Investment Management Definition - Features, Objectives, Scope

The study of Investment is concerned with the purchase and sale of different types of assets and the income or return derived from them. Investing is an interesting activity that attracts people from all walks of life irrespective of their occupation, economic status, education and family status. A person who has more money than is needed for current consumption is called a prospective investor. An investor who has more money than he needs can invest in securities or other assets such as gold or real wealth or he can deposit it in a bank. Companies which have more income than necessary, invest that income in expansion of existing firm or in new venture. An investor should take a reasoned decision about the various options available for investment.

Investment Management Definition

Funds appropriated for the purpose of obtaining additional income or capital growth are called appropriation. Under appropriation process, present consumption is sacrificed to get future income. The amount to be invested is fixed but the future income is uncertain. For a layman, investment means monetary commitment. Buying a flat or a house may be an investment with a view to an individual but it cannot be called a real investment as it is not generating financial income.

Investment Management Definition
Investment Management Definition

According to an economist, Investment refers to the increase in the capital stock of the nation in which the resources used in the production process.

Goods and Services Included Net increase in capital stock refers to an increase in buildings, equipment, and inventory. These are used to produce other goods and services. Investment Management

According to a financial expert, Investment is the allocation of money in assets that are likely to yield some profit or income over a specified period of time.

  • "Investment may be defined as the purchase by an individual or institutional investor of a financial or real asset that produces a return proportional to the risk assumed over some future investment period.-F.Amling 


  • "An investment is a commitment of funds made in the expectation of some positive rate of return. If the investment is properly undertaken, the return will be commensurate-with the risk the investor assumes.-Fischer and Jordan

It should be clear here that investment is related to long term investment. Financial and economic considerations are related with respect to investment because the savings made by an individual comes in the form of financial investment in the capital market which takes the form of economic investment. Though these two are related to each other but here we are concerned with the financial investment made in securities.

Elements of Investment

Three elements emerge from the above mentioned definitions and meanings of investment:-

  • Return
  • Relation between Return and Risk
  • Time Factor


Investors can buy and sell financial assets for earning income. Return is better known as the reward from investment which includes both current income and capital gains. In other words, return means the income received on investment in securities. Income on stock (shares) is received in the form of current dividend which is also known as current return. In this case the return has no future value. Income from stocks is not related to the maturity date whereas investments in bonds have a maturity date. Income on investment in bonds is received in the form of interest whereas investment in shares is received in the form of dividend.

Risk and Return

Risk and return cannot be separated from each other. Just hoping for income and forgetting about risk is an age-old investment ideology. Therefore, investment should be viewed from both risk and return aspects. It is generally understood that higher the risk, higher the return, but higher degree of risk does not necessarily mean higher return. Hence, the degree of risk is different in each security.

The entire process of risk and return is described in the chapter "Risk and Return Analysis".


Time is an important factor in appropriation. It is related to the time of buying and selling of securities in the market. The time period depends on the attitude of the investor. This period can be long term, medium term or short term as time period plays an important role in investment, hence the risk and return inherent in investment is studied.

Some professional analysts think that the investment period should be three years as this period is sufficient to analyze stocks and bonds. This period is enough to get economic results from new products, new ideas etc. As time passes, analysts are confident that circumstances will change and the investor can re-evaluate the return and risk inherent in each investment.

Investment VS Speculation

Investing in speculative deals expects profit on account of possible price changes. Investors in this are short term. Business takes risks to make profit. This can be described through an example

If a person buys a stock (share) for the purpose of dividend, he is called an investor. If he buys stock with the possibility of price increase in near future and sells it to earn profit then he is called speculator. There is very little difference between stock and investment as people invest in securities for both dividend and capital growth.

The time factor is different in speculation and investment. An investor is interested in a stable and good rate of return for a long period of time while the speculator is interested in getting exceptional returns.

Difference between Investor and Speculator

Investor -The investor makes a long-term plan for a good rate of return.

Speculators - The speculator devises a plan to generate extraordinary income in the short term.

Investor -Investor invests in low risk securities

Speculators - Speculator is willing to take more risk

Investor -Investor prefers maximum return and minimum risk

Speculators - High risk prefers high income.

Investor -Investor regularly analyzes the performance of the company on the basis of fundamental factors

Speculators - The speculator considers insider trading and market behaviour.

Investor -The investor mostly invests his own funds and avoids borrowing.

Speculators - It is the user of both its own and loan amount.

Investment VS Gambling

  • Gambling is different from betting and investing. It is clear from the above discussion that the investor makes a plan, analyzes the securities, studies the market before investing. After this, he invests in such investment options where the capital is safe and can also get good returns with minimum risk.
  • There is uncertainty in gambling. Gambling includes horse racing, card games, lottery, etc. Gambling is based on rumours, tips, and distorted information. Hence it is unplanned, unscientific and based on ignorance of risk factors. It is clear from the above description that there is a difference between investment and gambling.

Features of Investment

The following are the characteristics of an Investment Program:-

1. Safety of Principal

An investor should carefully review the economic and industry trends before making an investment to ensure the safety of the principal. Inaccuracies cannot be avoided, so the investor should consider diversification of assets for investment. The diversification of assets can be done on the basis of industry, management, financial and maturity. Losses can be minimized by proper consideration of these factors

2. Liquidity

An investor should keep an appropriate proportion of marketable securities in his portfolio. In this way he can get liquidity by investing in cash, fixed deposits and such units. Because every investor needs minimum liquidity to meet their contingency requirements

3. Legality

All types of investments should be approved by law. Laws related to real estate, trusts, shares, minors and insurance should be studied. Investing in illegal securities can cause many problems for the investor. To ensure the legality and safety of investment, the investor should invest in Government securities, Life Insurance Corporation, Unit Trust of India or Savings Certificates issued by the Government.

4. Income Stability

Every investor expects regular income at a fixed rate. It is important not only to have stability but also to have sufficient income after tax.

5. Tangibility

Some investors like to invest some part of their money in tangible assets such as buildings, machinery and land. It is worth mentioning here that tangible assets do not provide return, but provide satisfaction by giving a feeling of possession (entitlement) to the property.

6. Tradeability

The liquidity of an investment depends upon the tradability of the security. Transfer of shares, debentures, units etc. can be done. Such assets which cannot be transferred such as bank deposits, post office deposits, pension funds, insurance policies, etc. are not called securities. It is an important feature of investment

7. Return

The size of the investment depends on the income received. The higher the income, the larger will be the size of the investment. Income can be received in the form of dividend, interest and rent.

