Final - REPORT 5 TH Subject - Repaired - PDF

CHAPTER – 1
1.RATIONALE OF THE PROJECT
Investment is the commitment of a person’s funds to derive future income in the form of
interest, dividend, premiums, pension, pension benefits or appreciation in the value of
their capital purchasing of shares, debenture, post office savings certificate, insurance
policies are all investments in the financial sense. Such investments generate financial
assets.
In the economic sense, investment means the net additions to the economy’s capital stock
which consists of goods and services that are used in the production of other goods and
services. Investment in this sense implies the formation of new and productive capital in
the form of new constructions, plant and machinery, inventories, etc. such investments
generate physical assets.
The two types of investments are, however, related and dependent. The money invested in
financial investments is ultimately converted into physical assets. Thus, all investments are
ultimately converted into physical assets. Thus, all investments result in the acquisition of
some assets either financial or physical.
Investing in various types of assets is an interesting activity that attracts people from all
walks of life irrespective of their occupation, economic status, education and family
background. When a person has more money than he require foe current consumption, he
would be coined as a potential investor. The investor who is having extra cash could invest
it in securities or in any other assets like gold or real estate or could simply deposit in his /
her bank account. The companies that have extra income may like to invest their money in
the extension of the existing firm.
THE M.S.UNIVERSITY OF BARODA Page 1

CHAPTER – 2
2.RESEARCH METHODOLOGY
2.1 Significance & Need of The Project:-
An investment pattern of investor explains how an investor invests his savings in different
investment avenues and how he manages to maximize wealth by taking his investment decision. It
helps in understanding the psychology of investors and the manner in which they manage their
portfolio and how they can attain their objectives by investing wisely and by following good
principles of investment.
2.2 Objective of The Project:-
The research project undertaken has the following objective:-

“To study the Investment Patterns of the Investors with the
help of their characteristics like age-group, income and saving.”
Every project is started with keeping in mind specific objective. Without any objective researcher
are not able to reach his goal & result. The following points reflect the core of the objectives
which also directly focuses on the scope of the project work undertaken.
The primary objective is to study the investment pattern of the investor.

To determine what factors influence them while they choose a particular investment,a
particular company and in which particular scheme they prefer to invest and to find out
whether they are satisfied with their investment decision or not.
To find priority for investment like Returns, Risk, Safety, liquidity, maturity of
investment.
To compare different investment avenues available for investor.
To find the strength and weakness of different avenues.
To analyses Investment pattern through data interpretation.

2.3 Scope of The Project:-
This Study is limited to Baroda city only

This Study not includes other avenues such as diamond, retail textile & agricultural
business.
The scope of the study is limited to different selecting investment avanues.
This study will let us know the financial capacity of the people.
Corrective measures can be taken for the overall development of the region.
This study helps in estimating the purchasing power of the people.
This study helps to know about the response of the people regarding the investment
opportunities.
2.4 Research Design:-
My research design is based on questionnaire method. The questionnaire was given to

selected respondents. The sample was selected based on Stratified random sampling method and
the output was tabulated, analyzed and interpreted.
2.5 Universe:-
The universe of the research project is randomly selected and includes the unanimous
investors of Baroda like businessmen, doctors, professionals, engineers, interior designers, service
class, chartered accountants, advocates etc.
2.6 Sampling Method:-

The data is complied using random sampling method. Each item or element of the
population has an equal chance of being chosen at each draw.

2.7 Sample Size:-
The sample size of the research is 80 respondents which cover investors of Baroda like
businessmen, doctors, professionals, engineers, interior designers, service class, chartered
accountants, advocates etc.
2.8 Tools of Data Collection:-
The task of data collection is begins after a research problem has beendefined and research
designed/ plan chalked out. Data collection is to gather the data from the population. The data can
be collected of two types:
Primary Data
Secondary data
(1) Primary data:-
The Primary data are those, which are collected afresh and for the first time and thus
happened to be original in character. Primary data is collected with the help of
Questionnaires.
(2) Secondary data:-
The Secondary data are those which have already been collected by someone else
and which have already been passed through the statistical tool. Secondary data is collected
from books, internet and newspapers.
2.9 Treatment of Data:-
The data collected is tabulated with the help of tally marking, percentages, average which is
then presented through charts or graphs.

CHAPTER – 3
3. PROFILE OF THE INVESTMENT PATTERN
3.1 Introduction:-
Finance is considered to be life blood of business but I think not only business, finance is
blood of every individual’s life also. In today’s world individuals cannot live good life if they do
not have sufficient money to satisfy their needs. In an era of inflation, with tremendous price hike
of almost all commodities, individuals need enough money to satisfy even their basic necessities.
Earlier, living was very simple there weren’t many desires, needs and wants but now due to
increase in technologies and know-how, people need more money. New technologies bring
development in life, which is good but for that, they need more money. There is no problem for
individual’s who have more money and have many modes of earning income but still they want
more money as their living standard are high and for that they need money.
Individuals, whose income is very less, have more urged for money as compared to those
who have sufficient money. Both of them need money, so they have to plan first. By financial
planning they will allocate their money towards their expenditure and after that, there will
be some amount of money which is left and which will not be used anywhere which is called
savings.
Every one will save some amount of income after meeting their expense. If individual
keep this money lying aside and don’t use anywhere, it will not maximize their wealth. If they use
money in mode which will bring good returns or maximize their wealth, then for them there is
one more mode of earning money i.e. Investment. I have one quote for the people who don’t
enjoy their which as follows:-
“Wealth belongs to the person who enjoys it and not to the one
who keeps it “ – Afghan Proverb

3.2 Meaning of the Investment:-
“Investment is putting aside and employing money in financial instruments in the

present, with the expectation of a positive rate of return in the future.”
In other words, Investment involves making of a sacrifice in the present with a hope of
deriving future benefits. Investment has many meaning and facets. The two most important
features of an investment are current sacrifice and future benefit. There are a variety of activities
which display the two features of investment. For example, a portfolio manager buys 10,000
shares of ITC Ltd. For his mutual fund; a person may subscribe for a 6 year Post Office Monthly
Income Scheme. A corporate firm may spend Rs. 5 crore for expansion programmers; a middle
age man with a family decides to spend Ts. 10 lakhs to buy an apartment in a city and so on. All
these constitute investment activities because they involve current sacrifice of consumptions and
hope of futures gain. Perhaps, an investment in an apartment for the purpose of living in it may
involve, partially at least, certain current consumption but because the family will continue to live
in the house for a very long period of time, the act of purchasing a house or apartment may be
taken to be an investment activity.
Investment is an activity that is engaged in by people who have saving, i.e. investments
are made from saving, or in other words, people invest their savings. But all savers are not
investors. Investment is an activity which is different from saving. Let us see what is meant by
investment. Anything not consumed today and saved for future can be considered to be an
investment. For investor’s purposes, an investment will mean a measurable asset retained in order
to increase one’s personal health.
It may mean things to many persons. If one person has advanced some money to another,
he may consider his loan as an investment. He expects to get back the money, long with interest at
a future date. Another person may have purchase one kilogram of gold for the purpose of price
appreciation and may consider it as an investment. Yet another person may purchase an insurance
plan for the various benefits it promises in future. That is his investment.

3.3 Why Should one Invest ?
Investors invest in order to improve their future welfare. Funds to be invested come from
assets already owned, borrowed money, and savings or foregone consumption. By foregoing
consumption today consumption and investing the savings, investors expect to enhance their
future consumption possibilities. Anticipated future consumption may be by other family
members such as education funds for children or for themselves, possibly in retirement, when
investors are less able to work and produce for their daily need. Regardless of why investors
invest, they should all seek to mange their wealth effectively, obtaining the most from it. This
includes protecting their assets from inflation, tax and other factors.
Obviously, everybody wants more money. It’s pretty easy to understand that people invest
because they want to increase their personal freedom, sense of security and ability to afford the
things they want in life. However, investing is becoming more of a necessity. The days when
everyone worked the same job for 35 years and then retired to a nice fat pension are gone. For
average people, investing is not so much a helpful tool as the only way they can retire and
maintain their present lifestyle. Nowadays, investments are the foundation of our future financial
level. Bad investments can bring us negative turnovers and therefore decrease our future
possibilities. You are looking at two options for your money, the first you can spend it or save it
and second, invest it.
In short, one needs to invest to:
To beat inflation and earn return on your idle resources.
Generate a specified sum of money for a specific goal in life.
Make a provision for an uncertain future / for retirement.
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 a service in the future as it does now or did
in the past. For example, if there was a 6% inflation rate for the next 20 years, a Rs. 100 purchase
today would cost Rs. 321 in 20 years. This is why it is important to consider inflation as a factor
in any long-term investment strategy.

3.4 Investment V/S Speculation:-
Investor Speculation
(1) Planning An Investor has a relatively longer A speculator has a very short
horizon. His Holding period is planning horizon, day, week or
usually more than one year. month
(2) Risk An Investor is normally not willing to A speculator is willing to take risk.
assume more than moderate risk.
(3) Return An Investor usually seeks a modest A speculator looks for high rate of
expectation rate of return. return in short time in exchange of
high risk borne by him.
(4) Basis of Attaches greater significance to A Speculator relies more on hearsay,
decisions fundamental factors and attempts a technical chart market, market
careful evaluation of the prospects of psychology
Investment
(5) Leverage An Investor uses his own funds. A speculator plays with small
money.
3.5 Difference between Saving & Investment:-
In most cases, saving does not involve any element of significant

risk. It simply implies not spending. It is the difference between
income and expenses. Placing one’s savings in a bank deposit
allows people to access their hard-earned cash to meet short-term
expenses and store extra cash in a place safer than a mattress or
cabinet at home. The rates of return of funds placed in savings
account are lower than those in investment instruments. In
contrast, investing takes a more active approach to wealth
accumulation and involves risk. In an investment, a person
commits capital for the purchase of securities, business, property,
or even art work and jewelry with expectations of realizing
profits or returns in the future.

3.6 Characteristics of Investment:-
An investor generally prefers liquidity for his investment, safety of his funds, a good
return with minimum risk or minimization of risk & maximization of return.
1. Return :- Returns may come from earnings or growth. Earning or profits from investments
may be in the form of interest, dividends, or rent payments. Growth, in contrast, comes from the
appreciation in the value of the investment that is bought and sold. All investments are
characterized by the expectation of a return. In fact, investments are made with the primary
objective of deriving a return. The return may be received in the form of yield plus capital
appreciation. The difference between the sale price & the purchase price is capital appreciation.
The dividend or interest received from the investment is the yield. Different types of investments
promise different rates of return. The return from an investment depends upon the nature of
investment, the maturity period & a host of other factors.
2 .Risk :- How willing is the person to take risks? Can this person sleep well at night when the
value of the investment goes down? As a general rule, the greater the return, the higher is the risk.
Risk tolerance is a person’s strength to endure the ups and downs of the market without panicking
when the value of investments goes down. The list below describes five varieties of risk. Risk is
inherent in any investment. The risk may relate to loss of capital, delay in repayment of capital,
nonpayment of interest, or variability of returns. While some investments like government
securities & bank deposits are almost risk less, others are more risky. The risk of an investment
depends on the following factors.
1. The longer the maturity period, the longer is the risk.
2. The lower the credit worthiness of the borrower, the higher is the risk .
3. The risk varies with the nature of investment. Investments in ownership securities like
equity share carry higher risk compared to investments in debt instrument like debentures
& bonds.

3. Safety :- The safety of an investment implies the certainty of return of capital without loss of
money or time. Safety is another features which an investors desire for his investments. Every
investor expects to get back his capital on maturity without loss & without delay.
4. Liquidity :- An investment, which is easily saleable, or marketable without loss of money &
without loss of time is said to possess liquidity. How quickly will this person need the money?
When investing or placing funds in a savings or a time deposit, a person must determine how
soon he or she will need the money and assess the amount of his or her short-term expenses and
emergency money. Some investments like company deposits, bank deposits, P.O. deposits, NSC,
NSS etc. are not marketable. Some investment instrument like preference shares & debentures are
marketable, but there are no buyers in many cases & hence their liquidity is negligible. Equity
shares of companies listed on stock exchanges are easily marketable through the stock exchanges.
3.7 Objectives of Investment:-
The purpose of the study was to determine the saving behavior and investment preferences
of customers. Customer perception will provide a way to accurately measure how the customers
think about the products and services provided by the company. Today’s trying economic
conditions have forced difficult decisions for companies. Most are making conservative decisions
that reflect a survival mode in the business operations. During these difficult times, understanding
what customers on an ongoing basis is critical for survival. Executives need a 3rd party
understanding on where customer loyalties stand. More than ever management needs ongoing
feedback from the customers, partners and employees in order to continue to innovate and grow.
The main objective of the project is to find out the needs of current and future customers. For this
report, customer perception and awareness level will be measured in many important areas like:-
To understand all about different investment avenues available in India
To find out how the investors get information about the various financial
instrument
To find out how the investor wants to invest i.e. on his own or through a broker.
To find out the saving habits of the different customers and the amount they invest
in various financial instruments.

