1. Abstract 2. Executive summary 3. Companies Profile 4. History of the company 5. Introduction 5.1-purpose & objectives of the study 5.2- methodology 5.3- Value addition to the company 5.4- limitation of the study 6. Main text 6.1 Investment 6.2- Mutual fund 6.3- Equity 6.4- FD 6.5-Insurance

7. Data Analysis 8. Conclusion and recommendation 9. Questionnaire 10. Bibliography


Savings form an important part of the economy of any nation. With the savings invested in various options available to the people, the money acts as the driver for growth of the country. Indian financial scene too presents a plethora of avenues to the investors. Though certainly not the best or deepest of markets in the world, it has reasonable options for an ordinary man to invest his savings. The money you earn is partly spent and the rest saved for meeting future expenses. Instead of keeping the savings idle you may like to use savings in order to get return on it in the future. This is called Investment. One needs to invest to and earn return on your idle resources and generate a specified sum of money for a specific goal in life and make a provision for an uncertain future One of the important reasons why one needs to invest wisely is to meet the cost of Inflation. Inflation is the rate at which the cost of living increases. The cost of living is simply what it costs to buy the goods and services you need to live. Inflation causes money to lose value because it will not buy the same amount of a good or service in the future as it does now or did in the past. The sooner one starts investing the better. By investing early you allow your investments more time to grow, whereby the concept of compounding increases your income, by accumulating the principal and the interest or dividend earned on it, year after year. The three golden rules for all investors are:  Invest early  Invest regularly  Invest for long term and not short term This project will also help to understand the investors facet before investing in any of the investment tools and thus to scrutinize the important aspects for the investors before investing that further helped in analyzing the relation between the features of the products and the investors‟ requirements

The methodology for carrying out the project was very simple that is through primary data and secondary data obtained through various mediums like survey through questionnaire . the Internet. equity market. insurance. Today an investor is interested in tracking the value of his investments. Newspaper. and has been carried out with the objective of giving performance analysis of different investment plans. Only then would he be in a position to judge correctly whether his fund is performing well or not. Pms etc. 4 . the analysis of Funds has been done with respect to its various parameters. whether he invests directly in the market or indirectly through Mutual Funds. This dynamic change has taken place because of a number of reasons. commodity market. etc.fact sheet of the funds. and Sip etc. In order to achieve such an end the investor has to understand the basis of appropriate preference measurement for the fund. and make the right decision. Business magazines. With globalization and the growing competition in the investments opportunity available he would have to make guided and rational decisions on whether he gets an acceptable return on his investments in the funds selected by him. or if he needs to switch to another fund.INTRODUCTION OF FINANCE The project titled “Analysis on different investment plans” being carried out for SUNDARAM FINANCE. and acquire the basic knowledge of the different measures of evaluating the performance of the fund. This project title is undertaken to help the investors in tracking the performance of their investments in Mutual fund. Insurance.

1989 . 1:2 to shareholders on 9th February. and converted into a Public Limited in 1961. 1:2 to shareholders on 29th September. 1986 .5.000 Bonus shares issued in prop. 1971.The Company was incorporated on 11th August.5. 00. The main object of the company carries on Hire Purchase business and equipment leasing.19. 1986. 1981. 00. 1:1.000 Bonus shares issued in prop. Formation of Lakshmi General Finance 1982 .958 shares issued as bonus shares. 1:3 to shareholders on 20th December.000 Bonus shares issued in prop.000 Bonus shares issued in prop. 00.The Company proposed to extend financial services in a phased Manner through a subsidiary. 1972.The Company started Marketing Allwyn Nissan Vehicles.HISTORY OF SUNDARAM FINANCE GROUP 1954 .First finance company to be listed on the Madras Stock Exchange 1976.10.The Company started equipment leasing operations. 5 . 1978.30. 00.

Application is being made for the Approval of the Central Government. U. 1994 . 1990 .S.The Company issued 18.The Company has been awarded with the highest rating of AAA (Triple A) by CRISIL for its debenture programme to the extent at Rs.8 crore. 1994. 500 crore (Rs.Deposits crossed Rs. is a subsidiary of the Company.India Equipment Leasing Ltd. 00.GIC and State Bank of Mysore agreed to participate in the equity Capital of the subsidiary.50% Non-Convertible debentures for Rs. 1990 .CRISIL's top P1+ rating.60. 1993 . 1990. became subsidiary of the company. denoting the highest degree of safety for issue of CPs..A. 10 billion) 1995. 5 billion) 1996 .Receivables crossed Rs. was awarded to the Company. 1000 crore (Rs. on private placement basis to GIC Mutual Fund and LIC Mutual Fund.50 cr.000 Bonus shares issued in prop.1990 . 1:2. Washington.Sundaram Finance Ltd. This subsidiary was promoted jointly by the Company and International Finance Corporation. and Fiat Sundaram Auto Finance Ltd. and Sundaram Finance Securities Ltd. has promoted Sundaram Home Finance Ltd. Sundaram Finance Securities Ltd. 6 .

1996 . 1997. and Stewart Newton Holdings (Mauritius) Limited for setting up an Asset Management Company. 1996 .Received Best Tax Payer Award 7 . to set up a joint working group to prepare a business plan as a precursor to forming a joint venture company to apply for a licence to start general insurance business when themarket is deregulated. Income-Tax Department under the scheme for honouring Good Tax Payers in recognition of its meritorious record in the payment of taxes and discharge of all obligations under the direct tax laws and is the only non-banking financial company in the South to receive this award since it was instituted.per share. K.Receivables crossed Rs. U. 1997.The Company has been awarded a Certificate of Commendation by the Government of India.Sundaram Finance. A leading Swiss insurance firm. to set up a general insurance company In India.The Company signed a letter of intent with Winterthur Swiss Insurance Company on October 29.Sundaram Finance Training Centre was inagurated on 9th September. 2000 crore (RS. 20 billion) 1997. 1996 .The Company has entered into a joint venture agreement with Newton Management Limited.The company issued bonus shares in the ratio of 1:3 and thereafter rights shares in the ratio of 1:4 at a premium of Rs. 1996 .25/. Chennai has entered into a deal with Winterthur.1996 .

1999. Italy 1999. Aparajita Finance Company Ltd..A.Promoted Fiat Sundaram Auto Finance Limited.Sundaram Home Finance Ltd.. 2000 . has entered into a strategic tie up with United India Insurance to provide insurance cover for housing loans At a low premium. 2000.The company issued Non-Convertible Debentures on private placement basis to the tune of Rs.Promoted Royal Sundaram Alliance Insurance Company Limited.. Ltd. ABN Amro and the company have emerged as the top three Among automobile finance companies. (SHF) the newly-launched venture of Sundaram Finance Ltd (SF). and FMO Netherlands 2000 . and Paramjyothi Finance Co.India Equipment Leasing Ltd.p. Washington. 123 cr. a joint venture with Fidis S. 2000 . for tenors ranging from 36 months to 60 months. the first of its kind for India. have been Amalgamated with the Company with effect from 01.04. Ltd. mainly to banks and institutions at Competitive rates. Balika Finance Co.Sundaram Finance had signed a memorandum of understanding with Winterthur Swiss Insurance in October 1996 to enter the general insurance business in India after the government would open up the sector for the private sector 1999.ICICI.Promoted Sundaram Home Finance Limited with equity participation from International Finance Corporation (IFC). a joint venture 8 .1998. 1999.

Infotech division of Sundaram Finance 2000 . have been reaffirmed by Crisil. 2002-Wheels India Ltd and Sundaram Fin make second and final offer to all the balance public equity shareholders of Axles India Ltd.The Company has initiated moves to merge its wholly-owned Subsidiary Sundaram Finance Services Ltd with itself. 2001. 9 . Accordingly the company will offer 8% for 1 year . 2000 .Sundaram Finance will be launching Royal Sundaram Alliance Insurance Company Ltd.BPO arm of Sundaram Finance 2002-SBI signed Memorandum of Understanding with the company for Marketing the Insurance products.50cr loan.The `AA' rating assigned to the non-convertible debenture Programme and `FAA+' rating assigned to the fixed deposit programme of Sundaram Finance Ltd. for Non-Life Insurance 2000.5% for 2 years and 9% for 3 years. 2002-International Finance Corporation extends Sundaram Business Services . 2002-Slashes interest rates by 50 basis points on fixed deposits. 2001. by January. 8.with Royal & Sun Alliance Plc. 2002 -Company holds 40% equity stake in transport postal infrieght.Promoted Sundaram Infotech Solutions .

