UNIVERSITY OF MUMBAI

PROJECT REPORT ON
“A STUDY ON AWARENSS OF INVESTMENT RISKS
AMONGST INVESTORS IN MUMBAI REGION”
M.Com. II (SEMESTER IV)

ACADEMIC YEAR 2022-2023

SUBMITTED BY
KONAR ESEKIMUTHU SAGADEVAN
M.Com. II (Banking & Finance)
Roll No-27116

PROJECT GUIDE
Prof. Arul Kumar Pandian

S.I.W.S.
N. R. SWAMY COLLEGE OF COMMERCE & ECONOMICS AND
SMT. THIRUMALAI COLLEGE OF SCIENCE
337, SEWREE-WADALA ESTATE,
WADALA MUMBAI-400031
2022-2023

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 PROJECT REPORT ON
“A STUDY ON AWARENSS OF INVESTMENT RISKS
AMONGST INVESTORS IN MUMBAI REGION”
SUBMITTED
IN PARTIAL FULFILMENT OF THE REQUIREMENTS
FOR THE AWARDS OF DEGREE
MASTERS OF COMMERCE- BANKING AND FINANCE

SUBMITTED BY
KONAR ESEKIMUTHU SAGADEVAN
ROLL NO-27116
M.com II (SEMESTER IV)

S.I.W.S.
N. R. SWAMY COLLEGE OF COMMERCE & ECONOMICS AND
SMT. THIRUMALAI COLLEGE OF SCIENCE
337, SEWREE-WADALA ESTATE,
WADALA MUMBAI-400031
2022-2023

2
 S.I.W.S.

NAAC ACCREDITED ‘A’

This is to certify that Mr. KONAR ESEKIMUTHU SAGADEVAN
Students of South Indian Welfare Society. N. R. SWAMY COLLEGE OF
COMMERCE & ECONOMICS AND SMT. THIRUMALAI COLLEGE
OF SCIENCE studying of M.Com. II Semester IV (2022-23) has
successfully completed his project report on “A STUDY ON
AWARENSS OF INVESTMENT RISKS AMONGST INVESTORS
IN MUMBAI REGION”
in the academic year 2022-2023 the information submitted true and original
to the best of the knowledge

________________________ _______________________
(Signature of Project Guide) (Signature of Principal )

________________________ ________________________
(Signature of Coordinator) (Signature of External )

College Seal

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 ACKNOWLEDGEMENT

I acknowledge the value assistance provided by College, for Two Years

degree course in M.Com. II.
I specially thank the Principal Dr. Manali Londhe,
Vice Principal – Commerce CA Vaibhav Banjan
Vice Principal - Self Financing Courses: Mr. Ayyappan Iyer
The Coordinator of M.Com. Dr. Helen Selvaraj
Course in charge Mr.Arul Kumar for guiding me in the right direction to
prepare the project and giving their valuable time, knowledge and guidance
to complete the project successfully. My family and friends were great
source of inspiration throughout my project, their support is deeply
acknowledged.

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 DECLARATION

I, Mr. KONAR ESEKIMUTHU SAGADEVAN, Student of South Indian

Welfare Society. N. R. SWAMY COLLEGE OF COMMERCE &
ECONOMICS AND SMT. THIRUMALAI COLLEGE OF SCIENCE
studying in M.Com. II (Semester IV) hereby declare that I have completed
the project report on “A STUDY ON AWARENSS OF INVESTMENT
RISKS AMONGST INVESTORS IN MUMBAI REGION”
in the academic year 2022-2023. This information submitted is genuine
and practical to the best of my Knowledge.

Place: Mumbai
Date: 16/05/2023 KONAR ESEKIMUTHU
SAGADEVAN
(Roll No. 27116)

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 Index

Sr.no Particurs Page no

1. Introduction 7
2. Objective of the study 62

3. Scope and limitations of the study 63

4. Research and Methodology 65

5. Review of Literature 66

6. Data Analysis and Interpretation 68

7. Findings, Suggestions and Recommendations 79

andConclusions
8. Bibliography 83

9. Appendix 84

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 INTRODUCTION

1.1 HISTORY OF INVESTMENT.

● The origins of the present investment structure can be traced back to the
1600s. Although the Amsterdam Stock Exchange, which started in 1602, is
commonly referred to as the first stock exchange, there is evidence of
investing prior to that date. The Code of Hammurabi, which dates from
circa 1700 BC, providesa legal framework for investment.
● Technology has made investing easier than ever before and provided
investors with co nsiderably more options, yet the fundamentals have
remained unchanged for centuries
.
● Despite the fact that it was founded almost 400 years ago, the Amsterdam
Stock Exchange functions in the same way as stock markets do today: it
connects potential investors with investment possibilities and businesses
with financial injections. It was founded to issue shares by the Dutch East
India Company.
● Some of today's largest stock exchanges date back centuries. In 1801, the
London Stock Exchange was established, and in 1792, the New York Stock
Exchange was established. Stock indexes were created to make it easier for
investors and the general public to track performance. Some date back
nearly as far as the stock markets themselves.
For Example, the Dow Jones and Standard & Poor’s (S&P) are both over
150 years old.

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2 things the history of investing can teach us
● Unexpected events do occur. Stock markets are volatile and subject to a wide range of
influences. It makes market timing impossible. The other option is to create a long-term
strategy and stick to it through the ups and downs.
● Historically, markets recover. When markets fall, it can be tempting to sell your assets
before they fall further. However, this only cements your loss. When you look back,
markets have recovered, even after dramatic falls

The Code of Hammurabi (around 1700 BC) provided a legal framework for
investment, establishing a means for the pledge of collateral by codifying debtor
and creditor rights in regard to pledged land. Punishments for breaking financial
obligations were not as severe as those for crimes involving injury or death

The qirad was an important financial instrument in mediaeval Islamic society.

This was a deal between one or more investors and a broker in which the investors
entrusted their money to t he broker, who then traded it for a profit. The agent was
not accountable for any losses, and b oth parties earned a previously agreed-upon
portion of the profit.Many will notice that the qirad is similar to the institution of
the commenda later used in western Europe, though whether the qirad transformed
into the commenda or the two institutions evolved independently cannot be stated
with certainty.
The Amsterdam Stock Exchange is the oldest stock exchange in the world. The
corporation w as founded in 1602 by the Dutch East India Company and was the
first to issue shares on the Amsterdam Stock Exchange. Speculators were labelled
as stock, bond, and other security buy ers in the early 1900s by the media,
academia, and business. Since the 1929 Wall Street crash, and especially by the
1950s, the term investment had come to refer to the more conservative end of the
securities spectrum, whereas speculation was used by financial brokers and their
a dvertising agencies to refr to the higher-risk securities that were popular at the
time. The phra ses speculating and speculator have specifically referred to greater
risk enterprises during the final half of the twentieth century.

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1 2 OVERVIEW OF INVESTMENT
WHAT IS INVESTMENT

An investment is basically an asset this is created with the purpose of permitting

cash to develop. The wealth created can be used for a spread of objectives such
as assembly shortages in earnings, saving up for retirement, or gratifying sure
particular responsibilities inclusive of compensation of loans, fee of training fees,
or buy of other property.

Understanding the investment definition is essential as from time to time, it may

be hard to select the proper gadgets to meet your financial dreams. Understanding
the investment which means to your particular monetary situation will assist you
to make the right choices.

Investment might also generate profits for you in approaches. One, if you put
money into a saleable asset, you could earn income with the aid of manner of
income. 2nd, if investment is made in a return producing plan, then you may earn
an profits via accumulation of profits. In this sense, ‘what is funding’ can be
understood through pronouncing that investments are all about setting your
savings into property or gadgets that turn out to be worth more than their initial
well worth or those that will help produce an income with time.

Financially talking, an investment definition is an asset this is obtained with the

purpose of allowing it to understand in price over the years. Normally, investments
fall in anyone of three basic classes, as explained beneath.

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HOW TO INVEST
Now which you know ‘what is investment,’ and the way it allow you to create
wealth, the following aspect is to recognize how to make investments. Here are
some essential points you need to maintain in thoughts before you make a decision
to make investments

1. Analyze Your Financial Needs

Firstly, analyze your monetary situation regarding threat tolerance, funding
objectives and different factors like circle of relatives size, variety of incomes
individuals and existence desires. You can even take assist from a economic
professional. It will assist you make clear any doubts approximately ‘what's
funding which means for you?’ and pick out the ideal options.
2. Investment Diversification
Build a various monetary portfolio in step with your investment objectives with
the aid of placing your budget in one of a kind contraptions for maintaining the
right balance among threat and returns.

Also, whilst thinking about ‘what is investment which means’ and ‘wherein to
invest,’ don't forget giving precedence to those instruments that offer safety to
your loved ones. It could include existence coverage guidelines like term plan,
ULIP (ULIP full shape: Unit related coverage Plan) and different such
contraptions. You could don't forget the objectives for investment to generate
appropriate returns from it.

3. Time period
You must also understand that it's far tough to answer what's funding that means
for a particular person without thinking about the term. That is why, while
considering what is funding, realize what time you have got earlier than turning
your investments into coins. That is a essential detail that determines your
investment targets. Depending in your necessities, you may select short-term or
lengthy-term budget.

4. Periodical Reassessment
Seeing that finances are encouraged by way of market forces, it's far imperative
that you intently screen them periodically. You can additionally recall
readjustment if your portfolio isn't generating appropriate returns.

Depending on your investment and savings goals, you may pick out from a
diffusion of funding plans presented by way of Max lifestyles including assured
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1. To keep money safe
Capital renovation is one of the primary targets of investment for humans. Some
investments assist preserve tough-earned money safe from being eroded with
time. Through parking your price range in those contraptions or schemes, you
may make sure that you do now not outlive your financial savings. Fixed deposits,
government bonds, or even an normal savings account can assist preserve your
money secure. Even though the go back on funding can be decrease right here,
the objective of capital preservation is easily met.
2. To help money grow
Another one of the not unusual goals of investing cash is to make sure that it grows
right into a huge corpus through the years. Capital appreciation is typically an
extended-time period intention that allows human beings at ease their financial
future. To make the cash you earn develop into wealth, you need to recollect
funding goals and alternatives that provide a full- size return on the initial amount
invested. Some of the great investments to achieve growth encompass real
property, mutual price range, commodities, and equity. The threat related to those
options can be high, but the return is also usually substantial.

3. To Earn a steady stream of income

Investments can also assist you earn a steady supply of secondary (or primary)
profits. Examples of such investments encompass fixed deposits that pay out
regular hobby or shares of companies that pay buyers dividends continually.
Profits-generating investments let you pay on your everyday fees after you have
got retired. As an alternative, they also can act as outstanding sources of
supplementary income all through your running years through offering you with
additional money to fulfill outlays like university prices or EMIs.

4. To minimise the burden of tax

Other than capital boom or maintenance, traders also have other compelling goals
for funding. This motivation comes inside the shape of tax advantages provided
with the aid of the income Tax Act, 1961. Investing in alternatives which include
Unit connected insurance Plans (ULIPs), Public Provident Fund (PPF), and equity
linked savings Schemes (ELSS) may be deducted from your total income. This
has the effect of reducing your taxable profits, thereby bringing down your tax
liability.

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5. To save up for Retirement
Saving up for retirement is a need. It's far vital to have a retirement fund you could
fall returned on for your golden years, due to the fact you could no longer be
capable of retain running for all time. By way of investing the cash you earn
during your working years in the right funding alternatives, you can permit your
funds to grow sufficient to sustain you once you’ve retired.

6. To meet your financial goals

Making an investment can also help you obtain your short-term and long-time
periodfinancial desires with out an excessive amount of pressure or hassle. A few
funding alternatives, as an instance, include brief lock-during times and high
liquidity. These investments are ideal contraptions to park your finances in if you
want to store up for quick-term objectives like funding home upgrades or growing
an emergency fund. Different investment alternatives that include a longer lock-
in duration are best for saving up for long-term desires

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Categories of Investments
1. Ownership Investments
Ownership investments, as the call without a doubt shows, are belongings that are
purchased and owned by the investor. Examples of this type of funding include
stocks, real property houses, and bullion, among others. Investment a business is
also a kind of ownership funding.

2. Lending Investments
When you spend money on lending gadgets, you’re essentially behaving just like
the financial institution. Company bonds, authorities bonds, and even savings
accounts are all examples of lending investments. The money you park in a
financial savings account is essentially a loan which you give the bank. This cash
is used by the financial institution to fund the loans it offers out to its clients.

3. Cash Equivalents
Those are investments which are relatively liquid and might easily be converted
into coins. Cash market gadgets, as an instance, are wonderful examples of cash
equivalents. Cash equivalents generally offer low returns, but correspondingly,
the chance related to them is likewise negligible.

What Is Investment Meaning in Comparison to Savings?

‘what's funding meaning?’ becomes crucial when requested approximately
financial savings. Savings clearly suggest placing apart part of your income
through the years. The saved sum of money is subject to no hazard and, therefore,
does no longer assist you earn any income or returns. But, its value appreciation
stays greater or less stagnant, as there's no addition over and above what you add
every month.

Then again, investment definition is primarily based at the idea of incomes returns
or earnings at the cash you first put in a fund or spent on an asset purchase. Don't
forget here that the involvement of threat is what makes them profitable.
Whilst knowledge ‘what's investment meaning,’ keep in mind that there is an
immediate relation among returns and danger, that means extra great the danger
worried, better are the probabilities of incomes more returns. That is why when
you are identifying ‘what's investment that means?’ for you, you should test the
risk profile of different alternatives and evaluation your danger appetite.

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WHEN SHOULD YOU INVEST
Some human beings waste a few years in their life questioning over ‘what's
funding’ and identifying the investment targets and the way it's miles beneficial.
They hesitate to recall investment that means for wealth advent due to the
involvement of hazard. However, many investments are also threat-free, and some
deliver handiest little to slight risk.

When you are young, it's miles first-rate to fully apprehend approximately
‘what is investment that means’ and its role after which start. At an early age,
you have got few obligations and, as a consequence, have a higher tendency to
experiment with distinctive funding and leverage the ones, which fit your
necessities nice.

