PROJECT REPORT

ON
COMPARATIVE ANALYSIS OF INVESTMENT
AVENUES
Submitted in Partial fulfillment of two year full time MBA
Degree (2012-2014)
Under the supervision of

Submitted To:
Submitted By:

PREFACE

In this volatile capital market it has become very difficult for the investors that
where they should invest so as to have maximum profit. Since January, 2008
market has crashed from 21000 points to 13000 so investors could not decide of
investment avenues. The broking houses who are in the business of providing
investment opportunities and options to its clients are in trouble that how to
make their portfolio so that clients can gain.
This project takes you through with the great investment avenues available for
the investors, their comparative analysis so as to understand various investment
opportunities and satisfy investors. This project helps understanding the
differences between the different investment options and also guides you to
choose one of them as Investment Avenue.
So, it helps organization to improve their offerings in this volatile market and
take them towards development of their customer base.
All these steps help me to understand how to cope up with different types of
people and there diversified need and satisfaction level.

DECLARATION
I, Raj Kumar student of Malout Institute of Management & Information
Technology (MIMIT), Malout hereby declare that the summer training report
1

on Comparative Analysis of Investment Avenues submitted to the

Department of Management Studies in partial fulfillment of Degree of Masters
of Business Administration is the original work conducted by me.
The information and findings presented in this report are genuine,
comprehensive and reliable based on the data collected by me. The project was
undertaken as a part of the course curriculum of MBA full time program.
The matter presented in this report will not be used for any other purpose and
will be strictly confidential.
(Raj Kumar)

ACKNOWLEDGEMENT
2

Summer training is one of the most vital and active part of the curriculum of
management students. Its basic idea behind this is to strengthen the students
concept through practical training and make them acquainted with actual
method and procedures.
A project includes various fields of study which need a proper analysis and
which is not possibly done by an individual, it requires help from various
persons.
I would like to extend my heartfelt gratitude to my mentor, Ms Rajinder Kaur,
for all the support and necessary guidance throughout the project work. Without
her support and co-operation it would not have been possible for me to
complete the final research project.

Table of Contents
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 Preface
Declaration
Acknowledgement
Introduction to various investment avenues
Objective of study
Scope of study
Research methodology
Method of data collection
Questionnaire design
Sample size
Sampling technique
Data Analysis & Interpretation
Suggestions and recommendations
Limitation of study
Bibliography
Annexure

INVESTMENT AVENUES

INTRODUCTION
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Savings form an important part of the economy of any nation. With the savings
invested in various options available to the people, the money acts as the driver
for growth of the country. Indian financial scene too presents a plethora of
avenues to the investors. Though certainly not the best or deepest of markets in
the world, it has reasonable options for an ordinary man to invest his savings.
The money you earn is partly spent and the rest saved for meeting future
expenses. Instead of keeping the savings idle you may like to use savings in
order to get return on it in the future, this is called Investment.
One needs to invest and earn return on your idle resoures and generate sum of
money for a specific goal in life and make a provision for an uncertain future
.One of the important reason why people needs to invest wisely is to meet the
cost of inflation. Inflation is the rate at which the cost of living increases.
The cost of living is simply what it costs to buy the goods and services you need
to live. Inflation causes money to lose value because it will not buy the same
amountof a good or service in the future as it does now or did in the past. The
sooner one starts investing the better. By investing early you allow your
investments more time to grow, whereby the concept of compounding increases
your income, by accumulating the principal and the interest or dividend earned
on it, year after year. Tha three golden rules for all investors are :
Invest Early
Invest regularly
Invest for long term and not for short term
INVESTMENTS
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The dictionary meaning of investment is to commit money in order to earn a

financial return or to make use of the money for future benefits or advantages.
People commit money to investments with an expectation to increase their
future wealth by investing money to spend in future years. For example, if you
invest Rs. 1000 today and earn 10 %over the next year, you will have Rs.1100
one year from today.
An investment can be described as perfect if it satisfies all the needs of all
investors. So, the starting point in searching for the perfect investment would
be to examine investor needs. If all those needs are met by the investment, then
that investment can be termed the perfect investment. Most investors and
advisors spend a great deal of time understanding the merits of the thousands
of investments available in India. Little time, however, is spent understanding
the needs of the investor and ensuring that the most appropriate investments
are selected for him.
The Investment Needs of an Investor
By and large, most investors have eight common needs from their investments:
1. Security of Original Capital;
2. Wealth Accumulation;
3. Comfort Factor;
4. Tax Efficiency;
5. Life Cover;
6. Income;
7. Simplicity;
8. Ease of Withdrawal;
9. Communication.
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Security of original capital: The chance of losing some capital has been a
primary need. This is perhaps the strongest need among investors in India, who
have suffered regularly due to failures of the financial system.
Wealth accumulation: This is largely a factor of investment performance,
including both short-term performance of an investment and long-term
performance of a portfolio. Wealth accumulation is the ultimate measure of the
success of an investment decision.
Comfort factor: This refers to the peace of mind associated with an
investment. Avoiding discomfort is probably a greater need than receiving
comfort. Reputation plays an important part in delivering the comfort factor.
Tax efficiency: Legitimate reduction in the amount of tax payable is an
important part of the Indian psyche. Every rupee saved in taxes goes towards
wealth accumulation.
Life Cover: Many investors look for investments that offer good return with
adequate life cover to manage the situations in case of any eventualities.

