A REPORT ON THE STUDY OF VARIOUS INVESTMENT ALTERNATIVES AVAILABLE

Submitted to Punjab Technical University in partial fulfillment of the Requirements for the degree of

MASTER OF BUSINESS ADMINISTRATION

By

Kuldeep Kaur 80906317078

SWAMI VIVEKANAND BUSINESS SCHOOL

BANUR, PATIALA

ACKNOWLEDGEMENT
Praise is to almighty god, who made me able to carry out the present study successfully .It is a privilege for me to take this opportunity to express my sincere gratitude for my respected. co-supervisor, a dedicated scholar, noble personality and mentored , Ms sonal mathur IDBI Fortis insurance Co. Ltd Words will, not doubtful to document his great contribution at every stage of my post graduate career. I thank you for always having the time to support me and provide encouragement whenever I needed it, and for his limitless patience and constructive criticism. I sincerely owe gratitude to my respected supervisor. She has been a guiding light for all my efforts. It was she who imparted me the zeal to initiate this work and whose vigilant supervision guided me through out the course of this study. Last but not least, my gratitude also to my parents and family who cooperated with me in every possible manner and bestowed their love and blessings on to me.

My

special

thanks

to

the

principal,

colleagues,

teachers,

administrative staff and friends at various departments for all the interesting discussions and cooperation. Kuldeep Kaur

DECLARATION

I hereby declare that the project entitled investment opportunities in India from the perspective of advisor is entirely my own work. The details study is being submitted in partial fulfillment of the requirement for the award of degree in master of business administration. The report in a record of benefice study done by me and no part of this report has been submitted for the award of any degree or diploma The recommendation is based on my person judgment and hence the company is not legally bound to accept them. This report is my original work and data mentioned is to the best of my knowledge.

Kuldeep Kaur Roll No- 8O906317078

PERSONAL FINANCIAL PLANNING

FUNDAMENTALS OF FINANCIAL PLANNING Financial planning is an ongoing process for an individual. It is the process of meeting your life goals through the proper management of your finances. Life goals can include buying a home, saving for your child's education or planning for retirement. A person may start it at an early age and carry it forward through his life with changes to suit his changing goals and needs. Financial planning provides direction and meaning to your financial decisions. It allows you to understand how each financial decision you make affects other areas of your finances. Financial Planning can Jake a "big picture" view. of our financial situation and make financial planning recommendations that are right for, us. The financial planning can look at all of our needs including budgeting and saving, taxes, investments, insurance and retirement planning. Financial Planning is very important to achieve your financial goals which take different faces in ones life. Financial goals can vary from buying a house to buying crockery, buying car to buying seat covers and also from planning for children's expenses to buying their uniform and stationery. Financial planning is a process that helps a person work out where he or she is now, what he/she may need in the future and what he/she must do to reach the defined goals. The process involves gathering relevant financial information, setting life goals, examining the person's current financial status and coming up with a strategy or plan for how the person can meet his/her goals given the person's current situation and future plans. The objective of financial planning is to ensure that the right amount

of money is available in the right hands at the right point in the future to achieve and individual's financial goals. Process of Financial Planning: Financial Planning is the overall process of advising clients on how to achieve their financial goals. Financial Goals and Objectives refer to all goals and needs of a client which have a stated. Asset Allocation: The allocations of a client's investments at a broad level across various asset classes, which include hard assets (real estate, jewellery, etc.) and financial, assets. Risk Allocation: The extent, of loss in value that a client can tolerate, psychologically and financially and for how long they can withstand such declines in values. Financial Plan: A document that details clearly in writing the financial goals, available resources, time frame for investment, asset allocation, specific investment, etc. Portfolio Rebalancing: The process of making changes to the asset allocation and specific investment to ensure that the client's investment strategy stays consistent and current with changes in their needs, financial situation and market conditions. Types of Financial Goals After the above discussion, the next most important element in financial planning is to understand the various types of financial goals and monetary aspect to them. These are best defined when the amount and the time frame ate both clearly

how to use them in practice. Long-term goals Long-term financial goals represent the long-term requirements of an individual. Long-term goals may extend beyond a period of six years. The time period should not be so long that the goals become unrealistic to achieve. It is possible that goals change over a period of time and thus need to be revised on a regular basis. Short-term goals Short-term goals. are for a period of one year or less. They are immediate goals in the form of expenses in the current period, such as education expenses for a child newly admitted in nursery school. To attain long-term goals, it is essential to attain current short-term goals. The short-term goals also provide for the surplus required for savings; which are crucial for long-term goals. Intermediate goals. Interri1ediate goals fill up the gap between the short term and longterm goals. They are generally spread over a period of two to five years. The following table describes an individual's intermediate goals. It is always advisable to prioritize these goals on the basis of the urgency in fulfilling them. By doing so, an individual will be able to identify the goals. That he/she has to concentrate on immediately and which of them can be deferred for some time. Importance of Financial Planning Financial planning is very important for each and every body who earns. When it comes to money the question of managing them efficiently comes along. Financial planning is about efficiently managing ones finances. Every one has few goals or dreams in their lives, to fulfill them on time it is very important to manage your finances.

However it is by and large understood that financial planning is the Rich's shoes, but in fact it is all the more important for the middle income group. "It's not for the well-to-do; it's how you become well-to-do." As India is a growing economy, the problem of understanding the various investment options is also growing. Also attached is the problem of understanding the risk return trade off is important. On these lines we can discuss these few importance of financial planning for any investor or for that matter saver. Financial planning provides direction and meaning to your financial decisions. It allows you to understand how each financial decision you make, affects other areas of your finances. For example, buying a particular investment product might help you pay off your debts faster or it might enhance your goal of buying a car by a year or two. By viewing each financial decision as part of a whole, you can consider its Short and long-term affects on your life goals. You can also adapt more easily to life changes and feel more secure that your goals are on track. How can Financial Planning to be done? Yes yon can but if yon have the required skills. Financial planning is very technical and conceptual process. Some personal finance software packages, magazines or self-help books can help you do your own financial planning. However, you may decide to seek help from a professional financial planner if: You need expertise you don't possess in 'certain areas of your finances. For example, a planner can help you evaluate the level of risk in your investment portfolio or adjust your retirement plan due to changing family circumstances.

You want to get a professional opinion about the financial plan you developed for yourself. You don't feel you have the time to spare to do your own financial planning. You have an immediate need or unexpected life event such as a birth, inheritance or major illness. You feel that a professional adviser could help you improve on how you are currently managing your finances. You know that you need to improve your current financial situation but don't know where to start.

Steps in Financial Planning However Financial Planning is a very specialized process. It is also governed by lots of bodies. There fore it follows a standard process as prescribed by the Financial Planning Board. The Financial Planning Process consists of the following six steps: 1. Establishing and defining the client-planner relationship. The financial planner should clearly explain or document the services to be provided to you and define both his and your responsibilities. The planner should explain fully how he will be paid and by whom. You and the planner should agree on how long the professional relationship should last and on how decisions will be made. 2. Gathering client data, including goals. The financial planner should ask for information about your financial situation. You and the planner should mutually define your personal and financial goals, understand your time frame for results and discuss, if relevant, how you feel about risk. The financial planner should gather all the necessary documents before giving you the advice you need. 3. Analyzing and evaluating your financial status.

The financial planner should analyze your information to assess your current situation and determine what you must do to meet your goals. Depending on what services you have asked for, this could include analyzing your assets, liabilities and cash flow, current insurance coverage, investments or tax strategies. 4. Developing The financial and planner presenting should financial offer financial planning planning

recommendations and / or alternatives. recommendations that address your goals, based on the information you provide. The planner should go over the recommendations with you to help you understand them so that you can make informed decisions. The planner should also listen to your concerns and revise the recommendations as appropriate. 5. Implementing the financial planning recommendations. You and the planner should agree on how the recommendations will be carried out. The planner may. Carry out the recommendations or serve as your "coach," coordinating the whole process with you and other professionals such as attorneys or stockbrokers. 6. Monitoring the financial planning recommendations. You and the planner should agree on who will monitor your progress towards your goals. If the planner is in charge of the process, she should report to you periodically to review your situation and adjust the recommendations, if needed, as your life changes. .

AN INTRODUCTION TO THE COMPANY IDBI FORTIS INSURANCE COMPANY LTD.

IDBI Fortis Life Insurance Co Ltd., is a joint venture between three leading financial conglomerates - India's premier development and commercial bank, IDBI, India's leading private sector bank, Federal Bank and Europe's premier Bancassurer, Fortis, each of which enjoys a significant status in their respective business segments. .In this venture, IDBI owns 48% equity while Federal Bank IDBI each. IDBI fortis launched its first set of products across India in March 2008, after receiving the requisite approvals from the Insurance Regulatory Development Authority (IRDA). Today, IDBI fortis insurance company ltd. offer services through a vast nationwide network across the branches of IDBI Bank and Federal Bank in addition to a sizeable network of advisors and partners. IDBI Fortis comes with impeccable parentage, being the result of the coming together of three financial giants: IDBI Bank, Federal Bank and Fortis IDBI Bank, India's premier development and commercial bank, has been instrumental in sponsoring the development of key national institutions in the financial sector including the Securities and Exchange Board of India (SEBI), . National Stock Exchange of India Ltd (NSE) and National Securities Depository Ltd (NSDL). Today, it ranks amongst. India's foremost commercial banks, with a wide range of innovative products and services, serving retail as well as corporate customers in all comers of the country. Its offerings such as IDBI Flexi bonds and Suvidha deposits have attracted unparalleled response demonstrating utmost customer Fortis own 26% equity

confidence

Federal Bank, one of India's leading private sector banks, has a dominant presence in the state of Kerala along with a strong network across the rest of India. The bank serves over four million retail customers with a full complement of financial products and is known for its deeply rooted customer relationships both amongst resident and nonresident Indians. Federal Bank is one of the first large Indian banks to have an entirely automated and interconnected branch network. Fortis, a European financial services provider engaged in banking and insurance with a presence in over 50 countries, offers its personal, business and institutional customers a comprehensive package of products and services through its own channels, in collaboration with intermediaries and through other distribution partners. With the recent acquisition of ABN Amro Bank as part of a consortium, Fortis ranks among the largest financial institutions in Europe. Fortis also has insurance joint ventures in several countries of Europe as well as Asia. IDBI Fortis is dedicated to building. On the. rich traditions of its founding companies to deliver products and services that suit your financial needs in a clear, transparent and cost-effective manner.