Making an investment early is likewise higher due to the compounding

advantages on investments that help grow your cash. With extra years ahead, you
may attain maximum blessings to your investments, furnished you first recognize
and evaluate special elements of ‘what's funding that means’ and then start early.

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WHY SHOULD YOU INVESTED
You will be questioning why to give a lot significance to the query ‘what's funding
that means, whilst you may paintings toward saving extra from your earnings
rather. Taking a part of your earnings and saving every month will only create a
reserve fund, which might also prove to be insufficient in covering your circle of
relatives against a clinical emergency.

Alternatively, now that you know ‘what's investment,’ you may keep in mind
that making an investment your cash results in wealth technology and helps in
attaining existence dreams.

Challenges for New Investors

Learning to make investments is an critical a part of any complete financial plan.
Without it, you'll ultimately hit a plateau on your economic increase. But, many
humans don’t make investments because they assume it’s risky or don’t recognize
it. The following are some troubles that first-time traders struggle with, and a few
guidelines for solving these investment demanding situations.

Information Overload
Many humans seeking to get involved with the stock market google around to
find out the fundamentals and speedy discover themselves crushed through the
sheer quantity of seemingly complicated and even contradictory advice on the
internet approximately the economic markets. Thankfully, most of the most
reliable trading strategies successful traders use are pretty undying. New buyers
may additionally find it less difficult to avoid the noise and use books as a resource
to get started with their prevailing funding portfolio.

Unknown risks
New investors may not recognise approximately the hidden risks in many
seemingly simple investment techniques, that may motive their portfolios to take
giant hits early on in the method. To fight this pitfall, it’s important to be as
knowledgeable as possible. Before considering them as an investment choice,
ensure to be familiar with the dangers involved with margin, leverage, alternatives,
futures, etc.

Limited Capital
One of the largest challenges that new traders face is having confined capital to
be had to make investments, and this is simplest compounded while positive
monetary devices are too pricey. However, those troubles can frequently be solved
by searching into “partial shares.”
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Partial shares are basically workarounds that allow you to put money into fairness
at a lower rate. A couple of not unusual examples are using REITs to fight real
property funding demanding situations or the use of computerized making an
investment tools with low minimal deposits, many of which we overview proper
here on this website.

Over-Diversification
This project is sort of usually self-inflicted. Many new investors experience they
want to spend money on the whole lot to shield themselves from hazard.
However, over-diversification can appreciably stunt your portfolio’s increase. It's
miles often satisfactory to pick 2-three options to make investments most people
of your portfolio in.

Bad Timing
Although the least common of those five demanding situations, a few new traders
move into the marketplace proper earlier than a monetary downfall, and this has
caused buyers to lose money earlier than making any! However, this threat can
without problems be mitigated by way of greenback-price averaging, a method in
which you make investments into the market little by little and mitigate greater
enormous fluctuations inside the price to your portfolioover
a long period.

Not Getting Help

It’s risky to begin investing with none out of doors help. Particularly whilst
you’re getting began, you should be the use of a few form of funding advising,
whether it’s automatic or live. This could come up with brought warranty
which you’ll see a return on your money. Many online assets which includes
this website, Investopedia, or Wealthsimple’s loose making an investment
master elegance learn about non-public budget and making an investment
before leaping into the deep cease.

Now not Getting Your Financial orders

In case you don’t have your finances in order earlier than making an
investment, you is probably fighting an uphill battle.

Make certain all of your unsecured debt is completely paid off so that you aren’t
paying excessive interest rates, which can be nearly constantly higher than any
investment gains you might recognize. If you have credit card debt, pay that off
first. You may use a carrier including Tally consultant to get your debt prepared
16
and help you pay it off quicker. Tally also has an alternative that gives you a
decrease-hobby loan that will help you pay off your credit score card debt, so that
you aren’t caught strolling on a monetary hamster wheel for years down the road.

We also endorse the use of a free personal finance dashboard consisting of

personal Capital to get all your financial money owed in one vicinity so you can
get a higher view of your finances in one vicinity. This may assist you prepare
your accounts and come up with guidelines and tools to help plan your financial
destiny.
Now that you’re formally armed with overcoming the frequent problems
buyers face, it’s time to get your fingers grimy and start making an investment
to your future!

WHERE SHOULD I INVESTED

This tends to be a distinct answer for everyone, depending in your economic state
of affairs, desires, age, risk tolerance, and more. Due to the fact that this text isn’t
meant to serve as an funding manual, I’d endorse heading over to our nice robo
advisors page, in which we pass into detail approximately the excellent automatic
funding platforms for every type of investor.

The quick solution, however, is:

M1 Finance for most investors, as they're 100% loose automating investing that
offers lots of flexibility. You can select from expert-made “pies” including
various stocks and budget in specific industries primarily based for your dreams
or investment philosophy, or you could excellent-music your portfolio in case
you’re more of a fingers-on investor.

Wealthfront is also a first-rate, dependable robo consultant with a tested music

record and one of the first in the marketplace. At a 0.25% annual charge, they’re
also one of the maximum low priced.

Begin with one of those, and you can’t pass incorrect. They both offer an
exquisite and reliable funding platform and could put you on the right music
in your monetary destiny.

With a bit of luck, those pointers for solving funding challenges helped you better
apprehend those challenges going through investors in the stock marketplace,
and you presently have a higher concept of in which to attention

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MEANING. Funding is the usage of money to buy belongings inside the desire
that the asset will generate earnings through the years or respect over time
Consumption, alternatively, is while you purchase something with the immediate
purpose of private use and and not using a expectation that it will generate money
or growth in price.

Funding also helps grow the economic system as it creates monetary interest,
including the buying and promoting of goods and services and using people. Hired
human beings get paid and either keep, make investments, or spend their cash. If
they spend their cash, businesses make extra earnings. Companies can then
reinvest the earnings in similarly commercial enterprise activities that increase
the economy.

Of path, an excessive amount of of a great factor may be terrible. If all and sundry
is investing, then no one is ingesting. If no one is consuming, consumer-orientated
groups, which includes restaurants and retail establishments, will go through. This
can lead to layoffs. The secret's to find the proper stability between funding and
intake.
The funding landscape can be extraordinarily dynamic and ever-evolving. But
individuals who make an effort to apprehend the primary principles and the
exclusive asset lessons stand to benefit drastically over the lengthy haul.Step one
is studying to differentiate exceptional varieties of investments and what rung
each occupies at the "chance ladder."

An investment is an asset or item obtained with the purpose of producing earnings

or appreciation. Appreciation refers to an boom inside the cost of an asset through
the ars. When an individual purchases an excellent as an investment, the intent
isn't always to consume the best however as an alternative to use it inside the
destiny to create wealth.

An investment continually concerns the outlay of a few capital today—time,

effort, money, or an asset—in hopes of a greater payoff in the future than what
become at the beginning put in.

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HOW AN INVESTMENT WORK.
The act of investing has the intention of generating earnings and increasing value
through the years. An funding can talk over with any mechanism used for
generating future earnings. This consists of the purchase of bonds, stocks, or real
property assets, amongst different examples. Moreover, buying a belongings that
can be used to provide goods can be taken into consideration an funding.

In preferred, any action this is taken within the hopes of elevating destiny revenue
also can be taken into consideration an funding. For instance, while choosing to
pursue extra education, the intention is frequently to increase information and
improve abilties (inside the hopes of ultimately producing extra income)

Due to the fact making an investment is oriented toward the capability for destiny
growth or earnings, there may be continually a sure level of danger related to an
funding. An investment might not generate any profits, or can also truely lose value
over the years. As an example, it is also a opportunity that you will put money into
a agency that finally ends up going bankrupt or a challenge that fails to materialize.
This is the number one way that saving may be differentiated from investing:
saving is accumulating money for future use and involves no risk,
whereas investment is the act of leveraging money for a ability destiny advantage
and it entails some chance
The Golden Rule
The golden rule of investing is as follows:

“The higher the risk, the higher the return.”

Complexities in the stock market and market uncertainties led to the growth of a
new field of research in finance namely Behavioural Finance. Behavioural
Finance is a part of Behavioural Economics, which began as a result of prospect
theory which was developed by
Daniel Kahneman and Amos Tversky. Actually, Kahneman and Tversky
were both psychologists with no or little training in classical finance.

Inconsistencies in Financial market are due to cross-sectional and time series

patterns in returns from investment in securities that cannot be predicted by any
well-defined theory. Behavioural finance is the study of the influence of the
psychological factors on an individual in their investment behaviour. This new
approach of financial research advocates that investment decision is affected by
psychological and emotional factors.

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This new approach tries to prove or rather we can say that it assumes that the
investors are influenced by psychological factors such as attitude, over-
confidence, optimism, pessimism etc. Due to the role of these factors in the
investment has changed the direction of research in the area of Behavioural
Finance. As I mentioned earlier Kahneman and Tversky (1979) was the first
psychologist who developed this model. Later Shefrin and Statman (1994) and
Shleifer (2000) also contributed to this field. These researchers have attempted to
analyze the efficiency of financial markets and tried to discuss the fluctuations in
stock markets.

Challenges in the market environment are growing if the investors analyze the
different options and securities can reap the benefit. If we closely analyze the five
decade, we can find the finance theory had assumed that investors have little
difficulty in making decisions. According to the traditional theory, the investors
are not getting confused by the information presented to them and not swayed by
any emotions. But in real situation, this assumption does not match the reality,
and this led to new approach in finance theory. Over the last decades Behavioural
finance has gained importance as it is a new area of research. According to the
research investors rarely behave as per the assumptions made in traditional theory
of finance. According to behavioural researchers the finance theory should take
consideration of the observation of human behaviour. Behaviour Research use
psychological point of view to develop an understanding.

1) Primary market - purchase of shares via IPO (Initial Public Offering)

allotted by companies who issue public offers of shares.

2) Secondary market- Stock trading done via exchanges who is ready to

purchase from primary shareholders after listing in exchanges, and resale in
secondary market.

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Stock trading means a person or a company involved in trade of equity securities
via stock exchange by holding an Demat Account. Stock trading can be performed
by the investor with
the help of an stock broker / sub broker, agent registered under SEBI, who is the
stock market regulator . Agents make a commission for each trade of stock / equity
from the trader, who trade on behalf of a investorA stock (also called as share /
equity) market is the assortment of investors for shares (buyers and sellers). A broker
and trader can buy and sell shares of stock, bonds, and other securities at an agreed
price listed on a public stock exchange. A investor tactics about his investment and
returns since there are wide range of investment mode exist like Mutual Fund (SIP),
Commodities, Equity Shares, Options, Futures, IPO, Foreign Exchange, Gold ETF,
Bonds, Post Office Saving Schemes, Company Fixed Deposits, Insurance Plans,
Retirement Plans, PPF, etc . Retail investment and institutional investment are two
different manner available for traders, the trader need to do technical or fundamental
analysis to have maximum returns with minimum risk for investment.
Exchanges act as the hub centre for each transaction, that means that they
accumulate and supply the shares, and assure price to the seller of a safety. This
eliminates the chance to an individual dealer that the counterparty should default
at the transaction. There are numerous exchanges current, out of which BSE
(Bombay stock trade) and NSE (national stock trade) account’s maximum of the
buying and selling shares in India.

Equity trading (no expiry), owning the shares by using buy and finding profit
within an afternoon / week / month or years in keeping with the percentage of
returns deliberate by means of the investor.

21
Derivatives (final Thursday of the month has expiry), spinoff buying and selling
is a place wherein the trader can preserve or exchange the shares by way of
giving a margin amount till a specific period. The holdings of lot will expire on
remaining Thursday of that unique month. It's far investors desire to pick out the
ideal month of the lot for trading, potential of funding to maintain. The retaining
will get rectangular off in case the trader now not last the retaining on expiry day.
The buying and selling may be in plenty and could fluctuate in count
for every organisation according to the weightage of the shares. The fee of the
margin could be 10% price of the total stocks and can preserve it for its
respective month expiry. Month-to-month exchange has Futures delivery - The
dealer buy the lot and promote after enjoying the income in accordance to the
expectation. Futures rectangular Off - In case the trader fails to close the
conserving, the lot gets mechanically land up in keeping with the live stock fee
before last time at 3:00PM The characteristic of the option is a choice to are
expecting a price to be of the inventory in a week or month, An investor choose
the inventory by way of analysing the market trend as it boom or decrease in
charge of precise stock. If the prediction happens the investor

22
Macroeconomic Trends of growth, saving and investment in India Publish-
independence India under the making plans commission has strived to achieve the
desires of financial improvement by using developing an surroundings of
prosperity for its populace. Whilst the preliminary phase became more socialistic
and set out to reinforce the bottom for the economic system, the Hindu growth
price precipitated policy-makers to shift tools to a greater market based approach
and provide a freer rein to the economy For the reason that “New financial
coverage”, the country has witnessed a period of faster increase and an
development within the properly-being of the people as measured by using the
boom in the Gross domestic Product (GDP) and consistent with Capita earnings

With growth in the PCI, financial savings and investment in the u . S . A . Too
confirmed a northbound motion. The savings and investment charges in India
soared through the primary decade of the twenty first Century each peaking in
2007-08 before the economic disaster of 2009 started pulling them down.

As GDP grew quicker than the population annually, there was a sizeable increase
in per capita profits in the equal length. India changed into amongst the fastest
developing economies inside the world in the duration 2003-08 crowned best
through China which become additionally experiencing a fantastic growth spurt.
India’s momentum on the grounds that 2003 and shape of international change
allowed it to preserve a modest boom of 5.12% even in 2008-09, the yr of the
sovereign debt crisis despite the fact that itbroke the 3-year spree of boom quotes
above nine% and precipitated maximum macro- variables to

23
The BSE and NSE
Most of the buying and selling inside the Indian inventory marketplace takes location on
its inventory exchanges: the Bombay inventory alternate (BSE) and the countrywide
inventory alternate (NSE). The BSE has been in lifestyles in view that 1875.3 The NSE,
then again, turned into based in 1992 and commenced trading in 1994.4 but, both
exchanges comply with the same buying and selling mechanism, buying and selling
hours, and agreement process.