Objectives of Investment

The following are the objectives of appropriation:-

  • 1. Maximizing the Return
  • 2. Minimizing the Risk
  • 3. Maintaining Liquidity
  • 4. Hedging against Inflation
  • 5. Safety of Principal
  • 6. Tax Saving

Maximizing the Return

The main objective of investing is to maximize the return. Investors always expect a good return on investment. If invested in stocks, the investor gets the benefit of capital growth along with the dividend. The market return of a stock reflects the price increase in a particular stock. If a share is bought in 2014 for T 100 and sold in 2015 for T 120 and dividend is Rs 10 on it, then the return is calculated as follows:-

Example 1.

Return Capital Growth Dividend

Return = Capital Growth + Dividend / Purchase Value * 7

20+10/100*100 = 30%

Minimizing The Risk

The second objective of investment is to minimize the risk inherent in investment. Risk is related to variability in returns. An investment whose rate of return varies greatly over a specific time period is considered to be more risky. Every investor prefers to reduce their investment risk by combining different securities.

Maintaining Liquidity

Liquidity refers to the conversion of investment into cash. Liquidity is an important aspect of any investment option. Liquidity depends on trading and marketing facilities. If a part of the investment can be converted into cash without wasting time, it helps the investor to meet his contingency requirements. Stocks are considered liquid only if a good market is available for them. Stocks of Sensex, Nifty and Junior Nifty are considered more liquid.

Hedging Against Inflation

The return rate should be higher than the inflation rate. Otherwise the investor will actually suffer. Therefore, the rate of return should be such as to avoid the rise in prices.

Safety of Principal

Risk not only affects the return on investment. but also affects the income on the principal amount. The investment chosen should be legally and regulatoryly permissible. If it is not in line with the statutory framework, it will be difficult to address the problems of investors. Investments approved by law are deemed safe. Investing in positive securities is considered safer than investing in private securities.

From the point of view of security, the investments can be listed as follows:

  • Bank deposit
  • Government Bonds
  • UTI Units
  • Irrevocable Debenture
  • Convertible Debentures
  • Parity Fraction
  • Deposits In Non-Banking Financial Companies

Saving Tax

Tax is inevitable or is mandatory, it cannot be avoided. There are different tax rates for different income levels and investment options. Certain appropriations provide tax exemption. An investor tries to minimize his tax burden.

Importance Of Investments 

Why do people Invest? (Why do People Invest?)

Investing in the present times is both important and useful. The following factors make investment important:-

Increasing Rates of Taxation

There are many such investment options available in our country in which the investor can reduce his tax burden by investing. For example, ULIP, life insurance policy, National Savings Certificate, Post Office Cumulative Deposit Scheme, deposit in Public Provident Fund, etc. provide tax benefits.

Planning For Retirement

Investment decisions are also becoming important as most people retire between the ages of 60 and 65. A part of the earnings from employment should be kept for savings. However, savings by themselves do not add to wealth, so the savings should be invested in such a way that it can provide income till the maximum number of years of retirement.

Interest Rates

Interest rates are different for one investment and different interest rate level for another investment is an important aspect for a good investment plan. Therefore, this aspect must be taken care of before investing. High rate of interest is not good for investment. Hence the investor should include different types of securities in his portfolio. Your portfolio should be such that it has high risk high return and low risk, low return securities


Inflation has been a persistent problem in India for the past decade. Therefore, the investor should invest in such investment option which can provide higher rate of return to cover the loss due to inflation.


There has been an increase in income due to employment opportunities. Due to higher income, there has been an increase in investments so that more income can be obtained in addition to regular income.

Favorable Investment Environment

There should be a conducive environment for the investment market to function effectively. Business activities are influenced by the social, economic and political factors available in the country. These components are important for the investment environment. They ensure an increase in the growth rate and provide an environment for investment. The following components are generally considered favorable for the deployment environment.

1. Legal Safeguard

All investments must be legally protected. The investor would be willing to invest only if his contractual and property rights are assured. Investors in India get the benefit of independent enterprise and control. Freedom, efficiency and development is personal. are ensured by the competitive forces of the enterprise. In other words, discipline can be ensured in the investment market through legal control.

2. Currency

Most of the investments such as bank deposits, life insurance and shares etc. are made in the currency of the country itself. Monetary policy provides direction to investment. Price rise (inflation) destroys the purchasing power of investments. Inflation usually occurs in volatile situations such as floods or wars. A stable price level created by monetary and fiscal management contributes significantly to proper control, good governance, economic security, developing investment markets and investor protection. Therefore, a proper monetary policy should ensure a stable currency. As far as possible, monetary policy should neither encourage inflation nor encourage recession. Both situations do not bode well for a good investment environment.

3. Financial Institutions

Availability of financial institutions and financial services encourages savings and provides direction for productive use of savings for the development of investment market. The financial institutions available in India are development banks, commercial banks, mutual funds, life insurance companies, investment companies, investment bankers venture capital, brokers, lease, hire purchase and consumer finance, housing finance. ), merchant bankers and portfolio management. In India, there are many institutions under the Central Government and State Governments which have encouraged savings and investment.

4. Form of Business Organization

The permanent form of business organization encourages savings and investment. The public limited company form is considered the best form of business. Its three characteristics are very important - limited liability of shareholders, permanent life and transferability of shares. Unlike a Public Limited Company, a Solicitor or a Partnership Firm is liable for the payment of all types of debts to the extent of personal wealth. In such circumstances the investor is afraid to invest in this type of business. Apart from unlimited liability, partnership and sole proprietorship firms have a shorter life span. The partnership firm is dissolved on the death or retirement of any of the partners. Hence Public Limited Company is a popular option for investment.

5. Choice of Investment

Apart from depositing in the bank, there are many other investment options available to the investor. The question is which option is the best? Which option will provide balanced growth and stable income? An investor would prefer the right mix of different options - high return and stable income. Some investment options are available such as equity shares, bonds, prand funds, life insurance, fixed deposits and mutual fund schemes.

6. Risk

Every investor wants to get maximum return from his investment with minimum risk. Investments in the private sector include equity and preference shares, debentures, public deposits. There is a fear of high risk involved. Government securities are risk free and the investor feels safe. Private sector securities are attractive but also risky. The success of Infosys, Reliance, ipro has fulfilled the investment wisdom dream of the investors. An investor can maximize his income with minimum risk if he carefully analyzes company's prospectus and securities.

7. Political Factors

Political decisions affect the investment environment of the country. This effect can be favorable or unfavourable. The government sometimes takes decisions that are not in favor of investors, especially foreign investors. Therefore, it becomes difficult to provide suitable investment environment for foreign institutional investors.

