Investment is the process of investing money in any banking sector with expectation of getting some profit. In other words we can say that investing service helps to purchase goods in terms of asset or value for future use.
Investment banking is one of the multiplex financial institution, which raise capital and give financial services to the business institutions. It is a private bank in particular. These banks include insurance companies, stock brokerage, co-operative credit companies, chit funds and other cooperated banks. Investment banking provides-
- Ownership trading where the investors have the right to choose the type of investment
- The combination of two existing companies into a new one.
- Advisors to meet the needs of the investors by assisting them regarding Investment banking services.
The strong link-up between security issuers and investors will help to propaganda the new firm. Investment banking deals with the buying and selling of goods or values. There are different ways of investing pattern in financial services.
- Investing in stock in which the purchase and sale of shares is carried out. Shareholders become the part of the company who gets the right on company's asset at the time of liquidation, but can’t owe the assets and they also receive the dividend when declared.
- Investing in Bond which is a loan made by an investor in a company for exchange of interest where it will be returned to the company after receiving the principal amount at the time of maturity. Bonds can be of two kinds. Government aided corporate bonds which is low-risk and junk bonds which may be risky.
- Investing in mutual fund is the safest way of investment. Mutual fund advisors will provide investment banking services. Mutual fund are maintained on daily basis as per the changes in market rate. In case of managed mutual fund, manager himself claim the shares and bonds to be dealt so that it helps in the reduction in the net investment return to the mutual fund shareholders.
Investment is advantageous in way of safety, income and growth. We cannot expect safety of investment to the fullest from all banking sectors. Some investment like saving account are safe and low-risk but provides less income and others like bond funds which are not safe but can generate more income. Banks provide money market account which is safe and provides more income compared to saving account. Now-d-days investors opt for investing for short term to get higher income and aim for growing their income or capital in case of business. Decision making regarding investment is not easy for the investors. In business investment the investors are classified based on their requirement.
- Income investors, who are looking for safe and low- risk investment by which they can get regular payments.
- Growth investors will prefer to invest in companies where the growth rate is high and more importance will be given for the increase in assets value.
- Aggressive investors who have an urge for more amount may go for investing for the high rate of interest and able to tolerate the high risk.
- Capital appreciation investors are also called as long term investors as they give more importance for the increase in value of assets than the growth.