RESEARCH PROJECT

“ A STUDY OF INVESTMENT PATTERN OF 20

INDIVIDUALS FROM TAXATION POINT OF
VIEW”

NAME- SHREEYA S. KALEKAR

CLASS- M.COM PART 2
ROLL NO- 14547
INTRODUCTION:

The developing countries in world , like India face as seen the enormous task of finding
sufficient capital to utilize in their development efforts. Most of countries find it difficult at at
stage to get out of the vicious circle of poverty that is prevailing of low income, low saving, low
investment, low employment etc and the list goes on. With high capital output ratio, that is
observed India needs very high rates of investments that would take and make leap forward in
her efforts continues of attaining high levels of growth.
The major features that is seen in an investment are safety of principal amount, liquidity, income
and its stability, appreciation and lastly easy transferability. A different variety of investment
avenues in abundance and types are available such as shares, bank, companies, gold and silver,
real estate, life insurance, postal savings. All the investors invest who wish to invest , invest their
surplus money in the above mentioned avenues that are available based on their risk taking
attitude and capacity bearing.

Individual savings and investment pattern plays important role in any economy since it is a
major component of resource market. In the recent past the paradigm shift has been observed
in the strategies of service sector in India. With the increase in purchasing power and the
demand for a wide variety of products by the consumers, The financial markets offer new and
greater opportunities to investors. To tap this vast and expanding market, companies are
developing effective marketing and advertising strategies based on their study and
understanding of the behavior of investors. There are certainly significant differences in
the behavior of the rural consumers from the stand point of product
development, pricing policies, distribution, and after-sales service, which create differences in
requirements for marketing strategies in rural India. Understanding consumer and their
behavior is at the heart of marketing. In recent times, there has been a preoccupation among
financial institutions with customer retention and relationship marketing- essentially
understanding the behavior of consumers after the initial purchase made.

The main endeavor of any saver is to do investment as these small investments made today are to
meet their upcoming expenditures. The investor has a number of investment substitutes; from
traditional investments to newer options of recent years. Investment may be defined as an
employment of funds with the aim of gaining additional growth, in value or additional income.
Investment refers to the accumulation of some kind of asset with hope to get a return from it.
Economic growth of a country is controlled by savings and its transformation into investment.
The objective of the investments includes demographic factors like age, occupation, gender and
income of the savers. The main objective of this research paper is to know and comprehend the
investor’s investment patterns of workforce employed in private segment shipping industries and
the awareness of an individual is related to different investment choices. Its purpose is also to
provide an idea about all the factors considered by investors for an appropriate investment. The
wide range of problems can also be understood relating to investment of employees working in
private sector in shipping industries. Based on the study, it is concluded that investment of an
individual is based on the following three principles: 1. Depending on time either long term or
short term investment. 2. To track the right strategy to exploit the return. 3. To deal with
investible fund as per the financial goal of individual and risk profile. Also the present research
paper provides material facts for developing and expanding in the field of private finance and
investment.

The word “Awareness” refers to a consciousness of the existence of a particular truth, event or
thing. Hence, awareness is a course of action by which, one known’s the existence of a new thing.
This process of knowledge makes a man to have an idea about a thing which he has not known
earlier. However, he may not have a thorough knowledge of that thing. Acquiring the knowledge
of the latest developments in a particular field also amounts to awareness and hence awareness is
a continuous process.

The sense of awareness of an investor towards savings and investment is created modified and
shaped up by various external sources. The print and electronic media such as the dailies, weeklies,
television, radio etc., and personal contact with friends, relatives, investment consultants etc,
contribute a lot in creating awareness among investors. As the awareness of investors is considered
to be indispensable while studying one’s savings and investment pattern, an attempt was made to
measure the awareness level of investors. Awareness is an abstract concept and hence it cannot be
measured directly in quantifiable terms. Moreover, there is no fixed or readymade method
available to measure it but the awareness can be indirectly measured.

Over the years, India has emerged as one of the fastest growing economies in the world and an
attractive investment destination driven by economic reforms and a large consumption base. It
was the fastest growing major economy in 2017-18 with its GDP growing 8.2 per cent and
reaching Rs 167.73 trillion (US$ 2.30 trillion). Between April-September 2018, the GDP (at
constant 2011-12 prices) grew 7.6 per cent year-on-year. A host of factors has enabled this
growth, which includes a highly developed financial system, infrastructure requirements and
proactive government regimes. Domestic and foreign investments both have had made an impact
on the country’s growth. Between April 2000 and June 2018, India has received equity inflows
of US$ 389.60 billion through Foreign Direct Investments (FDI). Foreign Portfolio/Institutional
Investors (FPI/FII) have invested around Rs 12.51 trillion (US$ 171.81 billion) in India between
FY02-18. During April-August 2018, Foreign Institutional Investment in India stood at US$ 5.60
billion. The domestic stock markets ranked second globally in terms of number of Initial Public
Offer (IPO) raised with 161 IPOs offering US$ 5.52 billion upto November 2018.
The country is on a fast pace growth and is expected to become a US$ 5 trillion economy by
2022. Going by the estimates of Government of India, the country will need investments of US$
4.5 trillion to build sustainable infrastructure by 2040.
  Foreign Direct Investment
 Foreign Institutional Investment
 Domestic Investments
 Indian Investments Abroad

Investments are important because in today’s world, just earning money is not enough. You work
hard for the money you earn. But that may not be adequate for you to lead a comfortable lifestyle
or fulfill your dreams and goals. To do that, you need to make your money work hard for you as
well. This is why you invest. Money lying idle in your bank account is an opportunity lost. You
should invest that money smartly to get good returns out of it.

The Indian investor has a number of investment options to choose from. Some are traditional
investments that have been used across generations, while some are relatively newer options that
have become popular in recent years. Here are some popular investment options available in
India.

Stocks

Stocks, also known as company shares, are probably the most famous investment vehicle in
India. When you buy a company’s stock, you buy ownership in that company that allows you to
participate in the company’s growth. Stocks are offered by companies that are publicly listed on
stock exchanges and can be bought by any investor. Stocks are ideal long-term investments. But
investing in stocks should not be equated to trading in the stock market, which is a speculative
activity.

Mutual Funds

Mutual funds have been around for the past few decades but they have gained popularity only in
the last few years. These are investment vehicles that pool the money of many investors and
invest it in a way to earn optimum returns. Different types of mutual funds invest in different
securities. Equity mutual funds invest primarily in stocks and equity-related instruments, while
debt mutual funds invest in bonds and papers. There are also hybrid mutual funds that invest in
equity as well as debt. Mutual funds are flexible investment vehicles, in which you can begin and
stop investing as per your convenience. Apart from tax-saving mutual funds, you can redeem
investments from mutual funds any time as well.
Fixed Deposits

Fixed deposits are investment vehicles that are for a specific, pre-defined time period. They offer
complete capital protection as well as guaranteed returns. They are ideal for conservative
investors who stay away from risks. Fixed deposits are offered by banks and for different time
periods. Fixed deposit interest rates change as per economic conditions and are decided by the
banks themselves. Fixed deposits are typically locked-in investments, but investors are often
allowed to avail loans or overdraft facilities against them. There is also a tax-saving variant of
fixed deposit, which comes with a lock-in of 5 years.

Recurring Deposits

A recurring deposit (RD) is another fixed tenure investment that allows investors to put in a
specific amount every month for a pre-defined period of time. RDs are offered by banks and post
offices. The interest rates are defined by the institution offering it. An RD allows the investor to
invest a small amount every month to build a corpus over a defined time period. RDs offer
capital protection as well as guaranteed returns.

Public Provident Fund

The Public Provident Fund (PPF) is a long-term tax-saving investment vehicle that comes with a
lock-in period of 15 years. Investments made in PPF can be used to earn a tax break. The PPF
rate is decided by the Government of India every quarter. The corpus withdrawn at the end of the
15-year period is completely tax-free in the hands of the investor. PPF also allows loans and
partial withdrawals after certain conditions have been met.

Employee Provident Fund

The Employee Provident Fund (EPF) is another retirement-oriented investment vehicle that earns
a tax break under Section 80C. EPF deductions are typically a part of an earner’s monthly salary
and the same amount is matched by the employer as well. Upon maturity, the withdrawn corpus
from EPF is also entirely tax-free. EPF rates are also decided by the Government of India every
quarter.
National Pension System

The National Pension System (NPS) is a relatively new tax-saving investment option. Investors
in the NPS stay locked-in till retirement and can earn higher returns than PPF or EPF since the
NPS offers plan options that invest in equities as well. The maturity corpus from the NPS is not
entirely tax-free and a part of it has to be used to purchase an annuity that will give the investor a
regular pension.
Since there are so many types of investment vehicles, it is normal for an investor to get
overwhelmed. Someone new to investing would not where to invest their money. Making the
wrong investment choice can lead to financial losses, which is something that no one wants. This
is why you should use the following factors to decide where to invest your money.

Age
Typically, younger investors have fewer responsibilities and a longer time horizon. When you
have a long working life in front of you, you can invest in vehicles with a long-term view and
also keep increasing your investment amount with an increase in your income. This is why
equity-oriented investments like equity mutual funds would be a better option for young
investors, as compared to something like fixed deposits. But on the other hand, older investors
can opt for safer avenues like FDs.

Goal
Investment goals can be either short-term or long-term. For a short-term goal, you should opt for
a safer investment and use the return-generating potential of equities for long-term goals. Goals
can also be negotiable and non-negotiable. For non-negotiable goals like children’s education or
down payment for a house, guaranteed-return investments would be a good choice. But if the
goal is negotiable, which means that it can be pushed back by a few months, then investing in
equity mutual funds or stocks can be beneficial. Plus, if these investments do really well, then
you can even meet the goal before time.

Profile
Another thing to think about when choosing an investment option is your own profile. Factors
like how much you are earning and how many financial dependants you have are also critical. A
young investor with a lot of time on hand may not be able to take equity-related risks if he also
has the responsibility to take care of his family. Similarly, someone older with no dependents
and a steady source of income can choose to invest in equities to earn higher returns.
This is why it is said that when it comes to investments, one size doesn’t fit all. Investments not
only have to be chosen carefully but also planned properly to get the most out of them.
The first step in planning your investments is to figure out the right investment that fits your
profile and needs. Here are a few things to keep in mind when planning your investments:

 Choose investments carefully after doing adequate research

 Don’t fall for quick-buck schemes that promise high returns in a short time
 Review your stock and mutual fund investments periodically
 Consider the tax implications on returns you earn from your investments
 Keep things simple and avoid complicated investments that you don’t understand

In this article, we have learned a lot about investments and the various types of investments.
Now, it’s your time to be smart and to generate wealth.