8. Social Factors

Investment market environment is also influenced by the investor's evil attitude, desires, expectations, education and intellectual level, customs etc. All these factors encourage or discourage saving and investment. Social evils such as interest is haraam" "Thinking of today by dying worrying about tomorrow" etc. discourages savings and investment. Therefore, for the development of a good investment environment, there should also be a good social environment.

Historical Development Of Investment Management

Securities were first traded in 1725 at the auction market on Wall Street in Lower New York, a market primarily for agricultural products such as wheat and tobacco. The first market for securities was established in 1792 and was reported in a London register or diary, but the need for appropriation arose in the twentieth century.

Post-World War-I Period

This period has seen the development of financial market and changes in investor behavior. Some of the developments and changes that took place during this period are as follows:

Conservative Investors

During and after the First World War period, the investor and investment market was conservative. Bonds were among the main investment options. Ordinary stocks were not more reliable as they were considered to be more risky. Investing in common stock was done only if these were mortgaged to tangible assets and the dividend was stable, the company had a sound capital structure. and has sufficient working capital

Shift Towards Common Stock Investment

The publication of an investment study by Edgar Lawrence Smith in 1924 showed that the performance of ordinary stocks was better than that of bonds after the Civil War. As a result, investors started investing in equity shares. The period from 1920 to 1929 was a period of activity for the stock exchange. This period is known as the speculative period.

Pools & Corners

During the above period (1920-1929), 'Pools' and 'Corners' were used to describe the disturbances. Under the corner, the shares have to be concentrated in a few hands, whereas under 'Pool' these shares have to be sold with the aim of earning profit. Shares were sold on the basis of insider tip. Corners were used till 1923 but Pool continued to be used till 1934 until SEBI was established.


 Apart from Pools and Corners, another means of earning profit was developed. It was the 'leverage' that the firm used. Investment companies and public utility companies used it to provide above-average income to the shareholders. This method was used during share price appreciation.

A detailed study was done on the causes of Legislation

Pools, Corners and Evils of Leverage. On the basis of this study, specific Acts were made in which The Banking Act of 1933, The Securities Act of 1933, The SEBI Act of 1934 Public Utility Holding Company Act of 1935 are important.

Research Work in 1934

The research work of Benjamin Grahm and David L. Dodd was highly praised. The results of this work were published under the name "SecurityAnalysis". The results of the research work served as a role for securities analysts. Much work on securities analysis was done after the Second World War period.

Developments of Security Analysis Post World War II: 

After World War II, many experiments were done to control the financial and economic environment after the Second World War. Most of the experiments were based on the concept of "basic analysis" propounded by Grahm and Dodd. Later, the concept of 'technical analysis' was born as an alternative to fundamental analysis. This analysis (technical) R.D. Based on the work of Edwards and McGee–1948, technical analysts believe in market statistics and past trends in prices.

The Portfolio Theory 

The importance of portfolio management has increased due to the trend towards simple stock investing. Harry M. Markowitz provides an outline of portfolio valuations under uncertain circumstances. The trend towards common stock came after it was discovered that the business cycle could be controlled. Its importance grew even more when financial institutions showed interest in common stock. At that time financial institutions used to invest in bonds only but due to its influence, they started taking interest in the stock market.

Harry Markwitz's research work is the most important after Grahm Dodd's work on securities analysis. Who first tried to measure risk.

Investment Management Approaches

Investment Management Security pricing and valuation are mainly based on three considerations. These are as follows:-

The Fundamental Approach

An investor should select stocks on the basis of economic analysis, industry analysis and company analysis. Baseline analysts have four types of analysis- (a) Present Value Analysis, (ii) Real Value Analysis, (iii) Regression Analysis, (iv) Specific Situation Analysis. Some original investors follow a "buy and hold" policy – ​​buying stocks. And keep it with you for a long period. Financial institutions often use the basic method. A fundamental investor does not look at variable prices, but determines the price of the stock at which he can invest and evaluates the stock based on the market.

  • Home Loan Insurance Policy VS Term PlansHOME LOAN
  • According to this method, the earnings, dividends and the value of the assets of the firm should be given importance. The core of this ideology is 'believe in the true value of the stock'. Changes in stock prices are due to changes in expectations and availability of new information. The price of the stock depends on the future return and the future capitalization rate.

Contributors to the development of this theory include John Burr Williams- who worked on Present Value Analysis in 1938, Benjamin Grahm and David Dodd who worked on Intrinsic Value Analysis which later In what is known as “Security Analysis”. Gone. Meader, another researcher who tested stock prices through regression analysis in 1933.

Technical Analysis

Technical analysts believe that stock market movements create different types of movements at the same time. Mainly it creates long term movement which is called bull or bear market. A supportive trend is a movement that lasts from a week to several weeks or even months. The secondary trend is the opposite of the primary trend of the market i.e. it indicates a downtrend in the "bull market" or an uptrend in the bear market. These concepts are based on "Dow Theory". The third movement is the daily variability that the Dow theory ignores.

Technical analysis is based on the assumption that the price of a stock is influenced by demand and supply factors, that is, it depends on the demand and supply factors. This theory does not accept the Fundamental Approach of Real Values. Change in stock price indicates change in demand and supply. The demand and supply components are influenced by some right and wrong factors like guesses, doubts, attitudes, ideas etc. Technical analysts' analysis is expressed in the form of charts that compare the relationship between "price and volume". Technical analysts assist in the fundamental analysis done on stock prices. Technical analysts recognize that there is another important factor in price and volume analysis that is not included in fundamental analysis, and that is the "Psychology of the Market".

The Portfolio Theory Approach

The essence of portfolio theory as described by Jones Tuttle and Heaton is as follows – A portfolio's characteristics are not the sum of the characteristics of a single security. not merely the sum of the portfolio's single security characteristics particularly with respect to risk) From the above summary, it becomes clear that the market can be influenced by a single investor. The portfolio analyst also feels that there is risk involved in the management of the portfolio. He is in favor of diversification of the risk inherent in the security i.e. investing in different types of securities so as to reduce the risk. If the investor places an order in different types of securities, he can increase the quantum of profit i.e. get maximum return with minimum risk.

Investment Management Scope

Management of investments is a complex study of return maximization. Its scope includes the following:-

  • Security Analysis
  • Portfolio Management
  • Investment Planning
  • Securities Market
  • Securities

Securities Analysis

Traditionally, securities analysis emphasizes the potential for prices and dividends. According to this, the likely price of the firm's common stock and the future dividend rate are estimated and later the present value is determined. The actual value of the stock is compared with the present value of the specific security. If the current market price of the security is higher than the intrinsic value, the analyst recommends selling it and buying the security in the opposite case.