As of November 2021, the BSE had five,565 indexed corporations,five while the rival
NSE had 1,920 as of Mar. 31, 2021.6

Almost all of the substantial companies of India are listed on both the exchanges. The
BSE is the older inventory marketplace but the NSE is the most important stock market,
in phrases of quantity. Both exchanges compete for the order float that results in reduced
fees, marketplace efficiency, and innovation. The presence of arbitrageurs continues the
fees on the 2 inventory exchanges inside a totally tight variety.

Trading Mechanism
Buying and selling at each the exchanges takes area via an open digital restrict order
ebook in which order matching is accomplished via the trading computer.7 There are not
any market makers and the entire procedure is order-pushed, because of this that market
orders placed by using investors are robotically matched with the first-rate restriction
orders. As a end result, shoppers and sellers remain anonymous.

The benefit of an order-driven market is that it brings more transparency via displaying
all buy
and sell orders inside the buying and selling machine. However, inside the absence
of market makers, there's no guarantee that orders will be performed.

All orders inside the trading gadget want to be placed through brokers, many of
which provide an internet trading facility to retail customers. Institutional buyers
also can take benefit of the direct market get entry to (DMA) alternative wherein
they use trading terminals
supplied by brokers for placing orders directly into the stock marketplace buying and
selling gadget

Settlement and Trading Hours

Fairness spot markets observe a T+2 rolling settlement. This means that any
alternate taking area on Monday receives settled through Wednesday. All trading
on inventory exchanges takes location between 9:fifty five a.M. And three:30
p.M., Indian trendy Time (+ 5.Five hours GMT), Monday via Friday. Delivery of
stocks have to be made in dematerialized form, and every change has its own
clearing residence, which assumes all agreement danger by serving
24
Market Indexes
The two distinguished Indian marketplace indexes are Sensex and Nifty. Sensex
is the oldest marketplace index for equities; it includes stocks of 30 companies
listed at the BSE. It became created in 1986 and gives time series statistics from
April 1979, onward.

Another index is the standard and bad's CNX Nifty; it consists of 50 stocks
indexed on the NSE. It was created in 1996 and provides time collection
records from July 1990, onward

Market Regulation
The general responsibility of improvement, regulation, and supervision of the
inventory marketplace rests with the Securities and trade Board of India (SEBI),
which become shaped in 1992 as an unbiased authority. Since then, SEBI has
always tried to lay down market guidelines consistent with the pleasant
marketplace practices. It enjoys widespread powers of imposing consequences on
market members, in case of a breach.

Who Can Invest in India?

India started allowing out of doors investments most effective inside the Nineteen
Nineties. Foreign investments are classified into classes: overseas direct funding
(FDI) and overseas portfolio investment (FPI). All investments wherein an
investor takes part inside the every day control and operations of the corporation
are treated as FDI, while investments in stocks with none manipulate over
control and operations are dealt with as FPI.

For making portfolio investments in India, one have to be registered either as a

foreign institutional investor (FII) or as one of the sub-bills of one of the registered
FIIs. Both registrations are granted by way of the market regulator, SEBI.

Foreign institutional traders mainly consist of mutual budget, pension price range,
endowments, sovereign wealth funds, insurance organizations, banks, and asset
control organizations. At gift, India does now not allow overseas individuals to
make investments immediately in its inventory marketplace. But, excessive-
internet-worth people (those with a net well worth of at least $50 million) can be
registered as sub-accounts of an FII.
Foreign institutional traders and their sub-money owed can invest at once into any
of the shares listed on any of the inventory exchanges. Maximum portfolio
investments encompass funding in securities in the number one and secondary
25
markets, along with stocks, debentures, and warrants of organizations indexed or
to be indexed on a identified inventory change in India.

FIIs also can put money into unlisted securities outside inventory exchanges,
concern to the approval of the rate by using the Reserve bank of India. Eventually,
they could spend money on units of mutual finances and derivatives traded on any
inventory change.

An FII registered as a debt-most effective FII can make investments one

hundred% of its investment into debt devices. Different FIIs have to make
investments at least 70% in their investments in equity. The stability of 30% may
be invested in debt. FIIs have to use special non-resident rupee financial
institution accounts that allows you to pass cash inside and outside of India. The
balances held in such an account may be completely repatriated.
Restrictions and Investment Ceilings
The authorities of India prescribes the FDI restriction, and exceptional ceilings
were prescribed for distinctive sectors. Over a time period, the authorities has
been gradually growing the ceilings. FDI ceilings in the main fall inside the
variety of 26% to a hundred%.
By way of default, the maximum restriction for portfolio funding in a selected
indexed company is determined by means of the FDI limit prescribed for the sector
to which the company belongs. But, there are extra restrictions on portfolio
investment. First, the mixture restrict of funding by way of all FIIs, including their
sub-bills in any particular company, has been fixed at 24% of the paid-up
capital.12 however, the same may be raised as much as the sector cap, with the
approval of the agency's forums and shareholders.

Secondly, funding via any unmarried FII in any particular firm must now not
exceed 10% of the paid- up capital of the corporation. Policies allow a separate
10% ceiling on investment for each of the sub- accounts of an FII, in any unique
firm. But, in the case of overseas companies or people making an investment as a
sub-account, the identical ceiling is simplest five%. Regulations additionally
impose limits for funding in fairness-based totally derivatives buying and selling
on inventory exchanges.

26
Investments for Foreign Entities
Overseas entities and individuals can advantage publicity to Indian stocks via
institutional buyers. Many India-focused mutual budget have become popular
amongst retail buyers. Investments could also be made through a number of the
offshore devices, like participatory notes (PNs), depositary receipts, together with
American depositary receipts (ADRs) and international depositary receipts
(GDRs), exchange traded funds (ETFs), and alternate traded notes (ETNs).
As consistent with Indian policies, participatory notes representing underlying
Indian shares can be issued offshore through FIIs, only to regulated entities. But,
even small traders can invest in American depositary receipts representing the
underlying stocks of a number of the well- known Indian firms, indexed on the ny
stock change and Nasdaq. ADRs are denominated in bucks and concern to the
policies of the U.S. Securities and trade fee (SEC). Likewise, worldwide
depositary receipts are listed on eu inventory exchanges. However, many
promising Indian firms aren't yet the use of ADRs or GDRs to get admission to
offshore investors.

Retail investors also have the option of investing in ETFs and ETNs, based on
Indian stocks. India- targeted ETFs generally make investments in indexes made
from Indian stocks. Maximum of the shares blanketed within the index are those
already listed on the NYSE and Nasdaq.

As of 2020, two of the maximum distinguished ETFs based totally on Indian

stocks are the iShares MSCI India ETF (INDA) and the understanding-Tree India
income Fund (EPI). The maximum distinguished ETN is the iPath MSCI India
Index trade Traded notice (INPTF). Each ETFs and ETNs offer an awesome
funding opportunity for out of doors investors.

The Bottom Line

Rising markets like India are fast becoming engines for future increase. Presently,
best a very low percentage of the family financial savings of Indians are invested
in the home stock marketplace, but with gross domestic product (GDP)
developing at 7% to eight% annually for the previous couple of years, even though
in the 6% variety for 2018 and 2019, and a stable monetary market, we would see
extra money becoming a member of the race. Maybe it's the right time for outside
buyers to significantly think about becoming a member of the India bandwagon

27
CERTIFICATE OF DEPOSIT

A certificate of deposit (CD) is a product supplied by way of banks and credit score
unions that gives an hobby charge top rate in trade for the patron agreeing to leave
a lump-sum deposit untouched for a predetermined period of time. Almost all
client monetary establishments offer CDs, even though it’s up to every financial
institution which terms it wants to provide, how lots better the rate will be in
comparison to the financial institution’s financial savings and money marketplace
products, and what penalties it applies for early withdrawal.

Purchasing round is vital to locating the best CD fees because unique monetary
establishments offer a surprisingly wide range. Your brick-and-mortar financial
institution might pay a pittance on even lengthy-term CDs, as an example, while an
internet bank or neighborhood credit union may pay 3 to five instances the national
average. In the meantime,
a number of the high-quality costs come from special promotions,
occasionally with uncommon durations such as 13 or 21 months, in
preference to the greater commonplace terms primarily based on 3, six, or 18
months or full- yr increments

Understanding certificates of Deposit (CDs)

India delivered certificates of Deposit (CDs) in 1989 to increase the variety of cash
marketplace units inside the country and thereby provide investors more flexibility
in terms of utilization of their brief-time period price range.

What is a certificate of Deposit?

A certificates of Deposit (CD) is a cash marketplace device that is issued in a
dematerialised shape against price range deposited in a bank for a selected length.
The Reserve financial institution of India (RBI) issues tips for certificates of
Deposit every now and then.

Eligibility for certificate of Deposit:

Certificate of Deposit are issued with the aid of scheduled industrial banks and
pick out economic establishments in India as allowed through RBI inside a
restriction. Certificate of Deposits are issued to individuals, companies,
companies and price range among others. Certificates of Deposits also can be
issued to Non-Resident Indians but on a non-repatriable basis simplest. It's far
vital to note that banks and financial institutions cannot offer loans towards
certificate of Deposits. Also, banks can not purchase their very own certificates
of Deposits previous to the latter’s maturity. However, the aforementioned norms
28
may be relaxed by using the RBI for a specific time frame. It's miles critical to
notice that banks need to hold the statutory liquidity ratio (SLR) and cash reserve
ratio (CRR) at the charge of a certificates of Deposit.

Layout of certificates of Deposit

Banks and financial establishments must issue a certificates of Deposit in a
dematerialised form handiest. But, traders can are searching for a certificate in
physical form in addition to in keeping with Depositories Act, 1996. In case an
investor seeks a certificate in a physical shape, a financial institution informs the
monetary Markets department, Reserve bank of India, Mumbai. Also, a certificate
of Deposit includes stamp responsibility expenses as properly. For the reason that
certificates of Deposits are transferable in a physical shape, banks have to make
sure that they're issued on appropriate first-rate paper. A certificate of Deposit
needs to be signed through or extra signatories (authorized)

Minimal size and maturity of a certificate of Deposit

A certificate of deposit can handiest be issued for at the very least Rs.1 lakh by
way of a single issuer and in multiples of Rs.1 lakh. The adulthood of a certificate
of deposit depends at the investor. For instance, for a certificates of deposit issued
by way of banks, the adulthood length isn't much less than 7 days and now not
above 12 months while for financial establishments, a certificates of deposit must
now not be issued for much less than 1 12 months and now not above three years

29
Transferability
A certificates of deposit which is not held in an electronic shape
may be transferred by endorsement and delivery. But, a certificates
of deposit held in a demat shape is transferred in keeping with hints
accompanied by demat securities.

Bargain
Certificate of deposit can be issued at a discount on its face cost.
Moreover, banks and monetary establishments can trouble
certificates of deposits on a floating charge basis. But, the
technique of calculating the floating charge must be marketplace-
based

Reporting
Banks’ fortnightly return ought to consist of certificates of
deposits as per phase forty two of the RBI Act, 1934. Moreover,
banks and economic institutions have to also record
approximately certificates of deposits under the web Returns filing
machine (ORFS).

Starting a CD could be very just like establishing any preferred

bank deposit account. The distinction is what you’re agreeing to
whilst you join up the dotted line (although that signature is now
digital). Once you’ve shopped round and diagnosed which CD(s)
you’ll open, finishing the process will lock you into 4 matters.
● The interest rate:Locked costs are a high quality aspect due
to the fact they provide a clear and predictable go back in
your deposit over a selected time period. The bank cannot
later alternate the fee and consequently reduce your
earnings. At the turn aspect, a fixed return might also hurt
you if prices later upward push substantially and also you’ve
lost your possibility to take gain of better-paying CDs.
● The term:that is the length of time you compromise to leave
your price range deposited to keep away from any penalty
(e.G., six- month CD, one-year CD, 18-month CD, and so
forth.) The time period ends at the “adulthood date,” whilst
your CD has fully matured and you can withdraw your
funds penalty-free
● The principal:except for a few strong point CDs, that
30
 is the amount you settle to deposit whilst you open the
CD
● The institution:The financial institution or credit score
union wherein you open your CD will decide elements of
the settlement, including early withdrawal consequences
(EWPs) and whether your CD may be routinely reinvested
in case you don’t offer different commands at the time of
adulthood.

How Does a Certificate of Deposit Work?

A certificates of deposit is a easy and famous financial savings
automobile presented by means of banks and credit unions. While
a depositor purchases a certificate of deposit, they comply with
leave a certain amount of money on deposit on the financial
institution for a certain time period, such as twelve months. In
trade, the financial institution has the same
opinion to pay them a predetermined interest rate and guarantees
the compensation of their fundamental on the end of the time
period. As an example, making an investment $1,000 in a one-12
months five% certificates might mean receiving $50 in hobby
over the path of one year, plus the $1,000 you initially invested.

What Are the Advantages and Disadvantages of a Certificate

of Deposit? Some savers like certificate of deposit due to the
safety they provide, as well as the fact that they may be flawlessly
predictable. On the other hand, certificates of deposit normally
promise a completely modest fee of go back, in particular in latest
years while the federal finances fee is at traditionally low levels.If
the hobby fee supplied is beneath the current inflation fee, then
traders in certificate of deposit will truly lose money on their
funding, while measured on an inflation-adjusted basis. For this
reason, yield-conscious buyers may decide upon investments
which can be riskier however offer better capacity returns.

BONDS
Bonds can play a vital role in any investment portfolio. Bonds
yield income, are often considered less risky than stocks and can
help diversify your portfolio.

31
Characteristics of Bonds
Most bonds share some common basic characteristics including:
Face value is the cash amount the bond could be worth at
maturity; it is also the reference quantity the bond provider
makes use of while calculating interest bills. For example,
say an investor purchases a bond at a premium of $1,090,
and another investor buys the equal bond later whilst it's
miles buying and selling at a reduction for $980. While the
bond matures, both investors will obtain the $1,000 face fee
of the bond.
The coupon rate is the charge of interest the bond provider
can pay at the face price of the bond, expressed as a
percentage. For instance, a 5% coupon charge method that
bondholders will receive 5% x
$1000 face fee = $50 every 12 months.
Coupon dates are the dates on which the bond company will make hobby
payments. Payments may be made in any interval, however the preferred is
semiannual payments.
The maturity dateis the date on which the bond will
mature and the bond provider can pay the bondholder the
face value of the bond.
The issue price is the charge at which the bond provider originally sells the
bonds.