DIFFERENT

TYPE

OF

INVESTMENT'

PLAN

IN

IDBI

FORTIS

INSURANCE COMPANY LTD. WEALTHSURANCE Wealthsurance is a wealth-management account with subaccounts for investments and insurance. It is designed to meet twin goals of wealthbuilding and insurance protection Wealth building - The Wealthsurance Investment Account holds all the investments you have chosen. The investments made out of your premium allow you to manage and build

your wealth Insurance Protection - The Wealthsurance Insurance Account holds the insurance benefits you have chosen, which allows you to claim benefits in the event of a serious ailment, disablement, accident or death. The real power of the Wealthsurance Foundation Plan is that it offers the most comprehensive choice of investment options to develop your wealth plan. These investment options are designed to meet the needs of all types of investors and are offered in the Investment Basket. They are easy to understand and similar in features to familiar investments such as bank deposits, bonds, post office schemes or mutual funds What's more, with Wealthsurance, you get tax benefits on your contributions, returns and benefits. In effect, Wealthsurance is a tax-free wealth management account because all the money you put into it grows without any taxTo suit your unique needs to create and manage your plan to build wealth, the IDBI Fortis Investment Basket offers five types of investment options. Types of Investment Options IDBI offer five types of Investment Options: (a) Monthly Interest Account which gives interest at a declared rate on your account balance, (b) Guaranteed Return Funds which give a fixed, assured returns for a specified period, (c) Capital Guaranteed Funds which ensure that your principal is protected even while investing in stocks, (d) Market Linked Funds where you can choose to invest in stocks, bonds or money market and get market returns, (e) Asset Allocator Funds where you can leave the management of your funds entirely to IDBI, by simply indicating the level 9f risk you are prepared to take. In essence, with its truly versatile range of investment choices, the Wealthsurance Foundation Plan provides you with a one-stop solution to accumulate and grow wealth to meet both your short and long term financial objectives. Whether you want to plan for your child's education coming up in five years or the retirement coming after twenty five years,

the Wealthsurance Foundation Plan can meet your needs You can make a single investment or even manage most of your financial savings in it by choosing an appropriate mix of investment options. RETIRESURANCE The IDBI Fortis RetiresuranceTM Pension Plan is a Unit Linked Insurance Plan that helps you accumulate your funds for your retirement. The plan is tailor-made for the ever changing investment environment, with built-in flexibilities to manage your investment mix. On retirement, you can use he maturity proceeds to buy an annuity so that you have a monthly paycheck for life, even after you stop earning your regular income IDBI Fortis RetiresuranceTM Pension Plan boosts your funds through Guaranteed Loyalty Additions at the end of specific policy years to reward you for long-term investments.

Completed Policy Years 10 years 15 Years

Guaranteed Loyalty Extra units of 3.0% of the fund Value Extra units of 3.5% of the Fund value

20 years and every five Extra units of 4.0% of the fund Years thereafter value

Loyalty units will be a percentage of the average fund value in the last 36 months preceding the loyalty unit allocation date and will be paid provided all premiums are paid up to date and -the policy has not yet reached maturity. In case you have invested in multiple funds, the guaranteed loyalty additions will be added to each fund in the same proportion as the fund value in each fund bears to the total fund value.

HOMESURANCE PLAN Homesurance is a mortgage reducing term plan which offers protection to you and your family from your home loan liability. The plan provides a cover equal to the outstanding balance of your home loan in the unfortunate event of expiry of the insured A. Protection against Loan Liability Homesurance covers your life for an amount equal to your home loan liability as per your home loan schedule. In case of an unfortunate event of expiry of the insured, the outstanding balance amount is paid to the nominees in one lump sum, who may then settle the loan liability. B. Cover for Terminal Illness A unique feature of the Homesurance plan is that if pays an accelerated payment of death benefit upon the diagnosis of a terminal illness, where the insured has a medical prognosis of a life expectancy of six months or less. This helps you to settle the home loan liability should an unforeseen terminal illness occur. C. Optional Insurance Benefits During the tenure of your loan, unforeseen events like accidents, hospitalisation & major diseases could affect your finances. To protect you and your family from such tribulations, you may opt for optional insurance benefits as an addition to your Homesurance base plan. The Optional Insurance. Benefit is available only with the regular premium plan. You need to pay additional premiums for the term of the optional insurance benefit, depending upon the

sum insured chosen. With the Homesurance regular premium plan, you can choose Optional insurance benefits such as:

Accidental Death & Disablement benefit This benefit will pay the sum insured in case of death or disablement of the insured person due to an accident. Accidental Death Benefit The Accidental Death Benefit is paid if the insured person dies from an injury due to an accident. Hospital Cash Benefit At times you may require hospitalisation due to an illness or accidents. Hospitalisation can be a huge drain on your finances, which can affect your ability to pay the committed home loan EML The Hospital Cash Benefit can help you ease your hospitalization expenses burden. The Hospital Cash Benefit rider gives you a daily allowance for each day of hospitalisation and a higher allowance is given if the treatment requires you to be admitted to an Intensive Care Unit (LC.U.). To further assist in your recovery, an additional recovery allowance is offered, provided that you had been admitted to a hospital for more than five days. Mill or Diseases Benefit The major diseases benefit covers 17 major diseases and

surgical procedures. In case you are diagnosed with any of the specified major diseases you will receive a lump sum benefit which can be used for treatment or may assist in paying off your loan. The basic policy plan will continue even after paying off the Major diseases benefit.

Waiver of Premium Disablement

Benefit

on

Total

and

Permanent

In the event of total and permanent disablement of the Policy Owner due to illness or injury, the future regular premiums are waived and treated as paid Homesurance Protection Plan The Homesurance Protection Plan is a reducing term plan, which provides cover equal to the outstanding balance of your home loan. In the unfortunate event of death of the home loan borrower, the insurance cover enables repayment of the home loan liability. Protection against loan liability A home loan is usually a large liability and if the breadwinner who would repay the loan were not be there, it could become a serious burden to the family, the homesurance Protection Plan protects against this liability . This specifics of the plan are as follows. 1. Cover Amount reduces over time Your outstanding home loan amount normally reduces over time as you repay by way of monthly installments. Accordingly, the cover amount under the homesurance protection Plan also

reduces with time to reflect the outstanding loan amount. At the time you take the plan, you will receive a Policy schedule based on the amount and terms of your loan, which will show you the reducing cover amount over time. 2. Benefit Amount is paid on death The cover amount as per the Homesurance Protection Plan Policy Schedule as on the date of death, or the actual outstanding balance in the insured loan account as on the date In the event of death of the insured, we will pay either of death, whichever is higher. Death due to any cause including illness or accident is covered under the plan Death, whether in India or abroad is also covered under the plan. BONDSURANCE Bondsurance is the ideal plan to beat the ups and downs around you. It provides safety by giving you a guaranteed return on your investment. It also provides a life insurance cover to ensure the financial security of your loved ones. Not only these, it also gives you two tax benefits at the same time. Bondsurance is a single premium plan which allows you to make a one-time investment and get a guaranteed amount on maturity. You can choose a maturity period of 5 or 10 years for your investment. At the end of the chosen period, you will receive a guaranteed maturity amount Besides the guaranteed maturity amount, Bondsurance also provides a life insurance. cover. In case of death before the maturity date, a Death Benefit which is also guaranteed will be paid. Thus you can get life insurance cover, while earning an assured return on your investment. A. Guaranteed Return on your investment

Bondsurance gives you guaranteed returns on your onetime investment. All you have to do is choose the Maturity Benefit, and the Maturity Period for your investment. Based on your choice, the investment you have to make by way of single premium is determined Maturity Benefit You can choose any amount as the Maturity Benefit. The amount you choose is guaranteed and will be paid to you on the maturity date. Maturity Period You can choose the Maturity Period, which can be either 5 or 10 years. The Maturity Period is the policy term of your Bondsurance Plan. Single Premium Amount The single premium amount is based on your choice of Maturity Benefit, Maturity Period and the age of the Insured Person in completed years as on the date of application, as per the Premium Table below. Minimum single premium payable is Rs 20,000. There is no maximum limit. PREMIUM TABLE PREMIUM TABLE Age of Insured Person Premium per Rs. (in completed years) Benefit Maturity period 5 years 8-32 Rs. 778.98 (from age 13 yrs) 33-37 Rs. 785.91 38-42 Rs. 797.78 43-47 Rs. 819.56 48-52 Rs. 861.13

1000 of maturity Maturity period 10 years Rs. 555.28 (from age 8 yrs.) Rs. 567.16 Rs. 583.98 Rs. 625.56 Rs. 700.00

53-55

Rs. 936.36

Not Available

Note: The above premiums are exclusive of service tax and education cess, which are payable in addition. Premiums may be revised based on market conditions. B. Life Cover of 5 times the invested amount Besides giving assured returns, Bondsurance also provides a life insurance cover. In the unfortunate event of death of the Insured Person before the maturity date, a Death Benefit equal to five times the single premium amount will be paid. The Death Benefit (which is the Sum Insured) is guaranteed. The Plan will terminate upon payment of Death.