Investing is a great way to build wealth for future. But do you know you have to pay tax on the
income earned from most of the investment options? Hence, knowing your income tax liability
before choosing an investment option is critical. There are many tax-saving investment options
available in the market that provides the benefit of tax-free income.

The basic thinking of every generation is “think about the present and live in the present also
includes let the past go and thinking about the future is a waste”. Well it is right to some extent if
explained correctly “Think about the present”: means work hard enough in your present as you
have only today in hand and you never know what your future is going to be, working today will
also improve your future. “Let the past go”: no point clinging on to your past as it has no value,
the time has gone and will never return, do not regret but learn from your past; make sure you
learn from your past. “Thinking about the future is a waste”: waste here means waste of time, do
not waste time thinking about the future, instead work today so that along with today even your
tomorrow is secured, also work and save to make sure that your investments future is safe.

The emphasis here is on today for tomorrow. To explain this further, you definitely have a today
to spend on and the expenses to cover, these expenses may include house exp (miscellaneous
ones) expenses for your child’s education also other activities, your own expenses, your spouse’s
expenses, etc. These expenses actually never end. But then, you are earning today tomorrow you
will not be earning, what about your tomorrow? What about your child’s higher studies? What
about an emergency, an unforeseen event? There are so many questions unanswered, so much
that you need to answer, yet you have not investments for your future.

The thought of investments needs to come to your mind since the day you have your first salary
in hand. The reason for investments may vary, but they need to be investments, not saving
money and keeping the same in your pocket or in some hidden wallet in your wardrobe. Keeping
money hidden is simply dead money that has no value. Investments of money in may be a stock
market, or insurances or mutual funds is much better as your money fetches you returns and it
rotates in the market instead of being stagnant in your pockets.

Lets sum down everything and give you not one but many reasons to make investments

Reasons to make investments

Everything you do in life has a reason for example you get married to settle yourself in life with
a soul mate and lead yourself towards a family life, you work to make sure that your family does
not fall short of basic necessities, you save money for various reasons like vacations, unforeseen
events, etc. now you need to know why should you make investments.

Hit the inflation hard

You know keeping money in your wardrobe or under your mattress is very dangerous rite? You
never know when your house will be broken in by burglars and when will you be robbed. You
wouldn’t want to risk your families or your life. Keeping you money in a bank, is it really
sensible? Does it give you enough returns, the answer is NO. Keeping the money with you is not
rotating the money in the market is keeping it dead. Remember it’s not just you it’s a number of
other people with the same thinking of keeping their money at home.

This creates shortage of money in the market. A simple law of scarcity explains, “the scarce the
product the more is its value”, which means that the price for goods and services you pay will
shoot up and will continue to shoot up for the money in the market is scarce. This increases
inflation, inflation to some extent is ok; however it should not increase a lot. By making
investments you keep your money rotating in the market and this keep inflation constant.

Pension and retirement savings

Focusing on today and the requirements of the day is important, however these requirements will
never end they will only increase with time and will also grow as you grow. Remember one thing
you are able to fulfill your requirements today because you are earning enough and hence are
able to spend. What will happen when you stop working? What will happen after you retire?
Employers today do not support you with a pension as most of us work with
private organizations.

Will you be able to pay for yourself and the other growing requirements of your family? A
pension plan or a retirement plan can help you best in investments for your future, where you
will never have to look up to your kids for your expenses. Trust me the feeling of depending on
your children for your basic necessities is a very horrible feeling.

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Let your money work

You work hard to earn each penny, weather it is to spend on basics, luxuries or to save. In the
mean time what is your money doing in the locker or the safe or the bank account, nothing
simply lazing around. Do you know your money can earn you money? The moment your money
has the right direction the right path to follow it can earn you more that you expect. Yes the path
needs to be the right path, either the market directly, or the mutual funds or the insurance to meet
a goal. Focus on you future requirements and you will know where and how to invest. If you do
not have the right knowledge of investments take the help of an advisor.

Meet your financial goals

Each one of us have financial goals in life, these goals may include your child’s higher
education, your retirement, to build your wealth, etc. all of these goals can be met by putting
your money in the right direction in the right manner, however if you do not, your money lies
aimlessly in your bank account and your lockers. Neither your locker nor bank account will fetch
you as much money you require to meet your financial goals. The reason behind this is that your
money is either stagnant or as good as stagnant when not invest correctly.

To build your wealth correctly for your future requirements you need to study the market
properly and work towards the same; in case you have no knowledge about investments you
must seek advice. If you seek advice you will realize that the advisors take a lot of factors into
consideration before suggesting you an investments.

Increase your wealth

Investments are saving and it is saving the right way. Do not forget when in the market under
a fund manager or under an agent, a stock agent or an insurance company you money is put to
work a little aggressively, it includes your capital money or your investments along with the
interest, dividend, higher NAV, etc.

In short on top of your money you are receiving money from the market for taking the risk of
investing money in the market. Remember the higher the risk the higher the returns. It adds value
to your investments; this helps you in creating wealth for your financial goals. You can meet
your financial goals faster, as your money will increase faster.

Secure your families future along with yours

You never know when will you need money and for what reason, the future is not seen to
anyone. Hence all you can do is save money, yes savings are extremely important. In case
anything goes wrong and you are in desperate need of money you can withdraw your money
from the market and use it for the emergency. God forbid if anything happens to you your family
members or legal heirs can use the money to meet their basic needs or continue the same
investments. Money is money and money in the market will always grow. You can always count
on your money for your families or your requirement. Remember if your investments are
invested rightly it will always give you more than you expect.

Everything you do in life has a reason for example you get married to settle yourself in life with
a soul mate and lead yourself towards a family life, you work to make sure that your family does
not fall short of basic necessities, you save money for various reasons like vacations, unforeseen
events, etc. now you need to know why should you make investments.You know keeping money
in your wardrobe or under your mattress is very dangerous rite? You never know when your
house will be broken in by burglars and when will you be robbed. You wouldn’t want to risk
your families or your life. Keeping you money in a bank, is it really sensible? Does it give you
enough returns, the answer is NO. Keeping the money with you is not rotating the money in the
market is keeping it dead. Remember it’s not just you it’s a number of other people with the
same thinking of keeping their money at home.

This creates shortage of money in the market. A simple law of scarcity explains, “the scarce the
product the more is its value”, which means that the price for goods and services you pay will
shoot up and will continue to shoot up for the money in the market is scarce. This increases
inflation, inflation to some extent is ok; however it should not increase a lot. By making
investments you keep your money rotating in the market and this keep inflation
constant.Focusing on today and the requirements of the day is important, however these
requirements will never end they will only increase with time and will also grow as you grow.
Remember one thing you are able to fulfill your requirements today because you are earning
enough and hence are able to spend. What will happen when you stop working? What will
happen after you retire? Employers today do not support you with a pension as most of us work
with private organizations.

Will you be able to pay for yourself and the other growing requirements of your family? A
pension plan or a retirement plan can help you best in investments for your future, where you
will never have to look up to your kids for your expenses. Trust me the feeling of depending on
your children for your basic necessities is a very horrible feeling.

You work hard to earn each penny, weather it is to spend on basics, luxuries or to save. In the
mean time what is your money doing in the locker or the safe or the bank account, nothing
simply lazing around. Do you know your money can earn you money? The moment your money
has the right direction the right path to follow it can earn you more that you expect. Yes the path
needs to be the right path, either the market directly, or the mutual funds or the insurance to meet
a goal. Focus on you future requirements and you will know where and how to invest. If you do
not have the right knowledge of investments take the help of an advisor. Each one of us have
financial goals in life, these goals may include your child’s higher education, your retirement, to
build your wealth, etc. all of these goals can be met by putting your money in the right direction
in the right manner, however if you do not, your money lies aimlessly in your bank account and
your lockers. Neither your locker nor bank account will fetch you as much money you require to
meet your financial goals. The reason behind this is that your money is either stagnant or as good
as stagnant when not invest correctly.

To build your wealth correctly for your future requirements you need to study the market
properly and work towards the same; in case you have no knowledge about investments you
must seek advice. If you seek advice you will realize that the advisors take a lot of factors into
consideration before suggesting you an investments.Investments are saving and it is saving the
right way. Do not forget when in the market under a fund manager or under an agent, a stock
agent or an insurance company you money is put to work a little aggressively, it includes your
capital money or your investments along with the interest, dividend, higher NAV, etc.In short on
top of your money you are receiving money from the market for taking the risk of investing
money in the market. Remember the higher the risk the higher the returns. It adds value to your
investments; this helps you in creating wealth for your financial goals. You can meet your
financial goals faster, as your money will increase faster.

You never know when will you need money and for what reason, the future is not seen to
anyone. Hence all you can do is save money, yes savings are extremely important. In case
anything goes wrong and you are in desperate need of money you can withdraw your money
from the market and use it for the emergency. God forbid if anything happens to you your family
members or legal heirs can use the money to meet their basic needs or continue the same
investments. Money is money and money in the market will always grow. You can always count
on your money for your families or your requirement. Remember if your investments are
invested rightly it will always give you more than you expect.

SEC 80 C:

Under section 80C, a deduction of Rs 1,50,000 can be claimed from your total income. In simple
terms, you can reduce up to Rs 1,50,000 from your total taxable income through section 80C.
This deduction is allowed to an Individual or a HUF. A maximum of Rs 1, 50,000 can be
claimed for the FY 2018-19, 2017-18 and FY 2016-17 each.

If you have paid excess taxes, but have invested in LIC, PPF, Mediclaim, incurred towards
tuition fees etc.and have missed claiming a deduction of the same under 80C, you can file your
Income Tax Return, claim these deductions and get a refund of excess taxes paid.
Every year most of us struggle to save taxes. While most of us have an idea about commonly
known options but tax saving can be challenging for a young newly recruited employee.

The most widely used option to save income tax is section 80C of the Income Tax Act. As per
this section, if an individual or Hindu Undivided Families (HUFs) invests in or spends on
specified avenues then up to Rs 1.5 lakh, as per the current laws, of this investment/expenditure
can be claimed as a deduction from ..
By claiming this deduction, a person can reduce his/her gross taxable income and thereby the
total tax payable by him/her. For example, if your gross total earnings say, for a financial year is
Rs 6.5 lakh and if you invest Rs 1.5 lakh in notified schemes which allows you to claim this tax
benefit, then your net taxable income will come down to Rs 5 lakh and you would have to pay
tax on this amount.