2003-Mandates Ogilvy & Mather to carve distinct identity for its brand 'Sundaram'. 2003 of the single judge. while suspending the stay directed that the sale process of the machinery of the mills shall go on. Govindarajan. 2003-Uses Direct Selling Agents to increase its fleet card business. Mr B. the BPO division of Sundaram Finance Ltd has forayed into the overseas market by signing a three-year contract with Australia-based Total Super Pty Ltd. a self managed superannuation specialist firm. 2003-The Madras High Court permits the sale by Sundaram Finance Ltd. comprising Chief Justice. Subhashan Reddy. The First Bench. who made absolute the interim stay granted on January 2 and January 10. 2003-Mr T T Srinivasaraghavan and Mr G K Raman appointed as MD and Wholetime Director. Chennai. 2003. and Mr Justice K.2003-SHFL acquires Fiat arm from Joint Venture.Sundaram Fin join hands wih SBI Life 2003-Sundaram Business Services (SBS). 10 . but only confirmation of the sale shall be kept in abeyance. of machinery of Coimbatore Pioneer Mills Ltd by suspending the operation of the order dated February 21.

2008-Sundaram Finance Ltd.Sundaram Finance Ltd has informed BSE that the Board of Directors of the Company at its meeting held on February 27. has informed that the equity shares of the Company have been delisted from Madras Stock Exchange in accordance with SEBI (Delisting of Securities) Guidelines. with effect from January 27. 2008-The Company has issued Bonus Shares in the Ratio of 1:1.Merger with LGF making SF Billion dollar Balance sheet NBFC. 2008. inter alia. 2008 . 2004. 2005. has appointed Sri Aroon Raman as an Independent Director on the Board.90 % stake in Sundaram Asse Management Company Ltd from SFL. 2006. Chennai has tied up with the Company for purchase of HP/Lease Receivables Portfolio 2005-Company's Chairman. 2005.Sundaram Finance Ltd has appointed Sri S. 2009. 11 . France acquires 49. 2005-IKF Finance Ltd has informed that M/s Sundaram Finance Ltd. Sri S. has informed that at the meeting of the Board of Directors held on July 29.BNP Paribas Asset Management Group. Ravindran has been appointed as an Independent Director on the Board. 2009. 2003 for voluntary Delisting. Prasad as an Independent Director on the Board.2004-Sundaram Finance Ltd. Shri T S Santhanam expired on April 15.

for voluntary delisting Sundaram Finance Limited is an India-based financial services company. software solutions. tyre finance. insurance. Subsequently. fleet cards and logistics services. 2003. car and commercial vehicle finance. Sundaram Infotech Solutions Limited.The Company was incorporated in 1954. Sundaram BNP Paribas Asset Management Company Limited. The Company‟s subsidiaries include Sundaram BNP Paribas Home Finance Limited. home loans.00 Lakhs and later went public in 1972. the equity shares of the Company have been delisted from Madras Stock Exchange Limited (MSE) with effect from January 27. Professional Management Consultants Private Limited and Sundaram Securities Services Limited. 12 . The Company's shares were listed in the Madras Stock Exchange in 1972 and in the National Stock Exchange in January 1998. The company was started with a paid-up capital of Rs. Sundaram Business Services Limited. The activities of the Company include savings products like deposits and mutual funds. 2004. with the object of financing the purchase of commercial vehicles and passenger cars. Infreight Logistics Solutions Limited. Sundaram BNP Paribas Trustee Company Limited. business process outsourcing.2. Sundaram Finance Distribution Limited. in accordance with SEBI (Delisting of Securities) Guidelines.

position he held till his death.V. marketing of automobiles. and thus began a life-time involvement in automobile and finance.V. which together with its subsidiaries. banking and finance. general insurance. He served on the Government's Direct Taxes Advisory Committee. but also in financial planning and project financing. He was not only deeply involved in negotiations with foreign collaborators for the manufacture of quality auto components. gaining rich experience in road transport. Sundaram Clayton and Lucas-TVS. His financial acumen was always regarded highly.LATE MR. Brakes India. In 1930. He played a crucial role in the establishment of several auto component units in the TVS Group. 1912. which later merged into the United India Insurance Company. and the study Group on Road Transport Financing among others. he joined his father in business. He was Managing Director of the T. He also promoted Madras Motor General Insurance Company. in various capacities.6000 crore. Mr. now has an asset base of about Rs. manufacture of automobile components. V. 13 . In 1954.Sundaram Iyengar & Sons for nearly a decade before becoming its vice-chairman. T. and served parent company T. He moved to Chennai in 1936. prominent among which were Wheels India.Santhanam had his education in Madurai. Sundaram Iyengar & Sons. SANTHANAM SUNDARAM SOUL OF SUNDARAM FINANCE GROUP. he founded Sundaram Finance. but outside as well. not just in the TVS group. Born on November 8.

who had worked with him closely. In the late 1940s he promoted TVS Greens.Santhanam had contributed liberally to "the cause of our foundation." according to officials in the TVS Group. especially football. He kept himself updated on the happenings in the group companies and attended meetings of the Sundaram Finance Board. Ramanathan Krishnan. quality was paramount." said a ranking official of Sundaram Finance. He was an ardent supporter of sports." He was associated with the foundation for over 25 years. A keen tennis player himself. which had several leading national football players. He ensured that his auto component distribution companies provided transport operators genuine and quality products at fair prices. The Sundaram Medical Foundation and the hospital managed by it stand testimony of his keen interest in charitable causes. "His number sense was incredible. He championed educational. said Mr.Santhanam. He knew his principal employees by name and qualification. cricket and tennis. He was often spotted at Wimbledon during the tennis fortnight cheering on India's maestro. He was also the founder chairman of trade associations such as the Federation of Automobile Dealers' Association and the South India Hire Purchase Association. 14 . Vice-Chairman of Sankara Nethralaya.For Mr. religious and charitable causes and was instrumental in donating large sums of money from the companies with which he was associated. he sponsored several leading players during the early stages of their career. T S Surendran. "Work was worship for him.

according to T T Srinivasaraghavan.Mr. Mr.Santhanam brought to bear such involvement in the non-banking finance business.Srinivasaraghavan said. was a "visionary. and pointed to the travels Mr." he said.Santhanam had undertaken across the country often sipping tea with the drivers. "He never saw anyone as a competitor. encouraging small players to become corporate entities." Mr. Managing Director of Sundaram Finance. 15 . "He tirelessly worked for the uplift of transport operators." Even in early 1950s. he had understood the need for a good road infrastructure.Santhanam.

Tyre Finance and Logistics Services.65 million depositors and nearly 100. Equipment Finance. Patullos Road. the activities of the Sundaram Finance Group span Commercial Vehicle Finance. Sundaram Finance has a Nation-wide presence with over 400 branches. Sundaram Finance Limited. 0. Products / Services Offered       Deposits Car Finance Commercial Vehicle Finance Equipment Finance Fleet Card Tyre Finance Corporate Office Sundaram Finance Limited. Car Finance. 21. Insurance. Chennai . Fax : 91 44 2852 0456 16 . Phone : 91 44 2852 1181 . has grown today into one of the most trusted financial services groups in India. Today. which was incorporated in 1954 with the object of financing the purchase of commercial vehicles and passenger cars. Business Process Outsourcing.SUNDARAM FINANCE GROUP  SUNDARAM FINANCE LIMITED.600 002. Fleet Card. Home Loans.000 commercial vehicle and car finance customers . InfoTech Solutions. Asset Management.

. The fund house is sponsored by two giants of the financial services industry – Sundaram Finance Group and BNP Paribas Asset Management. Sundaram BNP Paribas Home Finance Limited combines its expertise in Home Finance with the service-orientation of its promoter Sundaram Finance.9% stake in Sundaram Home Finance Limited. Newton Group exited in 2002. Consequent to the completion of the regulatory approvals. SUNDARAM BNP PRIBAS ASSET MANAGEMENT Sundaram BNP Paribas Asset Management is one of the largest and well established fund houses in the country. Sundaram Finance Limited (SFL) and Union de Credit pour le Batiment (UCB) a wholly-owned subsidiary of BNP Paribas. Products / Services Offered 17 .. had entered into an agreement on 9th May 2007. regarding a strategic partnership in housing finance in India whereby UCB will acquire a 49. France.1% stake) and BNPP AM (49. Investment manager for Sundaram BNP Paribas Mutual Fund sponsored by Sundaram Finance &Newton Group. the name of the Company has been changed to Sundaram BNP Paribas Home Finance Limited effective 28 th November 2007. The company iss now a joint venture between Sundaram Finance (50. 1999. under the Companies Act 1956.9% stake).  SUNDARAM BNP PARIBAS HOME FINANCE LIMITED Sundaram Home Finance Limited was incorporated on July 2. a subsidiary of Sundaram Finance Limited.

