|
|
Mutually exclusive investment decisions |
|
|
|
 Home Site Map Add Term Search About Us Contributors |
Mutually exclusive investment decisionsInvestment decisions in which the acceptance of a project precludes the acceptance of one or more alternative projects.Mutually exclusive investment decisions Similar MatchesProtected investment productsProtected investment productsProtected Investment Products, or 'PIPs' are designed to give you a guaranteed return on your investment but at the same time to give you the opportunity to benefit from rises in the stock market. The 'protected' return might, for instance, be 4.5% per year fixed for 5 years. Even if the product's underlying index performs badly, you will receive that return. If the index performs better than the minimum return, you get a bonus payment at the end of the period. The PIPs offered by financial institutions vary according to the level of protected return, the underlying index, the terms of the bonus, and the duration of the investment. Some aim for 'safety first'; others are geared towards greater upside. In general, though, they will appeal to medium term investor who want to avoid being completely exposed to the gyrations of the stock market. Investment incomeInvestment incomeIncome, paid from an investment, such as dividends and interest. Return on investment (ROI)Return on investment (ROI)Generally, book income as a proportion of net book value. Investment trustInvestment trustA company quoted on the London Stock Exchange which invests its shareholders' funds in the shares of other companies.Points to note about investment trusts are:They enable private investors with limited funds to get diversified share ownership and without incurring heavy dealing costs.They enable investors to get exposure to markets that they may not be able to reach themselves (e.g. to emerging countries). Different trusts also have differing objectives (e.g. growth or income).They enable investors who don't have the skill or inclination to invest directly in companies to get the advantage of professional fund management (although see point below 6)It is easy for investors to drip-feed money into investment trusts over time by using a monthly savings plans.Unlike unit trusts, investment trusts are closed end funds. That is, there is a fixed number of shares in circulation, and the price of those shares is determined like other quoted shares - by supply and demand. This means that IT shares often trade at a discount to their Net Asset value (i.e. the value of their underlying investments) and it also makes IT shares more volatile than unit trust prices.ITs are actively managed funds which try to produce total returns better than the market average. However once management charges are taken into account, they often fail to meet this target. Hence the move by many investors to passive funds - trackers and index funds - which have lower charges. Temporary investmentTemporary investmentA short-term investment, such as a money market fund, Treasury bills, or short-term CD, which is usually held a year or less. Further SuggestionsReal Estate Investment Trust (REIT)Direct Foreign Investment ethical investment Capital investment Overinvestment Future investment opportunities Statutory investment Investment history investment club Target investment mix Investment letter Investment agreement Alternative Investment Market Value Line investment survey Investment company Automatic reinvestment Investment manager Reinvestment risk Unit investment trust Investment Valuation Model (IVM) investment bond Association of Private Client Investment Managers and Stockbrokers Investment climate Systematic investment plan Association of Investment Trust Companies |
|
|
|