Avisha Project report 2003

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Perception of Consumers Towards Investing in Share Market and Mutual Funds

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EXECUTIVE SUMMARY

Perception of Customers Preferences towards investing in

Mutual Fund and Share Trading is the topic head of the project report.In present scenario is not only confined to the selling of products,

advertisement and sales promotio but it includesconsumersatisfaction as a

whole. Marketing is a phenomenon which emphasizes in making new

customers and keeping the relations with the existing customers.

Financial products are those products which have valuesin monetary terms.

The Financial products are intangible in nature that means the customer

cannot even touch ,smell or feel it. In this manner, it becomes a challenge

for the sales personnel in financial sector to convince the customer to investin it. The sales personnel can only guarantee for the benefit that the customer

will get after a certain period of time span.

The evaluation of financial planning has been increased through decades,

which is best seen in customer rise. Now a days investment ofsaving has

assumed great importance.

According to the study of the Market,it is being observed that markets are

doing well in investments like, Mutual funds, Shares, Life Insurance etc. In

near future a proper financial planning is required to invest money in all typeof financial product because there is good potential in market to invest.The

main objective of this project is to know the Perception of Customers

Preferences towardsinvesting in Mutual Fund and Share Trading.


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INTRODUCTION

Savings form an important part of the economy of any nation. With the

savingsinvested in various options available to the people, the money acts asthe driver for growth of the country .Indian financial scene too presents a

plethora of avenues to the investors. Though certainly not the best or deepest

of markets in the world, it has reasonable options for an ordinary man to

invest hissavings.

The money you earn is partly s pent and the rest saved for meeting future

expenses. Instead of keeping the savingsidle you may like to use savingsin

order to get return on it in the future. Thisiscalled Investment.

One needs to invest to and earn return on youridle resources and generate aspecified sum of money for a specific goal in life and make a provision for

an uncertain future One of the important reasons why one needs to invest

wisely is to meet the cost of Inflation.

The cost of living issimply what it costs to buy the goods and services you

need to live. Inflation causes money to lose value because it will not buy the

same amount of a good orservice in the future asit does now or did in the

past. The sooner one startsinvesting the better. By investing early you allow

your investments more time to grow, whereby the concept ofcompoundingincreases your income, by accumulating the princi pal and the interest or

dividend earned on it, year after year. The three golden rules

for all investors are:

Invest early

Invest regularly

Invest for long term and not short termThis project will also help to understand the investors facet before investing

in any of the investment tools and thus to scrutinize the important aspects for

the investors before investing that further helped in analyzing the relation

between the features of the products and the investors requirements


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OBJECTIVES OF THE PROJECT:

The purpose of the study was to determine the saving behavior and

investment preferences of customers. Customer perception will provide away to accurately measure how the customers think about the products and

services provided by the company. Todays trying economicconditions have

forced difficult decisions for companies. Most are making conservative

decisions that reflect a survival mode in the business operations. During

these difficult times, understanding what customers on an ongoing basis.

More than ever management needs ongoing feedback from the customers,

partners and employeesin order to continue to innovate and grow. The main

objective of the project is to find out the needs of current and future

customers. For this report,customer perception and awareness level will be

measured in many important areas like:

y To understand all about different investment avenues available inIndia.

y To find out how the investors get information about the variousfinancial instrument.

y To find out the saving habits of the different customers and theamount they invest in various financial instruments.

y In which type of financial instrument they like to invest.y How long they prefer to keep their money invested.y What is the return that they expect from the investment.y What are the various factors that they consider before investing.y To find out the risk profile of the investor.y To give a recommendation to the investors that where they should

invest.

y To give a suggestion to my company where our fund lacks in themarket & how it should be rectified.


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After all as a management trainee I will try to get some

valuable knowledge from my seniors in the organization as well as

from my faculty guide which will help me in the future.

VALUE ADDITION TO THE COMPANY

This report will help the company to strengthen customer intimacy. The

report on various investment avenues available In India will help the

company in many areas like.

y It will help the company to understand the expectations the customerhave about their company from the perspective of financial

performance and corporate social responsibility.

y It will provide fresh insights which can help their business continueto flourish.

y The company can identify the particular service requirements ofdifferent types ofcustomers.

y The company can understand the problem areas.y The company can evaluate new servicesinitiatives.y The study will help in gaining a better understanding of what an

investor looks forin an investment option.y It can be used by the financial sector in designing better financial

instrument customized to suit the needs of the investor.

y It will help agents and brokersin marketing the existing instruments.y It will provide knowledge to the customer about the various financial

services provided by the company to theircustomers.

y It can help the company to understand what the requirement of thedifferent categories ofcustomersis .

This report will be developed in order to empowercompanies with detailed

primary market research needed to make well informed decisions and it will

provide independent measurement and validation of the health of

companys relationship with their customers. These are the various

advantages which will give some value addition to the company in

understanding the awareness level of the customer about the various


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investment options and what is the perception of the investors with regard to

the investments they want to make.

LIMITATIONS OF THE STUDY

The project is based upon various financial instrument that are available in

India and the perception level of the customer about these financial

instruments. For which there will be the need of information from the

customers about their knowledge of these financial products.

The various limitations of the study are:

y Total number of financial instrument in the market isso large that itneeds a lot of resources to analyze them all. There are various

companies providing these financial instruments to the public.

Handling and analyzing such a varied and diversified data needs a lot

of time and resources .

y As the project is based on secondary data, possibility of unauthorizedinformation cannot be avoided.

y Reluctance of the people to provide complete information aboutthemselvescan affect the validity of responses

y Due to time and cost constraint study will be conducted in onlyselected area of a Chandigarh and panchkula.

y The lack of knowledge in customers about the financial instrumentscan be a major limitation.


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Overview of Broking industry

The Indian broking industry is one of the oldest trading industries that has

been around even before the establishment of the BSE in 1875. Despite

passing through a number ofchanges in the post liberalization period, theindustry has found its way towardssustainable growth. With the purpose of

gaining a deeper understanding about the role of the Indian stock broking

industry in the countrys economy, we present in thissection some of the

industry insights gleaned from analysis of data received through primary

research.

For the broking industry, we started with an initial database of over 1,800

broking firms that were contacted, from which 464 responses were

received. The list was furthershort listed based on the number of terminalsand the top 210 were selected for profiling. 394 responses, that provided

more than 85% of the information sought have been included for this

analysis presented here asinsights. All the data for the study wascollected

through responses received directly from the broking firms. The insights

have been arrived at through an analysis on various parameters, pertinent to

the equity broking industry,such as region, terminal, market, branches,sub

brokers, products and growth areas.

