Interest rates & its effects on Investments
The document discusses regular investment habits and patterns when interest rates increase or decrease. It notes that decreasing interest rates attract loan takers and promote the economy, while increasing rates attract depositors and help control inflation. Major investments discussed include bank term deposits, debt funds, and gold ETFs. Factors that attract investors to banks include reputation, interest rates on deposits, and cross-selling. Bond prices and interest rates are inversely related, so investors buy bonds when rates fall and sell when they rise. The document also examines investors' preferences based on investment tenure and provides percentages of investments in different asset classes from 2011-2013. Smart investors are advised to follow daily news updates on interest rate changes.
Interest rates & its effects on Investments
- 1. ET FinPro Module - 2 What are the Regular Investment Habits , and Investing Patterns when there is Increase in Interest Rates & Decrease in Interest Rates ? Batch Code: HYD01AA0213 Faculty : 30th October 2013 Vishwanathan Ramakrishnan Presenter’s Name Presenter’s ID Gyaneshwary E1300310000151 Sumanth E1300310000107 Farha E1300310000133 Silambarasan Elango E1300310000132
- 2. Agenda S.No Description 1 Introduction 2 Decrease in Interest Rate 3 Increase in Interest Rate 4 Major Investments 5 Factors attracting Investors towards Bank 6 Factors attracting Investors towards Debt market 7 Preferred Investments 8 Base Rate Behavior 2010 - 2013 9 Correlation between Interest Rates and Bonds 10 Investments Patterns in Past 11 Investors Options in Recent times 12 Role of Media 13 Summary 14 References
- 4. Need For Investment Consider me :- INTEREST RATE
- 5. When Decrease in the Interest Rate Increase in the Interest Rate Attract Loan Takers Attract Depositors Promote Economy Control Inflation Govt. Debts
- 7. Factors attracting Investors Towards Bank Products Reputation of Bank Low Loan Interest Rate Trustable -Track Record High Interest Rate - TD Cross Selling
- 8. Interest Rate Base Rate Behavior 2010 - 2013 Year and Month source : www.rbi.org.in
- 9. Factors attracting Investors Towards Debt Market
- 10. Preferred Investment based on Tenure
- 11. Correlation between Interest Rate and Bond Prices Interest rates and Bond prices share an Inverse relationship RBI Increase in Rate Bond Prices Fall Invest in FD RBI Decrease in Rate Attracts FD Sell Bond Fall in FD Interest Rate Demand for Bond Increases Buy Bonds Withdraw Deposits source : businesstoday.intoday.in
- 12. Example XYZ Corporation issues- Bond ,face value of Rs 100 ,Coupon Rate 6%. Increase in Interest Rate : Secondary market Face Value Rs 99. Yield will be (Rs 6/Rs 99)X100 =6.06 %. Decrease in Interest Rate : Secondary market Face Value Rs 101. Yield will be (Rs 6/Rs 101)X100 =5.94 %.
- 13. Interest Rate Sep 25th, 2013 Year and Month
- 14. Interest Rate Year and Month Based on interest rates: Investments in 2011 2013 2012 source Percentage of Investment http://www.p businessstandard.com hdcci.in/ Investments in
- 15. Percentage of Investment Investments in 2011 Investments in Percentage of Investment Investments in 2012 Percentage of Investment Investments in 2013 Investments in Investments in
- 17. Smart Investors always keeps an eye on Daily News Update Oct 21, 2013 Banks cut rates on consumer loans to get funds from government Oct 22, 2013 Banks should show real yield on fixed deposits
- 19. Summary 6W & 1H Why we need to Invest ? Which was the most Preferred Investment Tenure ? What were the Regular Investment Patterns? Where did they Invest when there is Increase in Interest Rate ? When did they Invest in Bonds ? How changes in interest rate impacts Bond Prices ? Who are the better Investor?
- 21. Answered Queries
- 22. Thanks a lot !!