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INVESTMENT OPPORTUNITIES IN INDIA Investment objectives will almost always change for every investor throughout their lives.

Capital appreciation might be more important while you are young; meanwhile entering your golden years might place a greater emphasis on providing income. Whatever your objective, knowing what investment options are out there is extremely important. Here are 8 Investments that we feel every investor should be aware of: EQUITY Plain and simple, equity is ownership in part of a company. For every stock you own in a company you own a small piece of the office furniture, company cars, and even that lunch the boss paid with the company credit card. More importantly, you are entitled to a portion of the companys profits and any voting rights attached to the stock. With some companies the profits are typically paid out in dividends. The more shares you own, the larger portion of the company (and profits) you own. Equity represents ownership in a company and a portion of profits (dividends). Investors also have voting rights to elect the board members who oversee the major decisions made by management. In the long term, equity, by means of capital growth, yield higher rewards than other forms of investment securities. This higher return comes at a cost as equity entails the most risk. Should a company go bankrupt and liquidate, the common shareholders will not receive money until the creditors, bondholders, and preferred shareholders are paid. OBJECTIVES AND RISKS: Over the long term, there is no investment that provides better returns at a reasonable risk than equity. History has dictated that equity averages 11-12% per year and outperforms just about every other type of security including bonds

and preferred shares. Stocks provide potential for capital appreciation, income, and protection again moderate inflation. Risks associated with stocks can vary widely, and usually depends on the company. Purchasing equity instruments in a well established and profitable company means there is much less risk you'll lose your investment whereas by purchasing a penny stock your risks increase substantially. By using margin stocks also allow you to dramatically increase your leverage in a stock. This is only recommended for experienced investors. STRENGTHS:

Equity is very easy to buy and sell Especially with progresses in the Internet it is very easy to find reliable information on public companies making analysis possible. One of the major means if one is looking for capital appreciation. These instruments have high liquidity. Provides investors high income.

WEAKNESS:

Your original investment is not guaranteed. There is always risk the stock you invest in will decline in value and you may lose your entire principal. Your stock is only as good as the company you invest in, a poor company means poor stock performance.

MUTUAL FUNDS A mutual fund is simply a large group of people who lump their money together and give it to a management company to invest it for you. A mutual fund manager proceeds to buy a number of stocks from various markets and industries. Depending on the amount you invest, you own a part of the overall fund. OBJECTIVES AND RISKS: 2

For the most part, investors should buy mutual funds as a long term investment. The nice thing about mutual funds is that the objectives change from fund to fund. Each mutual fund has a different strategy, it is your job to decide what your objective's are. Mutual fund strategies range from growth/aggressive, low risk, balanced, momentum, and many others. Your risk tolerance will play a big role in what fund you purchase, it all comes down to the old risk/return tradeoff. For example, if your fund is for retirement, then perhaps a low risk money market fund is best for you. Many funds justify their under-performance as a factor of risk. If you are willing to sacrifice some performance in return for a better sleep at night then these "low risk" funds are a good option. STRENGTHS:

You get to own several companies no matter how much you decide to invest. In other words, you get instant diversification. You can easily make monthly contributions. A professional manager is the one managing the money. Theoretically, because of his/her experience and knowledge you should receive above average returns.

WEAKNESS:

Fund managers take a slice of the profits for their work. This slice varies but can be quite high. You pay management fees no matter if the fund actually makes you money or not.

INSURANCE: Insurance is income protection investment. The person you name as your beneficiary will receive proceeds from an insurance company. Insurance policies

are always an intelligent decision while investing your hard-earned money. More than a tax-saving instrument or an interest earning investment, an insurance policy is a guarantee that your loved ones would not have any financial difficulties in case any unfortunate incident happens to you. Insurance policies with high premium and low risk cover are similar to deposits and bonds. With a view to ensure that such insurance policies are treated at par with other investment schemes, it is proposed to substitute clause (10D) of the Section 10, so as to provide that the exemption available under the said clause shall not be allowed on any sum received under an insurance policy (maturity proceeds) in respect of which the premium paid in any of the years during the term of the policy, exceeds 20% of the capital sum assured. However, any sum received under such policy on the death of a person (death benefits) shall continue to be exempt. OBJECTIVES AND RISKS: No matter who you are, one benefit of insurance is the peace of mind that you get. If anything happens, the beneficiary will receive a check in a matter of days. Another reason is to cover any debts or liabilities you leave behind. Insurance can also create an inheritance for your heirs. Leaving a legacy by giving to charitable organizations are another good reason for insurance. Most insurance policies carry relatively small risk because insurance companies are usually stable and are heavily regulated by government. In "cash value" policies you are allowed to invest your policy in stock, bond or money market funds. In these types of policies the value of your insurance depends on the performance of those funds. STRENGTHS:

Insurance provides an excellent peace of mind in case unfortunate incidents happen to you.

Insurance policies are a relatively low risk investment. Insurance provides tax deferred savings, capital appreciation.

WEAKNESS:

Cash value funds can fluctuate depending on what the financial markets are doing. Provides nominal income as it is less risky.

REAL ESTATE: When you purchase a home the first thing you look at is the design and layout. But looking at the house as an investment could prove very lucrative years down the road. For a large portion of us, buying a home will be the largest single investment that we make in our lifetimes. Real estate investing doesn't just mean purchasing a house, it can include vacation homes, commercial properties, land (both developed and undeveloped), condominiums, along with many other possibilities. When buying property for the purposes of investing the most important thing you should always consider is the location. Unlike other investments, real estate is dramatically affected by the condition of the immediate area where the property is located, and other local factors. When assessing the value of real estate there are several factors that are considered. This includes the age and condition of the home, improvements that have been made, recent sales in the neighborhood, if there are any new zoning plans, etc. They look at the potential income a house may produce and how it compares to other houses in the area.

OBJECTIVES AND RISKS:

Real estate investing allows investors to target their objectives, for example if your objective is capital appreciation then buying a promising piece of property in a promising neighborhood will help you achieve this. On the other hand if it is income you are looking for then buying a rental building can help provide regular income. There are significant risks in holding real estate. For example property taxes, maintenance, repairs among other costs of holding the asset. Furthermore real estate is considered to be very illiquid, if you needed to sell the property immediately it can sometimes be hard finding a buyer. STRENGTHS:

Whether or not your objective is income or capital appreciation real estate investing has the ability to achieve either. Mortgages allow you to borrow against the property up to three times the value, this can dramatically increase investors leverage. Remember that you typically need a 5% down payment first .

WEAKNESS:

Selling property quickly can be a problem. There are significant holding costs, especially if you are not residing in it. Examples are property tax, insurance, maintenance, etc.

BULLION: The Indian connection with gold has been as old as Vedas. In our tradition, gold transcended its limits as an asset, became symbolic of Mahalakshmi, the goddess of wealth. It is a valued personal and family object of pride, an emotional asset. It links up culture, religion and economics. Even the poorest of poor Indian families would like to keep some gold. Hoard it.

Indians are the largest investors in gold in its various forms. An interesting development recently has been the permission for banks to issue gold bonds. These bonds represent securitisation of gold. Investors can hold these bonds and earn some returns, instead of holding the metal and incur costs and risks associated with storage. The instrument is still in its infancy.

OBJECTIVES AND RISKS: Investments in gold is not subject to erosion on account of rupee depreciation, which perhaps its biggest advantage. Historically, gold has been perceived as a hedge against inflation or as a means of security in bad times. Hence, investors do not always look for returns while investing in gold. The main objective an investor should look in this investment is inflation hedge. The risk levels of the instrument are low and safe. STRENGTHS:

Investors can hedge against inflation or as a security in bad times. Investors can expect moderate returns with respect to this investment. Gold as an investment is safe and moderate in terms of volatility.

WEAKNESS:

In India gold is valued personal and family object of pride rather as an investment. There is no capital appreciation even in the long run time horizon. Income levels are very less compared to other investment avenues.

GOVERNMENT BONDS:

A bond is nothing more than a loan of which you are the lender. Just like people need money, so do companies and governments. A company needs funds to expand into new markets while governments need money for everything from infrastructure to social programs. The problem large organizations run into is that they typically need far more money than the average bank can provide. The solution is to raise money by issuing bonds (or other debt instruments) to a public market. Thousands of investors then each lend a portion of the capital needed. Bonds are the most important and unique financial instruments in the financial markets of any economy.