Some key characteristics of the sample 394 firms are:

y On the basis of geographical concentration, the West region has themaximum representation of 52%. Around 24% firms are located in the

North, 13% in the South and 10% in the East

y 3% firmsstarted broking operations before 1950, 65% between 1950-1995 and 32% post 1995

y On the basis of terminals, 40% are located at Mumbai, 12% in Delhi,8% in Ahmadabad, 7% in Kolkata, 4% in Chennai and 29% are from

othercities

y From this study, we find that almost 36% firms trade in cash andderivatives and 27% are into cash markets alone. Around 20% trade in

cash, derivatives and commodities

y In the cash market, around 34% firms trade at NSE, 14% at BSE and52% trade at both exchanges. In the derivative segment, 48% trade at

NSE, 7% at BSE and 45% at both, whereas in the debt market, 31%

trade at NSE, 26% at BSE and 43% at both exchanges


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y Majority of branches are located in the North, i.e. around 40%. Westhas 31%, 24% are located in South and 5% in East

y In terms ofsub-brokers, around 55% are located in the South, 29% inWest, 11% in North and 4% in East

y Trading, IPOs and Mutual Funds are the top three products offeredwith 90% firms offering trading, 67% IPOs and 53% firms offering

mutual fund transactionsy In terms of various areas of growth, 84% firms have expressed interest in

expanding their institutional clients, 66% firms intend to increase FII clients and

43% are interested in setting up JV in India and abroady In terms of IT penetration, 62% firms have provided their website and around

94% firms have email facility

Terminals

y Almost 52% of the terminals in the sample are based in the Westernregion of India, followed by 25% in the North, 13% in the South and

10% in the East. Mumbai has got the maximum representation from

the West, Chennai from the South, New Delhi from the North and

Kolkata from the East.

y Mumbai also has got the maximum representation in having thehighest number of terminals. 40% terminals are located in Mumbai

while 12% are from Delhi, 8% from Ahmadabad, 7% from Kolkata,

4% from Chennai and 29% are from othercitiesin India.

y


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Branches & Sub-Brokers

The maximum concentration of branches is in the North, with as many as

40% of all branches located there, followed by the Western region, with

31% branches. Around 24% branches are located in the South and Eastconstitutes for 5% of the total branches of the total sample.

In case ofsub-brokers, almost 55% of them are based in the South. West

and North follow, with 30% and 11% sub-brokers respectively, whereas

East has around 4% of total sub-brokers.


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MY WORK AT TATA SECURITIES LIMITED

During the summer internship period i.e. from 2nd JUNE to 20th JULY, I have gonethrough various stages of Job role. I was basically given the work to Target variousConsumer Groups, Markets and different Organizations to whom and where thecompany can pitch its differential financial products/services as well as to create

Awareness about the company and its offerings in the regard to Promote which cancreate a Position in minds of the consumer. Moreover I was given some trainingclasses about various investments available for investment which have helped me alot in the understanding of different investment product The project has been agreat learning experience for me, at the same time it gave me enough scope

to implement my analytical ability. This project as a whole can be divided

into two parts:

y The first part gives an insight about the different investment avenuesavailable in India and its various aspects. It is purely based on

whatever I learned at TATA SECURITIES LIMITED. All the topics

have been covered in a very systematic way. The language has been

kept simple so that a layman could understand .

y The second part will consist of data and their analysis, will be collectedthrough a survey done on 60 people. Hope the research findings and

conclusions will be of use. It has also covered why people dont want to go ininvest? The advisors can take further steps to approach more and more

people and indulge them for taking their advices.

METHODOLOGY:

Source of Data:-

y Primary Data : Questionnaire, visiting organization.y

Secondary Data:

Information from the Company, Websites, journals andmagazines.

Sample Size: 30

Sampling technique : Random sampling.


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SAMPLING METHODOLOGY

Sampling Technique: Initially, a rough draft was prepared keeping in mind the objective

of the research.

A pilot study was done in order to know the accuracy of the Questionnaire. The final Questionnairewas arrived only after certain important changes were done. Convenience sampling technique will

be used for collecting the data from the TATA SECURITIES LIMITED customers. The consumers

are selected by the convenience sampling method. The selection of units from the

population based on their easy Availability and accessibility to the researcher is known

asconvenience sampling. Convenience sampling is at its best in surveys dealing with an

exploratory purpose for generating ideas and hypothesis.

Sampling Unit:

The respondants who were asked to fill out questionnaires are the sampling units. These comprise

of employees of MNCs, Govt. Employees, Self Employeds and existing customers of DIFFERENT

EQUITY BROKING FIRMS.

Sample size:

The sample size was restricted to only 30, which comprised of mainly peoples from

different regions of Chandigarh , mohali, panchkula due to time constraints.

Sampling area:

The area of the research was Chandigarh, PANCHKULA

The project workcan only be complete after:

Analyzing the data

Referring books and gathering more relevant information from the internet.

Drawing detailed and careful inferences from the analysis.


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Data CollectionQuestioning & observing are the two basic methods of collecting primary

data. Questionnaire studies are more relevant than observation studies

Importance of Questionnaire

When information is to be collected by asking questions to people who may have the

desired data, a standardized form called questionnaire is prepared which helps to

bring t he data as such required for the research work. The questionnaire is a list of

questions to be asked to the respondents. Each question is worded exactly as it is to

be asked & the questions are listed in an established sequence. Spaces in which to

record answers are provided in questionnaire.


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TATA SECURITIES LIMITED- A BRIEF PROFILE

Tata Securities Limited (TSL) is a wholly owned subsidiary of Tata Capital.

Tata Securities holds membershi p on the Bombay Stock Exchange (BSE)

and the National Stock Exchange(NSE). TSL offers both institutional andretail clients, quality products and services like Equity Trading, IPOs and

Mutual Funds.

Tata Securities Limited has been engaged in retail and institutional

distribution and broking. TSL distributes third- party investment products

and offersstock broking services of buying,selling or dealing in securities,

including futures and options, in its capacity as a member of the Bombay

Stock Exchange and the National Stock Exchange.TSL is also a depository

participant.

Tata Securities has a team forinstitutional and retail research and employed

more than 400 people. Except from it, it also provides the portfolio

management services(PMS) under the wealth management business of the

company.

Broking business requires three ingredients. Strong Brand, Distribution

network and the IT backbone. This are the aspects which the management

believes works for the Tata Securities.

Presently Tata Securities has 50 branches country-wide, which is

distributing third party mutual funds, fixed deposits, etc. forinvestors.

TATA SECURITIES LIMITED


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y Tata Securities Limited was established in 2007.

y Tata Securities Limited (TSL) is the Equity Broking arm of TataCapital Limited.

y It is the 100% subsidiary of Tata Capital Limited

y It is the Corporate Member of NSE (National Stock Exchange) andBSE (Bombay Stock Exchange)

y TSL offers specialized Broking Services in Equity and DerivativeSegment for retail and institutional clients

A Depository Participant of:

1. Central Depository Services (India) Limited(CDSL)2.National Securites Depository Limited.

Tata Securities Limited is providing two kinds ofservices :-

A. Retail Broking : Tata Securities is offering a 3- in -1 account whichbrings to itscustomers a seamless platform for trading in Equities and

investing in Mutual Funds and IPOs at very attractive brokerage rates.