Investment Proposals in India

Investment is the employment of funds with the aim of achieving additional income or growth in value. The essential quality of an investment is that it involves "waiting" for a reward. It the commitment of resources that have been saved or put away from current consumption in the hope that some benefits will accrue in future. As a part of investments proposals in India there are several prospects by whish customer look for investment criteria which are as follows Investment management Investment advice Tax planning Tax preparation Retirement planning Planning for life, long term care insurance advice Planning for other financial goals Estate planning

The aspect Which customer consider while investing into these proposals are Safety Return Time Period

Liquidity

Various Proposals of investment on which study is to be carried out are as follows Mutual funds Life insurance Post office schemes Bank Fixed Deposits Shares and stock broking Bonds and Debentures Gold

MUTUAL FUNDS
History on mutual funds The manual fund industry in India started in 1963 with the formation of Unit Trust of India, at the intiative of the Government of India and Reserve Bank. The history of mutual funds in India can be broadly divided into four distinct phases. First Phase- 1964-87 Unit Trust of India (UTI) was established on ,1963 by an Act of Parliament. It was set up by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial Development Bank of India (IDBI) took over the regulatory and administrative control in place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6,700 crores of assets under management. "

Second Phase -1987-1993 (Entry of Public Sector Funds) 1987 marked the entry of non- UTI, Public sector mutual funds set up by public sector banks and Life Insurance Corporation of India (LIC) and

General Insurance Corporation of India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fund established in June 1987 followed by Canbank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank, Mutual Fund(Nov89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC established its mutual fund in June 1989 while GIC had set up its mutual fund in December 1990. At the end of 1993, the mutual fund industry had assets under management of Rs.47,004 crores. Third Phase -1993-2003 (Entry of Private Sector Funds) With the entry of private sector funds in 1993, a new era started in the, Indian mutual fund industry, giving the Indian investors a ,wider choice of fund families. Also, 1993 was the year in which the first Mutual Fund Regulations came into being, under which all mutual funds, except UTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993. The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI (Mutual' Fund) ' The number of mutual fund houses went on increasing, with many foreign mutual funds setting up funds in India and also the industry has witnessed several mergers arid acquisitions. As at the end of January 2003, there were 33 mutual funds with total assets of Rs. 1,21,805 crores. The Unit Trust of India with Rs.44,541 crores of assets under management was way ahead of other mutual funds. Fourth Phase - Since February 2003 In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of India with assets ll11der management of Regulations 1996.

Rs.29,835crores as at the end of January 2003, representing broadly, the assets of US 64 scheme, assured return and certain other schemes. The Specified Undertaking of Unit Trust of India, functioning under an administrator and under the rules framed by Government of India and does not come under 'e purview of the Mutual Fund Regulations. The second is the UTI Mutual Fund Ltd, spons9red by SBI, PNB, BOB and LIC. It is registered with SEBI and functions under the Mutual Fund Regulations. With the bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76,000 crores of assets under management and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund Regulations, and with recent mergers taking place among different private sector funds, the mutual fund industry has entered its current phase of consolidation and growth. As at the end of September, 2004, f4ere were 29 funds, which manage assets of Rs.153108 crores under 421 schemes. Mutual Funds in India Mutual Funds is an instrument of investing money. Nowadays, bank rates have fallen down and are generally below the inflation rate. Therefore, keeping large amounts of money in bank. is not a wise option, as in real terms the value of money decreases over a period of time. One of the options is to invest the money in stock market. But a common investor is not informed and competent enough to understand. The intricacies of stock market. This is where mutual funds come to the rescue. A mutual fund is a group of investors operating through a fund manager to purchase a diverse portfolio of stocks or bonds. Mutual funds are highly cost efficient and very easy to invest in.. By pooling money together in a mutual fund, investors can purchase stocks or Ponds With much lower trading costs than if they tried to do it on their own. Also, one doesn't have to figure out which stocks or bonds to buy. But the biggest advantage of mutual funds is diversification. Diversification means spreading out money across many different types of investments. When one investment is down another might be up. Diversification of investment holdings reduces the risk tremendously.

Objectives of Mutual Funds

1. Income. Income funds focus on dividends .and interest that provide income to investors. This is a relatively steady Source of money, but the fund's NA V can still go up and down. 2. Growth. Growth funds focus on increasing the value of the principal or amount invested through capital gains and net asset values. Growth funds are usually more risky but offer greater potential return. 3. Stability. Stability funds focus on protecting the amount invested from loss so the fund's NA V does not go Down. This is the least risky type of fund but may make the least amount of money. Types of Mutual Fund Schemes Mutual fund schemes may be classified on the basis of its structure and its investment objective. By Structure Open-end Funds An open-end fund is one that is available for subscription all through the year. These do not have a fixed maturity. Investors can conveniently buy and sell units at Net Asset Value ("NA V") related prices. The key feature of open-end schemes is liquidity. Closed-end Funds A closed-end fund has stipulated maturity period which generally ranging from 3 to 15 years. The fund is open for subscription only during a specified period. Investors can invest in the scheme at the time of the initial public issue and thereafter they can buy or sell the units of the scheme on the stock exchanges where they are listed. In order to provide an exit route to the investors, some close-ended funds give an option of selling back the units to the Mutual Fund through periodic repurchase at NA V related prices. SEBI Regulations stipulate that at least one of the two exit routes is provided to the investor.

Interval Funds Interval funds combine the features of open-ended and close-ended schemes. They are open for sale or redemption during pre-determined intervals at NA V related prices.

By Investment Objective Growth Funds The aim of growth funds is to provide capital; appreciation over the medium to long term. Such schemes normally invest a majority of their corpus in equities. It has been proved that returns from stocks, have outperformed most other kind of investments. held over the long term. Growth schemes are ideal for investors having a long' term outlook seeking growth over a period of time. Income Funds The aim of income funds is to provide regular and steady income to investors. Such schemes generally invest in fixed income securities such as bonds corporate debentures and Government securities. Income Funds are ideal for capital stability and regular income. Balanced Funds The aim of balanced funds is to provide both growth and regular income. Such schemes periodically distribute a part of their. earning and invest both in equities and fixed income securities in the proportion indicated in their offer documents. In a rising stock market, the NA V of these schemes may not normally keep pace, or fall equally when the market falls. These are ideal for investors looking for a combination of income and moderate growth. Money Market Funds The aim of money market funds is to provide easy liquidity,

preservation of capital and moderate income. These schemes generally invest in safer short-term instruments such as treasury bills, certificates of deposit, commercial paper and inter-bank call money. Returns on these schemes may fluctuate depending upon the interest rates prevailing in the market. These are ideal for Corporate and individual investors as a means to park their surplus funds for short periods. Gilt Fund These funds invest exclusively in government securities. Government securities have no default risk. . NAV s of these schemes also fluctuate due to change in interest rates and other economic factors as is the case with income or debt oriented schemes. Index Funds Index Funds replicate the portfolio of a particular index such as the BSE Sensitive index, S&P NSE 50 index (Nifty), etc These schemes invest in the securities in the same weightage comprising of an index. NA V s of such schemes would rise or fall in accordance with the rise or fall in the index, though not exactly by the same percentage due to' some factors known as "tracking error" in technical terms. Necessary disclosures in this regard are made in the offer document of the mutual fund scheme. There are also exchange traded index funds launched by the mutual funds which are traded on the stock exchanges. Other Schemes Tax Saving Schemes These schemes offer tax rebates to the investors under specific. Provisions of the Indian Income Tax laws as the Government offers tax incentives for investment in specified avenues. Investments made in Equity Linked Savings Schemes (ELSS) and Pension Schemes are allowed as deduction U/S 88 of the Income Tax Act, 1961. The Act also provides opportunities to investors to save capital gains U/S 54EC by investing in

Mutual Funds. Special Schemes Industry Specific Schemes

Industry Specific Schemes invest only in the industries specified in the offer document. The investment of these funds is limited to specific industries like Infotech, FMCG, Pharmaceuticals . Index Schemes

lndex Funds attempt to replicate the performance of a particular index such as the BSE Sensex or the NSE 50

Sectoral Schemes

Sectoral Funds are those which invest exclusively in a specified sector. This could be an industry or a group of industries or various segments such as 'A' Group shares or initial public offerings. Benefits of Investing in Mutual Funds Professional Management Mutual Funds provide the services of experienced and skilled

professionals, backed by a dedicated investment research team that analyses the performance and prospects of companies and selects suitable investments to achieve the objectives of the scheme. Diversification

Mutual Funds invest in a number of companies across a broad crosssection of industries and' sectors; This diversification reduces the risk because seldom do all stocks decline at the same time and in the same proportion. You achieve this diversification through a Mutual Fund with far less money than you can do on your own.

Convenient Administration Investing in a Mutual Fund reduces paperwork and helps you avoid many problems such as bad deliveries, delayed payments and follow up with brokers and companies. Mutual Funds save your time and make investing easy and convenient.

Return Potential Over a medium to long-term, Mutual Funds have the potential to provide a higher return as they invest in a diversified basket of selected securities. Low Costs Mutual Funds are a relatively less expensive way to invest compared to directly investing in the capital markets because the benefits of scale in brokerage, custodial and other fees translate into costs for investors. Liquidity In open-end schemes, the investor gets the money, back promptly at net asset value related prices from the Mutual Fund. In closed end schemes, the units can be sold on a stock exchange at the prevailing market price or the investor can avail of the facility of direct repurchase at NAV related prices by the Mutual Fund.