Income: This refers to money distributed at intervals by an investment, which

are usually used by the investor for meeting regular expenses. Income needs
tend to be fairly constant because they are related to lifestyle and are well
understood by investors.

Ease of withdrawal: This refers to the ability to invest long term but
withdraw funds when desired. This is strongly linked to a sense of ownership.
It is normally triggered by a need to spend capital, change investments or cater
to changes in other needs. Access to a long-term investment at short notice can
only be had at a substantial cost.
Communication: This refers to informing and educating investors about the
purpose and progress of their investments. The need to communicate increases
when investments are threatened.
Security of original capital is more important when performance falls.
Performance is more important when investments are performing well.
Failures engender a desire for an increase in the comfort factor.
Perfect investment would have been achieved if all the above-mentioned needs
had been met to satisfaction. But there is always a trade-off involved in
making investments. As long as the investment strategy matches the needs of
investor according to the priority assigned to them, he should be happy.
The Ideal Investment strategy should be a customized one for each investor
depending on his risk-return profile, his satisfaction level, his income, and his
expectations. Accurate planning gives accurate results. And for that there must
be an efficient and trustworthy roadmap to achieve the ultimate goal of wealth
maximization.

Choosing the Right Investment Options

After understanding the concept of investment, the investors would like to
know how to go about the task of investment, how much to invest at any
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moment and when to buy or sell the securities, This depends on investment
process as investment policy, investment analysis, valuation of securities,
portfolio construction and portfolio evaluation and revision. Every investor
tries to derive maximum economic advantage from his investment activity.
For evaluating an investment avenues are based upon the rate of return, risk
and uncertainty, capital appreciation, marketability, tax advantage and
convenience of investment. The following Table should give the clear picture
relating to the investors investment decisions in various financial market
instruments. The choice of the best investment options will depend on personal
circumstances as well as general market conditions. For example, a good
investment for a long-term retirement plan may not be a good investment for
higher education expenses. In most cases, the right investment is a balance of
three things: Liquidity, Safety and Return.

Investment Options in India

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Some of the most preferred Investment Avenues

NoN-MARKETABLE FINANCIAL ASSETS
A good portion of the financial assets of individual investors is held in the form
of non-marketable financial assets like bank deposits, post office deposits,
company deposits, provident fund deposits. The main feature of these assets is
that they represent personal transactions between the investor and the issuer. For
Example, when you open a saving bank a/c , you deal with bank personally. In
contrast, When you buy equity shares in the stock market you do not know who
is the seller.
Bank Deposits
Bank deposit simply refers to opening a bank a/c & depositing money in it.
There are various kind of bank A/Cs: current A/c, saving a/c, Fixed deposit a/c.
While a deposit in current A/c does not earn any interest, deposits in other bank
a/c earn Interest.
Company Deposits
Many companies, large and small, solicit fixed deposits from the public.Fixed
deposits mobilized by manufacturing companies are regulated by RBI. Key
feature of co. deposits are as :
1. For a manufacturing co. the term of deposits can be one to three
years, whereas for a non-banking finance co. it can vary between
25 months to 5 years.
2. The interest rate on it are higher than those on bank deposits.
3. Company deposit represent unsecured loans.
4. It offers the facility for premature withdrawal to attract deposits.
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 Public provident fund scheme

Individuals & HUFs can participate in this scheme. A PPF a/c may be opened
at any branch of the SBI or its subsidiaries or at specified branches of other
nationalized banks. The subscriber to a PPF a/c is required to make a min.
deposit of rs.100 per year. The max. permissible deposit per year is
rs.70000/-.PPF currently earn a compound interest rate of 8% p.a. which is
totally exempt from taxes.