In which type of financial instrument they like to invest.
How long they prefer to keep their money invested.
What is the return that they expect from the investment.
What are the various factors that they consider before investing.
To find out the risk profile of the investor.
To give a recommendation to the investors that where they should invest.
Generally speaking, investors have a few factors to consider when looking for the right
place to park their money. Safety of capital, current income and capital appreciation are factors
that should influence an investment decision and will depend on a person’s age, stage/position in
life and personal circumstances. A 75-year-old widow living off of her retirement portfolio is far
more interested in preserving the value of investments than a 30-year-old business executive
would be. Because the widow needs income from her investments to survive, she cannot risk
losing her investment. The young executive, on the other hand, has time on his or her side. As
investment income isn’t currently paying the bills, the executive can afford to be more aggressive
in his or her investing strategies.
An investor’s financial position will also affect his or her objectives. A multi-millionaire
is obviously going to have much different goals than a newly married couple just starting out. For
example, the millionaire, in an effort to increase his profit for the year, might have no problem
putting down 5000000 in a speculative real estate investment. To him, a hundred grand is a small
percentage of his overall worth. Meanwhile, the couple is concentrating on saving up for a down
payment on a house and can’t afford to risk losing their money in a speculative venture.
Regardless of the potential returns of a risky investment, speculation is just not appropriate for
the young couple. As a general rule, the shorter your time horizon, the more conservative you
should be.

CHAPTER – 4
4. REVIEW OF LITERATURE
4.1 Introduction :-
A bewildering range of investment alternatives is available. They fall into two broad
categories
a) Financial Assets
b) Physical Assets
Investment in financial Assets consists of

i. Securitized (i.e. security form of) investments
ii. Non-securitized investments
The term ‘securities’ is used in the broadest sense, consisting of those papers that are quoted and
are transferable. Under Section 2(h) of the Securities Contract (Regulation) Act, 1956 (SCRA)
‘securities’ include:
a. Shares, scripts, stocks, bonds, debentures, debenture stock or other marketable securities
of same nature in or of any incorporated company or other body corporate.
b. Government Securities
c. Such other instruments as may be declared by the central government to be securities, and
d. Rights or interest in securities.
Therefore, in the above context, security forms of investments include equity

shares, preference shares, debentures, government bonds, units of UTI and other mutual
funds, and equity shares and bonds of public sector undertakings (PSUs).
Non security forms of investment include all those investments, which are not
quoted in any stock market and are not freely marketable, viz., bank deposits, corporate
deposits, post office deposits, national savings and other small savings certificates and
schemes, provident funds, and insurance policies.

The above investments are essentially forms of savings and should be treated as
such. In India, nearly 33% of the household savings go into such savings schemes as post
office savings schemes, life insurance, provident funds, etc.
Another popular investment avenue is the investment in physical assets such as
gold, silver, diamonds, real estate, antiques etc. India investors have always considered
physical assets to be attractive investments and, particularly for hedging against inflation.
India has a very long tradition in arts and crafts in jewellery, made of gold/silver and
precious stones. Moreover, it has been observed that in times of high inflation, investors
move away from financial assets into physical assets more particularly, real estate. As the
economy advances, the relative importance of financial assets tends to increase. Of course,
by and large the two forms of investments are complementary and not competitive.

4.2 Equity Shares :-
Equity shares represent equity capital, which is the ownership capital because equity
shareholders collectively own the company. The ownership of equity shares or stocks confers
upon the shareholders the benefits of such ownership, which is a residuary claim on the profits
and assets of the company after the claims of others have been satisfied. The shareholders are the
last category of those with claims on the company to receive any of its earnings and if the
company is dissolved, the last to receive any assets. Equity shareholders also enjoy the right to
control the company through the board of directors and have the right to vote on 1 every
resolution placed before the general body. Yet another right enjoyed by the equity shareholders is
the pre-emptive right that obliges the company to give the existing equity shareholders the first
opportunity to purchase, proportionately, additional equity shares called the ‘right shares’.
Equity shares are the first security to be issued by a corporation and in, the event of
bankruptcy, and the last to be retired. Equity shares, also called common stock, represent a share
in the ownership of a firm; they have the lowest-priority claim on earnings and assets of all
securities issued.
Equity shares, however, possess an unlimited potential for dividend payments and price
appreciation. In contrast, bonds and preference shares have a contract for fixed interest or
dividend payment that equity shares do not have. A share certificate states the number of shares,
their par value, the certificate number, distinctive numbers and the name of owner of the
certificate.Common stockholders or shareholders elect the board of directors and vote on major
issues that affect the corporation because they are the owners of the corporation.
Par value:- It is the face value of a share of the stock. Companies are allowed to fix a par
value the minimum being Re. 1 per share.
Book Value:- The book value is calculated by adding reserves to the equity capital of the
company, multiplied by the face value and divide by the equity capital of the company. Book
and market values might be equal on the day the stock in a new corporation is issued, but after
that, it appears that only coincidence will ever make them equal at any given moment.

Stock Price Quotations:- If you pick up any of the financial newspapers, they carry the
quotations of the last day’s trading on the major stock exchanges, including National Stock
Exchange (NSE), Bombay Stock Exchange (BSE), etc. They normally carry open, high, low,
close prices along with volumes of shares traded as well as the previous 52-week (1 year) high-
low prices for each stock. The prices mentioned are for one share of the company.
Preferred Stock:- Sandwiched between bondholders and common stockholders, preferred stocks
have an assured dividend and assume less risk than that borne by common stockholders. They
hardly have any voting rights in the corporation as compared to the common stockholders.
There are two types of companies
1. Publicly held companies and
2. Private companies.
Private companies are owned by the promoters (a small group of shareholders) while
the publicly held ones have shareholding by the ordinary investors too.
Equity shares can be classified in different ways but we will use the terminology of
‘Investors’. However it should be noted that the lines of demarcation between the classes are not
clear and such a classification is not mutually exclusive.
Stock Market Classification: In stock market parlance, it is customary to classify equity shares
as follows:-
1) Blue-chip Shares: Shares of large, well-established, and financially strong

companies with an impressive record of earnings and dividends.
2) Growth Shares: Shares of companies that have a fairly entrenched position in a
growing market and which enjoy an above average rate of growth as well as
profitability.
3) Income Shares: Shares of companies that have a fairly stable operations,
relatively limited growth opportunities, and high dividend payout ratios.
4) Cyclical Shares: Shares of companies that have a pronounced cyclically in their
operations.

5) Defensive Shares: Shares of companies that have are relatively unaffected by the
ups and downs in general business conditions.
6) Speculative Shares: Shares that tend to fluctuate widely because there is a lot of
speculative trading in them.
Note that the above classification is only indicative. It should not be regarded as rigid.
Advantages:-
Capital Appreciation: The stock price reflects the underlying fundamentals. Capital
gains offer certain tax advantages.
Dividend Payout: Companies can pay higher dividends and provide current cash flows to
the investor.
Bonus Shares: Enhance liquidity and ensure capital gains.
Right Shares: Shareholders may get additional shares for less than market price. If the
investor does not want to invest in that company he can sell his rights in the market.
Liquidity: Marketability and exit options are ensured in the case of actively traded stocks.
Security for Pledging: Capital appreciation of equity shares makes them good securities
for borrowing from the financial institutions and banks.
Disadvantages:-
Investment in equity shares should be more than 3 year or else don’t invest equity shares.
So in this short term investment is there but for beneficial point of view is not good.
Conditions:
Long term type of investor only invests in this.
Don’t invest on tips and only on fundamental analysis in this option.

4.3 Derivatives:-
A derivative is an instrument whose value depends on the value of some underlying asset.
Hence, it may be viewed as a side bet on that asset. From the point of view of investors and
portfolio mangers, futures and options are the two most important financial derivatives. They are
used for hedging and speculation. Trading in these derivatives has begun in India.
(1) Futures: A futures contract is an agreement between two parties to exchange an asset for
cash at a predetermined future date for a price that is specified today. The party which agrees to
purchase the asset is said to have a long position and the party which agrees to sell the asset is
said to have a short position.
The party holding the long position benefits if the price increases, whereas the party holding the
short position loses if the price increases and vice versa. To illustrate this point, consider a futures
contract between two parties, viz., A and B. A agrees to buy 1000 shares of Tata Chemicals at Rs.
100 From B to be delivered 90 days hence. A has a long position and B has a short position. On
the 90th day, if the price of Tata Chemicals happens to be Rs. 105, A gains Rs. 5,000 [1000 x
(105-100)] whereas B loses Rs. 5,000. On the other hand, if the price of Acme Chemicals on the
90th day happens to be Rs. 95, A loses Rs. 5,000 [1000 x (95-100)] whereas B gains Rs. 5,000.
(2) Options: An option gives its owner the right to buy or sell an underlying asset (our focus
here will be on equity shares) on or before a given date at a predetermined price. Note that options
represent a special kind of financial contract under which the option holder enjoys the right (for
which he pays a price), but has no obligation, to do something. There are two basic types of
options: Options are of two types - Calls and Puts options:-
(i) A call option gives the option holder the right to buy a fixed number of shares of a
certain stock, at a given exercise price on or before the expiration date. To enjoy this option, the
option buyer (holder) pays a premium to the option writer (seller) which is non-refundable. The
writer (seller) of the call option is obliged to sell the shares at the specified price, if the buyer
chooses to exercise the option.

(ii) A put option gives the option holder the right to sell a fixed number of shares of a
certain stock at a given exercise price on or before the expiration date. To enjoy this right, the
option buyer (holder) pays a non-refundable premium to the option seller (writer). The writer of
the put option is obliged to buy the shares at the specified price, if the option holder chooses to
exercise the option.
Advantages:-
Flexibility: Derivatives can be used with respect to commodity price, interest and
exchange rates and equity price. They can be used in many ways.
Risk Reduction: Derivatives can protect your business from huge losses. In fact,
derivatives allow you to cut down on non-essential risks.
Stable Economy: Derivatives have a stabilizing effect on the economy by reducing the
number of businesses that go under due to volatile market forces.
Disadvantages:-
If derivatives are misused, they can boomerang on the company. Because of their ability
to provide leveraging, derivative disasters are pretty common in international markets. Just as
there is huge potential of earning higher returns, it also exposes individuals and corporations alike
to lose money in case the market moves against the positions held by them.
Credit Risk: While derivatives cut down on the risks caused by a fluctuating market, they
increase credit risk. Even after minimizing the credit risk through collateral, you still face
some risk from credit protection agencies.
Crimes: Derivatives have a high potential for misuse. They have been the caused the
downfall of many companies that used trade malpractices and fraud.
Interest Rates: Wrong forecasts can result in losses amounting to millions of dollars for
large companies; it can wipe out small businesses. You need to accurately forecast the
long term and short term interest rates, something that many businesses cannot do.

4.4 Life Insurance:-
The basic customer needs met by life insurance policies are protection and savings.
Policies that provide protection benefits are designed to protect the policyholder (or his
dependents) from the financial consequence of unwelcome events such as death or long-term
sickness / disability. Policies that are designed as savings contracts allow the policy holder to
build up funds to meet the specific investment objectives such as income in retirement or
repayment of a loan. In practice, many policies provide a mixture of savings and protection.
The common types of insurance policies are:-
Endowment Assurance : There are basically two variants of this policy:

a) Non Participating (without profit) Endowment Assurance:-
This policy offers a guaranteed amount of money (the “sum assured”) at the maturity date
of the policy in exchange for a single premium at the start of policy or series of regular premiums
throughout the term of the policy. If the policyholder dies before the maturity date then usually
the same sum assured is paid on death. Of course, the policy could be structured with a sum
assured paid on death, which is different from that paid at maturity.
The policyholder may be allowed to surrender the policy before maturity and receive a
lump sum (surrender value or cash value) at the time, on guaranteed or nonguaranteed term. If the
policy holder wishes to keep the policy in force without paying further premiums, a reduced sum
assured (paid up value or paid up sum assured) may be granted. There is usually a provision to
take a loan up to 90% of the surrender value.
b) Participating (with profit) Endowment Assurance:-

The structure of this policy is similar to that of the non-participating policy except that the
initial sum assured under the policy is expected to be enhanced by payment of bonuses
(distribution of the profit made by the insurance company) to the policy holder. In the Indian
context, bonuses usually take the form of addition to the initial sum assured and become payable
in the event of the occurrence of the insured event, i.e. survival up to the maturity date or earlier
death. However, some life insurance companies provide bonuses (dividends) as regular cash

payments. In this case, the policy holder may have the option of the using the cash bonus
to offset the future premiums payable.
Money Back Plan:-

This is a popular savings cum protection policy because it provides lump sum at periodic
intervals. For example, given an initial sum assured of Rs. 1000 and a term of 20 years, the policy
may provide for part payment of the sum assured as follows:
20% at the end of 5 years
This policy is usually sweetened by providing a guaranteed addition to the initial sum
assured every year. The money back policy is illustrated above is non participating policy. The
policy can also be offered in the “Participating” format in which case the guaranteed additions
will be replaced by “bonuses”.
As with endowment assurance, a surrender value on guaranteed or non-guaranteed terms
may be paid if the policyholder chooses to withdraw from policy. Alternatively the policyholder
may have the option of converting the policy into a paid-up policy. Usually there is no loan
facility attached to this policy.
Whole life policy:-

This policy provides a benefit on the death of the policy holder whenever that might
occur. Basically it provides long-term financial protection to the dependents. It is particularly
useful as a means of protecting some of the expected wealth transfer that a parent would be
aiming to make to his or her children when he or she died. Without this policy, the wealth transfer
is likely to be very small if the parent died young. Such policies can also be a tax efficient way of
transferring wealth at any age depending on legislation (often reducing the liability to inheritance
tax).
There are both non-participating and participating versions of this policy. Non-
participating policies offer a guaranteed sum assured on death. Under participating polices, the
initial guaranteed sum assured may be increased by bonuses or cash refunds may be given.