OBJECTIVES AND RISKS: Bonds are an attractive investment option, particularly now with the liquidity that accompanies their listing on stock exchange. Bonds are stable option in terms of fixed returns and are recommended for the risk- averse investors. The investment objective of bonds is providing regular returns in medium or long term time horizon. This type of investment opportunity has a very high safety and moderate in terms of volatility and liquidity. STRENGTHS:

As the security is issued by government, it has minimal risk. Investors have the opportunity to invest in very long term debt sometimes up to 20 years because of the long maturity periods. Almost all the issues by the government have adequate liquidity except for a few. Tax benefits are available under section 80L up to Rs 3,000.

WEAKNESS:

The inflation will decrease the real return on the security and the possibilities of higher interest rates decrease the value of bond. Bonds are associated with low risk and hence fore go the opportunity to give higher returns as much as equity.

BANKING DEPOSITS: In recent years the Banking sector has been undergoing rapid changes, reflecting a number of underlying developments. The most significant has been the advances in communication and information Technology, which has accelerated and broadened the financial information dissemination. Bank deposits have been a favoured investment option with the Indian investor, mainly because of the liquidity and safety benefits they offer. Most banks are promoted either by the government or by leading financial institutions. OBJECTIVES AND RISKS: The liquidity and safety offered by banks does however come at a price. Yield on bank deposits is negligible after accounting for inflation and tax. While the return of the capital is guaranteed by the bank, deposit is not a secured investment, its perceived safety coming from the soundness of the bank management or ownership. Investors should be advised to park only at their savings in bank deposits. The investment objective is regular income and considered to be one of the safest investments. Generally the risk level of the investments is low. STRENGTHS:

Investments are secured, as they are maintained either by government or well established financial institutions. They score high on safety, as the return of capital is guaranteed to the depositor by the bank.

Provides a regular and steady source of income to the investors. The investment period of the bank products are flexible at all times, generalizing the investors preferences.

Bank products have very high liquidity and moderate in terms of volatility.

WEAKNESS:

The bank depositor does not hold the bank portfolio of investments. Low interest rates give low income to the investors.

SMALL SAVING SCHEMES: Returns from all small saving schemes - PPF, NSC, Post office MIPs and Kisan Vikas Patra - have been reduced by 1 percent (as expected by most and feared by all risk-averse investors). But they still continue to yield a remunerative 8 percent plus per year post tax. The post-office monthly income scheme, with an investment limit of Rs 3 lakh, gives a monthly return on 8 percent annual basis plus a bonus of 10 percent at the end of the term. Indira and Kisan vikas patra were originally introduced by as post office schemes in order to tap the savings of the rural India, but also became popular with urban investors. OBJECTIVES AND RISKS: If security is your prime concern, continue to invest here. Also due to their inherent safety and additional tax benefits on many small saving instruments like NSC, PPF and Post office MIPs, you should invest in them. Besides, with RBI cutting savings bank deposit rates to 3.5 per cent from 4 percent and the GOI Relief bonds reset to 7% and 6% respectively, the small saving schemes are a better option. STRENGTHS:

Tax exempt status makes these investments as an attractive mechanism for the small investors to build his savings portfolio. As government supported investments, these scores high on safety, compared to bank deposits. Provides regular and steady income to the investors.

WEAKNESS: 10

The invested money is locked in for long-term; hence there is a problem of liquidity.

Unit linked insurance plans (Ulip) A Unit Link Insurance Policy (ULIP) is one in which the customer is provided with a life insurance cover and the premium paid is invested in either debt or equity products or a combination of the two. In other words, it enables the buyer to secure some protection for his family in the event of his untimely death and at the same time provides him an opportunity to earn a return on his premium paid. In the event of the insured person's untimely death, his nominees would normally receive an amount that is the higher of the sum assured or the value of the units (investments). To put it simply, ULIP attempts to fulfill investment needs of an investor with protection/insurance needs of an insurance seeker. It saves the investor/insurance-seeker the hassles of managing and tracking a portfolio or products. Unit-linked life insurance products are those where the benefits are expressed in terms of number of units and unit price. They can be viewed as a combination of insurance and mutual funds. The number of units, which the customer would get would depend on the unit price when he pays his premium. The daily unit price is based on the market value of the underlying assets (equities, bonds, government securities etc.) and computed from the net asset value. Unit-linked insurance plans, ULIPs, are distinct from the more familiar with profits policies sold for decades by the Life Insurance Corporation. With profits policies are called so because investment gains (profits) are distributed to policyholders in the form of a bonus announced every year. ULIPs also serve the same function of providing insurance protection against death and provision of long-term savings, but they are structured differently. In with profits policies, the insurance company credits the premium to a common pool called the life fund,

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after setting aside funds for the risk premium on life insurance and management expenses. Every year, the insurer calculates how much has to be paid to settle death and maturity claims. The surplus in the life fund left after meeting these liabilities is credited to policyholders accounts in the form of a bonus. In a ULIP too, the insurer deducts charges towards life insurance (mortality charges), administration charges and fund management charges. The rest of the premium is used to invest in a fund that invests money in stocks or bonds. The number of units represents the policyholders share in the fund. The value of the unit is determined by the total value of all the investments made by the fund divided by the number of units. If the insurance company offers a range of funds, the insured can direct the company to invest in the fund of his choice. Insurers usually offer three choices an equity (growth) fund, balanced fund and a fund that invests in bonds. The two strong arguments in favour of unit-linked plans are that the investor knows exactly what is happening to his money and two, it allows the investor to choose the assets into which he wants his funds invested. A traditional with profits, on the other hand, is a black box and a policyholder has little knowledge of what is happening. An investor in a ULIP knows how much he is paying towards mortality, management and administration charges. He also knows where the insurance company has invested the money. The investor gets exactly the same returns that the fund earns, but he also bears the investment risk. The transparency makes the product more competitive. So if you are willing to bear the investment risks in order to generate a higher return on your retirement funds, ULIPs are for you. Traditional with profits policies too invest in the market and generate the same returns prevailing in the market. But here the insurance company evens out returns to ensure that policyholders do not lose money in a bad year. In that sense they are safer. ULIPs also offer flexibility. For instance, a policyholder can ask the insurance company to liquidate units in his account to meet the mortality charges if he is unable to pay any premium instalment. This eats into his savings, but ensures that the policy will continue to cover his life.

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ULIP - Key Features 1. Premiums paid can be single, regular or variable. The payment period too can be regular or variable. The risk cover can be increased or decreased. 2. As in all insurance policies, the risk charge (mortality rate) varies with age. 3. The maturity benefit is not typically a fixed amount and the maturity period can be advanced or extended. 4. Investments can be made in gilt funds, balanced funds, money market funds, growth funds or bonds. 5. The policyholder can switch between schemes, for instance, balanced to debt or gilt to equity, etc. 6. The maturity benefit is the net asset value of the units. 7. The costs in ULIP are higher because there is a life insurance component in it as well, in addition to the investment component

8. Insurance companies have the discretion to decide on their investment portfolios. 9. They are simple, clear, and easy to understand. 10. Being transparent the policyholder gets the entire episode on the performance of his fund. 11. Lead to an efficient utilisation of capital. 12. ULIP products are exempted from tax and they provide life insurance.

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13. Provides capital appreciation 14. Investor gets an option to choose among debt, balanced and equity funds. Unit-linked plans enjoy several advantages. They are: Simple, clear and easy to understand Transparent and visible for customers to take decisions Flexible and adaptable Puts the policyholder in control Policyholder gets the entire upside on the performance of his fund Besides all the advantages they offer to the customers, unit-linked plans also lead to an efficient utilisation of capital. MUTUAL FUNDS INTRODUCTION A Mutual Fund is a financial service organization / trust that receives money from the small investors, invests it in the share market, earns return on it, attempts to make it grow and agrees to pay the investors cash on demand on the present value of his investments. Investors who are ignorant of share market or do not want to get involved in it directly can invest in the Mutual Funds with the help of mutual fund based stock market experts, who analyze the companies before investing in it.Thus MUTUAL FUNDS play a very crucial role in an economy by mobilizing and investing them in capital market and money market, thus establishing a link between savings and capital market (share market). MUTUAL FUNDS are a method of channeling the savings of a person directly to the productive capacities of the country.

