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 Collection
Data 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.
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 investor’s 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.
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 and
unconscious 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.
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 did

not 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.
 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 investor’s
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.
1. Fixed Deposit Accounts.

Fixed deposit accounts is meant for those investors who want to

deposit 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 is
a 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-à-vis the fixed deposits but smaller as against the current accounts,
 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 daily
banking 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
 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
 and carrot of bonus too. The salient features of these schemes are
explained below:
Small Savings Schemes:-

Schemes Type Interest Rate Term Min-Max Premature Tax

Investment withdrawal Benefit
Public Recurring 8% 15 Min: Rs.500 Yes U/S
Provident Years Max:Rs.70,00 80C
Fund 0
National Growth 8% 6 years Min: Rs.100 No U/S
Savings compounded Max:No upper 80C
Certificate half yearly limit
Kisan Growth Amount 8 years Min: Rs.100 Yes Nil
Vikas doubles in 8 & 7 Max:No upper
Patra years & 7 months limit
months
Post Fixed 6.25%- 1-5 Min: Rs.200 Yes Nil
Office Diposit 7.50% Pa Years Max: No upper
Time & limit
Recurring
Deposit
Recular 8% Pa 6 Min: Rs.15,00 Yes Nil
Post Income payable Years Max: Rs.4.5
Office monthly Lac )Single)
Monthly Rs.9 Lac
Income (Jointly)
Scheme
Senior Regular 9% pa 5 Min: Rs 1000 Yea Nil
Citizen Income payable Years Max: Rs 15
Saving quarterly Lacs
Scheme

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 4th year
immediately preceding the year of withdrawal, or the year immediately
proceeding 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.
 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 be
issued 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 in
Budget 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.
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 and
Rs 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
 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:

Period Rate of Interest

One Year 6.25%
Two Year 6.50%
Three Year 7.25%
Four Year 7.50%

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
 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 before
three 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.
• 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 this
scheme 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
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 spreads
the 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 children’s
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 don’t suffer. So one should try and take cover for all
insurable risks. If you are aware of the major risks and buy the right
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 term
plan 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
useful in case you need money at regular intervals for your child’s
educations, marriage, etc.

c) Unit Linked Insurance Plans (ULIPs): ULIPs are similar to

traditional 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 individual’s 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
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 that
investments 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
 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
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 India’s 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 company’s assents and profits. Ownership in the
company is determined by the number of shares a person own divided by
the total number of shares outstanding. Equity shareholders collectively
own the company. They risks and enjoy the rewards of ownership.
 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 Company’s 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 securities—ranging 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
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 asset
Management Company (AMC) based on the fund’s 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.
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
investor’s 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 earning
and 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.
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 as
deduction 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
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 manager’s 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 money
gets 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.
 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 and
can 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 manager’s 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 scheme
that suits to his or her risk profilSorce:pandey I M (2007)
“Financial Management” Vikas publishing house Pvt. Ltd. New
Delhi.
4. DERIVATIVES:
A financial instrument whose price is dependent upon or derived from one
or more underlying assets. The derivative itself is merely a contract between
two or more parties its value is determined by fluctuations in the underlying
asset. The most common underlying assets include stocks, bonds,
commodities, currencies, interest rates and market indexes. Most derivatives
are characterized by high leverage. Derivation contracts are of different
types. The most common are forwards, futures, options and swaps. (S.L
Gupta (2007)” financial Derivates” p-4, prentice hall of India) Participants
who trade in the derivatives market can be classified under the following
three broad categories.
1. Hidgers: A hedge is a position taken in one market in an attempt of

offset exposure to the price risk of an equal but opposite obligation

or position in another market. So a person who undertakes such
position or adopts a strategy to reduce or eliminate this risk is called
a hedger. Hedgers face risk associated with the price of an asset.
They use the futures or options markets to eliminate this risk
associated with the price of underlying assts.
2. Speculators: Speculators are participants who are willing to take risk

on future movements in the price of an asset with the expectations to

earn profits. There is a potential for large gains as well as large
losses in speculation.
3. Arbitragers: Arbitragers are the participants who attempt to
make profits by taking advantage of discrepancy between prices of the
same product across different markets. But this discrepancy remains
for a short period because with this discrepancy there starts selling in
the market where price is high an buying in market where price is low.
 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 PSU’S
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.
  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
 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 Grades

AAA Highest Safety
AA High Safety
Investment Grades
A Adequate Safety
BBB Moderate Safety
Speculative Grades
BB Inadequate Safety
B High Risk
C Substantial Risk
D In Default