With endowment assurance, a benefit may be paid if the policyholder chooses to withdraw
from the policy. Similarly, there may be a “paid up” policy option. The policyholder may also
have the option of taking a loan up to say 90% of the surrender value.
Unit Linked Plan:-

A unit-liked plan is also an investment –oriented product. As compared to other
investment plans, the investment portion of the unit linked plan functions like a mutual fund.
It is invested in a portfolio of debt and equity instruments, in conformity with the announced
investment policy. Hence, it grows or erodes in line with the performance of that portfolio. Of
course, throughout the period of investment, the policy holder enjoys an insurance cover as
stipulated.
Term Assurance:-
This is a purpose protection policy, which provides a benefit on the death of the
policyholder within a specified term, say 5 years or 10 years or 20 years or whatever. Premiums
may be paid regularly over the term of the policy (or some shorter period) or as a single premium
at the outset. Generally, there is no payment if the policyholder survives to the end of the policy.
However, there is term assurance policies, which offer some proportion of premiums paid on
survival to the maturity date of the policy.
A popular variant of the term assurance policy is the decreasing term assurance policy
under which the sum assured decreases over the term of the policy. This type of policy can be
used to meet two such specific needs. First, it can be used to repay the balance outstanding under
a loan (like house mortgage) in the event of death of the policyholder. Secondly, it can be used to
provide an income for the family of the deceased policyholder from the time of death up to the
end of the policy term.
Term assurance policies are typically offered in the non- participating format. These
policies are usually structured with no “surrender value” and “paid up” policy options. The main
attraction of a term assurance policy is that it provides a death benefit at a lower cost than
under an endowment or whole life policy for the same level of benefit.

Immediate Annuity:-
This type of policy meets the policyholder’s need for a regular income, for example, after
his or her retirement. The policy can also be structured to provide an income for a limited period,
for example to pay the school fees of the policyholder’s children. The regular income is purchased
by paying a single premium at the inception of the policy. Strictly speaking the regular income
ceases on the death of the policyholder. There is however variants of this policy under which a
(reduced) income may be paid to the spouse (of the policyholder) over his or her lifetime; or the
single premium may be returned to the dependents of the deceased policyholder.
Immediate annuities can be offered either in the non-participating format or in the
participating format. In the case of a participating annuity the income paid to the policyholder is a
guaranteed amount plus a bonus added by the insurance company. Usually no payment is made to
the annuitant on withdrawal. Put differently, there is no surrender value option associated with
this type of policy.
Deferred Annuity:-
The usual structure of this policy is that the policyholder pays regular premiums for a
period up to the specified “vesting date”. These premiums buy amounts of regular income,
payable to the policyholder from the vesting date. A single premium at the start of the policy is a
possible alternative to regular premiums.
A deferred annuity enables the policyholder to build up a pension that becomes payable on
his or her retirement from gainful employment. At the vesting date of the annuity, the alternative
of a lump sum may be offered in lieu of part or all of the pension, thereby meeting any need for a
cash sum at that point, for example to payoff a housing loan.

Riders:-
Riders are add-ons to the life insurance polices. Theses add-ons can be purchased with the
base policy on payment of a small additional premium. The commonly offered riders in the Indian
context are:
Accidental Death Benefit (ADB) Rider
Critical Illness(CI) Rider
Waiver of Premium (WOP) Rider
Term Rider
Tax Breaks:-
At the time of writing, the tax breaks from a policy holder’s perspective are as follows:
The premium payable under a life insurance policy can be deducted from taxable income
under section 80 C of the income Tax Act, 1961. In the case of an individual, the
insurance policy can be on the life of the individual or on the life of the spouse of the
individual or on the life of any child of the individual. The deduction under Section 80 C
is also available for premiums payable under a non-commutable deferred annuity and for
contribution made by the individual to any notified pension fund set up a Mutual Fund or
by the UTI.
The premium paid by an individual under an annuity plan of the Life Insurance
Corporation of India or of any other insurer (as approved by the IRDA) is deductible from
the taxable income of that individual subject to a maximum amount of Rs. 10,000[Section
80 CCC of the Income Tax Act].
Any sum received under a life insurance policy, including the sum allocated by way of
bonus on such policy is exempt from tax under section 10 (10D) of the Income Tax Act.

Consideration in Choosing a Policy:-
Bear in mind the following considerations in choosing a policy
Review your own insurance needs and circumstances. Choose the kind of policy that has
benefits that most closely fit your needs. A life insurance agent or a financial advisor can
help you in this task.
Be sure that you can handle premium payments. Can you afford the initial premium? If the
premium increases later and you still need insurance, can you still afford it?
Don’t buy life insurance unless you intend to stick with your plan. It may be very costly if
you quit during early years of the policy’s term.
If you are thinking of surrendering your insurance policy or replacing it with a new one,
you should carefully assess the surrender value and the rights and benefits of the new
policy vis-a-vis the existing policy.
Savings Scheme Maximum Limit

Life Insurance Premiums No limit
Recognised Provident Fund No limit
Family Pension Scheme Within prescribed limits
16-yr Public Provident Fund Rs. 60,000 p.a.
10/15-yr Unit Linked Insurance Plan Rs. 75,000 target amount
10/15-yr Dhanaraksha Rs. 75,000 target amount
National Savings Certificate - VIII No limit
National Housing Bank No limit
National Savings Scheme-92 No limit
Jeevan Dhara/Jeevan Akshay of LIC No limit
Equity-Linked Tax-Saving Schemes Rs. 10,000
Retirement Benefit Plan of UTI No Limit
Instruments of Infrastructure Companies Each of these schemes attracts an extra
Units of MFs Dedicated to Infrastructure ceiling of Rs. 10,000.
FI Bonds Dedicated to Infrastructure

4.5 Real Estate:-
Real Estate has historically been useful in a portfolio for both income and capital gains.
Hence ownership, in itself, is a form of equity investment, as is the ownership of a second or
vacation home, since these properties generally in value. Other types of real estate, such as
residential and commercial rental property can create income streams as well as potential long
term capital gains. This type of investment is taken by large number of people for hedging the
inflation rates.
Real estate investment can be made directly, with a purchase in your own name or through
investments in limited partnerships, mutual funds, or Real Estate Investment Trusts (REIT). REIT
is a company organized to invest in real estate. Shares are generally traded in the organized
exchanges. Also, there are many kinds of investments. Some are very speculative while others are
more conservative.
The major classifications are:-
Residential house
Sources of housing finance
Features of housing loans
Guidelines for buying a flat
Commercial property
Agricultural land
Suburban land
Time share in a holiday resort
Unimproved land
Improved real estate
New and used residential property
Vacation homes
Low income housing
certified historic rehab structures
Other income-producing real estate such as office buildings, shopping
centers and industrial or commercial properties
Why Invest In Indian Real Estate?
Flying high on the wings of booming real estate, property in India has become a dream for every
potential investor looking forward to dig profits. All are eyeing Indian property market for a wide
variety of reasons:-
• It’s ever growing economy which is on a continuous rise with 8.1 percent increase
witnessed in the last financial year. The boom in economy increases purchasing power of
its people and creates demand for real estate sector.
• India is going to produce an estimated 2 million new graduates from various Indian
universities during this year, creating demand for 100 million square feet of office and
industrial space.
• Presence of a large number of Fortune 500 and other reputed companies will attract more
companies to initiate their operational bases in India thus creating more demand for
corporate space.
• Real estate investments in India yield huge dividends. 70 percent of foreign investors in
India are making profits and another 12 percent are breaking even.
• Apart from IT, ITES and Business Process Outsourcing (BPO) India has shown its
expertise in sectors like auto-components, chemicals, apparels, pharmaceuticals and
jewellery where it can match the best in the world. These positive attributes of India is
definitely going to attract more foreign investors in the near future.
Advantages:-
The potential for high return in real estate exists due, in part to the frequent use of
financial leverage.
There are potential tax advantages in real estate, as well.
Some consider real estate a good hedge against inflation.
Good quality carefully selected income property will generally produce a positive
cash flow.
As a real estate owner, you may be in a position to take your gains from real estate
through refinancing the property without having to sell the property, therein
triggering a taxable capital gain.

Disadvantages:-
There is generally limited marketability in real estate.
There is also a lack of liquidity, in that there is no guarantee that the
property can be disposed of at its original value, especially if it must be done
within a short period of time.
A relatively large initial investment often is required to buy real estate.
If ownership in investment property is held directly by the investor, there are
many “hands-on” management duties that must be performed.
Real estate is often considered high risk because it is fixed in location and
character. It is particularly vulnerable to economic fluctuations such as
interest rate changes and/or recession.
The Tax Reform Act of 1986 eliminated many of the previously- available
relating to real estate.
4.6 Bond:-
Bonds may be of many types - they may be regular income, infrastructure, tax saving or
deep discount bonds. These are financial instruments with a fixed coupon rate and a definite
period after which these are redeemed. The fundamental difference between debentures and bonds
is that the former is normally secured whereas the latter is not. Hence in general bonds are issued
at a higher interest rate than debentures. This avenue of financing is mainly availed by highly
reputed corporate concerns and financial institutions.
The three main kinds of instruments in this category are as follows:
Fixed rate
Floating rate
Discount bonds

• The bonds may also be regular income with the coupons being paid at fixed intervals or
cumulative in which the interest is paid on redemption.
• Unlike debentures, bonds can be floated with a fixed interest or floating interest rate. They
can also be floated without interest and are called discount bonds as they are issued at a
discount to the face value and an investor is paid the face value on redemption, and if
offered for longer terms are known as deep discount bonds.
• The main advantage with interest bearing bonds is the floating interest rate, which is
stipulated based on certain mark-up over stock market index or some such index.
• From the point of view of the investor bonds are instruments carrying higher risk and
higher returns as compared to debentures.
• This has to be kept in mind while floating bond issues for financing purposes. With the
current buoyancy in capital markets for equity instruments the demand for corporate
bonds is low.
Bonds or debentures represent long-term debt instruments. The issuer of a bond promises
to pay a stipulated stream of cash flows. This generally comprises of periodic interest payments
over the life of the instrument and principal payment at the time of redemption(s).This section
discusses the following instruments: government securities, saving bonds, private sector
debentures, and PSU bonds.
Government Securities:-
Debt securities issued by the central government, state government, and quasi-government
agencies are referred to as government securities or gilt-edged securities. Three types of
instruments are issued.
An investment that resembles a company debenture. It carries the name of the holder(s)
and is registered with the Public Debt Office (PDO). For transfer, it has to be lodged with
the PDO along with duly completed transfer deed. The PDO pays interest to the holders
registered with it on the specified date of payment.

