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CHAPTER 3

RESEARCH METHODOLOGY

Research methodology is a way to systematically solve the research

problem. It may be understood as a science of studying how research is done

scientifically. It consists of various steps adopted in the study of the research

problem.

Research Design:

Research design is a framework for conducting the research project. It

specifies the details of an arrangement of procedures for collection of and

analysis of data in a manner that aims to solve the research problems. The

research design is exploratory in nature.

Data CollectionData will be collected by two ways:-

1. Primary Data

Primary data is defined as the data collected for the first time. It is

new in nature. The primary data for this study was collected by

questionnaire method.

In questionnaire method, a structured questionnaire was personally

produced to the respondent with a request to answer the question

given therein and then return it to the researcher.


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2. Secondary Data

This type of data has already been collected by someone else and has

already passed through statistical process. The sources of secondary

data are:- Books, Websites, Magazines, Journals and Newspapers etc.For this study, Primary data and secondary data both were used.

Sampling Plan:

The data was collected from various investors by the use of sample survey

method. The following factors have to be decided within the scope of

sampling plan:-

1. Defining the universe.

The universe comprises of investors residing in Amritsar City.

2. Sampling unit

A sampling unit is the basic unit containing the elements of the

population to be sampled. In this case it is the investors randomly

taken.

3. Sample Size

It indicates the number of units to be surveyed. Though a large sample

gives more reliable results than a small sample but due to constrain of

time, the sample size is restricted to 100 investors only.

4. Sampling Procedure

This refers to the procedure by which the respondents should be

chosen. The respondents were selected on the basis of non-probability

convenience sampling.


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5. Research Instrument

For the purpose of research, a structured questionnaire for respondents

was developed.

6. Contact Method

The questionnaire was personally to respondents.

Data Analysis Technique

Analysis of the data was a done using simple percentage method. The

following formula was used.

Percentage= Number of responses for a question/Total responses * 100

The presentation of the data has been done through pie charts and bar

graphs.

LIMITATIONS OF THE STUDY:

Although the survey has been conducted vary cautiously kbut still due to

small sample size, some limitations are there. The main limitations of the

study are:-

1. Area of study is limited to the one city only and the findings may not

hold true for large cross section of population.

2. The sample size is small so the possibility kof sampling errors cannot

be ruled out in the study.

3. The investors behaviour is influenced by number of conscious andunconscious and unconscious factors governing their investment

decisions that are not fully covered.

4. The study is limited to the general investment options available, not

the full scenario of the investment options has been considered.


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5. The method of convenient sampling has been used to study the

behavior, but the chosen sample might not be the true representation

of the whole universe.

6. Sometimes the respondents were not interested in survey, so they didnot find it necessary to answer, or they may provide the wrong

information just to fill the questionnaire.

7. There may be biasness due to convenience sampling.


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CHAPTER 4

TYPES OF INVESTMENT

Overview:There are many ways to invest yours savings. Of course, to decide which

investment option is suitable for you, need to know its characteristics and

why it may be suitable for a particular investment objective set by you.

Some of most important investment avenues available to investors are

following:

Bank Deposits Small Saving Schemes

Insurance

Equity Market

Mutual Funds

Dept Instruments

Gold Real Estate

Type of Investment

Investment options in Banks

The options in the bank have become a very crucial part of an investors

portfolio and also of existing banking scenario. It has lea to indulge the

banks in marketing actives for attractive the investors and procuring their

funds throw very kinds of scheme. The deposit mobilization can be true

following types of deposit account.


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1. Fixed Deposit Accounts.

Fixed deposit accounts is meant for those investors who want todeposit of alum sums of money for of fixed period that is specify at

the time of making the deposit. So these deposits generate a fixed

return to the investors. Such deposits are there for, called fixed deposit

or term deposit. A fixed deposit is repayable on the expiry of a specify

period, chosen by the depositors to suit his purpose and to enable him

to get back the money paid as and when he needs it. Fixed deposit

also gives a higher rate of interest then a saving bank account. As the

date of payment of a fixed deposit scheme is determine in advance,

the banker need not to keep more cash reserve against it and can use

amount more profitably. The RBI generally fixed the upper and lower

sailing rate of interest for the deposit and the banks are free to offer

varying interest in fixed deposit of different maturities in that limits.

Source:http://www.webindia 123 com/finance/bank/fix.htm.

b) Saving Bank Account:

A Saving Bank account (SB account) is meant to promote the habit of

saving among the people. It also facilitates safekeeping of money. In

this scheme fund is allowed to be withdrawn whenever required, with

a restriction on the number of withdrawals. Hence a savings account isa safe, convenient and affordable way to save your money. The banks

offer a reasonable rate of interest on these savings. The need of

keeping cash reserves against such deposits is comparatively larger

vis--vis the fixed deposits but smaller as against the current accounts,


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because of the restrictions of number of withdrawals. The rate of

interest payable by the banks on deposits maintained in the savings

accounts is prescribed by th reserve bank. With effective from April 1,

2003 the rate of interest on saving deposits has been reduced from 4%to 3.5% per annum.

Source:http//www.webindia 123.com/finance/banks/sb.htm

c) Recurring Deposit of Cumulative Deposite Accounts:-

A Recurring deposit account is intended to induce the habit of savings

on a regular basis as a inducement is offered in the form of

comparatively higher rate of interest. A depositor opening a recurring

deposit account is required to deposit an amount chosen by him in his

account in installments for an agreed period selected by him. On

completion of agreed period, the depositor is paid a specified amount

which represents the total amount of installments plus intrest. The

period of recurring deposits varies from bank to bank. Premature

withdrawal is also permissible but penalty jis levied. TDS is not

applicable on Recurring Deposits. Souce:

http//www.iloveindia.com/finance/bank/recurring-bank-deposits.html

d) Current Account:-

Current Account is primarily meant for businessmen, firms,

companies, public enterprises etc. that have large number of dailybanking transactions. Current Accounts are cheque operated accounts

menat neither for the purpose of earning interest nor for the purpose of

saving but only for convenience of business hence they are non-

interest bearing accounts. A current account may be operated upon


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any number of times during working day. As the banker is under the

obligation to repay these deposits on demand, they are called demand

liabilities of a banker. This account satisfies the need of funds

requirements rather than an investment option.Source: http//www.iloveindia.com/finance/bank/current-account.html.

e) Other Attractive Saving Schemes:-

Banks have introduced various attractive saving schemes, some of

which are as follows:

Re investment Plan:- This is just like the fixed deposit with the

difference that deposits are accepted for a fixed peiod ranging

between 12 and 120 monts and interest, though calculated

periodically, is payable at the time of maturity. This plan provides for

the re-investment of interest also.

Cash Certificates:- These certificates are issued with different face

values payable after specified maturity periods. The issue prices for

different maturity periods are specified in advance. e.q one can get the

cash Certificate of Rs.100 afte one year by paying its discounted value

for certain installments.