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MUTUAL FUNDS in India with the establishment of UTI in 1964, with it's monopoly till 1987, with popular Unit 64 and ULIP as an associate trusts of IDBI. At present there are many MUTUAL FUNDS trusts in India like IDBI, ICICI, HDFC, SUNDARAM, BIRLA, KOTAK MATHINDRA etc. MUTUAL FUNDS are becoming very popular form of investment characterized by many advantages that they share with other forms of investments and what they posses uniquely themselves. MUTUAL FUNDS route offer several important advantages. Diversification: MUTUAL FUNDS invest in many companies rather than investing in one. Thus they can protect themselves from unexpected drop in value of some shares. The small investor cannot achieve wide diversification on this own because, mainly less funds at his disposal. MUTAUL FUNDS on the other hand, pool funds so many investors thus can participate in a large basket of many different companies Expertise supervision: When the investors invest in MUTUAL FUNDS they get the advantage of expertise management of their money as the MUTUAL FUNDS trusts carry on extensive research as to how the companies perform, what are the trends in the stock market, what investments are to be sold, when to sell them, which investments to be purchased, which to be sold and so on .., which is not possible for the small investor to do himself. Liquidity: Shares in MUTUAL FUNDS can be bought and sold on any business day, so investors easy access to their money which is not possible while direct investing in the stock market. Reduced Risk : Risk in investments is to recover the principal amount and the return on it. MUTUAL FUNDS investments on both fronts provide a

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comfortable situation. The expert supervision, diversification and liquidity minimize the risk. Classification of Mutual Funds

On the basis of consistution Open ended Schemes

The units offered by these schemes are available for sale and repurchase on any business day at NAV based prices. Hence, the unit capital of the schemes keeps changing each day. Such schemes thus offer very high liquidity to investors and are becoming increasingly popular in India. Please note that an open-ended fund is NOT obliged to keep selling/issuing new units at all times, and may stop issuing further subscription to new investors. On the other hand, an open-ended fund rarely denies to its investor the facility to redeem existing units Closed ended Schemes

The unit capital of a close-ended product is fixed as it makes a one-time sale of fixed number of units. These schemes are launched with an initial public offer (IPO) with a stated maturity period after which the units are fully redeemed at NAV linked prices. In the interim, investors can buy or sell units on the stock exchanges where they are listed. Unlike open-ended schemes, the unit capital in closed-ended schemes usually remains unchanged. After

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an initial closed period, the scheme may offer direct repurchase facility to the investors. Closed-ended schemes are usually more illiquid as compared to open-ended schemes and hence trade at a discount to the NAV. This discount tends towards the NAV closer to the maturity date of the scheme. Interval Schemes

These schemes combine the features of open-ended and closed-ended schemes. They may be traded on the stock exchange or may be open for sale or redemption during pre-determined intervals at NAV based prices On the basis of investment objective Equity Oriented Schemes These schemes, also commonly called Growth Schemes, seek to invest a majority of their funds in equities and a small portion in money market instruments. Such schemes have the potential to deliver superior returns over the long term. However, because they invest in equities, these schemes are exposed to fluctuations in value especially in the short term. Equity schemes are hence not suitable for investors seeking regular income or needing to use their investments in the short-term. They are ideal for investors who have a long-term investment horizon. The NAV prices of equity fund fluctuates with market value of the underlying stock which are influenced by external factors such as social, political as well as economic.HDFC Growth Fund, HDFC Tax Plan 2000 and HDFC Index Fund are examples of equity schemes. Further it can be classified as follows: General Purpose Sector Specific Special Schemes

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Debt Based Schemes These schemes, also commonly called Income Schemes, invest in debt securities such as corporate bonds, debentures and government securities. The prices of these schemes tend to be more stable compared with equity schemes and most of the returns to the investors are generated through dividends or steady capital appreciation. These schemes are ideal for conservative investors or those not in a position to take higher equity risks, such as retired individuals. However, as compared to the money market schemes they do have a higher price fluctuation risk and compared to a Gilt fund they have a higher credit risk. Further it can be classified as follows: Income Schemes Liquid Income Schemes. Money market Schemes Gilt Schemes Hybrid Schemes These schemes are commonly known as balanced schemes. These schemes invest in both equities as well as debt. By investing in a mix of this nature, balanced schemes seek to attain the objective of income and moderate capital appreciation and are ideal for investors with a conservative, long-term orientation. HDFC Balanced Fund and HDFC Childrens Gift Fund are examples of hybrid schemes.

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Introduction Each one of us needs finance at various stages of life, and to ensure that we have the money available at the right time, when needed. We may need money at the time of marriage of a daughter or son, and we need it then or later, or at the time of medical emergency, and again at the time, as later the money will not help. Or money will be needed simply at the time of retirement. In other words, we need finance at different times for different goals. Buying a home, providing for a childs education and marriage or for retirement are all examples of goals in life that can be measured in monetary terms. Personal financial needs are of two types- protection and investment. An earning member providing for his family to have continued income after his death is an example of a protection need. Providing for marriage expenses of a daughter is an example of an investment need. Needs may be one of the important reasons behind any investment objectives/ decisions made by an individual investor. Some of the investment objectives may be capital gains, generate regular income, secure future, safety of investment, avail tax benefits and others. Now the question arise how to satisfy the needs or how to achieve the above mentioned investment objectives, thus the answer provides to you with various investment avenues. Some of them are Mutual funds, Banking products, Insurance products, Bonds, Real estates, Gold, Equity shares, Pension plans. Besides returns, other potential benefits of any investment also include the safety of capital, risk or the stability of returns, the liquidity or access to the funds when needed, and the convenience with which the investment can be managed.

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Problems faced by individual investors in managing their investments are investors lack knowledge about various investments made by them, volatility of respective markets, lack of awareness of various investment avenues, lack of financial advice, risks involved in various investments returns provided by various investments, timing the markets, lack of financial resources, under performance of the markets, the proposition of investment and service was either unclear or not fully honored, too many products were launched with out the regard to customer needs and risk exposures, over emphasis on funds under management and finally emotions such as greed and fear which drive their investment decisions. STATEMENT OF PROBLEM With respect to all these individual investors, some of them are not aware of all the investment avenues. In my study I, would be trying to ascertain the awareness level of investors of various investment avenues and objective of investment with respect to age, education, occupation, monthly income and savings. Along with the above mentioned I would be studying investors objective behind investing in Mutual fund and Unit Linked Insurance plans. OBJECTIVES OF THE STUDY To ascertain the investors awareness about all investment avenues. To know the objective behind their investment. To know the objective behind investing in Mutual Funds and Ulip. SCOPE OF THE STUDY The study basically tries to identify the awareness of various investments and investors preference for mutual fund and unit linked insurances plan (ULIP). The study was done to individual investors restricted to the city of Bangalore. The study was done in specific for Unit linked insurance plans and Mutual funds.

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METHODOLOGY a) Type of the study Survey based analytical study was done. A survey was done with a sample size of 100; information relating to investors was collected regarding their age, education, occupation monthly income and savings Exploratory study is used. It is used when researchers lack the clear idea of the problems they will meet during the study. Through exploration researchers develop concepts more clearly, establish priorities, develop operational definitions and improve the final research design. b) Type of data Primary data: This data was collected with help of the questionnaire to know the various factors influencing the investments, investment preferences of the investors, the profile of the investors based on their education background, occupation, income levels and savings and such other factor are used. Secondary data: This type of data was collected from websites and various journals to know the various investment avenues and their strengths and their weakness. c) Sources of data The questionnaire formed the main primary source for the purpose of study for collecting information on the structural profile of the investors.

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All of the relevant primary data was through the questionnaire that was administered to the investors (attached as annexure1) The secondary data that was required has been collected through the magazines, newspaper articles, textbooks and Internet. d) Type of Survey The research conducted on the basis of sample survey. The reason for choosing sample survey was that the population is large and the elements are not so different from each other. e) Sampling Empirical field studies require collection of first hand information or data pertaining to the units of study from the field. A part of the population is known as sample. The process of drawing a sample from a larger population is called sampling There are two types of sampling namely Probability sampling and Non-probability sampling. Probability sampling is based on the concept of random selection, whereas non-probability sampling is non-random sampling. Non - Probability sampling is that sampling procedure which does not afford any basis for estimating the probability that each item in the population has of being included in the sample. In such a design, personal element has a great chance of entering into the selection of the sample. Probability Sampling Probability sampling is also known as Random Sampling or Chance Sampling. Under this sampling design, every item of the universe has an equal chance of inclusion in the sample. It is, so to say, a lottery method in which individual units are picked up from the whole group not deliberately but by some mechanical process.