Apart from investment in specified avenues, certain specified expenditures also qualify as
deductions from gross total income under section 80C.
It provides deduction to Individual/HUF in respect of various items like life insurance premium,
investment in Public Provident Fund, investment in NSC, investment in notified units of mutual
funds, deposit in Sukanya Samriddhi account, investment in mutual funds, amount paid for tution
fees, repayment of principal component of housing loan, investment in Post Office Time Deposit
Scheme, Senior Citizens Saving Scheme, etc.

Deduction on account of payment of life insurance premium is restricted to 10% of sum assured.
Overall deduction u/s 80C (along with deduction u/s 80CCC& 80CCD(1)) allowed is up to Rs.
1,50,000.
Minimum holding period

Following is the minimum holding period in respect of certain investments, deposits, etc.,
prescribed above which should be kept in mind while claiming deduction undersection 80C:

Minimum
Nature of Investments/Deposits Holding
Period
ULIP of UTI or LIC 5 years
Life insurance policy 2 years
Senior Citizens Saving Scheme and 5 years
Post Office Time Deposit
Principal Repayment of loan 5 years
including Cost of
Purchase/construction of residential
house property

If any of the aforesaid investments, subscriptions, etc., is terminated, sold, etc., before the
minimum holding period specified above, then the deduction allowed in earlier years would be
deemed as income of the previous year of termination, sale, etc. Further, no deduction will be
allowed in respect of contribution, payment, etc., made towards such policy, units, etc. (i.e.,
which is terminated) during the year of termination.

In case of withdrawal during the life time of depositor from Senior Citizens Savings

Scheme or Post Office Time Deposit before the aforesaid period (i.e., before 5 years), the
amount received on such withdrawal (excluding interest which is already taxed in earlier years)
will be charged to tax in the year of withdrawal

Tax saving investment plans are instrumental in effectively achieving your financial goals.
Investment schemes available in the market provide tax exemptions and tax deductions. Learn
how you can reduce your tax burden by investing in the tax saving schemes at the right time.
Choose from various tax saving mutual funds to claim tax exemptions and/or tax deduction
under section 80c or section 80ccc.

To determine how an investment vehicle is taxed in a given year, first ask yourself what went on
with the investment that year. Did it generate interest income? If so, the income is probably
considered ordinary. Did you sell the investment? If so, a capital gain or loss is probably
involved. (Certain investments can generate both ordinary income and capital gain income, but
we won't get into that here.)

If you receive dividend income, it may be taxed either at ordinary income tax rates or at the rates
that apply to long-term capital gain income. Dividends paid to an individual shareholder from a
domestic corporation or qualified foreign corporation are generally taxed at the same rates that
apply to long-term capital gains. Long-term capital gains and qualified dividends are generally
taxed at special capital gains tax rates of 0 percent, 15 percent, and 20 percent depending on your
taxable income. (Some types of capital gains may be taxed as high as 25 percent or 28 percent.)
The actual process of calculating tax on long-term capital gains and qualified dividends is
extremely complicated and depends on the amount of your net capital gains and qualified
dividends and your taxable income. But special rules and exclusions apply, and some dividends
(such as those from money market mutual funds) continue to be treated as ordinary income.
The distinction between ordinary income and capital gain income is important because different
tax rates may apply and different reporting procedures may be involved. Here are some of the
things you need to know.

Categorizing your ordinary income

Investments often produce ordinary income. Examples of ordinary income include interest and
rent. Many investments — including savings accounts, certificates of deposit, money market
accounts, annuities, bonds, and some preferred stock — can generate ordinary income. Ordinary
income is taxed at ordinary (as opposed to capital gains) tax rates.

But not all ordinary income is taxable — and even if it is taxable, it may not be taxed
immediately. If you receive ordinary income, the income can be categorized as taxable, tax
exempt, or tax deferred.

 Taxable income: This is income that's not tax exempt or tax deferred. If you receive
ordinary taxable income from your investments, you'll report it on your federal income
tax return. In some cases, you may have to detail your investments and income on
Schedule B.
 Tax-exempt income: This is income that's free from federal and/or state income tax,
depending on the type of investment vehicle and the state of issue. Municipal bonds and
U.S. securities are typical examples of investments that can generate tax-exempt income.
 Tax-deferred income: This is income whose taxation is postponed until some point in
the future. For example, with a 401(k) retirement plan, earnings are reinvested and taxed
only when you take money out of the plan. The income earned in the 401(k) plan is tax
deferred.

A quick word about ordinary losses: It's possible for an investment to generate an ordinary loss,
rather than ordinary income. In general, ordinary losses reduce ordinary income.
Understanding what basis means

Let's move on to what happens when you sell an investment vehicle. Before getting into capital
gains and losses, though, you need to understand an important term — basis. Generally
speaking, basis refers to the amount of your investment in an asset. To calculate the capital gain
or loss when you sell or exchange an asset, you must know how to determine both your initial
basis and adjusted basis in the asset.

First, initial basis. Usually, your initial basis equals your cost — what you paid for the asset. For
example, if you purchased one share of stock for $10,000, your initial basis in the stock is
$10,000. However, your initial basis can differ from the cost if you did not purchase an asset but
rather received it as a gift or inheritance, or in a tax-free exchange.

Next, adjusted basis. Your initial basis in an asset can increase or decrease over time in certain
circumstances. For example, if you buy a house for $100,000, your initial basis in the house will
be $100,000. If you later improve your home by installing a $5,000 deck, your adjusted basis in
the house may be $105,000. You should be aware of which items increase the basis of your asset,
and which items decrease the basis of your asset. See IRS Publication 551 for details.

Calculating your capital gain or loss

If you sell stocks, bonds, or other capital assets, you'll end up with a capital gain or loss. Special
capital gains tax rates may apply. These rates may be lower than ordinary income tax rates.

Basically, capital gain (or loss) equals the amount that you realize on the sale of your asset (i.e.,
the amount of cash and/or the value of any property you receive) less your adjusted basis in the
asset. If you sell an asset for more than your adjusted basis in the asset, you'll have a capital gain.
For example, assume you had an adjusted basis in stock of $10,000. If you sell the stock for
$15,000, your capital gain will be $5,000. If you sell an asset for less than your adjusted basis in
the asset, you'll have a capital loss. For example, assume you had an adjusted basis in stock of
$10,000. If you sell the stock for $8,000, your capital loss will be $2,000.

Schedule D of your income tax return is where you'll calculate your short-term and long-term
capital gains and losses, and figure the tax due, if any. You'll need to know not only your
adjusted basis and the amount realized from each sale, but also your holding period, your taxable
income, and the type of asset(s) involved. See IRS Publication 544 for details.

 Holding period: Generally, the holding period refers to how long you owned an asset. A
capital gain is classified as short term if the asset was held for a year or less, and long
term if the asset was held for more than one year. The tax rates applied to long-term
capital gain income are generally lower than those applied to short-term capital gain
income. Short-term capital gains are taxed at the same rate as your ordinary income.

 Taxable income: Long-term capital gains and qualified dividends are generally taxed at
special capital gains tax rates of 0%, 15%, and 20% depending on your taxable income.
(Some types of capital gains may be taxed as high as 25 percent or 28 percent.) The
actual process of calculating tax on long-term capital gains and qualified dividends is
extremely complicated and depends on the amount of your net capital gains and qualified
dividends and your taxable income.

 Type of asset: The type of asset that you sell will dictate the capital gain rate that applies,
and possibly the steps that you should take to calculate the capital gain (or loss). For
instance, the sale of an antique is taxed at the maximum tax rate of 28 percent even if you
held the antique for more than 12 months.

Using capital losses to reduce your tax liability

You can use capital losses from one investment to reduce the capital gains from other
investments. You can also use a capital loss against up to $3,000 of ordinary income this year
($1,500 for married persons filing separately). Losses not used this year can offset future capital
gains. Schedule D of your federal income tax return can lead you through this process.

New Medicare contribution tax on unearned income may apply

High-income individuals may be subject to a 3.8 percent Medicare contribution tax on unearned
income (the tax, which first took effect in 2013, is also imposed on estates and trusts, although
slightly different rules apply). The tax is equal to 3.8 percent of the lesser of:

 Your net investment income (generally, net income from interest, dividends, annuities,
royalties and rents, and capital gains, as well as income from a business that is considered
a passive activity), or
  The amount of your modified adjusted gross income that exceeds $200,000 ($250,000 if
married filing a joint federal income tax return, $125,000 if married filing a separate
return)
So, effectively, you're subject to the additional 3.8 percent tax only if your adjusted gross income
exceeds the dollar thresholds listed above. It's worth noting that interest on tax-exempt bonds is
not considered net investment income for purposes of the additional tax. Qualified retirement
plan and IRA distributions are also not considered investment income.

 Saving money is an important part of every financial plan. Putting money aside each
month will help you prepare for emergencies, stay out of debt and reach your financial
goals.
 But setting money aside and saving only gets you so far. To build your savings faster,
you may consider investing. This could be in short-term, lower-risk investments, or long-
term, higher-risk investments.
 Here are some reasons people invest:
 To harness the power of compound interest – compounding allows you to earn more
by re-investing the money you earn on your investments. Learn more about growing your
savings with compound interest.
 To meet savings goals faster – stashing money under your mattress may help you save,
but your money isn’t working for you, and may actually be losing value due to inflation.
Saving and earning interest can help you meet your goals faster.
 To save for long-term goals – the longer your time horizon (the amount of time before
you need your money), the less concerned you’ll be over short-term market volatility.
See how time horizon affects risk and return.
 Understanding risk and return
 Some investments are riskier than others – there’s a greater chance you could lose some
or all of your money. For example, Canada Savings Bonds (CSBs) have very low risk
because they are issued by the government of Canada. GICs and bank deposits also carry
low risk because they are backed by large financial institutions. With GICs and deposits
you also have the additional protection of deposit insurance on amounts up to $100,000 if
your financial institution goes bankrupt. With these low-risk investments you are unlikely
to lose money. However, they have a lower potential return than riskier investments and
they may not keep pace with inflation.
 Over the long-term, bonds have a potentially higher return than CSBs and GICs, but they
also have more risks. Their prices may drop if the issuer’s creditworthiness declines or
interest rates go up. Learn more about the risks of bonds.
 Stocks have a potentially higher return than bonds over the long term, but they are also
riskier. Bondinvestors are creditors. As a bond investor, you’re legally entitled to fixed
 amounts of interest and principal and are repaid in priority if the company goes bankrupt.
However, if the company is successful, you won’t earn more than the fixed amounts of
interest and principal. Shareholders are owners. As a shareholder, if the company is
unsuccessful, you could lose all of your money. But if the company is successful, you
could see higher dividends and a rising share price.
 Some investments, such as those sold on the exempt market are highly speculative and
very risky. They should only be purchased by investors who can afford to lose all of the
money they have invested.
 All investments involve some degree of risk. In finance, risk refers to the degree of
uncertainty and/or potential financial loss inherent in an investment decision. In general,
as investment risks rise, investors seek higher returns to compensate themselves for
taking such risks.
 Every saving and investment product has different risks and returns. Differences include:
how readily investors can get their money when they need it, how fast their money will
grow, and how safe their money will be. In this section, we are going to talk about a
number of risks investors face.