B. Institutional Broking : Tata Securities provides a suite of products andservices to Institutional clients supported with comprehensive

research on companies and theirsectors.


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Tata Capital Limited is a subsidiary of Tata Sons

Limited and is registered with the Reserve Bank of India(RBI) as a

systematically important Non-Deposit Accepting Non-Banking Financial

Company. Tata Capital caters to the need of the diverse needs of retail,

corporate and institutional customers, directly or indirectly through its

subsidiaries through various areas of business namely Consumer Finance

and advisory services.

Tata Capital caters to the need of the diverse needs of retail,corporate and

institutional customers, directly orindirectly through itssubsidiaries through

various areas of business namely Consumer Finance and advisory services.

Tata Capital marks the entry of the Tata Group into a host of new financial

services. The Company caters to multiple needs of the retail and institutionalcustomer- truly a one-stop shop, be it investment or finance

Tata Capital brings the trust and the expertise of the Tata Group into the

world of financial standards. The Company is driven by a strong focus on

value creation forstakeholders and the society at large.

AREAS OF BUSINESS

Tata Capital has financial products and the services in the following seven

sectors:

Distribution and Broking: Third party investment products, equityand commodity trading for retail and institutional investors.

Retail finance: Passenger and commercial vehicle loans,used car loans, credit cards and consumer durable loans for retail

customers.

Commercial Finance: Financial products for SMEs and projectfinance


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Held higher level positions in companies like Hindustan Unilever, Unilever

Arabia, Brook Bond Li pton and is currently serves as an independent

director in variouscapacities.

Mr PP Kadle- Managing Director

An Honors Graduate in Commerce and Accountancy

Member of Institute of Chartered Accountants of India, The Institute of Cost

and Works Accountants of India, and the Institute of Companies Secretaries

of India

Held positions in the fields of management, accountancy, law, finance and

treasury.


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MILESTONES ACHIEVED BY THE COMPANY


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PROJECT OVERVIEW

In todays dynamicinvestment world, the options for an investor are in largeno. A smart investor considers many factors while making an investment

decision. Different investment options have different degrees of risks,

different pattern of cash outflow, and different ways of paying back of

returns and above all suitability for different income pattern ofinvestor.

We can divide investment options in two categories. They are mainly,real

investments andfinancial investments.Real investments include investments

made to buy house, car or machinery which are real assets. Financial

investments includeinvesting fundsin buying some shares, mutual funds orbonds which are financialassets.

In a more generalized form there are the below mentioned investment

options available.

PERSONAL INVESTMENTS:

These are a type of financial investments wherein we can save our money as

savings in a bank and get interest on the invested amount. These are very

general form ofinvestments.

STOCKMARKETINVESTMENTS:

In these form of investments we can invest our money in stocks and earn

profits or make losses depending on the stock's performance in the market. It

is a complex form of investment wherein we are continuously required to

keep an eye on the market performance.

REAL ESTATEINVESTMENTS:

These are a type of property investments wherein we can invest our money

in buying a house or a piece of land. We can use the real estate for personal

residential or commercial use or can rent or lease it for commercial or

residential purposes. Here we get a good profit margin and at the same time

our assets are increased.


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BUSINESSINVESTMENTS:

We can invest our money in our own business instead of investing it withsome othersource. Thisis a good method ofinvesting our money and at the

same time setting something for ourselves.

There are many companies and advisors to guide people regarding the

selection of a particular investment option. They analyze the market

situation and refer a suitable investment option for people. People can take

their help if they want to reduce their risks and increase their profits. There

are even many investment brokers and investment analysts to help people

with the process ofinvestment.


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as the safest avenue wherein a person deposits money and earnsinterest on

it. The two main modes ofinvestment in banks,savings

accounts and fixed deposits have been effectively used by one and all.

However, today the interest rate structure in the country is headed

southwards, keeping in line with global trends. With the banks offering just

above in their fixed deposits for one year, the yields have come down

substantially in recent times. Add to this, inflammatory pressure in the

economy and we have a position where the savings are not earning. The

inflation iscreeping up almost 8% at times, this means the value of money

saved goes down instead of going up. This effectively mars any chance of

gaining investments from the banks.

Banks in India can be categorized into non-scheduled banks and scheduled

banks. Scheduled banks constitute of commercial banks and co-operative

banks. There are about 67,000 branches of Scheduled banks spread acrossIndia. During the first phase of financial reforms, there was a nationalization

of 14 major banksin 1969.

As far as the present scenario is concerned the banking industry is in a

transition phase. The Public Sector Banks (PSBs), which are the foundation

of the Indian Banking system account for more than 78 per cent of total

banking industry assets. On the other hand the Private Sector Banks in

India is witnessing immense progress. They are leadersin Internet banking,

mobile banking, phone banking, ATMs. On the other hand the Public Sector

Banks are still facing the problem of unhappy employees. There has been a

decrease of 20 percent in the employee strength of the private sectorin the

wake of the Voluntary Retirement Schemes (VRS).

st of the banks and their fixed deposit rates:

ABN AMRO Bank 5-6.75%

Allahabad Bank 5.5-6%

Andhra Bank 5.5-6%

Axis Bank 6.5-7.3%Bank of Baroda 6-7%

Bank of India 6.75-7%

Barclays Bank 5-5.5%

Canara Bank 7-7.5%

Citi Bank 4.25-4.5%


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Corporation Bank 5-5.5%

Dena Bank 6.75-7.5%

Deutsche Bank 3-4.5%

Dhanalakshmi Bank 6.5-8%

Federal Bank 6.5-7.5%LiHDFC Bank 5.5-7%

Hongkong Sanghai 8-8.75%

Banking Corp. Ltd.

ICICI Bank 25-7.5%

IDBI Bank 7-7.75%

Indian Overseas 6-7.5%

Bank

Indussind Bank 7-8.25%

ING Vysya Bank 5.75-7.75%

Jammu and Kashmir

Bank 5.5-6%

Karnataka Bank 7-8%

Karur Vysya Bank 7-8.25%

Kotak Mahindra Bank 6-7%

Oriental Bank of

Commerce 5.5-6%

Punjab National

Bank 5-6.5%

SBI 6.25-7%

Standard Chartered Bank 4.5-7.25%

State Bank Of B&J 6.75-7.5%

State Bank of Hyderabad 6.5-7.5%

State Bank of Indore 6.75-7.5%

State Bank of Mysore 6.5-7.25%

State Bank of Travancore 4.25-5.75%

Syndicate Bank 7-7.5%

UCO Bank 6.5-7%

Union Bank of India 5.50%United Bank Of India 6.5-7.5%

Vi jaya Bank 5.5-6%

YES Bank 7.25-7.75%

Source: various banks websites


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2. Fixed offered by Post Offices deposits:

Just like banks, post officesin India have a wide network. Spread across the

nation, they offer financial assistance as well as serving the basicrequirements of communication. Among all saving options, Post office

schemes have been offering the highest rates. Added to it is the fact that the

investments are safe with the department being a Government of India

entity. So the two basic and most sought features, those of return safety and

quantum of returns were being handsomely taken care of.