A promissory note, issued to the original holder, which contains a promise by the
President of India (or the Governor of state) to pay as per a given schedule. It can be
transferred to a buyer by an endorsement by the seller. The current holder has to present
the note to the government treasury (or a designated authorized agency) to receive interest
and other payments
A bearer security, where the interest and other payments are made to the holder of the
security.
Government securities have maturities ranging from 3-20 years and carry interest rates
that usually vary between 7 and 10 %. Even though these securities carry some tax advantages,
they have traditionally not appealed to individual investors because of low rates of interest and
long maturities and some what illiquid retail markets. They are typically held by banks, financial
institutions, insurance companies, and provident funds mainly because of certain statutory
compulsions.
Savings Bonds:-
A popular instrument for earning tax-exempt income, RBI Savings Bonds has the following
features:
Individuals, HUFs, and NRIs can invest in these bonds.
The minimum amount of investment is Rs1,000. There is no maximum limit.
The maturity period is 5 years from the date of issue.
There are two options: the cumulative option and the non- cumulative option.
The interest rate is 8.0 percent per annum, payable half- yearly. Under the cumulative
option is Rs, 1,000 becomes Rs. 1,480 after 5 years.
The interest earned is taxable. The bonds are exempt from wealth tax without any limit.
The bonds are issued in the form of Bond Ledger Account or in the form of Promissory
Notes. Bond Ledger Account can be opened in the name of the investors at the receiving
offices(designated offices of banks) and at the public Debt Offices of RBI. Bonds in the
form of Promissory Notes are issued only at RBI offices.

The Bonds are transferrable. The Bond Ledger Account is transferrable, wholly or in part,
by execution of a prescribed transfer deed. Promissory Notes are transferrable by
endorsement and delivery.
Nomination facility is available.
The bonds can be offered as security to banks for availing loans.
Private Sector Debentures:-
Akin to promissory notes, debentures are instruments meant for raising long term debt. The
obligation of a company towards its debenture holders is similar to that of a borrower who
promises to pay interest and principal at specified times. The important features of debentures are
as follows:
• When a debenture issue is sold to the investing public, a trustee is appointed through a
deed. The trustee is usually a bank or a financial institution. Entrusted with the role of
protecting the interest of debenture holders, the trustee is responsible for ensuring that the
borrowing firm fulfils its contractual obligations.
• Typically, debentures are secured by a charge on the immovable properties, both present
and future, of the company by way of an equitable mortgage.
• All debenture issues with a maturity period of more than 18 months must be necessarily
credit-rated. Further, for such debenture issues, a Debenture Redemption Reserve (DRR)
has to be created. The company should create a DRR equivalent to at least 50 percent of
the amount of issue before redemption commences.
• Previously the coupon rate (or interest rate) on debentures was subject to ceiling fixed by
the Ministry of Finance. No such ceiling applies now. A company is free to choose the
coupon rate. Further, the rate may be fixed or floating. In the latter case it is periodically
determined in relation to some benchmark rate.
• Earlier the average redemption period for non-convertible debentures was supposed to be
about seven years. Now there is no such restriction. A company has freedom to choose the
redemption (maturity) period.

• Debentures sometimes carry a ‘call’ feature which provides the issuing company
with an option to redeem the debentures at a certain price before the maturity date.
Sometimes, the debentures may have a ‘put’ feature which gives the holder the
right to seek redemption at specified times at predetermined prices.
• Debentures may have a convertible clause which gives the debenture holder the
option to convert the debentures into equity shares on certain terms and conditions
that are pre-specified.
4.7 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. Everybody else
associated with a mutual fund is a service provider, who earns a fee. The money in the mutual
fund belongs to the investors and nobody else. Mutual funds invest in marketable securities
according to the investment objective. The value of the investments can go up or down, changing
the value of the investor’s holdings. NAV of a mutual fund fluctuates with market price
movements. The market value of the investors’ funds is also called as net assets. Investors hold a
proportionate share of the fund in the mutual fund. New investors come in and old investors can
exit, at prices related to net asset value per unit.

Schemes of Mutual Funds:-
A variety of schemes are offered by mutual funds. Based on investment policy, the more
commonly offered schemes may be broadly classified as follows
1) EQUITY SCHEMES:-
(i) Growth schemes:- The corpus of the growth scheme is invested substantially (80-
95 present) in equity or equity related instruments. The principal objective of such a
scheme is to achieve long term capital growth for unit holders
(ii) Index schemes:- An index scheme is an equity scheme that invests its corpus in a
basket of equity stock that comprise a given stock market index such as NIFTY, ET
BRANDEX - 25 Branded Co’s, ET LIFEX - 30 Pharma Co’s etc. With each stock
being assigned a weightage equal to what it has in the index. The principal objective
of an index scheme is to give a return in line with the index movement.
(iii) Sector schemes:- A sectoral scheme invests its corpus in the equity stocks of a given
sector such as pharmaceuticals, information technology, telecommunication, and so
on. Sectoral schemes appeal to investors interested in taking a bet on these.
2) BALANCED SCHEMES:-
A balanced scheme, as the name suggests, invests its corpus across two broad asset
classes, viz equity and debt mere or less balanced manner. The objective of a balanced scheme is
to combine growth with stability. A commonly followed allocation is as follows:
Allocation of % of Corpus
Maximum Minimum
Equity 60 % 40 %
Debt 60 % 40%

3) DEBT SCHEMES:-
• Income schemes, Gilt Schemes, Money Market Instrument
The corpus of an income scheme is invested primarily in fixed income securities such as
Govt. of India securities, debt obligation of state and local governments; corporate debentures and
money market instruments. A small portion of the corpus say 10 to20 percent; may be invested in
equity instruments. The primary objective of income scheme is to provide a steady income
without impairing the capital.
Equity linked saving (ELSS).
Under 9.T if year invest up to Rs.1, 00,000 you get tax depending upon year tax rate.
• Fixed Maturity Plans:- A Fixed Maturity plan is a closed-ended debt scheme that has a
fixed maturity. Presently, FMPs come with tenures ranging from 3months to 3 years and
have an indicative, but not a guaranteed, return. The corpus of an FMP is invested
primarily in corporate bonds.
Open ended and close-end Schemes:-

A mutual fund may be close-end or an open-end scheme.
The key difference between the closed-end and open-end schemes are as follows:
• The subscription to a closed-end scheme is kept open only for a limited period (usually
one month or three months), where as open-end scheme accepts funds from investors by
offering its units on a continuing basis.
• A close-end scheme does not allow investors to withdraw funds as and when they like,
where as an open-end scheme permits investors to withdraw funds on a continuing basis
under a re-purchase arrangement.
• A close-end scheme has a fixed maturity period (usually five to fifteen years), where as an
open-end scheme has no maturity period.
• The close-end schemes are listed on secondary market, where as the open-end schemes are
ordinarily not listed.

Advantages:-
(1) 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.
(2) 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. You achieve this
diversification through a Mutual Fund with far less money than you can do on your own.
(3) 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.
(4) 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.
(5) 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 lower costs for investors.
(6) 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.
(7) 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.
(8) 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.

(9) Affordability:- Investors individually may lack sufficient funds to invest in high-grade
stocks. A mutual fund because of its large corpus allows even a small investor to take the
benefit of its investment strategy.
(10) Choice of Schemes:- Mutual Funds offer a family of schemes to suit your varying needs
over a lifetime.
(11) 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.
Disadvantages:-
(1) Professional Management:- Some funds doesn’t perform in neither the market, 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, for picking up stocks.
(2) Costs: The biggest source of AMC income is generally from the entry & exit load which
they charge from investors, at the time of purchase. The mutual fund industries are thus
charging extra cost under layers of jargon.
(3) Dilution:- Because funds have small holdings across different companies, high returns
from a few investments often don't make much difference on the overall return. Dilution is
also the result of a successful fund getting too big. When money pours into funds that have
had strong success, the manager often has trouble finding a good investment for all the new
money.
(4) Taxes:- When making decisions about your money, fund managers don't consider your
personal tax situation. For example, when a fund manager sells a security, a capital-gain tax
is triggered, which affects how profitable the individual is from the sale. It might have been
more advantageous for the individual to defer the capital gains liability.

4.8 Money Market Instruments:-
Debt instruments, which have a maturity of less than one year at the time of issue, are
called money market instruments. These instruments are highly liquid and have negligible risk.
The major money market instruments are Treasury bills, certificate of deposit, commercial paper,
and repos. The money market is dominated by the government, financial institutions, banks, and
corporate. Individual investors scarcely participate in the money market directly. A brief
description of money market instruments is given below.
Treasury Bills:-
Treasury bills are the most important money market instruments. They represent the
obligations of the Government of India which have a primary tenor like 91 days and 364 days.
They are sold on an auction basis every week in certain minimum denominations by the Reserve
Bank of India. They do not carry an explicit interest rate (or coupon rate). Instead, they are sold at
a discount and redeemed at par. Hence the implicit yield of a Treasury bill is a function of the size
of the discount and the period of maturity.
Though the yield on Treasury bill is somewhat low, they have appeal for the following reasons:-
• They can be transacted readily and there is a very active secondary market for them.
• Treasury bills have nil credit risk and negligible price risk (thanks to their short tenor).
Certificate of Deposits:-
Certificate of deposit (CDs) represents short term deposits which are transferable from one
party to another. Banks and financial institutions are the major issuers of CDs. The principal
invertors in CDs are banks, financial institutions, corporate, and mutual funds. CDs are issued in
bearer or registered form. They generally have a maturity of 3 months to 1 year. CDs carry a
certain interest rate.
CDs are a popular form of short-term investment for mutual funds and companies for the
following reasons:
• Banks are normally willing to tailor the denominations and maturities to suit the needs of
the investors.

• CDs are generally risk-free.
• CDs generally offer a higher rate of interest than Treasury bills or term deposits.
• CDs are transferable.
Commercial Paper:-
Commercial paper represents short-term unsecured promissory notes issued by firms that
are generally considered to be financially strong. Commercial paper usually has a maturity period
of 90 days to 180 days. It is sold at a discount and redeemed at par. Hence the implicit rate is a
function of the size of discount and the period of maturity.
Repos:-
The term “repo” is used as an abbreviation for Repurchase Agreement or Ready
Forward. A “repo” involves a simultaneous “sale and repurchase” agreement.
A “repo” works as follows:-
Party A needs short-term funds and Party B wants to make a short-term investment.
Party A sells securities to Party B at a certain price and simultaneously agrees to
repurchase the same after a specified time at a slightly higher price. The difference
between the sale price and the repurchase price represents the interest cost to Party A and
conversely the interest income for Party B.
A “reverse repo” is the opposite of a “repo” – it involves an initial purchase of an
asset followed by a subsequent sale. It is a safe and convenient form of short-term
investment.

4.9 Non-Marketable Financial Assets:-
A good portion of the financial assets of individual investors is held in the form of non-
marketable financial assets like bank deposits, post office deposits, company deposits, and
provident fund deposits. A distinguishing feature of these assets is that they represent personal
transactions between the investor and the issuer. For example, when an investor opens a savings
bank account at a bank, he or she deals with the bank personally. In contrast, when an investor
buys equity shares in the stock market, he or she does not know who the seller is. The important
non-marketable financial assets held by investors are briefly described below:-
Bank Deposits:-
Perhaps the simplest of investment avenues, by opening a bank account and depositing
money in it one can make a bank deposit. There are various kinds of bank accounts: current
account, savings account, and fixed deposit account. While a deposit in a current account does not
earn any interest, deposits in other kinds of bank accounts earn interest. The important features of
bank deposits are as follows:-
• Deposits in scheduled banks are very safe because of the regulations of Reserve Bank of
India and the guarantee provided by the Deposit Insurance Corporation, which guarantees
deposits up to Rs. 1, 00,000 per depositor of a bank.
• There is a ceiling on the interest rate payable on deposits in the savings account.
• The interest rate on fixed deposits varies with the term of the deposit. In general, it is
lower for fixed deposits of shorter term and higher for fixed deposits of longer term.
• If the deposit period is less than 90 days, the interest is paid on maturity; otherwise it is
generally paid quarterly.
• Bank deposits enjoy exceptionally high liquidity. Banks now offer customer the facility of
premature withdrawals of a portion or whole of fixed deposits. Such a withdrawals would
earn interest rates corresponding to the periods for which they are deposited.
• Loans can be raised against bank deposits.

• For saving bank accounts, most banks calculate interest on the minimum deposit between
the 10th and the last date of the month. So the best way to maximize returns on an
investor’s savings account is to treat it like a current account between the 1st and the 10th,
and fixed deposit for the rest of the month.
Post Office Deposits:-
A post office savings account is similar to a savings bank account. Its salient features are as
follows:
• The interest rate is 4 percent (Revised) per annum.
• The interest is tax exempt.
• The amount of first deposit should be at least Rs. 20 for an ordinary account and Rs,
250 for a checking account.
• The maximum balance that can be hold is Rs. 1,00,000 for a single account and
Rs. 2, 00,000 for a joint account.
• Interest Tax Free.
• Any individual can open an account.
Post Office Time Deposits (POTDs):-

Similar to fixed deposits of commercial banks, POTDs have the following features:-
• Minimum amount of deposit is Rs 200/- and in multiples of Rs 200/- thereafter. No

maximum limit.
• The interest rates on POTDs are, in general, slightly higher than those on bank deposits.
• The interest is calculated half-yearly and paid annually.
• No withdrawal is permitted up to six months.
• A POTD account can be pledged.
• Deposits in 10 years to 15 years Post Office Cumulative Time Deposit Account can be
deducted before computing the taxable income under Section 80 C.
• Minimum amount of deposit is Rs 200/- and in multiples of Rs 200/- thereafter. No

maximum limit.