They include:

 Business Risk
 With a stock, you are purchasing a piece of ownership in a company. With a bond, you
are loaning money to a company. Returns from both of these investments require that
that the company stays in business. If a company goes bankrupt and its assets are
liquidated, common stockholders are the last in line to share in the proceeds. If there are
assets, the company’s bondholders will be paid first, then holders of preferred stock. If
you are a common stockholder, you get whatever is left, which may be nothing.
 If you are purchasing an annuity make sure you consider the financial strength of the
insurance company issuing the annuity. You want to be sure that the company will still
be around, and financially sound, during your payout phase.

 Volatility Risk
 Even when companies aren’t in danger of failing, their stock price may fluctuate up or
down. Large company stocks as a group, for example, have lost money on average about
one out of every three years. Market fluctuations can be unnerving to some investors. A
stock’s price can be affected by factors inside the company, such as a faulty product, or
by events the company has no control over, such as political or market events.
 Inflation Risk
 Inflation is a general upward movement of prices. Inflation reduces purchasing power,
which is a risk for investors receiving a fixed rate of interest. The principal concern for
individuals investing in cash equivalents is that inflation will erode returns.

 Interest Rate Risk

 Interest rate changes can affect a bond’s value. If bonds are held to maturity the investor
will receive the face value, plus interest. If sold before maturity, the bond may be worth
more or less than the face value. Rising interest rates will make newly issued bonds more
appealing to investors because the newer bonds will have a higher rate of interest than
older ones. To sell an older bond with a lower interest rate, you might have to sell it at a
discount.

 Liquidity Risk
 This refers to the risk that investors won’t find a market for their securities, potentially
preventing them from buying or selling when they want. This can be the case with the
more complicated investment products. It may also be the case with products that charge
a penalty for early withdrawal or liquidation such as a certificate of deposit (CD).

 Are There Any Guarantees?

 The Federal Deposit Insurance Corporation (FDIC) –

Savings accounts, insured money market accounts, and certificates of deposit (CDs) are
generally viewed as safe because they are federally insured by FDIC. This independent
agency of the federal government insures your money up to $250,000 per insured
bank. It is important to note that the total is per depositor not per account. But there’s a
tradeoff between security and availability; your money earns a low interest rate.

 The FDIC insures deposits only. It does not insure securities, mutual funds, or similar
types of investments that banks and thrift institutions may offer.
 The National Credit Union Administration (NCUA) –

The National Credit Union Share Insurance Fund (NCUSIF) is the federal fund created
by Congress in 1970 to insure credit union member’s deposits in federally insured credit
unions. The Dodd -Frank Act permanently established NCUA’s standard maximum
share insurance amount at $250,000. NCUSIF is backed by the full faith and credit of the
U.S. Government.

 Securities Investors Protection Corporation (SIPC) –

Securities you own, including mutual funds that are held for your account by a broker, or
a bank's brokerage subsidiary, are not insured against loss in value. The value of your
investments can go up or down depending on the demand for them in the market. The
Securities Investors Protection Corporation (SIPC), a non government entity, replaces
missing stocks and other securities in customer accounts held by SIPC member firm up to
$500,000, including up to $250,000 in cash, if the firm fails.

 9 types of investment risk

 Market risk
 The risk of investments declining in value because of economic developments or other
events that affect the entire market. The main types of market risk are equity risk, interest
rate risk and currency risk.

 Equity risk –

applies to an investment in shares. The market price of shares varies all the time
depending on demand and supply. Equity risk is the risk of loss because of a drop in the
market price of shares.
 Interest rate risk – applies to debt investments such as bonds. It is the risk of losing
money because of a change in the interest rate. For example, if the interest rate goes up,
the market value of bonds will drop.

 Currency risk – applies when you own foreign investments. It is the risk of losing
money because of a movement in the exchange rate. For example, if the U.S. dollar
becomes less valuable relative to the Canadian dollar, your U.S. stocks will be worth less
in Canadian dollars.

 Liquidity risk
 The risk of being unable to sell your investment at a fair price and get your money out
when you want to. To sell the investment, you may need to accept a lower price. In some
cases, such as exempt market investments, it may not be possible to sell the investment at
all.

 Concentration risk
 The risk of loss because your money is concentrated in 1 investment or type of
investment. When you diversify your investments, you spread the risk over different
types of investments, industries and geographic locations.

 Credit risk
 The risk that the government entity or company that issued the bond will run into
financial difficulties and won’t be able to pay the interest or repay the principal at
maturity. Credit risk applies to debt investments such as bonds. You can evaluate credit
risk by looking at the credit rating of the bond. For example, long-term Canadian
government bonds have a credit rating of AAA, which indicates the lowest possible credit
risk.

 Reinvestment risk
 The risk of loss from reinvesting principal or income at a lower interest rate. Suppose you
buy a bond paying 5%. Reinvestment risk will affect you if interest rates drop and you
have to reinvest the regular interest payments at 4%. Reinvestment risk will also apply if
the bond matures and you have to reinvest the principal at less than 5%. Reinvestment
 risk will not apply if you intend to spend the regular interest payments or the principal at
maturity.

 Inflation risk
 The risk of a loss in your purchasing power because the value of your investments does
not keep up with inflation. Inflation erodes the purchasing power of money over time –
the same amount of money will buy fewer goods and services. Inflation risk is
particularly relevant if you own cash or debt investments like bonds. Shares offer some
protection against inflation because most companies can increase the prices they charge
to their customers. Share prices should therefore rise in line with inflation.
Real estate also offers some protection because landlords can increase rents over time.

 Horizon risk
 The risk that your investment horizon may be shortened because of an unforeseen event,
for example, the loss of your job. This may force you to sell investments that you were
expecting to hold for the long term. If you must sell at a time when the markets are down,
you may lose money.

 Longevity risk
 The risk of outliving your savings. This risk is particularly relevant for people who are
retired, or are nearing retirement.

 Foreign investment risk

 The risk of loss when investing in foreign countries. When you buy foreign investments,
for example, the shares of companies in emerging markets, you face risks that do not
exist in Canada, for example, the risk of nationalization.
 Risk takes on many forms but is broadly categorized as the chance an outcome or
investment's actual return will differ from the expected outcome or return. Risk includes
the possibility of losing some or all of the original investment. Different versions of risk
are usually measured by calculating the standard deviation of the historical returns or
average returns of a specific investment.
 The Basics of Risk

 A high standard deviation indicates a high degree of risk. Many companies allocate large
amounts of money and time in developing risk management strategies to help manage
risks associated with their business and investment dealings. A key component of the risk
management process is risk assessment, which involves the determination of the risks
surrounding a business or investment.

 A fundamental idea in finance is the relationship between risk and return. The greater the
amount of risk an investor is willing to take, the greater the potential return. Investors
need to be compensated for taking on additional risk. For example, a U.S. Treasury
bond is considered one of the safest, or risk-free, investments and when compared to
a corporate bond, provides a lower rate of return. A corporation is much more likely to go
bankrupt than the U.S. government. Because the risk of investing in a corporate bond is
higher, investors are offered a higher rate of return.

 There are several ways to measure risk, such as downside deviations, Roy's safety first
ratio, and portfolio standard deviation. Measuring risk allows investors and traders to
hedge some of that risk away using various strategies including employing derivatives
positions.

 Individuals also have their own willingness and ability to take risk (risk-tolerance) based
on objective factors like income and age as well as subjective factors like personality,
personal experience, and emotion.

 "Riskless" Securities
 On the other end of the investment spectrum, ultra-conservative investors avoid any type
of risk to principal whatsoever. These types of investors seek safety and insured holdings
such as bank certificates of deposits (CDs), whose one-year interest rate averages
approximately 1.25% as of June 2016. Bank deposits are also insured by the Federal
Deposit Insurance Corporation (FDIC), an agency created to maintain consumer
confidence in the U.S. banking system.
 U.S. Treasury's, backed by the full faith and credit of the U.S. government, also appeal to
risk-averse investors. The three-month Treasury bill is considered a riskless security and
is measured against securities that hold higher measures of volatility. As of July 1, 2016,
the 91-day T-bill, purchased at a discount to par value, has a yield to maturity of 0.27%.
 While considered "riskless" all assets - even U.S. government debt - has some, albeit very
small, level of riskiness.
 Morningstar Risk Ratings
 Morningstar is one of the premier objective agencies that affixes risk ratings to mutual
funds and exchange-traded funds (ETF). An investor can match a portfolio’s risk profile
with his own appetite for risk. Highly volatile precious metal ETFs such as the Global X
Gold Explorers ETF receive a high risk rating from Morningstar as the fund invests 48%
of its holdings in international gold mining companies. The highly volatile fund holds a
three-year standard deviation of 59.02 when compared to the Morgan Stanley Capital
Index (MSCI) All Country World Index, whose measure is 11.82. Risk-hungry investors
were rewarded with a 2016 year-to-date (YTD) return of 140.17% through June 30, 2016.