These traditional views have now shifted to a more modern one, which emphasizes risk and return analysis in addition to price and dividend estimates.

Market Analysis

Stock market is a mirror of general economic condition. Increases in gross domestic product and inflation are reflected in the stock prices. The result of economic slowdown in the economy comes out in the form of bear market. Stock prices can also change in the short run, but in the long run they either move upwards or downwards.

Industry Analysis

The industries which contribute to the analysis of the main segment of the economy may differ in the rate of growth. Some industries grow faster than GDP and their growth potential remains low. For example, in 1998 the information technology industry achieved a higher growth rate than GDP. Therefore, the potential development and greater importance of the industry should be analyzed.

Company Analysis

The purpose of company analysis is to help investors take better decisions. The earning power, profitability, operating efficiency, capital structure and management of the company should be analyzed.

Portfolio Management

Portfolio is a combination of securities such as stock bonds and money market instruments. The composition of the investment portfolio depends on the nature of the investor. Understanding market instruments and market movements helps in understanding the market. The portfolio is constructed in such a way that the investor can achieve his objectives. The investor wants to get maximum return with minimum risk. For this he diversifies his portfolio and allocates funds for securities.

Diversification - The main objective of diversification is to reduce the risk. Diversification helps to spread the risk across multiple assets. The performance of some securities in a diversified portfolio is not as expected while others may deliver higher than expected results. In this way the actual return from the portfolio can be brought closer to the expected income. There are many ways to diversify a portfolio.

(i) Debt & Equity Diversification

Debt instruments provide a fixed income with limited capital growth whereas ordinary equity provides both income and capital gains. Diversification is done by mixing both debt and equity i.e. some investment is done in debt instruments and some in equity shares.

(ii) Industry Diversification

The development of industries and their response to government policies differ from each other. Hence industry diversification is required and it reduces the risk.

(iii) Company Diversification

Securities of different companies are bought to reduce the risk. The technical analyst suggests buying the securities based on the price movement whereas the fundamental analyst suggests the selection of financially sound and investor friendly companies.

(iv) Selection

The securities are selected on the basis of level of diversification, industry and company analysis. Funds are allocated to selected securities. Therefore, the selection of securities and allocation of funds constitute the portfolio.

Investment Planning

Investment planning is necessary to get maximum benefit from the limited resources of the investor. It is a commitment to allocate funds in one or more assets over a specified period of time. It refers to the action taken to achieve the investment objectives. The investment planning process includes the following steps

  • (i) To determine the purpose of appropriation.
  • (ii) Understanding the risk involved in the investment.
  • (iii) Creating an investment portfolio
  • (iv) Evaluation of market and investment options.

Appropriation planning helps in the following ways:-

  • (i) Identifying the financial objectives of the investor.
  • (ii) To get maximum benefit from the investment.
  • (iii) Choosing the right investment option.
  • (iv) Maintaining a balance between risk and return.

Securities Market

Securities market is classified into money market and capital market. Short term securities with a maturity period of less than one year are traded in the money market. This market demand is for money, ropos, treasury bills, commercial bills, certificates of deposit, commercial papers, etc.

The capital market is where long-term securities such as equity shares, bonds and debentures are traded. Capital market is classified into jar and secondary buy market. Securities are issued for the first time in the primary market while securities already issued are traded in the subsidiary market.


Different types of securities are traded in the market. We often think of shares and bonds as securities. Securities included in the Securities Contract Regulation Act, 1956

  1. Equity Share
  2. Preference Share
  3. Debenture
  4. Bonds

Sources of Financial/Investment Information 

An investor needs sufficient information for investment. The type of information required. Simultaneously, the sources of information also keep changing. Important information related to investment can be obtained from the following sources:-

Stock Market

All financial newspapers and investment-related magazines publish stock market news. BSE, NSE and OTCEI issue separate news about stock market movements. SBI provides information through newsletter about changes in stock market rules. The Reserve Bank of India (RBI) also issues news related to the stock market. SEBI, BSE, NSE and RBI have their own official websites

Note:- News and other publications of SEBI, BSE, NSE and RBI are available on their website.


Information about the industry is essential to identify such industries which have performed well in the national economy. Financial newspapers regularly publish industrial studies for investors. Expert opinion on industries is available in Business India, Business Today and Dalal Street magazine.


BSE, NSE and OTCEI provide details about listed companies on their website. Almost all financial magazines do company analysis. Forbes India Magazine, The Economic Times, Financial Express, Business Standard and India Today overview each company.

Provides review of company management and policy changes and company performance. The company's annual report also provides information about the company's performance.

National Events (National Affairs)

Political events and development of the economy affect the investment decisions. Political events appear in newspapers, magazines such as India Today, Outlook, Fortune India. Economic events and their impact on the securities market are analyzed in magazines and newspapers such as the Financial Express, Economic Times and Business Line. RBI Bulletins and Annual Reports provide information on Gross Domestic Product (GDP), GN, Inflation, Agricultural and Industrial Products, Capital Markets, Banking Sector Activities and Balance of Payments. The Center for Monitoring India Economy (CMIE) publishes information on economic components. The Economic Survey of India also provides information about the economy, industries and other sectors.

National Affairs

Political events and the development of the economy affect the investment decisions. Political events appear in newspapers, magazines such as India Today, Outlook, Fortune India. Economic events and their impact on the securities market are analyzed in magazines and newspapers like Financial Express, Economic Times and Business Line. RBI Bulletins and Annual Reports provide information on Gross Domestic Product (GDP), GNP, inflation, agricultural and industrial products, capital markets, banking sector activities and balance of payments. The Center for Monitoring India Economy (CMIE) publishes information on economic components. The Economic Survey of India also provides information about the economy, industry and other sectors.

International Affairs

Due to increasing globalization, international events affect the national economy. Because all the countries of the world are economically and politically connected to each other. The economic crisis of one country has a significant impact on another country. All dailies carry international news. Baron's National Business and Financial Weekly, Wall Street Journal (a US daily), International Business Week, Fortune International, Financial Times of London, and the Economist (a weekly from the UK) provide financial information for investors and business executives.

Indian magazines such as Business World and Fortune India also present reviews of international events. International financial institutions such as the IMF, World Bank and Asean Development Bank publish their periodic survey reports.

You will know - Investment Management Definition - Features, Objectives, Scope

Investments In The Lockdown Period 2021

Due to the recent epidemic, markets around the world are in a downturn, and investments In The Lockdown Period 2021 depreciating in almost all asset classes, be it mutual funds, equities, debt instruments, real estate, or any other type of investment. In such a situation, what should be your attitude towards the investments or investments you have made in the markets?