Fixed InCOME SECURITIES

It includes the following:
Government Securities
Saving Bonds
Private sector Debentures
Public sector undertaking bonds
Government Securities
Debt securities issued by the central government, state government and
quasi-government agencies are referred to as govt. securities or giltedged securities. Govt. securities have maturities ranging from 3-20
years and carry interest rates that usually vary between 8 and 10 %.
RBI Savings Bonds
Individuals, HUFs, and NRIs can invest in these bonds. The minimum
amount of investment is rs.1000/-. There is no upper limit. The maturity
period is 5 years from the date of issue. The interest rate is 8% p.a.,

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payable half-yearly. These bonds can be offered as security to banks for

availing loans.
Private sector debenture
Akin to promissory notes, debentures are instruments meant for raising
Long-term debt. The obligation of a co. towards its debenture holders is
similar to that of a borrower who promises to pay interest and principal
at specified times.
When a debenture issue is sold to the investing public, a trustee is
appointed through deed. The trustee is usually a bank or financial
institution.
Public Sector Undertaking Bonds
PSUs issue debentures that are referred to as PSU bonds. There are two
broad varieties of PSU bonds: taxable bonds and tax-free bonds. There
is no deduction of tax at source on the interest paid on these bonds. They
are transferable by mere endorsement and delivery. There is no stamp
duty applicable on transfer. They are traded on stock exchanges.
Fixed Deposits
It same as a term or time deposit. Money may be placed with a bank, merchant
bank, building society or credit union for a fixed term at a fixed rate of interest
which remains unchanged during the period of the deposit. Depositors may have
to accept an interest penalty if they break the deposit, ie, ask to take the money
out before the agreed period has expired.
Few points which FD investors must consider at the time of investment,
1. Safety
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FDs have conventionally been the premier choice for investors with a low risk
appetite; assured returns is the key factor which attracts investors towards
deposits. Stick to FDs of the highest credit rating i.e. those with a AAA rating
even if their rates seem modest vis--vis those offered by company deposits.

2. Tenure
Short tenured fixed deposits continue to be your best bet. With interest rates on
the ascent, a further hike in rates offered by fixed deposits cannot be ruled out.
Locking your investments in longer tenured instruments may lead to an
opportunity loss.
3. Liquidity
Find out how FD fares on the pre-mature encashment front i.e. how easily can
your investment be liquidated. Also enquire about the penalty clauses, e.g. do
you suffer a loss of interest and/or principal amount. Compare how various FDs
rank on this parameter and pick the best deal; thereby try to minimise the impact
of illiquidity which is typically associated with FDs.
4. Additional benefits
Fixed deposits from reputed entities offer additional benefits, e.g. they can be
used as collateral against which loans can be raised. Select a fixed deposit
scheme which scores favourably on such parametersAny investment portfolio should comprise the right mix of safe, moderate and
risky investments. While mutual funds and stocks are the favorite contenders for
moderate and risky investments,fixed deposits, government bonds etc. are
considered safe investments. Fixed deposits have been particularly popular
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among a large section of investors in India as a safe investment option for a long
period.
With fixed deposits or FDs as they are popularly known, a person can invest an
amount for a fixed duration. The banks provide interest rates depending on this
loan amount and the tenure of deposit. Here are the benefits, drawbacks of fixed
deposits and precautions one should take while making such investments.

Mutual funds
A Mutual Fund is a trust that pools the savings of a number of investors who
share a common financial goal. The money thus collected is then invested in
capital market instruments such as shares, debentures and other securities. The
income earned through these investments and the capital appreciation realized is
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 invest in a diversified, professionally managed basket
of securities at a relatively low cost. The flow chart below describes broadly the
working of a mutual fund:
Mutual Fund Operation Flow Chart

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ORGANISATION OF A MUTUAL FUND

There are many entities involved and the diagram below illustrates the
organizational set up of a mutual fund:

Mutual fund units are Issued and redeemed by the Fund Management Company
based on the fund's net asset value (NAV), which is determined at the end of
each trading session. NAV is calculated as the value of all the shares held by the
fund, minus expenses, divided by the number of units Issued. Mutual Funds are
usually long term investment vehicle though there some categories of mutual
funds, such as money market mutual funds which are short term instruments.

