SWOT Analysis:

MUTUAL FUNDS

Strength
• MFs are governed by SEBI. So, customer interests are taken care of.
• Ranked MFs usually give stable returns
• They are managed by professionals in the field.
• Long Term Capital Gains and Dividends are tax free for the investor.
• You can use Systematic Investment Planning (SIP) for small investments on a regular basis. You do
not need a big amount to invest.

Weakness
• Entry load, exit load expenses and management fees to be incurred by investor
• Some types of funds are illiquid

Opportunity
• Different types of funds for different types of investors and their needs. For example, liquid funds
allow you to withdraw money easily. There are Equity Linked Savings Schemes that offer tax benefit.
• You can invest in the market with a small amount and match market performance
• It is convenient and easy to invest in MFs. You can take loan against MFs.

Threat
• Rate of return is not fixed
• MFs do not match the high returns of the stock market and do not offer as much security as bonds

EQUITY/SHARE
Strengths
• Management including the promoters and the employees.
• Products or services (quality of the product, criticality in the value chain, research &
development, patent, and the likes)
• Margins (sustenance of the margins vis-a-vis the competitors, importance of the product,
substitution, etc.)
• Customer base (customer loyalty, brand loyalty, etc.)

Weaknesses
• Product liability
• Absence of research/innovation
• Unstable management or declining promoter’s interest including siphoning of the funds
from the company resources.
• Competitive intensity

Opportunities
• Internal opportunities such as new geography, new product, etc.
• External opportunities such as mergers or acquisitions, a new segment, new industries, etc.
• Macroeconomic factors such as scarcity of resources, an abundance of the same, etc.
Social trends

Threats
• Litigation
• Government policies that may impact the business
• Competition
• Substitute and its pricing

REAL ESTATE

Strength
• Risk of investment is lower as compared to equity
• Usually demand is always there and therefore prices do not fall steeply

Weakness
• An illiquid investment
• There are many procedures and lot of documentation involved.
• A large sum of money is required for investment.

Opportunity
• You will have a real asset in your hands once it is built.
• It can provide you income in the form of rent or increase in capital.

Threat
• The builders have a strong consortium which can be disadvantageous to the customer.
• In many place, you have to pay a very high price
• Calamities can destruct or damage property
 GOLD

Strength
• Gold is a valuable asset across the world.
• It is a good hedge against the equity markets.
• You can invest in gold in physical and paper format.
• Investment in gold provides balance in investment portfolio

Weakness
• People in India are emotional about gold. They do not easily sell it thus making it illiquid.
• There is cost and security threat involved in storing physical gold

Opportunity
• Gold demand usually keeps increasing as the population increases. As demand increases, value
increases.
• Gold is associated with weddings and other special events in one's lifetime. So there is demand for
gold across the word.
• It can be used as collateral for loans.

Threat
• The price of gold fluctuates quite a bit. There can be a time that when you want to sell, the price is
low thus offering low returns.
• There can be spurious vendors that sell you low quality gold. You have to be careful while buying
gold

BONDS

Strength
• Government bonds are considered secure as they are backed by RBI
• There is a fixed interest rate

Weakness
• Returns are not as high as equity or MF returns
• Bonds are relatively illiquid compared to equity and MFs

Opportunity
• Investments in Tax free bonds offer taxation benefits
• When interest rates in financial system are higher, you get better returns.
• Many bonds can be traded in the secondary market which offers exit options to the investors.

Threat
• If the interest rates rise, the price of bonds will fall.
• If the company or organization defaults on payment, the investor will lose his capital and
interest

PPF

Strength

• PPF has a simple and accessible process of opening an account and maintaining it.
• Investment in PPF offers tax deduction under Section 80C.
• You can take loans against your PPF account. You can also make partial withdrawals. This is useful
during emergencies.
• It has the lowest level (almost next to nothing) of investment risk.

Weakness
• PPF is relatively less liquid as compared to other investment options
• Withdrawals can be made only at the end of the 7th financial year.
• There is a lock-in period of 15 years.
• The account cannot be closed prematurely unless death is the cause.

Opportunity
• It is a great tool for saving for the future.
• Interest earned on PPF account is exempt from tax as of now.

Threat
• The interest rate has been falling over a period of time.
• The returns may not be able to beat inflation.