Sourcehttp//ww.fireworkszone.com/onlinebusiness/misc/best_interest

_rates_on_savings.html.

Investment Options In Small Savings Schemes:-Small savings schemes are administers through post offices. These are

ideal for small investors looking for fixed return with high safety. A

number of schemes with varying tax treatment, monthly income option


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and carrot of bonus too. The salient features of these schemes are

explained below:

Small Savings Schemes:-

Schemes Type Interest Rate Term Min-Max

Investment

Premature

withdrawal

Tax

BenefitPublic

Provident

Fund

Recurring 8% 15

Years

Min: Rs.500

Max:Rs.70,00

0

Yes U/S

80C

National

Savings

Certificate

Growth 8%

compounded

half yearly

6 years Min: Rs.100

Max:No upper

limit

No U/S

80C

Kisan

Vikas

Patra

Growth Amount

doubles in 8

years & 7

months

8 years

& 7

months

Min: Rs.100

Max:No upper

limit

Yes Nil

Post

Office

Time &

Recurring

Deposit

Fixed

Diposit

6.25%-

7.50% Pa

1-5

Years

Min: Rs.200

Max: No upper

limit

Yes Nil

Post

Office

Monthly

Income

Scheme

Recular

Income

8% Pa

payable

monthly

6

Years

Min: Rs.15,00

Max: Rs.4.5

Lac )Single)

Rs.9 Lac

(Jointly)

Yes Nil

Senior

Citizen

Regular

Income

9% pa

payable

5

Years

Min: Rs 1000

Max: Rs 15

Yea Nil


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Saving

Scheme

quarterly Lacs

a) Public Provident Fund(PPF): PPF is a great investment if you have

age on your side so that you can maximize the benefit by extending the

period of holding. The public provident Fund Scheme is a statutory

scheme of the Central Government of India. The scheme can be

opened by an individual or a minor through the guardian. The maturity

period of this Scheme is of 15 years. The minimum deposit under this

scheme is 500/- p.a. and the maximum is Rs. 70,000/- p.a. The rate of

interest provided by this scheme is 8 % compounded annually. The

facility of first withdrawal is available after the expiry of five years

from the end of the financial year in which the first investment was

made. The amount of withdrawal is restricted to 50% of the balance,

standing to the credit of the subscriber at the end of the 4 th year

immediately preceding the year of withdrawal, or the year immediatelyproceeding the year of withdrawal whichever is lower. There are also

some tax benefits provided under this scheme as deposits in PPF

qualify for rebated under section 80-C of Income Tax Act. The interest

on deposits is totally tax free.

Source:http//www.personalfn.com/tax/ppfo9.html

b) National Savings Certificate (NSC): National Savings Certificate

(NSC) is an assured return scheme, armed with powerful tax rebates

undr the Income Tax Act, 1961.


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NSC application forms are available at all post-offices. The application

can be made either in person or through an agent of small savings

schemes. Single Holder Type Certificate can be issued to an adult for

himself or on benefit of a minor. Joint A Type Certificate may beissued jointly to two adults payable to both holders jointly or to the

survivor. Joint B Type Certificate may be issued jointly to two adults

payable to either of the holders or to the survivor. NSCs are issued in

denominations of Rs 100, Rs 500, Rs 1,000, Rs 5,000 and Rs 10,000.

There is no prescribed upper limit on investment in NSCs. Interest is

payable at 8 per NSC scheme is 6 years. NSCs do not offer any scope

of premature withdrawal except on death to another or forefeiture by

pledge or by court order. However, NSCs can be transferred from one

person to another through the post office on the payment of prescribed

fee. NSCs are held physically in the form of Certificates. Deposits

made in this scheme qualify for tax benefits under Section 80C of

Income Tax Act subjent to an upper limit of Rs 100,000.

Source:http//www.personalfn.com/tax/nsc09.html

c) Kisan Vakas Patra (KVP): Kissan Vikas Patra (KVP) doubles your

money in 8 years and 7 months with the advantage of premature

withdrawal. KVP is sold through all Head Post Offices and other

authorized post offices throughout India. The Government of India has

reduced the interest rates on KVP and order post office schemes inBudget 2003-04. Consequently, the tenure of this scheme has been

increased from 7 years 8 months to 8 years and 7 months. KVP is not

meant for regular income. It is for those looking kfor a safe avenue of

investment without the pressing need for a regular source of incme.


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Any adult individual can purchase Kisan Vikas Patra (KVP) in his or

her name or jontly with another adult individual. The minimum

investment in KVP is Rs 100. Certificates are available in

deominations of Rs 100, Rs 500, Rs 1,000, Rs 5,000, Rs 10,000 andRs 50,000. A KVP is sold at face value; the maturity value is printed

on the Certificate. Although no TDS is application on the interest

income from KVP, there are no tax incentives as per the provisions of

the Income Tax Act, 1961. However, there are options for premature

encashment, subject to certain rules and loss of interest.

If the premature encashment hakes plane within a period of one

year from the date of purchase of the certificate, only the face

value of the certificate shall be payable. No interest is payable in

this case.

After the expiry of one year, but before two years and six

months from the date of the issue of the certificate, the face

value of certificate together with simple interest at the specified

rate for the completed months for which th certificate has been

held, shall be payable.

If a certificate is encased any time after expiry of two-and-a-half

years, the amount payable is a specified by the government from

time to time.

Source:http//www.personalfn.com/tax/Kisancikas09.html

Post Office Time & Recurring Deposits (POTD): You can exit a

POTD within six months of starting one without receiving any

interest and if with-drawn after one year then 2 percentage

points are deducted. In this scheme rebate under section k80-C


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is not admissible and interest income is also taxable. However,

deposits are exempt from wealth tax.

Interest payable annually but calculated quarterly at following rates:

Minimum amount of deposit under this scheme is Rs 200/- and there is no

maximum limit of amount of deposit. Account can be opened by an

individual, two adults jointly and minor through guardian. This scheme

has tenure of five years. And can be further extended for five years if so

desire. If deposits are not drawn on maturity, these are eligible to saving

account interest rate for a maximum period of two years.

Source:http//www.bajajcaptial.com/ivestment/govt-

scheme/time_deposit.php

d) Post Office Monthly Income Scheme (POMIS): the post-office

monthly income scheme (MIS) provides for monthly payment of

interest income to investors. The post-office MIS gives a return of 8

percent plus a bonus of 5 percent on maturity. However, this 5 percent

bonus is not available in case of premature withdrawals. It is meant to

provide a source of regular income on a long-term basis. It is meant for investors who want to invest a lump sum amount initially and earn

interest on a monthly basis for their livelihood. The scheme is,

therefore, a boon for retired person account can be opened by an

individual, two/three adults jointly, and a minor through a guardian but

Period Rate of InterestOne Year 6.25%Two Year 6.50%Three Year 7.25%Four Year 7.50%


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not by NRIs. The maximum investment in a post-office MIS is Rs

1500 for both single and joint accounts. The maximum investment for

a single account is Rs 4.5 lakh and Rs 9 lakh for a joint account. The

duration of the MIS is six years. Investors can withdraw money beforethree years, but at a discount of 5 percent. No such deduction will be

made if an account is closed after three years. Premature closure of the

account is permitted any time after the expiry of a period of one year

of opening the account. Facility of premature closure of account is

available after 1 year to 3 years @ 2.00% discount. Deduction of 1% if

account is closed prematurely at any time after years. The interest

income accruing from a post-office MIS is taxable whereas it is

exempt from Wealth Tax.