 Types of Financial Risk

 Market risk and specific risk are two different forms of risk that affect assets. All
investment assets can be separated by two categories: systematic risk and unsystematic
risk. Market risk, or systematic risk, affects a large number of asset classes, whereas
specific risk, or unsystematic risk, only affects an industry or particular company.
 Systematic risk is the risk of losing investments due to factors, such as political riskand
macroeconomic risk, that affect the performance of the overall market. Market risk is also
known as volatility and can be measured using beta. Beta is a measure of an investment's
systematic risk relative to the overall market.
 Market risk cannot be mitigated through portfolio diversification. However, an investor
can hedge against systematic risk. A hedge is an offsetting investment used to reduce the
risk in an asset. For example, suppose an investor fears a global recession affecting the
economy over the next six months due to weakness in gross domestic product growth.
The investor is long multiple stocks and can mitigate some of the market risk by
buying put options in the market.
 Specific risk, or diversifiable risk, is the risk of losing an investment due to company or
industry-specific hazard. Unlike systematic risk, an investor can only mitigate against
unsystematic risk through diversification. An investor uses diversification to manage risk
by investing in a variety of assets. He can use the beta of each stock to create a
diversified portfolio.
 For example, suppose an investor has a portfolio of oil stocks with a beta of 2. Since the
market's beta is always 1, the portfolio is theoretically 100% more volatile than the
market. Therefore, if the market has a 1% move up or down, the portfolio will move up
or down 2%. There is risk associated with the whole sector due to the increase in supply
 of oil in the Middle East, which has caused oil to fall in price over the past few months. If
the trend continues, the portfolio will experience a significant drop in value. However,
the investor can diversify this risk since it is industry-specific.
 The investor can use diversification and allocate his fund into different sectors that are
negatively correlated with the oil sector to mitigate the risk. For example, the airlines and
casino gaming sectors are good assets to invest in for a portfolio that is highly exposed to
the oil sector. Generally, as the value of the oil sector falls, the values of the airlines and
casino gaming sectors rise, and vice versa. Since airline and casino gaming stocks are
negatively correlated and have negative betas in relation to the oil sector, the investor
reduces the risks that affect his portfolio of oil stocks.
 Business risk refers to the basic viability of a business—the question of whether a
company will be able to make sufficient sales and generate sufficient revenues to cover
its operational expenses and turn a profit. While financial risk is concerned with the costs
of financing, business risk is concerned with all the other expenses a business must cover
to remain operational and functioning. These expenses include salaries, production costs,
facility rent, and office and administrative expenses. The level of a company's business
risk is influenced by factors such as the cost of goods, profit margins, competition, and
the overall level of demand for the products or services that it sells.
 Other common types of risk include credit risk, default risk, and counterparty risk.

 Risk vs. Uncertainty

 Risk is defined as a calculable probability of loss, such as a standard deviation or using a

technique such as value at risk (VaR). Because it is measurable and probabilistic, risk can
be hedged or insured against, and so reduced. Uncertainty, on the other hand, refers to
circumstances where the outcomes or potential probabilities for a loss are unknown and
unknowable. Because uncertainty cannot be calculated it cannot be fully hedged against.
The distinction between risk and uncertainty can be attributed to the economists John
Maynard Keynes and Frank Knight.
 If you're just starting out, beginning an investment program may be something that hasn't
been on your radar. You may be more concerned with how to pay for items like food and
gasoline. However, if you can scrape together even a small amount of money for
investment purposes, you'll be on your way to creating a much rosier financial picture in
the years to come.
 Tip
 Having financial investments is important because your investments can help you beat
inflation, save for retirement, put your money to work and serve as additional financial
resources.

 Beating the Inflation Rate

 In addition to making for uncomfortable sleeping, stuffing your money under a mattress
does little to mitigate the impact of inflation over time. Putting your money in a regular
bank savings account won't help much either because of the typically minuscule interest
rates. While placing your money in investment vehicles, such as stocks and mutual funds,
introduces an element of risk, you stand a much better chance of outpacing the inflation
rate throughout a period of years.

 Saving for Retirement

 Depending solely on Social Security benefits as your source of retirement income
probably won't cut it unless you plan to subsist on a diet of rice and water. Unless your
company offers a sizable pension plan, you will probably need to start an investment
program as early as possible to ensure a comfortable retirement. IRAs offer an easy way
to invest for retirement and also provide certain tax benefits. If your employer offers a
401(k) plan, you can benefit from the matching funds that many companies will deposit
in your account on your behalf.

 Putting Your Money to Work

 If you have a job, you're undoubtedly familiar with the concept of working for your
money. Investing allows you to turn the tide by making your money work for you.
Through the magic of compound interest, for example, your accumulated interest actually
earns additional money without you having to lift a finger. Consequently, your original
investment can multiply greatly over time. For example, if you invested $1,000 at an
interest rate of 7 percent compounded annually, your investment would grow to
$7,612.26 after 30 years.
 Having More Financial Resources
 Some investments can fulfill more than one financial purpose and serve as a valuable
resource. For instance, when you purchase a home, it may appreciate in value and yield a
handsome profit when you sell it. Additionally, as you make your monthly mortgage
payments you build up equity, which is the amount of your ownership stake in the
property. You can borrow against your accumulated equity by taking out a home equity
loan or home equity line of credit to help you more immediate financial needs.
 Saving is closely related to investment. By not using income to buy consumer goods &
services, it is possible for resources to be invested by being used to produce fixed capital,
such as factory & machinery. Saving can therefore be vital to increase the amount of
fixed capital available which contributes to economic growth.
 However increased saving doesn’t always refers to increased investment. If saving is not
deposited in a financial intermediary like bank or stashed for any reason there is no
chance for those savings to be recycled as investment by business.
 This means saving may increase without increasing investment possibly causing a short
fall of demand rather than to economic growth. It may happen during recession period. In
the short term, if saving falls below investment, it can lead to a growth of aggregate
demand and an economic boom. In the long term, if saving falls below investment it
eventually reduces investment and detracts from future growth is made possible by
foregoing present consumption to increase investment.
 Saving & Investment are two crucial elements of macro-economics. The term Saving &
Investment sometimes make us confusing & we use these terms in interchangeably. So
concept of Saving & Investment should be cleared. Spending less on consumption than
available one’s disposable income called individual saving or simply saving. It bears no
risk or a slight of risk at all. It can be deposited in a bank or pension fund, buy a business,
pay down debt etc. The common element of saving is the claim on asset that can be used
to pay for future consumption. If there is return on the saving in the form of dividend,
interest, rent on capital gain there can be a net gain in individual saving and they in
individual wealth.
 When an individual decides to increase saving by consuming less, it will affect others
because he who depends on him will loss his income. Later, he will like to cut his
consumption. Thus it will affect the whole. In such a way, individual saving convert into
aggregate saving.

 Aggregate saving doesn’t increase as a result of individual acquiring pieces of paper like
dollar bill or stock or bond certificates. That merely swap one type of financial asset for
another without affecting the total. Aggregate saving occurs when the nation acquires real
domestic asset. Such as new housing new machinery, new factories and offices, additions
to a firm’s inventory of goods or new claim on asset overseas. And that is preciously
what is meant by investment.

 Investment is one kind of catalyst’s for growth in aggregate wealth. Without increasing
aggregate saving we cannot increase investment. Increasing individual saving will not
increase aggregate saving unless they increase investment.
  We have seen earlier. The relationship of saving & Investment & how there is a little bit
difference of them which will be mentioned here.

 We know saving includes reducing expenditure, such as recurring cost. In term of

personal finance, saving refers to low risk preservation of money like deposit account
whereas investment specifics where risk is higher.

Income consumption and saving are all closely liked. More, precisely, personal saving is
that part of disposable income that is not consumed, saving equals income minus
consumption. Remember that macro economics use the term investment or real
investment to mean additions to the stock of productive assets or capital goods like
computers or trucks. when Amazan. com builds a new warehouse or when the Smiths
build a new house. These activities represent investment . Many people speak of
investing when buying a place of land an old security or any title to property. In
economics these purchases are really financial transactions or financial investments,
because what one person is buying someone else is selling. There is investment only
when real capital is produced.

National saving or just saving is the total income in the economy that remains after paying for
consumption and government purchases that is —S=Y-C-G

The terms saving and investment can sometimes be confusing. Most people use these terms
casually and sometimes inter. changeably, By contrast the macro economics who put together the
national income accounts use these terms carefully and distinctly.

RESEARCH METHODOLOGY:

The process used to collect information and data for the purpose of making business decisions.
The methodology may include publication research, interviews, surveys and other research
techniques, and could include both present and historical information.

There are several important aspects to research methodology. This is a summary of the key
concepts in scientific research and an attempt to erase some common misconceptions in science.
A). Introduction

Investment analysis is a broad term that encompasses many different aspects of investing. It can
include analyzing past returns to make predictions about future returns, selecting the type of
investment vehicle that is best for an investor's needs or evaluating securities such
as stocks and bonds for valuation and investor specificity.
Everybody wants a secure future with a comfortable financial cushion. But, how do you go about
building one? How can you earn more without having to work 24×7? You make your money
work for you. That’s what investment is all about. The best thing money can buy is more money
– you need to be investing to get to your financial goals. Now investing isn’t all that easy. You
need to identify the right asset, evaluate whether it is in line with your personal goals, and
then build a strategy to generate good returns. But don’t stress out. To make it easier for you, we
bring you the best investment options to choose from.
There are various options available where one can invest the money like Public Provident Fund
(PPF), Equity Shares, Mutual Funds, Gold, Post Office Schemes, Real Estate, Initial Public
Offerings, Company Fixed Deposits, Unit Linked Insurance Plans, Bonds etc.,Likewise I would
like to focus on one aspect i.e. Mutual Funds.
Mutual Fund is a trust that pools together the resources of investors to make a foray into
investments in the capital market thereby making the investor to be a part owner of the assets of
the mutual fund. It is an organization that pools the resources of various investor for the purpose
of investment. It involves the process of Investor invest money in > Mutual Fund Schemes
(Companies) > Securities will provide Return> it would be passes on to the investor after
deducting the expenses and the commission amount.
The fund is managed by a professional money manager who invests the money collected from
the investors in various stocks, bonds or other securities according to the specific investment
objectives as established by the fund.

The advantage of the Mutual Fund is that

 It is managed professionally
 The risk factor is minimum
 The return is maximum
 Tax benefit
 Choices of the schemes as per the Individual needs
 Liquidity
 Transparency
 Highly Regulated by SEBI
 Flexibility
Anybody with the investible surplus with as little as a few thousands of rupees can invest in
mutual funds by buying units of a particular mutual fund scheme that has a defined investment
objective and strategy. So, we can say that Mutual Funds are trusts which pool resources from
large number of investors through issue of units for investments in capital market instruments
such as shares, debentures and bonds and money-market instruments such as commercial paper,
certificate of deposits and treasury bonds.

There are various types of the Mutual Fund Schemes like the balanced funds, Equity Diversified
Funds, Equity Linked Tax Saving Schemes, Sector Funds, Thematic Funds, Arbitrage Funds,
Hedge Fund, Cash Fund, Exchange Traded Funds.

