Globalization has made many challenges and it has become very complex to make or conserve money. Investment is the choice by the individual to risk his savings with the hope of gain. An asset is usually purchased, or equivalently a deposit is made in a bank or in securities, in hopes of getting a future return or interest from it. As an investor expecting decent returns, he has a number of investment opportunities open to him. The economical well-being of an investor depends on how wisely he invests.

In today’s scenario many options for investment are available for an individual but investor are not aware of these options. What are these options? What features these options have?
Even most investor has heard many type of investment opportunity. Knowing this they does not know the features of them and from there they can buy or how these option can be available for them.

If an investor has some options, the question arise how he can choose best option? Which option gives him better return? What steps an investor should take pre investment? What type of analysis an investor should do? What is the investment decision process?

What are the various options?

There are many options where an invester can put his money. These options have different features.

These are

Securities form : like :

Treasury bills (T-Bills),
Commercial paper (CP),
Negotiable certificate of deposits (NCD’s),
Central Government dated securities,
Semi government dated securities,
Corporate Debentures,
Bonds,
Preference Shares,
Equity Shares,

Non-Securities forms : like :

Bank fixed deposits,
National Savings Scheme (NSC),
Public Provident Fund Scheme (PPF),
Post Office Savings Deposits Scheme,
Deposits with Commercial/ Co-operative banks,
Corporate Fixed Deposits(CFD),
Units of UTI ,
Mutual Funds,
Growth Monthly Income Scheme,

Real Investment : like :

Land and House property,
Gold, Silver
Precious stones,
Art objects like Paintings, Antiques, Sculptures and Etchings,

Derivatives : like :
Futures,
Options,

What Observations / consideration/ analysis should do before investment?

In order that any investment program shall be reasonably certain of success, there are a number of features that must be evaluated and considered. It is only natural that we consider them carefully, because the program itself must be tailored to the needs of the individual. An investor can do fundamental and technical analysis.

The individual temperament of the investor is quite important. Some people worry about any risks, regardless of size; some worry about things that might happen and could cause disaster. Such persons should place their funds in investments that promise the highest degree of safety, such as good-quality bonds; they would never be happy otherwise. In the field of investment, as in all other cases where risks must be assumed, there is no place for the man who tortures himself when he takes them. Peace of mind is far more important.

What is the investment decision process?

Setting the goals and objectives, setting the Time Horizon-short term or long term, investing the Right amount, choosing the Right Firm, determining the appropriate risk level, forming the optimal portfolio are the some steps which should necessarily taken by an investor pre-investment.

Now there are a range of futures contracts available on different commodities for trading ranging from agricultural commodities to financial commodities. All these products are not suitable for all traders, especially beginners. Novice traders, especially those do not have no previous experience of trading any financial instruments should concentrate on only one or two commodities which most suit their style of trading and risk tolerance.

Any commodity future contract that a beginner trader trade must satisfy at least two requirements; first the market must be liquid with high trading volume and activity, second the market should be trendy so that the novice trader can practice his/her trading strategies effectively.

Traders willing to risk their money in futures market should thoroughly aware of the products that they are going to trade. They should also be sure about different fundamental and technical market analysis tools, and various risk minimizing tactics. They should have done demo (practice/paper) trading to get familiar with the market. If all these requirements are fulfilled you can select from the below list of commodities futures which are liquid and trendy.

1. Futures on Currencies: All currency futures on G7 currencies are liquid, but futures on currencies like Swiss Franc (CHF), Japanese Yen (JPY) and British Pound (GBP) are liquid and very trendy.

2. Futures on Energy Commodities: All three most popular energy futures, crude oil, natural gas and heating oil are good instruments for trading. But many of these futures are large sized ones and are not suitable for small-budget traders. International issues and economic changes are major profit deciding factor.

3. Futures on Food commodities: Coffee, Sugar and Orange are good for trading. But food commodities usually have less trading volume and liquidity compared to others.

4. Futures on Agricultural commodities: Cotton, Corn, Oats and Soybeans are good. Seasonal climate changes and local issues of production area are major profit deciding factors.

5. Futures on Metal commodities: There are a range of products available, of that gold, silver and copper are better suited for novice traders.

6. Futures on Financial instruments: T-bonds are suitable for short-term traders and Eurodollars are suitable for long-term traders.

Remember, the liquidity, trendiness and profitability of all trading instruments change with time. More over there are many other things to be considered before making any trading decision, which involve risk tolerance, attaining diversity, position sizing, short-term or long-term profit goals, trading software, fees involved, brokerage firm and the market you are trading.

Mini futures contracts are available on most (all) above instruments, which offer greater flexibility and lesser account requirements, and are thus most suitable for beginner traders.

Investment Clubs are growing in popularity and no wonder when they give private investors the opportunity to pool their resources, to create broader portfolios in order to manage risk, diversify and share skill sets.

If you are attracted to the idea of investing in the stock market but feel uneasy or intimidated about going it alone, then look at forming an Investment Club with other like-minded individuals from your family, friends, work collegues or social circle. You then have a body that can share the learning, decisions and risk. You might even discover that it can be fun.

Once you have your core membership, you now need to organise yourselves into a legal entity. This will protect you and all the members and ensure the club runs to an agreed set of rules based on a constitution.

You are, in effect, forming a partnership with the express aim of investing in a variety of stock market vehicles for the benefit of the club and its members. So, begin by arranging an ‘Inaugural Meeting’ at a date, time and venue available to all your potential members. At this meeting you should elect a Chairperson, Treasurer and Secretary as the officers of the club (rather like a CEO and board of directors). You will need to give yourselves enough time at this meeting to also put the following in place:

- Name your club… (you will open your bank and stockbroker accounts in this name).
- Formulate your clubs’ Constitution… (this is the clubs’ instrument of government, a charter by which the club will operate).
- Formulate the clubs rules which all members should sign… (these rules are based on the constitution but also include how money is paid in, how Units are distributed, how new members can join and members leave etc.).
- Agree on the initial and monthly subscriptions paid by the membership.
- Research and appoint the right Bank for you.
- Research and appoint the right Broker for you.
- Agree your investment strategy… (this will depend on how you view risk to reward).
- Decide the best method of research and education.
- Elect stock champions… (a ’stock champion’ is given the task to conduct detailed analysis of potential investments which they present to the members).
- You might want to form an Investment Committee… (to ensure your portfolio is geared to your investment aims).
- You will also need to prepare a document which will be used to inform your local Tax office that you exist.
- Decide the date, time and venue of your first ordinary monthly meeting.

And there you have it, your investment club is up and running and ready to take the financial world by storm. Regular meetings are held to assess an existing portfolio, plan future trades and bring new members into the fold. Your Treasurer will let you know just how much your investments are worth and issue more units for your monthly subscriptions. Any points arising can be discussed and voted on and, in between meetings, research and education can take place involving all the membership.