Source:http//www.bajajcaptial.com/ivestment/govt-

scheme/postoffice_mis.php

e) Senior Citizens Savings (SCS): This is a very safe investment scheme

issued by central govt. The tenure of this scheme is 5 years and can be

extended by another 3 years. Liquidity is available in this scheme after

one year but it proves costly as there is a penalty of 1.5% of the

amount deposited. The scheme is available for citizens above 60 years

of age; however a provision has been put in place for individuals who

have crossed 55 years of age but subject to the following conditions

that: The person has retired on superannuation or otherwise on the date

of making the investment, also the investment is made within one

month of the date of receipt of retirement benefits.


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A certificate from the employer, indicating the fact of retirement,

retirement benefits, along with period of such employment with

the employer, is attached with the application form.

The scheme offer an interest of 9% per annum. Investments in thisscheme can be made in any post office by opening an account.

The deposit amount shall be a multiple of Rs 1,000 and should not

exceed Rs 1,500,000. Investments in the scheme are eligible for

tax benefits under section 80C of Income Tax Act. The interest

income from th scheme is fully taxable kand subject to TDS (tax

deduction at source) as well.Source:http//www.bajajcaptial.com/ivestment/govt-

scheme/sr_citizens.php


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INSURANCE

Overview

Insurance is a contract between two parties whereby one party agrees to

undertake the risk of another in exchange for consideration known as

premium and promises to pay a fixed sum of money to the other pary on

happening of an uncertain event (death) or after the expiry of a certain

period in case of life insurance or to indemnify the other party on happening

of an uncertain event in case of general insurance. Insurance works on th

basic principle of risksharing. A grat advantage of insurance is that it spreadsthe risk of a few people over a large group of people exposed to risk of

similar type. Insurance is broadly classified into two parts covering different

types of risks (Source:http//www.appuonline.com/insurance):

1. Long-term (Life insurance)

2. General Insurance (Non-Life Insurance)

Life insurance is intended to secure the financial future of the nominees in

the absence of the person insured. The purpose of buying a life insurance is

to protect your dependants from any financial difficulties in your absence.

The It helps individuals in providing them with the twin benefits of insuring

themselves while at the same time acting has a compulsory savings

instrument to assist you in planning for such future needs like childrens

marriage, purchase of various household items, gold purchases or as seed

capital for starting a business.

Source:http//www.irdaindia.org/whiatslifeinsurance.htm

Life is full of dangers, but with insurance you can least ensure that you

and your dependents dont suffer. So one should try and take cover for all

insurable risks. If you are aware of the major risks and buy the right


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products, you cover quite a few bases. The major insurable risks are as

follows:

Life

Health Income

Professional Hazards

Assets

Debt Repayment

Types Of Insurance Policies:

a) Term Plans

A term plan covers you for a term of one or more years. It pays a death

benefits only if the policy holder dies during the period the insurance is in

force. Unlike other plans that come with an investment or saving

component, term plans are products that cover only your life. This mean

your dependents of nominees get the sum assured on your death. A termplan offers life cover at a very nominal cost. This is due to the fact that

term plan premiums include only mortality charges and sales and

administration expenses. There are no savings elements.

b) Money Back Plan: A money back plan aims to give you a certain some

of money at regular intervals; simultaneously it also provides you with

life cover. It is a savings plan with the added advantages of life cover and

regular cash inflow. Money back plans are especially useful in case you

need money at regular cash inflow. Money back plans are especially


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useful in case you need money at regular intervals for your childs

educations, marriage, etc.

c) Unit Linked Insurance Plans (ULIPs): ULIPs are similar totraditional insurance policies with the exception that premium amount is

invested by the insurance company in the market-linked instruments like

stocks, corporate bonds and government securities. However, investments

in ULIP should be in tune with the individuals risk appetite. ULIPS offer

flexibility to the policy holder-the policy holder can shift his money

between equity and dept in varying proportions.

d) Pension/Retirement Plans: Planning for retirement is an important

exercise for any individual. A retirement plan from a life insurance

company helps an individual insure his life for a specific sum assured. At

the same time, it helps him in accumulating a corpus, which he receives at

the times of his retirement.

e) Endowment Plans: Individuals with a low risk appetite, who want an

insurance cover, which will also give them returns on maturity could

consider buying traditional endowment plans. At maturity, a lump sum is

paid out equal to the sum assured. If death occurs during the term of the

policy them the total amount of insurance and any dividends are paid out.

Source:http//www.domain-b.com/finance/insurance/2005/20050916_types_insurance.html


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SECURITIES MARKET:

Overview

Among all the options available, securities are considered the most

challenging as well as rewarding ones. But investment in securities

requires considerable skill and expertise and carries the risk of loss if the

choice of securities is not right or they are not transacted at right time.

When compared to other investment options and have outperformed most

other forms of investments in the long term. Equities have the potential to

increase in value over time. Research studies have proved thatinvestments in some shares with a longer tenure of investment have

yielded far superior returns than any other investments. However, this

does not mean all equity investment would guarantee similar high returns.

Equities are high risk investments. One needs to study them carefully

before investing.

There are a number of factors, which affect the performance of equities ad

studying and understanding all of them on an ongoing basis, can be

challenging for most. Fear, greed and a short-term investment approach

act as hurdles that frustrate the investor from achieving his/her investment

goals. You also need to diversify your equity portfolio i.e., include more

stocks and sectors. This helps you diversify your investment risk, so even

if one stock/industry is not performing well, in your portfolio. Other

stocks/ as liquidity, safety, returns, industries should help you shore up

your portfolio.

There is a large of varieties of instruments referred to as securities in

common parlance. Different securities carry different risk-return profiles.

Generally higher risks carry higher returns and vice-versa. So, it depends


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upon risk appetite of the investor that how much risk he is writing to take.

Various options available are described in the following paragraphs and

evaluated broadly on the criteria such involvement needed to manage the

investment etc.

Overview

Among all the option available, securities are considered the most

challenging as well as rewarding ones. But investment in securities requires

considerable skill and expertise and carries the risk of loss if the choice of

securities is not right or they are not transacted at right time when compared

to other investment option and have outperformed most other forms of

investments in the long term. Equities have the potential to increase in value

over time. Research studies have proved that investment in some shares with

a longer tenure of investment have yielded far superior returns than any

other investment. However, this does not mean all equity investment would

guarantee similar high returns. Equities are high risk investment. One needs

to study them carefully before investing.