Though certainly current market position is not the most efficient systemsin

terms ofservice standards and liquidity; these have still managed to attract

the attention of small, retail investors. However with the government

investing itsintention of reducing the interest ratesin small savings options,this avenue is expected to lose some of the investors. Public Provident Funds

act as options to save for the post retirement period for most people and have

been considered good option largely due to the fact that returns were higher

than most other options and also helped people gain from tax benefits under

various sections. This option too is likely to lose some of its sheen on

account of reduction in the rates offered.

3. Company fixed deposits:

Another oft-used route to invest has been the fixed deposit schemes floated

by companies. Companies have used fixed deposit schemes as a means of

mobilizing funds for their options and have paid interest on them. The safer

a company is rated, the lesser the return offered has been the thumb rule.

However, there are several potential roadblocks are there.

Firstly, of all the danger of financial positions of the company not being

understood by the investor lurks. The investors rely on intermediaries who

more often than not, dont reveal the entire truth.

Secondly, liquidity is a major problem with the amount being received

months after the due dates. Premature redemption is generally not

entertained without cuts in the returns offered and though they present a

reasonable option to counterinterest rate risk (especially when the economy

is headed for a low interest regime), the safety of amount has been found


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lacking. Many cases like the Kuber Group and DCM Group fiascoes have

resulted in low confidence in this option.


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EQUITY SHARES

ABOUT SHARES:-

At the most basic level, stock (often referred to as shares) is ownership, or equity, ina company. Investors buy stock in the form of shares, which represent a portion of acompany's assets (capital) and earnings (dividends) .

As a shareholder, the extent of your ownership (your stake) in a company dependson the number of shares you own in relation to the total number of shares availableFor example, if you buy 1000 shares of stock in a company that has issued a total of100,000 shares, you own one per cent of the company. While one per cent seems

like a small holding, very few private investors are able to accumulate a shareholdingof that size in publicly quoted companies, many of which have a market valuerunning into billions of pounds. Your stake may authorize you to vote at thecompany's annual general meeting, where shareholders usually receive one vote pershare.

In theory, every stockholder, no matter how small their stake, can exercisesome influence over company management at the annual general meeting. In reality,however, most private investors' stakes are insignificant. Management policy is farmore likely to be influenced by the votes of large institutional investors such aspension funds.

A)STOCKS SYMBOLS:-A stock symbol, or 'Epic' symbol, is the standard abbreviation of a stock's name. Youcan find stock symbols wherever stock performance information is published - forexample, newspaper stock listings and investment websites. Company names alsohave abbreviations called ticker symbols. However, it's worth remembering thatthese may vary at the different exchanges where the company is quoted.

b)PERFORMANCE INDICATORS:-

Here is a list of the standard performance indicators

Performance Indicator


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Definition

Closing price

The last price at which the stock was bought orsold.

High and low

The highest and lowest price of the stock from the previous trading day .

52 week range

The highest and lowest price over the previous 52 weeks .

Volume

The amount ofshares traded during the previous trading day High and low .

Net change

The difference between the closing price on the last trading day and the

closing price on the trading day prior to the last .

THE STOCK EXCHANGES:-

A marketplace in which to buy orsell something makes life a lot easier. The

same applies to stocks. A stock exchange is an organization that provides a

market place in which investors and borrowers trade stocks. Firstly, the

stock exchange is a market forissuers who want to raise equity capital by

selling shares to investorsin an Initial Public Offering (IPO). The stock

exchange is also a market forinvestors who can buy and sell shares at anytime.

a)Trading shares on the stock exchange:As an investor in the INDIA, you can't buy or sell shares on a stock

exchange yourself. You need to place your order with a stock exchange

member firm (a stockbroker) who will then execute the order on your behalf.

The NSE AND BSE are the leading stock exchange in the INDIA. Trading

is done through computerized systems.

b) The Trading process:-

If you decide to buy orsell yourshares, you need to contact a stockbroker

who will buy orsell the shares on your behalf. After receiving your order,

the stockbroker will input the order on the SETS or SEAQ system to match


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your order with that of another buyer orseller. Details of the trade are

transmitted electronically to the stockbroker who is responsible forsettling

the trade. You will then receive confirmation of the deal.

c) Types ofshares available on the stock exchange:-

You cannot trade all stocks on the stock exchange. To be listed on a stock

exchange, a stock must meet the listing requirements laid down by that

exchange in its approval process. Each exchange has its own listing

requirements, and some exchanges are more particular than others. It is

possible for a stock to be listed on more than one exchange. This is known

as a dual listing.

Why do so many people invest in shares?

Simply put, you want to invest in order to create wealth. While investing is

relatively painless,its rewards are plentiful. To understand why you need to

invest, you need to realize that you lose when you just save and do not

invest. That is because the value of the rupee decreases every year due to

inflation. Historically shares have outperformed all the other investment

instruments and given the maximum returns in the long run. In the twenty-

five year period of 1980-2005 while the other instruments have barely

managed to generate returns at a rate higher than the inflation rate (7.10%),

on an average shares have given returns of about 17% in a year and that does

not even take into account the dividend income from them. Were we to

factor in the dividend income as well, the shares would have given even

higher returns during the same period.

[Inflation: general rise in prices and wages caused by an increase in the

money supply and demand for goods, and resulting in a fall in the value of

money. Inflation occurs when most prices rise by some degree across the

economy.]

Investment options Returns per annum

Stock market 17

Bank fixed deposits 9%


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Gold 5.7%

Advantages of investing in shares:

There are lots of advantages of investment in share market. Some of these

are:

Dividend income: investments in shares are attractive as much for theappreciation in the share prices as for the dividends theircompanies pay out.

Tax advantages:shares appear as the best investment option if you alsoconsider the unbeatable tax benefits that they offer. First, the dividend

income is tax-free in the hands ofinvestors. Second, you are required to pay

only a 10% short term capital gains tax on the profits made from investments

in shares, if you book your profits within a year of making the purchase.

Third, you don't need to pay any long term capital gains tax on the profitsif

you sell the shares after holding them for a period of one year. The capital

gains tax rate is much higher for otherinvestment instruments: a 30% short-

term capital gains tax (assuming that you fall in the 30% tax bracket) and a

10% long-term capital gains tax.