Investments In The Lockdown Period 2021

They have also seen depression in world economies before, causing destruction in people’s portfolios and personal wealth. Investors often lose large sums of money due to such depressions. However, it has also been observed that ultimately, each of these depressions is followed by a bounce in the markets when things finally get back to normal and exciting.

Therefore, there is always a strong positive movement that follows the collapse. It is up to you whether you choose to be affected by depression or remain optimistic and look at the long-term picture.

The present situation is similar which may question what should be done about Investments In The Lockdown Period 2021. The answer is simple – invest in strong equipment.

Let us look at the top DOS about our investment in view of the current situation and do not.

What to do with your investment?

Investments In The Lockdown Period 2021
Investments In The Lockdown Period 2021

Also read :What Is Trading

1. Save money for emergencies

Although this point is not directly related to investment, it is an extremely important issue for your financial plan. Sudden bear markets often have a profound impact on people’s earning capacity and there is an occasional risk that your income may also be constrained. If this is not the case, the risk of infection cannot be ignored, and it would simply mean isolation in which it can be difficult to work. Therefore, before planning any investment, you should ensure that the store has sufficient emergency funds. Generally, you should have enough money for at least 6 months of your expenses.

2. Make new investments in blue-chip stocks

If after setting aside funds for an emergency, you have a surplus that can be invested in the markets, use it to invest in new avenues such as quality blue-chip stocks that are currently very Are available at appropriate evaluation. You can easily buy the equity of some of the big names in the markets for a relatively low cost. Trust companies that form an essential part of a country’s economy or society such as the FMCG sector, technology sector, infrastructure, etc. These stocks and sectors form the backbone of any economy and once an epidemic comes, it is sure to recover and move forward. Thus, appreciation of your wealth.

3. Buy gold as your investment portfolio

While equity will give your portfolio the boost it needs, gold will help protect a portion of your investment capital from any sudden drop. Therefore, do not forget to invest a part of your investment capital in gold. Gold has always been a safe haven for investors and in most cases has an inverse relationship with equity. Gold should be bought from buyers at every dip in situations like these.

4. Increase your SIPs

If you have money invested in mutual funds, you will see your net asset value plummeting, and this may sow the seeds of your exit. However, remember that this is the time to increase your allocation to your mutual fund and buy more units as they will eventually recover and help you build your wealth.

5. Keep in mind that the markets will take time to recover

The most important thing to keep in mind is that you should not expect an investment made by you to suddenly show a profit and start appreciating. The current state of the economy is still under pressure and there is a chance that there may be a second wave of coronaviruses that could affect the economies in this way. Therefore, be mentally prepared to wait for investment to grow and appreciate.

What’s not to do with your investment?

1. Do not check your investment on a daily basis

If your money is already invested in mutual funds or equities or any other Investments In The Lockdown Period 2021 avenue and is suffering losses due to the current situation, it is best not to see it every day. If you do not need the invested amount immediately, it is best to wait for the markets to rebound before withdrawing your investments. Continually revisiting your portfolio will only serve to help you financially rather than harm your mental peace.

2. Do not get out of your investment in panic

On seeing the negative valuation of Your Investments In The Lockdown Period 2021, if you are planning to withdraw your invested amount, it is not very large and should be avoided at all costs. Also, if your money has been invested in a mutual fund, it would not be a wise move to completely stop paying your SIP. Remember that after this decline the markets will recover and your investments will increase again. But till then you need to be patient and do not take any drastic decision suddenly.

3. Do not use your entire investment capital for new investment

While you should take this opportunity to start new Investments In The Lockdown Period 2021, you should not invest your entire investment capital at once. New investments, be they in equity or gold or debt or mutual funds, should be made in a staggered manner after considering all aspects related to investment. Extend your investment over the long term to get the most out of any fluctuations that present a more attractive shopping opportunity.

4. Do not forget about your optimal investment allocation

While it is time to make new Investments In The Lockdown Period 2021, it is also necessary to remember and understand what the optimal portfolio structure is for you according to your needs. You need to do a complete risk analysis based on various factors specific to you and only then start new investments related to asset allocation suitable for your needs. Only then your investments can be successful.

5. Do not watch the news too much and give your opinion on it

Watching too much news can also be detrimental to your opinion and viewpoint of what is important and what is not. The current situation is quite disappointing, and the news often does not portray a small development as breaking news. In such cases, your decision as a long-term investor may be hampered, and therefore, it is wise not to take the news seriously.

In the end, it is extremely important that you remain financially aware and agile during this time and make the most of this time to make investment decisions that will benefit you in the long run for your family and overall financial well-being. Are

[2021] Business Environment Definition - Characteristics, Relationship

Describe the characteristics of the present Indian business environment. What is the relationship between business and environment?

Business Environment Definition

The new economic policy in India was announced in 1991. In the economic policy, more emphasis was given on liberalization, privatization and globalization. After July 1991, the government took several policy measures for the rapid economic development of the country and to bring the country out of the economic crisis. The following are the characteristics of the present Indian business environment.

Business Environment Definition
Business Environment Definition


Liberalization Definition Economic liberalization refers to those efforts by which the economic policies, rules and rules and administrative controls and procedures of a country are made in accordance with the needs of the country's rapid economic development. So that by providing international direction to the country's economy, it can be made able to compete on the world level.

Need/justification of liberalization or why liberalization? (Need or Rationale of Liberalization or Why Liberalization?) The following arguments can be given regarding

Adequate technical and human resources are available in India to accelerate industrial development. Therefore, liberalization has been considered necessary to give impetus to industrial development in the country.

  1. For the best use of resources - There are many types of resources available in the country. The policy of liberalization is followed in the country for the use of those resources.
  2. For Competitive Industrial Environment – ​​Regulation and control have put restrictions on the entry and exit of firms and due to that less competitive industrial environment has been created in the country. Therefore, the policy of liberalization will create a competitive industrial environment.
  3. To encourage foreign investment- Liberalization of industrial sector will encourage more investment in the country.
  4. To increase employment opportunities - Due to the trend of liberalization, when there will be industrial development in the country, then employment opportunities will increase. As a result unemployment will be curbed.
  5. To control the spread of money - Due to the trend of liberalization, there will be an increase in the production of capital and consumer goods in the country, which will help in controlling the spread of money.
  6. Availability of cheap and best goods - Due to liberalization, new industries will be established in the country and cheap and best goods will be produced.

Rcent Trend in Liberalization in India - The modern trends of liberalization in India can be explained through the following points.

