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Mr. John has ? 1,00,000 for investment purposes. Should he invest in equity shares, preference shares, public deposits or debentures? Justify your answer.

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John’s investment depends on many factors:

  • If he wants control in the company or participation in management of the company, he should invest in equity shares.
  • If he wants some certainty in returns and also wants something extra in case of huge profits, he should invest in preference shares.
  • If he wants perfect certainty, he should invest in public deposits or debentures as rate of return is pre fixed.
  • He also needs to see if he wants to invest for short term or long term. If he is interested in short term investment, then he should choose public deposits.
  • If he is interested in middle term investment, he should invest in preference shares or debentures.
  • If he is interested in long term investment, he should invest in equity shares.

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