Categories of Bonds
There are four primary categories of bonds sold in the markets.
But, you could also see overseas bonds issued via corporations
and governments on some platforms. ● Corporate bonds are
issued by means of agencies.
Businesses problem bonds rather than are looking for financial
institution loans for debt financing in lots of instances because
bond markets provide more favorable phrases and decrease
hobby prices.
● Municipal bonds are issued by means of states and
municipalities. A few municipal bonds offer tax-
unfastened coupon income for buyers.
● Authorities bonds together with those issued via the U.S.
Treasury. Bonds issued via the Treasury with a 12 months
or less to adulthood are called “payments”; bonds issued
with 1–10 years to adulthood are referred to as “notes”; and
32
 bonds issued with greater than 10 years to adulthood are
known as “bonds.” The whole category of bonds issued by
way of a central authority treasury is frequently together
known as "treasuries." government bonds issued with the
aid of countrywide governments may be known as sovereign
debt.
● Corporation bonds are those issued by using
government- affiliated groups which includes Fannie
Mae or Freddie Mac.

33
What types of bonds are there?
Bonds – also known as constant profits devices – are used by governments or
agencies to raise cash through borrowing from buyers. Bonds are normally issued
to raise price range for particular tasks. In return, the bond provider guarantees to
pay returned the investment, with interest, over a sure period of time.

Certain types of bonds – company and authorities bonds – are rated by way of
credit score groups to assist determine the quality of these bonds. These ratings
are used to assist examine the chance that traders might be repaid. Typically, bond
rankings are grouped into two main categories: funding grade (better rated) and
high yield (lower rated).
The three major types of bonds are corporate, municipal, and Treasury bonds:

1. Corporate bonds.are debt devices issued by means of a organisation to

elevate capital for initiatives like expansion, studies and development. The
hobby you earn from corporate bonds is taxable. However company bonds
generally provide higher yields than authorities or municipal bonds to
offset this drawback.

2. Municipal bondsare issued by a town, metropolis or nation to raise cash

for public projects consisting of faculties, roads and hospitals. In contrast
to company bonds, the hobby you earn from municipal bonds is tax-loose.
There are sorts of municipal bonds: standard responsibility and revenue.

Municipalities use general obligation bonds to fund initiatives that do not produce
earnings, along with playgrounds and parks. Due to the fact fashionable obligation
bonds are backed through the overall religion and credit of the issuing
municipality, the provider can take whatever measures vital to guarantee bills on
the bonds, inclusive of raising taxes.

Revenue bonds, on the other hand, pay lower back investors with the earnings
they're anticipated to create. For instance, if a country problems revenue bonds to
finance a new toll road, it might use the price range generated with the aid of tolls
to pay bondholders. Each trendy obligation and revenue bonds are exempt from
federal taxes, and local municipal
bonds are regularly exempt from country and nearby taxes as well. Sales bonds
a very good manner to spend money on a network while producing hobby.

34
Treasury bonds
(additionally referred to as T-bonds) are issued by means of the U.S. Government.
When you consider that they’re subsidized by way of the total faith and credit of
the U.S. Government, treasury bonds are taken into consideration threat-loose.
But treasury bonds don’t yield hobby costs as excessive as corporate bonds. At
the same time as treasury bonds are challenge to federal tax, they’re exempt from
country and local taxes.
Bond fundsAre mutual finances that usually put money into a selection of bonds,
consisting of company, municipal, Treasury, or junk bonds. Bond finances usually
pay better interest prices than financial institution bills, money marketplace bills
or certificates of deposit. For a low funding minimal ranging from some hundred
to a few thousand greenbacks, bond funds assist you to spend money on an entire
range of bonds, managed by using professional cash managers. Whilst making an
investment in bond price range, preserve in thoughts.
● Bond funds typically encompass better control costs and
commissions ● The profits on a bond fund can vary, as bond price
range commonly put money into multiple form of bond
● You may be charged a redemption price in case you sell your shares inside
60 to

ninety days
● Bond price range which might be leveraged have extra threat

● Junk bonds are a sort of high-yield corporate bond which can be rated
beneath funding grade. At the same time as those bonds provide better
yields, junk bonds are named because of their higher default chance in
comparison to investment grade bonds. Buyers with a lower tolerance for
danger might also want to keep away from investing in junk bonds.

What are the risks associated with investing in bonds?

As with any funding, buying bonds also entails dangers:
● Interest Rate Risk: whilst hobby prices upward thrust, bond fees fall, and
the bonds which you presently keep can lose price. Hobby rate movements
are the important reason of price volatility in bond markets.
● Inflation risk: Inflation is the rate at which the charge of products and
services rises over time. If the rate of inflation outpaces the fixed amount of
profits a bond affords, the investor loses shopping electricity.
● Credit Risk: credit score hazard (also referred to as business threat or
financial hazard) is the possibility that an provider could default on its debt
duty. ● Liquidity Risk: Liquidity chance is the possibility that an investor
35
 may wish to sell a bond however is unable to discover a consumer.
● Stocks generally tend to earn extra money than bonds. inside the period
1928-2010, stocks averaged a return of eleven.Three%; bonds again on
common five.28%. ● Bonds freeze your investment for a hard and fast time
period. For example, in case you buy a
ten-yr-bond, you could’t redeem it for 10 years. This creates the
potential to your preliminary funding to lose cost. Shares,
alternatively, may be bought at any time.
What are some tips for investing in bonds?
When investing in bonds, it’s important to:
1. Know when bonds mature. The maturity date is the date whilst your
funding could be repaid to you. Before you commit your budget, recognize
how lengthy your funding could be tied up in the bond.
2. Know the bond’s ratingA bond’s rating is an indication of how
creditworthy it's far. The decrease the rating, the more danger there is that
the bond will default – and also you lose your funding. AAA is the very best
score (using the usual & negative’s score system). Any bond with a score
of C or underneath is taken into consideration a low quality or junk bond
and has the very best danger of default
3. Investigate the bond issuer’s track record.Knowing the background of a
corporation may be beneficial while deciding whether or not to invest in their
bonds. 4. Understand your tolerance for risk.Bonds with a decrease credit
score score usually provide a higher yield to catch up on better ranges of
chance. Assume carefully about your threat tolerance and keep away from
investing completely based totally on yield. 5. Factor in macroeconomic
risks.Whilst hobby charges rise, bonds lose price. Hobby charge chance is the
risk that prices will alternate before the bond reaches its adulthood date. But,
keep away from trying to time the marketplace; it’s difficult to predict how
interest fees will pass. Alternatively, recognition on your lengthy-term
investment targets. Rising inflation also poses dangers for bonds..
6. Support your broader investment objectives.Bonds need to help
diversify your portfolio and counterbalance your investment in shares and
other asset training. To ensure your portfolio is balanced appropriately,
you may need to consult an asset

36
 allocation calculator primarily based on age.
7. Read the prospectus carefully.In case you’re making an investment in a
bond fund, be sure to take a look at the fees and analyze precisely what
sorts of bonds are inside the fund. The call of the fund can also handiest
inform part of the tale; for example, sometimes authorities bond budget also
consist of non-authorities bonds.
8. Use a broker who specializes in bonds. If you’re shopping individual
bonds, select a company that knows the bond market. Use FINRA
BrokerCheck to help find honest experts that assist you to open a brokerage
account.
9. Learn about any fees and commissions.Your broker can assist
wreck down the charges related to your funding

REAL ESTATE INVESTMENT.

Real property investment Trusts (REITs) are worried in structuring price range
that permit traders to make investments to earn earnings. REITs offer an exquisite
possibility to assignment into worthwhile investments.
Knowledge REIT’s
At instances whilst the financial system is booming, and the government lays
greater impetus at the development of infrastructure and actual property, the
actual estate funding trusts preserve a first-rate significance to buyers looking for
to benefit publicity to the real property sector and obtain profits thru their
investments.

A actual estate investment trust (REIT) is an entity that is created with the
principle reason of channelising the finances that would be invested in operational
functioning or possession of the real estate to in addition generate profits for the
traders.

A REIT capabilities in a similar manner to mutual budget and offers you an

smooth manner to invest in real estate. It provides the benefit of diversification
and lengthy-term capital appreciation. REITs are a excellent way of investing
within the actual estate zone as they are indexed at the inventory exchanges.

37
Records of REIT’s
REITs based on the strains of mutual budget had been first delivered inside the
u.S.A. Of the us inside the Nineteen Sixties, through the Cigar Excise Tax
Extension Act to enhance actual property development with the aid of way of
existing investments, from traders interested in retaining a stake inside the real
estate zone.

The upsurge in actual property offered the possibility of reaping massive

dividends at the investments made, thereby bringing to impact, the actual property
development projects and worthwhile the buyers financially. REITs had been first
delivered in India by way of the Securities and alternate Board of India (SEBI) in
2007, nearly 50 years once they were first included as an investment vehicle.

Objectives of REITs
The crux of REITs is to give buyers the dividends generated from capital profits
which are collected from the selling of business belongings. The REIT allocates
ninety% of its earnings as dividends to its investor’s. It provides a secure and
assorted funding opportunity to get into actual property investments.
● The REITs are transparent. There's a complete valuation of the REIT each
12 months at the side of a 1/2-every year audit.
● Diversification: As according to the guidelines, REITs should spend
money on at least initiatives with the fee of one asset comprising 60% of the
funding. ● Low threat: there may be low risk concerned in REITs as a
minimum of eighty% of the belongings are invested in sales- producing
projects which can be finished. The
ultimate 20% is allocated to investments in below-construction properties,
mortgage- based totally securities, fairness shares deriving at least 75% of
income from actual estate activities, authorities securities, cash market
units, cash equivalents, and so on

38
 . Types of REITs Equity REITs
They're proprietors of real estate residences and rent them to businesses or
individuals to make money. The earnings is then disbursed a few of the REIT
traders as a dividend.

Mortgage REITs
They are not the proprietors, but get EMIs towards the assets from the proprietors
and developers. The earnings are via net interest Margin (difference of interest
earned on mortgage and fee of funding the loan) which they distribute many of
the REIT buyers as a dividend.

Hybrid REITs
It invests in both equity and mortgage REITs

Eligibility of REITs
For a enterprise to qualify as a REIT, the subsequent standards should be satisfied:
● 90% of the earnings need to be distributed to the investors inside the form of
dividends
● 80% of the investment have to be made in houses which are able to producing
revenues
● Handiest 10% of the total investment must be made in actual property below-
creation homes
● The enterprise have to have an asset base of at the least Rs 500 crores
● NAVs have to be up to date two times in each economic year

REIT funds: Structure Formation and Implementation

The based formation and implementation of REIT funds, make certain that the
traders of all monetary capacity get to make investments and make contributions
to the growth and improvement of the actual property quarter. In India, the
authorities is taking vital steps to ensure the budget attain the real estate zone thru
citizens’ participation in such price range.

There have been traits in this regard by using way of the authorities passing the
real property regulation bill. It guarantees the rights of the buyers investing in
actual estate improvement budget. The government additionally ensured the
removal of the Dividend Distribution Tax DDT, associated with the REIT price
range which changed into an impediment inside the

39
implementation of the actual estate investment Trusts.
Advantages of Investing in REITs
● REITs are not as capital good sized as a right away investment in assets.
Furthermore, there are not many worthwhile investment possibilities
left at gift.
● It's miles simpler to spend money on real property the use of REITs. ●
Compared to direct funding in actual property, REITs have lower liquidity
chance. ● REITs are regulated through SEBI; consequently possibilities of
fraud are very unusual.
● The ones are obvious as they display the capital portfolio annually and semi-
yearly.
● These offer a rather better dividend as about 90% of income is paid as a
dividend to the REIT buyers.

Difference Between REITs and Real Estate Mutual Funds

REITs and actual property mutual finances are distinct yet similar as they both
provide liquidity and a cheap manner to get publicity to diverse and substantial
capital actual property assets. Lengthy-time period buyers have the capability to
obtain the rewards of dividend earnings and capital appreciation over an extended
duration. For retail or quick-time period buyers with a low investible surplus, these
actual property price range present an opportunity to put money into residences
that in any other case may not be possible to put money into. A actual property
fund can invest in a actual property investment trust to provide advantages to
investors, making REIT a part of the investment.

● Actual estate Mutual budget offer wider diversification than the REITs
based on the funding strategy and feature the benefit of professionals and
professionals handling their portfolio, unlike the REITs.
● REITs distribute a better amount of dividend every year to shareholders or
traders than real estate mutual finances.
● The price of the real estate tends to boom throughout instances of
inflation as assets expenses and rent is going up, therefore giving a higher
return to the REIT investor. ●
REIT or the actual property mutual fund funding should be unfold
throughout numerous real property classes or funds on the way to
minimise the threat, and it ought to no longer be more than 10% of the
portfolio.
40
The RBI’s thought to allow banks to invest in REITs will propel a variety of
groups to herald their REITs and get them listed at the inventory trade. REITs
have also been authorised via SEBI and thus are seemed upon as a certain measure
by way of the Indian authorities to pool in extra investments to India’s realty
sector. As soon as the REITs are up and equipped for the funding, we may also
desire to peer an boom within the retail quarter participation.
FIXED TERM
What is Fixed Term?
Fixed term describes an investment automobile, normally a few form of debt
device, that has a hard and fast term of investment. With a fixed-time period
funding, the investor parts together with his or her cash for a specific time period
and is repaid his or her essential investment most effective on the cease of the
investment length. In a few cases, even though a set term is said on the investment,
the investor or company may not ought to decide to it.

Understanding Fixed Term

A common instance of a set-time period funding is a time period deposit in which
the investor deposits his or her price range with a monetary institution for a
specified time period and can't withdraw the budget till the stop of the time period,
or at least not without going through an

early withdrawal penalty. The investor, for the most component, is dedicated to
the fixed time period of this financial tool.