1. The number of industries requiring license has been reduced.

2. The number of industries safe for the public sector has also been reduced.

3. The limit for foreign capital investment was increased.

4. Assets limit of monopoly houses abolished

5. FEMA Act replaced by FERA

6. Exemption granted in foreign technology agreements

7. Liberally exempted from import of gold and silver

8. Exempted in import of capital goods, raw materials etc.

9. The rates of import duty were also reduced.

10. The tax structure was reformed.

11. Liberalization of capital market.


Privatization Definition - The concept of privatization was adopted in the new policy. Therefore, more importance was given to the private sector industries. Instead of 17 industries in the public sector, only 4 industries have been kept. All other industries have been opened to the private sector. The transfer of public sector industries to the private sector is called privatization. Presently the government is giving more importance to privatization. The private sector in India is growing rapidly. Employees in the private sector work hard and efficiently.


(III) Globalization – Globalization was promoted in the new policy.

Globalization Definition – Globalization is the process related to the external sector of the economy by which efforts are made to integrate the Indian economy with the world economy. Today no country can remain isolated from other countries of the world, due to this India is also increasing its economic relations with other countries of the world.

Note:- Under globalization, India is increasing its economic relations with other countries in three ways, which are as follows:

1. By increasing foreign trade - India is taking measures to increase its exports and imports.

2. Through the exchange of foreign technology - India is developing its industries and infrastructure sectors by importing advanced technology according to its requirement from developed countries.

3. Increase in Foreign Investment - Since 1991, both forms of foreign-private investment have given a lot of impetus to foreign direct investment and foreign institutional investment.

Various steps towards globalization – The various steps towards globalization are as follows:-

  • Liberalizing Foreign Trade Policy
  • Moving towards a free market,
  • To make efforts to increase the use of technology of developed countries in various economic fields by making agreements with foreign technology.
  • To encourage foreign investment.

4. Increase in Competition - The environment of competition has increased in the Indian markets. Domestic industries are facing more competition from multinational corporations. Nowadays big shopping malls are also seen in India.

5. Increase in Foreign Trade - Being a member of the World Trade Organization, tariff barriers to foreign trade were reduced. This gave a big boost to foreign trade

6. Reduction in Foreign Debts- The Government of India is not taking new foreign loans at present, but is repaying the old foreign loans. Hence the growth in the foreign exchange markets in India

7. Increase in Foreign Investment - Due to the liberal approach of the Government of India towards foreign investment, foreign investment increased significantly. 74% foreign investment was allowed in many industries. India's capital formation and balance of payments situation also improved due to more inflow of foreign investment.

8. Increase in Service Sector - India's service sector has developed a lot. Banks, insurance, telecommunications, tourism education etc. are included in the service sector. The contribution of the service sector to the national income is more than half. The image of India has also improved a lot as a result of the development of the service sector.

9. Improvement in standard of living - The standard of living of the people in India has improved a lot since the last few years. T.V., Fridge, Air-conditioner and Cars are being demanded more by the people in India. Many foreign companies are also involved in the production of these items.

Open Demat Account Upstox

Relationship Between Business & Business Environment

Relation Between Business and Environment - There is a deep relationship between business and environment. When the environment is favorable then the business can be increased. Due to adverse changes in the environment, business may have to face many difficulties. The relationship between business and environment is revealed by

1. Environment makes business dynamic – Many elements of the environment like economic, socio-cultural and technological etc. are constantly changing, due to which the policies of the business have to be changed. In this way the manager adapts his business according to the change in the environment.

2. Interrelationship - Business is affected by the environment and the environment is also affected by business, as in the days of recession, industries have to reduce their production. Thus the environment affects the business. Similarly, when groups of business organizations pressurize the government to change the economic policy, then in such a situation the business affects the environment.

3. Opportunities and Threats - If the prevailing environment in the country is conducive to the development of business, then in such a situation the management of the business will feel right, because they will take advantage of the environment and develop their business more. On the other hand, adverse changes will discourage managers. It becomes clear from the above things that there is a deep relationship between business and environment, because both depend on each other because environment affects business and business affects the environment.

What Is Trading - Earn Regular Income From Trading

Hello friends, we often hear about trading Like (Equity Market, Commodity Market, Forex Trading) in the stock market, many people earn millions by investing in trading. But thousands of people also have loss. What is trading? There is a difference between trading and investment, what are the types of trading and regular income can be earned from trading. Today I will explain all these with details. 

What Is Trading

What Is Trading?

Friends, Trading is called business in Hindi, which means buying something and selling it at increased prices. So that we can increase the profit on our investment more. Similarly, buying shares in the stock market and as soon as the price of the shares increases, To earn profit by selling it, we call Trading in the stock market. Now a lot of people think that they do the same in investment. What is the difference between trading and investment?

  • In investment, we hold shares for a long time like 1 YR, 5 YR, 10 YR. (In trading we hold shares for a very short period of time such as - 1 Minutes, 1 Hour, 1 Months)
  • In investment, we buy the shares of the good company because we hold the shares of the company for a long time in the investment. (In trading, we do not know about any details of companies and buy only by looking at the price of their shares. Because in trading we mean by the movement of price and as soon as the price rises, we make money by selling the shares)
  • In investment, we get profit after a long time, there is less risk in it. Because we buy the shares of good companies. (In trading, we get profit very quickly, such as 1 day, 1 hour, but there is more risk in it. Because the price movement is random in the short term)

The biggest difference between investment and trading is attitude. Bcoz

Investment - In investment, before investing in any company, we get a lot of information about it and analyze it. That the shares of the company whose shares we are buying will increase or decrease in the long time period.  (Trading - If we buy the shares of a company without studying the company. Have bought shares only by looking at the Price package of that company. So that as the price of the company increases, we earn money by selling shares. So we will call it trading)

Fundamentle Analysis - Friends study the company carefully and understand their business, we call Fundamental Analysis & we must do a fundamental analysis of the company before investing. But if we study the price of shares of a companies & try to predict its pattern, Then we call it Technical Analysis & We must do technical analysis of the shares before trading.

Types Of Trading

When we think about trading, first of all we have to find out which one to trade and for this we should know How many types of trading are there.

There are 4 Types of Trading

Scalping Trading

In this type of trading we buy the shares for a few minutes. And as soon as the price becomes a little bit incremental, then we earn a profit by selling the shares.

For Example - Suppose you bought 10000 shares of a company on 100 rupees Per shares. And after a few minutes, if the price of the shares is increased from 100 rupees to 100.50, then sell it and earn a profit of 5000 rupees. So this is what we will call scalping trading.

Intraday Trading

The second type of trading is call intraday trading. In this type of trading, we hold the shares for a few hours & the same day, before the market closes. We earn profits by selling the shares.