Transparency You get regular information on the value of your investment in addition to disclosure on the specific investments made by your scheme, the proportion invested in. each class of assets and the fund manager's investment strategy and outlook. Flexibility Through features such as regular investment plans, regular withdrawal plans and dividend reinvestment plans, you can systematically invest or withdraw funds according to your needs and convenience. Affordability Investors individually may lack sufficient funds to invest in high-grade, stocks. A mutual fund use of its large corpus allows even a small investor to take the benefit of its investment strategy. Choice of Schemes Mutual Funds offer a family of schemes to suit your varying needs over a lifetime. Well Regulated All Mutual Funds .are registered with SEBI and they function within the provisions of strict regulations designed to protect the interests of investors. The operations of Mutual Funds are regularly monitored by SEBI. Indian Mutual Fund Industry

Mutual funds are no longer looked down upon but seen as a healthy investment option and in April 07 total investment in 33 funds crossed Rs 3.5 lakh crore, an industry official has said. Also, the risk appetite is growing with burgeoning young middle class, making mutual funds a preferred option compared to small l saving schemes that is considered safe but give low returns. is increasing day by day and the returns they are giving," "MFs are increasingly being recognised by households, in order to maximize returns," he said. Total AUM as on April 30 was Rs 3,50,441 crore as ago. compared to Rs 3,26,388 crore a month . . "Main reason for the growth in assets of mutual funds is awareness which

In March 2007, Foreign Institutional Investors (FIls) were net buyers of I equities with purchases of Rs 14,033 m (as on

March 30, 2007). On the contrary mutual funds were net sellers to the tune of Rs 20,275 m. These are only some of the statistics that show that the Indian mutual funds industry is still .D Its infancy. It is important to study the present industry scenario to gain a better. Understanding of the impediments to the growth of the industry: Lack of Investor Awareness: Retail investors had a wrong notion about mutual funds as an investment avenue. The benefits of risk diversification, professional management and ease of administration involved while investing in mutual funds are not clearly understood. Knowledge of financial products is ingrained in school and college curriculum in countries like UK, US and France. Investor Risk Appetite: Equity funds account for 30% of the total AUM in India. This figure is more than 50% in most developed countries. Frequent stock market scams and the bust of tech sector specific MFs have contributed to this apprehension. The growth in mutual funds has come through the growth in investments in short. term instrument like Money Market ,futua1 Funds which account for 40% of ADM. Higher Returns of Alternative Debt Instruments: Government guaranteed schemes provide risk free returns at competitive rates of returns. This is why mutual funds have difficulty competing retail business. Concentration of Corporate Investors: Mutual funds have become overly attractive to corporate investors because of higher returns than bank deposits and ability to distribute capital gains tax. Corporate investors account for 57% of the AUM (by value). Though

the turnover rates have increased the average fund in management has grown by only 25% in the past 4 years. It is clear that the lack of growth in funds under management in India is because of the absence of long term investors. Corporate investors take profits frequently resulting in destruction in the compound growth in funds under- management. Distributors are forced to pass on more commissions to companies, while fund companies are compelled to offer funds with wafer thin margins. Retail investors lose out in the sense that they continue to pay higher expenses. Distribution: One of the major factors impacting the growth of mutual fund industry is the absence of any regulation in distribution of mutual funds. Mutual fund investors need distributors who are able to inform them about the efficacy of distribution product for a particular risk profile stage in life cycle. Lack of distributor awareness and the absence of any disclosures from distributors make mis selling of MF products commonplace. Also penetration in rural areas is a problem. Only 3% of rural households own mutual funds. For mutual funds to set up a distribution network in these centers can be very expensive. Current Scenario Since private players were allowed in 1993, the Indian Mutual fund industry has witnessed a sea change in the wayit operates, in the regulatory and investor attitude towards Mutual fund products. From a single player in 1987 today there are 29 mutual funds offering as many as 477 schemes. The total assets under management have risen to Rs 334563 crores. However, the accolades regarding the growth of the MF industry should be reserved until this growth is analyzed taking the MF industry in other developed countries in consideration. Here are certain

statistics that reflect that Indian Mutual fund industry still has along way to go when compared to global standards. AUM as a Percentage of GDP: In most of the devel9ped countries the total assets under management ranges from 30%-60% of the GDP. Total assets under management are only 8% of the GDP in case of India. Penetration of Mutual funds: In India it is estimated that 6.7% of the households hold mutual funds. This figure is close to 50% in case of the US and 17% in case of UK. Mutual funds account for, only 0.73% of total financial assets in India (11% of bank deposits). AUM for Mutual funds had exceeded the bank deposits in US in as early as 1998. These are only, some of the statistics that show that the Indian mutual funds industry is still in its infancy. It is important to study the present industry scenario to gain a better understanding of the impediments to the growth of the industry: Lack of Investor Awareness: Retail investors had a wrong notion about mutual funds as an diversification, investment avenue. The benefits of risk management and ease of professional

administration involved while investing in mutual funds are not clearly understood. Knowledge of financial products is ingrained in school and college curriculum in countries like UK, US and France. Investor Risk Appetite: Equity funds account for 30% of the total AUM in India. This figure is more than 50% in most developed countries. Frequent stock market scams and the bust of tech sector specific MFs have contributed to this apprehension. The growth in mutual funds has come through the growth in investments in short term instrument like Money Market Mutual Funds which account for 40% of AUM. Higher Returns of Alternative Debt Instruments: Government guaranteed schemes provide risk free returns at competitive rates of returns, This is why mutual funds have difficulty competing retail

business. Concentration of Corporate Investors: Mutual funds have become overly, attractive to corporate investors because of higher returns than bank deposits and ability to distribute capital gains tax. Corporate investors account for 57% of the AUM (by value). Though the turnover rates have increased the average fund in management has' grown by only 25% in the past 4 years. Lt is clear that the lack of growth in funds under management in India is because of the absence of long term investors. Corporate investors take profits frequently resulting in destruction in the compound growth in funds under management. Distributors are forced to pass on more commissions to companies, while fund companies are compelled to offer funds with wafer thin margins. Retail investors lose out in the sense that they continue to pay higher expenses. Distribution: One of the major factors impacting the growth of mutual fund industry is the absence of any regulation in distribution of mutual funds. Mutual fund investors need distributors who are able to inform them about the efficacy of distribution product for a particular risk profile and stage in life cycle. Lack of distributor awareness and the absence of any disclosures from distributors make mis selling of MF products commonplace. Also penetration in rural areas is a problem. Only 3% of rural households own mutual funds. For mutual funds to set up a distribution network in these centers can be very expensive. In many countries, mutual fund industry sees a point of inflection, a point after which the AUM increases spectacularly after a period of sluggish growth. This happened in case of US after 1992-93 when the AUM increased from $1 trillion to $7.3 trillion in 2004. Many studies have revealed that this period of growth corresponds to following factors.

Explosive growth in capital markets. A sound system of regulation. Increase in investor awareness

Comparison of Indian MF Industry with Global Standards The first mutual fund was established in the year 1924 in US. Like any other product they went through a life cycle experiencing sluggish growth between 1930 - 1970s and then witnessed rapid growth from 1990s onwards. The total worldwide AUM was $16.3 Trillion in 2004- 05. A brief comparison of Indian MF industry with Global MF industries (citing examples of US and EU countries) is presented below: Types of Products: Indian funds do not offer products that cater to entire life cycle of an investor. Mutual funds in US offer products that cater to diverse needs of investors ranging from purchase of house, car etc to admission in university. Mutual funds investing in commodities and real estate do not exist in India. An important factor that has led to growth in Mutual fund industry in US is the presence of pension. . As Americans began to pay attention to their own retirement plans through company sponsored retirement schemes, called "401(k)" plans, mutual funds started being looked upon as a smart option. Regulation: The mutual fund industry is one of the most regulated industries in the financial sector. The MF industry in US has been plagued by many scandals and SEC has acted fast to restore investor confidence and trust. Fines to the tune of $1.5 billion have been levied. Though allegations regarding frauds have surfaced in Indian MF industry also SEBI has been quick to investigate and restore confidence. However, certain issues regarding SEBI still exist Unlike its American counterpart SEBI hasn't been able to formulate regulations to increase the depth of MFs. Regulations regarding the privatization of Pension funds took a long

time to come. SEBI hasn't been able to educate investor on the usage of mutual funds as investment options. Risk Management Techniques: A recent survey by PWC revealed that as many as 50 percent of the respondent mutual funds are not managing risk properly. 50 percent of the respondents did not even have documented risk procedures or dedicated risk managers. Indian Mutual fund industry does not use statistical techniques of risk management but is using diversification effectively within the market limitations. As far as use of derivatives is concerned, they are not presently used because of the low volumes, low liquidity and absence of sufficient hedging products in the market Risk management in US mutual funds is more prevalent with the use - of statistical software and the use of VaR approach to risk management. Several fund companies have set up risk control measures internally, but they still have a long way to go in relaying this - to clients. Governance: With the recent late trading and market timing scandals in US mutual funds the issue of corporate governance of mutual fund has again gained center stage. There have been allegations of late timing in Indian MFs. The structure of Indian mutual funds is very similar to US mutual fund. SEC (the US MF regulator) requires of the directors to be independent. This proportion is 2/3 in case of India. However, there remain fundamental doubts whether the current governance structure provides institutionally appropriate checks and prevents potential conflict of interest and provide effective fund administration. Currently, a mutual fund is set up in the form of a trust under the Indian Trust Act, which was enacted in 1882 to essentially govern private trusts and charitable institutions. The trust structure has the following difficulties for a mutual fund: The issue of individual versus collective liability of trustees, which has deterred experienced persons from serving as trustees of mutual funds.

AMC is not subjected to a specific law book and is indirectly regulated by SEBI through trustees. Approval of directors of AMC lies with the trustees and not with SEBI. The study of MF structures of other countries (UK) reveals that there is a scope for simplification of the current structure. Eliminating the sponsor and giving the power to propose the creation of the MF to the asset management company (AMC) could be a possible alternative.

Future Expectations from Indian Mutual Fund Industry Taking into consideration the above comparison and the current situation prevailing in the capital markets, the realistic expectations from the Indian Mutual fund Industry could be: Increased Penetration: With the proposed opening up of pension funds to the private sector we can expect the penetration levels of MFs to increase in the next few years. Because of their experience in managing MFs the AMCs will play an important role in the management ofpension funds.