Once a term deposit reaches or procedures maturity, the investor need to notify
his or her economic group to both re-make investments the cash into another fixed
term funding or deposit the cash proceeds into his or her account. If the financial
group is not given any shape of notification, proceeds from the mature time period
deposit automatically rolls itself over to another term deposit with the identical
constant term as before. The interest rate can potentially be decrease than the
preceding fee given that every new deposit is set on the contemporary rate. A time
period deposit is the opposite of a demand deposit, in which the investor is loose
to withdraw his or her finances at any time. As a fee for the ease of withdrawal at
any time, call for deposits usually pay decrease interest fees than time period
deposits.

Fixed Terms and Debt Instruments

Fixed terms also apply to debt instruments such as debentures and bonds. These
securities are issued with a fixed term that may be short-, intermediate-, or long-
41
 term. The fixed term or time to maturity is stated in a bond indenture at the time
of issuance. Unlike term deposits, bonds can be sold before they mature. In other
words, investors are not committed to the fixed term of the security.
Issuers can also retire a bond before it matures if the bond has an embedded call
option. The trust indenture specifies the term a bond can be fixed for before an
issuer redeems it from bondholders. Callable bond issuers are not committed to
the fixed term of the bond.

Types of FD Regular FD Account

The everyday FD account is for folks that are aged much less than 60 years. The
interest charges for such an FD account can be lesser than the one provided for
senior citizens. Any Indian resident person can open this account.
FD Account for Senior Citizens
This account is devoted to senior residents, i.E. Individuals aged above 60 years.
Such account holders get a higher hobby charge than ordinary and may get right
of entry to the month-to- month hobby payout option, which may be thought of
as a means for the month-to-month charges for senior residents.

Corporate FD Account
Company firms get a separate set of hobby prices and deposit tenures with banks.
Corporations can deposit the extra investment or earnings they have got raised in
such company FD money owed in the meanwhile till they placed the coins in use.

Tax-Saving FD Account
Many threat-averse people utilise the tax-saving FD accounts with a minimal
lock-in length of five years to store profits tax. Such deposits advantage tax
deduction underneath phase 80C of the earnings Tax Act, 1961.

NRO FD Account
Non-Resident ordinary FD account can be opened with the aid of overseas Citizen
of India (OCI), person of Indian origin (PIO), and Non-Resident Indian (NRI).
Any earnings earned in INR may be deposited only in NRO FD debts. This
account can be collectively held with an Indian resident as long as this character
falls in one of the classes of spouse and children distinct beneath phase 6 of the
groups Act, 1956.

42
NRE FD Account
A Non-Resident outside (NRE) FD account may be opened with the aid of or more
NRIs. The account acts as the proper manner to transform the foreign currency
earned outside India into Indian foreign money denominations. Both the foremost
and interest from this account are absolutely repatriable. The interest income from
this account is exempted from tax underneath segment 10(four) of the income Tax
Act.

FCNR FD Account
Foreign foreign money Non-Repatriable FD account can be opened by NRIs and
might deposit cash earned distant places in India. The currencies usually usual are
US bucks, kilos Sterling, Euro, japanese Yen, and so on. The account allows you
to retain your cash inside the same currency whilst incomes accurate returns.

FD Account With Monthly Payout

This FD scheme will pay out the hobby accumulated on a month-to-month
foundation. This is the hobby amassed will no longer be delivered lower back to
the major, and the hobby will not be compounded in this case. You could pick to
get the hobby element despatched to your financial savings account on a monthly
foundation and utilise the sum for any prices.
FD Account With Maturity Payout
In this example, the interest gets accumulated inside the FD account over the
deposit tenure, receives compounded, and you'll receive the important + hobby
additives upon maturity ofthe FD account

What Does Lock-in Period Mean for FDs?

Within the case of an FD account, the lock-in duration is similar to the adulthood
period or deposit tenure. This surely method that you can't withdraw the amount
deposited inside this length. Even if you do, it comes with a penalty.

In relation to tax-saver FD schemes, you strictly cannot withdraw the funds inside
5 years from the date of account opening. In the case of other FD schemes,
untimely withdrawal remains allowed with sure penalty phrases defined on the
time of opening the account. The phrases may also range from bank to financial
institution.

It is advised that you oblige to the lock-in length and permit the major accrue
interest with out annoying it to advantage the most gain.

43
What Does Loan Against FD Mean?
Don't forget which you have deposited Rs.1 lakh in a hard and fast deposit account
with financial institution B for a tenure of 3 years. On account that you've got
made the deposit for a protracted duration, the bank is of the same opinion to offer
6% p.A. And you're happy about it.

But, on the end of the primary year, you have got stumble upon an emergency
scenario and need Rs.70,000. In case you withdraw the deposit prematurely, you'll
be penalised and could not receive the predicted returns.

In this situation, the financial institution will suggest you are taking a mortgage at
the FD rather than final the deposit account. This is you may take a loan on the
FD quantity, utilise the money for the emergency, and pay it returned earlier than
the account maturity. This permits the FD account to accrue interest as ordinary
and you obtain money to cope with the emergency, both
at the equal time.

Features and Benefits of FD Accounts

● The investment tenure of FDs degrees from seven days up to 10 years,
and it varies across banks.
● The go back on investment is compounded periodically; it is able
to be month-to- month, quarterly, or yearly.
● Senior citizens are furnished with zero.Five% better returns in comparison to
ordinary clients.
● Partial and premature withdrawals may be authorised with penalties. ●
Taxpayers can spend money on tax-saver FD schemes to store taxes below
section 80C of the income Tax Act, 1961.
● Upon adulthood of the FD account, investors can reinvest the sum for any other
term.
● Mortgage towards FDs is available.
● Traders will gather better returns if they invest for an extended length. ●
Returns are confident as they're not tied with the market highs and lows as in
the case of mutual price range.
● The funding is safe as banks and different economic
● Establishments are constantly below the purview of the Reserve financial
institution of India (RBI).
● Compounded hobby makes your investment develop at a miles faster
fee. ● Untimely withdrawals are allowed, so you will usually have a
corpus to fall again on at instances of disaster.
●

44
Advantages of FD
Saving addiction: opening an FD account teaches you an critical monetary
lesson—saving. After you get the taste of saving and appreciate the magic of
interest in addition on your savings, you may learn to shop increasingly going
ahead. This can assist lessen the dependancy of spending on useless matters.

Assured Returns: Many investment instruments provide out various returns

primarily based available on the market fluctuations; even the payout of capital
funding might not be assured. In comparison, the FD account assures to return
each important quantity and an interest factor at the quit of the deposit tenure as
promised.

Flexibility: you could select a deposit tenure based totally on your requirement
and convenience. You can deposit the money for a duration as short as 7 days or
so long as 10 years and allow the money acquire a few attractive interest on its
own.

No renovation: in contrast to the case of shares and mutual budget, you can
deposit the cash and loosen up. Energetic control isn't important in relation to
an FD account.

Clean Liquidity: even though there is a lock-in period for the account, you can
liquidate the investment whenever you want. The lock-in situations are not as
stringent as any other investment instrument.

Protection: keep in mind that the bank with which you have deposited cash
defaults. Don’t fear! You'll be eligible for a maximum reimbursement of Rs 5 lakh
from Deposit insurance and credit guarantee enterprise (DICGC). This is
applicable from 4th February 2020. This
arrangement makes FDs a safe funding option.

Tax gain: you can get a tax deduction under section 80C of as much as Rs.1.Five
lakh when you make an investment on a tax-saver FD scheme with a minimum
lock-in period of 5 years. Limitations of FD
Fixed Returns: even though the returns will not move south and a specific go
back percent is assured, the concept hinders the opportunity of incomes better
returns.

Lock-in duration: FD money owed come with a specific lock-in duration this is
selected through the customers themselves. The funding can be liquidated earlier

45
than adulthood simplest on the fee of a penalty at the hobby fee promised, that is
nothing but a loss.

Limited tax advantages: though a five-year tax-saver FD account is chosen by

way of individuals to store tax in a safer manner, the returns from the account are
taxable underneath the profits Tax Act.

MUTUAL FUNDS
Mutual finances in India paintings in much the equal way as mutual finances
within the united states. Like their American counterparts, Indian mutual budget
pool the investments of many shareholders and invest them in a spread of
securities depending on the dreams of the fund. Also like U.S. Funds, there may
be a huge variety of various fund kinds to be had for purchase depending at the
desires and threat tolerance of any given investor. Mutual price range are a famous
funding alternative in India because, like American price range, they provide
automatic diversification, liquidity, and professional control.

An Overview of Indian Mutual Funds

Any form of mutual fund that exists inside the U.S. Is reflected in some manner
inside the Indian marketplace. There are mutual funds that invest in equity or
shares and are controlled to obtain more than a few goals. Some equity mutual
finances are designed to generate lengthy- term capital profits via growth or cost
investing strategies, like the Birla SL Frontline equity Fund, even as others are
focused on producing dividend income for shareholders. A few combine the 2,
such as the famous ICICI Prudential equity & Debt Fund.

Indian mutual funds may additionally spend money on bonds and different debt
securities with the intention of generating everyday hobby earnings. Indian debt
funds put money into authorities or company debt contraptions and cash
marketplace securities similar to American price range.

There also are Indian balanced budget that invest in each equity and debt units to
create portfolios that provide a diploma of stability with out completely ignoring
the ability for huge profits in the stock marketplace. An awesome instance is the
DSP equity possibilities Fund. Similar to within the American marketplace, the
Indian market offers mutual funds that specialize in certain sectors, only invest in
authorities or inflation-included debt, music a given index, or are designed to
maximize tax-performance.

A sophisticated managed device to trade a conclave of money from many

46
investors to invest in stocks, bonds and other securities is mutual fund. An
investor procur mutual fund 'units', by holding share in a particular scheme.
Fund's current net asset value (NAV) act as the value of the unit to purchase for
the investor. NAVs keep fluctuating, according to the fund's holdings

of the particular mutual fund instrument So, each investor decides to invest
according to the proportionate in the gain or loss of the fund.

Investors in capital market have many types of instruments to invest. The trader /
investor definitely has to analyse the methods, trends, and techniques available in
each instruments before investing / trading in that particular platform. Due to lack
of this awareness in investors it happens to face high risk even for a small returns.

47
Regulation
Mutual Fund Management Structure
The mutual fund sponsor, both an individual, organization of people or corporate
body, is liable for applying for registry with SEBI. As soon as accredited, the
sponsor need to shape a agree with to maintain the assets of the fund, hire a board
of trustees or consider organisation, and pick out an asset control business
enterprise.

The board of trustees or trust company is liable for overseeing the mutual fund
and ensuring it operates with the high-quality interests of its shareholders in mind.
The asset management employer is the entity in price of managing the fund's
portfolio and communicating with shareholders.

If the asset supervisor needs to amplify the product line, introduce a brand new
scheme or alternate an current one, it have to first acquire approval from the board
of trustees or consider organisation. Similarly, the trustees ought to hire a
custodian and depository participant who's chargeable for retaining song of asset
trading hobby and safeguarding each the tangible and intangible property of the
fund.

Types of Mutual Funds

Mutual finances are divided into several styles of classes, representing the styles
of securities they have got targeted for his or her portfolios and the kind of returns
they are looking for.
There is a fund for nearly every kind of investor or investment technique.
Different not unusual forms of mutual finances include money marketplace
finances, zone finances, alternative finances, clever-beta finances, goal-date
price range, or even funds of funds, or mutual price range that buy shares of
different mutual price range.

48
Equity Funds
Fixed-Income Funds
Every other massive group is the constant earnings category. A fixed-earnings
mutual fund specializes in investments that pay a set price of go back, such as
government bonds, corporate bonds, or different debt gadgets. The concept is that
the fund portfolio generates hobby income, which it then passes on to the
shareholders.

Once in a while known as bond finances, those finances are frequently actively
managed and are seeking to buy tremendously undervalued bonds in order to sell
them at a income. These mutual finances are likely to pay higher returns than
certificates of deposit and cash market investments, however bond budget are not
without threat. Because there are many extraordinary forms of bonds, bond
finances can vary dramatically depending on where they make investments. For
instance, a fund focusing on high-yield junk bonds is a whole lot riskier than a
fund that invests in authorities securities. Moreover, almost all bond price range
are situation to interest charge chance, this means that that if costs go up, the cost
of the fund is going down. Index Funds
Any other institution, which has grow to be extremely popular inside the previous
few years, falls underneath the moniker "index finances." Their funding approach
is primarily based at the belief that it's far very difficult, and regularly steeply-
priced, to try to beat the marketplace consistently. So, the index fund supervisor
buys shares that correspond with a prime marketplace index which includes the
S&P 500 or the Dow Jones industrial common (DJIA). This method requires less
research from analysts and advisors, so there are fewer charges to eat up returns
before they may be exceeded directly to shareholders. These budget are regularly
designed with fee-sensitive investors in thoughts.

49
Balanced Funds
Money Market Funds
The cash marketplace includes secure (threat-free), brief-term debt contraptions,
by and large authorities Treasury bills. This is a secure vicinity to park your
money. You may not get vast returns, however you might not should fear
approximately losing your principal. An average return is a touch more than the
quantity you will earn in a regular checking or savings account and a bit less
than the common certificate of deposit (CD). While cash market funds spend
money on extremely-safe belongings, in the course of the 2008 monetary
disaster, a few money market funds did experience losses after the percentage
rate of these funds

Income Funds
Earnings funds are named for their purpose: to offer current earnings on a regular
foundation. These budget invest more often than not in authorities and remarkable
corporate debt, retaining those bonds till maturity with a view to offer interest
streams. Even as fund holdings may additionally appreciate in fee, the number one
goal of these funds is to provide steady cash glide to investors. As such, the
audience for these price range includes conservative investors and retirees.
Because they produce everyday profits, tax-conscious buyers may also need to
keep away from those finances.

PPF (Public Provident Fund)

What is a PPF account?
Public Provident Fund (PPF) became introduced in India in 1968 with the
objective to mobilise small savings in the form of investment, coupled with a go
back on it. It can additionally be referred to as a savings-cum-tax financial savings
funding car that allows one
to build a retirement corpus while saving on annual taxes. All and sundry seeking
out a secure funding option to shop taxes and earn assured returns must open a
PPF account.