B). Statement of Problems

To understand the investment pattern of the Individuals. To understand the various schemes and
the areas for investment which would enhance the returns at minimum risk. To remove the risk
fear factor inside the people for the investment . Today also most of the people feel unsafe to
invest their money under it. To provide the statistical data of the people around Pune . To study
the practical aspects along with the data of the statistics.

C). Need of the Study

 To make the people understand the need of the proper investment of the funds
adequately.
 To provide various investments as one of the investment pattern of the individual
 To eradicate the myths and wrong presumptions about thevarious investments
 To make the analysis and to make people aware about the selection of the proper pattern .
 To understand how and which investments have minimum risk and maximum returns
along with the tax benefits.

D). Relevance and Importance of Study

Investing in the various investments is an expert’s job in the present market scenario. A
systematic investment in this instrument is bound to give rich dividends in the long term. That is
why over 2 crore investors have faith in mutual funds also.The money collected from the
investors is invested by a fund manager in different types of securities. These could range from
shares and debentures to money market instruments depending on the schemes stated objectives.
Investment of the funds is the very important task.

E). Assumptions

 The risk factor is minimum in some investments.

 There is quite diversified portfolio by the professional manager
 The selection of the proper investment is carried out
 There are no unethical practices followed

F). Objectives

 To understand various investment patterns of the investment and the distribution of the
funds.
 To remove the myths and fear from the minds of the people about various risk prone
investments.
 To show how it contributes to the tax benefit
 To understand and analyse the risk factors and accordingly take wise decision as to going
with the Market risk prone investments.

G). Justification of Objectives

To study the various patterns by taking the examples of the individual portfolio and studying
accordingly. The investments are professionally managed resource for the investors. There is the
proper selection of the funds and thereby giving maximum returns along with the minimum risk.
Thus to increase the belief of the people in this type of the investment. The market risks and the
fear of loss of the money to be reduced to the extent and make the concept understand clearly.

F). Statement of Hypothesis

 The target is minimization of the risk and the maximization of the returns

 The tax benefit is achieved and other investment patterns as well if managed
appropriately.

 The individuals are aware about the importance of investments and various policies as the
Investment Pattern .

G). Working Definitions

The fund is managed by a professional money manager who invests the money collected from
the investors in various stocks, bonds or other securities according to the specific investment
objectives as established by the fund. The Mutual Fund industry in India started in 1963 with the
formation of the Unit Trust Of India , at the initiative of the Government of India and Reserve
Bank of India.

MUTUAL FUND:

The investment is defined as the asset or item acquired with the goal of generating income or
appreciation. In finance, an investment is a monetary asset purchased with the idea that the asset
will provide income in the future or will later be sold at a higher price for a profit.
Mutual Fund is an organization that pools the resources of various investor for the purpose of
investment. The fund is managed by a professional money manager who invests the money
collected from the investors in various stocks, bonds or other securities according to the specific
investment objectives as established by the fund. Mutual Fund is a trust that pools together the
resources of investors to make a foray into investments in the capital market thereby making the
investor to be a part owner of the assets of the mutual fund.

NET ASSET VALUE

It is the amount which a unit holder would receive if the mutual fund were wound up. An
investor in mutual fund is a part owner of the assets and liabilities. Returns to the investor are
determined by the interplay of two elements , Net Asset Value and Costs of Mutual Funds. NAV
is the ‘Total Assets – Total External Liabilities’ divided by the ‘Total number if units’.

UNITS AND UNIT HOLDER

Equity Shares- Units

Equity Shareholders- Unit Holder

H). Scope of the Study

 To study the various investment patterns of the individuals and accordingly focus on the
maximization of the returns. Thereby enhancing optimum utilizations of the funds.
 There are various banks and the organizations which provide various mutual fund
schemes to the investors and the other investment plans as well.
 The study is based on the analysis of the risk and return analysis of the investors
 The area selected for the study is Pune City.

I). Limitations of the Study

 The data collected of the individuals for study would be for 20 individuals.
 There will be time limit for data collection and data analysis
 Information from the investors might be short but the details of the schemes would be in
depth.
J). Class of Respondents

 Assesse
 Investors
 The Fund Manager
 The Bank Manager

K). Universe and Sample Size

There are numerous Banks and the Companies that provide Mutual Funds. But the sample size
taken is of 2 Fund Managers and 20 assesses.

L). Justification of Sampling Method

We are doing this project only for fulfilling our M. Com Degree and the above sample is given
so, no need of any further justification and we use MS Word and MS Excel for this.

M). Research Design

The process used for the data collection is of questionnaire method . Basically research includes
descriptive as well as conclusive data.

N). Sources of Data

 Primary Data
Direct communication was done with the manager and the investors
 Secondary Data
Secondary Data is the data that has been already collected by and really available from
the other sources. Ex- Published, Unpublished . Personal Sources, Bank Websites and the
Annual Reports.
O). Methods of Data Collection

 Selected 2 Companies and 20 Customers

 Prepare Questionnaires
 Distribute the same questions to them
 Take an interview for further information

P). Tools of Data Collection

The tools for the Mutual Funds are the MS Excel and MS Word

Q). Note on Statistical Tools to be used

We are using percentages for making comparison.

Using the Graphs and Pie Charts.
Using a Table Chart.

1. Technique of Data Analysis

Data is collected and then the data is processed further. Then the fact of opinion is started. Direct
and Indirect data are sorted. The data is studied and important points are jotted down. Opinions
expressed.

2. Review of Relevant Literature

Study Material, Bank and the Companies websites are available , Annual Reports are also
available.

3. Schemes of the Report

Report will be divided in 8 parts:
 Introduction
 Research Methodology
 Literature Review
 Data collection and interpretation
 Data Analysis
 Finding
 Conclusion and Recommendation
 Further scope of Research

R). Knowledge Contributions / Likely Outcomes

I will get information about the Mutual Funds. What is a Mutual Fund and how it is important
for the Investment Purposes. It would be helpful for us and also we should know various types of
the Mutual Fund Schemes . I will also give the detail information about the Mutual Fund
Schemes, its importance in the management of the funds in the effective manner. This project
will thus tell us how the Mutual Funds works, the risk and the return analysis, the tax benefit out
of it.

“Research is a systematic and refined technique of thinking, employing specialized tools,

instruments and procedures in order to obtain a more adequate solution of a problem than would
be possible under possible means. It starts with a problem, collects data or facts, analyses them
critically and reaches decisions based on the actual evidence.” –C.C.Crawford. As above stated
definition, this research will try to collect more and more relevant information with tools like
Primary and secondary collection of data. Collection of data refers to a purposive gathering of
information relevant to the subject matter of the study from the units under investigation.
Primary data are original, collected by researcher for the first time for any investigation and used
for statistical analysis. Secondary data are collected by others and used by others. It is mostly
published in newspapers, periodicals Journals and authentic websites etc. The primary data
collection will be made by personally visiting the colleges and academic institutes in the district.
The sample of 500 respondents will be selected for the study. Secondary data will be collected
from the websites, annual reports as well as publications of SEBI, NISM, RBI and other financial
institutes.
From last two decades, Latur at local level and nearby talukas in the district have emerged as an
important educational hub. Out of 370 colleges affiliated to Swami Ramanand Teerth
Marathawada University, Nanded, there are 131 colleges only in Latur District. With this
numerical data we can come to a conclusion that 35.41% of total affiliated colleges at S.R.T.M.
University, Nanded are concentrated in Latur district only. Such a large numbers of colleges,
teaching, non-teaching staff and a considerable number of students strength, make this research
work significant and being such a high quantum, it is vital to study the investment awareness of
this community.
Saving and investment related available options at Bank Level are- Savings Bank Account, Bank
Fixed Deposit (Bank FDs), Recurring Deposit Account, Special Bank Term Deposit Scheme etc.
Government Schemes for Savings and Investment include National Savings Certificate (NSC),
Public Provident Fund (PPF), Post Office Scheme (POS), Kisan Vikas Patra (KVP) etc. Different
investment products like Bonds , Debentures, Company Fixed Deposits, Mutual Funds, Equity
etc., Insurance Policies like Life Insurance, Term Life Insurance, Endowment Policies, Annuity /
Pension Policies / Funds, Units Linked Insurance Policy (ULIP), Health Insurance,
Comprehensive health insurance coverage, Hospitalisation plan, Critical Illness Plans and other
Specific Conditions Coverage will be considered.

REVIEW OF LITERATURE :

A literature review or narrative review is a type of review article. A literature review is

a scholarly paper, which includes the current knowledge including substantive findings, as well
as theoretical and methodological contributions to a particular topic. Literature reviews
are secondary sources, and do not report new or original experimental work. Most often
associated with academic-oriented literature, such reviews are found in academic journals, and
are not to be confused with book reviews that may also appear in the same publication. Literature
reviews are a basis for research in nearly every academic field.[1] A narrow-scope literature
review may be included as part of a peer-reviewed journal article presenting new research,
serving to situate the current study within the body of the relevant literature and to provide
context for the reader. In such a case, the review usually precedes the methodology and results
sections of the work.
Producing a literature review may also be part of graduate and post-graduate student work,
including in the preparation of a thesis, dissertation, or a journal article. Literature reviews are
also common in a research proposal or prospectus (the document that is approved before a
student formally begins a dissertation or thesis).

“BOOKS ARE THE QUIETEST AND MOST CONSTANT FRIENDS; THEY ARE THE
MOST ACCESSIBLE AND WISEST COUNSELORS, AND THE MOST PATIENT OF
TEACHERS.” -Charles W.Eliot

Review of literature is very important to give better understanding and insight necessary to
develop a broad conceptual framework in which a particular problem can be examined. It helps
in the formation of specific problem and helps acquaint the investigator to what is already known
in relation to the problem under review and it also provides a basis for assessing the feasibility of
the research, Review of literature is important to a scholar in order to know what has been
established and documented as there are critical summaries of what is already known about a
particular topic. Therefore a review of literature helps in relating the present study to the
previous ones in the same field.  Martin P. and McCann B. (1998) in their book titled “The
Investor’s Guide to Fidelity Funds – Winning Strategies for Mutual Fund Investing” have very
nicely guided investors regarding issues related with mutual fund investing. They have advised
that Investors should focus on sectors of the global economy that have the greatest potential for
profit in order to beat the market averages. By combining this approach with the safety provided
by mutual funds’ inherent diversification, mutual funds become an investment vehicle with all
the advantages of trading individual securities and none of the disadvantages. Like any other
investment, it is essential to develop a strategy for selecting which funds to buy and sell – and
when. These decisions should not be left to the emotions or to chance.  Gremillion L (2005) in
his book “Mutual Fund Industry Handbook – A Compehensive Guide for Investment
Professionals” has given detailed information about working of mutual fund industry. It has also
mentioned the different type of challenges faced by various professionals connected with this
industry.