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A) Equity Funds
Equity funds are considered to be the more risky funds as compared to other
fund types, but they also provide higher returns than other funds. It is advisable
that an investor looking to invest in an equity fund should invest for long term
i.e. for 3 years or more. There are different types of equity funds each falling
into different risk bracket. In the order of decreasing risk level, there are
following
Types of equity funds:-

Aggressive Growth funds

Growth Funds
Equity income /Dividend yield
Diversified equity funds
Equity Index Funds
Value Funds
B) Money Market/Liquid Funds
Money market / liquid funds invest in short-term (maturing within one year)
interest bearing debt instruments. These securities are highly liquid and provide
safety of investment, thus making money market / liquid funds the safest
investment option when compared with other mutual fund types. However, even
money market / liquid funds are exposed to the interest rate risk. The typical
investment options for liquid funds include Treasury Bills (issued by
governments), Commercial papers (issued by companies) and Certificates of
Deposit (issued by banks).
C) HYBRID FUNDS

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As the name suggests, hybrid funds are those funds whose portfolio includes a
blend of equities, debts and money market securities. Hybrid funds have an
equal proportion of debt and equity in their portfolio. There are following types
of hybrid funds in India:

Balanced Funds
Growth-and-Income Funds
Asset Allocation Funds
D) GILT FUNDS
Also known as Government Securities in India, Gilt Funds invest in government
papers (named dated securities) having medium to long term maturity period.
Issued by the Government of India, these investments have little credit risk (risk
of default) and provide safety of principal to the investors. However, like all
debt funds, gilt funds too are exposed to interest rate risk. Interest rates and

prices of debt securities are inversely related and any change in the interest rates
results in a change in the NAV of debt/gilt funds in an opposite direction.

Pros & cons of investing in mutual funds:

For investments in mutual fund, one must keep in mind about the Pros and cons
of investments in mutual fund.
Advantages of Investing Mutual Funds:
A. Professional Management - The basic advantage of funds is that, they are
professional managed, by well qualified professional. Investors purchase funds
because they do not have the time or the expertise to manage their own
portfolio. A mutual fund is considered to be relatively less expensive way to
make and monitor their investments.
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B. Diversification - Purchasing units in a mutual fund instead of buying

individual stocks or bonds, the investors risk is spread out and minimized up to
certain extent. The idea behind diversification is to invest in a large number of
assets so that a loss in any particular investment is minimized by gains in others.
C. Economies of Scale - Mutual fund buy and sell large amounts of securities at
a time, thus help to reducing transaction costs, and help to bring down the
average cost of the unit for their investors.
D. Liquidity - Just like an individual stock, mutual fund also allows investors to
liquidate their holdings as and when they want.
E. Simplicity - Investments in mutual fund is considered to be easy, compare to
other available instruments in the market, and the minimum investment is small.
Most AMC also have automatic purchase plans whereby as little as Rs. 2000,
where SIP start with just Rs.50 per month basis.
Disadvantages of Investing Mutual Funds:
A. Professional Management- Some funds doesnt perform in neither the
market, as their management is not dynamic enough to explore the available
opportunity in the market, thus many investors debate over whether or not the
so-called professionals are any better than mutual fund or investor him self, for
picking up stocks.
B. Costs The biggest source of AMC income is generally from the entry &
exit load which they charge from investors, at the time of purchase. The mutual

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fund industries are thus charging extra cost under layers of jargon.
C. Dilution - Because funds have small holdings across different companies,
high returns from a few investments often don't make much difference on the
overall return. Dilution is also the result of a successful fund getting too big.
When money pours into funds that have had strong success, the manager often
has trouble finding a good investment for all the new money.
D. Taxes - when making decisions about your money, fund managers don't
consider your personal tax situation. For example, when a fund manager sells a
security, a capital-gain tax is triggered, which affects how profitable the
individual is from the sale. It might have been more advantageous for the
individual to defer the capital gains liability

Equity Market
A stock market is a public market for the trading of company stock and
derivatives at an agreed price; these are securities listed on a stock exchange as
well as those only traded privately.
Indian stock markets particularly the BSE and the NSE, had been a preferred
destination not only for the Indian investors but also for the Foreign investors.
Although Indian Markets had been through tough times due to various scams,
but history shows that they recovered very fast. Many types of scrip had been
value creators for the investors. People have earned fortunes from the stock
markets, but there are people who have lost everything due to incorrect timings
or selection of fundamentally weak companies.
Equity shares
At the most basic level, stock (often referred to as shares) is ownership, or
equity, in a company. Investors buy stock in the form of shares, which represent
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a portion of a company's assets (capital) and earnings(dividends). As a