L.I. fund Tax saver fund Balanced fund Sundaram Infotech Solutions Sundaram Finance Distribution Limited 18 . and unmatched. one of the most respected non-banking financial institution in India. innovation in terms of products and services. personalized customer service.E. The coming together of these two financial giants allows us to offer you the best global practices in insurance industry.Home Loans LoansExtension Loans Loans to Professionals Improvement Land Loans NRI Loans  ROYAL SUNDARAM ALLIANCE INSURANCE COMPANY LIMITED Royal Sundaram brings to you the golden heritage and reliability of Sundaram Finance (AAA). and RSA(formerly Royal & SunAlliance). one of the oldest and the second largest general insurer in the UK. ProductsSelect fund Select midcap Growth fund S.M.

PROMOTERS Chairman Sri S Viji Directors Sri S Ram Sri S Narayanan Sri T R Seshadri Sri S Ravindran Sri S Prasad Sri Aroon Raman Sri Srinivas Acharya Managing Director Sri T T Srinivasaraghavan 19 .

Deputy Secretary & Compliance Officer 20 .Company Secretary Sri S Venkatesan. CFO & Secretary Compliance Officer Sri P Viswanathan.

21 . customer perception and awareness level will be measured in many important areas like: To understand all about different investment plans available in India. understanding what customers on an ongoing basis is critical for survival. Most are making conservative decisions that reflect a survival mode in the business operations. For this report .e. In which type of financial instrument they like to invest. Customer perception will provide a way to accurately measure how the customers think about the products and services provided by the company.INTRODUCTION OBJECTIVES OF THE PROJECT: The purpose of the study was to determine the saving behavior and investment preferences of customers. During these difficult times. To find out how the investors get information about the various financial instrument To find out how the investor wants to invest i. To find out the saving habits of the different customers and the amount they invest in various financial instruments. on his own or through a broker. Executives need a 3rd party understanding on where customer loyalties stand. More than ever management needs ongoing feedback from the customers. Today‟s trying economic conditions have forced difficult decisions for companies. The main objective of the project is to find out the needs of current and future customers. partners and employees in order to continue to innovate and grow.

The sample from the above population for our study had consisted of around 100 individuals 22 . What is the return that they expect from the investment. To find out the risk profile of the investor. To give a suggestion to my company where our fund lacks in the market & how it should be rectified. What are the various factors that they consider before investing.How long they prefer to keep their money invested. To give a recommendation to the investors that where they should invest. POPULATION AND THE SAMPLEThe population that we have taken for our study was the people in Delhi.

Investor‟s perception about the different investment solutions. 2. Suggestion METHODSThe information and the perception of the individuals will be collected by meeting personally with the help of structured questionnaire. 3. 23 . Finding out the awareness level of Investors.METHODOLOGYThis methodology is based on Primary research which was carried out at Delhi. The research involves: 1. Data analysis with the help of excels and graphs: the collected data of individuals will be analyzed with the help of Graphs. Past investment patterns 4.

It will provide knowledge to the customer about the various financial services provided by the company to their customers. The company can understand the problem areas. It will provide fresh insights which can help their business continue to flourish. It can be used by the financial sector in designing better financial instrument customized to suit the needs of the investor. The study will help in gaining a better understanding of what an investor looks for in an investment option. 24 . It will help agents and brokers in marketing the existing instruments. The report on various investment avenues available In India will help the company in many areas like. It will help the company to understand the expectations the customer have about their company from the perspective of financial performance and corporate social responsibility. The company can identify the particular service requirements of different types of customers.VALUE ADDITION TO THE COMPANY This report will help the company to strengthen customer intimacy. The company can evaluate new services initiatives.

These are the various advantages which will give some value addition to the company in understanding the awareness level of the customer about the various investment options and what is the perception of the investors with regard to the investments they want to make. 25 .It can help the company to understand what the requirement of the different categories of customers is This report will be developed in order to empower companies with detailed primary market research needed to make well informed decisions and it will provide independent measurement and validation of the health of company‟s relationship with their customers.

Reluctance of the people to provide complete information about themselves can affect the validity of responses. The lack of knowledge in customers about the financial instruments can be a major limitation. Handling and analyzing such a varied and diversified data needs a lot of time and resources . For which there will be the need of information from the customers about their knowledge of these financial products. As the project is based on secondary data. There are various companies providing these financial instruments to the public.LIMITATIONS OF THE STUDY The project is based upon various financial instrument that are available in India and the perception level of the customer about these financial instruments. The information can be biased due to use of questionnaires 26 . possibility of unauthorized information cannot be avoided. The various limitations of the study are: Total number of financial instrument in the market is so large that it needs a lot of resources to analyze them all. Due to time and cost constraint study will be conducted in only selected area of Delhi.

reading the paper or socializing with friends. sleeping. not to mention the fact that having a bunch of money is no fun if we don't have the leisure time to enjoy it. It's actually pretty simple: investing means putting your money to work for you. you can also be earning money elsewhere. Quite simply. The point is that it doesn't matter which method you choose for investing your money. so instead. This includes putting money into stocks. Essentially. the goal is always to put your 27 . most of us were taught that you can earn an income only by getting a job and working. You can't create a duplicate of yourself to increase your working time.your money . Growing up. you have to work more hours. or even mowing your lawn. mutual funds. However. bonds. or starting your own business. And that's exactly what most of us do. or real estate (among many other things)." Each of these vehicles has positives and negatives. That way. you need to send an extension of yourself . it's a different way to think about how to make money. There's one big problem with this: if you want more work. decide to work overtime or look for a higher-paying job. making your money work for you maximizes your earning potential whether or not you receive a raise. while you are putting in hours for your employer. which we'll discuss in a later section of this tutorial. There are many different ways you can go about making an investment. Sometimes people refer to these options as "investment vehicles." which is just another way of saying "a way to invest. there is a limit to how many hours a day we can work.RESEARCH WORK INVESTMENTThe act of committing money or capital to an endeavor with the expectation of obtaining an additional income or profit.

S. Mutual funds invest in marketable securities according to the investment objective. The money in the mutual fund belongs to the investors and nobody else. with more money under Mutual Fund management than deposited with banks. Mutual Fund Mutual fund is a pool of money collected from investors and is invested according to stated investment objectives Mutual fund investors are like shareholders and they own the fund. Mutual fund investors are not lenders or deposit holders in a mutual fund.A. who earns a fee. Emergence of Mutual Funds:Mutual Funds now represent perhaps the most appropriate investment opportunity for most small investors.NAV of a mutual fund fluctuates with market price movements. As financial markets become more sophisticated and complex. Everybody else associated with a mutual fund is a service provider. at prices related to net asset value per unit. investor need a financial intermediary who provides the required knowledge and professional expertise on successful investing. The Indian Mutual Fund industry has already opened up many exciting investment opportunities to Indian investors. Mutual Fund is a still new financial intermediary in India.the fund industry has already overtaken the banking industry. New investors come in and old investors can exit. changing the value of the investor‟s holdings. The market value of the investors‟ funds is also called as net assets. it's the most important concept for you to understand. Despite the expected continuing growth in the to work so it earns you an additional profit. Even though this is a simple idea. Investors hold a proportionate share of the fund in the mutual fund. It is no wonder then that in the birthplace of mutual funds-the U. The value of the investments can go up or down. 28 .

one doesn't have to figure out which stocks or bonds to buy. One of the options is to invest the money in stock market. as in real terms the value of money decreases over a period of time. This is where mutual funds come to the rescue. But the biggest advantage of mutual funds is diversification. Diversification means spreading out money across many different types of investments. investor in UK considered the stock market is good for the investment. under which the Unit Trust of India (UTI) was set-up as a statutory body. The designated role of UTI was to set up a Mutual Fund. Mutual Fund Industry in India:Mutual Fund is an instrument of investing money. When one investment is down another might be up. called. investors can purchase stocks or bonds with much lower trading costs than if they tried to do it on their own. keeping large amounts of money in bank is not a wise option. bank rates have fallen down and are generally below the inflation rate. In 1963. But for small investor it is not possible to operate in the market effectively. By pooling money together in a mutual fund. Nowadays. 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. Also.History of Mutual Funds:In the second half of 19th century. Diversification of investment holdings reduces the risk tremendously. the government of India took the initiative by passing the UTI act. But a common investor is not informed and competent enough to understand the intricacies of stock market. In 1987 the other public sector institutions set up their Mutual 29 . set up in London in 1860. The first investment company was the Scottish-American Investment Company. Therefore. This led to establishment of an investment company which led to the small investor to invest in equity market. UTI‟s first scheme.