Importance of Public Provident Fund account

● PPF account is one of the pleasant funding alternatives for people who've
a low-risk appetite
● .PPF is a government-backed scheme, and the funding is likewise no longer
market- connected. Because of this, it offers assured returns to guard the
50
 funding wishes of many human beings.
● As the returns from PPF debts are fixed, they're used as a
diversification tool for the investor’s portfolio. Moreover, additionally
they offer tax-saving blessings

What is the interest rate on PPF?

The modern-day hobby fee is 7.1% p.A. This is compounded yearly.

The Finance Ministry set the hobby rate each yr, which is paid on thirty first
March. The interest is calculated on the bottom balance among the close of the
fifth day and the ultimate day of each month.

Essential features of PPF

● Tenure: The PPF has a minimal tenure of 15 years, which can be
prolonged in blocks of five years as according to your want.

● Funding Limits: PPF allows a minimum investment of Rs 500 and a maximum

of Rs
1.5 lakh for each economic yr. Investments may be made in a lump sum or
in a most of 12 instalments.
● Starting stability: The account can be opened with simply Rs a hundred.
Annual investments above Rs 1.5 lakh will not earn hobby and will no
longer be eligible for tax savings.
● Deposit Frequency: Deposits into a PPF account has to be made at the least
once each yr for 15 years.
● Mode of deposit: The deposit into a PPF account may be made both by way
of manner of cash, cheque, demand draft (DD) or through a web fund switch.
● Nomination: A PPF account holder can designate a nominee for his account
both on the time of beginning the account or in the end.
● Joint money owed: A PPF account may be held handiest inside the call of
1 individual. Beginning an account in joint names is not allowed.
● Threat element: given that PPF is subsidized through the Indian
government, it offers guaranteed, hazard-free returns in addition to
complete capital protection. The element of threat involved in maintaining
a PPF
Who is eligible to invest in PPF
● Any Indian citizen can put money into PPF.
● One citizen can have simplest one PPF account except the second account
is within the name of a minor.
● NRIs and HUFs are not eligible to open a PPF account. But, if they have an
51
 current PPF account of their name, then it shall continue to be lively until
its finishing touch date. However, those money owed can't be extended for
5 years as inside the case of Indian citizens.

PPF withdrawal
Most often, you may completely withdraw the PPF account balance only upon
adulthood i.E. After the completion of 15 years. Upon of completion of 15 years,
the complete quantity standing to the credit score of an account holder inside the
PPF account along with the gathered hobby can be withdrawn freely and the
account can be closed.

But, if account holders are in want of finances, and desire to withdraw earlier
than 15 years, the scheme permits partial withdrawals from year 7 i.E. On
completing 6 years.

An account holder can withdraw in advance, up to a maximum of 50% of the

quantity that is in the account at the quit of the 4th yr (preceding the yr wherein
the amount is withdrawn or at the give up of the preceding yr, whichever is lower).
In addition, withdrawals may be made simplest as soon as in a monetary year.

Procedure for withdrawal from PPF

If you wish to partly or absolutely withdraw the stability mendacity in your

PPF account. Step 1: Fill in the utility shape using shape C with relevant

information.

Step 2: put up the utility to the concerned branch of the financial institution in
which your PPF

52
 What are the tax benefits of investing in PPF?

PPF is one investment car that falls underneath the Exempt-Exempt-Exempt

(EEE) category. This, in different phrases, way that every one deposits made inside
the PPF are deductible under segment 80C of the income Tax Act. But, it must be
stated that the most contribution in PPF cannot exceed Rs.1.Five lakh in one
financial year.

Furthermore, the amassed amount and hobby is likewise exempt from tax at the
time of withdrawal. It's miles critical to note that a PPF account can't be closed
before maturity.

A PPF account, however, may be transferred from one factor of designation to

another. But, do remember the fact that a PPF account can't be closed in advance.
Most effective inside the case of the account holder’s loss of life can the
nominee’s document for the closure of the account.

1.3 INVESTMENT
RISK What Is Risk?
Danger is defined in monetary terms because the risk that an final results or
funding's actual profits will vary from an predicted outcome or return. Hazard
consists of the possibility of dropping a few or all of an authentic investment.

Quantifiably, chance is generally assessed via thinking about historical behaviors

and consequences. In finance, trendy deviation is a common metric related to
hazard. Preferred deviation gives a measure of the volatility of asset costs in
assessment to their historical averages in a given time frame.

Normal, it is possible and prudent to manipulate investing dangers by knowledge

the fundamentals of chance and the way it's far measured. Learning the risks that
may practice to distinctive scenarios and some of the ways to manipulate them
holistically will help all varieties of buyers and enterprise managers to keep away
from unnecessary and expensive losses.

What Is Investment Risk?

Funding chance is described as the chance or uncertainty of losses in place of
expected benefit from funding due to a fall inside the honest fee of securities
inclusive of bonds, stocks, real estate, etc. Every kind of funding is exposed to
some degree of investment threat like the marketplace danger i.E., the loss on the
invested amount or the default chance i.E., the money invested is in no way lower
53
back returned to the investor.

While you invest, you make selections approximately what to do along with your
financial property. Chance is any uncertainty with respect to your investments
that has the ability to negatively have an effect on your economic welfare.

For example, your funding fee might upward push or fall because of
marketsituations (market hazard). Corporate choices, along with whether to make
bigger into a brand new area of enterprise or merge with another enterprise, can
affect the value of your investments (business risk). If you personal an worldwide
investment, events inside that u . S . A . Can affect your investment (political risk
and foreign money threat, to call two).

There are other sorts of threat. How clean or difficult it's miles to coins out of an
investment whilst you need to is known as liquidity hazard. Some other danger
factor is tied to what number of or how few investments you preserve. Usually
speakme, the more financial eggs you have

54
in one basket, say all of your cash in a single stock, the greater danger you take
(awareness hazard). In short, risk is the opportunity that a terrible economic
outcome that subjects to you may arise.

There are several key principles you need to recognize when it comes to funding risk.

Risk and Reward.The extent of risk related to a selected investment or asset

elegance commonly correlates with the extent of return the investment might gain.
The intent in the back of this dating is that investors inclined to tackle unstable
investments and potentially lose money must be rewarded for his or her risk.

In the context of making an investment, praise is the opportunity of higher returns.

Historically, shares have loved the maximum sturdy common annual returns over
the long term (just over 10 percentage in step with yr), observed by using company
bonds (round 6 percent annually), Treasury bonds (5.Five percent in step with
year) and coins/cash equivalents which includes quick-time period Treasury bills
(three.5 percentage consistent with 12 months). The tradeoff is that with this better
return comes more chance: as an asset class, stocks are riskier than company
bonds, and company bonds are riskier than Treasury bonds or bank financial
savings products.

Exceptions Abound
Although stocks have historically provided a higher return than bonds and cash
investments (albeit, at a higher stage of hazard), it is not usually the case that
stocks outperform bonds or that bonds are lower danger than stocks. Both stocks
and bonds involve hazard, and their returns and hazard levels can vary depending
on the winning market and economic conditions and the manner in which they're
used. So, despite the fact that goal-date price range are generally designed to turn
out to be extra conservative as the goal date processes, funding risk exists at some
stage in the lifespan of the fund.

Averages and Volatility.

Even as ancient averages over long periods can manual choice-making about
threat, it may be tough to predict (and not possible to understand) whether or not,
given your precise instances and with your particular dreams and needs, the
ancient averages will play for your want. Even if you hold a broad, different
portfolio of shares which includes the S&P 500 for an prolonged time frame,
there's no assure that they'll earn a rate of return identical to the long-term historic
average.
55
The timing of each the acquisition and sale of an investment are key determinants
of your funding return (together with charges). But whilst we've got all heard the
adage, “purchase low and promote high,” the truth is that many investors do
simply the opposite. In case you buy a inventory or inventory mutual fund whilst
the market is warm and prices are excessive, you may have more losses if the
charge drops for any cause as compared with an investor
who offered at a decrease rate. That means your average annualized returns may
be less than theirs, and it'll take you longer to get better.

Traders must also keep in mind that protecting a portfolio of stocks even for an
prolonged period of time can result in terrible returns. For instance, on March 10,
2000, the NASDAQ
composite closed at all-time excessive of 5,048.62. It has best been recently that
the final rate has approached this file level, and for nicely over a decade the
NASDAQ Composite turned into nicely off its historic excessive. In quick, if you
obtain at or near the marketplace’s height, you could still no longer be seeing a
fine go back to your investment. Buyers maintaining man or woman stocks for an
extended time frame additionally face the danger that the enterprise they are
invested in ought to enter a nation of permanent decline or pass bankrupt.

56
 INVESTMENT DEFINITIONS
Underneath are some definitions of various investment and monetary phrases that may be
referred to on this website online. This list does now not consist of the definitions of all
phrases that may be noted on this website online.

Alpha — Measures danger-adjusted overall performance and is usually calculated because

the distinction between the returns of an investment and its benchmark.

Beta — Measures of an investment’s hazard relative to the market. It could also be taken
into consideration a degree of systematic danger.

Correlation — A statistical measure of an funding’s motion in terms of another. CPI

— Consumer Price Index
Downside risk— Measures the potential losses which can occur if a specific funding
position is taken.

Period — Measures the sensitivity of the rate of a hard and fast income funding to a given
change in hobby quotes.

Strategic asset allocation — Is generally considered a protracted-time period target

allocation for a portfolio.

Tactical asset allocation — short-time period allocation adjustments typically due to

marketplace situations.
Tracking risk— Measures the deviation inside the performance of an investment
relative to its benchmark.
Riskless Securities
Whilst it is real that no investment is fully free of all feasible risks, certain securities have
so little practical hazard that they may be considered chance-unfastened or safe.
Trustworthy securities often form a baseline for studying and measuring threat. Those
forms of investments offer an expected price of go back with very little or no chance.
Regularly, all forms of buyers will look to those securities for retaining emergency savings
or for containing property that need to be right now reachable.

Risk and Time Horizons

Time horizon and liquidity of investments is mostly a key component influencing chance
evaluation and danger control. If an investor desires budget to be without delay accessible,
they may be much less possibly to invest in excessive chance investments or investments
that can't be right away liquidated and much more likely to area their cash in trustworthy
securities.

Time horizons can also be an essential aspect for man or woman funding portfolios. More
youthful investors with longer time horizons to retirement may be inclined to spend money
on higher threat investments with higher potential returns. Older buyers would have a
57
exceptional chance tolerance when you consider that they may want budget to be more
effectively to be had.

1.3 TYPES OF INVESTMENT RISKS

Every saving and funding action includes special dangers and returns. In wellknown,
economic concept classifies investment risks affecting asset values into categories:
systematic risk and unsystematic hazard. Broadly speaking, traders are uncovered to each
systematic and unsystematic risks.
Systematic dangers, also referred to as marketplace risks, are dangers that can affect a
whole economic marketplace normal or a huge percentage of the total market. Market
danger is the hazard of losing investments due to elements, such as political threat and
macroeconomic hazard, that affect the overall performance of the general marketplace.
Market hazard cannot be effortlessly mitigated via portfolio diversification. Different
common sorts of systematic chance can consist of interest rate risk, inflation danger, foreign
money risk, liquidity chance, united states of america hazard, and sociopolitical danger.

Unsystematic chance, also called specific risk or idiosyncratic risk, is a category of risk that
best affects an enterprise or a particular organization. Unsystematic threat is the threat of
dropping an funding because of corporation or enterprise-specific chance. Examples
encompass a trade in management, a product take into account, a regulatory trade that could
pressure down organisation sales, and a brand new competitor inside the marketplace with
the potential to get rid of market percentage from a organization. Buyers regularly use
diversification to control unsystematic risk by using making an investment in a diffusion of
belongings.
Similarly to the large systematic and unsystematic dangers, there are several particular
types of threat, such

1) Business Risk
Enterprise threat refers to the simple viability of a enterprise—the query of whether a
business enterprise will be able to make sufficient income and generate enough revenues
to cowl its operational costs and turn a earnings. While monetary chance is concerned with
the fees of financing, enterprise danger is involved with all the other expenses a commercial
enterprise should cowl to stay operational and functioning. These costs consist of salaries,
production charges, facility rent, workplace, and administrative charges. The level of a
corporation's enterprise threat is encouraged through elements consisting of the price of
goods, earnings margins, opposition, and the general level of demand for the goods or
services that it sells.

2) Credit or Default Risk

Credit score chance is the risk that a borrower could be not able to pay the contractual
hobby or major on its debt responsibilities. This kind of hazard is specially concerning to
traders who hold bonds of their portfolios. Authorities bonds, in particular the ones issued
by the federal government, have the least amount of default threat and, as such, the lowest
returns. Company bonds, alternatively, generally tend to have the highestquantity of default
58
chance, however also better hobby costs. Bonds with a lower risk of default are taken into
consideration investment grade, while bonds with higher chances are considered high yield
or junk bonds. Traders can use bond rating agencies—together with wellknown and
negative’s, Fitch and Moody's—to determine which bonds are funding-grade and which
are junk.

3) Country Risk
Us of a chance refers to the chance that a country might not be capable of honor its
economic commitments. While a rustic defaults on its duties, it could damage the overall
performance of all different monetary units in that u . S . – in addition to different
international locations it has family members with. Usa threat applies to shares, bonds,
mutual finances, alternatives, and futures that are issued inside a particular united states of
america. This sort of chance is most customarily visible in emerging markets or countries
which have a excessive deficit.

4) Foreign-Exchange Risk
While investing in foreign countries, it’s critical to bear in mind the truth that foreign
exchange quotes can alternate the rate of the asset as nicely. Foreign exchange threat (or
exchange price danger) applies to all financial units which might be in a forex other than
your home foreign money. As an example, if you live in the U.S. And spend money on a
Canadian inventory in Canadian dollars, although the percentage
price appreciates, you could lose cash if the Canadian dollar depreciates with regards to the
U.S. Dollar.
5) Interest Rate Risk
Hobby charge threat is the hazard that an funding's fee will change because of a exchange
in the absolute degree of interest prices, the spread among two costs, inside the form of the
yield curve, or in another interest charge dating. This type of risk impacts the fee of bonds
more directly than shares and is a sizable hazard to all bondholders. As hobby quotes
upward thrust, bond expenses within the secondary market fall—and vice versa.