The book has provided a broad and comprehensive sweep of information and knowledge, which
will help everybody who has serious interest in the industry.  Tyson E (2007) in his book
“Mutual Funds for DUMMIES” (5th edition) has provided practical and profitable techniques of
mutual fund investing that investors can put to work now and for many years to come. By proper
selection investor can identify good schemes, where fund managers invest in securities as per
that match investors’ financial goals. Investors can spend their time doing the activities in life
that they enjoy and are best at. Mutual Funds should improve investors’ investment returns as
well as their social life. The book helps investors how to avoid mutual fund investing pitfalls and
maximizing their chances for success. Whenever any investor wants to buy or sell a mutual fund,
the decision needs to fit his overall financial objectives and individual situation.  Jank S (2010)
in his Discussion Paper on “Are there disadvantaged clieneles in mutual funds?” has mentioned
that mutual fund investors chase past performance, even though performance is not persistent
over time. This means that investors buy mutual funds that had a high return in the past. On the
other hand, investors are reluctant to withdraw their money from the worst performing funds.
This behavior has often been attributed to the irrationality of mutual fund investors.
Sophisticated investors rationally chase past performance, because high past performance is a
signal for managerial ability. No significant difference was found between investor composition
of the worst performing funds and those with average performance.  Singh B K (2012) in an
article “A study on investors’ attitude towards mutual funds as an investment option” from
International Journal of Research in Management has reiterated the need for spreading the
awareness about Mutual Funds among common masses. There is a strong need to make people
understand the unique features of investment in Mutual Funds. From the existing investors point
of view the benefits provided by mutual funds like return potential and liquidity have been
perceived to be most attractive by the invertors’ followed by flexibility, transparency and
affordability. 

Divya K. (2012) in the article “A Comparative study on evaluation of Selected

Mutual Funds in India” from International Journal of Marketing and Technology has suggested
that the investment managers whose performance is below benchmark index should have a
relook at their investment strategy and asset allocation. Investing styles should be redesigned
according to up & down swings of the market to generate superior performance. To increase the
efficiency and popularity of mutual funds, the regulator should set the sta mentioned that Out of
five private sector balanced category mutual funds (under study) two earned a return above the
average returns. Two have made negative returns. All the private sector balanced category funds
selected for the study have a positive Sharpe ratio. The range of excess returns over risk free
return per unit of total risk is wide. All the funds selected for the study have a positive Treynor
ratio. All the funds selected for the study has positive Jensen’s alpha indicating superior
performance.  Narayanasamy R. and Rathnamani V (2013) in an article “Performance
Evaluation of Equity Mutual Funds(on selected Equity Large Cap Funds)” from International

Journal of Business and Management Invention have mentioned that all funds performed well
during the period under study despite volatility in the market. The fall in NIFTY during the year
2011 impacted the performance of all selected mutual funds. In order to ensure consistent
performance of mutual funds, investors should also consider statistical parameters like alpha,
beta, standard deviation besides considering NAV and total return.  Santhi N.S. and
Gurunathan K. (2013) in the article “The growth of Mutual Funds and Regulatory Challenges”
from Indian Journal of Applied Research have mentioned that as mutual fund industry has grown
tremendously over past few years, Regulators are keeping close watch on any potential impact of
mutual fund products on financial stability and market volatility. The growth of mutual funds has
been accompanied by innovative products and servicing methods. Regulators will have to do
balancing act by carefully managing risks and not imposing unnecessary regulation.  Iqbal N
(2013) in an article titled, “Market Penetration and Investment Pattern of Mutual Fund Industry”
from International Journal of Advanced Research in Management and Social Sciences has
mentioned that although mutual funds are predominantly present in urban areas but have started
capturing rural markets also through new range of products, new strategies adopted for Rural
Market Penetration and with new awareness programs. As rural market integrate more and more
with urban, there will be huge inflow of investors. The responsibility of various intermediaries’
especially mutual funds will increase manifold.  Sharma R and Pandya N K (2013) in the
article “Investing in Mutual Fund: An overview” from Asian Research Journal of Business
Management mentioned that still number of people are not clear about functioning of Mutual
Funds, as a result so far they have not made a firm opinion about investment in mutual funds. As
far existing investors, return potential and liquidity have been perceived to be most attractive.
There is a lot of scope for the growth of mutual funds in India. People should take decision based
on performance of Mutual fund rather than considering whether it is private sector or public
sector.  Sharma N. and Ravikumar R (2013) in an article “Analysis of the Risk and Return
relationship of Equity based Mutual Fund in India” from International Journal of Advancements
in Research & Technology have mentioned that their study investigated the performance of
Equity based mutual fund schemes using Capital Asset Pricing Model (CAPM). In the long run
private and public sector mutual funds have performed well. But while comparing the
performance over last 15 years it is found that private sector mutual funds have outperformed the
Public Sector mutual funds. The schemes of private sector mutual funds not only performed
better than those of public sector mutual funds but were also found to be less risky.  Vasantha
S. et al (2013) in an article “Evaluating the Performance of some selected open ended equity
diversified Mutual fund in Indian mutual fund Industry” from International Journal of Innovative
Research in Science, Engineering and Technology have stated that risk appetite of an investor
plays an important role in selection of mutual fund. While deciding their investment in mutual
funds investor should take decision based on their investment objective and analyze the fund
based on various criteria such as risk prevailing in the market, variations on the return and
deviations in the return etc.  Jani D and Jain R (2013) in an article “Role of Mutual Funds in
Indian Financial System as a Key Resource Mobilizer” from Abhinav Journal (International

Monthly Referred Journal of Research in Management & Technology) have reiterated that since
fundamentals of Indian economy are relatively strong, the economy will be on a successful path
in the coming year. As economy grows, Mutual Funds are going to be key resource mobilizer for
Indian financial system. Indian Mutual Fund industry is going to observe good growth rate in
near Future.  Nair R K (2014) in the article “Indian Mutual Fund Market – A tool to stabilize
Indian Economy” from International Journal of Scientific and Research Publications has
reiterated that a Mutual fund is a powerful tool to stabilize Indian economy. The products of
mutual funds are playing a vital role in mobilizing scattered savings among investors and
channelize these funds to infrastructural development of the country. The banks and Financial
Institutions are also playing a crucial role by promoting mutual fund business in the country. 
Sehdev R and Ranjan P (2014) in the article “A study on Investor’s perception towards mutual
fund investment” from Scholars Journal of Economics, Business and Management have
mentioned that mostly people are preferring balanced funds and debt funds. After that people
look for Equity diversified and Sector funds. The factors responsible for investors’ preference for
mutual funds as an investment option are benefits and transparency, returns, redemption period,
Liquidity and Institutional Investor’s activity. For information on mutual funds people are mostly
depending on internet rather than any other media channel. 

Cici G et al (2014) in their Discussion Paper on “Market transparency and the marking precision
of bond mutual fund managers” have stated that the transparency enhancing TRACE (Trade
Reporting and Compliance Engine) system was associated with large and statistically decreases
in cross fund bond mark dispersion. They also find some evidence that issuer initiations into
Markit’s CDS (Credit Default Swap) spread database also contributed to a decrease in bond mark
dispersion, but only in pre –TRACE era. These results support the view about people “operating
largely in the dark” applied to not just retail investors but also to professional fund managers. 
Srivastava S and Malhotra S (2015) in an article “A Paradigm Shift in Risk Measuring Tools of
Mutual Fund Industry” from International Journal of Informative & Futuristic Research have
mentioned that equity funds are performing better than debt funds. A strong linear relationship
was found between risk and return. Fund managers can adopt Calmar ratio and safety first ratio
to analyze the risk of selected funds.

No fund is risk free and Investors should invest in equity and equity related instruments to
diversify the risk.  Prabhu G and Vechalekar N.M. in the article “Perception of Indian Investor
towards investment in mutual funds with special reference to MIP Funds” from IOSR Journal of
Economics and Finance have mentioned that most of the investors are aware of various schemes
of mutual funds. The mutual fund investors mainly belong to the age group from 19 years to 55
years. The investors fall in the income group of Rs 30,000 to Rs 70,000 and above. Investors
prefer mutual funds due to diversification of portfolio and tax benefits. Consistent returns given
by funds have been the reason of investors’ interest in MIP fund.

Bibliography:

Websites-

1. http://shodh.inflibnet.ac.in:8080/jspui/bitstream/123456789/4011/3/03_litrature%20review.pdf
2. https://www.mutualfundindia.com/
3. https://www.icai.org/

Reference Books-

1. Francis, J C; Taylor, R W (2004) – Schaum‘s Outline of Theory and Problems of

Investments New Delhi : Tata McGraw Hill.
2. Avadhani, V A (1995)- Investment for Beginners Bombay : Himalaya Publishing House.
DATA ANALYSIS AND INTERPRETATION:

Data analysis is the most crucial part of any research. Data analysis summarizes collected data. It
involves the interpretation of data gathered through the use of analytical and logical reasoning to
determine patterns, relationships or trends. Data analysis is a process of
inspecting, cleansing, transforming, and modeling data with the goal of discovering useful
information, informing conclusions, and supporting decision-making. Data analysis has multiple
facets and approaches, encompassing diverse techniques under a variety of names, and is used in
different business, science, and social science domains. In today's business world, data analysis
plays a role in making decisions more scientific and helping businesses operate more effectively.

Data mining is a particular data analysis technique that focuses on modeling and knowledge
discovery for predictive rather than purely descriptive purposes, while business
intelligence covers data analysis that relies heavily on aggregation, focusing mainly on business
information. In statistical applications, data analysis can be divided into descriptive
statistics, exploratory data analysis (EDA), and confirmatory data analysis (CDA). EDA focuses
on discovering new features in the data while CDA focuses on confirming or falsifying
existing hypotheses. Predictive analytics focuses on application of statistical models for
predictive forecasting or classification, while text analytics applies statistical, linguistic, and
structural techniques to extract and classify information from textual sources, a species
of unstructured data. All of the above are varieties of data analysis.