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. Convenient Administration: - Investing in a Mutual Fund reduces paperwork and helps you avoid many problems such as bad deliveries. In 1992. Diversification: - Mutual Funds invest in a number of companies across a broad cross-section of industries and sectors. This diversification reduces the risk because seldom do all stocks decline at the same time and in the same proportion.Funds. In 2001 there is a crisis in UTI and in 2003 UTI splits up into UTI 1and UTI 2. government allowed the private sector players to set-up their funds. You achieve this diversification through a Mutual Fund with far less money than you can do on your own. The history of Indian Mutual Fund industry can be explained easily by various phases:- Benefits of Investing in Mutual Funds Professional Management: - Mutual Funds provide the services of experienced and skilled professionals. In 1994 the foreign Mutual Funds arrives in Indian market. delayed payments and follow up with 30 .

Transparency: - You get regular information on the value of your investment in addition to disclosure on the specific investments made by your scheme. Mutual Funds save your time and make investing easy and convenient. Return Potential: Over a medium to long-term. custodial and other fees translate into lower costs for investors.brokers and companies. the proportion invested in each class of assets and the fund manager's investment strategy and outlook 31 . 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. Mutual Funds have the potential to provide a higher return as they invest in a diversified basket of selected securities. 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. In closed-end schemes. Liquidity: In open-end schemes. the investor gets the money back promptly at net asset value related prices from the Mutual Fund.

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. A mutual fund because of its large corpus allows even a small investor to take the benefit of its investment strategy. Affordability: Investors individually may lack sufficient funds to invest in highgrade stocks. you can systematically invest or withdraw funds according to your needs and convenience.Flexibility: - Through features such as regular investment plans. regular withdrawal plans and dividend reinvestment plans. The operations of Mutual Funds are regularly monitored by SEBI. Choice of Schemes: - Mutual Funds offer a family of schemes to suit your varying needs over a lifetime. 32 .

For example. 33 . When money pours into funds that have had strong success. for picking up stocks. Taxes: When making decisions about your money. which affects how profitable the individual is from the sale. the manager often has trouble finding a good investment for all the new money. as their management is not dynamic enough to explore the available opportunity in the market. thus many investors debate over whether or not the so-called professionals are any better than mutual fund or investor himself. at the time of purchase. Dilution is also the result of a successful fund getting too big. The mutual fund industries are thus charging extra cost under layers of jargon. when a fund manager sells a security.Disadvantages of Investing Mutual Funds Professional Management: Some funds doesn‟t perform in neither the market. fund managers don't consider your personal tax situation. a capital-gain tax is triggered. Costs: – The biggest source of AMC income is generally from the entry & exit load which they charge from investors. It might have been more advantageous for the individual to defer the capital gains liability. high returns from a few investments often don't make much difference on the overall return. Dilution: – Because funds have small holdings across different companies.

Closed-ended Funds:A closed-end fund has a stipulated maturity period which generally ranging from 3 to 15 years. In order to provide an exit route to the investors. 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. 34 . They are open for sale or redemption during pre-determined intervals at NAV related prices. The fund is open for subscription only during a specified period. Investors can conveniently buy and sell units at Net Asset Value ("NAV") related prices.Types of Mutual Funds Mutual fund schemes may be classified on the basis of its structure and its objective:By Structure:Open-ended Funds:An open-end fund is one that is available for subscription all through the year. These do not have a fixed maturity. 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 closeended schemes. some close-ended funds give an option of selling back the units to the Mutual Fund through periodic repurchase at NAV related prices. The key feature of open-end schemes is liquidity.

No-Load Funds:A No-Load Fund is one that does not charge a commission for entry or exit. That is. commercial paper and inter-bank call money. certificates of deposit. a commission will be payable. The advantage of a no load fund is that the entire corpus is put to work. These schemes generally invest in safer short-term instruments such as treasury bills. Investments made in Equity Linked Savings Schemes (ELSS) and Pension Schemes are allowed as deduction u/s 88 of the Income Tax Act. 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. each time you buy or sell units in the fund. Typically entry and exit loads range from 1% to 2%. preservation of capital and moderate income. These are ideal for Corporate and individual investors as a means to park their surplus funds for short periods. no commission is payable on purchase or sale of units in the fund. 1961.Money Market Funds:The aim of money market funds is to provide easy liquidity. The Act also provides 35 . Load Funds:A Load Fund is one that charges a commission for entry or exit. That is. Returns on these schemes may fluctuate depending upon the interest rates prevailing in the market. It could be worth paying the load. if the fund has a good performance history.

provided the capital asset has been sold prior to April 1. It is advisable that an investor looking to invest in an equity fund should invest for long term i. but they also provide higher returns than other funds. Growth Funds invest in those companies that are expected to post above average earnings in the future. there are following types of equity funds:- AGGRESSIVE GROWTH FUNDS:In Aggressive Growth Funds.e.opportunities to investors to save capital gains u/s 54EA and 54EB by investing in Mutual Funds. 2000 and the amount is invested before September 30. are prone to higher risk than other equity funds. Various types of Mutual Funds: Equity Funds: Equity funds are considered to be the more risky funds as compared to other fund types. 2000. There are different types of equity funds each falling into different risk bracket. Without entirely adopting speculative strategies. In the order of decreasing risk level. 36 . fund managers aspire for maximum capital appreciation and invest in less researched shares of speculative nature. Because of these speculative investments Aggressive Growth Funds become more volatile and thus. GROWTH FUNDS: Growth Funds also invest for capital appreciation (with time horizon of 3 to 5 years) but they are different from Aggressive Growth Funds in the sense that they invest in companies that are expected to outperform the market in the future. for 3 years or more.

However. There are following types of specialty funds: Sector Funds:Equity funds that invest in a particular sector/industry of the market are known as Sector Funds. blue chip companies (less than Rs. Criteria for some specialty funds could be to invest/not to invest in particular regions/companies. Banking. Auto.SPECIALTY FUNDS: Specialty Funds have stated criteria for investments and their portfolio comprises of only those companies that meet their criteria. are comparatively riskier than diversified funds. Pharmaceuticals or Fast Moving Consumer Goods) which is why they are more risky than equity funds that invest in multiple sectors. Specialty funds are concentrated and thus. foreign securities funds are exposed to foreign exchange rate risk and country risk. Foreign securities funds achieve international diversification and hence they are less risky than sector funds. 2500 crore but more than Rs. Mid-Cap or Small-Cap Funds:Funds that invest in companies having lower market capitalization than large capitalization companies are called Mid-Cap or Small-Cap Funds. The exposure of these funds is limited to a particular sector (say Information Technology. Market capitalization of Mid-Cap companies is less than that of big. 500 crore. 500 crore) and SmallCap companies have market capitalization of less than Rs. Foreign Securities Funds:Foreign Securities Equity Funds have the option to invest in one or more foreign companies. Market 37 .