There are number of factors, which affect the performance of equities

ad studying and understanding all of them on an ongoing basis, can be

challenging for most. Fear, greed and a short-term investment approach act

as hurdles that frustrate the investor for achieving his/her investment goals.

You also need to diversify your investment risk, so even if one

stock/industry is not performing well, in your portfolio, other stock/industries should help you shore up your portfolio.

There is a large of varieties of instruments referred to as securities in

common parlance. Different securities carry different risk-return profiles.

Generally higher risks carry higher returns and vice-versa. So, it depends on


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risk appetite of the investor that how much risk he is willing to take. Various

option available are described in the following paragraphs and evaluated

broadly on the criteria such as Liquidity, Safety, Returns, Involvement

needed to manage the investment etc:

1) Equity shares- Primary Market -: Primary market refers to the market

of new issue of shares by new companies as well as existing companies.

Companies, Governments or public sector institution can obtain funding

through the sale of a new stock or bond issue. Apart from Shares, other

instruments commonly issued in the primary market are debentures,

convertible debentures, mutual funds, shares with option, etc:

2) Equity Shares- Secondary Market-: Secondary market refers to the

stock exchanges where investors can buy/sell shares that are listed on

them. Equity shares have dominated Indias stock market.

As result of significant developments in the past, particularly

computerization, online trading, dematerialization and depository

participation, regulations by SEBI, investors are now dealing with a

much more transparent and efficient secondary markets.

Equity shares yield returns in two ways: one, dividends declared by the

companies usually at the end of a year and other, the capital gains on sale

of equity shares. An equity share also represents a claim on its

proportional share in the companys assents and profits. Ownership in the

company is determined by the number of shares a person own divided bythe total number of shares outstanding. Equity shareholders collectively

own the company. They risks and enjoy the rewards of ownership.


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Liquidity of investment in equity shares depends upon the trading

volumes of the shares. If the share is actively traded, an investor can

easily sell the shares and realize the sale proceeds.

However if the share is not traded, then liquidity is constraint.Equity shares are primarily volatile instruments and carry risk element

with them. Equity share is an investment avenue for an investor who is

not risk averse. Such an investor is prepared to take the risks in order to

generate higher returns. Returns from equity shares at aggregated levels

have been historically higher than most other avenues over the long term

just with a few exception. However individual could gain or lose

depending on the companies shares they invest in. an investor needs to be

aware of the companies and their performances.

It is very important to closely monitor the Companys performance in

order to track the investment performance. An investor should also have

some basic knowledge of financials and of marked systems in order to

manage equity investment. The trends in equity marked are reflected in

the movement of the equity indices and the volume of the trading activity

MUTUAL FUNDS

Overview

A Mutual fund is a trust that pools together the savings of a number of

investors who share a common financial goal. The fund manager invests this

pool of money in securitiesranging from shares and debentures to money

marked instruments or in a mixture of equity and debt, depending upon the

objectives of the scheme. The income earned through these investments and

the capital appreciations realized are shared by its unit holders in proportion


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to the number of units owned by them. Thus a mutual fund is the most

suitable investment for the common man as it offers an opportunity to in a

diversified, professionally managed basket of securities at a relatively low

cost. Mutual fund units are issued and redeemed and by the assetManagement Company (AMC) based on the funds net asset value (NAV),

which is determined at the end of each of trading session.

Mutual funds are considered to be the best investment as on one hand it

provides good returns and on the other hand it gives us safety in comparison

to other investments avenues. Figure3.4 below describes broadly the

working of a mutual fund:-

Working of a Mutual Fund

Types of Mutual Funds

Mutual fund schemes may be classified on the basis of its structure and its

investment objective.

a) By Structure

Open-Ended Funds

Open-end mutual funds continue for unlimited period of time, investors

can join and leave the funds any time. In an open-ended fund, investors

can buy and sell units of the fund, at NAV related prices directly from the

fund. This is called an open ended fund because the pools of funds is

open foe additional sales and repurchases. Open ended funds have to

balance the interest of investors who came in, investors who go out and

investors who stay invested.


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ii) Closed-Ended Funds

A closed ended fund is pen for sale to investors for a specific period

which is specified at the start of the fund, after which further sales are

closed. It has fixed number of shares or units outstanding. Any further transaction for buying the units or repurchasing them, happen in the

secondary markets, where closed end funds are listed.

b) Growth Funds:

The aim of growth funds is to provide capital appreciation over the

medium to long-term. Such schemes normally invest a major of

investors money in equity shares with high growth potential. Growth

schemes are ideal for investors having a long-term outlook seeking

growth over a period of time.

ii) Income Funds:

The aim of income funds is to provide regular and steady income to

Investors. Such scheme generally invest in fixed income securities such

as bonds, corporate debentures and Government securities.

iii. Balance Funds:

The aim of balance funds is to provide both growth and regular income

so combines the objectives of learning current income and capital

appreciation. Such schemes periodically distribute a part of their earningand invest both in equities and fixed income securities in the proportion

indicated in their offer documents. They generally invest 40-60% in

equity and debt instruments.


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iv. Money Market Funds:

The aim of money funds is to provide easy liquidity, preservation of

capital and moderate income. These schemes generally invest in safer

money market instruments such as treasury bills, certificates of deposit,commercial paper and inter-bank money Returns on these schemes may

fluctuate depending upon the interest rates prevailing in the market.

v. Load Funds:

A Load Fund is one in which a commission is charged for entry or exit.

That is, each time you buy or sell units in fund, a commission will be

payable. Typically entry and exit loads range from 1% to 2%.

vi. No-Load Funds:

A No-Load Fund is one that does not charge a commission for entry or

exit. That is, no commission is payable on purchase or sale of units in the

fund.

C) Other Schemes:

Tax Saving Schemes :

These schemes are targeted to investors in high tax brackets because

income from these schemes is tax exempt. Investments made in Equity

Linked Savings Schemes (ELSS) and pension Schemes are allowed asdeduction u/s 88 of the Income Tax Act, 1961. The Act also provides

opportunities to investors to save capital gains u/s 54EA and 54EB by

investing in Mutual funds, provided the capital assets has been sold prior

to April 1, 2000 and the amount is invested before September 30, 2000


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Index Schemes:

Index funds attempt to replicate the performance of a particular index

such as the BSE SENEX or the NSE 50. Volatility of such schemes is in

sync with the index.

Sect oral Schemes:

These are schemes whose objectives is to invest only in the equity of

those companies existing in a specific sector. For e.q., sector based funds

like FMCG, infrastructure, Technology , Pharmaceutical etc.