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For the purpose of the present study, non-probability sampling has been selected. A non-probability sample of 100 respondents was selected because the total size of target population was enormously unlimited. It is specifically called Convenience sampling because no formal source of respondents was available. Only the use of third party databases was available for research. f) Size of sample There is a large target population and which is unknown; the sample size was restricted to 100.The sample of 100 would represent the entire population. g) Tool for data collection Questionnaire: - The study was conducted with the aid of well-structured questionnaire that avoided the ambiguous, loaded as well as leading questions. The language of the question was simple and easy to understand. The tool was prepared in such a way that answers were given to various elements such as age, education, occupation, income levels, percentage of savings, objectives behind investment decisions. Some informal interviews served the purpose to some extent. Schedule: - The information in addition to the questionnaire was collected by meeting company people personally. The information with respect to the following areas was collected namely: Various recent investment avenues, various factors that influence investment decision, various motivating factors for investing etc. Duration of the Study The research was conducted for a period of eight weeks h)Administration The questionnaire was administered to the investors of Bangalore. Appointments were fixed in order to administer the questionnaire according to their convenient

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time. In all cases, the researcher was present when the questionnaire was filled and so the clarifications were immediately provided. i) Techniques for data Analysis The data collected is tabulated into various sets of groups based on the requirements. In order to ascertain the awareness of investment avenues, data relating to respondents age, education, occupation ,monthly income and their savings has been collected and tabulated and then inference has been drawn from them. In order to know the objectives behind their investment , investors data relating to respondents age, education, occupation ,monthly income and their savings has been collected and tabulated and then inference has been drawn from them. In order to know the objectives behind investing in ULIP and mutual fund , investors data relating to respondents age, education, occupation ,monthly income and their savings has been collected and also their purpose of investment in ULIP and mutual fund has been collected.

LIMITATIONS OF THE STUDY

Since the sampling procedure was convenience, the sample selected may not be a true representative of the population. The respondents did not disclose some information, which was considered confidential. Some personal details and other information were left out of the study. The information collected is not completely authentic it could be subjected to bias. The study was confined to Bangalore due to which the result cannot be applied universally.

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CHAPTER SCHEME Chapter: 1 Investment opportunities in India This chapter mainly deals with various investment opportunities such as equities, mutual funds, insurance, and deposits in various financial institutions. Etc. It also deals with strengths and weakness of various investment avenues. Chapter: 2 Research Design A research design serves as a bridge between what has been done in the conduct of study to realize the specified objectives. It is an outline of the projects working. Chapter: 3 Profile The current trends in the industry and brief company profile have been outlined .The products and services the company offers has also been briefed. Chapter: 4 - A Study of investors awareness about various investment avenues and purpose of investment- An Analysis In this chapter using data collected the information has been tabulated and an analysis has been drawn, on the basis of age, education, occupation, monthly income and the savings of the investors. Chapter: 5 Summary of Findings, conclusions and Suggestions In this chapter we will actually include all that we have analyzed and what has been found. Finally conclude checking whether the objective of the study has been achieved or not.

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PROFILE OF FINANCIAL SERVICES. In the '90s there has been a decisive shift towards a new wave, the domain of financial services. In the era of the consumer, financial services, which seek to put the consumer in the forefront, have come to stay. Skillful marketing has opened up a wide spectrum of areas where financial services find their presence today. The lines are blurring between financial services for business and individuals. Traditional FSPs - once exclusive distributors of their own proprietary products are pursuing two new approaches: First, many are sourcing other companies' products in order to distribute more to their own customers. Banks are sourcing insurance products; brokerages are sourcing credit cards, electronic bill presentment and payment. You don't need to own the cow to sell the milk anymore. Second, there is a movement towards the distribution of products through partners' distribution channels, but with much trepidation as this raises complex issues of brand dilution and revenue recognition. Most notable is Citibank. Its proprietary heritage was so strong that in the 1970s and 1980s, Citibank had its proprietary ATMs manufactured exclusively. Today, the Citi group distributes products from other providers (DRIASI for small business insurance), collaborates extensively (Bolero, myFICO), sells products to non-relationship customers (Worldpay), and distributes Citi products through alternative channels (Lending Tree, FXALL). The main function of the financial services sector is to persuade people to entrust their money into its care. The sector therefore also involves professional issues relating to ethics and confidentiality. Corporate governance and the interests of

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the stakeholders have become paramount and several well-meaning measures are being taken in this direction. A discussion on financial services in India cannot be done at one go for its widespread and varied. This series on financial services focuses on its evolution. It maps and analyses the changing financial services scenario and also provides an insight into the various activities undertaken and services rendered by the financial service providers in India. The financial services industry in India is still emerging from a long period of government control. The sector has been identified by IFSL as one of its top priority markets. The main focus of attention by the British High Commission in India is to encourage the Indian Government to bring down barriers to entry for overseas companies. Whilst the private banking sector has benefited most to date, much still needs to be done to allow free entry to overseas insurance and accountancy services and in making a start on the legal services market, which remains tightly closed to overseas law firms. As the market opens up, opportunities for new financial services products can be expected to grow. But the time, effort and resources required to develop the market will make it suitable only for the larger companies.

PROFILE OF BAJAJ CAPITAL Bajaj Capital is a financial services company engaged in the business of Merchant Banking, Resource Mobilization, Distribution of Financial Products, Investment Advisory Service, buying and selling of Money Market Investments and Tailor Made Financial Planning for Individuals and Corporate Clients. Bajaj Capital is a Securities and Exchange Board of India (SEBI) approved Category I Merchant Banker/Investment Advisor, member of Delhi Stock Exchange and dealer on OTC Exchange of India.

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The company was promoted in 1965 by Shri. K. K. Bajaj, a lawyer turned businessman with an objective to provide professional guidance to investors on where, when and how to invest and to assist the corporate sector in its resource raising activities. Bajaj Capital became the first company to set up Investment Centers all over India for this purpose. Today, Bajaj Capital has 90 offices in over 40 important Indian Cities. Every year Bajaj Capital raises resources for over 1000 top Institutions/Corporate for their fixed income and Equity offerings. Bajaj Capital is also one of Indias largest distributors of financial products like Mutual Funds and Insurance. Merchant Banking Bajaj Capital enjoys SEBI category ( I ) authorization for Merchant Banking. They offer the full spectrum of Merchant Banking Services, beginning from identifying the best time for an issue to final stage of marketing it, to harvest unparalleled success. Bajaj Capital has always been cautious to associate only with select capital issues and has managed over 100 issues for both Debt and Equity over the years for Corporate sector from family owned companies to professionally managed multinationals to government companies and across the entire spectrum of industries. On a cumulative basis,they have managed issues worth over Rs100 billion and are constantly ranked among Top 10 Merchant Bankers in the country. Bajaj Capital excels in the area of Debt offerings from Central and State Financial Institutions and Infrastructure companies. Our excellence in this field is a function of deep industry knowledge, proven financial savvy and a team of brightest minds in the industry. These strengths enable us to structure, price and distribute Debt solutions that generate outstanding response. Resource Mobilization Bajaj Capital is one of Indias leading mobilizes of public savings in shape of 28

financial instruments like company Deposits, Bonds, Debentures, IPO's and other Government saving schemes. Bajaj Capital since inception has raised resources for 2000 leading institutions and corporate including over 1600 Private Corporate, over 40 Government Companies/PSUs, over 28 Mutual Fund, 15 Central and State level Financial institutions & over 15 Banks. The list includes the whos who of Top Government Institutions and Private Corporate in India. Bajaj Capitals annual resource mobilization exceeds Rs30 billion. Distribution of Mutual Fund Bajaj Capitals is widely regarded as one of Indias largest distributor of Mutual Funds. They distribute over 100 schemes of all leading and selected Mutual Fund. Investment Advisory Bajaj Capital offers need based Investment Advice to retail investors, High Net worth Investors (HNI) & Institutional Investors. Bajaj Capital is serving 5, 40,000 Retail investors all over India including 10,000 NRIs and 5000 HNIs besides 2500 Institutional Investors. We offer investors advice on a range of over 1000 investment schemes including Fixed Income, Equity and Mutual Fund products besides insurance. Over 7000 prospective clients visit there offices all over India daily, seeking investment advice. Bajaj Capital has a Premier Clients Group exclusively to cater to high Net worth Individuals (HNIs) who seek special attention. Relationship Manager is assigned to every such Investor to constantly keep him up to date on latest market changes and review his portfolio regularly. Money Market Bajaj Capital has an active Money Market desk which is engaged in purchase & sale of Central & State Government Securities and Bonds catering to the needs of Educational & Charitable Trusts, Societies, Corporate, Banks, Provident/Super Annuation/Gratuity Fund and HNIs. Bajaj Capital is also active in meeting short-