shareholder, the extent of your ownership (your stake) in a company depends on
the number of shares you own in relation to the total number of shares available
For example, if you buy 1000 shares of stock in a company that has issued a
total of 100,000 shares, you own one per cent of the company.
While one per cent seems like a small holding, very few private investors are
able to accumulate a shareholding of that size in publicly quoted companies,
many of which have a market value running into billions of pounds. Your stake
may authorize you to vote at the company's annual general meeting, where
shareholders usually receive one vote per share.
In theory, every stockholder, no matter how small their stake, can exercise some
influence over company management at the annual general meeting. In reality,
however, most private investors' stakes are insignificant. Management policy is
far more likely to be influenced by the votes of large institutional investors such
as pension funds.
a) STOCKS SYMBOLS
A stock symbol, or 'Epic' symbol, is the standard abbreviation of a stock's name.
You can find stock symbols wherever stock performance information is
published - for example, newspaper stock listings and investment websites.
Company names also have abbreviations called ticker symbols. However, it's
worth remembering that these may vary at the different exchanges where the
company is quoted.
b) PERFORMANCE INDICATORS
Here is a list of the standard performance indicators
Performance Indicator

Definition

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Closing price: The last price at which the stock was bought or sold
High and low : The highest and lowest price of the stock from the previous
trading day
52 week range: The highest and lowest price over the previous 52 weeks
Volume:

The amount of shares traded during the previous trading day

High and low

Net change:

The difference between the closing price on the last trading

day and the closing price on the trading day prior to the last.
THE STOCK EXCHANGES
A marketplace in which to buy or sell something makes life a lot easier.
The same applies to stocks. A stock exchange is an organization that provides a
marketplace in which investors and borrowers trade stocks. Firstly, the stock
exchange is a market for issuers who want to raise equity capital by selling
shares to investors in an Initial Public Offering (IPO). The stock exchange is
also a market for investors who can buy and sell shares at any time.
a) Trading shares on the stock exchange
As an investor in the INDIA, you can't buy or sell shares on a stock exchange
yourself. You need to place your order with a stock exchange member firm (a
stockbroker) who will then execute the order on your behalf. The NSE AND
BSE are the leading stock exchange in the INDIA. Trading is done through
computerized systems.
b) The trading process
If you decide to buy or sell your shares, you need to contact a stockbroker who
will buy or sell the shares on your behalf. After receiving your order, the
stockbroker will input the order on the SETS or SEAQ system to match your
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order with that of another buyer or seller. Details of the trade are transmitted
electronically to the stockbroker who is responsible for settling the trade. You
will then receive confirmation of the deal.
c) Types of shares available on the stock exchange
You cannot trade all stocks on the stock exchange. To be listed on a stock
exchange, a stock must meet the listing requirements laid down by that
exchange in its approval process. Each exchange has its own listing
requirements, and some exchanges are more particular than others. It is possible
for a stock to be listed on more than one exchange. This is known as a dual
listing.

Derivative Market
Is a product whose value is derived from the value of one or more basic
variables, called underlying. The underlying asset can be equity, index, foreign
exchange (forex), commodity or any other asset. Derivative products initially
emerged as hedging devices against fluctuations in commodity prices and
commodity-linked derivatives remained the sole form of such products for
almost three hundred years. The financial derivatives came into spotlight in
post-1970 period due to growing instability in the financial markets. However,
since their emergence, these products have become very popular and by 1990s,
they accounted for about two thirds of total transactions in derivative products.

Types of derivatives
The most commonly used derivatives contracts are forwards, futures and
options, which we shall discuss in detail later. Here we take a brief look at
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various derivatives contracts that have come to be used.

A. Forwards: A forward contract is a customized contract between two entities,
where settlement takes place on a specific date in the future at today's preagreed price.
B. Futures: A futures contract is an agreement between two parties to buy or
sell an asset at a certain time in the future at a certain price. Futures contracts
are special types of forward contracts in the sense that the former are
standardized exchange-traded contracts.
C. Options: Options are of two types - calls and puts. Calls give the buyer the
right but not the obligation to buy a given quantity of the underlying asset, at a
given price on or before a given future date. Puts give the buyer the right, but
not the obligation to sell a given quantity of the underlying asset at a given price
on or before a given date.
D. Swaps: Swaps are private agreements between two parties to exchange cash
flows in the future according to a prearranged formula. They can be regarded as
portfolios of forward contracts. The two commonly used swaps are:
Interest rate swaps: These entail swapping only the interest related
cash flows between the parties in the same currency.
Currency swaps: These entail swapping both principal and interest
between the parties, with the cash flows in one direction being in a
different currency than those in the opposite direction.