CRISIL RATING SYMBOLS

Source: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
 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 is
an asset class that’s 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
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.
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 in
world 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 ESTATE
Overview
Real estate investment has been strongly taking up over other options for
domestic as well as foreign investors. The factors like change in
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. The
boom 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. It’s 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
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 individual’s
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 residential
property. 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.
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:

Type of Return Safety Volatility Liquidity

Investment
Equity High Low High High
Bonds Moderate High Moderate Moderate
Co- Moderate Moderate Moderate Low
Debenture
Bank Low High Low High
Deposits
PPF Moderate High Low Moderate
Life Low High Low Low
Insurance
Gold Moderate High Moderate Moderate

CHAPTER 5
DATA ANALYSIS AND INTERPRETATION
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 age

groups. 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:

 Percentage of
Age in Years
respondents
20-30 62
31-40 24
41-50 8
>50 6
Age of the respondents.

Percentage of
3 respondents
Age in Years

0 20 40 60 80

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.
Table 2: Sex of the respondents.
Percentage of
Sex
respondents
Male 82
Female 18

Sex of the respondents

Percentage of respondents

Male
Female

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.
Annual
Figures in percentage
Income
<2 lac 29
2-4 lac 41
4-6 lac 17
>6 lac 13

Annual Income of the respondents.

Annual Incom e

50

40

30
Figures in
20 percentage

10

0
<2 lac 2-4 lac 4-6 lac >6 lac

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 4-6
lacs 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.

 Occupation Figures in Percentage
working class 64
Businessmen 36

Occupation of the respondents:

Figures in Percentage

w orking class
Businessmen

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.
Table 5: Qualification of the respondents.

Qualification Figures in Percentage

Matric 7
Intermediate 5
Graduate 43
PG 34
Professional 11

Figure 5: Qualification of the respondents.

Qualification

50
40
30
20
10
0 Figures in Figures in
Percentage
Matric
Intermediate

Percentage
Graduate

PG

Professional

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.
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 2
High Expenses 19
Try to save 48
Always save some % 30
Others 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.

Percentage of
Instruments
respondents
Shares 96
Mutual Funds 82
Insurance 88
Post Office Schemes 90
fixed Deposits 98
Govt Securities 74
Real Estate 78
Gold 82
Awareness about investment instruments.

Percentage of respondents

120
100
80
Percentage of
60
respondents
40
20
0
fix S c e
lF s

d
al ies
ds

e ts

te
G De s
ua r e

ol
m

t S si

ta
ce ran
un

Re c uti

G
ut ha

ed he
ov po

Es
S

s u
I n
ffi
M

O
st
Po

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
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.
Analysis of responses: This section cevers the analysis and interpretation of
the primary data collected through the survey.
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 2

High Expenses 19
Try to save 48
Always save some % 30
Others 1
Figure 1: Practice on saving money:
Figures in Percentage

60
50
40
30 Figures in Percentage
20
10
0
ng

ve

s
es

er
vi

sa
ns

th
sa

m
pe

O
to

so
in

Ex

y
ve

Tr

ve
h
lie

sa
g
Hi
be

ys
't

wa
no

Al
Do

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 don’t 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 respondents
Shares 96
Mutual Funds 82
Insurance 88
Post office Schemes 90
Fixed Deposits 98
Govt. Securities 74
Real Estate 78
Gold 82

Figure 2. Awareness about investment instruments.

Perecentage of respondents

120
100
80
Perecentage of
60
respondents
40
20
s

0
e

s
cu s
s

tie
m

te
t
c e
d

si
s

S nc
e

ld
ta
n

ri
tu r e

o
h
F

o
s
p
e ra
a

G
lE
e
l
h

e
ic u

D
S

S
ff s

a
o In

e
u

t.
e

R
M

v
ix

o
F

G
st
o
P

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
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 particular

investment 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 respondents
News papers 44
Magazines 18
T.V. advertisements 22
References 72
Consultants 48

Figure 3: Source of information

Percentage of respondents

80
70
60
50 Percentage of
40
30 respondents
20
10
ts

0
n
rs

ts
s

e
e

n
m

c
p

lta
n
e
zi
a

re
is
p

su
a

fe
rt
g
s

n
e
a
w

o
v
M

R
e

C
d
N

a
.
.V
T
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 respondents
Shares 32
Mutual Funds 44
Insurance 78
Post office schemes 42
Fixed Deposits 74
Govt. Securities 22
Real Estate 24
Gold 14