Swing Trading

The third type of trading we call swing trading. In this type of trading, we hold shares for a few days. & earn profit by selling the shares within one or two weeks.

Position Trading

Fourth type of trading is called position trading. In this type of trading, we hold shares form a few weeks to a few months. & then earn profit by selling them.

Can We Earn Regular Income From Trading

Friends, now we will know that we can earn regular income from trading. Yes friends, we can earn regular income from trading. But it is not possible to earn as much as possible.  

If you want to earn more money from trading, then you will need a lot of money. Friends, if you want to earn more profit in trading to invest money then we will have to buy more shares for which more money will be required. Along with money, We should have a good knowledge of technical analysis. Only then we will be able to understand the price pattern. And will be able to buy or sell shares at the right time. Along with this, We'll have to understand the use of stoploss well to keep the loss to a minimum. 

My Last Words
And friends, The most important thing in trading is to constantly learn from your mistakes & to not give up. Because every successful trader is successful only when he continuously improves his trading. So if you also want to become a successful trader then follow all these points well.

(Beginner's Guide) How To Start Investing In Stocks - Quick-Start Guide

Investing is one way in which you are busy in life and money works for you so that you can fully get the returns of your labor in future. Start Investing in Stocks. Investment is a means to a happy ending. Veteran investor Warren Buffett defined investment as “the process of investing money now to get more money in the future”. 1 Investment aims to make your money work in hopes of one or more types of investment vehicles. Your money is increasing over time.

How To Start Investing In Stocks
How To Start Investing In Stocks

Let’s say you have a set of $ 1,000 apart, and you’re ready to enter the world of investment. Or maybe you only have $ 10 extra a week, and you want to invest. In this article, we will walk you through how to get started as an investor and show you how to maximize your returns while minimizing your costs.

How To Start Investing In Stocks

  • Investment is defined as money or capital for an effort, with the hope of earning an additional income or profit.
  • Unlike consumption, investing money for the future, hoping that it will grow over time.
  • However, investment comes with a risk of loss.
  • Investing in the stock market is the most common way for beginners to gain investment experience.

What Kind of Investor Are You?

Before you make your money, you have to answer the question, what kind of investor am I? When opening a brokerage account, online brokers like Charles Schwab or Fidelity will ask you about your investment goals and how much risk you’d like to take.

How to Start Investing in Stocks

Some investors want to take an active hand to manage the growth of their money, and some like to “set it and forget it.” More “traditional” online brokers, like the two mentioned above, allow you to invest in stocks, bonds, exchange-traded funds (ETFs), index funds and mutual funds.

Hоw Muсh Medicaid аnd Medicare Cost Americans (2021)

Hоw Muсh Medicaid аnd Medicare Cost Americans - Medicare аnd іtѕ means-tested sibling Medicaid represent thе оnlу forms оf health coverage аvаіlаblе tо millions оf Americans today. Thеу represent ѕоmе оf thе mоѕt successful social insurance programs ever, serving tens оf millions оf people, including thе elderly, younger beneficiaries wіth disabilities, аnd thоѕе wіth lоw incomes оr limited resources.

Health Insurance

Hоw Muсh Medicaid аnd Medicare Cost Americans

Medicare Insurance - A Guide For New US Citizens 

Medicare іѕ administered bу Thе Centers fоr Medicare аnd Medicaid Services (CMS), whісh іѕ а component оf thе Department оf Health аnd Human Services. CMS works аlоngѕіdе thе Department оf Labor аnd thе Treasury tо enact insurance reform. Thе Social Security Administration determines eligibility аnd coverage levels. Medicaid іѕ administered аt thе state level; states aren’t required tо participate іn thе program, but аll сurrеntlу do. Thоѕе lаѕt fеw sentences won’t give уоu аn idea оf hоw muсh money wіll соmе оut оf уоur paycheck tо fund thоѕе programs; thеу wеrе included tо give аn idea hоw far-reaching thе programs are. (For more, see: What’s thе Difference Bеtwееn Medicare аnd Medicaid?)

Hоw Muсh Medicaid аnd Medicare Cost Americans (2021)

Hоw Muсh Medicaid аnd Medicare Cost Americans (2021)
Hоw Muсh Medicaid аnd Medicare Cost Americans (2021)

Thе fact іѕ thаt еvеrуоnе іn thе workforce іѕ required tо pony uр thеіr share tо fund thеѕе programs — еіthеr thrоugh payroll deductions (Medicare wages) оr whеn thеу file taxes еасh year. Thе Affordable Care Act (ACA), оr “Obamacare,” hаѕ increased thе costs tо taxpayers, раrtісulаrlу fоr thоѕе іn thе top tax brackets — thе cost оf extending medical coverage tо mоrе Americans. (For more, see: Nеw Taxes Undеr Thе Affordable Care Act.)

Sо јuѕt hоw muсh аrе Americans paying fоr Medicare аnd Medicaid? And hоw muсh wіll уоu pay?

Individual Taxpayer Burden

Taxpayers whо receive wages, salaries оr income frоm self-employment аrе required tо pay Medicare tax оn аll оf thеіr wages. Thеrе uѕеd tо bе а limit оn thе amount оf income оn whісh Medicare tax wаѕ assessed, but thіѕ wаѕ eliminated іn 1993. Nоw аll earned income оf аnу kind іѕ assessed а 2.9% tax wіth nо limit. Employers whо pay thеіr employees W-2 income wіll cover hаlf оf thіѕ amount, оr 1.45%; thе employee muѕt pay thе оthеr half. In mоѕt cases, thе employer wіll withhold thе amount thе employee owes ѕо thаt nо balance іѕ owed аt tax time. Self-employed taxpayers muѕt pay thе entire amount themselves, but thеу аrе allowed tо deduct hаlf оf thіѕ cost аѕ а business expense (the amount іѕ coded аѕ а deduction fоr adjusted gross income (AGI), ѕо іt isn’t nесеѕѕаrу fоr thе taxpayer tо bе аblе tо itemize).

  1. How to Sign Up for Medicare: How and When to Enroll (PART 1)
  2. Understanding thе Basics оf Medicare | 4 Simple Steps to Understanding Medicare (2021)

On Jan. 1, 2013, thе ACA аlѕо imposed аn Additional Medicare Tax оf 0.9% оn аll income аbоvе а сеrtаіn level fоr high-income taxpayers. Single filers wіll hаvе tо pay thіѕ additional amount оn аll earned income thеу receive аbоvе $200,000 аnd married taxpayers filing jointly wіll owe thіѕ оn earned income іn excess оf $250,000. Thе threshold іѕ $125,000 fоr married taxpayers whо file separately.