29

term fund requirements of various corporate clients by arranging Inter Corporate Deposits and raising commercial paper. Financial Planning Financial goal of each individual investor varies according to his dream, ambition and family size and future financial planning for the children & old age pension for self and wife so does the pathway to achieve it. At Bajaj Capital we apply the principles of Financial Planning as both science & art, we understand the time horizon, risk bearing capacity and investment goals of investors keeping in mind their psyche and financial needs. Based upon this we help individual investors plan their entire life up to Retirement, Taxes, Insurance needs and other important personal financial goals HISTORY 1964-Bajaj Capital sets up its first 'Investment Centre' in New Delhi to guide individual investors on where, when & how to invest. India's first Mutual Fund, Unit Trust (UTI) of India is incorporated in the same year. 1965-Bajaj Capital is incorporated as a company and in the same year innovates a new financial instrument Companies Fixed Deposits. EIL Ltd. (Oberoi Hotels, then known as Associated Hotels of India Ltd.) becomes the first company to raise Fixed Deposits. 1966-Bajaj Capital expands its product range & includes all UTI schemes and Government saving schemes in addition to Company Fixed Deposits. 1969- Bajaj Capital manages its first Equity issue (through associate company) of Grauer & Weil India Ltd. right from drafting of prospectus to marketing of issue

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1975- Bajaj Capital starts offering need based investment advice to investors which would later be christened as Financial Planning in the investment world 1981- SAIL becomes the first government company to accept deposits, later followed by IOC, BHEL BPCL, HPCL & others. Thus opening floodgates for growth of retail investment market in India. Bajaj Capital plays an active role in all the schemes as Principal Brokers. 1986- Public Sector Undertakings (PSUs) start making Public issues of BondsMTNL, NHPC, IRFC offer a series of Bond Issues. Bajaj Capital tops ranking in most of them. 1987- Launch of Public Sector Mutual Funds in India led by SBI. Bajaj Capital plays a significant role in fund mobilisation for all these players. 1991- SBI issues India Development Bonds for NRIs. Bajaj Capital becomes the top mobiliser with collections over US $ 20 million 1993- Launch of first Private Sector Mutual Fund- Kothari Pioneer followed by Birla & Alliance in the following years. Bajaj Capital plays an active role and ranked among top mobilisers for all these schemes. 1995- IDBI & ICICI start issuing their series of Bonds for retail investors. Bajaj Capital is Co-manager in all these offerings & rank constantly among top 5 mobilisers, on all India basis 1997- Private sector players lead revival of Mutual Funds in India through Openended0 Debt schemes. Bajaj Capital consolidates its position as Indias largest retail Distributor of Mutual funds.

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1999- Bajaj Capital starts marketing Life & General Insurance Products of LIC & GIC (through associate firm) in anticipation of opening up of the Insurance Sector. Bajaj Capital achieves milestone of becoming top Pension Scheme seller in India & launches marketing of Health insurance schemes of GIC. 2000 & beyond As a 'One stop Financial Supermarket' Bajaj Capital offers all financial products including the full range of Investment and Insurance products. Bajaj Capital offers Full service Merchant banking including structuring, management & marketing of Capital Issues. Bajaj Capital reinvents Financial Planning in its international sense & equips its full team of Investment Experts as Financial Planners PRODUCT PROFILE: Company Fixed Deposits Company Fixed Deposits offer better returns than Bank Deposits with minimum lock-in periods. Bajaj Capital offers select Fixed Deposit Schemes of reputed Manufacturing, Finance and Government companies. They offer over 300 Company Deposit schemes Bonds and Debentures Bajaj Capital arranges Government of India Relief Bonds, which are tax-free bonds. In addition they offer infrastructure Bonds (Tax Saving Bonds), Capital Gains Tax Saving Bonds, Bonds from central and state Government Institutions. Mutual Funds Mutual funds are the only investment option that give you market related, realistic returns through proper diversification of risk by investing in debt and equity instruments. Bajaj capital also gives you transparency in transactions, anytime liquidity and tax-efficiency. They offer over 100 Equity Funds, Debt Funds and Liquid Funds.

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Life Insurance Provides for dependents in case of a mishap. Replaces earning power if disabled. Protects your ability to meet accumulation, education, marriage goals. We all have financial responsibilities; in the absence of the bread earner it becomes very difficult to fulfill these. This is the reason for getting yourself and your loved ones a life cover to give you peace of mind also giving protection for critical illness and monthly income. General Insurance Address health care concerns. Provides for auto, home and personal liability protection. Provides for potential long-term care costs. Plan for business continuation. While to grow your wealth, you must protect yourself from a stroke of misfortune which would take away some of your wealth earned over so many years. Pension Schemes A pension scheme is a savings plan that is designed to grow over time to provide you with an income during retirement. The government provides tax incentives that allow your fund to grow virtually tax-free. Housing Loans Bajaj capital arranges housing loans for you while helping you save sizeable amounts of tax in the bargain. The loans are for purchase, construction, renovation, etc, and are from the leading Housing Finance Companies, offering competitive interest rates at your door step. Car/Scooter Insurance Bajaj capital offers automobile solutions to safeguard your vehicle from theft, accidents, and other mishaps, ensuring you very easy and hassle free procedures. Financial Planning Services Offered by Bajaj Capital Financial Planning is the process of meeting your life's goals through proper 33

management of your finances. The process includes gathering relevant financial information, setting your goals, examining your current financial situation and formulating strategies for how you can achieve your goals, given your current financial situation and future plans. At Bajaj capital they are dedicated to the financial planning approach and give you advice only after understanding your financial needs. Investment Planning Everyone should have secure savings for a rainy day. Once these are in place, you have to start thinking about investing for the future. Baja capital helps you to plan your investments so that you may reach your personal goals by investing according to the risk that you can bear and your recommended mix of investments. Cash Flow Budgeting Baja capital analyze your income, expenses, assets and liabilities to see which budgeting techniques you can use to help you reach your current and long-term financial goals. Children's education and marriage planning: One of the most important financial goals for every parent is to plan their children's futures so that they can make the steps to success easier for them to climb. Owing to the steep rise in the cost of higher education and marriage, it has become essential to start planning and saving for these events well in advance.Bajaj capital helps you to achieve these goals by suggesting prudent investment avenues to you. Asset purchase Bajaj capital all long that one day we are able to purchase our dream house, car or other assets. To help you fulfill these goals, we give you advice on how to accumulate the funds to purchase these assets by suggesting monthly savings

34

plans and other investment instruments that will make your money grow to the required amounts. Tax Planning Bajaj capital helps you to reach your personal goals by identifying how to increase your income by saving taxes and by helping you invest in tax saving instruments that fit your personal portfolio and situation.

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INTRODUCTION The project is an attempt to identify the investors awareness of various investment avenues and to know the purpose of investing in unit linked insurance plans and mutual funds. This study required both Primary and Secondary data. Primary data was collected through a structured questionnaire and the Secondary data was made available through company literature and internet. All the respondents were contacted personally which consisted of individual investors of Bangalore. The information was collected by meeting them personally. In this project investors awareness of investment avenues, investors time horizon for investing and objectives of investing in ULIP and mutual funds The data collected has been analyzed thoroughly through, and presented in the form of tables and graphs in the succeeding pages.

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PROFILE OF THE RESPONDENTS Age has a very important impact on the investment by the investors. The table below shows age group of the respondents. Table No.1 Table showing number of respondents and their age group No. OF AGE 20-30 31-40 41-55 55 and above Total Respondents 32 12 40 16 100

Most of the respondents were in the age group of 41-55(40%).The least were in the age group of 31-40(12%). Educational qualification sometimes makes changes in the investment decisions of the individual investors. The table below shows the education of the respondents. Table No.2 Table showing number of respondents and their education No. OF Education Undergraduate Graduate Post graduate Respondents 12 40 48

37

Total

100

Post graduates were the maximum number of respondents (48%).Even the graduates were more than 1/3 of the sample size (40%). Occupation directly related to income which has major impact on the investment decisions. The table below shows the occupation of the respondents. Table No.3 Table showing number of respondents and their occupation No. OF Occupation Professional Salaried Business Total Respondents 20 48 32 100

The professional were 20% of the respondents. The salaried were the maximum number of respondents which was 48%. The business people were nearly about 1/3 of the sample size (32%).

Investments in various avenues are directly related to the income of the investors. The table below shows the monthly income of the respondents. Table No.4 Table showing number of respondents and their monthly income No. OF Monthly income < 10000 10001-20000 20001-30000 30001 and above Total Respondents 4 40 36 20 100

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Investors monthly income below 10000 was 4%. Investors in the income group of 10001-20000 were 40%; this was the largest group in monthly income basis. Investors monthly income of 20001-30000 was 36%. Investing in various investment avenues is related with the savings pattern of the investors. The table below shows the monthly savings of the respondents. Table No.5 Table showing number of respondents and their monthly savings No. OF Monthly savings < 2500 2501-5000 5001-10000 10001 and above Total Respondents 12 40 32 16 100

Investors saving less than a 2500 a month were 12%, this was small group. Investors saving between Rs2501-5000 were 40%, this was the largest group.