Increased Emphasis on Retail Investors through Supply Chain Innovations: Retail investments less than Rs 10,000 are unprofitable for AMCs. However, certain supply chain innovations and investments in retail infrastructure would lead to increased emphasis on retail investors. Some of the possible innovations can be the use of "straight-through processing," an industry buzz phrase for automating mutual fund transactions so that the entire processfrom placing a trade to final settlement-is fast, relatively seamless and less subject to manipulation. Straight for Ward concept, straight-through processing requires substantial integration and cooperation among members of the mutual fund supply chain. Using IT, members of the mutual fund supply chain can improve efficiency,

manage risk and improve regulatory compliance-all critical moves for maintaining investor confidence in mutual funds. As urban markets reach a peak mutual funds would target second rung cities and smaller towns to increase their investor base. Diverse Range of Products: In order to make MFs more acceptable to the retail investor mutual fund industry has to mature to offering comprehensive life cycle financial planning and products alone. These would include products catering to specific life cycle needs like buying a house, funding college admission etc. With increase in investor awareness many new products would be introduced. Some of them are listed here: derivative based MFs (though a cap derivative exposure for a sponsor currently exists), commodities and real estate MFs. (appropriate regulation from SEBI in case of real estate pending), feeder funds, funds of funds, capital protected funds, etc. Increase in the need for financial advice: As the affluence of Indians increases and the range of financial products available to meet people's needs expands - mortgages, deposits, life products, defined contribution pensions, mutual funds, etc - the need for financial advice will increase. Mutual fund distribution will become geared towards providing sound financial advice according to investor's risk profile and stage in life cycle.

Life Insurance Life is very fragile and death is a certainty. We cannot control the uncertainties of life. But, we can cover the risks surrounding us. Life insurance, simply put, is the cover for the risks that we run during our lives. It protects us from the contingencies that could affect us. Life insurance is not for the person who passes away, it for those who survive.

It is the responsibility of every bread earner to guard against the events that could affect the family in the unfortunate circumstance of his/her demise. Thus, having a life insurance policy is very vital. Before going for a life insurance policy it is imperative that you know about various types of life insurance policies. Endowment Policy, India An endowment policy covers risk for a specified period, at the end of which the sum assured is paid back to the policyholder, along with the bonus accumulated during the term of the policy. An endowment life insurance policy is designed primarily to provide a living benefit and only secondarily to provide life insurance protection. Group Insurance, India Group insurance offers life insurance protection under group policies to various groups such as employers-employees, professionals, cooperatives, weaker sections of society, etc. It also provides insurance coverage for people in certain approved occupations at the lowest possible premium cost. Group insurance plans have low premiums. These include employer-employee groups, associations of professionals (such as doctors, lawyers, chartered accountants etc), members of cooperative banks, welfare funds, credit societies and weaker sections of society. Joint Life Insurance Policy, India Joint life insurance policies are similar to endowment policies as they too offer maturity benefits, to the policyholders, apart form covering risks like all life insurance policies. But joint life policies are categorized separately as they cover two lives simultaneously, thus offering a unique advantage in some cases, notably, for a married couple or for partners in a business firm.

Loan Cover Term Assurance Policy, India Loan cover term assurance policy is an insurance policy, which covers a home loan. Such a policy covers the individual's home loan amount in case of an eventuality. The cover on such a policy keeps reducing with the passage of time as individuals keep paying their EMls (equated monthly installments) regularly, which reduces the loan amount. This plan provides a lump sum in case of death of the life assured during the term of the plan. The lump sum will be a decreasing percentage of the initial sum assured as per the policy schedule. Since this is a nonparticipating (without profits) pure risk cover plan, no benefits are payable on survival to the end of the term of the policy. Money Back Policy, India Money back policy provides for periodic payments of partial survival benefits during the term of the policy, as long as the policyholder is, alive. They differ from endowment policy in the sense that in endowment policy survival benefits are payable only at the end of the endowment period. An important feature of money back policies is that in the event of death at any time within the policy term, the death claim comprises full sum assured without deducting any of the survival benefit amounts, which may have already been paid as money-back components. The bonus is also calculated on the full sum assured. Pension Plan, India A pension plan or an annuity is an investment that is made either in a single lump sum payment or through installments paid over a certain number of years, in return for a specific sum that is received every year, -every half-year or every month, either for life or for a fixed number of years.

Term Life Insurance Policy, India Term life insurance policy covers risk only during the selected term period. If the policyholder survives the term, the risk cover comes to an end. Term life policies are primarily designed to meet the needs of those people who are initially unable to pay the larger premium required for a whole life or an endowment assurance policy. Benefits of a "Term Assurance Plan" The main reason for taking an insurance plan is to provide a suitable financial buffer against contingencies. The existence of term assurance plans is governed by this utility. 1. Death benefit - In case of unfortunate death of the policyholder these plans provide the payment of the sum assured to the nominee. Hence, such plans provide financial protection for the family in case of death of the insured person during the term. 2. Low cost risk cover - A term plan is the cheapest product available in the insurance industry today. Cost wise, it is the most effective of all insurance plans. 3. Cover against outstanding loans - Any term plan can also be used as a cover against outstanding loans and liabilities. In case the person has taken a large number of loans, then the person can take a term assurance plan equal to the amount of the loan so that in case of his death, the insurance company will clear the outstanding liabilities helping the family to become free from the financial burden. Investor's Comer. 4. Tax benefits of a "Term Assurance Plan" Premiums paid towards a

term assurance plan are eligible for a deduction under section 80C up to a maximum of Rs. 1,00,000. The death benefit that will be received under such a policy will also be exempt from tax under section 10(1OD) of the Income Tax Act.
VI. Comparison between term assurance plan without return of S.No. Kotak LIC MNYL HDFC Name of the Preferred Anmol Level Term Term plan Term Plan Jeevan Assurance Assurance Plan key features Low cost pure Low cost Low cost Low cost pure term pure term pure term term assurance assurance assurance assurance plan plan plan plan Age of entry 18yrs.-60yrs. 18yrs.18yrs.18yrs.-60yrs./ (min. & max.) 55yrs. 55yrs. 18yrs.-55yrs. (if optional benefits are taken) Maximum 70 years 65 years 60 years 65 years age at maturity Minimum & 10yrs30yrs 5 yrs- 25yrs 5,10,15,20 5 yrs-30yrs for maximum for regular or 25 yrs. single term premium premium 2 yrs 5yrs-30yrs for to 15 yrs. single premium premium I-Pru Life Guard Low cost pure term assurance plan 18yrs.-55yrs.

65 years 5yrs-30yrs for level term assurance without return of premium. 10yrs30yrs for level term assurance with return of premium. 3yrs15yrs. For single premium. Mini S.A. for Single Premium Policy 2.5 lacs. For others schemes S.A. in open subject to Mini. A.P. of Rs. 2400.

Min. & max. SA.

OPEN-subject to Mini. Yly. Premium Rs. 2000 & single Premium Rs. 10000.

Rs. 5 laks to Rs. 3 crores

Mini 2.5 lacs Max. 5 crores.

OPEN- subject to Mini. Yly. Premium of Rs. 1500.

The following table presents the cost structure a 30 year old male for a sum assured of Rs. 10,00.000 for 10 years. Kotak Preferred Term Plan Annual premium is Rs. 2,645 and single premium is Rs. 16,640 Annual premium is Rs. 2,564 and single premium is Rs. 17,120 Comparative costs of term plans without return of premium Anmol Jeevan I Term I-PrudentialMNYL-level Assurance Plan of HDFC Annual premium is Rs. 2,670 and single premium is Rs. 19,380 Life Guard Without return of premium Annual premium is Rs. 3,032 and single premium is Rs. 20,167 Term Assurance Annual premium is Rs. 2,280 and single premium is Rs. 19,940

Unit Linked Insurance Plan (ULIP)

Unit linked insurance plan(ULIP) is life insurance solution that provides for the benefits of protection and flexibility in investment. The investment is denoted as units and is represented by the value that is has attained called as Net Assets Value (NAV). The policy value at any time various according to the value of the underlying assets at the time. ULIP provides multiple benefits to the consumers. The benefits include: Life protection Flexibility Investment Options Option to take additional cover Disability Surgeries Tax Planning
Funds Name Secure Fund Objective Progressive by investing returns higher Equities 0% to 20% Debt Instruments 60% to 100% Money Market & Cash 0% to 20%

Investment and Saving Adjustable Life Cover Transparency Death due to accident Critical Illness Liquidity

element of assets in debt with minimum Balanced Fund exposure to equities Capital growth by availing and equity of market opportunities in debt and providing a good balance between risk Growth Fund and return High capital growth by investing higher element of assets in Protector Fund the equity market Progressive returns on your investment by investing higher element of assets in debt securities with a minimum exposure to 0% to 20% 60% to 100% 0% to 20% 30% to 85% 0% to 50% 0% to 20% 0% to 45% 50% to 90% 0% to 10%

equities.

Whole Life Insurance Policy, India A whole life policy runs as long as the policyholder is alive. As risk is covered for the entire life of the policyholder, therefore, such policies are known as whole life policies. A simple whole life policy requires the insurer to pay regular premiums throughout the life. In a whole life policy, the insured amount and the bonus is payable only to the nominee of the entitled to any money during his/her own lifetime. A whole life plan which covers the individual throughout his life may be highly appropriate in the following cases A young person who is interested in getting a cover for rest of his life. A working executive who wants to take advantage of getting a life long insurance cover. A person who understands the importance of insurance and believes in securing his future against losses. A person who does not believe in taking up a host of insurance products, but believes in a one product which provides a comprehensive risk cover, lasting as long as he lives.

PARAMETERS Risk cover The primary objective of taking an insurance policy is to have a risk cover. Hence, it is important that the sum assured is commensurate with the changing needs and requirements of the individual.