Easy liquidity:sharescan also be made liquid anytime from anywhere (onsharekhan.com you can sell a share at the click of a mouse from anywhere inthe world) and the gains can be realized in just two working days.

Considering the high returns, the tax advantages and the highly liquid nature,

shares are the best investment option to create wealth.

How people earn from the investment in shares?

Sharescan give us returnsin two forms:

A. Appreciation in share prices: You buy shares with the belief thattheir price will increase and that when this happens you will be able to sell

off yourshares and earn profit. For example,if you bought a share for Rs100

three years ago and it is

Rs500 today, then you have earned Rs400 in three years.


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B. Dividend:when a company makes profits,it can choose to share part ofdividend of 25%. Then if the face value of its share is Rs10 you will get

Rs2.50 for every share you own of that company,irrespective of the market

price. In itself this might not be much, but over a longer period of time orif

you have a lot ofshares, you could earn quite a bit from the dividend itself.The best thing about dividends is that they are tax-free in the hands of

investors. Dividend yield stocks are known to give returns higher than fixed

deposits [dividend yield = (dividend pershare / market price of the share) x

100].its profits with itsshareholders by paying out dividend. This dividend

is paid as a percentage of the face value of the share. For example, a

company may declare a

What are the expenses during transaction?

Every share transaction attracts some tax or the other. Some of the ma in

expenses are as follows.

Capital gains tax: If you purchase a share and sell it at a price higher than

the purchase price and if this sale is within a year of the purchase, then a

10% capital gains tax is levied on the profit that you make. For example,if

you bought a share for Rs100 on January 1, 2005 and sold it for Rs150 on

July 1, 2005, then you have to pay a tax of 10% on the Rs50 profit that you

make. If you sell after a year of purchase, there is no tax on the long-term

gains.

Securities transaction tax:Securities transaction tax (STT) is levied bythe government on every transaction you do on a stock exchange. You dont

have to pay thisseparately; itscollected by your broker. As per the Union

Budget 2005 the STT will be 0.10% on delivery-based transactions and

0.02% on intra-day transactions.

Brokerage:Brokers get a commission on every trade that they do for you.This commission varies from broker to broker; at sharekhan.com the

brokerage is 0.5% for delivery-based transactions and 0.10% for intraday

transactions. On the brokerage amount you are required to pay a service tax

to the government (to be collected by the broker). The brokerage varies

depending on the service that the broker provides you. Some brokers,such


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as Share khan, offeritsclients regular updates on companies, multiple means

to transact and customerservice support.

Depository fees:Since most of the shares exist in a dematerialized form,

every time you buy or sell shares the transactions are being noted by yourDP. The DPs normally levy a charge which is an annual charge or a charge

on each transaction.

Risks ---the only disadvantage in investing in shares:

There are two types of risk associated with this kind ofinvestment: company

specific riskand market risk.

Set of risks that deals with a company and its sector are referred to as

company

spe

cific

ris

k.E

xamples ofcompany

spe

cific

ris

k: badmanagement, bad marketing strategies, sector disturbances that have an

impact on industry etc. External factors (economic, global factors) that affect

the market as a whole are referred to as market risk.

Examples of market risk: political instability, high inflation, rupee

depreciation, rising interest rates, global incidents like wars and disasters

that throttle the nation's economy etc.

How company specific risk can be identified?

With careful scrutiny and proper homework,it might be easy to identify andbe forewarned of the risks a company may be carrying. Specifically check

out for the mergers and acquisitions that do not have a real synergy or are a

nightmare after reconciliation (A O L - Time Warner, Hewlett Packard-

Compaq). Also issuspicious of diversifications that do not really add value

to a company's core offering. A third kind of risk would be with the

companies that have bet their stakes on a single product offering and are

high on debt. Likewise companies that depend on research could be prone to

higher risk,if the research doesn't come to fruition.

How to identify sector driven risk?

Ifsteel prices rise, auto companies get affected. If low cost Chinese products

invade the country's market, then local fast moving consumer goods

companies might find no takers for their products. The changing nature of


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5. Blue-chips are safe bets

Blue-chip companies are there because they have done well in the past and

have a high market capitalization. It is a likely guess that they will maintaintheir track record and give you higher returns even in future. Therefore

invest in companies that have a good track record.

6.Slow and steady stream of investments

Set aside a certain portion of your earnings every month and invest that sum

in shares irrespective of the market conditions. This way, over a period of

time you can amass a substantial number of shares of the stocks in your

portfolio.

7. Think portfolio

Don't put all your earningsin a single stock. Try to have a diverse portfolio

of stocks. This way even if one stock doesn't do well, you are still well

protected. Also invest acrosssectors,since any problem in one sector would

affect all stocksin the sector. As a thumb rule,if you have investments of up

to Rs50, 000 invest in two to three stocks. For about Rs150, 000 invest in

three to five stocks, for around Rs500, 000 have five to seven stocks and

around ten stocks for higher amounts.

8. Dont invest all your savings

Always maintain a core set of reserves. You should never touch these

reserves for investing, so that even in the worst case you still have some

money. Typically these reservesshould be yoursalary of about six months.

9. be level-headed

Invest wisely, don't get swayed by rumors and allow Share khan to be your

guide at all times. Investment success won't happen overnight, so avoid

overreacting to short term market swings.


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accordingly. Each unit of any scheme represents the proportion of pool

owned by the unit holder (investor).

Mutual Funds in India are financial instruments. These funds are collective

investments which gather money from different investors to invest in stocks,

short term money market financial instruments, bonds and other securities

and distri bute the proceeds as dividends. The Mutual Funds in India are

handled by Fund Managers, also referred as the portfolio managers. The

Securities Exchange Board of India regulates the Mutual Funds In India. The

share value of the Mutual Funds in India is known as net asset value per

share (NAV). The NAV is calculated on the total amount of the Mutual

Funds in India, by dividing it with the number of shares issued and

outstanding shares on daily basis.

Mutual funds in India advantages:

y The Mutual Funds in India offer flexibility by means of dividendreinvestment,systematic investment plans and systematic withdrawal

plans.

Mutual funds:

y These funds are available in small units,so they are affordable to thesmall investors.

y The fees charged for to the custodial, brokerage and others servicesare very low in case of Mutual Fundsin India.y These funds have the option of redeeming or withdrawing money at

any point of time.

y The Mutual Funds in India have low risk as it is managedprofessionally.

y Like most developed and developing countries the mutual fund culthas been catching on in India.

The important reasons for thisinteresting occurrence are:

Mutual funds make it easy and lesscostly forinvestors to satisfy their need

forcapital growth,income and/orincome preservation.

Mutual fund brings the benefits of diversification and money management to

the individual investor, providing an opportunity for financial success that

was once available only to a select few. Understand a Mutual fund is easy as

it'ssuch a straightforward concept. A mutual fund is a company that pools


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the money of many investors, its shareholders to invest in a variety of

different securities.