Sorce:http//finace.indiamart.com/India_business_information/types_of

schemes_mutual_funds.html

Benefits of Mutual Funds:

Investing in Mutual Funds offers several benefits:

Professional Expertise: Fund managers professional expertise is

involved in case of Mutual Funds. With their mix of professional

qualification and market knowledge, they are better placed than the

average investor to understand the markets.

Simplicity : Mutual Funds are the simplest means of investing in the

stock market securities for small investors and for those investors

who have no understanding of stock market or who do not have

time or liking to actively trade stocks.

Lower Risk : the risk factor is significantly reduced as the moneygets invested in a large number of securities (diversification),

across categories and various assets classes, So, even if one scrip

were to suffer, chances are that some other scrip would do

favorable and even out the losses.


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Lower transaction Cost: When compared to direct investments in

the capital market, Mutual Funds cost less. This is due to savings

in brokerage costs, demat costs, depository costs etc.

Liquidity : Investments in Mutual Funds are completely liquid andcan be redeem end at their NAV-related price on any working day.

Transparency : You will always have access to complete

information on the value of your investment in addition to the

complete portfolio of investment, the proportion allocated to

different assets and the fund managers investment strategy.

Flexibility : Through features such as Systematic Investment Plans,

Systematic Withdrawal Plans and Divided Investment Plans, you

can systematically invest or withdraw funds according to your

needs and convenience and can also switch your money from one

plan to another.

SEBI regulated market: All Mutual Funds are registered with SEBI

and function within the provisions and regulations that protect the

interests of investors. AMFI is the supervisory body of Mutual

Funds Industry.

Return Potential: Over a medium to long term, Mutual Funds have

the potential to provide a higher return as they invest in a

diversified basket of selected sanctities.

Choice of Schemes: Mutual Funds offer a family of schemes to suit

your varying needs over a lifetime. So one can select any schemethat suits to his or her risk profilSorce:pandey I M (2007)

Financial Management Vikas publishing house Pvt. Ltd. New

Delhi.


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So prices of both markets will soon become equal. Source:Gupta S L

(2007)Financial Derivatives p-31-33, prentice hall of India

Derivatives Markets:Derivatives markets can broadly be classified into two categories as

commodity derivative market and financial derivatives market. As th

name suggest, commodity derivatives markets trade contracts for

which the underlying asset is commodity. It can be an agricultural

commodity like wheat, soybeans, rapeseed, cotton etc or precious

metals like gold, silver etc.

4. Debt Instruments:

Debt Instruments represent contract between two parties where one

party is the investor and the other party is the issuer. The debt contact

specifies the rate of interest, time of interest payment, repayment of

principal, etc. In India, the term bond is used to represent the debt

instrument issued by the central and state government and PSUS

Bonds issued by government do not have any risk of default because

govt. Will always meet obligations on its bonds. The term debentue

is used to mean debt issues from the private corporate sector, which

are not free from risk of default. The principal features of a debt

instrument are:

Maturity: refers to the date on which the principal would be

repaid;

Coupon: is the rate at which interest is calculated with

reference to the face value.


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Face value: It is also called par value. A debenture or bond

is generally issued at a face value of Rs. 100.

Redemption value: the value that a bondholder will get on

the maturity is called redemption value.

Market value: The price at which is currently traded in the

market.

Source:Pandey I M (2007) Financial Management p44, Vikas

publishing house Pvt. Ltd. New Delhi.

Types of Debt Instruments:1. Company debentures: Debentures are the debt instruments.

Companies generally issue these debentures to borrow form

debenture holders an generally offer a fixed rate of interest such

investors. Most debentures are issued at a fixed maturity. In some

cases the companies also pay a premium on maturity. Investors can

subscribe to the public issue of debentures by companies or can

buy debentures from the secondary market. Prices of debentures

are generally mush less volatile relatively to shares as these

securities generate fixed returns to the investors. Investors earn

interest and capital gain (difference between the purchase price and

the sale price or if held till the redemption, the difference between

the purchase price and the redemption price). Yields on debentures

could be higher or lower than the specified rate of interest

depending on the correlation between the face value and market

value of the securities. Liquidity in debentures in unfortunately low

in the Indian markets in view of the lack of interest in these

instruments so far. Very few debentures are actively paded on


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stock exchanges. Most of the debts are required to be rated by the

credit agencies because there is a risk of default involved in these

securities issued by companies. Rating indicates the quality of the

instrument. An indication of credit rating is given as follows.Credit Rating Symbols and what they mean:

High Investment GradesAAA Highest SafetyAA High Safety

Investment GradesA Adequate SafetyBBB Moderate SafetySpeculative GradesBB Inadequate SafetyB High Risk C Substantial Risk D In Default

CRISIL RATING SYMBOLSSource:Khan M Y & Jain P K (2006), Financial Management by Tata

Megraw Hill New Delhi.

Different Rating agencies might have different symbols then the ones given

above. An investor need not be actively involved in investment

management, except to the extent of keeping basic track of companies.

2. Public Sector and Financial Institutions Bonds:- Public sector

undertakings as well as development financial institutions issues

various bond from time to time. Most bonds offer attractive

schemes like monthly interest, quarterly interest, various

redemption options, deep discount bond options, etc. Bond prices


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are dependent on the face value of the instruments. The most

common face value is Rs.100. The central govt. of India also issues

bonds and securities. But there is no risk of default involved in

these govt. securities.

GOLD

Overview

In India, gold has always played a multi-dimensional role Apart from being

used for adornment purpose, it has also served as an asset for the investment

and also used as a hedge against inflation and currency depreciation. Gold isan asset class thats associated with safety. However, the ups and down that

the yellow metal has seen over the last few months, has made it book

similar to other marker investment assets . This is due to an unexpected

demand for gold as an investment avenue since the last couple of years.

Moreover , gold has generated phenomenal returns as an investment option

in the past three years. It has generated almost 100 per cent more than 30 per

cent absolute return in last three and one year respectively From Rs 6,300

per 10 grams in May 2005, Currently , gold is quoting at around Rs 15,000

per 10 grams in Feb 2009.

Currently, the fundamentals of gold as a commodity are also good as there is

a huge mismatch in demand and supply of this metal. The demand for gold

is increasing but from the supply side, gold mining has been stable for the

last five years at 2,500 tonnes a year, New mines that are being developed

are serving to replace current production only, rather than cause any

significant expansion in the global supply Gold, with its traditionally


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negative co- relation with other asset classes such as stocks, fixed income

securities and commodities, has made it a popular investment for portfolio

diverfication , which can be witnessed in the current scenario where

volatility in stock markets has led to sky rocketing gold prices.

An individual can invest in gold thorough various ways . The most

conventional way is to possess it in physical form. However, this kind of

investment is not only risky but also requires high carrying cost.

The other option is to invest in gold bonds or certificates issued by various

central and commercial banks. These bonds generally carry interest rates

and a lock-in period varying from three years to seven years . On maturity,

depositors can take the delivery of gold or amount equivalent depending on

their options . the other ways to invest in gold are.