Survival benefits A whole life plan is said to be an insurance policy which provides a cover for living too long only because Cash inflows that the policyholder gets from the policy at regular intervals can be a determining factor while selecting a whole life plan. An example that can be quoted is that Tata AIG's Mahalife pays cash every year in perpetuity from the 10th year of the policy. Cash benefits The bonuses that are payable on the plan are also another feature that needs to be taken into account. Some plans have pay guaranteed bonuses while some other plans provide non-guaranteed bonus payouts after 6 years, while a few others provide such payouts only from the 10th year. Hence, the individual should select that policy which starts the bonus payouts at the earliest so as to benefit from the power of compounding. Flexibility Ultimately, the policy belongs to the individual. Hence, the individual should have the flexibility to select the sum assured, the premium paying term etc. While some plans have the flexibility, some do not offer such flexibility to the individual. .

Simplicity While flexibility is indeed important, in case too much of options are given to the policyholder it makes the product more complex. Hence, it is important to strike a via-media to ensure that the product is flexible and at the same time easy for the policyholder to understand. Ever dreamt of a life cover till the age of 80 and beyond? Whole life plan

provides just that!

S.No . 1 2 3 Futures Name of company Product Key factors the LIC Jeevan Anand Whole life insurance plan It offers life cover throughout the life of the policyholder. On maturity the sum anssured along with bonuses in paid to the policyholder. PPT is for a maximum of 75 years. 18 years years to 65 MYNL Whole Life Plan Whole life insurance plan It offers non reversionary bonus from the 3rd year of the policy. Tata AIG Mahalife Whole life insurance plan Pays 5% from the 10th year throughout the life of the policyholder.

Premium paying term Minimum and maximum age at entry Mode of premium payment Guaranteed returns Cash benefits

5 6

Flexible premium payment option 18 years to 55 years Yearly, Quarterly, Half yearly & Monthly NA Non guaranteed returns are paid in the nonreversionary format SA plus bonuses Sum assured + bonus, (The earlier payouts will not be deducted) WOP, CIR, Term rider, dreaded disease rider

12 years

30 days to 60 years Yearly, Quarterly, Half yearly & Monthly 5% from the 10th year of the policy 5% of the SA is paid every year form the 10th for the rest of the persons life. SA plus bonuses Sum assured + bonus, (The earlier payouts will not be deducted) Disability, term, WOP accidental death rider

Yearly, Quarterly, half-yearly, & monthly or SP. NA Sum assured along with bonus is paid at the expiry of the stipulated term. Sum assured along with bonus is paid. Sum assured + bonus, (The earlier payouts will not be deducted) Accident benefit rider

7 8

9 10

Maturity benefits Death benefits

11

Riders available

Public Provident Fund

Popularly known as PPF, is a savings cum tax saving instrument. It also serves as a retirement planning tool for many of those who do not have any structured pension plan covering them. Public Provident Fund account can be opened at designated post offices throughout the country and at designated branches of Public Sector Banks throughout the country. The account can be opened by an individual in his own name, on behalf of j minor of whom he is a guardian, or bya Hindu Undivided Family. The Public Provident Fund Scheme is a statutory scheme of the Central Government of India. The Scheme is for 15 years. The rate of interest is 8% compounded annually. The minimum deposit is 500/- and maximum is Rs. 70,000/- in a financial year. One deposit with a minimum amount of Rs.500/- is mandatory in each financial year. The deposit can be in lump sum or in convenient installments, not more than 12 Installments in a year or two installments in a month subject to total deposit of Rs. 70,000/-. The account in which deposits are not made for any reasons is treated as discontinued account and such account can not be closed before maturity. The discontinued account can be activated by payment of minimum deposit of Rs.500/- with default fee of Rs. 50/- for each defaulted year. The deposits shall be in multiple of Rs.5/- subject to minimum amount of Rs.500/-. The deposit in a minor account is clubbed with the deposit of the account of the Guardian for the limit ofRs.70,000/-. No age is prescribed for opening. a PPF account. Interest is not contractual but rate is notified by Ministry of Finance,

Govt. of India, at the end of each year. The facility of first withdrawal in the 7th year of the account subject to a limit of50% of the amount at credit preceding three year balance. Thereafter one Withdrawal in every year is permissible. The PPF scheme is operated through Post Office and Nationalized banks. PPF account can be opened either in Post Office or in a Bank. Account is transferable from one Post office to another and from Post office to Bank and from Bank to Post office. Account is transferable from one Bank to another bank as well as within the bank to any branch. Deposits in PPF qualify for rebate under section 80-C of Income Tax Act. The interest on deposits is totally tax free. Deposits are exempt from wealth tax. Nomination facility available. PUBLIC PROVIDENT FUND
Name the Scheme PPF of Interes t 8% Maturity period 15 years Limit deposit Min: Rs. 500 Max: year Rs. 70000 in a 20% Rebate u/s 88 upto Rs. 70000/- & I.T. concessions for interest u/s 10(i)I.T. concession entire amount. for interest of I.T. benefit Place Deposit SBI selected Nationalized Bank and of

Post Offices India possesses the largest postal network in the world with 187000 post offices spread all over e country as on March 31, 2006, of which 89 per

cent are in the rural sector. Post offices in India playa vital role in the rural areas. They connect these rural areas with the rest of the country and also provide banking facilities in the absence of banks in the rural areas. Post Offices offer various types of accounts. These are: Post Office Saving Account Minimum amount Rs20/- in case of non- cheque account, Rs.500/- in case of cheque account. Minimum balance of Rs 500/- is to be maintained for a cheque account. Account is opened with cash only. Maximum balance permissible Rs. 1,00,000/- in a single account and 2,00,000/- in Joint account. Two/Three adults, individuals, minor through guardian. A Minor having 10 years. of age can also open an account directly. One individual account and one joint account can only be opened at a post office. Income tax relief is available on the amount of interest under the provisions of section 80L of Income Tax Act. Post Office Five Year Recurring Deposit Scheme An account can be opened in multiple ofRs.5 & minimum monthly deposit is Rs 10. An account can be opened of any post office & can be transferred from one post office to another anywhere in India. One can open more than one account. Nomination facility is available. Automatic deductions are made at the source by employer on the consent of the employer. through Payroll .M.P .K.B.Y Agent will collect the amount from depositor every month & deposit it in the

post office. The account can be opened on behalf of a minor & operated either by mother or father. One can get rebate rupees one on 6 advance deposits & rupees four on 12 advance deposits of an account ofR.10/- denomination. An insurance like benefit is available on the Deposits up to denomination ofRs.50/-. Account can be continued up to ten years

Post Office Monthly Income Account Post Office Monthly Income Account is meant for those investors who want to invest a lump sum and earn interest on monthly basis for their livelihood. The scheme is, therefore, a boon for retired persons. The account can be opened by a single adult or 2-3 adults jointly. Maturity period is 6 years. Minimum investment amount is Rs.l000/- or in multiple thereof. Maximum amount is Rs. 3 lakhs in a single account and Rs. 6 lakhs in a joint account. Premature encashment facility after one year. Interest income is taxable, but no TDS. The Only Post Office scheme where monthly interest is payable. Account can be opened by an individual, two/three adults jointly, and a mi or through a guardian. A minor having attained 10 years of age can open an account in his/her own name directly. Minors have a separate limit of investment of Rs. 3 lakhs and the same is not clubbed with the limit of guardian. A separate account is opened for each deposit. Facility of premature closure of account after 1 year to 3 years @ 2.00% discount. Deduction of 1 % if account is closed prematurely at any time after

three years. Facility of reinvestment on maturity of an account. Interest not withdrawn does not carry any interest. Maturity proceeds not drawn are eligible to earn savings account interest rate for a maximum period of two years. Nomination facility is available. Rebate under section 80 C is not admissible. Most suitable scheme for senior citizens and for those who need regular monthly income. Post Office Time Deposit Account Post office time deposit account is just like the bank fixed deposit account. These time deposits are meant for those investors who want to deposit a lump sum for a fixed period. Time deposit account can be opened at any post office with a minimum deposit of Rs. 200. There is no maximum limit for the account. Interest payable annually but calculated quarterly at following rates: Period One Year Tow Years Three Years Five Years Rate of Interest 6.25% 6.50% 7.25% 7.5%

Minimum amount of deposit is Rs.200/-. No maximum limit. Account can be closed after 6 months but before one year without any interest. Facility of redeposit on maturity of an account. No interest is payable on undrawn interest amount. Account can be opened by an individual, two adults jointly and minor through guardian. A Minor who has attained the age of 10 years can open the account

in his/her own name to be operated directly. Non Resident Indian / HUF can not open the account. Any number of accounts can be opened. Two, three and Five years accounts can be closed after one year at a discounted rate of interest. Deposits not drawn on maturity are eligible to saving account interest rate for a maximum period of two years. Account can be pledged as security against a loan to banks/ Government institutions. Accounts are transferable from one Post office to any Post office in India. Rebate under section 80-C is not admissible: Interest income is taxable. . Deposits are exempt from wealth tax. No T.D.S. Nomination facility available.

National Savings Certificate National Savings Certificate, popularly known as NSC, is a time-tested tax saving instrument that combines adequate returns with high safety. National Savings Certificate can be purchased by the following: Rs. 1000/- grows to Rs. 1601/- in six years. Minimum investment Rs. 500/ Maximum no limit. Certificates can be pledged as security against a loan to banks/ Govt. Institutions. A Tax saving investment under Sec 80C Interest income is taxable, but no TDS.

Rate of interest 8% compounded half yearly Two adults, individuals and minor through guardian can purchase. Companies, Trusts, Societies or any other Institutions are not eligible to purchase. Non-resident Indian/HUF cannot purchase. No premature encashment. Annual interest earned is deemed to be reinvested and qualifies for tax rebate for the first 5 years under section 80 C of the Income Tax Act. Maturity proceeds not drawn are eligible to Post Office Savings Account interest for a maximum period of two years. Nomination facility is available Facility of purchase/payment to the holder of Power of Attorney. Tax Saving instrument - Rebate admissible under section 80 I of the Income Tax Act. Deposits are exempt from Wealth Tax.