Investments may be in stocks, bonds, money market securities or some

combination of these.

For the individual investor, mutual funds propose the benefit of having

someone ESE manage your investments and diversify your money over

many different securities that may not be available or affordable to you

otherwise. A mutual fund, by its very nature, is diversified -- its assets are

invested in many different securities. Beyond that, there are many different

types of mutual funds with different objectives and levels of growth

potential, furthering your odds to diversify. Investing in mutual has various

benefits, which makesit an ideal investment .

Professional investment management:

One of the primary benefits of mutual fundsis that an investor has access to

professional management. A good investment manageriscertainly worth the

fees you will pay. Good mutual fund managers with an excellent research

team can do a better job of monitoring the companies they have chosen to

invest in than you can, unless you have time to s pend on researching the

companies you select for your portfolio. That is because Mutual funds hire

full-time, high-level investment professionals. Fundscan afford to do so as

they manage large pools of money. The managers have real-time access to

crucial market information and are able to execute trades on the largest andmost cost-effective scale. When you buy a mutual fund, the primary asset

you are buying is the manager, who will be controlling which assets are

chosen to meet the funds' stated investment objectives.

Diversification:

A crucial element in investing is asset allocation. It plays a very big part in

the success of any portfolio. However, small investors do not have enough

money to properly allocate their assets. By pooling your funds with others,

you can quickly benefit from greater diversification. Mutual fundsinvest ina broad range ofsecurities. This limitsinvestment risk by reducing the effect

of a possi ble decline in the value of any one security. Mutual fund unit-

holderscan benefit from diversification techniques usually available only to

investors wealthy enough to buy significant positions in a wide variety of

securities.


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Low Cost:

A mutual fund let's you participate in a diversified portfolio for as little as

Rs.5, 000, and sometimes less.

Convenience and Flexibility:

Investing in mutual funds hasits own convenience. While you own just one

security rather than many, you still enjoy the benefits of a diversified

portfolio and a wide range ofservices. Fund managers decide what securities

to trade collect the interest payments and see that your dividends on

portfolio securities are received and your rights exercised. It also uses the

services of a high quality custodian and registrar. Another big advantage is

that you can move your funds easily from one fund to another within a

mutual fund family.

Liquidity:

In open-ended schemes, you can get your money back promptly at net asset

value related prices.

Transparency:

Regulations for mutual funds have made the industry very transparent. You

can track the investments that have been made on your behalf and the

specific investments made by the mutual fund scheme to see where your

money is going. In addition to this, you get regularinformation on the value

of yourinvestment.

Variety:

There is no shortage of variety when investing in mutual funds. You can find

a mutual fund that matches just about any investing strategy you select.There are funds that focus on blue-chip stocks, technology stocks, bonds or a

mix ofstocks and bonds. The greatest challenge can be sorting through the

variety and picking the best for you.

Mutual fund risks:


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Having understood the basics of mutual funds the next step is to build a

successful investment portfolio. Before you can begin to build a portfolio,

one should understand some other elements of mutual fund investing and

how they can affect the potential value of your investments over the years.

The first thing that has to be kept in mind is that when you invest in mutual

funds, there is no guarantee that you will end up with more money when you

withdraw yourinvestment than what you started out with.

That is the potential of loss is always there. Even so, the opportunity for

investment growth that is possible through investments in mutual funds far

exceeds that concern for most investors. Here's why.

At the cornerstone ofinvesting is the basic principal that the greater the risk

you take, the greater the potential reward. Risk then, refers to the volatility --

the up and down activity in the markets and individual issues that occursconstantly over time. This volatility can be caused by a number of factors --

interest rate changes, inflation or general economic conditions. It is this

variability, uncertainty and potential for loss, that causesinvestors to worry.

We all fear the possibility that a stock we invest in will fall substantially.

Different types of mutual funds have different levels of volatility or potential

price change, and those with the greaterchance of losing value are also the

funds that can produce the greater returns for you over time. You might find

it helpful to remember that all financial investments will fluctuate. There are

very few perfectly safe havens and those simply don't pay enough to beat

inflation over the long run.

Number of available options:

Diversification

Professional Management

Potential of returns

Beside these important features, mutual funds also offer several other key

traits.Important among them are:

1. Well Regulated

2. Transparency

3. Flexible, Affordable and a Low Cost affair


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Structure of the Indian mutual fund industry:

The Indian mutual fund industry is dominated by the Unit Trust of India,

which has a total corpus of Rs. 700bn collected from more than 20 million

investors. The UTI has many schemesin all categoriesi.e. equity, balanced,

income etc with something open ended and some being closed ended. The

unit scheme 1964 commonly referred to as US 64, which is a balanced fund,

is the biggest scheme with a corpus of about Rs. 200bn. UTI was floated by

financial institution and is govern by a special act of parliament. Most ofits

investors believe that the UTI is government owned and controlled, which,

while legally uncorrected,is true for all practical purposes.

Recent trends in mutual fund industry:

The most important trend in the mutual fund industry is the aggressive

expansion of the foreign owned mutual fund companies and the decline of

the companies floated by nationalized banks and smaller private sector

players. Many nationalized banks got into the mutual fund business in the

early nineties and got off to a good start due to the stock market boom

prevailing them. These banks did not really understand the mutual fund

business and they just viewed it as another kind of banking activity. Few

hired specialized staff and generally chose to transferstaff from the parent

organizations.The performance of most of the schemes floated by these funds was not

good. Some schemes had offered guaranteed returns and their parent

organizations had to bail out these AMCs by paying large amounts of money

as the difference between the guaranteed and actual returns. The service

levels were also very bad. Most of these AMCs have not been to retain staff,

float new schemes etc, and it is doubtful whether, barring a few exceptions,

they have serious plans ofcontinuing the activity in a major way.

The foreign owned companies have deep pockets and have come in here

with the expectation of a long haul. They can be credited with introducingmany new practicessuch as new product innovation,sharp Improvement in

service standards and disclosure, usage of technology, broker education and

support etc. In fact, they have forced the industry to upgrade itself and

service levels of organizations like UTI have improved dramatically in the

last few yearsin response to the competition provided by these.


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Schemes of a Mutual Fund:

The asset management company shall launch no scheme unless the trustees

approve such scheme and a copy of the offer document has been filed with

the Board. Every mutual fund shall along with the offer document of each scheme pay

filing fees.

The offer document shall contain disclosures which are adequate in order

to enable the investors to make informed investment decision including the

disclosure on maximum investments proposed to be made by the scheme in

the listed securities of the group companies of the sponsor a close-ended

scheme shall be fully redeemed at the end of the maturity period. Unless a

majority of the unit holders otherwise decide for its rollover by passing a

resolution.