Insurance

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People need insurance in the first place. An insurance policy is primarily

meant to protect the income of the familys bread earners. The idea is if any
one or both die their dependents continue to live comfortably. The circle of
life begins at birth follower by education, marriage and eventually after a
Life time of work we look forward to life of retirement. Our finances too tend
to change as we go through the various phases of life. In the first twenty of
our life, we are financially and emotionally dependents on our parents and
their are no financial commitments to be met. In the next twenty years we
gain financial independence and provide financial independence to our
families. This is also the stage when our income may be unable to meet the
growing expenses of a young household. In the next twenty as we see our
Investments grow after our children grow and become financially
independent. Insurance is a provision for the distribution of risks that is to say
it is a financial provision against loss from unavoidable disasters. The
protection which it affords takes form of a guarantee to indemnify the insured
if certain specified losses occur. The principle of insurance so far as the
undertaking of the obligation is concerned is that for the payment of a certain
sum the guarantee will be given to reimburse the insured. The insurer in
accepting the risks so distributes them that the total of all the amounts is paid
for this insurance protection will be sufficient to meet the losses that occur.
Insurance then provide divided responsibility. This principle is introduced in
most stores where a division is made between the sales clerk and the cashiers
department the arrangement dividing the risks of loss. The insurance
principle is similarly applied in any other cases of divided responsibility. As a
business however insurance is usually recognized as some form of securing a
promise of indemnity by the payment of premium and the fulfilment of
certain other stipulations

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Types of insurance
A)

Term insurance plans

Term insurance is the cheapest form of life insurance available. Since a term
insurance contract only pays in the event of eventuality the life cover comes at
low premium rates. Term insurance is a useful tool to purchase against risk of
early death and protection of an asset.
B) Endowment plans
Endowment plans are savings and protection plans that provide a dual benefit of
protection as well as savings. Endowment plans pay a death benefit in the event
of an eventuality should the customer survive the benefit period a maturity
benefit is paid to the life insured.
C) Whole of life plans
A whole of life plan provides life insurance cover to an individual up to a
specified age. A whole of life plan is suitable for an individual who is looking
for an extended life insurance cover and /or wants to pay premium over as long
as tenure as possible to reduce the amount of upfront premium payment.
D) Pension plans
Pension plans allow an individual to save in a tax deferred manner. An
individual can either contribute through regular premiums or make single
premium investments. Savings accumulate over the deferment period. Once the
contract reaches the vesting age , the individual has the option of choosing an
annuity plan from a life insurance company. An annuity is paid till the life the
lifetime of the insured or a predetermined period depending upon the annuity
option chosen by the life insured.
E) Unit Linked Insurance Plans
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Unit linked insurance plan (ULIP) is life insurance solution that provides for the
benefits of risk protection and flexibility in investment. The investment is
denoted as units and is represented by the value that it has attained called as Net
Asset Value (NAV). The policy value at any time varies according to the
value of the underlying assets at the time. In a ULIP, the invested amount of the
premiums after deducting for all the charges and premium for risk cover under
all policies in a particular fund as chosen by the policy holders are pooled
together to form a Unit fund. A Unit is the component of the Fund in a Unit
Linked Insurance Policy. The returns in a ULIP depend upon the performance of
the fund in the capital market. ULIP investors have the option of investing
across various schemes, i.e., diversified equity funds, balanced funds, debt
funds etc. It is important to remember that in a ULIP, the investment risk is
generally borne by the investor.
In a ULIP, investors have the choice of investing in a lump sum (single
premium) or making premium payments on an annual, half-yearly, quarterly or
monthly basis. Investors also have the flexibility to alter the premium amounts
during the policy's tenure. For example, if an individual has surplus funds, he
can enhance the contribution in ULIP. Conversely an individual faced with a
liquidity crunch has the option of paying a lower amount (the difference being
adjusted in the accumulated value of his ULIP). ULIP investors can shift their
investments across various plans/asset classes (diversified equity funds,
balanced funds, debt funds) either at a nominal or no cost.
Expenses Charged in a ULIP
Premium Allocation Charge

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A percentage of the premium is appropriated towards charges initial and

renewal expenses apart from commission expenses before allocating the units
under the policy.
Mortality Charges
These are charges for the cost of insurance coverage and depend on number of
factors such as age, amount of coverage, state of health etc.
Fund Management Fees
Fees levied for management of the fund and are deducted before arriving at the
NAV.
Administration Charges
This is the charge for administration of the plan and is levied by cancellation of
units.
Surrender Charges
Deducted for premature partial or full encashment of units.
Fund Switching Charge
Usually a limited number of fund switches are allowed each year without
charge, with subsequent switches, subject to a charge.
Service Tax Deductions
Service tax is deducted from the risk portion of the premium.

