Socially Responsible Investment (SRI)

Socially responsible investment (SRI) can be defined broadly as an investment process that considers the social and environmental consequences of investments, both positive and negative, within the context of rigorous financial analysis. SRI funds aim to integrate personal, social and environmental concerns with financial considerations, their objective is to increase investors’ wealth while ensuring that the selected companies have a positive impact on people and the Planet. Often called ethical investments or sustainable investments, this type of investment has become increasingly popular in recent years.

The early stages of the SRI movement can be traced back to the nineteenth century, especially amongst religious movements such as the Quakers and Methodists.… Read the rest

Think Beyond Traditional Plans to Maximize on Your Goals: Here’s How

Long gone are the days when you invested Rs. 1 lakh a year for 20 years to receive Rs. 20 lakhs. While our grandparents and parents were dependent on this benefit for their future retirement, the truth is that the present generation will not. The essential question here is, “What can the present generation do to secure their future?” and “Are there any chances of ever getting one that can match up to these plans?”.

The answer is Yes. Today,there are far more ways to potentially grow your money. There is another world of investment options beyond these traditional plans that can provide opportunities for maximizing your returns and saving for retirement.… Read the rest

Learn about Securities Investments – Buying and Selling


Deciding on the proper time to purchase a security that you would like to add to your holdings can be a daunting task. If the price drops immediately after you buy, it may seem as if you missed out on a better buying opportunity. If the price jumps right before you make your move, you may feel as if you paid too much. As it turns out, you should not let these small fluctuations influence your decision too much. As long as the fundamentals that led you to decide on the purchase have not changed, a few points in either direction should not have a large impact on the long-term value of your investment.… Read the rest

Difference Between Defined Benefit and Defined Contribution Pension Schemes

Pension is a fund that is built during the working life of the employee and then used to secure the income after retirement. These funds can be operated by employer (occupational pension) who invests over time or alternatively employee can invest in a fund of their choice (private pension scheme). Both of these schemes generate income after retirement.

Pension schemes are of two major types:

  1. Defined Benefit Scheme
  2. Defined Contribution Scheme
1. Defined Benefit Scheme

Defined benefit scheme is a type of pension scheme which ensures a particular level of income/benefit after retirement. Most of the cost of the benefit and risk of the investment is borne by the employer however in the contributory define benefit scheme employees also make compulsory contributions.… Read the rest

Risks Associated with Derivatives

Although derivatives are legitimate and valuable tools for hedging risks, like all financial instruments they create risks that must be managed. Warren Buffett, one of the world’s most wise investors, states that “derivatives are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal.”

On one hand derivatives neutralize risks while on the other hand they create risks. In fact there are certain risks inherent in derivatives. Derivatives can be dangerous if not managed properly. Numerous financial disasters such as Enron can be related to the mismanagement of derivatives. In the 1990s, Procter & Gamble lost $157 million in a currency speculation involving dollars and German Marks, Gibson Greetings lost $20 million and Long-Term Capital Management, a hedge fund, lost $4 billion with currency and interest-rate derivatives.… Read the rest

Catastrophe Bonds or CAT Bonds

Catastrophe Bonds (or CAT Bonds) are high-yield, risk-linked securities used to transfer explicitly to the capital markets major catastrophe exposures such as low  probability disastrous losses due to hurricanes and earthquakes.  It has a special condition that states that if the issuer (Insurance or Reinsurance Company) suffers a particular predefined catastrophe loss, then payment of interest and/or repayment of principal is either deferred or completely waived.  These bonds were first introduced as a solution to problems resulting from traditional  insurance market capacity constraints, excessive insurance premia, and insolvency risk  due to catastrophic losses.

Catastrophe Bonds or CAT Bonds are complex financial tools which transfer peril specific risks  to the capital markets instead of an insurance company.

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