Gold ETFs: Gold ETFs provided investors a means of participating in the

gold bullion market without the necessity of taking physical delivery of

gold, and to buy and sell that participation through the trading of a security

on stock exchange.

These are passively managed funds so, when gold prices move up, the ETF

appreciates and when gold prices move down, the ETF loses value.

In the last one year, almost all gold ETFs have generated similar returns to

gold bullion index.


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World gold funds: gold funds are the latest option for investing in gold.

These are mutual funds, specializing in investing in equity and equity-

related securities of gold mining companies. Since gold mining companies

are not listed on Indian stock exchanges, the gold mutual funds invest inworld gold funds that invest in gold funds that invest in gold mining

companies across the world. It would be misleading to equate investment in

a gold mining equity with direct investment in gold bullion as the

appreciation potential of a gold mining company share depends on market

expectations of the future price of gold, the costs of mining it, the likelihood

of additional gold discoveries and discoveries and several other factors.

Hence as the price of gold rises , profit of gold mining stocks rise more in

percentage terms. As supply side of gold is not increasing, existing gold

mining companies are likely to witness a significant increase in

profitability and value in the next couple of years. Hence, as long as demand

for gold rises, World gold funds are likely to be the most remunerative

option for investors.

Source: http://www.hindustantimes.com/StoryPage.aspx?section

Name=NLeter&id=35e06af0-f6eb-43fc-b924-

f7cfb107ad&Headline=Gold+as=an=investment

http://www.indianmba.com/Faculty_Column/FC418/fc418.html)

REAL ESTATEOverview

Real estate investment has been strongly taking up over other options for

domestic as well as foreign investors. The factors like change in


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demographics, increase in disposable incomes, purchasing power took on

new trends , customer- friendly banks and easier housing loans coupled

With reforms initiated by the government , made the real estate sector

emerge as one of the biggest areas of personal investment in Indian. Theboom in the sector has been so appealing that real estate has turned out to be

a convincing investment as compared to other investment vehicles such as

capital and drbt markets and bullion market . it is attracting investors by

offering A possibility of stable income yields, moderate capital

appreciation , tax structuring benefits and higher security in comparison to

other investment options. Its an investment option since it fights inflation .

As in the stock market , the prices in real estate are also driven by sentiments

.All that is required to reverse a price movement is a cgange in sentiment

(Source:http://www.indianground.com/investments/real_estate_investments.

aspx)

With the relatively larger amounts of funds required and the generaily

longer holding periods for meaningful returns, it remains an option for the

not-so-small retail investor. One should be very clear about why he wants to

invest inreal estate. It is a very good tool for wealth creation but like all

other assets, has its share of risks. Before you invest in real estate, no matter

how you do it, make sure you all aware of the pros, cons, and risks that are

involved. Remembered, not every real estate investment is going to make

you rich. Are you willing to take a risk for the chance to make a lot of money? There is no denying that real estate investing is a risk, but the

rewards are many if you succeed. Careful planning, however, can minimized

the risks. Investment in real estate could be broken into several segments

individuals who buy residences for personnel use, those who buy house to


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rent them out, and those who buy commercial or retail property for own or

for rental purposes.

Residential real estate: Residential properties, refers to property used for residing by anyone. It means the property is meant to be resided in and not

used for any other purpose like business. This is the most common form of

real estate investment as it includes the property purchased as individuals

houses. In many cases, the buyer does not have the full purchase price for a

property and must engage a lender such as a bank, finance company or

private Lender. A residential property offers some advantages like Captial

appreciation of residential property in general is very high. Secondly, loans

are available from various quarters for buying or constructing a residential

property and interest on loans for buying/constructing a residential home is

tax deductive within certain limits. Due to factors, residential property

represents the most important part of portfolio for the bulk of investors.

Commercial real estate: This property is solely used for business purposes.

Commercial real estate includes office buildings, industrial property,

medical centers, hotels, malls, retail stores, shopping centers, farm land,

multifamily housing buildings, warehouses, garages, and industrial

properties. The major advantage of investing in commercial and retail

property is that the returns are much higher compared to residential property.

Also commercial and retail properties are less volatile than residentialproperty. But you will need much higher amounts to invest in commercial

property than in residential property. Also compared to financial asset such

as shares, real estate is a highly illiquid asset. Therefore, your commercial

real estate investments should be for the long term.


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Source:http//money.outlookindia.com/article.aspx?

sid=10&cid=70&articleid=6651..http://www.hindonnet.com/fline/fl2506/stories/

20080328250612000.html

Comparison of various Investment Options: The various investment options

discussed above can be compared on the basis of certain factors like return,

safety, volatility, liquidity associated with them as under:

CHAPTER 5

DATA ANALYSIS AND INTERPRETATION

Type of

Investment

Return Safety Volatility Liquidity

Equity High Low High High

Bonds Moderate High Moderate Moderate

Co-

Debenture

Moderate Moderate Moderate Low

Bank

Deposits

Low High Low High

PPF Moderate High Low ModerateLife

Insurance

Low High Low Low

Gold Moderate High Moderate Moderate


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Demography Profiles: This survey was conducted on 100 household

investors. The respondents gave brief information about their age, sex,

income, occupation.

1. Age Groups : Total no. of respondents were classified into four agegroups. The total sample was constituted of 62 percent of

respondents in age of 20-30 and 24 percent in age group of 31-40,

while only 8 percent in 41-50 & 6 percent in above 50 age group.

Table 1: Age of the respondents:


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Age in YearsPercentage of

respondents20-30 6231-40 2441-50 8>50 6

Age of the respondents.

Sex Ratio: Of the total no. of 100 respondents surveyed. Majority of them

were male constituting 82 percent where as female constituting only 18

percent.

0 20 40 60 80

1

2

3

4

5

Percentage of respondents

Age in Years


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Table 2: Sex of the respondents.

SexPercentage of

respondents

Male 82Female 18

Sex of the respondents

Income levels: Income levels were classified into 4 levels, namely below

less than 2 lacs, 2 to 4 lacs, 4 to 6 lacs and above 6lacs.

Annual Income of the respondents.


Male

Female


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Annual

IncomeFigures in percentage

6 lac 13

Annual Income of the respondents.

Of the total respondents 41 percent were in income level of 2-4 lacs

followed by 29 percent in less than 2 lacs income level, 17 percent in 4-6lacs level and 13 percent in above 6 lacs level.

3. Occupational Structure: Sample include responses from

businessmen and a good number of service class/salaried class

which includes Govt. Employees, Chartered Accountant, Engineer,

Banks, Software Professionals, etc so as to include their perception

and awareness .

Table 4: Occupation of the respondents.