39

Age has a very important impact on the investment decision. People in different age group perceive different level of risk. The table below shows the investment objective of different age group. Table No.6 Table showing the investment objective of various age groups. Investment objective Age Fixed Income Housing Children education/Marriag e Retirement Plan Tax relief Liquidity Total 20-30 20(6) 12(3) 12(3) 12(3) 24(7) 20(6) 31-40 12(3) 12(3) 8(2) 4(1) 12(3) 41-55 36(10) 8(2) 28(8) 24(7) 20(6) 16(4) 55 & above 16(4) 12(3) 12(3) 8(2) 12(3) 16(4) Total 84(24) 44(12) 60(17) 48(13) 68(19) 52(15) 356(100)

Graph No.1 Graph showing the investment objective of various age groups INVESTMENT OBJECTIVE
40 30 20 10 0 20-30 31-40 41-55 55 & above Tax relief Liquidity AGE GROUP INVESTORS Fixed Income Housing Children education/Marriage Retirement Plan

Inference: Investors in the age group of 41-55, invest with an objective of fixed income (11%). In the same age group 8% of them prefer for future like children education or marriage. Investment for retirement plan is low- 13%.The second important objective for many investors is for tax relief (19%).

40

Education has an impact on the investment objective. Different level of education has a different objective. The table below shows the education impact on their investment objective. Table No.7: Table showing the investment objective of various education groups. Investment Objective Education Fixed Income Housing Children education/Marriag e Retirement Plan Tax relief Liquidity Total Under graduate 8(2) 4(1) 8(2) 4(1) 8(2) 32(8) Graduate 36(10) 16(4) 20(6) 24(7) 32(9) 32(9) 160(45) Post Graduate 36(10) 24(7) 28(8) 24(7) 24(7) 28(8) 164(47) Total 80(22) 44(12) 56(16) 52(15) 64(18) 60(17) 356(100)

Graph No.2 Graph showing the investment objective of various education groups.

INVESTMENT OBJECTIVES Fixed Income


40 30 20 10 0 Housing Children education/Marriage Retirement Plan Tax relief Liquidity Inference: FIXED INCOME : Investors who are graduates and post graduates their main objective of investment is fixed income.Graduates and Post graduates give

INVESTORS

Under Graduate Post graduate Graduate EDUCATION

41

second preference for investing as tax relief tool. Under graduates dont have the investment objective of liquidity. Investors objectives differ along with their monthly income. The table below shows investment objective of the investors with their monthly income. Table No.8 Table showing the investment objective of investors of various monthly income levels. Investment Objective Monthly Income Fixed Income Housing Children education/Marriage Retirement Plan Tax relief Liquidity Total Less than 10000 4(1) 4(1) 4(1) 12(3) 1000120000 24(7) 16(4) 16(4) 20(6) 28(8) 20(6) 124(35) Graph No.3 Graph showing the investment objective of investors of various monthly income levels.
Investment objective
35 30 25 20 15 10 5 0 Less than 10000 10001-20000 20001-30000 30001 & above Fixed Income Housing Children education/Marriage Retirement Plan Tax relief Liquidity

2000130000 32(9) 12(3) 16(4) 12(3) 16(4) 28(8) 116(34)

30001 & above 16(4) 16(4) 20(6) 16(4) 20(6) 16(4) 104(28)

Total 76(21) 44(12) 56(16) 48(13) 68(19) 64(18) 356(100)

INVESTORS

MONTHLY INCOME

Inference: Investors in the monthly income group of 20001-30000 prefers for investing mainly for fixed income (9%).The second importance they give is for

42

liquidity of their investments. But investors in the income group of 10001-20000 mainly prefer investing for tax relief(8%). Age has an impact on the awareness of investors. The table below shows the investors awareness about various investment avenues on the basis of the age Table No.9 Table showing the awareness of various investment avenues on the basis of age Investment Avenues Age Banks Post office Deposits Equities Insurance Real estate Mutual Funds Total 20-30 32(6) 32(6) 32(6) 32(6) 24(5) 28(5) 180(34) 31-40 8(2) 8(2) 12(2) 12(2) 12(2) 12(2) 56(12) Graph No.4 Graph showing the awareness of various investment avenues on the basis of age
INVESTMENT AWARENESS
120 100 INVESTORS 80 60 40 20 0 20-30 31-40 41-55 55 & above Total Real estate Mutual Funds Banks Post office Deposits Equities Insurance

41-55 40(8) 40(8) 28(5) 32(6) 28(5) 32(6) 200(38)

55 & above Total 12(2) 92(18) 16(3) 96(18) 12(2) 84(16) 12(2) 88(17) 12(2) 76(15) 16(3) 88(17) 88(16) 524(100)

AGE Inference: Investors in the age group of 21-30 are aware about almost all the investment opportunities, where as investors in the age group of 55 and above

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are not aware of the investment opportunities as of the age group of 21-30.Even investors in the age group of 41-55 is aware of the various investment avenues. The education level has a impact on awareness on the investment avenues. The following table shows the awareness level of the investors on the basis of education. Table No.10 Table showing the awareness of various investment avenues on the basis of Education. Investment Avenues Education Banks Post office Deposits Equities Insurance Real estate Mutual Funds Total Under graduate 12(2) 12(2) 8(2) 8(2) 8(2) 8(2) 56(12) Graduate 32(6) 40(8) 28(5) 32(6) 36(7) 32(6) 200(38) Graph No.5 Graph showing the awareness of various investment avenues on the basis of Education. Post Graduate 48(9) 48(9) 48(9) 48(9) 32(6) 44(8) 268(50) Total 92(18) 100(19) 84(16) 88(17) 76(15) 84(16) 524(100)

INVESTMENT AWARENESS

Post Graduate
EDUCATION

Graduate

Mutual Funds Real estate Insurance Equities Post office Deposits Banks

Under graduate

10

15

20

25

30

35

40

45

50

INVESTORS

Inference:

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Most of the Undergraduates are not aware of investment avenues. Post graduates are aware of most of the investment avenues. Most of them (19%) are aware of post office deposits as investment avenues. Occupation has a very important impact on the awareness level of the investment avenues. It may be because of the peer group or the job profile may have affected on the awareness of the investment avenues. The following table tells us the relationship between awareness level of investment avenues and the occupation. Table No.11 Table showing awareness of various investment alternatives of various occupations. Investment Avenues Occupation Banks Post office Deposits Equities Insurance Real estate Mutual Funds Total Professional 20(4) 20(4) 20(4) 20(4) 12(2) 20(4) 112(22) Salaried 48(9) Business 32(6) Total 100(19) 96(18) 88(17) 84(16) 80(15) 76(15) 524(100)

48(9) 28(5) 40(8) 28(5) 32(6) 32(6) 40(8) 28(5) 28(5) 28(5) 236(45) 156(32) Graph No.6

Graph showing awareness of various investment alternatives of various occupations.


INVESTMENT AWARENESS
60

INVESTORS

50

40

30

Banks Post office Deposits Equities Insurance Real estate Mutual Funds

20

10

Professional

Salaried OCCUPATION

Business

Inference: The awareness level of professional of various investment alternatives is when compared to the business people .The salaried investors are aware of

45

most the investment alternatives. Salaried and business people have equal awareness level for mutual fund. Salaried are more aware of banks and post office deposits as investment avenues. Investment awareness even depends on savings pattern of the investors. The following table tells us about the savings pattern and their awareness level of investment avenues Table No.12 Table showing saving of the investors and their awareness of various investment avenues Investment Avenues Saving Banks Post office Deposits Equities Insurance Real estate Mutual Funds Total Inference: Less than 2500 12(2) 12(2) 8(2) 8(2) 4(1) 4(1) 28(10) 2501-5000 36(7) 36(7) 32(6) 32(6) 32(6) 36(7) 204(39) 5001-10000 32(6) 32(6) 24(5) 28(5) 32(6) 32(6) 180(34) 10001 & above 16(3) 16(3) 16(3) 16(3) 12(2) 16(3) 92(17) Total 96(18) 96(18) 80(15) 84(16) 80(15) 88(17) 524(100)

The awareness level of various investment alternatives in the monthly saving group of Rs2501-5000 and Rs5001-10000 is high. But awareness level of investment avenues of investors monthly income is less than 2500 is very low. Table No.13 Table showing awareness of investment and the investors monthly income. Investment Avenues Monthly Income Banks Post office Deposits Equities Insurance Real estate Mutual Funds Total Less than 10000 4(1) 4(1) 1000120000 36(7) 36(7) 36(7) 36(7) 24(5) 32(6) 200(39) 2000130000 36(7) 32(6) 28(5) 36(7) 36(7) 36(7) 204(39) 30001 & above 20(4) 20(4) 20(4) 20(4) 12(2) 20(4) 112(22) 46 Total 96(18) 92(18) 84(16) 92(18) 72(14) 88(16) 524(100)