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COMPARATIVE ANALYSIS of investment avenues

Return

Safety

Volatility Liquidity

Convenience

Equity

High

Low

High

High

Moderate

Bonds

Moderate

High

Moderat

Moderate

High

Moderate

e
Moderat

Low

Low

Low

Moderate

Co. Debentures

Moderate

Co. FDs

Moderate

Low

e
Low

Bank Deposits

Low

High

Low

High

High

PPF

Moderate

High

Low

Moderate

High

Insurance

Low

High

Low

Low

Moderate

Mutual Funds

High

High

Moderat

High

High

29

RESEARCH METHODOLOGY
RESEARCH DESIGN

A Research design is purely and simply the framework of plan for a study that
guides the collection and analysis of data. The study is intended to find the
investors preference towards various investment avenues. The study design is
descriptive in nature.
DESCRIPTIVE RESEARCH
Descriptive study is a fact-finding investigation with adequate interpretation. It
is the simplest type of research and is more specific. Mainly designed to gather
descriptive information and provides information for formulating more
sophisticated studies.

METHODS OF DATA COLLECTION

Primary data : Telephonic survey, Questionnaire
Secondary data : Newspapers, Websites
Sample Size : 100
Research Area : Bathinda
Sampling Technique
30

Convenience method of sampling is used to collect the data from the

respondents. Researchers or field workers have the freedom to choose
whomever they find, thus the name convenience. About 100 samples were
collected from Malout and Bathinda cities.

OBJECTIVE OF THE STUDY

To understand all about different investment avenues available in India.
1. To find out how the investors get information about the various financial
instrument
2. To find out the saving habits of the different customers and the amount
they invest in various financial instruments.
3. In which type of financial instrument they like to invest.
4. To give a recommendation to the investors that where they should invest.

SCOPE OF STUDY
The study enables to have a better knowledge of investing option available in
the market. The study highlights some of the most important investing
options available with the Indian investors. It gives an overview of pros and
cons of investing in different avenues and also help in choosing best from
them.

31

DATA ANALYSIS & INTERPRETATION OF

THE STUDY

A.

Number of male and females in survey

Gender

Respondent
32

Male

83

Female

17

Total

100

Table 1.1

Figure 1.1
Interpretation
The male respondent are 83 and the females are 17 which shows the majority of
male respondent in survey.

B. Geographical Distribution
Geographical distribution

% of respondent

Malout
Bathinda

28
72
33

Table 1.2

Figure 1.2
Interpretation
As the sampling area is Noida & Ghaziabad. Here, 72% respondent are from
Ghaziabad & 28% from Noida.

C. Age of the respondent

Age
20-30
31-40
41-50
Above 50
Total

% of Respondent
25
36
27
12
100
34

Table 1.3

Figure: 1.3
Interpretation
The total number of respondent are 100.The % of respondent are : 25 % from
age group 20-30, 36% from age group 31-40, 27% from 41-50 and 12% from
age group above 50.

D. Occupation of Respondent
Occupation
Student
Entrepreneur
Working
Professional
Retired
Total

% of Respondent
5
25
32
23
15
100
Table: 1.4

35

Figure :1.4
Interpretation
As the sample size is 100, where major responses are from working category
i.e. 32% & the rest are 25% from entrepreneur, 23% from professionals, 15%
from retired & 5% from students.
E. Knowledge about the available investment avenues
Investment Options

YES

NO

Mutual fund

55

45

Equity market

75

25

Derivatives

35

65

Fixed Deposit

100

Insurance

98

Table: 1.5

36

Figure :1.5
Interpretation
The responses mention in table 1.5 shows that people are more aware about
investment as fixed deposits (100) in bank because it is a common type of
investment since earlier time, followed by Insurance (98). Near about 75 people
knows about investment in equity shares & 55 in mutual funds. Only 35 people
knows about investment in derivatives because it is common to those people
who are risk taker.

F. Source of Information regarding investment avenues

Sources of information
Media
Newspaper
Co.s sales force
Advertisement

Responses in %
45
30
15
10
Table 1.6

37

Figure 1.6
Interpretation
Table 1.5 shows that media is the most powerful source of information
regarding investment avenues, for example: Zee Business, CNBC Aawaz.
After media newspaper is a good source of information. Co.s sales force &
advertisement are also helpful in providing such information.