6) Political Risk
Political chance is the chance an investment’s returns ought to suffer because of political
instability or modifications in a rustic. This form of danger can stem from a exchange in
authorities, legislative bodies, other foreign coverage makers, or military manipulate.
Additionally known as geopolitical danger, the danger becomes more of a issue as an
funding’s time horizon receives longer

7) Counterparty Risk
Counterparty threat is the likelihood or probability that one of these involved in a
transaction may default on its contractual obligation. Counterparty danger can exist in
credit, funding, and trading transactions, particularly for the ones occurring in over-the-
counter (OTC) markets. Monetary funding products which includes shares, options, bonds,
and derivatives deliver counterparty danger.
8) Liquidity Risk
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Liquidity danger is associated with an investor’s capacity to transact their investment for
cash. Normally, traders will require some top rate for illiquid property which compensates
them for holding securities over the years that can not be without difficulty
liquidated.

9) Market Risk
Market risk is the chance of an funding dropping its cost because of numerous financial
occasions that can have an effect on the entire marketplace. The main types of market threat
encompass:
● Equity Risk: This hazard relates to the funding in the shares. The marketplace charge
of the stocks is risky and keeps on increasing or decreasing based totally on various factors.
Hence, fairness risk is the drop in the market rate of the stocks.
● Intrest Rate Risk: hobby rate danger applies to the debt securities. Interest prices
affect the debt securities negatively i.E., the marketplace value of the debt securities
increases if the interest costs lower.
● Currency Risk: forex risk pertains to foreign exchange investments. The danger of
dropping money on foreign exchange investments because of
motion inside the exchange prices is forex risk. For example, if america dollar depreciates
to Indian Rupee, the funding in US greenbacks might be of less value in Indian Rupees

10) Liquidity Risk

Liquidity Riskis the hazard of being not able to sell the securities at a fair charge and
changing into coins. Because of less liquidity in the marketplace, the investor may need to
promote

60
1) Concentration Risk
Concentration danger is the threat of loss at the invested quantity as it turned into invested in
simplest one protection or one form of protection. In awareness hazard, the investor loses nearly
all of the invested amount if the market cost of the invested precise security is going down.

2) Credit Risk
Credit threat applies to the hazard of default at the bond issued by a employer or the government.
The issuer of the bond may additionally face economic difficulties because of which it can no
longer be able to pay the interest or foremost to the bond traders, accordingly, defaulting on its
responsibilities.

3) Reinvestment Risk
Reinvestment chance is the threat of dropping better returns on the major or profits due to the
low charge of hobby. Don't forget a bond offering a go back of 7% has matured, and the main
must be invested at five%, consequently dropping an possibility to earn higher returns.

4) Inflation Risk
Inflation chance is the chance of loss of purchasing power due to the fact the investments do no
longer earn higher returns than inflation. Inflation eats away the returns and lowers the shopping
power of money. If the go back on funding isdecrease than the inflation, the investor is at a better
inflation risk.

5) Horizon Risk
Horizon danger is the hazard of shortening of funding horizon because of personal events like
loss of process, marriage or shopping for a residence, etc.

6) Longevity Risk
Durability danger is the hazard of outliving the financial savings or investments,
specifically pertain to retired or nearing retirement people.
7) Foreign Investment Risk
Foreign investment hazard is the danger of investing in foreign nations. If the u . S . As an
entire is liable to falling GDP, high inflation, or civil unrest, the investment will lose cash.

1.4 INVESTMENT RISKS MANAGEMENT

Despite the fact that there are dangers in investment, these risks may be managed and
controlled. Diverse ways of coping with the dangers encompass:
● Diversification: Diversification includes spreading investment into diverse assets like stocks,
bonds, and actual estate, etc. This helps the investor as he'll advantage from other investments if
one among them does now not carry out. Diversification can be achieved throughout special
assets and also within the belongings (e.G., investing across diverse sectors whilst investing in
stocks).
● Investing continually (Averaging): through investing continuously i.E., making an investment
small quantities at ordinary periods of time, the investor can common his investment. He's going
to sometime buy excessive and occasionally buy low and hold the initial price rate of the
investment. But, if the investment rises within the market fee, he'll gain at the whole investment.
● Investing for the long time: long-term investments offer higher returns than brief-term
investments. Despite the fact that there is brief-time period volatility inside the prices of
securities, but, they commonly advantage when invested over an extended horizon (5,10, two )

61
Important Points
● It's miles the chance of dropping the money invested because of the fall within the truthful
price of the security.
● Securities with better danger give better returns.
● The risk mainly consists of market risk however is not constrained to marketplace risk. There are
different hazard sorts like credit danger, reinvestment hazard, and inflation danger, etc.
● Despite the fact that investment chance relates to almost all forms of investments, this will be
decreased by using diversification, averaging out funding, and long-horizon investing.
Low Risk Investments
What are Low-Risk Investments?
Low hazard Investments are investments which can be inherently safer than their opposite numbers.
Stocks are low chance in comparison to alternatives, bonds are low hazard compared to shares and
treasury bonds are low hazard in comparison to corporate bonds.

However, to define what low chance is, we want to realize what risk is and a way to quantify it. So allow
us to first look at the approaches to outline threat, see the way to quantify it, and then get into searching
at some low-chance investments
There are numerous ways to outline what hazard is. To position it absolutely, – hazard is some thing
undesirable taking place. In finance, it might be the moment of the charge of an asset within the opposite
route to what the investor has bet.

How to Verify a Low Risk Investment Portfolio?

Quantification of danger is a question of defining the intention of the funding after which the forms of
hazard it has. Allow us to take an investor who is investing in stocks; the range of dangers he has are
easy marketplace risks, monetary hazard, corporation default danger, etc. There are measurement
methods for each sort of hazard. The most common way to outline and quantify threat is to apply it as a
proxy for measuring chance. Variance is the most not unusual way to explain what chance is.Combining
all of the risks gives us what the entire danger of an investment is. In a portfolio, upload allof the dangers
and notice if they're inside the chance profile of investors – in this situation, low-risk investments.

Allow us to take a look at the example to look how it may be dealt with through looking at a coupleof
examples

Examples of Low-Risk Investment

Example #1 – Portfolio
To look at the exclusive forms of investments, traders make, let us observe portfolios of two funds. Both
of these budget are from AQR capital, one of the world’s main fund managers, founded with the aid of
Cliff Asness in 1998. Presently, they allocate and diversify their price range through alternative
Investments (for excessive hazard takers), global Allocation (for Medium hazard-takers), equity funds
(for Medium hazard-takers), and fixed profits budget (for low threat-takers). If we breakdown the
portfolio of every of those price range to an inexpensive level, we will see which of them are volatile
investments and which ones aren't very risky investments.

The whole lot being said, one has to keep in mind that there is no threat with out go back. Economics
says that markets are efficient, and there's no way a person can get a income on their investments without
dangers. In case there may be a mismatch between the cost and charge of an asset, it's miles known as
arbitrage, and groups are brief to pounce on it and neutralize the arbitrage. As a matter of truth, AQR
capital has a fund that is dedicated to arbitrages.

62
Example #2- Fixed Income Funds
Constant income budget are mutual budget that spend money on high quality constant profits securities
like government money owed, treasury payments, cash markets, and so on. And pay the

traders a set price of return as in step with the price terms and period (can be either monthly, quarterly or
yearly basis).

Consequently, the returns that lie across the suggest, but not throughout the extremes. Since the kind of
fund shows what the unique property wherein AQR has invested are, the organisation does not move
deep enough to explain all of the bonds in which it invested.
Risk Management: How to manage your risks while investing money Investing money has
forever been a unstable commercial enterprise. There's constantly the opportunity of adverse
consequences and this may be due to myriad diversifications and combinations.

Danger is an inherent a part of our regular lives. Even the handiest choices we make, whether personal
or expert, are fraught with a couple of dangers. Hence, in one way or the opposite, we are all hazard
managers by default. If we had to define danger in plain phrases, there would be
the possibility of an undesirable outcome. Threat management allows to mitigate and manage these
unwanted consequences with the usage of enhance making plans.

In the cutting-edge world, risk and its control characteristic prominently inside the domain of economic
investment, making it essential for clients to apprehend the salient nature of hazard in this area.

Financial Investment Risk Management

Making an investment money has all the time been a volatile business. There may be continually the
opportunity of negative results and this may be due to myriad permutations and combinations. The health
of the financial world is depending on market forces and external factors like climate failures, public
health crisis, political crisis and plenty more. For this reason, many human beings favor to err atthe side
of warning while investing their tough-earned money. For customers, proper risk management in
economic investment hinges on asking prudent questions with the aim of lowering the general danger
of one’s portfolio. Humans often rely upon gut intuition instead of performance and other developments,
when investing cash. That is in no way an awesome idea because the security of the cash you're investing
is of extreme importance.

In addition to understanding applicable risks, clients should additionally be privy to the stairs worriedin
assessing and dealing with those risks.

# Defining your goals and identifying risks:An man or woman have to honestly define his personal
dreams, and what would represent a high quality outcome for them. Having a clean set of goals is critical
to being able to correctly discover all ability dangers. To discover these dangers, do not forget no longer
simply the existing situation however additionally potential destiny situations. Never underestimate any
possibly high-impact occasion; although it seems unlikely to manifest.
# Analyzing risk and developing a mitigation plan:One of the guiding concepts in chance control is
to consider all worst-case situations. That is fairly contrary to our social installation wherein it could
be considered inauspicious to talk about terrible effects or “terrible information”. However, except we
understand the worst that may happen, we cannot plan something to prevent it from occurring in any
respect. It's far extraordinarily vital to have a again-up plan for future chance situations in case they
sooner or later materialise.

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 Objectives of the study

Major objectives of the research work include:

1. To understand the investor income and saving pattern.

2. To know their long term financial goals.

3. To find out risk appetite of investor

4. To find out whether the investors are looking for long term growth or
risk or return or liquidity.

5. To understand what parameters, do investor consider before investing

Understand the pattern in which investor will invest their income equities, stock, mutual funds etc

SCOPE OF RESEARCH

The scope of the study is restricted to the survey of investors in the city of Mumbai Chembur with respect to their
earnings and their investment pattern while doing their financial Planning.
This study will provide with all the reasons why is investing important and why
People invest in many types of Investment Avenues and how does it provide the people with profit and benefit. The
study will also provide the information required for any person to understand the investing pattern of an individual
and also how there are some risks which an investor should avoid while investing his income.

RESEARCH AND METHODOLOGY

Primary data
data that is collected by a researcher from first-hand sources, using methods like surveys, interviews,
or experiments. It is collected with the research project in mind, directly from primary sources.
Questionnaire method was used to collect the primary data. The primary data was collected using google
forms. The term is used in contrast with the term secondary data.

Secondary data
data gathered from studies, surveys, or experiments that have been run by other people or for other
research. Typically, a researcher will begin a project by working with secondary data. This allows
time to formulate questions and gain an understanding of the issues being dealt with before the more
321costly and time consuming operation of collecting primary data.

Method of Data Collection

Researcher must be very careful in using secondary data. He must make a minute scrutiny because it is
just possible that the secondary data may be unsuitable or may be inadequate in the context of the
problem which the researcher wants to study. In this connection Dr. A.L. Bowley very aptly observes
that it is never safe to take published statistics at their face value without knowing their meaning and
limitations and it is always necessary to criticise arguments that can be based on them. By way of
caution, the researcher, before using secondary data, must see that they possess following
characteristics:

64
 ● Reliability of data:The reliability can be tested by finding out such things about the said data: (a)
Who collected the data? (b) What were the sources of data? (c) Were theycollected by using proper
methods (d) At what time were they collected? (e) Was there any bias of the compiler? (t) What level
of accuracy was desired? Was it achieved?

● Suitability of data: The data that are suitable for one enquiry may not necessarily be found suitable
in another enquiry. Hence, if the available data are found to be unsuitable, they should not be used by
the researcher. In this context, the researcher must very carefully scrutinise the definition of various
terms and units of collection used at the time of collecting the data from the primary source originally.
Similarly, the object, scope and nature of the original enquiry must also be studied. If the researcher
finds differences in these, the data will remain unsuitable for the present enquiry and should not be used

LIMITATIONS
● The study is primary data and a different tool is used to the study that may suggest results
as the approach differs.

● Some respondents did not take this survey seriously.

Time is an critical trouble. Enough time is required to make right analysis and interpretations

65
 REVIEW OF LITERATURE

Several studies have been conducted on the various aspects of the capital markets in the past.
These studies mainly relate to various instruments of capital market, shareholding pattern, new
issue market and scope, market efficiency, risk and return, performance and regulation of
mutual funds. However, not much of research work has been done on investment patterns
amongst the young age group of the working population and investor’s perceptions.

Ghose.T.P. (1998) conducted a study on VAR (Value at Risk). There are two steps in
measuring market risk; the first step is computation of the Daily Earning at Risk; the second
step is the computation of the VAR. He stated that price sensitivity could be measured by
modified duration (MD) or by cash flow approach. He reviewed the various types of risks in
relation to the different institutions. He opined that 'Managing risk' has different meanings for
banks, financial institutions, and non-banking financial companies and manufacturing
companies. In the case of manufacturing companies, the risk is traditionally classified as
business risk and financial risk. Banks, financial institutions and non-banking financial
companies are prone to various types of risks important of which are interest rate risk, market
risk, foreign exchange risk, liquidity risk, country and sovereign risk and insolvency risk.

Suseela Subramanya (1998) commented on the risk management processes of banks. She
revealed that banks need to do proper risk identification, classify risks and develop thenecessary
technical and managerial expertise to assume risks. Embracing scientific risk management
practices will not only improve the profits and credit management processes of banks, but will
also enable them to nurture and develop mutually beneficial relationships with customers. She
concluded that the better the risk information and control system the more risk a bank can
assume prudently and profitably

Wazal, Sudesh Kumar Sharma (2017) in their study measure the number of retail investors
in the Indian equity market and how it compares with rest of the world. Population of retail
investors in Indian equity market is dismally low when compared with other leading economies.
It was justified the estimate population of retail investors at 4.45 percent of total Indian
population. Over the time period, the numbers have increased since the investor confidence is
being maintained investment in the equity market. Another noteworthy interesting fact is that
more than 50% of the retail investment is from the western region of the country. Retail
investors in India is disproportionately distribute with western region like from Mumbai and
Pune Cities dominating with nearly half of the investor population.