8(2)

Inference:

Investors monthly income between 10001-30000 are aware of most

of the investment avenues, but investors monthly income less than 10000 are aware of only 2 investment avenues. Occupation has a very important impact on the purpose of investing in ULIP. It may be because of the peer group or the job profile may have affected on the awareness of the investment avenues. The following table tells us the relationship between purpose of investing in ULIP and their occupation Table No.14 Table showing the purpose of investing in ULIP on their occupation Purpose of investing In ULIP Occupation Returns Liquidity Protection for dependents Tax Relief Total Professional 8(6) 8(6) 4(3) 12(9) 32(24) Salaried 20(15) 8(6) 12(9) 20(15) 60(45) Business 12(9) 8(6) 8(6) 12(9) 40(31) Total 40(30) 24(18) 24(18) 44(33) 132(100)

Graph No.7 Graph showing the purpose of investing in ULIP on their occupation
INVESTMENT IN ULIP
25

20

INVESTORS

15

10

Returns liquidity Protection for dependents Tax Relief

Professional

Salaried

Business

OCCUPATION

Inference:

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Investment in ULIP by the investors is mainly for tax relief (33%) and returns (30%).Most of the salaried invest in ULIP for the purpose of returns and a tool for tax relief and benefits. Investing in ULIP as a purpose of liquidity investment is same for professionals, salaried and also for business people. Investors objectives for investing in ULIP differs along with their monthly income.the table below shows the purpose of investing in ULIP and the monthly income of the investors. Table No.15 Table showing purpose of investing in ULIP on the basis of monthly income Purpose of Investing In ULIP Monthly Income Returns Liquidity Protection for dependents Tax Relief Total

Less than 10000

1000120000 12(9) 4(3) 4(3) 12(9) 32(24) Graph No.8

2000130000 16(12) 12(9) 16(12) 16(12) 60(45)

30001 & above 12(9) 8(6) 4(3) 16(12) 40(31)

Total 40(30) 24(18) 24(18) 44(33) 132(100)

Graph showing Educational qualification of the investors and their purpose of investment in mutual funds.
INVESTMENT IN ULIP

MONTHLY INCOME

30001 & above

20001-30000

Tax Relief Protection for dependents liquidity Returns


10001-20000

Less than 10000

10

12

14

16

18

INVESTORS

Inference:

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Investors in the all monthly income group invest in ULIP mainly with an objective of tax relief (33%).Investors monthly income less than 10000 are not interested in investing in ULIP, this may be because of other investment that they have already invested. Investors income between 20001-30000 have equal importance for returns, protection for dependents and tax relief. Education level has an impact on the purpose of investing in mutual fund. The table below shows education of the investors and the purpose of investment in the mutual fund Table No.16 Table showing Educational qualification of the investors and their purpose of investment in mutual funds. Purpose of Investment in M/Fs Education Professionally Managed Returns Liquidity Tax relief Total Under graduate 4(3) 4(3) 8(6) 16(12) Graduate 20(14) 20(14) 8(6) 12(9) 60(43) Graph No.9 Graph showing Educational qualification of the investors and their purpose of investment in mutual funds. Post Graduate 24(17) 24(17) 4(3) 12(9) 64(45) Total 48(34) 52(37) 8(6) 32(23) 140(100)

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INVESTMENT IN MUTUAL FUNDS


30

25

INVESTORS

20

15

Professionally Managed Returns Liquidity Tax relief

10

0 Under graduate Graduate Post Graduate

EDUCATION

Inference:

Postgraduates

invest

in

mutual

funds

because

they

are

professionally managed and have good returns (17%). Investment in mutual fund as a liquidity instrument is very less among investors. Graduates invest in mutual funds because they are professionally managed and have good returns (14%). Occupation of the investors can have influence on the purpose of investing in the mutual fund. The table below shows the purpose of investment in mutual fund and their occupation Table No.17 Table showing the purpose of investment in mutual funds on the basis of the investors occupation Purpose Of investment Occupation Professionally Managed Returns Liquidity Tax relief Total Inference: Most of investors purpose of investing in mutual fund is because it is professionally managed (34%). Investors dont see mutual fund as a liquidity investment avenue, only the business people see it as a liquidity instrument. The Professional 12(9) 12(9) 8(6) Salaried 12(9) 16(11) 16(11) Business 24(17) 24(17) 8(6) 8(6) Total 48(34) 52(37) 8(6) 32(23) 140(100)

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business people are the one who invest mainly for the purpose of returns and professional management.

Impact of Age on the investment horizon. The table below shows the investment horizon of investors on basis of their age Table No. 18 Table showing the investment horizon of the investors on the basis of their age Investment Horizon Age Less than 1 year 1-2 years 2-5 years 5 year and above Total 20-30 4(4) 8(8) 16(16) 4(4) 32(32) 4(4) 8(8) 12(12) Graph No.10 Graph showing the investment horizon of the investors on the basis of their age 31-40 41-55 4(4) 8(8) 12(12) 16(16) 40(40) 4(4) 4(4) 8(8) 16(16) 55 & above Total 8(8) 20(20) 36(36) 36(36) 100(100)

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Inference: Investor between the ages 41-55 are investing for a long term i.e for more than 5 years. Investors between the ages20-30 are investing for term of 2-5 years. Most of the investors dont invest for a short term (less than a year). The education level of the investors will have impact on their investment horizon. The table below shows investment horizon of the horizon and their education qualification. Table No.19 Table showing the education of the investors and their investment horizon. Investment Hori zon Age Less than 1 year 1-2 years 2-5 years 5 year and above Total 8 4 12

Under graduate

Graduate 4 8 8 20 40

Post Graduate 4 12 20 12 48

Total 8 20 36 36 100

Graph No.11 Graph showing the education of the investors and their investment horizon.

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INVESTMENT HORIZON

Post Graduate

EDUCATION

Graduate

5 year and above 2-5 years 1-2 years Less than 1 year

Under graduate

10

15

20

25

INVESTORS

Inference: 50% of the graduates invest for more than 5 years .Approximately 40% of the post graduates invest for a period between 2-5 years. Investors investment horizon is related to their monthly income. The table below shows the investment horizon and their monthly income. Table No.20 Table showing investment horizon of investors and their monthly income Investment Horizon Age Less than 1 year 1-2 years 2-5 years 5 year and above Total Less than 10000 1000120000 8 8 16 8 40 Graph No.12 Graph showing investment horizon ofHorizon investors and their monthly income Investment Number of Investors 20 15 10 5 0 Less than 10000 1000120000 20001- 30001 & 30000 above 53 Monthly Income 2000130000 12 12 12 36 30001 & above

4 4

4 16 20

Total 8 20 36 36 100

Less than 1 year 1-2 years 2-5 years 5 year and above

Inference: People having monthly income of more than Rs10000 invest for long term. People investing for more than 5 years are those who are having monthly income of more than 30000.

Age is one of the crucial factor influencing investment decisions either in ULIP or Mutual fund. The table below shows the investment option of the investors and their age Table No.21 Table showing the age of the investors and their option to invest either in ULIP/mutual fund/both. Investment optio n Age ULIP Mutual fund Both Total

20-30 8 28 36

31-40 12 12 Graph No.13

41-55 8 24 8 40

55 & above 4 4 4 12

Total 12 36 52 100

Graph showing the age of the investors and their option to invest either in ULIP/mutual fund/both.