• Investment up to Rs 1,00,000/- per annum qualifies for Income Tax Rebate under section
80C of IT Act.
• Interest income is taxable.
• 2 year, 3 year or 5 year accounts on or after 01.12.2011 if closed after one year, interest on
such deposits shall be calculated at a discount of 1% on the rate specified for respective
period as mentioned in the concerned table given under Rule 7 of Post office Time
Deposit Rules.
• Liquidity of Post Office Time Deposit (POTD)—1, 2, 3 & 5 years—to be improved by
allowing premature withdrawal at 1% less than the time deposits of comparable maturity.
For premature withdrawals between six and 12 months of investment, the POSA rate of
interest will be paid.

Monthly Income Scheme of the Post Office (MISPO):-
A popular scheme of the post office, MISPO is meant to provide regular monthly
income to the depositors. The salient features of this scheme are as follows:
• The minimum amount of investment is Rs. 1,000. The maximum investment can
be Rs. 3, 00,000 in a single account or Rs. 6, 00,000 in a joint account
• Existing rate of 8.0% p.a. will be revised to the 8.2% p.a.
• The duration of the scheme is reduced to 5 years from 6 year.
• Payment of 5% bonus on maturity is discontinued.
Kisan Vikas Patra (KVP):-

A scheme of the post office, the Kisan Vikas Patra has the following features:
• Kisan Vikas Patra certificates is that the deposited amount doubles itself after the
completion of stipulated period and the rate of interest offered by the post offices for these
certificates remain same throughout the loan period.
• The tenure of Kisan Vikas Patra certificates is 8 years and 7 months.
• This scheme will be discontinued and no longer will be available with the post office
savings.
• Kisan Vikas Patras (KVPs) to be discontinued.
National Saving Certificate (NSC):-

• National Savings Certificate (NSC) reduced from six years to five years.
• A new NSC instrument, with a maturity period of 10 years, to be introduced.
• Investment as well as the interest deemed to be re-invested qualifies for deduction u/s
80C.
• It comes in the denominations of Rs.100, Rs. 500, Rs.1, 000, Rs. 5,000 and Rs.10, 000.

Employee Provident Fund Scheme:-
A major vehicle of savings for salaried employees, the provident fund scheme has the
following features:
• Each employee has a separate provident fund account in which both the employer and
employee are required to contribute a certain minimum amount on a monthly basis.
• The employee can choose to contribute additional amounts, subject to certain restrictions.
• While the contribution made by the employer is fully tax exempt (from the pint of view of
the employee), the contributions made by the employee can be deducted before computing
the taxable income under Section 80 C.
• Provident fund contributions currently earn a compound interest of 8.5 percent per annum
that is totally exempt from taxes. The interest however is accumulated in the provident
fund account and not paid annually to the employee.
• The balance in the provident fund account is fully exempt from wealth tax. Further, it is
not subject to attachment under any order or decree of a court.
• Within certain limits, the employee is eligible to take a loan against the provident fund
balance pertaining to his contributions only.
• Loan facility available from 3rd financial year up to 5th financial year. The rate of interest
charged on loan taken by the subscriber of a PPF account on or after 01.12.2011 shall be
2% p.a. However, the rate of interest of 1% p.a. shall continue to be charged on the loans
already taken or taken up to 30.11.2011.

Public Provident Fund Scheme:-
One of the most attractive investment avenues available in India, the Public Provident
Fund (PPF) scheme has the following features:
• Individuals and HUF’s can participate in this scheme. A PPF account may be opened at
any branch of the State Bank of India or its subsidiaries or at specified branches of the
other public sector banks.
• The payment of commission on the PPF schemes (1%) and Senior Citizens' Savings
Scheme (0.5%) will be discontinued.
• Interest on loans from the PPF will be increased to 2% p.a. from the existing 1%.
• Minimum deposit is 500/- per annum. Maximum deposit is Rs. 1,00,000/- per annum
(Revised).
• The scheme is for 15 years.
• Investment up to Rs 1,00,000/- per annum qualifies for Income Tax Rebate under section
80C of IT Act.
• Interest is completely tax-free.
• Deposits can be made in lump sum or in 12 installments.
• Withdrawal is permissible from 6th financial year.
• The interest rates for PPF account is 8.0% p.a. and it has been revised to 8.6% p.a. which
is very good for the customers. It will attract more investors to open the PPF account.
• Interest on loans from the PPF will be increased to 2% p.a. from the existing 1% p.a.

4.10 Precious Metals:-
From times immemorial gold, silver and art objects have constituted important media for
investment from the points of view of both capital appreciation and liquidity. But these precious
metals do not yield any current return. In fact, there is a cost, even if modest, in holding bullion;
capital appreciation could also be on some equity shares besides a current return.
Gold:-
Gold is one of the most valuable assets in any economy. It has been used in India primarily
as a form of saving by the housewives. Although it is said to appreciate any times yet in India it is
more of a sense of security and a fixed asset rather than for the use of sale or for the purchase of
making profit or income on this investment. Gold may be called a hedge against inflation or a
well or reservoir for future use or substitute for the rupees which are used as a means of transfer
or exchange. Gold to the investor in recent years has been important mainly because of rise in
prices due to inflation. It has been used more for speculation rather than for a long-term
investment and for quick profits. Fold may be invested into either in form of gold shares which
are banned in India, gold coins, gold bars and gold jewellery.
Silver:-
Silver is sold in the form of weight by kilograms in India. Silver may be owned in the
form of coins, utensils, glasses, bowls, plates, trays or jewellery. This, like gold, has been a hedge
during inflation. The price of silver although less than gold, also keeps on rising in the same way
as gold. Silver utensils and trays, from the point of view of use, are an excellent possession but it
is difficult to re-sell them and get the value of investments. At the time of resale of these
investments, the silversmith takes away the expenses of polish and non-silver which is used in
shaping these beautiful vessels. As a result, the investor is able to get only 60% of the value of
silver. In India, it is considered a good investment to shape silver into coins and to buy them
during Diwali. Silver key chains and jewellery are also kept for use for re-sale purposes in future.
Silver coins five a higher return in the form of value. Silver bars are also legal and can be used for
selling. The sale price of silver bars is the price recorded for pure silver. The price of silver and
gold is quoted daily in the stock exchange list.

CHAPTER – 5
5.Data
Data Analysis & Interpretations
Table and Pie Chart 1: In

Investor Major Goal
Investors Major Goal while Investing in any Avenue Number Of Respondents
Security 8
Inflation protection 2
Growth and security 51
Growth 7
Maximum growth 10
Other than above Mention options 2
From the Above table, it can be said that 51 respondents which is 64 % of 50 respondent’s
major goal is Growth and security and least number of investors Major Goal is Inflation
Protection. This table can be better explained with the help of graph which as follows:
Any Pie Chart Showing Investors Major Goal While Investing in any Avenue
other, please
specify Security
3% 10%
Maximum growth Inflation protection
12% 2%
Growth
9%
Growth and
security
64%
THE M.S.UNIVERSITY OF BARO

BARODA Page 45
From the Above Graph, it can be observed that other investors has maximum growth, only
growth and only security as their major goal and only 2% of Investors has their major goal is
Inflation protection. 3% of investor selected tax saving option aass their major goal which is under
other than above mention goal.
Table and Pie Chart 2: Investors overall family Financial Situation
Investors overall family Financial Situation Number of

Respondents
We have no savings and large debts. 2
We have few savings and fair amount of debt. 6
We have some savings but also some debts. 21
We save quite regularly and have paid off most debts 37
We have few debts and are quite secure. 14
From the Above table, it can be said that 37 respondents which is 46% of 80 respondent’s
overall family financial situation has No debts or Paid
Paid-off
off Most Debts and they Save Quite
Regularly. Least number of Investor has Large Debts and No Savings.
This table
le can be better explained with the help of graph which as follows:
We have no Pie Chart Showing Investor's Overall Family's Financial Situation

savings and large We have few
debts. savings and fair
We have few
2% amount of debt.
debts and are
quite secure. 8%
18%
We have some
savings but also
some debts.
26%
We save quite
regularly and have
paid off most debts
46%

BARODA Page 46
From the Above Graph, it can be observed that other investors financial situation is has
some savings and but also some debts which is 26 %, after that investors have debts but they are
quite secure.
Around 8% have few savings and fair amount of debt and only 2% of investor has large
debts and no savings. By the chart it is observed that Baroda’s investor have negligible amount of
debts which is a positive sign of investor.
Table and Pie Chart 3: Investment Knowledge of Investors
Investment Knowledge Number of

Respondents
I have little knowledge and unfamiliar with Investing 3
I have some knowledge but little experience with Investing 23
I have a fair amount of knowledge and 31
am familiar with how different asset classes work
I have considerable knowledge and 16
am comfortable with many investing principles
I have extensive knowledge. 7
have fair amount of knowledge and they are familiar with how different asset classes work. Only
less number of investors has little knowledge of investing which is 3%.
This table can be better explained with the help of graph which as follows:
Pie Chart Showing Investment Knowledge of Investor

I have little knowledge
I have extensive and unfamiliar with
knowledge. investing
9% 3%
I have considerable
knowledge and am
comfortable with many
investing principles
20%
I have some knowledge
but little experience with
investing
I have a fair amount of 29%
knowledge and am
familiar with how
different asset classes
work
39%
From the Above Graph, it can be observed that 9% of investors have extensive knowledge
of investing so they are experienced investors.
Table and Pie Chart 4: Showing Duration of Investment of Investor

nvestor
Duration of Investment Number of Respondents

Less than 1 year 4
1-less
less than 3year 24
3 – Less than 5 year 27
5 – Less than 7 8
More than 7 years 17
has selected 3- 5 years as their duration of investment as this is higher than 1 year so it is long
term investment.
Only few investor preferred short investment i.e. less than 1 year which is only 5%.
Pie Chart Showing Duration OF Investment Preferred by Investors

Less than 1 year
More than 7 years 5% 1-less
less than 3year
21% 30%
5 – Less than 7
10%
3 – Less than 5 year

34%

BARODA Page 48
From the Above Graph, it can be observed that 21% of investor preferred duration of
investment more than 7 years compare with this higher number of investor preferred 1-3
1 years as
their duration of investment but less than 33-5 years investors.
Table and Pie Chart 5: Showing Maximum Temporary Decline Tolerable

or Bearable by Investors
Maximum Temporary Decline Number of Respondents
0% decline 12
0-1%
1% decline 5
1-6%
6% decline 15
6-11%
11% decline 11
11-15%
15% decline 16
15-21%
21% decline 21
From the Above table, it can be said that 21 respondents which is 26% of 80 respondents’
has highest decline bearing capacity and it is highest in available options also i.e. 15-21%
15
declines.
Pie Chart Showing Maximum Temporary Decline Tolerable or

Bearable by Investors
0% decline
15%
15-21% decline 0-1%

1% decline
26% 6%
1-6%
6% decline
11-15% decline 19%
20%
6-11% decline
14%
From the Above Graph, it can be observed that Least investors bearing capacity is 0-1%
0
decline which are 6% of 80 respondents from their investment. 15% of investorss can not bear
Temporary Decline i.e. 0% decline from their investments.
BARODA Page 49
Table and Pie Chart 6: Showing Distribution of Avenues on the basis of 20-29
20
years of Age-Group
Avenues \ Age group 20-29 years

Equity Shares 25
Insurance Schemes 27
Real Estate 2
Bonds 7
Mutual Fund 24
Money Market Instrument 4
Non-Marketable
Marketable Financial 29
Asset
Precious Metals 14
From the Above table, it can be said that 29 respondents of 20

20-29
29 age group which is 22 %
of 80 respondents’ invest in non
non-marketable
marketable financial Asset (i.e. Bank deposit, Provident fund
etc), after this insurance schemes takes second position.
Pie Chart Showing Distribution of Avenues on the basis of 20

20-29
29 years
of Age-Group
Equity Shares
Precious Metals 19%
Non-Marketable 11%
Financial Asset
22%
Insurance Schemes
20%
Money Market
Instrument
3%
Mutual Fund Real Estate

18% 2%
Bonds
5%

BARODA Page 50
30
years of Age-Group
Equity Shares 11
Real Estate 4
Bonds 5
Mutual Fund 11
Non-Marketable
Asset
Precious Metals 10
30-39
39 age group which is 24 %
of 80 respondents’ invest Insurance Schemes i.e. Life Insurance, after this Mutual Fund takes
second position.
This table can be better explained with the help of gr
graph which as follows:

30-39
39 years of
Age-Group Equity Shares
Precious Metals
15%
14%
Insurance Schemes
Non-Marketable 24%
Financial Asset
18%
Money Market
Instrument
1%
Mutual Fund
15% Real Estate
Bonds 6%
7%
From the above pie chart, it can be observed that this age group prefers less of money
market instruments (i.e. certificate of deposit) which are only 1%.