Option Income Funds write options on a large fraction of their portfolio. One prominent type of diversified equity fund in India is Equity Linked Savings Schemes (ELSS). As per the mandate. These funds are well diversified and reduce sector-specific or company-specific risk. which is otherwise considered as a risky instrument. which generate stable income for investors. ELSS usually has a lock-in period and in case of any redemption by the investor before the expiry of the lock-in period makes him liable to pay income tax on such income(s) for which he may have received any tax exemption(s) in the past. diversified equity funds invest mainly in equities without any concentration on a particular sector(s). ELSS investors are eligible to claim deduction from taxable income (up to Rs 1 lakh) at the time of filing the income tax return. These funds invest in big. DIVERSIFIED EQUITY FUNDS: Except for a small portion of investment in liquid money market. investment gets risky. 38 . like all other funds diversified equity funds too are exposed to equity market risk. Option Income Funds:While not yet available in India. high dividend yielding companies. However. and then sell options against their stock positions. The shares of Mid-Cap or Small-Cap Companies are not as liquid as of Large-Cap Companies which gives rise to volatility in share prices of these companies and consequently.Capitalization of a company can be calculated by multiplying the market price of the company's share by the total number of its outstanding shares in the market. a minimum of 90% of investments by ELSS should be in equities at all times. Proper use of options can help to reduce volatility.

to a large extent. it is advisable to invest in Value funds with a long-term time horizon as risk in the long term. Equity index funds that follow broad indices (like S&P CNX Nifty. Equity Income or Dividend Yield Equity Funds are generally exposed to the lowest risk level as compared to other equity funds. EQUITY INCOME OR DIVIDEND YIELD FUNDS: The objective of Equity Income or Dividend Yield Equity Funds is to generate high recurring income and steady capital appreciation for investors by investing in those companies which issue high dividends (such as Power or Utility companies whose share prices fluctuate comparatively lesser than other companies' share prices). steel. Value stocks are generally from cyclical industries (such as cement.) which make them volatile in the short-term. Therefore.Equity Index Funds: Equity Index Funds have the objective to match the performance of a specific stock market index. are more risky. sugar etc. The portfolio of these funds comprises of shares that are trading at a low Price to Earnings Ratio (Market Price per Share / Earning per Share) and a low Market to Book Value (Fundamental Value) Ratio. The portfolio of these funds comprises of the same companies that form the index and is constituted in the same proportion as the index. Value Funds may select companies from diversified sectors and are exposed to lower risk level as compared to growth funds or specialty funds. 39 . VALUE FUNDS:Value Funds invest in those companies that have sound fundamentals and whose share prices are currently under-valued. is reduced. Sensex) are less risky than equity index funds that follow narrow sectoral indices (like BSEBANKEX or CNX Bank Index etc). Narrow indices are less diversified and therefore.

they are subject to credit risk (risk of default) by the issuer at the time of interest or principal payment. Based on different investment objectives. funds that invest only in Tax Free Infrastructure or Municipal Bonds. Although debt securities are generally less risky than equities. Any loss incurred. governments and other entities belonging to various sectors (like infrastructure companies etc. debt funds usually invest in securities from issuers who are rated by credit rating agencies and are considered to be of "Investment Grade". financial institutions. issued by companies of a specific sector or industry or origin. is shared by all investors which further reduces risk for an individual investor. To minimize the risk of default. Some examples of focused debt funds are sector. In order to ensure regular income to investors.DEBT / INCOME FUNDS:Funds that invest in medium to long-term debt instruments issued by private companies. banks. specialized and offshore debt funds. Focused Debt Funds: Unlike diversified debt funds. on account of default by a debt issuer. Because of their narrow 40 . focused debt funds are narrow focus funds that are confined to investments in selective debt securities. The best feature of diversified debt funds is that investments are properly diversified into all sectors which results in risk reduction. debt (or income) funds distribute large fraction of their surplus to investors. Debt funds are low risk profile funds that seek to generate fixed current income (and not capital appreciation) to investors. there can be following types of debt funds:- Diversified Debt Funds: Debt funds that invest in all securities issued by entities belonging to all sectors of the market are known as diversified debt funds. Debt funds that target high returns are more risky.) are known as Debt / Income Funds.

In the past. debt funds generally try to minimize the risk of default by investing in securities issued by only those borrowers who are considered to be of "investment grade".orientation. the security of investments depends upon the net worth of the guarantor (whose name is specified in advance on the offer document). these funds are conceivable and may be offered to investors very soon. High Yield Debt Funds adopt a different strategy and prefer securities issued by those issuers who are considered to be of "below investment grade". These funds are more volatile and bear higher default risk. However. Assured Return Funds: Although it is not necessary that a fund will meet its objectives or provide assured returns to investors. Although not yet available in India. High Yield Debt funds: As we now understand that risk of default is present in all debt funds. To safeguard the interests of investors. These funds are generally debt funds and provide investors with a low-risk investment opportunity. although they may earn at times higher returns for investors.e. but there can be funds that come with a lock-in period and offer assurance of annual returns to investors during the lockin period. Any shortfall in returns is suffered by the sponsors or the Asset Management Companies (AMCs). But. The motive behind adopting this sort of risky strategy is to earn higher interest returns from these issuers. and therefore. Monthly Income Plans of UTI) 41 . focused debt funds are more risky as compared to diversified debt funds. UTI had offered assured return schemes (i. SEBI permits only those funds to offer assured return schemes whose sponsors have adequate net-worth to guarantee returns in the future.

that assured specified returns to investors in the future. Interest rates and prices of debt securities are inversely related and any change in the interest rates results in a change in the NAV of debt/gilt funds in an opposite direction. However. Fixed term plan series usually invest in debt / income schemes and target short-term investors. thus making money market / liquid funds the safest investment option when compared with other mutual fund 42 . These securities are highly liquid and provide safety of investment. fixed term plans are not listed on the exchanges. MONEY MARKET / LIQUID FUNDS:Money market / liquid funds invest in short-term (maturing within one year) interest bearing debt instruments. Sundaram BNP Paribas AMC in India offers assured return schemes to investors fund called million millionaires plan. like all debt funds. The objective of fixed term plan schemes is to gratify investors by generating some expected returns in a short period. Fixed Term Plan Series: Fixed Term Plan Series usually are closed-end schemes having short term maturity period (of less than one year) that offer a series of plans and issue units to investors at regular intervals. Eventually. gilt funds too are exposed to interest rate risk. UTI was not able to fulfill its promises and faced large shortfalls in returns. government had to intervene and took over UTI's payment obligations on itself. Gilt Funds invest in government papers (named dated securities) having medium to long term maturity period. Currently. these investments have little credit risk (risk of default) and provide safety of principal to the investors. GILT FUNDS:Also known as Government Securities in India. Issued by the Government of India. Unlike closed-end funds.

The typical investment options for liquid funds include Treasury Bills (issued by governments). HYBRID FUNDS:As the name suggests. These funds invest in companies having potential for capital appreciation and those known for issuing high dividends. Hybrid funds have an equal proportion of debt and equity in their portfolio. moderate capital appreciation and at the same time minimizing the risk of capital erosion. even money market / liquid funds are exposed to the interest rate risk. The level of risks involved in these funds is lower than growth funds and higher than income funds. Commercial papers (issued by companies) and Certificates of Deposit (issued by banks). There are following types of hybrid funds in India: Balanced Funds: The portfolio of balanced funds includes assets like debt securities. Balanced funds are appropriate for conservative investors having a long term investment horizon. Growth-and-Income Funds: Funds that combine features of growth funds and income funds are known as Growth-and-Income Funds. hybrid funds are those funds whose portfolio includes a blend of equities. However. The objectives of balanced funds are to reward investors with a regular income. convertible securities.types. 43 . debts and money market securities. and equity and preference shares held in a relatively equal proportion.

crude oil etc. Asset allocation funds adopt a variable asset allocation strategy that allows fund managers to switch over from one asset class to another at any time depending upon their outlook for specific markets. COMMODITY FUNDS:Those funds that focus on investing in different commodities (like metals. debt. food grains. the success of these funds depends upon the skill of a fund manager in anticipating market trends. gold futures or shares of gold mines) are common examples of commodity funds. money market or non-financial (physical) assets like real estate. fund managers may switch over to equity if they expect equity market to provide good returns and switch over to debt if they expect debt market to provide better returns.ASSET ALLOCATION FUNDS: Mutual funds may invest in financial assets like equity. In other words. "Precious Metals Fund" and Gold Funds (that invest in gold. It should be noted that switching over from one asset class to another is a decision taken by the fund manager on the basis of his own judgment and understanding of specific markets. A commodity fund that invests in a single commodity or a group of commodities is a specialized commodity fund and a commodity fund that invests in all available commodities is a diversified commodity fund and bears less risk than a specialized commodity fund..) or commodity companies or commodity futures contracts are termed as Commodity Funds. 44 . and therefore. REAL ESTATE FUNDS:Funds that invest directly in real estate or lend to real estate developers or invest in shares/securitized assets of housing finance companies. commodities etc.

