Today topic- BEGLA- 135- UNIT- 7- Money Matters- English in Daily Life- IGNOU Subject
INTRODUCTION
- We all need to do some investments and savings for our future.
- We need to pay some taxes to the government.
- Financial matters are very important for us.
- We will learn, understand and discuss issues relating to finance.
- Will practice comprehension of share bulletins, brochures on bonds/equities/insurance schemes.
READING COMPREHENSION- MANAGING MONEY
- People who put aside a little cash regularly, to tide themselves through tough times, especially in old age, are considered to be wise and farsighted.
- Now-a-days, the idea of 'saving' has changed vastly; it is no longer a simple matter of stashing away gold or buying a piece of land.
- There are professional 'fund managers'-experts with a specialized knowledge of investment options and financial markets-who offer their services and invest your money in keeping with your needs and risk-taking ability.
- Let us read the following passage to get an idea about mutual funds.
Mutual Funds - The Power Of Money
- The Power of Money A mutual fund is a corpus or collection of funds, received from various investors, with the objective of investing in a certain category of financial institutions.
- The returns are paid to the investors in the same ratio as their original investment.
For example, you are a group of five friends who have saved rupees one thousand each. - fund manager who invests this corpus in a 'low-risk' scheme with a 10% return, which then gives you a total of Rs. 5,500.
- This is shared equally among your group, so each gets Rs. 1,100.
- The advantage of this is that you can invest even small amounts, and share in the performance of various
- companies, since the mutual fund will have many investors and can buy more shares with its large corpus of money.
(a) Equity Funds
In this mutual fund, the investor's money is put into the equity market (also called the share market).
The fund manager, uses the corpus to buy up shares from the stock exchange.
If the share prices go up, you make a profit; if not, you suffer a loss.
The Net Asset Value (NAV) of the fund thus fluctuates with market price movements.
Two common types of Equity funds are diversified equity fund, and sectoral equity fund.
Diversified Equity Fund
This is a fund in which the fund manager invests in shares of companies spread over different sectors of the industry, for example, pharmaceuticals, chemicals, information technology, the finance sector, etc.
The 'diversity' of industries gives this fund its name.
The risk is also spread over a large area.
For example, if there is a growth in the iron and steel sector, but a slump in the technology sector, the loss in one will be balanced by the gain in the other.
Sectoral Equity Fund
Here, the fund manager invests in only one sector of the economy.
For example, an FMCG fund is one which invests only in companies from the 'Fast Moving Consumer Goods' sector-like Hindustan unilever, Colgate, Nestle, etc.-but will not invest in companies such as Infosys or Wipro, which are part of the technology sector.
(b) Debt Funds:
These invest primarily in the debt' market.
The mutual fund becomes a 'lender' and earns interest on the corpus of money that it 'lends' to the 'borrowers'.
The interest earned is then distributed the investors of this fund.
The risk in bond funds among is comparatively lower than in equities.
READING COMPREHENSION-II: INSURE AND BE SECURE
- Life insurance is an essential part of financial planning.
- The reason most people buy life insurance is to replace income that would be lost with the death of an income earner in the family.
- The premature death of the income earner could result in a drastic reduction in the family's life-style.
- An added benefit is that life insurance proceeds are tax-free.
the person receiving the benefits of the policy. - This could be a blood relative-father, mother, sister, brother, child or your spouse.
- You have to pay a fixed amount, called premium, at regular, fixed intervals.