G. Rating given to Investment Avenue

More preferred

Moderate

Less preferred

Mutual Fund

25

22

15

Equity

12

18

22

Derivatives

10

33

38

Fixed

80

15

75

15

10

deposits
Insurance

Table:1.7

Interpretation

H. % of Income As Investment

39

% Of Income As Investment

Responses

Below 5 %

37

5-10 %

28

10-20%

20

Above 20%

15
Table 1.8

Figure:1.8
Interpretation

40

I. Basis for making Investment

Basis of Investment

Responses in %

Market Sentiments
Fundamental & technical Analysis
Past performance

43
18
39
Table: 1.9

Figure: 1.9
Interpretation
As per the responses obtained from the survey of 100 people shows that 43%
people takes market sentiments as the basis for making investment, while there
are 39% people, who considers the past performance & only 18% people makes
fundamental & technical analysis for making Investment .

J. Reason for choosing any particular investment option

41

Reason to invest

Responses in %

Maximum Return

45

Tax Saving

12

Safety

18

Regular Income Flow

30
Table : 1.10

Figure :1.10
Interpretation
As responses obtained from people shows that maximum people makes
investment with the aim to gain max. return &regular income flow.Out of 100 ,
43% people Invest to gain Max. return, 29% for regular income flow,17% for
safety & 11% for tax saving.

SUGGESTIONS & RECOMMENDATIONS

42

 To earn good return with less capital risk, a investor have to

be active while designing his portfolio.
Every attributes of investor like his age level, income level,
his expectation level have effect on their portfolio design.
An investor should go with well diversified portfolio in
compare to stick on only one or two investment avenue.
Investors should update his knowledge continuously to grab
good opportunities in market.
Investors should take decision carefully because updation of
portfolio is a costly affair.

LIMITATION OF THE STUDY

43

The project is based upon various financial instrument that are available in India
and the perception level of the customer about these financial instruments. For
which there will be the need of information from the customers about their
knowledge of these financial products. The various limitations of the study are:
Total number of financial instrument in the market is so large that it needs
a lot of resources to analyze them all.
Handling and analyzing such a varied and diversified data needs a lot of
time and resources.
Reluctance of the people to provide complete information about
themselves can affect the validity of responses.
Due to time and cost constraint study is conducted in only area of
Ghaziabad and Noida.
The lack of knowledge in customers about the financial instruments can
be a major limitation.
The Information can be biased due to the use of questionnaire.

Bibliography
44

 www,nseindia.com
www.bseindia.com
www.amfiindia.com
www.mcx.com
www.mutualfundsindia.com
www.scribd.com

Annexure
45

QUESTIONNAIRE

1. What is your age ?

(a) 20-30 [ ]

(b) 31-40 [ ]

(c) 41-50 [ ]

2. Gender
(a) Male

[ ]

(b) Female
46

[ ]

(d) 51 & above [ ]

3. Occupation
(a) Student [ ]

(b) Entrepreneur [ ]

(d) Professional [ ]

(e) Retired [ ]

(c) Working [ ]

4. Do you know about the following investment options

available in financial market?
Mutual Fund

Yes

No

Fixed deposits

Yes

No

Derivatives

Yes

No

Equity

Yes

No

Insurance

Yes

No

5. How do you get information regarding these financial

instruments?
Advertisement [ ]

Media [ ]

Newspaper [ ]

Co.s Sales force [ ]

6. Please rate the following investment options as per your preference
:
Mutual Fund [ ]

Fixed Deposits [ ]

Equity [ ]

Insurance [ ]

Derivatives [ ]

7. How often you invest in these investment avenues?

Regularly

As per mkt. cond.

47

Speculation

9. What is your Annual Income ?

A. 1 to 3 lacs

[ ]

B. 3-5 lacs

[ ]

C. 5-10 lacs

[ ]

D. More

[ ]

10. What % of Income you invest in these financial instrument ?

A. Below 5%

[ ]

B. 5 10 %

[ ]

C. 10 20%

[]

D. Above 20%

[ ]

11. On what basis you invest in any particular investment option :

Past performance

Market Sentiments

Fundamental/tech. analysis

others

12. What are the factors you consider while investing in any of the
financial instrument?
Max. return

Tax saving

Safety

Regular income flow

13. How long you prefer to keep your money invested in any financial
instrument?
Less than 6 months

6 months to 1 yr.

1 to 3 yrs.

More than 3 yrs.

14. How much return you expect from investment?

A. 10 to 20% [ ]

B. 20 to 30%

C. 30 to 50% [ ]

D. above 50% [ ]
48

[ ]

15. Are you satisfied with your investment decision, please rate :
Highly satisfied

Satisfied

Less Satisfied

Not satisfied

49