45 . the expenses of Fund of Funds are quite high on account of compounding expenses of investments into different mutual fund schemes. FUND OF FUNDS:Mutual funds that do not invest in financial or physical assets. The objective of these funds may be to generate regular income for investors or capital appreciation. which further helps in diversification of risks. just like conventional mutual funds maintain a portfolio comprising of equity/debt/money market instruments or non financial assets. However. but do invest in other Mutual Fund schemes offered by different AMCs. are known as Fund of Funds.are known as Specialized Real Estate Funds. Fund of Funds provide investors with an added advantage of diversifying into different mutual fund schemes with even a small amount of investment. Fund of Funds maintain a portfolio comprising of units of other mutual fund schemes.

Top Performing Schemes – AUM as on 30th April 09 + Tata Pure Equity (269.30 cr) + HDFC MIP Long-term (887. Ltd. Top Performing Schemes – AUM as on 30th April 09 + HDFC Top 200 (2338 cr) + HDFC Equity (2759. Tata Mutual Fund Inception Date – June 30th 1995 Trustee – Tata Trustee Company Pvt.77 cr) + Tata Short-term Bond (292. SBI Mutual Fund Inception Date – June 29th 1987 46 . HDFC Mutual Fund Inception Date – June 30th 2000 Trustee – HDFC Trustee Company Ltd.Top 10 mutual fund providers 1.95 cr) + Tata Index Nifty (6.08 cr) 3.90 cr) 2.

Reliance Mutual Fund Inception Date .15 cr) 4. Top Performing Schemes – AUM as on 30th April 09 + Reliance MIP (168.50 cr) + Magnum Balanced (333.57 cr) 5.25 cr) + Reliance Diversified Power Sector Fund (3809. Ltd. Ltd.Trustee – SBI Mutual Fund Trustee Company Pvt. Top Performing Schemes – AUM as on 30th April 09 47 . Top Performing Schemes – AUM as on 30th April 09 + Magnum Contra (1.11 cr) + Magnum Multiplier Plus (687. DSP BlackRock Mutual Fund Inception Date – December 16th 1996 Trustee – DSP Merrill Lynch Trustee Company Pvt.52 cr) + Reliance Banking Retail (681.958.June 30th 1995 Trustee – Reliance Capital Trustee Company Ltd.

50 cr) 7. Kotak Mutual Fund Inception Date – June 23rd 1998 Trustee – Kotak Mahindra Trustee Company Ltd. Pvt.69 cr) + Kotak 30 (688.08 cr) + DSPBR Equity (919.88 cr) + Principal Personal Tax Saver (332. Principal Mutual Fund Inception Date – November 25th 1994 Trustee – Principal Trustee Co.+ DSPBR top 100 Equity (1167.77 cr) + DSPBR GSF Longer Duration (425.81 cr) + Principal Index (21.53 cr) 8. Top Performing Schemes – AUM as on 30th April 09 + Kotak Bond Reular (445. Ltd Top Performing Schemes – AUM as on 30th April 09 + Principal Child Benefit (19.67 cr) 6. Sundaram BNP Paribas Mutual Fund 48 .14 cr) + Kotak opportunities (658.

54 cr) + Sundaram BNP Paribas Select Focus Fund (880.87 cr) + Templeton IGSF PF (32. Ltd. Franklin Templeton Mutual Fund Inception Date – February 19th 1996 Trustee – Franklin Templeton Trustee Services Pvt.20 cr) 10. 49 . Birla Sun Life Mutual Fund Inception Date .78 cr) + Sundaram BNP Paribas Bond Saver (59.Inception Date – August 24th 1996 Trustee – Sundaram BNP Paribas Trustee Company Limited Top Performing Schemes – AUM as on 30th April 09 + Sundaram BNP Paribas taxsaver (703.12 cr) 9.68 cr) + Franklin India Prima Plus (1153.December 24th 1994 Trustee – Birla Sun Life Trustee Co. Top Performing Schemes – AUM as on 30th April 09 + Franklin India Blue Chip Fund (1642. Ltd.

) + Birla Frontline Equity (481.14 cr) + Birla'95 (127.Top Performing Schemes – AUM as on 30th April 09 + Birla GSF Long Term (10.12 cr) 50 .48 cr.

b) PERFORMANCE INDICATORS:Here is a list of the standard performance indicators 51 . however. which represent a portion of a company's assets (capital) and earnings (dividends). newspaper stock listings and investment websites. In reality.for example. every stockholder. Your stake may authorize you to vote at the company's annual general meeting. Investors buy stock in the form of shares. is the standard abbreviation of a stock's name. stock (often referred to as shares) is ownership. the extent of your ownership (your stake) in a company depends on the number of shares you own in relation to the total number of shares available For example. or 'Epic' symbol. You can find stock symbols wherever stock performance information is published . where shareholders usually receive one vote per share. While one per cent seems like a small holding. if you buy 1000 shares of stock in a company that has issued a total of 100. In theory. in a company. many of which have a market value running into billions of pounds. Management policy is far more likely to be influenced by the votes of large institutional investors such as pension funds. or equity. no matter how small their stake. a) STOCKS SYMBOLS:A stock symbol. it's worth remembering that these may vary at the different exchanges where the company is quoted. Company names also have abbreviations called ticker symbols. very few private investors are able to accumulate a shareholding of that size in publicly quoted companies.EQUITY SHARES ABOUT SHARES:At the most basic level. you own one per cent of the company. As a shareholder. most private investors' stakes are insignificant.000 shares. However. can exercise some influence over company management at the annual general meeting.

Performance Indicator Definition Closing price sold High and low previous trading day 52 week range weeks Volume trading day High and low Net change trading day and the prior to the last The last price at which the stock was bought or The highest and lowest price of the stock from the The highest and lowest price over the previous 52 The amount of shares traded during the previous The difference between the closing price on the last closing price on the trading day THE STOCK EXCHANGES:A marketplace in which to buy or sell something makes life a lot easier. The stock exchange is also a market for investors who can buy and sell shares at any time. you can't buy or sell shares on a stock exchange yourself. You need to place your order with a stock exchange member firm (a stockbroker) who will then execute the order on your behalf. The same applies to stocks. A stock exchange is an organization that provides a marketplace in which investors and borrowers trade stocks. The NSE AND BSE are the leading stock exchange in the INDIA. Firstly. Trading is done through computerized systems. 52 . a) Trading shares on the stock exchange: As an investor in the INDIA. the stock exchange is a market for issuers who want to raise equity capital by selling shares to investors in an Initial Public Offering (IPO).

It is possible for a stock to be listed on more than one exchange. and some exchanges are more particular than others. This is known as a dual listing. c) Types of shares available on the stock exchange:You cannot trade all stocks on the stock exchange. a stock must meet the listing requirements laid down by that exchange in its approval process. After receiving your order. 53 . You will then receive confirmation of the deal.b) The trading process:If you decide to buy or sell your shares. To be listed on a stock exchange. Details of the trade are transmitted electronically to the stockbroker who is responsible for settling the trade. the stockbroker will input the order on the SETS or SEAQ system to match your order with that of another buyer or seller. you need to contact a stockbroker who will buy or sell the shares on your behalf. Each exchange has its own listing requirements.

6 months. 1 year. The minimum deposit amount also varies with each bank. The amounts can be in multiple of Rs. you might find differential interest rates in odd tenures like 390 days or 200 days. If you are flexible in terms of deposit tenures. 100 to an unlimited amount with some banks.  Great Deals: The banks are free to offer varying rates of interest for products of different maturities.5 years to 5 years.  Compounding: Compounding of fixed deposit interest rate is available for all deposits more than 3 months. 15. 54 . Some of the salient features of a bank deposit are:  Flexible Deposit Terms : The tenure of fixed deposits can vary from as low as 7.  Flexible Interest Payment Terms : A Bank Fixed Deposit gives you the option of taking the interest income. 1. It can range from as low as Rs.FIXED DEPOSITE A fixed deposit is best suited for those investors who want to invest a lump sum of money at a low risk and are comfortable committing it for a fixed period of time. 30 or 45 days to 3. as a lump-sum amount on its maturity as well as every quarter (quarterly interest payment) or every month (monthly interest payment)  Electronic Clearing: The Interest payable on Fixed Deposit can also be transferred directly to Savings Bank or Current Account of the customer. 100.  Safe Investments: Bank deposits are generally safe investments because they are insured under the Deposit Insurance & Credit Guarantee Scheme of India. and earn a rate of interest on th same.