Kisan Vikas Patra Kisan Vikas Patra (KVP) is a saving instrument that provides interest income similar to bonds. . Amount invested in Kisan Vikas Patra doubles on maturity after 8 years & 7 months. Kisan Vikas Patra can be purchased by the following: Minimum Investment Rs. 500/- No maximum limit. Rate of interest 8.40% compounded annually. Money doubles in 8 years and 7 months. Two adults, Individuals and minor through guardian can purchase. Companies, Trusts, Societies and ?fiy other Institution not eligible to purchase. Non-Resident Indian/HUF are not eligible to purchase.

Facility of encashment from 2 'l2 years. Maturity proceeds not drawn are eligible to Post office Savings account interest for a maximum period of two years. Facility of reinvestment on maturity. Rebate under section 80 C not admissible. Interest income taxable but no TDS Deposits are exempt from Wealth tax.

Government of India 8% Savings (Taxable) Bonds, 2003 The salient features of the Bond areas follows Eligibility for Investment The Bonds may be held by (i) an individual, not being a Non-Resident Indian (NRI) (a) (b) (c) (d) (ii) (iii) (a) (b) (c) 'Charitable Institution' to mean a Company registered under Section 25 of the IndianCompanies Act 1956 or An institution which has obtained a Certificate of Registration as a charitable institution in accordance with a law in force; or Any institution which has obtained a certificate from Income Tax Authority for the purpose of Section 80G of the Income Tax Act, 1961. In his or her individual capacity, or In an individual capacity on joint basis, or In an individual capacity on anyone or survivor basis, or On behalf of a minor as father/mother/legal guardian

A Hindu Undivided Family'

(iv)

"University" means a university established or incorporated by a Central, State or Provincial Act, and includes an institution declared under section 3 of the University Grants Commission Act, 1956 (3 of 1956), to be a university for the purposes of that Act.

Senior Citizens Savings Scheme 2004 One of the most attractive small savings scheme - ideal for VRS takers of the age of 55 years and above and Sr. Citizens of 60 years and above. Interest @ 9 % per annum payable quarterly. Minimum deposit of Rs 1000 and its multiples and maximum 15 Lakhs Five years scheme
Interest Rate Tax Incentive Post Office Savings Account Post Office Recurring Deposit (5 years) Post Office monthly Income Scheme (6 years) Post Office Time Deposits (1 year) Post Office Time Deposits (2 years) Post Office Time Deposits (3 years) Post Office Time Deposits (5 years) National Savings Scheme 9 Section 88 (2)(ix) 9.5 Section 88 Under Section 80L and Under Section 80L (1)(3)(i) 9 Nil Under Section 80L (1)(3)(i) 9 Nil Under Section 80L (1)(3)(i) 8 Nil Under Section 80L (1)(3)(i) 7.5 Nil Under Section 80L (1)(3)(i) 9.5 Nil Under Section 80L (1)(3)(i) 3.5 9 Nil Nil Under Section 10 Under Section 80L (1)(3)(i) Tax Incentives on

Rs.

Scheme

1992 (4 years) National Savings Certificate

VIII Issue (6 years)

(2)(x)

interest accrued annually can 88 be deemed to be reinvested under section

Kisan years)

Vikas

Patra

(7.25

10.03

Nil

Nil but no TDS

Public Provident Fund (15 years) Deposit scheme for Retiring Employees (3 years) Relief Bonds (5 year)

9.5

Section 88(2)9v)

Under Section 10(11)

8.5

Nil

Under Section 10(15)(iv)(i)

8.5

Under Section 10

*Tax rebate equal to 20 per cent (up to a ceiling of Rs. 12,000)on deposits available under section 88 and withdrawals completely exempt under section 10. @ Tax deduction upto Rs. 12,000 available under section 80L. Source: (1) (2) BANKS Bank Fixed Deposits Bank Fixed Deposits are also known as Term Deposits. In a Fixed Deposit Account, a certain sum of money is deposited in the bank for a specified time period with a fixed rate of interest. The rate of interest for Bank Fixed Deposits depends on the maturity period. It is higher in case of longer maturity period. There is great flexibility in maturity period and it ranges from 7days to 10 years. The interest is compounded annually and is added to the principal amount. Minimum deposit amount is Rs 10001- and there is no upper limit. Loan/overdraft facility is available against bank fixed deposits. Premature Government of India, Note on Small Savings Schemes An Overview. Budget Documents, Government of India.

withdrawal is permissible but some penalty is levied. Tax Deductible at Source, if the interest paid/payable on deposit exceeds Rs.50001- per customer, per year, per branch DEPOSIT SCHEME FOR RETIRING GOVERNMENT EMPLOYEES This scheme is open to retired Central and State governments' employees and retired judges of Supreme Court and High Courts. The account can be opened at designated branches of Public Sector Banks throughout the country. Minimum deposit limit to open the account is Rs 1000, while the maximum limit equals total retirement benefits in multiple of one thousand rupees. Retirement benefits means: Balance at the credit of employee in any of the Government Provident Funds Retirement/Superannuation gratuity Commuted value of pension Cash equivalent of leave Savings element of Government insurance scheme payable to the employee on retirement.

OBJECTIVES
Every study has certain objectives and the study is carried out to fulfill those objectives. The objectives of this project "Various investment alternatives available is as follows:

1. To study the various investment alternatives available. 2. To study the factors that influences the investment preference. 3. To study the reasons for investing in different investment alternatives 4. To study the various objective of investment 5. To study the most preferable investment alternative by various investors. 6.To study the present trend of investment.

RESEARCH METHODOLOGY Every project requires genuine research. Successes of any project and getting genuine results from that, depends upon the research method used by the researcher. Research Methodology is a way to systematically solve the research problems. It may be understood as a science of studying how research is done scientifically. In this various steps that are generally adopted by a

researcher in studying the research problem along with the logic behind them is studied. RESEARCH DESIGN: Research design is the basic framework, which provides guidelines for the rest of the research process. It is a blue print according to which research is to be conducted. The research design specifies the methods of the data collection and how that data is analyzed. A research design is a specialization of methods and procedures for acquiring the information needed for solving the problem. The research design is descriptive in nature, which is concerned with characteristics of an individual or a group. SAMPLE SIZE: It refers to the items to be selected from the universe to constitute the sample. The sample size for the survey was 60. SAMPLING TECHNIQUE: The sample size has been taken by simple random sampling technique. DATA COLLECTION: Both Primary and Secondary data has been used for the purpose of data collection. Primary data has been collected by conducting personal interview of the respondents and administering a self designed questionnaire. Secondary data has been collected by using secondary sources of information like Company Boucher, Journals, Magazines and Websites. Survey Analysis 1. Occupation Details of the people interviewed

Details

No of Responses

Percentage

Business Man Professional Retired Service Others

12 19 8 15 6

20 31.67 13.33 25 10

35 30 25 20 15 10 5 0
Business man Professional Retired Services Others

No of responses

As with the above table, the respondent who were intervened with respect to their occupation details is categorized which from the survey 19 people were professional and 6 people who fall in other category like house wife ,unemployed etc. 2.Annual Income of the people intervened.

Annual Income Up to 100000 100000-200000 200000-500000 Above 500000

No. of responses 6 16 31 7

Percentage 10 26.67 51.67 11.67

The respondents who were intervened as were of different income groups range which starts till 100000 and moves till 500000 & above.

The majority of the income group was of middle class who have their income between 100000 and 500000.
55 50 45 40 35 30 25 20 15 10 5 0 up to 1ooooo 100000-200000 200000-500000 500000&above

No of RESPONSES

With the above majority of the people who were intervened have their annual income around between 200000 500000 with share of 51.67% from total people intervened.

3. Reason for Investment in Different Avenues.

Income Invested Liquidity Returns Returns Tax benefits Safety Low risk Others

No of responses 6 16 19 12 12 5 2

Percentage 10 26.67 26.67 3I.67 20 8.33 3.33

With above table facts the reason for investing in different investment avenues has been studied as majority people invest for purpose of tax benefits with 31.67% other look for returns, safety, low risk and liquidity factor.

40 35 30 25 20 15 10 5 0
Liquidity Return Tax benefits Safety Low risk Others

No of Responses

4.Investment average

out

of

their

monthly/annual

income

on

an

Income invested Less then 30% 30% to 50% More than 50%

No. of responses 35 19 6

Percentage 58.33 31.67 10

The table clearly shows that majority of people tends to invest less than 30% of the total income which is 58.33% respondent agreed about investment less than 30% of their total income.

70 60 50 40 30 20 10 0

No of Responses

Less than 30%

30%to50%

More than50%

The above graph shows that less than 30% of total income people prefer to invest in different investment option.

5. Time horizon of investment made.

Income inverted Up to 1 Year 1 to 3 years 3 to 5 years 5 year & above

No. of responses 5 15 22 28

Percentage 8.33 25 36.67 30

The above table shows that people tend to invest for particular longer time period which is sows in table through response. Lesser number of people invests in for shorter time period ranging 1-3 years majority

people tend to invest for longer time period.

40 35 30 25 20 15 10 5 0

No of Responses

1y ea r

ye ar

ye ar

1t o3

3t o5

The trend what is seen through study is that people willing to invest for longer period of time which through survey more than 3 years & above 36.67% people said they invest between 3 5 years and 30 % said they invest more than 5 years.