BARODA Page 51
40
years of Age-Group
Equity Shares 4
Real Estate 2
Bonds 4
Mutual Fund 10
Non
Non-Marketable Financial 12
Asset
Precious Metals 5

40-49
49 age group which is 27%
of 80 respondents’ invest Insurance Schemes i.e. Life Insurance, after this Non-Marketable
Non
Financial Asset (i.e. bank deposit, P.F., Post Office etc) takes second posi
position.

40-49
49 years
Precious Metals of Age-Group
Equity Shares
9% 8%
Non-Marketable Insurance Schemes
Financial Asset 27%
23%
Money Market Real Estate

Instrument 4%
2%
Mutual Fund Bonds

19% 8%
From the above pie chart, it can be observed that this age group prefers less of money
market instruments (i.e. certificate of deposit) which are only 2%.

BARODA Page 52
50
years of Age-Group

Equity Shares 8
Real Estate 2
Bonds 0
Mutual Fund 6
Non-Marketable
Marketable Financial Asset 11
Precious Metals 6
50-59
59 age group which is 25%
of 80 respondents’ invest in non
non-marketable
marketable financial Asset (i.e. Bank deposit, Provident fund
etc), after this insurance schemes
es takes second position.

50-59
59 years
of Age-Group
Precious Metals Equity Shares
14% 19%
Non-Marketable
Financial Asset Insurance Schemes
25% 23%
Money Market
Instrument
0% Real Estate
Mutual Fund 5%
14% Bonds
0%
From the above chart, it can be observed that no investor from this age group invest in Bonds.

BARODA Page 53
Table and Pie Chart 10: Showing Distribution of Avenues on the basis of 60 or
above years of Age-Group
Avenues \ Age group 60 or above years

Equity Shares 2
Insurance Schemes 2
Real Estate 1
Bonds 0
Mutual Fund 2
Non-Marketable
Precious Metals 2
From the Above table, it can be said that respondents of this age group invest highly in
Equity Shares, non-marketable
marketable financial Asset (i.e. Bank deposit, Provident fund etc), Insurance
Schemes, Mutual Fund, Precious Metals.
This table can be better explained
ined with the help of graph which as follows:
Pie Chart Showing Distribution of Avenues on the basis of 60 and above

years of Age-Group
18% 19% Insurance Schemes
Non-Marketable 18%
Financial Asset
18%
Money Market
Instrument
Real Estate
0%
9%
Mutual Fund
18% Bonds
0%
From above Pie Chart, it can be observed in this Age

Age-Group
Group no investor invest in Bonds
and Money Market Instrument and only 9% of investors invest in real Estate.

BARODA Page 54
Table and Pie Chart 11: Showing Distribution of Avenues on the basis of Age-
Group
Avenues \ Age group 20-29 30-39 40-49 50-59 60 or above

years years years years years
Equity Shares 25 11 4 8 2
Insurance Schemes 27 17 14 10 2
Real Estate 2 4 2 2 1
Bonds 7 5 4 0 0
Mutual Fund 24 11 10 6 2
Money Market Instrument 4 1 1 0 0
Non-Marketable Financial Asset 29 13 12 11 2
Precious Metals 14 10 5 6 2
From the Above table, it can be said that 20-29 age group of people invest highly in
Equity shares, Insurance Schemes, Bonds, Mutual Fund , Money Market Instrument, Non-
Marketable Financial Asset, Precious Metals from rest of age groups. Only 30-39 Age-Group of
respondents invest highly in Real Estate.
Pie Chart Showing Distribution of Avenues on the basis of Age-

Group
2
Precious Metals 56 10 14
2 1112
Non-Marketable Financial Asset 13 29
0
0
1 4
2 6 10 11
Avenue
Mutual Fund
24
0
0
Bonds 45
7
12
Real Estate 2 4
2
2 10
Insurance Schemes 14 17 27
2 8
Equity Shares 4 11
25
0 5 10 15 20 25 30 35
Age Group(years)
60 or above years 50-59 years 40-49 years 30-39 years 20-29 years

Table and Pie Chart 12: Showing Distribution of Avenues on the basis of
Income-Group of less than Rs 1, 50,000
Avenues \ Income Group less than Rs.1,50,000
Equity Shares 4
Insurance Schemes 6
Real Estate 0
Bonds 1
Mutual Fund 2
Non-Marketable Financial 6
Asset
Precious Metals 2
From the Above table, it can be said that respondents of this Income-Group invest highly
in Non-marketable financial Asset (i.e. Bank deposit, Provident fund etc) and Insurance Schemes
which is 6 of 80 Respondents i.e. 29%. This table can be better explained with the help of graph
which as follows:
Pie Chart Showing Distribution of Avenues on the basis of Income-Group

of less than Rs 1, 50,000

9% 19%
Non-Marketable
Financial Asset
29%
Insurance Schemes
29%
Money Market
Instrument
0%
Mutual Fund
Bonds Real Estate
9%
5% 0%
From above Pie Chart, it can be observed that, this Income-Group has no
investments in Real Estate and Money Market Instrument avenues.

Income- Group of Rs. 1, 50,000 – Rs.2,00,000
Avenues \ Income GrGroup RS. 1,50,000- Rs.2,00,000

Equity Shares 7
Insurance Schemes 6
Real Estate 0
Bonds 0
Mutual Fund 4
Non-Marketable
Precious Metals 2
From the Above table, it can be said that respondents of this Income-Group
Group invest highly
in Non-marketable
marketable financial Asset (i.e. Bank deposit, Provident fund etc) which is 8 of 80
Respondents i.e. 29%. Equity Shares take Second position which is 7 of 80 Respondents.
Pie Chart Showing Distribution of Avenues on the basis of Income

Income-
Group of Rs. 1, 50,000 – Rs.2,00,000
Non-Marketable 7% 25%
Financial Asset
29%
Insurance Schemes
21%
Money Market Real Estate

Instrument 0%
4% Mutual Fund Bonds
14% 0%
From above Pie Chart, it can be observed that, this Income

Income-Group
Group has no investments in
Real Estate and Bonds and insurance schemes avenues stand on third position.

BARODA Page 57
Income- Group of Rs. 2, 00,000 – Rs. 3,00,000
Avenues \ Income Group Rs.2,00,000- Rs.3,00,000

Equity Shares 8
Real Estate 3
Bonds 3
Mutual Fund 11
Non-Marketable
Asset
Precious Metals 4
From the Above table, it can be said that respondents of this Income
Income-Group
Group also invest
highly in Non-marketable
marketable financial Asset (i.e. Bank deposit, Provident fund etc) which is 15 of 80
Respondents i.e. 25%. An Insurance Scheme takes Second position which is 14 of 80
Respondents i.e. 23%.This table can be better explained with the help of graph which as follows:

Income-
Group of Rs. 2, 00,000 – Rs. 3,00,000
7% 14%
Non-Marketable
Financial Asset
25%
Insurance Schemes
23%
Money Market
Instrument
3% Real Estate
Mutual Fund Bonds 5%
18% 5%
From above Pie Chart, it can be observed that, this Income-Group

Income lowest
investment preferred avenue is Money Market Instrument which is only 3%.

BARODA Page 58

Equity Shares 19
Real Estate 1
Bonds 5
Mutual Fund 23
Non-Marketable
Asset
Precious Metals 16
Income-Group
Group invest highly
in Insurance Schemes which is 27 of 80 Respondents i.e. 23%. Non
Non-Marketable
Marketable Financial Asset
takes Second position which is 25 of 80 Respondents i.e. 21%. This table can be better explained
with the help of graph which as follows:

Income-
Group of Rs. 3, 00,000 – Rs. 5,00,000
14% 16%
Non-Marketable
Financial Asset
21% Insurance Schemes
23%
Money Market
Instrument Real Estate
1% 1%
Mutual Fund Bonds
20% 4%
From above Pie Chart, it can be observed that, this Income

Income-Group
Group lowest investment
preferred avenue
nue is Money Market Instrument and Real Estate which is only 1%.

BARODA Page 59
[

Equity Shares 5
Insurance Schemes 7
Real Estate 2
Bonds 2
Mutual Fund 5
Non-Marketable
Asset
Precious Metals 5
From the Above table, it can be said that respondents of this Income-Group
roup also invest
highly in Insurance Schemes which is 7 of 80 Respondents i.e. 23%. Non-Marketable
Non
Financial Asset, Mutual Fund, Equity Shares and Precious Metals take Second position
which is 5 of 80 Respondents i.e. 16%.

Income-
Group of Rs. 5, 00,000 – Rs. 8,00,000
16% 16%

Financial Asset 23%
16%
Money Market
Instrument
0%

16% Bonds 7%
6%
From above Pie Chart, it can be obser

observed that, this Income-Group
Group has no investment in
Money Market Instrument avenue by Investors.

BARODA Page 60
Income- Group of Rs. Rs. 8, 00,000 and above
Avenues \ Income Group Rs.8,00,000 and above

Equity Shares 7
Real Estate 5
Bonds 5
Mutual Fund 8
Non-Marketable
Asset
Precious Metals 8
Income-Group
Group also invest
highly in Insurance Schemes which is 10 of 80 Respondents i.e. 19%. Non-Marketable
Marketable Financial
Asset, Mutual Fund and Precious Metals take Second position which is 8 of 80 Respondents i.e.
15%. This table can be better explained with the help of graph which as follows:
Pie Chart Showing Distribution of Avenues on the basis of Income-

Income Group
of Rs. Rs. 8, 00,000 and above
15% 13%
Financial Asset 19%
15%
Real Estate
Money Market 10%
Instrument
4%
Bonds
Mutual Fund 9%
15%
From above Pie Chart, it can be observed that, this Income-Group

Group lowest investment
preferred avenue is Money Market Instrument which is only 4%.

BARODA Page 61
Income- Group
Avenues \ Income less than Rs. 1,50,000- Rs.2,00,000- Rs.3,00,000- Rs.5,00,000- Rs.8,00,000
Group 1,50,000 Rs.2,00,000 Rs.3,00,000 Rs.5,00,000 Rs.8,00,000 and above
Equity Shares 4 7 8 19 5 7
Insurance 6 6 14 27 7 10
Schemes
Real Estate 0 0 3 1 2 5
Bonds 1 0 3 5 2 5
Mutual Fund 2 4 11 23 5 8
Money Market 0 1 2 1 0 2
Instrument
Non-Marketable 6 8 15 25 5 8
Financial Asset
Precious Metals 2 2 4 16 5 8
From the above chart, it can be said that Insurance Schemes has maximum investors as
compared with other Avenues. It has got 27 respondents from 50 (who selected this avenue)
respondents which is 50% in Rs.3, 00,000- Rs.5, 00,000 of Income-Group.
Non-Marketable Financial Asset stands on second position which is from same Income Group of
Rs.3, 00,000- Rs.5, 00,000. It has 25 Investors from 67 (who selected this avenue) which are
37.31%.
After this mutual fund, Equity shares and Precious Metals which are from same Income
Group have maximum investors compare with other income Groups of respective Avenue.
It is also observed the Real Estate, Bonds and Money Market Instrument has no investor in few
income Groups compare with other Avenues.

Pie Chart Showing Distribution of Avenues on the Basis of
Income- Group
8
5
Precious Metals 16
4
2
2
8
5
Non-Marketable
15
8
6
2
0
2
1
0
8
5
Mutual Fund 23
Avenues
11
4
2
5
2
Bonds 5
3
0
1
5
2
Real Estate 1
3
0
0
10
7
14
6
6
7
5
Equity Shares 19
8
7
4
0 5 10 15 20 25 30
Income- Group(Rs.)
Rs.8,00,000 and above Rs.5,00,000- Rs.8,00,000 Rs.3,00,000- Rs.5,00,000

Rs.2,00,000- Rs.3,00,000 RS. 1,50,000- Rs.2,00,000 less than 1,50,000
From the Above Chart, it can be observed that maximum investors of Real Estate, Bonds
and Money Market Instrument are from Income
Income-Group of Rs 8, 00,000
00 and above.