Investment Amount: You will be expected to invest a minimum of Rs 5.000 in an FMP. An FMP will give an indicative.26% Dividend distribution tax 55 . 3. Alternatives to Fixed Deposit Accounts FMP. which can be less. You know what you are getting and when.Tax implications The interest income earned on a deposit is taxable at the same tax slab as the customer is in. Charges are usually levied on premature withdrawal of the deposit or taking additional features like a debit card against it. Tax Treatment: An FMP gets preferential tax treatment making it a better option then Fixed deposits for returns on a post tax basis. It will be added to his income in the year under the head “Other Income”. Returns: A fixed deposit in India gives assured returns. The differences: 1. return. While fixed deposits are taxed at the normal tax rate – FMP dividends are tax free in the hands of the investor ( there is a 14. Fees and Charges Normally. there are no charges for a plain vanilla fixed deposit account.Fixed Maturity Plans ( A type of mutual fund) The similarity first: Both have fixed tenures. 2. Not so in the case of a bank deposit. but not assured.

And in case the investor opts for the growth option for tenures more than one year. The tax rate under which is 10% without indexation and 20% with indexation benefit. his gains will be taxed as long term capital gains on debt investments. 56 .deducted at source).

This principle is introduced in most stores where a division is made between the sales clerk and the cashiers department the arrangement dividing the risks of loss. The principle of insurance so far as the undertaking of the obligation is concerned is that for the payment of a certain sum the gurantee will be given to reimburse the insured. In the first twenty of our life.In the next twenty years we gain financial independence and provide financial independence to our families. we are financially and emotionally dependents on our parents and their are no financial committments to be met. Insurance then provide divided responsibilty. As a business however insurance is usually recognized as some form of securing a promise of indemnity by the payment of premium and the fulfillment of certain other stipulations 57 . The insurer in accepting the risks so distributes them that the total of all the amounts is paid for this insurance protection will be sufficient to meet the losses that occur. This is also the stage when our income may be unable to meet the growing expenses of a young household. In the next twenty as we see our investments grow after our children grow and become financially independent.An insurance policy is primarily meant to protect the income of the family‟s breadearners. Insurance is a provision for the distribution of risks that is to say it is a financial provision against loss from unavoidable disasters. Our finances too tend to change as we go through the various phases of life. The idea is if any one or both die their dependents continue to live comfortably. marraige and eventually after a lifetime of work we look forward to life of retirement . The protection which it affords takes form of a gurantee to indemnify the insured if certain specified losses occur.The circle of life begins at birth follower by education .Insurance People need insurance in the first place. The insurance principle is similarly applied in any other cases of divided responsibilty.

Pension plans Pension plans allow an individual to save in a tax deffered manner. A whole of life plan is suitable for an individual who is looking for an extended life insurance cover and /or wants to pay premium over as long as tenure as possible to reduce the amount of upfront premium payment. Once the contract reaches the vesting age . Term insurance is a usefu tool to purchase against risk of early death and protection of an asset. Endowment plans Endowment plans are savins and protection plans that provide a dual benifit of protection as well as savings. Endowment plans pay a death benifit in the event of an eventuality should the customer survive the benifit period a maturity benifit is paid to the life insured. An individual can either contribute through regular premiums or make a single premium investments. Savings accumulate over the deferment period. Since a term insurance contract only pays in the event of eventuality the life cover comes at low premium rates . the individual has the option of choosing an 58 . Whole of life plans A whole of life plan provides life insurance cover to an individua upto a specified age .Types of insurance Term insurance plans Term insurance is the cheapest form of life insurance available.

An annuity is paid till the life the lifetime of the insured or a pre-determined period depending upon the annuity option chosen by the life insured. The returns in a ULIP depend upon the performance of the fund in the capital market. if an individual has surplus funds. Investors also have the flexibility to alter the premium amounts during the policy's tenure. Conversely an individual faced with a liquidity crunch has the option of paying a lower amount (the difference being adjusted in the accumulated value of his ULIP). For example. ULIP investors can shift their 59 . he can enhance the contribution in ULIP. In a ULIP. debt funds etc. It is important to remember that in a ULIP. In a ULIP. the invested amount of the premiums after deducting for all the charges and premium for risk cover under all policies in a particular fund as chosen by the policy holders are pooled together to form a Unit fund. diversified equity funds. half-yearly. balanced funds. investors have the choice of investing in a lump sum (single premium) or making premium payments on an annual. the investment risk is generally borne by the investor.annuity plan from a life insurance company.e. The policy value at any time varies according to the value of the underlying assets at the time. A Unit is the component of the Fund in a Unit Linked Insurance Policy. ULIP investors have the option of investing across various schemes. The investment is denoted as units and is represented by the value that it has attained called as Net Asset Value (NAV). i. Unit Linked Insurance Plans Unit linked insurance plan (ULIP) is life insurance solution that provides for the benefits of risk protection and flexibility in investment. quarterly or monthly basis.

60 . state of health etc. Mortality Charges: These are charges for the cost of insurance coverage and depend on number of factors such as age. balanced funds. Fund Management Fees: Fees levied for management of the fund and is deducted before arriving at the NAV. debt funds) either at a nominal or no across various plans/asset classes (diversified equity funds. Expenses Charged in a ULIP Premium Allocation Charge: A percentage of the premium is appropriated towards charges initial and renewal expenses apart from commission expenses before allocating the units under the policy. Administration Charges: This is the charge for administration of the plan and is levied by cancellation of units. amount of coverage.

Top insurance companies Life Insurance Corporation of India : This leading Insurance company of India was established in the year 1956 by the alliance of 16 non-Indian companies.154 Indian Insurance Companies and 75 provident. It has 100 divisional offices.2048 computerized branches. Service Tax Deductions: Service tax is deducted from the risk portion of the premium. subject to a charge.ATM Premium payment facility and the company's Info centers in Mumbai. Kolkata and many others cities. Delhi. Bajaj Allianz Life Insurance: This Indian Insurance company is a joint venture of Alliance AG.ECS.Surrender Charges: Deducted for premature partial or full encashment of units. It has introduced new strategies for the facilitation of the customers like the IVRS. Fund Switching Charge: Usually a limited number of fund switches are allowed each year without charge. among the 61 .7 zonal offices and the company's corporate office. with subsequent switches.which is one among the largest Life Insurance companies and Bajaj Auto.

Renewal Premium Payment etc.Life Insurance Saving Plans.Retirement.Riders.Health etc. Retirement and Saving . SBI Life is a joint venture of BNP Paribas Assurance and SBI. Tata AIG Life : This renowned life Insurance company in India offers a wide array of products related to life insurance for associations.biggest 2.SBI LifeGroup Criti9. Tata AIG Life Assure 10 Years and many others.& 3 wheeler producers in the world.individuals and businesses. It renders services like the AIG Health First.Life Insurance Online. The company offers high quality solutions to its corporate Indian clients.NRI. 62 .AIG Health Life Protector. The company provides Life Insurance Solutions to meet the needs of Protection.Health Care.Life Time Care. SBI Life : This renders premium Insurance solutions like SBI Life-Smart ULIP. Tata AIG Life Hospi Cash Back.RPI/RFI and many others. It also offers services like the NRI services.Premium Payment Procedure. and online services like the Address change. SBI Life-Unit Plus Child Plan etc.It has recently launched the Money back Plus Plan and offers Insurance programs like the Children. The Company has various plans for the customers like the Pension. Tata AIG Life Maha Gold.ECS Facility. Birla Sun Life Insurance: It is one of the major insurance companies in India and a joint venture of Sun Life Financials and Aditya Birla group. The company is a joint venture of America International Group and TATA group.

Savings etc.investment. The customer base of the company is about more than 7 million who depend on the company for pension. 63 . Kotak Life Insurance: This premier Insurance company in India offers insurance facilities related to Savings. NAV. Health.Kotak Long Life Health Plus etc. HDFC Standard Life: This is one of the major market leaders in the insurance sector in India. The company has 14 corporate agency tie ups. Reliance Capital Limited's associate company is Reliance Life which is one of the leading private sectors in India.Protection. Protection.Health Plans.Retirement.banking needs.Investments.Child. The company provides the Protection Plans.Max New York Life: This Life Insurance company in India provides the best solutions related to life insurance like children's plan. Investment. Reliance Life : The company based in India offers the best plans for Life Insurance in India.Retirement Plans and Investment plans and is also the ultimate solver of solutions for Groups and Individuals.Retirement Plans. Premium Payment Options and many others. It opens up services like Insurance Guide. 33 bankassurance relationships and direct sales force at 14 locations. It is now covering 36 products related to life and health insurance. retirement solution.Child Plans.Protection Plans. The company offers Insurance services like the Group Plans.Savings and Investment Plans etc. Kotak Long Life Secure Plus.