0

10

20

30

40

50

6 lac

Annual Income

Figures inpercentage


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Occupation Figures in Percentage

working class 64Businessmen 36

Occupation of the respondents:

This shows that majority of respondents were from working class

constituting 64 percent where as businessmen constituted only 36 percent of

total respondents.

4. Qualification : the respondents were also classified on the basis of their

qualification, in the following groups.

Figures in Percentage

w orking class

Businessmen


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Table 5: Qualification of the respondents.

Qualification Figures in Percentage

Matric 7Intermediate 5Graduate 43PG 34Professional 11

Figure 5: Qualification of the respondents.

This shows that

majority of respondents were will qualified, with 43 percent graduates and

34 percent post graduates in the total sample. 11 percent of the sample was

professionals and only 7 percent with matric level and 5 percent at

intermediate level.

Analysis of responses:- this section covere the analysis and interpretation of

the primary data collected through the servey.

Matric

Intermediate

Graduate

PG

Professional

Figures inPercentage

01020304050

Qualification

Figures inPercentage


44/66

Q1:- What is your practice on saving money?

To determine the saving habits of the investors, the questionnaire enquired

the respondents as about their practice of savings. The greater the inclination

of saving the more will be the funds available for investment.

Table 1: Practice on saving money:

Practice on saving money Figures in Percentage

Dono't believe in saving 2High Expenses 19Try to save 48

Always save some % 30Others 1

Q 2:- Which type of instrument are you aware of out of the following? (You

can choose multiple options).

To know about the awareness level of investors, they were asked about some

of the important investment instruments and their responses were as shown

below:

Table 2: Awareness about investment instruments.

InstrumentsPercentage of

respondentsShares 96


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Mutual Funds 82Insurance 88Post Office Schemes 90fixed Deposits 98

Govt Securities 74Real Estate 78Gold 82

Awareness about investment instruments.

Interpretation: In this figure we found that the most of the investors areaware about above investment instruments. The reason may be that all the

above investment instruments are common for household investors and other

reason may be that majority of the respondents were well qualified.

Analysis of responses: This section covers the analysis and interpretation of

the primary data collected through the survey.

Anal ysis of responses: This section cevers the analysis and interpretation of

the primary data collected through the survey.


02040

6080

100120

Share

s

Mutua

l Fun

ds

Insura

nce

Post

Office

Sche

ms

fixed D

epos

its

Govt

Secu

tiies

Real E

state

Gold

Percentage of

respondents


46/66

Q1:- What is your practice on saving money?

To determine the saving habits of the investors, the questionnaire enquired

the respondents as about their practice of savings. The greater the inclination

of saving the more will be the funds available for investment.

Table 1: Practice on saving money:

Dono't believe in saving 2High Expenses 19Try to save 48Always save some % 30Others 1


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0102030405060

Dono

't belie

ve in

savin

g

Hig h E

xpen

ses

Try to

save

Alway

s sav

e som

e %Ot

hers


Figure 1: Practice on saving money:

Interpretation : Around 48 percent of the respondents try to save from their

income, while only 30 percent of the respondent always makes an effort to

save some part of their income, as depicted in figure above. Only 2 percent

of the respondents dont believe in savings, which substantiate high

important of savings in Indian households.

Q2: Which type of instrument are you aware of out of the following?

( you can choose multiple options). mm

Table 2: Awareness about investment instruments:

Instruments Percentage of respondentsShares 96Mutual Funds 82Insurance 88


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Perecentage of respondents

020

406080

100120

Shar

e

Mutua

l Fn

Insur

anc

Post

office

Sch

e

Fixed

Dep

o

Govt.

Sec

uri

Real

Esta

Gol

Perecentage of respondents

Post office Schemes 90Fixed Deposits 98Govt. Securities 74Real Estate 78

Gold 82

Figure 2. Awareness about investment instruments.

Interpretation : In this figure we found that the most of the investors are

aware about above investment instruments. The reason may be that all the


49/66


01020304050607080

News p

ape

Maga

zine

T.V.

advertis

em

Refer

enc

Consu

ltan


above investment instruments are common for household investors and other

reason may be that majority of the respondents were well qualified.

Q3. By which source of information you come to know about particularinvestment tools?

To know about the particular source of information used by the respondent

for making investments in various tools, they were provided with the options

of various sources of information and their responses were as below.

Table 3 Source of information

Source Percentage of respondentsNews papers 44Magazines 18T.V. advertisements 22References 72Consultants 48

Figure 3: Source of information


50/66

Interpretation : The media through which the investor came to know about

the instrument is mostly the reference. There are 72 percent respondents who

invest in the instruments after getting the reference from their friends and

relatives. Financial consultants and newspapers also act as a good source of information according to the respondents.

Q4. In which of the following financial instruments have you invested ?

Respondents were asked the financial instruments in which they have

invested & most of the respondents gave multiple responses regarding this

question as shown below.

Table 4 : Investment Alternatives

Instruments Percentage of respondentsShares 32Mutual Funds 44Insurance 78Post office schemes 42Fixed Deposits 74Govt. Securities 22Real Estate 24Gold 14

Figure 4 : Investment Alternatives


51/66


010203040

5060708090

Share

s

Mutua

l Fun

ds

Insura

nce

Post

office

sche

mes

Fixed

Depo

sits

Govt.

Secur

ities

Real E

state

Gold

Percentage of

respondents

Interpretation : The investors have invested in various instruments, where

in Insurance the highest numbers of people have invested i.e. 78 percent.

And in Fixed deposits and post office schemes, it is 74 and 42 percent

respectively. 44 in mutual funds, 32 in shares and last but not the least in

real estates it is 24 percent . So more investment is made in the more safe

instruments, the reasons may be market volatility or economic crisis.

Q5 For how long are you investing in financial instruments ?

The respondents were asked as from where they have started investing in

financial instrument so as to ascertain the average period of experience of an

investor in the market.

The responses were then graphically represented in figure 5.

Table 5: Period of investment

Time period Percentage of respondents< 1 year 221to 3 year 40>3year 38


52/66

Figure 5 : Period of investment.


05

1015202530354045

< 1 year 1to 3 year >3year


Figure 5 Time Period

Interpretation : in this we studied that respondents are investing in these

instruments from a long, short or a medium time period. The people

investing from one to there years are the higher in number i.e.40 and least

22 percent from than 1 year.

Q6: How often do you invest in these financial instruments?

Respondents were asked this question to ascertain the continuity in their

investment i.e. whether they invest regularly or not.

Table 6:

Pattern of investment Percentage of


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respondents

Regularly 68

Occasionally 32

Figure 6:


Regularly

Occasionally

Interpretation : So most of the respondents are regularly investors i.e. they

believe in investments after regular intervals where as 32 percents of therespondents invest occasionally only.

Q7: What is your objective behind investment?