Rules Regarding Advertisements:

The offer document and advertisement materialsshall not be misleading or

contain any statement or opinion, which are incorrect or false.

Investment Objectives and Valuation Policies:

The price at which the units may be subscri bed orsold and the price at

which such units may at any time be repurchased by the mutual fund shall bemade an available to the investors.

Restrictions on Investments:

A mutual fund scheme shall not invest more than 15% ofits NAV in debt

instrument issued by a single issuer, which are rated not below investment

grade by a credit rating agency authorized to carry out such activity under


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COMMODITIES

A commodity is a normal physical product used by everyday people during

the course of their lives, or metals that are used in production or as a


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traditional store of wealth and a hedge against inflation. For example, these

commodities include grainssuch as wheat,corn and rice or metalssuch as

copper, gold and silver. The full list ofcommodity marketsis numerous and

too detailed. The best way to trade the commodity marketsis by buying and

selling futures contracts on local and international exchanges. Tradingfuturesis easy, and can be accessed by using the services of any full or on-

line futures brokerage service. Traditionally, there is an expectation when

trading commodity futures of achieving higher returnscompared to shares or

real estate,so successful investorscan expect much higher returnscompared

to more conventional investment products.

The process of trading commodities, as mentioned above, must be facilitated

by the use of trading liquid, exchangeable, and standardized futures

contracts, as it is not practical to trade the physical commodities. Futures

contracts give the investor ease of use and the ability to buy orsell without

delay. A futurescontract is used to buy orsell a fixed quantity and quality of

an underlying commodity, at a fixed date and price in the future. Futures

contractscan be broken by simply offsetting the transaction. For example,if

you buy one futurescontract to open then you sell one futurescontract to

close that market position.

The execution method of trading futures contracts is similar to tradingphysical shares, but futurescontracts have an expiry date and are deliverable

.Futures contracts have an expiry date and need to be occasionally rolled

over from the current contract month to the following contract month.

The reason is because the biggest advantage to trading commodity futures,

for the private investoris the opportunity to legally short-sell these markets.

Short-selling is the ability to sell commodity futures creating an open

position in the expectation to buy-back at a later time to profit from a fall in

the market. If you wish to trade the up-side ofcommodity futures, then it

will simply be a buy-to-open and sell-to- close set of transactionssimilar to

share trading.


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The commodity markets will always produce rising of falling trends, and

with the abundance of information and trading opportunities available there

is no reason for any investor to exclusively trade the share market when

there is potential profits from trading commodity futures .The increased use

of commodity trading vehicles in investment management has ledpractitioners to create investable commodity indices and products that offer

unique performance opportunities forinvestorsin physical commodities. As

is true for stock and bond performance, as well as investment in managed

futures and hedge fund products,commodity-based products have a variety

of uses. Besides being a source of information on cash commodity and

futurescommodity market trends, they are used as performance benchmarks

for evaluation ofcommodity trading advisors and provide a historical track

record useful in developing asset allocation strategies. However, the investorbenefits ofcommodity or commodity-based products lie primarily in their

ability to offer risk and return trade-offs that cannot be easily replicated

through otherinvestment alternatives. Previous research that direct stock and

bond investment offers little evidence of providing returns consistent with

direct commodity investment. commodity-based firms may not be exposed

to the risk of commodity price movement. Thus for investors, direct

commodity investment may be the principal means by which one can obtain

exposure to commodity price movements.

The commodities that are traded in the market

Gold

Copper

Silver


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Survey Report


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I conducted a survey upon various classes in Punjab. I asked them about

their income range and the investment options in which they invest. The

objective of the survey was to know the behavior of people as per as

investment decision isconcerned.

I divided Investment optionsin fourcategories:

1. Fixed deposits

2. Equity (Stock markets)

3. Mutual Funds

4. Commodity

I also divided income pattern in fourcategories:

1. Low (500000)

S.

No.

Name Income Investment Options

Low Medium High FD Equity MF Commodity

1 Amrik

Singh

* YES YES YES

2 RK

Sharma

* YES YES YES

3 Gurmit

Singh

* YES YES

4 Satwinder

Singh

* YES YES

5 Aman

Preet

* YES YES YES

6 PK Tyagi * YES YES

7 KC

Mouriya

* YES YES YES YES

8 Manoj

Sharma

* YES YES

9 Mansi

Gupta

* YES


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10 Prince * YES YES YES

11 Narender

Kumar

* YES YES

12 Prabhjot

Singh

* YES YES YES

13 Sarita

Kandpal

* YES YES

14 Minakshi * YES YES

15 Karan

Singh

* YES YES

16 Jasbir

Singh

* YES YES YES

17 Harpreet

Singh

* YES YES

18 Pawan

Kumar

* YES YES

19 Ravi

Gupta

*

20 Avantika

Mehta

* YES YES

21 Pooja * YES YES

22 G. Trivedi * YES YES YES YES23 BD Bains * YES YES YES

24 Darshan

Singh

* YES YES YES

25 Mukesh

Kumar

* YES YES YES

26 Jitander

Singh

* YES YES

27 Harish

Chander

* YES

28 Rekha

Choudhary

* YES YES

29 Anant

Singh

* YES YES YES

30 Mohinder * YES YES YES YES


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Punj

After arranging data income pattern wise and investment option wise, we get

Income

Level

No. of

People

Investment Options

FD Equity MF Insurance

Low 7 5 1 0 4

Medium 16 11 8 10 12

High 7 3 5 6 6

Total 30 19 14 16 22


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Interpretation

Lets find out the risk behavior of the investors with the help of this graph


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Conclusions

1. As FDs provides fixed income, these are popular in each category.But as the income of investor shifts from a income range to upper

income range, he looks for another avenues for the Investment.

2. The change in the risk taking behavior of investor with change inincome is clearly indicated by the change in equity investment with

change in the income range.

a. Investors with low income level are very risk avoiders. Hencethey invest with FDs rather than Equity.

b. But as the income level increases, investor become more risktakers and start investing in equities. Same is the case with

MFs.

3. Income pattern drive investment decisions,sort of,in the same way,inwhich it effects the equity investments.

a. Though the middle level income investor is more interested inMF as compared to equities as they want MFs companies to

take care of the theirinvestment decisions.

b. However the MFs are less risky as money is pooled indiversified companies hence are gaining popularity.

c. MFs are not existent in low income level investors, May bedue to lack of knowledge.

4. Whatever the income level is, insurance investment is popularamong all income levelsinvestors.

0

10

20

30

40

50

60

70

80

90

FD Equity MF commodity

Low

Midium

High


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a. However insurance investment is not done on regular basis.Few investors are just one time investors.


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Analysis

1) Do you know about the following financial instruments?


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The sample size consists of 30 respondents and out of which almost all the peopleare fully aware about investment avenues like gold and fixed deposits and almost 95are aware about equity shares and mutual funds

2) How do you get information about the following investmentavenues?