Education Insurance Plans etc.ICICI Prudential: This major Insurance Company in India provides health Insurance.Retirement Plans and many others.Forever Life.MediAssure.ULIP. Life Insurance Plans of the company covers Premium Guarantee Plans. one of the oldest and the second largest general insurer in the UK. Pension Plans encompass LifeStage Pension. 64 .life insurance. ROYAL SUNDARAM : Royal Sundaram brings to you the golden heritage and reliability of Sundaram Finance (AAA). one of the most respected non-banking financial institution in India.ULIPs. and RSA(formerly Royal & SunAlliance). Health Insurance Plans cover Hospital Care.

ANALYSYS  Do you know about the following Investment plans? 120 100 80 60 40 20 0 EQUITY SHARES MUTUAL FUNDS INSURANCE FIXED DEPOSIT YES NO The sample size consists of 100 respondents and out of which almost all the people are fully aware about investment avenues like gold and fixed deposits and almost 95 are aware about equity shares and mutual funds  How do you get information about the following investment avenues? INFORMATION ADVERTISEMENT EXECUTIVE FRIENDS MAGAZINES 65 .

company sales executives and friends and relatives.  Rate the following according to your preference? 90 80 70 60 50 40 30 20 10 0 MUTUAL FUND INSURANCE EQUITY SHARES FIXED DEPOSIT MORE PREFERRED MODERATE LESS PREFERRED Out of the 100 respondents asked the most preferred financial instrument is fixed deposits and the then the rest like equity shares with 70 % and insurance.Out of the 100 respondents about 50% of them get the information from advertisements on the television and internet and the rest from the magazines .  What is your age? AGE 20-30 31-40 41-50 51-60 60 ABOVE 66 .

5lakhs and 20% in the 3.5LAKHS 2.  What are the factors that you consider while investing in any financial instrument? 60 50 40 30 20 10 0 RETURN TAX SAVING REGULAR INCOME SAFETY Column1 Column2 Column3 Out of the respondents 50% were of the opinion that return and safety are the main reasons behind their investment decisions .5- bracket 67 .  What is your annual income? INCOME LESS THEN 1LAKH 1-2.5LAKHS 3.Out of the respondents that were surveyed the maximum were of the age group of 31-40.5-5LAKH ABOVE 5LAKH Out the total respondents around 40 %were in the income group of 2.

 How long do you prefer to keep your money invested? 80 60 40 20 0 LONG TERM SHORT TERM 35 65 Column1 Out of the 100 respondents mostly were of the view that they invested there money for short term 68 . How much of your money you invest in financial instruments? 60 50 40 30 20 10 0 10%to20% 20%to30% 30%to50% MORE THAN 50% Column1 Column2 Column3 Most of the respondents surveyed were mostly those people who invest 10 to 30 % of their money in these instruments.

 How much return do you expect from your investments? Column1 50 40 30 20 10 0 10 TO 20% 20 TO 30% 30 TO 50% MORE THAN 50% Column1 69 .

They also have a predetermination of the time period of investment. According to my view the age group of 21-30 can be a great potential investors for the company as the has high risk profile. Income. 70 . Capiatal preservation etc.CONCLUTION AND RECOMMENDATIONS CONCLUTION After completing the survey and watching the analysis I come to this conclusiion that the before investment investors do have focus on Tax savings. more disposible income. and the time horizon is perfect 3-7 years ( short term).

The ULIP has a 20%-22% return which good enough for investment.000 Rs disposible income group. ULIPS can also be offered to this group.  The age group of 41-50 years.000-20. Company should try to reach them and tap the investor.  The age group of 31-40 years.  Mutual Funds can also be offered as they have high risk profile. 71 . Company will get a good investor with diluted risk profile. investors are from the 15. investors are with „Moderate’ risk profile. the primary focus of these investors are retirement and time horizon is likely to be above 10years. This group of customers can also be offerd Mutual funds because in that also the exposure is in equities.Recommendation company must follow up these high potential customers. Company can offer them ULIPs.and Fixed Deposits as investment instrument.000-15. The main focus should be to reach to the customer. Company should take initiative to get demat account of these customers. these customers are aware of ULIPs and aware of other product. Investor in this group are invested in Insurance sector. they can be offered Equity shares because this group of people have a high risk profile and they can afford to takes risks which is usually associated with equity shares.000 Rs per month disposible income. most of the investors are from the 10. Fixed deposits can be a good option for them. This is also good potential group for the retirement plan in ULIPs. Mutual funds can be an option but that must be a debt fund to invest.

Apart from this company should offer to open demat account with them.  Recommendation company shoul tap these class by innovative marketing strategies as they already invested. Company should try to minimise the risk tolerence by offering Fixed deposits. and offer FDs. Most investor are with negative return acceptability and time horizon is < 3 years. Depending upon the data I conclude that the srevice class has a time horizon of 3-7 years and risk tolerence „Low. For this group of people the company can target Fixed deposits which gives continues return like monthly interests so that they can keep on getting returns. 72 .  In the survey there were lot of people who were in the age group of above 60. ULIPs. For the age group of above 50 years. They invested in FDs.  For the business class. Investors have invested in insurance sector but in this age insurance would not be a good option for investor.Moderate‟. OCCUPATION If we see the survey data it will seen that respondents are majorly Service peopole and Business Class. Mutual Fund and ULIPs. the risk profile is high-very high. Company should offer Mutual funds with risk profile High to very high thus investor can get a high return. Equity shares. Mutual fund can be a lucrative offer if the Fund is any moderate fund or debt the term is not more than 3 years. the rish profile would be low moderate.

Disposible Income  The disposible income bracket less than Rs.5000 per month are basically safe investors and have not and do not prefer investing in mutual funds and ULIP. Thus positioning of these products should be such that people are attracted towards this scheme. Emphasis on marketing of the products should be given.  Respondents under disposible income bracket Rs.5,000-Rs.10,000 have mainly invested in insurance and real estate. But when survey was done and their preferences was asked these respondents strongly preferred investing in these strategies.  Disposible Income Bracket of Rs.15,000-Rs.20,000 are the strong contenders for investing their money and these people have invested in real estate, insurance and fixed deposits. Moreover there is mixed preferences for their investments thus proper segmentation of the sample should be done accordingly marketing strategies should be adopted.  Though there is a small percentage of respondents in disposible income bracket above Rs.20,000 who least prefer investing in mutual fund. But this is the segment which can be well targeted and their portfolio should be such that gives them more returns. The case of ULIP is different as people strongly prefer investing in this investment strategy. Thus emphasis for selling ULIP in this income bracket.



Research for different types of INVESTMENT PLANS in Market
Name : ______________________________________________________ Contact No :________________ Occupation_____________________ E mail !d:______________________________ Age : _____________________ Gender : ____________________ (M/F)

Add : ________________________________________________________ ______________________________________________________________

Q1. Which type of investment mode you are willing to invest?

Long term investment plans Short term investment plans

Q2. In which type of Investment Plan you have invested or interested to invest?

Mutual funds Fixed deposit Stocks/Shares Insurance Other _________________

Q3. Your purpose of investment?

Saving Taxes Wealth maximization Future security


Q4. Annual income index?

Less than Rs. 100000 Rs. 100000-250000 Rs. 250000-350000 Rs. 350000-500000 Rs. 500000 and above

Q5. Which Investment plan you think is more risky?

Mutual funds Fixed deposit Stocks/Shares Insurance Other ___________________

Q6. What factor you concentrating while investing?

Return Risk Both

Q7. Give rank to the investment plans according to risk and return factor

Mutual funds Fixed deposit Stocks/Shares Insurance Other ____________________

In which company. Are you aware with the Equity funds and Debt funds? Yes No Q9.Q8. you are interested to invest your money? LIC HDFC SUNDARAM SBI ICICI KOTAK MAHINDRA BAJAJ ALLIANCE DATE: ____________________ Signature ___________________ 76 . Which plan is more precious for investment? Mutual fund Insurance Stock/share Q10. funds/nav/about funds/open ended www.ask.investopedia/aboutus/html www.BIBLIOGRAPHY 77 www.htm www.

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