BEGLA- 135- UNIT- 7 ( Money Matters ) English in Daily Life

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.

READ MORE- BEGLA- 135- UNIT- 6 ( Describing Daily Events )