BARODA Page 63
Table and Pie Chart 19: Showing Distribution of Avenues on the Basis of
Annual Net Savings of Rs. 15,000
15,000-Rs.20, 000
Avenues \ Annual Net Savings Rs. 15,000-20,000

Equity Shares 3
Insurance Schemes 5
Real Estate 0
Bonds 0
Mutual Fund 2
Non-Marketable
Precious Metals 0
From the Above table, it can be said that respondents of this Group invest highly in
Insurance Schemes and Non-Marketable
Marketable Financial Asset which has 5 respondents from 80
respondents. Equity Share takes Second Position which has got 3 respondents from 80
respondents.This table can be better explained with the help of graph which as follows:
Pie Chart Showing Distribution of Avenues on the Basis of Annual Net

Savings of Rs. 15,000
15,000-Rs.20,000
Non-Marketable Precious Metals Equity Shares
Financial Asset 0% 20%
33%
Insurance Schemes
34%
Money Market
Instrument
0%
Mutual Fund
13% Real Estate Bonds
0% 0%
From above Pie Chart, it can be observed that, this Group no investor in Money Market
M
Instrument, Bonds, Precious Metals and Real Estate avenues.

BARODA Page 64
Annual Net Savings of Rs. 20,000
20,000-Rs.50, 000
Avenues \ Annual Net Savings Rs. 20,000-Rs 50,000

Equity Shares 10
Real Estate 1
Bonds 3
Mutual Fund 11
Non-Marketable
Precious Metals 7
From the Above table, it can be said that respondents of this Group invest highly in Non-
Non
Marketable Financial Asset which has 16 respondents from 80 respondents i.e. 25%. Insurance
Schemes takes Second Position which has got 14 respo
respondents
ndents from 80 respondents i.e. 22%. This
table can be better explained with the help of graph which as follows:

Savings of Rs. 20,000-Rs.50, 000
Insurance Schemes
Financial Asset 22%
25%
Real Estate
1%
Money Market
Instrument Mutual Fund Bonds
3% 17% 5%
From above Pie Chart, it can be observed that, this Group lowest investment preferred
avenue is Real Estate has got only 1% of investors

BARODA Page 65
Table and Pie Chart 21: Showing Distribution of Avenues on the Basis of Annual Net
50,000-Rs.1, 00, 000
Avenues \ Annual Net Savings Rs. 50,000-Rs.1,00,000
Equity Shares 17
Real Estate 0
Bonds 4
Mutual Fund 18
Non-Marketable
Precious Metals 10
Insurance Schemes which has 21 respondents from 80 respondents i.e. 23%. Non-Marketable
Non
Financial Asset takes Second Position which has got 20 respondents from 80 respondents i.e.
22%.This table can bee better explained with the help of graph which as follows:

50,000-Rs.1, 00, 000
Financial Asset
22%
Insurance Schemes
Money Market 23%
Instrument
0%
Bonds 0%
20%
5%
From above Pie Chart, it can be observed that, this Group no investor in Money
Market Instrument and Real Estate.

BARODA Page 66
Annual
nual Net Savings of Rs. 1,00,000
1,00,000-Rs.2, 00, 000
Avenues \ Annual Net Savings 1,00,000-Rs. 2,00,000

Equity Shares 9
Real Estate 3
Bonds 4
Mutual Fund 9
Non-Marketable
Precious Metals 6
Insurance Schemes and Non-Marketable
Marketable Financial Asset which has 13 respondents from 80
respondents i.e. 22%. Equity Share and Mutual Fund takes Second Position has got 9 respondents
from 80 respondents i.e. 15%. This table can be better explained with the help of graph which as
follows:

Savings of Rs. 1,00,000
1,00,000-Rs.2, 00, 000
Equity Shares
Precious Metals
15%
Non-Marketable 10%
Financial Asset
22%
Insurance Schemes
22%
Money Market
Instrument
4% Real Estate
Mutual Fund Bonds 5%
15% 7%
avenue is Money Market Instrument has got only 4% of investors

BARODA Page 67
Annual Net Savin
Savings of Rs.2, 00, 000 and above.
Avenues \ Annual Net Savings 2,00,000 and above

Equity Shares 11
Real Estate 7
Bonds 5
Mutual Fund 13
Non-Marketable
Precious Metals 14
Insurance Schemes which has 17 respondents from 80 respondents i.e. 21%. Mutual Fund and
Non-Marketable
Marketable Financial Asset takes Second Position has got 13 respondents from 80
respondents i.e. 16%. This table can be better explained with the help of graph which as follows:
Pie Chart Showing Distribution of Avenues on the Basis of Annual

Net Savings of Rs.2, 00, 000 and above.
17% 13%
Insurance Schemes
Non-Marketable 21%
Financial Asset
16%
Real Estate
Money Market 9%
Instrument
Bonds
2% Mutual Fund
6%
16%
avenue is Money Market Instrument has got only 2% of investors.

BARODA Page 68
Annual Net Savings.
Avenues \ Annual Net Savings Rs. 15,000- Rs. 20,000- Rs. 50,000- 1,00,000-Rs. 2,00,000
20,000 Rs 50,000 Rs.1,00,000 2,00,000 and above
Equity Shares 3 10 17 9 11
Insurance Schemes 5 14 21 13 17
Real Estate 0 1 0 3 7
Bonds 0 3 4 4 5
Mutual Fund 2 11 18 9 13
Money Market Instrument 0 2 0 2 2
Non-Marketable Financial Asset 5 16 20 13 13
Precious Metals 0 7 10 6 14
From the above chart, it can be said that Insurance Schemes has maximum investors as
compared with other Avenues. It has got 21 respondents from 50 investors (who selected this
avenue) which is 30% in Rs.50,000- Rs, 1,00,000 Annual Net Savings Group.
Non-Marketable Financial Asset stands on second position which is from same Rs.50,000- Rs,
1,00,000 Annual Net Savings Group. It has 20 Investors from 67 (who selected this avenue)
which are 29.85%.
After this mutual fund and Equity shares which are from same annual Savings Group have
maximum investors compare with other income Groups of respective Avenue.
It is also observed the Real Estate, Bonds, Money Market Instrument and Precious Metals have no
investor in few income Groups compare with other Avenues.

Pie Chart Showing Distribution of Avenues on the Basis of
Annual Net Savings.
6 14
Precious Metals 10
0 7
13
13
Non-Marketable
Marketable Financial Asset 16 20
5
2
0 2
0
13
9
Avenues
Mutual Fund 11 18
2
5
4
4
Bonds 3
0
3 7
Real Estate 0
0 1
17
13
Insurance Schemes 14 21
5
11
9 17
Equity Shares 10
3
0 5 10 15 20 25
Annual Net Savings(Rs.)

2,00,000 and above 1,00,000-Rs. 2,00,000 Rs. 50,000-Rs.1,00,000
Rs.1,00,000
Rs. 20,000-Rs
Rs 50,000 Rs. 15,000-20,000
From the Above Chart, it can be observed that maximum investors of Real Estate, Bonds
and Precious Metals are from Rs. 2, 00,000 and above Annual Net Savings Group.
Money Market Instruments maximum investors are from Annual Net Savings Groups of Rs.
20,000-Rs 50,000 , Rs.1,00,000-Rs.
Rs. 2,00,000, and 2,00,000 and above.

BARODA Page 70
CHAPTER – 6
6.FINDINGS
After collection, Tabulation and Presentation of the data into graphs as previously shown,
I present my findings of the data form various dimensions considering the tabulation and charts as
my base: Following are the findings:
WITH REFERNCE TO OCCUPATION:

Businessman:-
15 % of my respondents are businessmen. Form this dimension, I found that
Baroda’s businessmen highly invest in insurance and mutual funds and give moderate
importance to equity shares, non marketable financial assets and precious metals.
Businessmen give least importance to investment in real estate, bonds, and money-market
instruments. Considering this, it can be said that, businessmen are moderate risk takers
and give more importance to growth and security as their prime objective when investing.
The psychology of businessmen (in Baroda) is to take moderate risk and expect moderate
returns. The high income segment of this group prefers to invest in derivatives.
Profession:-
15 % of my respondents are professionals. From this dimension, I found that
Baroda’s professions highly invest in insurance, non-marketable financial assets, mutual
funds and precious metals and give moderate importance to bonds, equity shares, and real
estate. They give least importance to money-market instruments. The psychology of
businessmen (in Baroda) is to take moderate risk but expect high returns. But, whenever
they receive high returns from their occupation they choose to invest more in real estate.
They invest keeping tax saving as a significant objective. They prefer to invest in such
investment alternatives that provide security to them and give the benefit of tax saving.

Service class:
70 % of my respondents are from service class. From this dimension, I
found that Baroda’s service class people highly invest in insurance and non-
marketable financial assets, majorly because these provide them more security and
growth. Some portion of their income is directly transferred to their Provident Fund
account as per the statutory requirements. These are the only good investment
alternatives for them. Since their income is less, they find it secure to invest in bank
deposits, PPF, various post office schemes etc.
They give moderate importance to equity shares, mutual fund and precious
metals and their preference for these alternatives increase when there is increase in
their income. While investing in bank deposits, they prefer to invest in Saving plus
Recurring deposits. When they receive good amount of returns by the way of bonus,
commission or perks, they prefer to invest this amount in Fixed Deposits. Of these,
those investors, who earn well, and have good amount to invest, prefer to take risk by
investing in equity shares.
Considering findings of the above mentioned occupational categories, it can
be said that investors of Baroda give more importance to insurance, mutual fund and
non-marketable financial assets.
WITH REFERENCE TO INCOME GROUP:
Low income group:-

On the basis of the classification of investors based on their income into different
income groups, I found out that lowest income group of respondents give more
importance to insurance. So it can be said that they give more importance to the security
of their family’s future and give negligible importance to real estate and money market
instruments as they have very little disposable income.

Middle class:-
As the level of income rises, investors switch over to equity shares, mutual funds and
non-marketable financial assets as their main preferences. Upper middle class income group
gives highest importance to precious metals and insurance. These investors present a mixed
attributes of high income and low income. This is because, they, like low income groups,
prefer insurance as a measure of safety for their family’s future and also precious metals as it
is less risky as compared to other avenues and also because it glitters and represents their a
move towards high income group.
High income group:

High income group give more importance to real estate, bonds, and money
market instruments. Since this group of investor has very high income, they prefer to
channelize their excessive money in real estate. In addition to these, high income
groups, when they have more disposable income, prefer to give short-term loans to
needy investors. They act like Shahukars for them. Secondly, they also prefer to invest
their excess funds in upcoming projects i.e., enter into partnership with new
entrepreneurs, who require funds to establish their business.
WITH REFERENCE TO ANNUAL NET SAVINGS:
This dimension is similar to income groups. I have divided this category into two
groups – low savings group and high savings group.
Low saving groups:-

This group gives more preference to insurance and non-marketable financial assets. So
it can be said that they give more importance to the security of their family’s future. They
invest in Post Office Small Saving Schemes and in PPF. As their savings increase, the
importance of insurance and non-marketable financial assets increases for them, and they
gradually divert their focus on other investment avenues like equity shares, precious metals,
mutual funds etc.

High Saving groups:-
This group invests in almost all investment alternatives compared to low saving group
and give more importance to insurance, equity shares and mutual funds. However, of these
investors, those who have relatively very high savings give more importance to precious
metals, real estate, bonds, and money-market instruments.
WITH REFERENCE TO AGE-GROUP:
I have classified the respondents into different age-groups, in order to understand its impact
on their investment patterns. On the whole, I found that the investors falling in 20 – 29 years
are active in investing since most of them are unmarried, they have less economic burden and
with excess funds they highly invest in mutual funds, non-marketable financial assets, money
market instruments and precious metals. The investors of this group are high risk takers.
However, they also invest in insurance as a measure of safety of their dependents.
Higher the age of investor, the less he/she’s risk taking capacity since they become more
responsible with more dependents on and with less disposable income. They focus on
securing their future and thus invest in insurance, real estate and other less risky avenues.
OVERALL FINDINGS:
On the basis of the information collected related with annual net savings and annual income of
investors, I calculated an average savings rate relative to the income of investors i.e.,
calculation of how much percent is saved (net) from their annual income.
This rate comes to 26.2 %. i.e., on an average, investors save 26.2 % from their annual
income.
However, not all investors save at this rate. 32 respondents out of 80 i.e., 40 % of investors
save more than 26.2% and 60 % of investors save less than this.

There are many reasons for low level of savings by maximum investors. One of the reasons
could be, most of the Indians stay in joint families and therefore their expenses are high
leaving them with low disposable income. Secondly, due to inflation, the prices of essential
goods increase. Thus, more income of investors is spent on this leaving little amount to save.
Thirdly, with rapid modernization there is also a need to be updated with technological know-
how. Moreover, the needs and wants of individuals are increasing rapidly and this also stands
to be a major expense restricting savings.
Maximum investors’ major goal is growth and security. Indian investors give maximum
importance to their family’s growth and security. Therefore, they invest in such alternatives
that match their goals.
Maximum investors have no debts and they save quite regularly. It can be derived that
maximum investors do not borrow money to invest and this indeed is a good sign.
Maximum investors prefer long term investments. By this it can be said that since these
investments are long term, they provide more return as any investment that gives high return
involves high risk.