Thеrе іѕ аlѕо аn additional nеw tax оn unearned income, ѕuсh аѕ investment income fоr thоѕе wіth AGIs аbоvе thеѕе thresholds knоwn аѕ thе Unearned Income Medicare Contribution Tax. Taxpayers іn thіѕ category nоw wіll owe аn additional 3.8% Medicare tax оn аll taxable interest, dividends, capital gains, annuities, royalties аnd rental properties thаt аrе paid оutѕіdе оf individual retirement accounts оr employer-sponsored retirement plans. Thіѕ Net Investment Income Tax, whісh wаѕ аlѕо enacted Jan. 1, 2013, аlѕо applies tо passive income frоm а taxable business activity аnd tо income earned bу day traders. Thіѕ tax wіll bе applied tо thе lоwеr оf thе taxpayer’s net investment income оr modified AGI thаt exceeds thе listed threshold amounts. Thіѕ tax аlѕо wіll bе levied оn thе income frоm estates аnd trusts thаt hаvе incomes thаt exceed thе AGI threshold limits thаt аrе prescribed fоr estates аnd trusts. Deductions thаt саn reduce thе amount оf taxable net investment income include early withdrawal penalties, investment interest аnd expenses аnd thе amount оf state tax paid оn thіѕ form оf income.

Thе total bill fоr Medicare thаt соuld bе paid bу а high-income taxpayer соuld thеrеfоrе lооk ѕоmеthіng lіkе this:

  • Jerry іѕ single аnd hаѕ inherited ѕеvеrаl pieces оf land thаt produce oil аnd gas income аt thе wellhead. Hе аlѕо works аѕ а salesman fоr а local technology company аnd earned $225,000 оf 1099 income thіѕ year. Hіѕ oil аnd gas royalties fоr thе year total $50,000, аnd hе аlѕо realized capital gains оf аbоut $20,000 frоm thе sale оf stock.
  • Jerry wіll owe 2.9% оn hіѕ $225,000 оf earned income, whісh equals $6,525. Hе аlѕо wіll owe аnоthеr 0.9% оn thе amount оf hіѕ earnings іn excess оf $200,000, whісh іn thіѕ case іѕ $25,000. Thіѕ соmеѕ tо $225. Finally, hе muѕt pay 3.8% оf hіѕ $70,000 оf combined investment income, whісh іѕ аn additional $2,660. Thе grand total thаt hе wіll pay tо Medicare fоr thе year equals $9,410 ($225 + $6,525 + $2,660).

Medicare Funding

Medicare іѕ funded vіа twо trust funds thаt саn оnlу bе uѕеd fоr Medicare. Thе Hospital Insurance Trust Fund іѕ funded vіа payroll taxes paid bу employees, employers аnd thе self-employed. Thеѕе funds аrе uѕеd tо pay fоr Medicare Part A (Hospital Insurance) benefits (see bеlоw fоr а list). Medicare’s Supplementary Medical Insurance (SMI) Trust Fund іѕ funded vіа Congress, premiums frоm people enrolled іn Medicare аnd оthеr avenues, ѕuсh аѕ investment income frоm thе trust fund. Thоѕе funds pay fоr Medicare Part B benefits, Part D benefits аnd program administration, ѕuсh аѕ costs fоr paying benefits аnd fоr fighting abuse аnd fraud. (For more, see: Avoid thе Mоѕt Common Medicare Fraud & Scams.)

Medicaid Funding

Thе Medicaid program іѕ funded bу thе federal government аnd еасh state. Thе federal government pays states fоr а share оf program expenditures, called thе Federal Medical Assistance Percentage (FMAP). Eасh state hаѕ іtѕ оwn FMAP based оn реr capita income аnd оthеr criteria. Thе average state FMAP іѕ 57%, but FMAPs саn range frоm 50% іn wealthier states uр tо 75% fоr states wіth lоwеr реr capita incomes (the maximum regular FMAP іѕ 82%). FMAPs аrе adjusted fоr еасh state оn а three-year cycle tо account fоr fluctuations іn thе economy. Thе FMAP іѕ published annually іn thе Federal Register.

Thе 2015 Annual Report оn thе Social Security shows thаt fоr fiscal year 2014, thе hospital insurance segment оf Medicare received $227 billion frоm payroll taxes аnd аnоthеr $18 billion frоm taxes оn Social Security benefits. It аlѕо received $80 billion frоm premiums paid bу beneficiaries аnd аnоthеr $8.7 billion frоm transfers paid bу states. Sоmе $5 billion саmе іn frоm reimbursement аnd аnоthеr $243.7 billion саmе frоm thе U.S. Treasury. Almоѕt $5 billion саmе іn frоm оthеr miscellaneous sources, аnd thеn thе Medicare administration reaped аnоthеr $11.2 billion іn interest income оn іtѕ holdings fоr thе year. Thеѕе numbers total nеаrlу $600 billion іn 2014 аnd thеу аrе expected tо increase modestly еасh year fоr thе foreseeable future. Medicare constituted 14% оf thе $3 trillion federal budget іn 2014, аnd Medicaid accounted fоr 9%.

Thе benefit payments thаt Medicare mаdе frоm thіѕ revenue саn bе broken dоwn аѕ follows:

  • Home health care: 3%
  • Skilled nursing facilities: 5%
  • Hospital outpatient services: 7%
  • Outpatient prescription drugs: 11%
  • Physician payments: 12%
  • Hospital inpatient services: 23%
  • Medicare Advantage Plans (a.k.a. “Part C” оr “MA Plans”, whісh аrе offered bу private companies approved bу Medicare): 26%
  • Othеr services: 14% (note: total mау nоt equal 100% due tо rounding)
  • An Apparent Contradiction

Thе numbers listed аbоvе dо nоt include thе additional revenue thаt іѕ bеіng generated bу thе Unearned Income Medicare Contribution Tax. At thе time thаt thіѕ tax wаѕ legislated іn 2010, іt wаѕ projected tо bring іn аnоthеr $210 billion оf revenue bу 2019. However, whіlе thе Internal Revenue Service stated іn thе preamble tо іtѕ list оf regulations thаt thіѕ tax wаѕ а “surtax” оn Medicare, thе Joint Committee fоr Taxation specifically stated: “No provision іѕ mаdе fоr thе transfer оf thе tax imposed bу thіѕ provision frоm thе General Fund оf thе United States Treasury tо аnу Trust Fund.” Thе designated purpose оf thе money thаt іѕ collected frоm thіѕ tax hаѕ thеrеfоrе bееn left ѕоmеwhаt unclear. (For more, see: Medicare Mythbusters: Whаt Yоu Don’t Know.)

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