Out of the 30 respondents about 50% of them get the information from

advertisements on the television and internet and the rest from the magazines

,company sales executives and friends and relatives.

3) Rate the following according to your preference?

Out of the 30 respondents asked the most preferred financial instrument isfixed deposits and the thenthe rest like equity shares with 70 % and insurance.

4) What is your age?

Out of the respondents that were surveyed the maximum were of the age

group of 31-40

4) What are the factors that you consider while investing in any

financial instrument?

Out of the respondents 50% were of the opinion that return and safety are

the main reasons behind theirs

investment decisions .

5) On what basis you invest in any particular financial instrument?

The respondents were mostly of the opinion that portfolio is the most

important factor before investing and then fundamental analysis done by

them or by the financial advisor and then the other factors

6) How will you invest your money in any financial instrument?


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Most of the respondents surveyed that they mostly invest their money

through a broker and then through sun brokers n agents.

7) What is your age?

Out of the respondents that were surveyed the maximum were of the age

group of 31-40

8) What are the factors that you consider while investing in any

financial instrument?

Out of the respondents 50% were of the opinion that return and safety are

the main reasons behind theirinvestment decisions .

9) On what basis you invest in any particular financial instrument?

The respondents were mostly of the opinion that portfolio is the most

important factor before investing and then fundamental analysis done by

them or by the financial advisor and then the other factors .

10) How will you invest your money in any financial instrument?

Most of the respondents surveyed that they mostly invest their money

through a broker and then through sub brokers and agents .Out the totalrespondents around 60 %were in the income group of 1- 3lakhs and 22% in

the 3-5lakhs.

11) How much of your money you invest in financial instruments?

Most of the respondentssurveyed were mostly those people who invest 10 to

30 % of their money in these instruments.

12) How long do you prefer to keep your money invested?

Out of the 100 respondents mostly were of the view that they invested there

for a money at least for a period of 1year to 3 years.


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CONCLUSION AND RECOMMENDATIONS

After completing the survey and watching the analysis I come to thisconclusion that the before investment investors do have focus on Taxsavings, Income, Capital preservation etc. They also have a

predetermination of the time period of investment.


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good option for investor. Company should try to minimize the risktolerance by offering Fixed deposits.

In the survey there were lot of people who were in the age group ofabove 60. For this group of people the company can target Fixeddeposits which gives continues return like monthly interests so thatthey can keep on getting returns.OCCUPATIONIf we see the survey data it will seen that respondents are majorlyService people and Business Class. Depending upon the data Iconclude that the service class has a time horizon of 3-5 years andrisk tolerance Low- Moderate. They invested in FDs, Equity shares,Mutual Fund and ULIPs.

Recommendation company should tap these class by innovativemarketing strategies as they already invested, and offer FDs, ULIPs.Mutual fund can be a lucrative offer if the Fund is any moderate fundor debt fund.

For the business class, the risk profile is high-very high. Mostinvestor are with negative return acceptability and time horizon is < 3years. Company should offer Mutual funds with risk profile High tovery high thus investor can get a high return. Apart from this companyshould offer to open demat account with them.Disposable Income .

The disposable income bracket less than Rs.5000 per month arebasically safe investors and have not and do not prefer investing inmutual funds and ULIP. Thus positioning of these products should besuch that people are attracted towards this scheme. Emphasis onmarketing of the products should be given. Respondents under disposable income bracket Rs.5,000-Rs.10,000have mainly invested in insurance and real estate. But when survey

was done and their preferences was asked these respondentsstrongly preferred investing in these strategies.

Disposable Income Bracket of Rs.15,000-Rs.20,000 are the strongcontenders for investing their money and these people have investedin real estate, insurance and fixed deposits. Moreover there is mixed

preferences for their investments thus proper segmentation of the


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sample should be done accordingly marketing strategies should beadopted.

Though there is a small percentage of respondents in disposableincome bracket above Rs.20,000 who least prefer investing in mutualfund. But this is the segment which can be well targeted and their

portfolio should be such that gives them more returns. The case ofULIP is different as people strongly prefer investing in this investmentstrategy.


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QUESTIONNAIRE


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NAME :

OCCUPATION :

CONTACT NO :

EMAIL ID :

1.Do You Know About The Financial Instrumentso Mutual funds YES/NOo Stock/Shares option YES/NOo Banks YES/NOo Commodities YES /NOo Real estate YES/NOo Insurance YES/NO

Any other specify-----------------------------

2. How do you get information regarding these Financial

Instrument?

Advertisement

Company Sales force

Friends / Relatives

Magazines /Newspaper

If any other please

specify.

3.Please rate the Financial Instruments as per your Preference.


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MORE

PREFERED

MODERATE LEAST

PREFERED

EQUITYSHARES

Mutual fundInsurance

Fixed DepositsCOMMODITIES

REAL ESTATES

4.What is your age?

15-20

21-4041-50

51-60

60 above

5. What are the factors which you consider while investing in anyFinancial Instrument?

Return (capital appreciation)

Tax Saving

Liquidity

Regularincome flow

Safety

Risk

If any other please

specify.


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6. On what basis you will invest in any particular Financial

Instrument?

Past Performance

Portfolio

Fund Manager

Fundamental/Technical Analysis

Market Sentiment

If any other please

specify

7. How will you invest your money in any Financial Instrument?

Yourself

Through any stock broking company. Please specify

Name..

Sub broker/ Agents

Through Banks

If any other please

specify

..

8. In what type of Financial Instrument you like to invest?


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Equity based

Debt based

Balanced Fund

Hybrid Fund

ELSS (equity linked saving scheme)

If any other please specify

9. What is your annual income?

1lac to 3 lack

3lac to 5lac

5lacto 10lac

more than 10 lacks

10. How much of your money you invest in any Financial

Instrument?

10% to 20%

20% to 30%

30% to 50%

More than 50%

If any other please

specify

..


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11. How long you prefer to keep your money in any Financial

Instrument?

Less than 6 months

6 months to 1 year

1 year to 3 year

More than 3 years

If any other please specify

12. How much return you expect from any Financial Instrument?

10% to 20%

20% to 30%

30% to 50%

More than 50%

If any other please

specify

13. Will you invest your money forsaving the Tax in any Financial

Instrument?

YesNo

14. Are you satisfied with yourinvestment decision, Please rate?


70/72


76

Highly satisfied

Satisfied

Lesssatisfied

No satisfaction

15. Any othercomments.

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[15]- Give yourcomment on investment pattern if any?

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77


72/72


BIBLIOGRAPHYa. www.tata-aig-life.com

b.

www.moneycontrol.comc. www.investsmartindia.comd. www.insurancejournal.come. www.irdaindia.orgf. http://stockcharts.comg. http://en.wikipedia.orgh. http://www.google.com/finance

Documents

Avisha Project report 2003