VK - Swot Analysis of Investment Options
VK - Swot Analysis of Investment Options
VK - Swot Analysis of Investment Options
-VIDYA KUMAR
Executive Summary – SWOT Analysis is a business tool that evaluates a subject on the basis of its
strengths, weaknesses, opportunities and threats. It helps to compare subjects and make prudent
decisions. We present the SWOT analysis for Equity, Mutual Funds and Real Estate here from a
retail investor's perspective.
SWOT Analysis is a business tool to evaluate anything from products, stocks, companies etc. It is a
tool to analyse 'Strengths', 'Weaknesses', 'Opportunities' and 'Threats' for comparing different
subjects. It gives a snapshot of the advantages and disadvantages of the subjects being compared.
Here we attempt to provide a SWOT Analysis of some of the investment options available to you as a
retail investor.
SWOT ANALYSIS OF EQUITY
Strength Opportunity
Weakness Threat
- High risk investment option - Initial capital may get wiped out
1
- Costs like brokerage, transaction related taxes - Volatility can impact returns
to be incurred - Many local and global factors affect share prices
- No security or guarantee of returns and if they are negative, there may be a big
impact.
Strength Opportunity
- MFs are governed by SEBI. So customer interests - Different types of funds for different types of
are taken care of. investors and their needs. For example, liquid
- Ranked MFs usually give stable returns funds allow you to withdraw money easily. There
- They are managed by professionals in the field. are Equity Linked Savings Schemes that offer tax
- Long Term Capital Gains and Dividends are tax- benefit.
free for the investor. - You can invest in the market with a small
- You can use Systematic Investment Planning (SIP) amount and match market performance
for small investments on a regular basis. You do - It is convenient and easy to invest in MFs.
not need a big amount to invest. You can take loan against MFs.
Weakness Threat
- Entry load, exit load expenses and management - Rate of return is not fixed
fees to be incurred by investor - MFs do not match the high returns of the stock
- Some types of funds are illiquid market and do not offer as much security as bonds
Strength Opportunity
- Risk of investment is lower as compared to - You will have a real asset in your hands once it is
equity built.
- Usually demand is always there and therefore - It can provide you income in the form of rent or
prices do not fall steeply increase in capital.
2
Weakness Threat
In the next article, we will have a SWOT Analysis of bonds, Gold and PPF