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Don't put all your eggs in one basket" is an oft-quoted proverb. Probably, much before Mark Mobius, Peter Lynch and other financial gurus had made their debut on this earth, the wise old men of yore had thought, and thought hard to put together the said proverb.
Thus, the returns from fixed income securities remain unchanged over the period for which they are invested in. Beyond the period or before the period of investment, the rates would be prone to vary.
Changes in the reserve ratio (CRR) stipulated by the Reserve/Federal Bank lead to changes in the rate of interest/ returns for the investor. A shift in the global economy and change in the CRR of the banks in the country which has a dominant role in the global economy can influence the interest rates in other countries too.
An investor has a choice of investing in various assets over time. He can invest in movable assets like securities, stocks, fixed deposits and immovable assets like land, buildings etc. Each class of investment has its own risks and returns. The returns from each asset would also vary from time to time, depending on various socio-political, economic and geographical factors.
The capital markets offer a wide range of investment options like shares, stocks, debentures, fixed income securities etc. While shares and stocks are high risk-high return instruments, bonds and fixed income securities are safer modes of investment. Capital markets typically tend to move in cycles or phases, called bull and bear phases . A bull market is one in which the majority of the shares move up and there is ample capital appreciation for the investor. ...
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