Venkatesha. R and Hiriyappa (2017) - The researcher analyzes the perception of the investors
towards NSE and BSE derivative market, the research was done by collecting datas from 150
respondents with a help of structured questionnaire. The results shows still awareness has to be
given to investors even if there is a development among the investors in
last five years, SEBi or any government body has to take responsibility for bringing the

66
Investors perception as well as to analyze the investor behavior and influence an investment decision.
It was analyzed that the main factors influencing investments are the return on investment and the
short-term profitability. Every investor should be very cautious in market trend or risk while investing
since the respondents rated ROI very high. Return on investment (ROI) is a very important factor that
influences the investment decision. Return is the ultimate aim for an investor. Hence, majority of
respondents rated ROI very high. The main factors influencing investments are the return

67
 DATA ANALYSIS INTERPRETATION AND
PRESENTATION

AGE

AGE
20-30 31-40 41-50 50- Above

0%
3%1%

96%

Sr no Particular Percentage % No of response

1 20-30 96%

2 31-40 3.3%

3 41-50 1.1%

4 50 above 0

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Gender

GENDER
Male Female

15%

85%

Sr no Particular Percentage No of response

1 Male 44%

2 Female 56%

69
Annual income

Annual income

10,000-50,000 50,000-100,000 100000-1,50000 1,50000- above

Sr no Particular Percentage No of response

1 10000-50000 65%

2 50000-1000000 4%

3 100000-150000 7%

4 150000 mad above 24%

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Occupation

OCCUPATION
Students Working Entrepreneur Retired

6%
3%

38%

53%

Sr no Particular Percentage No of response

1 Students 38%

2 Working 52%

3 Entrepreneur 3%

4 Retired 6%

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What percentage of your saving income do you invest ?

WHAT PERCENTAGE OF YOUR SAVING INCOME DO

YOU INVEST ?
Below 5% 40% 5%-10% 36% Above 20% 24%

14%

51%
35%

Sr no Particular Percentage
No of
response
1 Below 5 50%

2 5-10 34%

3 Above 20 14%

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How do you invest?

PERCENTAGE
Monthly Quarterly Half yearly Yearly

15%

12%

56%

17%

Sro Particular Percentage

1 Monthly 56%

2 Quarterly 17%

3 Half yearly 12%

4 Yearly 15%

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Do you invest in risk-free investment ?

PERCENTAGE
yes no maybe

29%
38%

33%

Sr Particular Percentage
no

1 Yes 26%

2 No 30%

3 Maybe 35%

74
Which factors do you consider before investing ?

Series 1

CAPITAL APPRECIATION 17.60%

SAFETY 46.20%

TAX BENEFITS 31.90%

RISK FACTOR 23.10%

RETURN ON INVESTMENT 38.50%

0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00% 40.00% 45.00% 50.00%

Series 1

Sr no Participate Percentage No of response

1 Return on investment 60% 30

Risk factor 36% 18

2
3 Tax benefits 10% 10

4 Safety 15% 15

5 Capital Appreciation 10% 10

75
In which of these investment do you invest ?

PERCENTAGE
Stocks FD Real estate Mutual funds Bonds Others

11% 14%
5%

26% 30%

14%

Sr no Particular Percentage No of response

1 Stocks 32% 16

2 FD 14% 7

3 Real estate 18% 9

4 Mutual funds 12% 6

5 Bonds 10% 5

6 Others 14% 7

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Rate the given below avernus as per your preference?

LOW RETURN HIGH RISK LOW RETURN

Real estate Mutual Funds Stocks Bonds PPF FD Certificates of Deposit

0%
16%
22%

3%
7%
33%

19%

High Return

Real estate 16.5%

Mutual Funds 33%

Stocks 18.7%

Bonds 6.6%

PPF 3.3%

FD 22%

Certificates of Deposit 0

77
On what basis do you invest in a particular investment option ?

NO OF RESPONSE
Market sentimental Past performance Technical and fundamental analysis Other

18%
27%

28%

27%

Sr no Particulars No of response

1 Market sentimental 17.60%

2 Past performance 27.50%

3 Technical and fundamental 27.50%

analysis
4 Others 27.50%

78
. Rank in order these risk as a investor

No of response

Business risk Inflation risk Liquidity risk Market risk Interest rate risk

No of response

Business risk 11%

Inflation risk 20.90%

Liquidity risk 22%

Market risk 31.90%

Interest rate risk 14.30%

79
CONCLUSION AND SUGGESTION

The financial system is developing, the job marketplace has been doing well and there has been a upward
push inside the graph for salaries. The brand new era of children in India may have cash in its pockets
and sufficient possibility to position it to desirable use, if they are able to shift from the conventional
financial institution account savings to the capital market. They recognize the significance and blessings
of investing and understand how they want to apply their cash now and within the destiny. They need
moneymaking alternatives to position their money in for days to come back but are understandably afraid
or harassed because of loss of realistic know-how.

Conventional saving alternatives like post workplace schemes and glued deposits are now skipé. Options
like publish workplace schemes and fixed deposits aren't very famous with the youth as the fee of
interest on them is lower as compared to other investment options available. But one way or the other
savings debts are nevertheless seen broadly. Safety and security which were continually vital reasons
for funding are nevertheless influential in determining the course of investment.But their preserve is
loosening. With money in hand and age on their side, the younger investors are getting more inclined
in the direction of taking danger. Fixed deposits are not a totally appealing investment option for
youngsters these days. Tax saving is one of the reasons behind investment by means of the youth.
Conventional saving schemes do no longer provide any tax benefits and are, therefore, preserving the
kids away from them. There seems no intent forinvesting in fixed deposits and submit workplace
schemes after they provide no tax rebates and the Rate of return on them is fixed and additionally
decrease than different funding alternatives. There is exemption for capital profits arising out of fairness
shares and fairness orientated Mutual Fund Units problem to sure situations underneath the income Tax
Act.

Mutual fund has won the choose of the children these days. Investment in mutual budget Via the
Systematic investment Plan (SIP) is a preferred funding choice for the Kids. That is specifically actual
of the young salaried elegance which has simply commenced incomes And does no longer have a fat
bank balance as but. In case of Systematic funding Plans, as a substitute Of bulk price, a small quantity
is to be paid every month. This makes them very popular With the salaried magnificence who find it
tough to shell out a huge quantity at one- move. Mutual Funds also have the gain of requiring lesser
financial competence as they're managed with the aid of Experts while supplying higher returns and
higher potentialities than financial institution accounts. Other traditional investment options just like the
fixed Deposit or the put up office schemes (PPF/ NSC / NSS/ KVP/IVP) are losing their way due to
blockading of budget and decrease returns. Gold continues to be desired to a degree especially
when it comes to girls. Due to rise in price of gold from someplace round four,000-5,000 in 2003 to
around 17,000 in 2010, gold remains shining as an funding alternative. But it's also an high-priced
investment and calls for a fat purse initially inside the wish of getting a fatter handbag. Youngsters today
are privy to what is taking place around them and are sensible enough to determine what is exceptional
for them. Every alternative is
considered and the professionals and cons of every weighed cautiously earlier than the choice to invest
the tough-earned money is taken.

Children today do know approximately the options to be had to them because of the fast spread of facts
these days; they're now not always sure about how to cross approximately making an investment in
more moderen approaches actively. An knowledgeable investor is a great investor; there may be
possibility for providing them with steering and records however it needs to be performed in a way that
is in
Accordance with their life-style – seminars and workshops are now not the kind of alternatives to peruse.

80
technology. The social media platforms particularly Face book, Twitter, LinkedIn in conjunction withe
agencies and web sites can be a medium to spread attention approximately diverse alternatives available for
the younger investors. Therefore, investor schooling can play a essential role inimproving the energetic
participation of the buyers in the market, which can assist them inside theknowledgeable investment and
in getting correct returns. Media can also spotlight young buyers vianewspaper columns, which could
encourage more participation inside the capital market from theyounger technology

Some Recommendations for investors:

To quote J. Kenfield Morley, “In investing money, the amount of interest you want should depend on
whether you want to eat well or sleep well”. An individual investor should keepthe following points in
mind while taking the decisions related to savings and investment of the savings:

(1) Safety of Investment

While making an investment decision, the factors that an investor needs look out for would
vary with the type of investment. For example, in the case of shares, the safety may be partially
gauged from quantitative data such as the past trend in the price of the stock, the financial
performance of the company; it also may be supplemented with qualitative factors such as the
reputation of the company.

Analyzing balance sheets and project reports, however, require a great deal of expertise and
time, which is usually beyond the scope of the retail investor. Therefore, the reputation of the
issuer remains the only guide available.

(2) Credit Rating

When it comes to deposits or bonds issued by public companies or financial institutions, an
investor can rely on credit ratings. A Credit Rating is an evaluation of the safety of an
instrument made by an agency. These agencies undertake a detailed analysis of the issuer's
strengths and weaknesses. The rating is allotted based on a formula that also incorporates past
performance and volatility. They have a large and expert infrastructure that allows them to
make the kind of financial judgement, beyond the scope of an individual retail investor.

(3) Type of Return

The return on investment may consist of appreciation in the value of the investment or receipt
of income or both. The first type of return is typical of real estate whereas the second type is
obtained as interest on loans or fixed deposits, savings certificates, bonds or debentures. Both
income as well as appreciation in value could be got from equity shares of good companies.

(4) Risk - Return Linkage

The investor needs to be aware that there is a direct relationship between ' Return' on investment
and the 'Risk' of losing them. Higher the return, greater is the possibility of loss. The Savings
bank account under the present rules laid down by the Reserve Bank of India, gives interest
depending on the duration of the deposit. A long-term deposit gives a higher rate of interest.
The possibility of losing money in the savings bank account is almost negligible, except in
remote cases of small-time co-operative banks. While the risk of losing money is almost absent.
For instance, the saving bank accounts and bank fixed deposits offer interest in the range of 4.5

81
to 9% per annum respectively. The Company Fixed Deposits offer somewhat better rates of 12
to 15 % per annum. Building contractors and film producers offer very high returns such as 24
to 36 % per annum, but the probability of losing the entire principal amount in this case is very
high

(5) The Tax Factor

Return on investment in the form of income, attracts income tax under the Income Tax Act. Incidence
of this tax depends on the type of the investment income and the quantum of other income. The

interest on Savings bank accounts and bank fixed deposits is eligible for a tax concession up to Rs.
10,000 under Section 80TTA of the IT Act. Beyond that, it is taxable under the Income Tax Act as
normal income.

As stated earlier, company fixed deposits yield higher returns than bank deposits, but they offer no tax
concession. Incomes from mutual funds, deposits with notified financial institutions, interest oncertain
Post Office Deposits, interest on certain NSC, interest on notified bonds and debentures, are also eligible
for a tax deduction under section 80L, all within an overall ceiling of Rs. 15,000.

The interest from PF and PPF is fully exempt from tax. Contribution up to Rs. 60,000 per year enjoys
a tax rebate equal to 20% with a ceiling of Rs. 12,000. In the PPF, whenever there is a contribution made
to the minor children's account, not only is the interest tax free but also it is not clubbed with the parent's
income.

(6) The Inflation Factor

As mentioned earlier, real return is return that is post tax and post inflation. The value of theinvestment
depends on the amount that the money can buy, and this goes down as inflation goes up. Therefore
while evaluating the return from a scheme; one needs to see whether it is giving returns beyond the
inflation rate.

The greatest problems with the investment avenues such as gold, silver, diamond and jewelry have
been that they have not served as an effective hedge against inflation.
(7) High Risk and High Returns
And finally, equity shares of listed companies as an avenue of investment can be extremely
rewarding. But they are also risky and call for a special mental makeup and unusually sharp
skills on the part of the investor. As Peter Lynch, the acclaimed American fund manager said,
"common stocks are not for everyone, nor for all times in the life of the same person".

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 Bibliography

https://www.wallstreetmojo.com/investment-risk/

https://www.principal.com/individuals/build-your-knowledge/whats-investment-risk-
and-why-does-it-matter

https://www.investor.gov/introduction-investing/investing-basics/what-risk

https://www.investopedia.com/terms/r/risk.asp

https://www.scribd.com/document/509093389/Questionnaire-on-Investment-Awareness-
Among-Young-Generation

https://www.researchgate.net/publication/345840995_Investment_Awareness_Among_Y
oung_Generation

https://www.amfiindia.com/investor-corner/knowledge-center/risks-in-mutual-
funds.html

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Appendix

1) Age
• 20-30
• 31-40
• 41-50
• 50- Above

2) Gender
• Male
• Female

3) Occupation

• Student
• Working
• Enterpreneur
• Retired

4) Annual income

• 10,000-50,000
• 50,000-100,000
• 100000-1,50000
• 1,50000- mad above

5) What percentage of your saving income do you invest ?

• Below 5% -10%
• 10% - 20%
• 20% - 30%
• 30% - 40%

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6) How do you invest
• Monthly
• Quarterly
• Half yearly
• Yearly

7) Do you invest in risk-free investment ?

• Yes
• No
• Maybe

8) Which factors do you consider before investing ?

• Returns on invest
• Risk factor
• Tax benefits
• Safety
• Capital appreciation

9) In which of thes investment do you invest ?

• Stock
• Fixed deposit
• Real-estate
• Mutual fund
• Bonds
• Others

10) Rate the given below avernus as per your preference?

• Real estate
• Mutual funds
• Stocks
• Bonds
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 • PPF
• Fixed deposit
• Certificate of deposit

11) On what basis do you invest in a particular investment option ?

• Market sentimental
• Past performance
• Technical and fundamental analysis
• Other

12) Rank in order these risk as a investor

• Business risk
• Inflation risk
• Liquidity risk
• Market risk
• Interest rate risk

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