CHAPTER – 7
7.RECOMMENDATIONS
Most of the investors invest considering growth and security as their major investment
goal. Most of the present alternatives provide growth and security is ensured by investing
in insurance scheme. Considering current economic conditions, investors should also aim
at focusing on saving and inflation as their major investment goal. When investor invests
in tax saving investment alternative, their income is saved. With these savings, they can
invest more in other alternatives that can lead to wealth maximization.
Investors should regularly update their investment knowledge. Investors of Baroda have
fair amount of knowledge, but if they try and seek even more information, they can be
aware of new investment avenues that can be beneficial for investment.
I recommend that those investors who do not invest in gold should invest at least 5 % of
their savings in gold. Now-a-days gold coins issued by Post office are gaining more
popularity. They can also invest in Gold Mutual Funds that offers an investor a new,
innovative relatively cost efficient and secured way to access the gold market. Gold units
are intending to offer the investor a means of participating in the gold bullion market
without taking the necessity of physical delivery of gold. Investors can buy and sell their
interest through the trading of security on regulated stock exchange.
If investors are interested in investing in mutual funds, they should invest more in ELSS
funds (Equity Link Saving Scheme). The following are best four ELSS:
• Canara Robeco Equity Tax Saver
• Franklin India Taxshield
• Magnum Taxgain
• Sundaram Bnp Paribas Taxsaver

I recommend the investors to invest Reverse Mortgage, which is a new investment avenue.
A reverse mortgage (or lifetime mortgage) is a loan available to senior citizens. Reverse
mortgage, as its name suggests, is exactly opposite of a typical mortgage, such as a home
loan. In a typical mortgage, you borrow money in lump sum right at the beginning and
then pay it back over a period of time using Equated Monthly Installments (EMIs). In
reverse mortgage, you pledge a property you already own (with no existing loan
outstanding against it). The bank, in turn, gives you a series of cash-flows for a fixed
tenure. These can be thought of as reverse EMIs.
Unit Linked Insurance Plan (ULIP) is a life insurance solution that provides the benefits of
protection and flexibility in investment. This plan is gaining popularity in very short time
and they seem to shine in comparison with traditional endowment product form insurers.
Leaving money languishing in a savings bank account is akin to committing a cardinal sin
in financial terms. At best, a conventional savings bank account can fetch an annual return
of around 3.50%. Investor should invest in fixed deposit. For example, you could consider
investing a portion of your surplus monies in a fixed deposit. Typically, a 1-Yr fixed
deposit with a bank could earn a return of 8.00%-8.50%.
There are two categories of funds that have caught the imagination of investors these days
liquid and liquid-plus funds. Though, at present, most of the money in these funds comes
from institutional investors, the retail investor is slowly beginning to realize their benefits.
These funds can prove to be useful for the retail investor to manage their short-term
surpluses.
If investors are making investment decision today, that will directly affect our future
wealth, it would make sense that they utilize a plan to help guide their decision.
Surprisingly the majority of people do not have in place any type of formulized
investment plan. Taking some time to put together, a financial plan can reap tremendous
benefits. First let’s define financial planning.

INVESTMENT PYRAMID
High Risk Investment

10 % - 30 %
Equity Shares & Equity Mutual Funds,
Commodities, Real Estate
Return – 20% to 100%
Medium Risk Investments

20 – 40 %
Private Deposits, Balanced Mutual
Funds, ULIP, Bullion, Art Collections
Return – 10 % to 20 %
Secured Investments
40 % - 60%
Bank Deposits, Bonds, Small
Savings, PPF, Insurance, FMP, Debt Mutual Funds
Return – 6 % to 10 %

BARODA Page 78
CHAPTER – 8
8.CONCLUSION
After collecting data, tabulating and analyzing it with the help of graphs and tables, I have
come to understand the investment patterns of the investors of Baroda. Before explaining
the main investment patterns of investors of Baroda, I would like to present some of the
investor characteristics: Firstly, investors of Baroda are moderate risk takers. They neither take
excessive risk nor do they take low risk. However the recent economic slowdown did affect them
and they suffered considerable decline in their investments, they are still hopeful that these
conditions will improve and are optimistic to get moderate returns on their investment in near
future. Baroda’s investors have no debts and they save quite regularly. This is one of their
good characteristic since this means that they do not borrow to invest. Investors of Baroda have
chosen Growth and Security as their Major Goal. This shows that they are very futuristic and
invest to their secure tomorrow. That’s what investment mean postponing current consumption
for future benefits.Following is the investment pattern of investor which I derived after analysis of
my entire project:
Table and Pie Chart 25: Showing Investment Pattern of Baroda’s Investor
Avenues Percentage of
savings invested in
Avenue (%)
Equity Shares 20.27
Insurance Schemes 19.6965
Real Estate 4.711
Bonds 3.735
Mutual Fund 13.32
Money Market Instrument 0.98
Non-Marketable Financial 30.15787
Asset
Precious Metals 6.987

From the table, it can be said that Investors of Baroda invest their 30% (The percentage is
calculated on the basis of average of 80 respondents given percentage of savings). of their savings
in Non-Marketable Financial Asset (i.e. Bank Deposits, Post Office, Company Deposits and
Provident Fund). This avenue has got maximum percentage of savings. It can be said that
Baroda’s investor invests their maximum savings in this avenue which has got good tax saving
opportunities and other good features.
For example Public provident fund which gives highest Return- 8.6 % among the safest
category of investment. Only instrument that falls under EEE (Exempt - Investment amount,
Exempt- Interest accrual, Exempt- Interest pay out) category under Income Tax Act investor need
not pay a single penny of tax. Power of compounding can act effectively as the investment period
is for 15 years. Tax exemption is available under section 80 C. Loan facilities and withdrawal
facility is also available. It can be said that Baroda’s investor has good knowledge of investment.
Equity Shares (i.e. Cash Market, Derivatives and Both) avenue has got Second Position in
percentage of savings which is 20.27% (The percentage is calculated on the basis of average of 80
respondents given percentage of savings). Last years huge ups – downs in market still investor
invests their 20% of savings in share market. It can be said that the investors are optimistic.
Third Preference is given to Insurance Schemes (i.e. Life Insurance) avenue. 20%
(Rounded) of savings is invested. (The percentage is calculated on the basis of average of 80
respondents given percentage of savings). Its importance is increasing day by day as Baroda’s
investor goal is security and growth; both are fulfilled in this particular avenue. It gives security to
family members of investor and there are small returns from this avenue too. Loan facility is also
available in this avenue. Equity shares and Insurance Schemes Avenue have got equal importance
by investors. But are not given same rank as equity is 20.27% rounded to 20% and insurance is
19.65% rounded to 20%.
Mutual Fund has god fourth position in percentage of savings invested. 13% (rounded) of
savings are invested in this. (The percentage is calculated on the basis of average of 80
respondents given percentage of savings). Due to various tax savings mutual fund are coming into
market the importance of mutal fund is increasing. This table can be better explained with the
help of graph which as follows:

Pie Chart Showing Investment Pattern of
Baroda’s Investor
Equity Shares
Insurance Schemes
7%
20% Real Estate
30%
Bonds
20%
Mutual Fund
13% 4% 5%
Money Market Instrument

1%
Non-Marketable
Marketable Financial
Asset
Precious Metals
From above Pie Chart,

rt, it can be observed that, Precious Metals have got fifth preference in
percentage of savings invested which is 7%. (The percentage is calculated on the basis of average
of 80 respondents given percentage of savings). Its one of the good and oldest avenue
avenu in which
the prices are increase compare to earlier prices and its safest avenue too. Now popularity of small
gold coins which are issued by post office is increasing. Its safest just because of it has not got
frequent ups-downs
downs as in share market.
Sixth position is got by Real Estate Avenue in percentage of savings invested which is
5%. (The percentage is calculated on the basis of average of 80 respondents given percentage of
savings). It has got sixth position as only wealthy investors and upper m
middle
iddle class of people
invest in this avenue. Due to last years ups
ups-down
down in real estate its importance is reduced and
investors find little risky investment.

BARODA Page 81
Due to this property rates were gone down but slowly and gradually rates increase there
is scope of increase in investment in this avenue.4 % of savings is invested in Bonds by Baroda
Investors. (The percentage is calculated on the basis of average of 80 respondents given
percentage of savings). It has got second last position in investment pattern of investment because
of decreasing popularity of this avenue.
Lowest percentage of savings is invested in Money Market Instrument Avenue only 1% of
savings is invested. (The percentage is calculated on the basis of average of 80 respondents given
percentage of savings). This is the only which has given least importance. AS new and good
avenues are available in market which got good tax savings options and other good features.
Secondly, only on instruments of this avenue is useful to individuals i.e. Certificate of Deposit
and its importance is also getting reduced.

BIBLIOGRAPHY
Security Analysis and Portfolio Management

• Sudhindra Bhatt
Investment Analysis and Portfolio Management

(Tata McGraw-Hill Publishing Company Limited)
• Prasanna Chandra
Investment Management – Security Analysis and Portfolio

Mangement(Himalaya Publishing House)
• Preeti Singh
Taxmann’s Smart Strategies for Tax Savings

• Mukesh Patel
WIBLIOGRAPHY
http://www.indiapost.gov.in/POSB.aspx
http://www.tax4india.com/saving-schemes-in-india/time-deposit.html
http://www.assampost.gov.in/banking.htm
http://www.goodreturns.in/personal-
finance/planning/2011/12/revision-post-office-savings-scheme.html
http://www.simpletaxindia.net/2011/11/new-rate-ppfnsc-monthly-
income-scheme.html
http://www.businessstandard.com/india/storypage.php?autono=44753
&tp=on
http://www.business line/article2521052.ece.htm

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CHAPTER – 1

1.RATIONALE OF THE PROJECT

THE M.S.UNIVERSITY OF BARODA Page 1

2.1 Significance & Need of The Project:-

2.2 Objective of The Project:-

The research project undertaken has the following objective:-

The primary objective is to study the investment pattern of the investor.

THE M.S.UNIVERSITY OF BARODA Page 2

This Study is limited to Baroda city only

2.4 Research Design:-

My research design is based on questionnaire method. The questionnaire was given to

2.6 Sampling Method:-

THE M.S.UNIVERSITY OF BARODA Page 3

2.8 Tools of Data Collection:-

(1) Primary data:-

(2) Secondary data:-

2.9 Treatment of Data:-

THE M.S.UNIVERSITY OF BARODA Page 4

3. PROFILE OF THE INVESTMENT PATTERN

THE M.S.UNIVERSITY OF BARODA Page 5

“Investment is putting aside and employing money in financial instruments in the

THE M.S.UNIVERSITY OF BARODA Page 6

THE M.S.UNIVERSITY OF BARODA Page 7

3.5 Difference between Saving & Investment:-

In most cases, saving does not involve any element of significant

THE M.S.UNIVERSITY OF BARODA Page 8

THE M.S.UNIVERSITY OF BARODA Page 9

3.7 Objectives of Investment:-

THE M.S.UNIVERSITY OF BARODA Page 10

THE M.S.UNIVERSITY OF BARODA Page 11

Investment in financial Assets consists of

Therefore, in the above context, security forms of investments include equity

THE M.S.UNIVERSITY OF BARODA Page 12

THE M.S.UNIVERSITY OF BARODA Page 13

THE M.S.UNIVERSITY OF BARODA Page 14

1) Blue-chip Shares: Shares of large, well-established, and financially strong

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THE M.S.UNIVERSITY OF BARODA Page 17

THE M.S.UNIVERSITY OF BARODA Page 18

Endowment Assurance : There are basically two variants of this policy:

b) Participating (with profit) Endowment Assurance:-

THE M.S.UNIVERSITY OF BARODA Page 19

Money Back Plan:-

Whole life policy:-

THE M.S.UNIVERSITY OF BARODA Page 20

Unit Linked Plan:-

THE M.S.UNIVERSITY OF BARODA Page 21

THE M.S.UNIVERSITY OF BARODA Page 22

THE M.S.UNIVERSITY OF BARODA Page 23

Savings Scheme Maximum Limit

THE M.S.UNIVERSITY OF BARODA Page 24

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THE M.S.UNIVERSITY OF BARODA Page 27

THE M.S.UNIVERSITY OF BARODA Page 28

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Private Sector Debentures:-

THE M.S.UNIVERSITY OF BARODA Page 30

4.7 Mutual Fund:-

THE M.S.UNIVERSITY OF BARODA Page 31

THE M.S.UNIVERSITY OF BARODA Page 32

Open ended and close-end Schemes:-

THE M.S.UNIVERSITY OF BARODA Page 33