Investing is a conscious decision to set money aside for a long enough

periods in an avenue that suits your risk profile. The questionnaire asked the

respondents to revel their objective behind investments,

Table7: Objective behind investments


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Objective Percentage of respondentsReturn on investment 30Safety of capital 26Tax benefits 24

Retirement planning 12Hedging against inflation 2Liquidity 4Others 2

Figure 7: Objective behind investment

percentage of respondents

0

5

10

15

20

25

30

35


Objective

Figure 7: Objective

Interpretation: the research has highlighted that return o investment is

the most important factor which they consider while investing as evident

by the response wherein 30 percent of the respondents voted for the same.

However, it can secondary objective which depicts that investors give

greater emphasis to the returns and willing to adjust with safety of capital

24 percent of the respondents consider tax and 12 percent respondents

consider tax planning as their main objective behind investments where as


55/66

inflation and liquidity are among the least important factors among the

investors.

Q8: What is the horizon of time span for which are investing?

Respondents were asked about the horizon of time span for which they

are investing to know that weather they are short term investor or medium

or long term investor.

Table 8: Investment Period

Investment period Percentage of respondentsOne day to 30 days 10One month to three months 16Three months to one year 20One to three years 24More than three years 30

Figure 8: investment period


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0

5

10

15

20

25

30

One dayto 30days

Onemonth to

threemonths

Threemonthsto oneyear

One tothreeyears

Morethanthreeyears



Interpretation : The investment period for which the investors invest, is

more than three years in most of the cases, where the people investing for

the short period is less. Around 30 percent respondents were of the viewthat they made long term investment.

Q9: What percentage of your total income do you invest?

Indians generally tend to save a lot from their earnings, but invest less. A

major portion of the savings is kept as idle cash, and only a fraction of thesavings is invested. This question was asked to know that what fraction of

their income do they invest.


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0

10

20

30

40

50

60

1-5% 6-10% 11-20% >20%


Table 9: Percentage of Earnings invested

%of earnings invested Percentage of

respondents1-5% 48

6-10% 26

11-20% 18

>20% 8

Figure 9: Percentage of Earnings invested

Interpretation : The investors are investing varying amounts in the

instruments. Here we have studies that most of the respondents( 48

percent) invested upto 5 percent of their income while the people

investing 6 to 10 percent are comparatively less (26 percent) in number

further the respondents investing 11-20 percent are 18 percent & people

investing more than 20 percent are least i.e. only 8 percent of the total

respondents.


58/66


59/66


Yes

No

Interpretation : On analyzing the repose 78 percent of the persons plan

their investments while only 22 percent take investment decisions on ad hoc

basis. So it can be interpreted that most of the respondents are aware about

the importance of financial planning

Q11. Do you seek opinion from others while taking your investment

decisions?

Respondents were asked that whether they seek opinion from others while

taking their investment decisions or they independently take their decisions

Table 11

Response Percentage of respondentsYes 66No 34

Figure 11


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Interpretation : As it is clear from the figure above , most of the

respondents ( 66 percent) seek advice from others while making investment

decisions where as only 34 percent of the respondents take their investment

decisions independently.

Q12. If yes from whom do you take opinion for your investment

decisions?

The respondents were asked about from whom do they take opinion for their

investment decisions & their responses are shown as:

Table 12: Source of investment advice

Source of Investment advice Percentage of respondentsFriends/Relatives 42Broker 18Chartered accountant 6Financial Advisors 30Others 4

Figure 12 : Source of investment advice.


61/66


05

1015202530354045

Frien

ds/R

elaBr

oke

Chart

ered a

cco

Finan

cial A

dvOt

her


Interpretation : Out of those 66 respondents those see advice from others

while making investment decisions, 42 percent of these respondents prefer

friends & relative as their source of investment advice and 30 percent prefer

financial advisors. Brokers & chartered accountants are among the least

preferred ones.

Q13. Which of the following instrument is considered to be the ,fundamentally safe form investment in your opinion ?

Respondents were enquired about what they considered to be fundamentally

secure form of investment i.e. least risky investment option. The risk

perception varies from investment avenues on the basis of their opinions .

Table 13. Fundamentally safe form of investment

Instruments Percentage of respondentsBank Deposits 24PropertyLand 11Insurance 18


62/66


05

1015202530

Bank

Depo

Prop

ertyL

Insuran

Post

offic

e sch

Gol

Govt

. Secur

Mutu

al Fu Eq uit


Post office schemes 16Gold 7Govt. Securities 18Mutual Funds 4

Equity 2

Figure : 13 Fundamentally safe form of investment

Interpretation : On enquiring from the respondent about what are the

fundamental secure forms of investment ,24 percent of the respondentsfeel that investing in fixed deposits is the safest form of investment

followed by Insurance and Gov .Securities both at the second place The

least secured form of investment as revealed by respondents is

investment in equity as secondary market is subject to huge volatility

& uncertainty.

Q14. Are you satisfied with the amount of return generated by your

present investment tool ?


63/66


05

1015202530354045

High

ly sa

tis

Satis

fie

Neutr

Diss

atisfi

High

ly dis

sati


This question was asked to measure the investors level of satisfaction

with respect to his investors level of satisfaction with respect to his

investment profile.

Table 14: Satisfaction level

Satisfaction level Percentage of respondents

Highly satisfied 12

Satisfied 42

Neutral 16

Dissatisfied 22

Highly dissatisfied 8

Figure 14. Satisfaction level


64/66


Yes

No

Interpretation : the number of respondents who are highly satisfied from

the investment alternative made by them is 12 & the respondents those are

somewhat satisfied are 42. Where as the unsatisfied respondents are 22

in number & highly dissatisfied investors are 8 percent 16 percent of therespondents are neutral in their level of satisfaction .

Q15. Would you like to make4 any change in your investment option

according to current scenario?

This question was asked to find the impact current economic scenario on

the investment decisions of an investor i.e. whether he wants to shift to

some other investment tool or is satisfied with current investment .

Table 15.

Response Percentage of respondentsYes 32No 68

Figure 15.


65/66


05

1015202530

Bank

Dep

o

Prop

erty/L

Insur

an

Post

offic

e sch

Gol

Govt

. Sec

u

Mutu

al Fu

Eq uit


Interpretation : Most of the respondents (68 percent ) do not want to shift

to some other investment tool i.e. they are satisfied with their current

investments where as 32 percent of the respondents are willing to shift to

some other investment tools.

Q16. If yes, in which option would you like invest in current scenario ?

This question was asked from only those respondents who like to shift to

some other investment tool & they were asked about the option in which

they would like to invest in current scenario.

Table 16

Instruments Percentage of respondentsBank Deposits 25Property/Land 12.5Insurance 9.375Post office schemes 6.25Gold 6.25Govt. Securities 3.125Mutual Funds 21.875Equity 16.625

Figure 16.


66/66

Interpretation : Of the respondents those are unsatisfied with their current

investments and are willing to shift to some other investment tools, 25

percent of them would like to shift to bank deposits and 21.875 percent

would like to shift to mutual funds & 15.625 percent to equity .

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