Here is your free sample essay on Investment

Part of income that is invested monthly or yearly in some well managed plans to gener­ate some additional income is called invest­ment. Money can be invested in number of ways. For proper investment of money one should have detailed knowledge of the schemes.

Following are the main means of investment:

Bank

Bank is an organised institution which deals with money matters. A person can de­posit his savings in the bank and can with-draw when he requires it. Bank pays inter at a fixed rate on the deposits. There are two main functions of a bank:

(i) Deposits the money of people (ii) Gives back the demanded money cheque, draft, etc.

Advantages of bank account

Following are the advantages of a bank account:

1. There is no possibility of theft of t money kept in a bank.

2. Bank pays interest on deposits where the money kept at home fetches no in­terest.

3. A person spends economically in ord to deposit maximum amount in the bar

4. One can avail the facility of bank lock by having a bank account. Valuables jewellery, share certificates, other important documents, etc. can be kept safe in the locker.

5. Transaction of money from different places is possible through bank.

6. Small amount deposited at regular in­tervals becomes a considerable amount after sometime. This money can be invested in business, etc.

Depositing money in a bank

There are three main types of bank]’ accounts for depositing money:

1. Fixed Deposit Account

2. Savings Account

3. Current Account

1. Fixed Deposit Account

It is also known as ‘Term Account’. Here the money is deposited for a fixed period of time. This pe­riod is normally varies from 15 days to 5 years. The longer the term of deposit, the higher is j the rate of interest. If a depositor wants to withdraw money before the expiry of the fixed period, he will not get the full amount of inter-1 est. Depositor, if desires, may avail a loan upto 75-90% of the deposited amount.

2. Savings Account

This account is meant for those who deposit small amounts occasionally. In most of the banks, this ac­count can be opened with an initial deposit of? 500/-. There has to be a minimum balance of? 500/- in the savings account otherwise a deduction of? 50/- per annum is made as operational charges.

This account can be opened by any person in his name or in joint names of two or more persons or by the guardian in the name of a minor. This ac­count fetches an interest of 3.5% per annum. In this type of account, the depositor can deposit an amount any number of times but cannot withdraw it for more than 100 times in a year.

3. Current Account

This type of account is more useful for businessman. Here the money can be deposited or withdrawn daily. The money can be withdrawn only by cheque. Here the minimum balance should be? 5000/- Money in this account fetches no interest.