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Inference The age group between 20-30 liketo invests in ULIP and Mutual fund. But the age groups above 55 are very risk averse, so they dont like to expose themselves to Mutual fund. Investors in the age group of 31-40 would lke to invest in Mutual funds because they are mainly intereted in returns Education has an impact on investment in ULIP or in mutual fund .the table below shows the education of the investors and the investment option they have choosed Table No.22 Table showing the education of the investors and their option to invest either in ULIP/mutual fund/both. Investment option Education ULIP Mutual fund Both Total 4 8 12 Uner graduate Graduate 8 16 16 40 Graph No.14 Table showing the education of the investors and their option to invest Post Graduate 4 16 28 48 0 Others Total 12 36 52 100

Investment either in ULIP/mutual fund/both


30 Number of 20 Investors 10 0 ULIP Mutual fund

Option

Under graduate Graduate Post Graduate Others 55 Both

Of their lac Inference Most of the Undergraduates dont like to invest in ULIP this may be because their lack of knowledge.Most of the post graduates prefers to invest in oth, this shows that education level plays a very important role in investing ULIP or Mutual fund. Investing in ULIP/Mutual fund/both depends on the savings pattern of the investors .The table below shows the savings of the investors and investment their option. Table No.23 Table showing savings of the investors and their option to invest either in ULIP/mutual fund/both. Investment Monthly option Savings ULIP Mutual fund Both Total

less than 2500 4 8 12

25015000 24 16 40

5001-10000 4 8 20 32

10001 & above 8 8 16

Total 12 36 52 100

Graph No.15 Investment option Graph showing savings of the investors and their option to invest either in ULIP/mutual fund/both 25 20 ULIP Number of 15 Mutual fund Investors 10 5 Both 0 less 2501- 5001-10001 than 5000 10000 & 2500 above 56 Monthly Savings

Inference: Most of the investors prefer to invest in ULIP as well as Mutual Funds. Investors monthly saving below 5000 are not interested investing only in ULIP, but they are interested in investing in both the investment opportunities. INTRODUCTION The primary data collected through the questionnaire was thoroughly analyzed and then presented in the form of tables and graphs .The findings from the analysis has been listed below: Summary of Findings. Investors awareness about all investment avenues: Investors in the age group of 21-30 are aware about almost all the investment opportunities, where as investors in the age group of 55 and above are not aware of the investment opportunities as of the age group 21-30.Even investors in the age group of 41-55 are aware of the various investment avenues. Most of the Undergraduates are not aware of investment avenues. Post graduates are aware of most of the investment avenues. Most of investors (19%) are aware of post office deposits as investment avenues. The awareness level of professionals of various investment avenues is less when compared to the business people .The salaried investors are aware of most the investment avenues. Salaried and business people have equal awareness level for mutual fund. Salaried are more aware of banks and post office deposits as investment avenues.

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The awareness level of various investment avenues in the monthly saving group of Rs2501-5000 and Rs5001-10000 is high. Investors saving less than 2500 are having very less awareness of various investment avenues. Investors monthly income between 10001-30000 are aware of most of the investment avenues, but investors monthly income less than 10000 are aware of only 2 investment avenues Investors Objective behind their investment: Investors in the age group of 41-55, invest with an objective of fixed income (11%). In the same age group 8% of them prefer for future, like children education or marriage. The second important objective for many investors is for tax relief (19%). Investors who are graduates and post graduates their main objective of investment is fixed income. Graduates and Post graduates give second preference for investing as tax relief tool. Under graduates dont have the investment objective of liquidity. Investors in the monthly income group of 20001-30000 prefers for investing mainly for fixed income (9%).The second importance they give is for liquidity of their investments. But investors in the income group of 10001-20000 mainly prefer investing for tax relief (8%). Most of the salaried investors main objective for investment avenues is fixed income. Objective/purpose of investing in Mutual Funds and Ulip: ULIP: Investment in ULIP by the investors is mainly for tax relief (33%) and returns (30%). Investors in the age group of 21-30 mainly invest for tax relief and returns. It is same even for the investors in the age group of 4155. Most of the salaried invest in ULIP for the purpose of returns and as a tool for tax relief and benefits. Investing in ULIP as a purpose of liquidity 58

investment is same for professionals, salaried and also for business people. Investors in all the monthly income group invest in ULIP mainly with an objective of tax relief (33%).Investors monthly income less than 10000 are not interested in investing in ULIP, this may be because of other investment that they have already invested. Investors monthly income between 20001-30000 has equal importance for returns, protection for dependents and tax relief.

MUTUAL FUND: Most of investors purpose of investing in mutual fund is because it is professionally managed (34%). Investors main objective of investing in mutual fund is returns. Investors in the age group of 41-55 invest with the objective of good returns and also for tax relief. Postgraduates invest in mutual funds because they are professionally managed and have good returns (17%). Investment in mutual fund as a liquidity instrument is very less among investors. Graduates invest in mutual funds because the funds are professionally managed and have good returns (14%). Most Investors dont see mutual fund as a liquidity investment avenue, only the business people see it as a liquidity instrument. The business people are the one who invest mainly for the purpose of returns and professional management.

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CONCLUSION Investment awareness of individuals differs on their age, education, occupation, monthly income and their savings. Even investors objectives differ from each individual. Investors objective differs even in investing in Unit linked insurance plans and mutual funds. Most of the investors prefer to invest in both the investment avenues. But only few prefer to invest only in Unit linked insurance plans. Returns in Unit linked insurance plans and mutual funds are almost similar. The financial planner has to know the objectives of the investors and know the risk appetite of the investors and then should suggest the best investment avenue Investors awareness about all investment avenues Investors in the age group of 21-30 are aware about almost all the investment opportunities, where as investors in the age group of 55 and above are not aware of the investment opportunities as of the age group 21-30.Even investors in the age group of 41-55 are aware of the various investment avenues.Most of the Undergraduates are not aware of investment avenues. Post graduates are aware of most of the investment avenues..The awareness level of professionals of various investment avenues is less when compared to the business people .The salaried investors are aware of most the investment avenues. Salaried and business people have equal awareness level for mutual fund. Salaried are more

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aware of banks and post office deposits as investment avenues. Investors saving less than 2500 are having very less awareness of various investment avenues. Investors monthly income between 10001-30000 are aware of most of the investment avenues, but investors monthly income less than 10000 are aware of only 2 investment avenues Investors Objective behind their investment: Investors in the age group of 41-55, invest with an objective of fixed income (11%). In the same age group 8% of them prefer for future, like children education or marriage. The second important objective for many investors is for tax relief (19%).Investors who are graduates and post graduates their main objective of investment is fixed income. Graduates and Post graduates give second preference for investing as tax relief tool. Under graduates dont have the investment objective of liquidity. Investors in the monthly income group of 2000130000 prefers for investing mainly for fixed income (9%).The second importance they give is for liquidity of their investments. But investors in the income group of 10001-20000 mainly prefer investing for tax relief (8%). Objective/purpose of investing in Mutual Funds and Ulip: ULIP: Investment in ULIP by the investors is mainly for tax relief (33%) and returns (30%). Investors in the age group of 21-30 mainly invest for tax relief and returns. It is same even for the investors in the age group of 41-55. Most of the salaried invest in ULIP for the purpose of returns and as a tool for tax relief and benefits. Investing in ULIP as a purpose of liquidity investment is same for professionals, salaried and also for business people. Investors in all the monthly income group invest in ULIP mainly with an objective of tax relief (33%).Investors monthly income less than 10000 are not interested in investing in ULIP, this may be because of other investment that they have already invested. Investors monthly income between 20001-30000 has equal importance for returns, protection for dependents and tax relief.

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MUTUAL FUND: Most of investors purpose of investing in mutual fund is because it is professionally managed (34%). Investors main objective of investing in mutual fund is returns. Investors in the age group of 41-55 invest with the objective of good returns and also for tax relief. Postgraduates invest in mutual funds because they are professionally managed and have good returns (17%). Investment in mutual fund as a liquidity instrument is very less among investors. Graduates invest in mutual funds because the funds are professionally managed and have good returns (14%). SUGGESTIONS The suggestions made here are based on the study conducted as a part of Bajaj capital Ltd. It is necessary for the financial planners to remember that, customer is the decision maker. It is important to make plans according to customer requirements. Financial services industry started its growth very recently, so creating awareness among various professionally managed funds is necessary. They should try to understand the needs and preferences of investors and keep re scheduling the portfolios. Planners taking on the role of guides can also help investors become aware of certain needs that have not yet been realized. Age, education, occupation, monthly income and savings of individual play a very crucial role in awareness and objectives of investment opportunities, so the financial planner should be very meticulous in financial planning of individuals.

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Awareness about ULIP is very less among investors, so it is very important for financial advisors and planners to tell about the benefits of ULIP and how it can be suited to individual needs. Most of the investors prefer to invest in mutual fund for the reason because it is having good returns, but even ULIP funds is also professionally managed and even it is having good returns.

1. BOOKS Association of Mutual Funds of India Bulletin Financial management Prasanna Chandra Financial services ICFAI press ( VOL I )

2. MAGAZINES CFA CHARTERED FINANCIAL ANALYLIST INVESTMENT MONITOR ASIA INSURANCE POST

3. WEBSITES www.amfiindia.com- Association of Mutual Funds of India www.mutualfundsindia.com - Mutual funds of India www.bajajcapital.com- Bajaj Capital Ltd. www.rupeelane.com www.investopedia.com 63

www.equitymaster.com www.icfaipress.org

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