ‘basis’ is usually negative.
How are Options and Futures Traded?
Since options and futures are forms of derivatives, their values change according to changes in the value of the underlying asset. Options and futures are the most common type of exchange traded derivatives. These are traded on organized exchanges and can be bought or sold the way stocks are traded on a stock exchange. In contrast, over the counter (OTC) derivatives, such asforwards and swaps, are not bought or sold through exchanges.
Benefits of Options and Futures
The benefits of options and futures are:
* Hedging: Options and futures are hedging tools, used especially in a bearish market.
* Low transaction costs: They give investors the same exposure with lower transaction cost than other debt instruments.
* Standardized contract: Options and futures are exchange traded. Hence, their pricing and volume transacted are transparent.
* High liquidity: Buyers and sellers of options and futures can be found easily.
Risks of Options and Futures
The risks associated with options and futures are:
* Counterparty risk: This refers to the owner of the contract refusing to buy or sell the asset as agreed.
* Market risk: This refers to the risk of adverse price movements resulting in losses.
Mutual Fund, Mutual Funds
A mutual fund is an investment vehicle that comprises a pool of funds collected from a large number of investors who invest in securities such as stocks, bonds, and short term money market instruments. The portfolio of a mutual fund is structured and maintained by fund managers.
Features of a Mutual Fund
Trading in mutual funds is carried out under strict government regulations. In accordance with the Securities Act of 1933 and the Securities Exchange Act of 1934, all mutual funds must be registered with the US Securities and Exchange Commission (SEC). Disclosure of information about relevant details and the acquired securities are also legally essential.
Specific features of mutual funds include liquidity, transfer of money, purchase of units and high competition. Investment in mutual funds is highly liquid as funds are required to redeem shares daily. It permits transfer of money from one type of fund to another, but the exchange takes place within the same fund family. Units of mutual funds can either be purchased directly or through an investment professional, such as a broker or a financial planner.
Types of Mutual Funds
Mutual funds are classified on the basis of maturity period or investment objective. On the basis of maturity period, mutual funds include open ended funds and close ended funds.
Mutual funds based on investment objectives include growth/equity-oriented funds, income/debt-oriented funds, balanced funds, gilt funds and index funds.
Benefits of a Mutual Fund
* Facilitates easy access of professionally-managed portfolios to small investors. Allows investors to instantly diversify into several sectors and reduce the risk profile of their portfolio.
* The cost of transaction in a mutual fund is divided among all the shareholders, which facilitates cost-effective diversification.
* Enables investors to benefit from professional services like that of a fund manager.
Risks of a Mutual Fund
* Separately managed accounts may perform better than mutual funds.
* High risk and unpredictability of returns.
* Some mutual funds over-diversify or invest within a specific sector or region. This eliminates the benefits of diversification.
Despite these risks, investors are keen to diversify their portfolios and utilize the benefits of mutual funds to earn high returns.
Features of a Mutual Fund
Trading in mutual funds is carried out under strict government regulations. In accordance with the Securities Act of 1933 and the Securities Exchange Act of 1934, all mutual funds must be registered with the US Securities and Exchange Commission (SEC). Disclosure of information about relevant details and the acquired securities are also legally essential.
Specific features of mutual funds include liquidity, transfer of money, purchase of units and high competition. Investment in mutual funds is highly liquid as funds are required to redeem shares daily. It permits transfer of money from one type of fund to another, but the exchange takes place within the same fund family. Units of mutual funds can either be purchased directly or through an investment professional, such as a broker or a financial planner.
Types of Mutual Funds
Mutual funds are classified on the basis of maturity period or investment objective. On the basis of maturity period, mutual funds include open ended funds and close ended funds.
Mutual funds based on investment objectives include growth/equity-oriented funds, income/debt-oriented funds, balanced funds, gilt funds and index funds.
Benefits of a Mutual Fund
* Facilitates easy access of professionally-managed portfolios to small investors. Allows investors to instantly diversify into several sectors and reduce the risk profile of their portfolio.
* The cost of transaction in a mutual fund is divided among all the shareholders, which facilitates cost-effective diversification.
* Enables investors to benefit from professional services like that of a fund manager.
Risks of a Mutual Fund
* Separately managed accounts may perform better than mutual funds.
* High risk and unpredictability of returns.
* Some mutual funds over-diversify or invest within a specific sector or region. This eliminates the benefits of diversification.
Despite these risks, investors are keen to diversify their portfolios and utilize the benefits of mutual funds to earn high returns.
Money
Any generally accepted medium to make a payment for goods and services or paying back debts is called money. Money is the most liquid asset. In the modern world, every country’s currency is the most common form of money in that region.Physical money usually consists of two types, notes or paper money and .
History of Money
The barter system (trade between two individuals each of whom possesses something needed by the other) was in use before money was invented as a medium of exchange more than 100,000 years ago. The various objects used for trade were as diverse as barley, silver, bronze and whale teeth. While the word ‘money’ has its origins in an ancient Roman temple (Juno Moneta) where the Roman mint was located, coins were first used in ancient Greece, China and India in 400 BC. China was the first country to use paper notes as a means of trade in the seventh century, making them the most customer-friendly mode of exchange.
Money: Characteristics
Money has the following characteristics:
# Medium of exchange: facilitating the transferability factor of trade.
# Unit of account: simplifying the divisibility of an exchange.
# Store of value: people can save it and retrieve the value it holds when needed.
Types of Money
Money can be divided into the following categories:
# Commodity money: Any commodity that is used as money itself and exchanged for its worth. For example gold, silver, rice and shells.
# Representative money: Token coins, certificates or digital transactions that can be dependably exchanged for a fixed amount of various commodities.
# Credit money: Any claim against anybody that can be utilized for purchasing commodities in the future. Examples include savings bonds and treasury bonds.
# Fiat money: Money issued legally by the government as a currency in the form of notes and coins.
The central bank of a country has the power to manipulate the supply of money in the national economy. To increase the money supply, the central bank can simply print it or can purchase government fixed-income securities from the market, putting money into public hands. On the other hand, central banks sell government securities to reduce the money supply. The payment made by the buyers of these securities forms the money taken out of supply.
History of Money
The barter system (trade between two individuals each of whom possesses something needed by the other) was in use before money was invented as a medium of exchange more than 100,000 years ago. The various objects used for trade were as diverse as barley, silver, bronze and whale teeth. While the word ‘money’ has its origins in an ancient Roman temple (Juno Moneta) where the Roman mint was located, coins were first used in ancient Greece, China and India in 400 BC. China was the first country to use paper notes as a means of trade in the seventh century, making them the most customer-friendly mode of exchange.
Money: Characteristics
Money has the following characteristics:
# Medium of exchange: facilitating the transferability factor of trade.
# Unit of account: simplifying the divisibility of an exchange.
# Store of value: people can save it and retrieve the value it holds when needed.
Types of Money
Money can be divided into the following categories:
# Commodity money: Any commodity that is used as money itself and exchanged for its worth. For example gold, silver, rice and shells.
# Representative money: Token coins, certificates or digital transactions that can be dependably exchanged for a fixed amount of various commodities.
# Credit money: Any claim against anybody that can be utilized for purchasing commodities in the future. Examples include savings bonds and treasury bonds.
# Fiat money: Money issued legally by the government as a currency in the form of notes and coins.
The central bank of a country has the power to manipulate the supply of money in the national economy. To increase the money supply, the central bank can simply print it or can purchase government fixed-income securities from the market, putting money into public hands. On the other hand, central banks sell government securities to reduce the money supply. The payment made by the buyers of these securities forms the money taken out of supply.
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