Figure 4 : Investment Alternatives

 Percentage of respondents

90
80
70
60
50 Percentage of
40 respondents
30
20
10
0
e
es

d
s

te
ds

es

ie
nc

ol
sit

ta
ar

un

r it

G
ra

po

Es
Sh

he

cu
lF

su

e
sc

al
Se
ua

D
In

Re
d
e
ut

t.
xe
fic
M

ov
of

Fi

G
st
Po

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 22
1to 3 year 40
>3year 38
Figure 5: Period of investment.
Percentage of respondents

45
40
35
30
25 Percentage of
20 respondents
15
10
5
0
< 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
 respondents

Regularly 68
Occasionally 32

Figure 6:
Percentage of respondents

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 the
respondents 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

Objective Percentage of respondents
Return on investment 30
Safety of capital 26
Tax benefits 24
Retirement planning 12
Hedging against inflation 2
Liquidity 4
Others 2

Figure 7: Objective behind investment

percentageof respondents

35

30

25
Percentage of
20 respondents
15 Objective

10

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
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 respondents
One day to 30 days 10
One month to three months 16
Three months to one year 20
One to three years 24
More than three years 30

Figure 8: investment period

 Percentage of respondents

30

25

20

15
Percentage of
10 respondents

0
One day One Three One to More
to 30 month to months three than
days three to one years three
months year years

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 view
that 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 the
savings is invested. This question was asked to know that what fraction of
their income do they invest.
Table 9: Percentage of Earnings invested

%of earnings invested Percentage of

respondents
1-5% 48
6-10% 26
11-20% 18
>20% 8

Figure 9: Percentage of Earnings invested

Percentage of respondents

60

50

40
Percentage of
30
respondents
20

10

0
1-5% 6-10% 11-20% >20%

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.
Q10: Do you plan your investment?
To evaluate the level of importance the investor gives on detailed
financial planning to arise in their investment decision, the respondents
were asked to reveal whether there investments are result of a careful
planning or it’s a mere word of mouth. As many individuals follow word
of mouth leaving behind the facts that every individuals has different
financial goals, they tend up to in making wrong decisions for their
investments.
Most are aware that planning is critical, yet don’t have the time or the
expertise to develop a plan and make the needed financial decisions.

Table: 10 Planning of investment options

Response Percentage of
respondents
Yes 78
No 22

Figure 10: Planning of investment options

Percentage of respondents

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 respondents
Yes 66
No 34

Figure 11
Percentage of respondents

Yes
No
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 respondents
Friends/Relatives 42
Broker 18
Chartered accountant 6
Financial Advisors 30
Others 4

Figure 12 : Source of investment advice.

 Percentage of respondents

45
40
35
30
25 Percentage of
20 respondents
15
10

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5

rs
s

ta
0
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tiv

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la

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d ok

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cc
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th
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s/

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n

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e

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ri

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rt
F

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h
C

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 respondents
Bank Deposits 24
PropertyLand 11
Insurance 18
Post office schemes 16
Gold 7
Govt. Securities 18
Mutual Funds 4
Equity 2

Figure : 13 Fundamentally safe form of investment

Percentageof respondents

30
25
20
Percentageof
15
respondents
10
5
s
e

s
d

0
its

s
m

tie
n

ch e

d
e
s

n
a

y
s nc

ri
cud
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it
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p

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u
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e

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rt

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l
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ff s

tu
p

o In
k

t.
ro
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v
a

M
P

o
B

G
st
o
P

Interpretation : On enquiring from the respondent about what are the

fundamental secure forms of investment ,24 percent of the respondents
feel 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 ?
 This question was asked to measure the investor’s level of satisfaction
with respect to his investor’s 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

Percentage of respondents

45
40
35
30
25 Percentage of
20 respondents
15
10
5
d

0
d

e
d
fie

i
d

sf
l

fie
a
f ie
tis

tr

ti
tis

a
u
tis
sa

s
e

sa

is
a

N
ly

d
S

is
h

ly
D
ig

h
H

ig
H
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 the
respondents 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 respondents
Yes 32
No 68

Figure 15.

Percentage of respondents

Yes
No
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 respondents
Bank Deposits 25
Property/Land 12.5
Insurance 9.375
Post office schemes 6.25
Gold 6.25
Govt. Securities 3.125
Mutual Funds 21.875
Equity 16.625

Figure 16.

Percentageof respondents

30
25
20
Percentageof
15
respondents
10
5
s
e

s
d
its

0
m

tie
n

ch e

d
e
s

n
s nc

y
ri
cud
o

/L

it
e ol
p

e ra

u
F
ty
e

SG

q
ic u

l
D

E
a
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ff s

tu
p

o In
k

t.
n

ro

u
v
a

M
o
P
B

G
st
o
P
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 .