6.Liquidity of investments within next 5 years Portion investment Not to Liquidity 0% to 10% 11% to 20% 21% to 50% 51% or more if No of responses 20 15 14 8 3 33.33 25 23.33 13.33 5 Percentage

5y ea

up

r& a

to

bo ve

35 30 25 20 15 10 5 0
Not to liquidate 0%to10% 11%to20% 21%to50% 51%&above

No of Responses

The above table and graph shows that the portions of investment people invest it for the long term purpose in order to get some good returns. People in large portion invest in schemes which are of long purpose as 33.33% respondent donot want to liquidate their investment within 5 year to expect long returns while another 25% said they want to liquidate their investment between 0 to 10%, 23.33 wants to liquidate between 11 to 20%. Since these days people are now willing to invest to the long term purpose investing in options like insurance schemes, post office, bonds etc.

7.Risk taken to achieve Higher Returns. Risk Pattern No. of responses Very Little Moderate amount A Lot 11 18.33 27 45 22 36.67 Percentage

People these days are little bit conscious in terms of taking decision

regarding investment they prefer to take lesser risk in order to have safe and assured returns. Still majority of people invest in various products taking
30 25 20 15 10 5 0 Very Littlle Moderat amount A Lot No of Responses

moderate level of risk which is approx. 45% respondent agreed to it.As shown in the above graph people take moderate risk in terms of investing in different products which is 45% of respondent, 18.33% respondent said they take lots of risk while investing mainly these are who invest in shares/stock etc.

8. Investment objective of the respondent The table shown here include the response of the people with their investment objective. The criteria which they consider while and income investing in various investment proposals. The criteria which is being considered is capital preservation. Income growth. People consider both capital preservation as well as income growth while investing in various options. Some percentage agreed on investing with criteria of moderate growth. Detail No of Percentage

responses Capital Preservation Income Growth of Income or Capital Preservation Growth Income (balanced) Moderate Growth Maximum Growth 23 16 20.9 9.09 and 24 21.9 14 31 12.4 28.6 8 7.2

30

25

20

15

No of Responses

10

0
of in co m e$ In C co ap m ita e lp G re ro se w th rv $I at nc io n om e( ba la nc ed M od ) er at e G ro w M th ax im um G ro w th C ap i ta lp re se rv at io n G ro w th

As shown in the above graph consideration of the objective while

investing in different investment products 28.6% of respondent have their objective of growth of income or capital preservation. 21.9% respondent considers growth of income & capital preservation with balanced approach. People prefer moderate growth as compared to have maximum growth in investing.

9.Factors influencing the Investment Decision of Investors. Details Brokers News Magzines Friends Self-Evaluation Others No of Responses 19 6 4 12 18 1 Percentage 32 10 6 20 30 2

35 30 25 20 15 10 5 0

No of responses

Ev al ua tio n

Fr ie nd s

Ne ws

Br ok er s

ag zi ne s

Se lf-

O th er s

There

are

many factors that influences the investment decision of the investors. It may be the current news (Political ,Technological, Financial ,etc) Magazines ,Friends etc. in the study it proved that many people trust the brokers most for the investment decisions. These are the ones who have less experience. The Self-Evaluation is the next major factor .The experienced person trust himself thereafter he/she invests .Magazines and current News also matters. Any bad news can make a person change his/her decision. 10.Investment in Various Product. Product Shares/Stock broking Mutual funds Insurance Gold Post office schemes Bonds Fixed deposits Others No. of responses 6 15 19 3 9 2 4 2

The table here shows the investment of people into various financial products. People today with the newer trends in financial sector invest largely in insurance, shares, post office schemes with latest upcoming trend in investment is mutual funds.
35 30 25 20 15 10 5 0

No of Responses

The trend what we see through the graph is people tend to invest more in insurance schemes with total of 19 respondent agreed on investing in insurance, post office schemes, shares are also preferred with 9 & 6 respondent respectively. 11.Response to Financial Planing services Services Availed No of Availed No of Future responses yes responses No interest of responses Yes Investment Management Investment advice Tax Preparation Retirement 28 32 24 36 36 24 21 39 40 20 40 20 20 40 35 Future No interest No of responses No 25

planning Planning life, term advice Planning other financial goals Estate Planning The table above indicates people response to financial planning services as the respondent has taken largely on matters of tax preparation, insurance and investment advice. While there is still less number in respect to services for planning for financial goals, estate planning and retirement planning. People are now days with change in the trends and with lesser time for financial services are accepting various services may be investment management, investment advice or for other financial goals. Large number of people responded in getting services on investment advise and investment management. 25 35 18 42 for 19 41 23 37 for 45 long care 15 34 26

insurance

50 45 40 35 30 25 20 15 10 5 0

No of responses Yes No of responses No

dv ic e

io n

ni ng

ag em

at

...

tp la n

ep ar

in su r

an

en

ci al

pr

rm ca r

in an

st m

en

Ta x

ire m

ve

en

on g

ve

In

,L

,L ife

45 40 35 30 25 20 15 10 5 0
tm en tm an ag em In en ve t st m en ta dv Pl ic Ta e an x ni pr ng ep R fo ar et rl at ire ife io m n ,L en on tP g te la nn Pl rm an in ca g ni re ng in fo su ro ra th n. er . fin an ci al go Es el ta te pl an ni ng

Pl an

ni

Pl an

ng

ni

ng

fo r

ot he

In

R et

st m

te

rf

Es ta

tm

te

pl an n

ta

go

el s

in g

en

No of responses Yes No of responses No

The above two graphs shows the response to financial planning services as we can can see previously people had availed 89 people responded they take advice for tax preparation 82 responded for taking advice on

In v

es

insurance planning

while only 42 responded on taking services on

investment management advice, 46 for planning financial goals. Since with the change in trend and time constrain now people are willing to take financial planning services in near future people show their keen interest in taking services on investment advice total 94 responded to it in favour.79 responded on investment management services in near future. Since people who already taken advice on insurance they still want to take advice in near future 85 responded to take advice for security and risk cover for whole life. Since they already prepare tax files through their representatives so most of people responded that they do not require tar preparation services in future

11.Investment in Mutual Funds in near future as comparison to other investment avenues available

No 42% Yes 58%

Yes No

Increasing in the returns and awareness in mutual finds people are now

willing to invest in mutual funds but they expect advice and guidance in investing in mutual funds since this trade is still not full covered as financial advice by various advisory services provider so with increase in the services and market trends people would invest heavily in mutual funds looking growth prospect bright in this instrument.

Findings Criteria of People Invest in options less than 30% of their total income. People still consider investment for tax saving option People do tend to invest for long term purpose in order to realize actual returns. Majority of people take less or moderate risk while investing People look investment for capital preservation and income growth as criteria Brokers Advice matters to as much as 32% of the people Major part of the people also preferred self evaluation as best . Still people prefer to invest in insurance schemes in order to get returns as well cover life risk. Majority of people take less or moderate risk while investing.

Personal financial planning advice is now being considered by investors.

With

increasing

in

awareness

people

now

shifting

their

performance toward mutual funds.

limitations Time available with the investors for interaction was less . Mostly people do not have time for filling questionnaire .So they do not provide true information. Availability and Approachability of the customers. Some people were not willing to disclose investment profile.

Suggestion/ Conclusion Now days people prefer to invest in securities which having

lesser risk and ensure returns so there is scope of mutual funds to grow. Mutual funds is still untapped so growth prospects are their in

this industry. People now consider financial planning advice to attain their

objectives so services regarding financial products have a larger scope. Proper marketing and awareness of investment options should

be provided to customers.

BIBLIOGRAPHY

www.mutualfundsindia.com www.easymf.com www.myiris.com

WWW.IDBIFORTIS .COM

www.amfiindia.com www.moneycontrol.com www.nseindia.com www.besindia.com

Books:

Agarwal, J.D. Security Analysis & Portfolio Management: A Review, Finance India, Vol. No. 1, March 1989. Bhatt, V. V. An Appraisal of Some Recent Estimates of Savings and Investments, CRNI, Vol. 5, 1963. Douglas A. Hayes and W. Scott Bauman Investments: Analysis and Management, III Ed., 1976 MacMillan. Malhotra, Naresh Marketing Research and Applied Orientation, IV Ed., 2005, Pearson. Brealey & Myers Fundamental of Corporate Finance.

Questionnaire
1.Name:_______________ 3.Sex:M/F 5 Occupation Details Business Man Retired Any Other 2.Age:_________ 4.Educational Qualification:___________________

Professional Housewife

6.Your Annual income is up to 100000 100000-200000

200000-500000 Above-500000

7.How much does you invest out of your monthly/annual income on an average? Less than 30% 30%to 50% More than 50%

8 What is the time horizon of your investment ? 1 year 3 year 3 to 5 year 5 year and above

9. Which of the following investment alternatives you have invested? Shares/Stock broking Mutual fund Gold Post offices Schemes Any Other specify

Insurance Bonds Fixed Deposits

10 .what is the reason for investing in different avenues? Liquidity

Return

Tax benef Low risk

Safety Others

11.How much risk you willing to take to achieve higher returns? Very little

Moderate amount

A lot

12 What is your primary investment objective? Capital preservation Income

Growth of income or capital preservation Growth and income (balanced) Moderate Growth Maximum Growth

13 How frequently do you review your investment decision? Quarterly Half yearly Annually One time

14.Will you need to liquidate portion of your investment portfolio over next five year? No requirement to liquidate any portion of portfolio with in 5 year

To liquidate between 0% to 10%of the investment portfolio with in 5 year


To liquidate between 11%to 20% of the investment portfolio with in 5 year

To liquidate between 21%to 50% of the investment portfolio with in 5 year

To liquidate between 51% of the investment portfolio with in 5 year

15 Would you like to invest in Mutual Funds in near future as comparison to other investment avenues available yes

no

16.What financial planning services are you interested in ?

Advisory Services Investment Management Investment advice Tax Preparation

Future interest Y

Future interest

Retirement planning Planning life, term advice Planning other financial goals Estate Planning

for Y long care

insurance

for Y