Analysis refers to breaking a whole into its separate components for individual examination.
Data analysis is a processfor obtaining raw data and converting it into information useful for
decision-making by users. Data are collected and analyzed to answer questions, test hypotheses
or disprove theories.

Statistician John Tukey defined data analysis in 1961 as:

"Procedures for analyzing data, techniques for interpreting the results of such procedures, ways
of planning the gathering of data to make its analysis easier, more precise or more accurate, and
all the machinery and results of (mathematical) statistics which apply to analyzing data."

There are several phases that can be distinguished, described below. The phases are iterative, in
that feedback from later phases may result in additional work in earlier phases
PERSONAL PROFILE OF INDIVIDUALS :

1. SAMPLE SIZE:
The survey conducted to investigate ―The Investment pattern of the individuals in the Private
Sector‖ and Government Sector which discloses the reasons, methods, types and modes of
investment followed by these people.
The sample size of 20 respondents was surveyed out of which 10 were male and 10 were female.
The graph below depicts the same.

SAMPLE SIZE

20
18
16
14
12
10
8
6
4
2
0
MALE FEMALE TOTAL
Series 1 10 0 0
Series 2 0 10 0
Series 3 0 0 20

Series 1 Series 2 Series 3

It is evident from the chart that the number of male and female respondents were equal in
number.
2. AGE GROUP:

9
8
7
6
5
4
3
2
1
0
20-30 31-40 41-50 ABOVE 50
MALE 3 1 5 2
FEMALE 3 3 3 1
TOTAL 6 4 8 3

MALE FEMALE TOTAL

It is evident from the chart above that majority of the respondents fall in the age group of 41 to
50 years and minimum in Above 50.
3. ORGANIZATION WORKING:

TYPE OF ORGANIZATION
18
16
14
12
10
8
6
4
2
0
PRIVATE GOVT.
MALE 9 1
FEMALE 7 3
TOTAL 16 4

MALE FEMALE TOTAL

Most of the people are from the Private Sector ,the majority is for Males. In Govt. sector the
majority is of the Females.
4. MONTHLY INCOME:

MONTHLY INCOME
12

10

0
Less than Rs. 10,000 Rs.10,000 to Rs.30,000 Rs.30,000 to Rs.50,000 Above Rs. 50,000
MALE 1 4 4 1
FEMALE 0 6 3 1
TOTAL 1 10 7 2

MALE FEMALE TOTAL

Most of the category is from Rs.10,000 to Rs. 30,000.

5. INCOME TAX RETURN FILED:

I.T. RETURN
20
18
16
14
12
10
8
6
4
2
0
FILED NOT FILED
MALE 9 1
FEMALE 10 0
TOTAL 19 1

MALE FEMALE TOTAL

It is observed that female do file it on time and males as well but with exception of 1.
6. YEARS OF EXPERIENCE:

0
Less than 5 years 5-10 years 10-15 years more than 15 years
MALE 3 4 3 0
FEMALE 4 2 3 1
TOTAL 7 6 6 1

MALE FEMALE TOTAL

It is observed that the experience is majority of less than 5 years. Hardly 1 person among 20 has
experience of more than 15 years.
7. PROPORTION OF SAVINGS TO INCOME:

Savings:Expenditure

15

10:90 20:80

The saving to expenditure ratio for the maximum individuals fall in the category of 20:80.
8. TYPE OF INVESTMENTS:

TYPE OF INVESTMENTS (IN POINTS)

SHORT TERM (< THAN 1 YRS)

MEDIUM TERM (1-3 YRS)

LONG TERM (>THAN 3 YRS)

0 20 40 60 80 100 120 140

LONG TERM MEDIUM TERM (1-3 SHORT TERM (<
(>THAN 3 YRS) YRS) THAN 1 YRS)
TOTAL 31 51 118
FEMALE 14 24 62
MALE 17 27 56

TOTAL FEMALE MALE

The maximum category of females invest in short term investments. As compared to males ,
females investment for short term category is higher and that for the long term investments the
male investment is higher .
9. OBJECTIVE OF THE INVESTMENT :

OBJECT

11 11

3
7

19

SAFETY LIQUIDITY RETURN RELIABILITY LOW RISK

Here we can observe that mostly people think that the main object is to earn higher returns. The
least object is for liquidity. There is equal vote for safety and the low risk categories.
10. AVENUES OF INVESTMENT:

AVENUES

FUTURES, OPTIONS , DERIVATIVES

MUTUAL FUNDS
PROVIDENT FUND
SHARES
REAL ESTATE
INSURANCE POLICIES
POST OFFICE
BANK FD
GOLD

0 2 4 6 8 10 12 14 16 18
FUTUR
INSURA ES,
PROVID MUTUA
BANK POST NCE REAL OPTION
GOLD SHARES ENT L
FD OFFICE POLICI ESTATE S,
FUND FUNDS
ES DERIVA
TIVES
TOTAL 14 17 16 17 12 8 9 6 1
FEMALE 10 8 8 9 7 4 4 2
MALE 4 9 8 8 5 4 5 4 1

TOTAL FEMALE MALE

We can observe that the highest investment is made by all individuals in ‘Insurance Policies’
and the least is made in ‘Futures, options , derivatives’. Females highest investment is in ‘Gold’
and least is in ‘Mutual Funds’ . No female has gone for Futures and Options. In males the highest
investment is in ‘Bank FD’ and least is in ‘Futures and Options’.
11. FREQUENCY OF CHANGING INVESTMENTS:

FREQUENCY

25
20
15
10
5
0
ABOVE 1
1 MONTH 1-6 MONTHS 1 YEAR
YEAR
TOTAL2 11 9
FEMALE 5 5
MALE 6 4
MALE FEMALE TOTAL2

We can see from the above graph that both male and females prefer to change the investments in
1 year or above 1 year. So we can say that mostly the investments preferred are medium term or
long term investments.
12. LIC POLICIES :

NO. OF LIC POLICIES

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
ON YOUR NAME ON YOUR SPOUSE FOR CHILDREN
TOTAL 25 13 14
FEMALE 12 6 7
MALE 13 7 7

MALE FEMALE TOTAL

It is observed that the number of LIC policies by both female and male for the family members
and self are adequately good in number.
13. INFLUENCED BY : FOR INVESTMENT DECISIONS

FEMALES:

INFLUENCED BY- FOR FEMALES

FAMILY MEMBERS RELATIVES PROFESSIONAL ASSOCIATES

FRIENDS/COLLEAGUES AGENTS EXPERT OPNION

Mostly the females are being influenced by family members and friends and colleagues. The
least decisions are taken by consulting the expert.
MALES:

INFLUENCED BY- FOR MALES

FAMILY FRIENDS PROFESSIONAL ASSOCIATES

FRIENDS/COLLEAGUES AGENTS
RELATIVES EXPERT OPINION

It is observed that the males are mostly influenced by the family members and agents. Again
very few consult the experts.
14. RETURN ON INVESTMENT:

FEMALES:

4.5

3.5

2.5

1.5

0.5

0
LESS THAN 20% ABOVE 20%

EXPECTED RECEIVED
MALES:

4.5

3.5

2.5

1.5

0.5

0
LESS THAN 20% ABOVE 20%

EXPECTED RECEIVED

Mostly the people expect higher and get less. Same is the case for both females and males
Thus it is required to get more knowledge about the investments and accordingly diversify it.
INTERPRETATION:

The economy is prospering, the job market is booming and salaries are touching a new high. The
new breed of Indian youth has its pockets full and is intelligent enough not to let its money rust
in bank accounts. Investment is on their mind and an option that has the potential to multiply
their savings and provide maxi-mum tax rebate is the one they crave. Traditional saving options
like post office schemes and fixed deposits are now passed.

Options like post office schemes and fixed deposits are not very popular with the youth as the
rate of interest on them is lower as compared to other in-vestment options available. Safety and
security which were once upon atime the main reasons for investment are no longer the major
criteria that determine the choice of investment. With money in hand and age on their side, the
young investors are not hesitant in taking risk. ―Fixed deposits are not a very attractive
investment option for youngsters these days.

Most of the people who opt for fixed deposits are senior citizens is revealed in one of the surveys
conducted in India. Saving tax is one of the major reasons behind investment by the youth.
Traditional saving schemes do not provide any tax benefits and are, therefore, keeping the
youngsters away from them. ―Why should I invest in fixed deposits and post office schemes
when they provide no tax rebates and the rate of return on them is fixed and also lower than other
investment options,‖ is what Young saver and investor has to say.

Mutual fund is the most favored option of the youngsters today. ―The stock market is doing so
well. I am a little apprehensive about investing directly in the stock market but at the same time I
want to avail of the benefits of the rapidly rising stock market. So, mutual funds are the best
option for me is what a 30 something Investor has to say. Investment in mutual funds through the
Systematic Investment Plan (SIP) is a favoured investment option for the youngsters. This is
especially true of the young salaried class which has just started earning and does not have a fat
bank balance as yet. ―In case of Systematic Investment Plans, instead of bulk payment, a small
amount is to be paid every month. This makes them very popular with the salaried class who find
it difficult to shell out a large amount at one go. Real Estate market is also the one which
youngsters prefer after all the above ones. Especially in a city like Mumbai where Real estate is
always on the high or up, this is not at all bad investment option. But there is no fixed return and
the risk and amount of investment is high.

Other Traditional Investment option like the Fixed Deposit or the Post Office schemes (PPF/
NSC / NSS/ KVP/IVP) are losing their way due to blocking of funds and lower returns. Gold is
still preferred to some extent especially when it comes to females. Due to rise in price of gold
from somewhere around 4,000-5,000 in 2003 to around 17,000 in 2010, gold is still shining as an
investment option. Youngsters today are aware of what is happening around them and are
intelligent enough to decide what is best for them. Every option is considered and the pros and
cons of each weighed carefully before the decision to invest the hard-earned money is taken.

Thus from the above analysis of the data we can say that the awareness about investments in the
public is developing to a greater extent. It is required to spread the knowledge and the reliable
and relevant source for the investors. The investors should get proper guidance and get proper
way so that it can plan it well. Thus it will really help people in proper planning of the revenue
and to increase the earnings. This ensures the individuals about the safety of the funds and the
optimum utilization of the savings made by the individuals.

FINDINGS, REASONS AND CONCLUSION:

FINDINGS:

1. In the study the researcher has investigated 20 respondents of Pune city and it reveals that
almost everyone is aware about the investments to their extent but due to lack of financial
planning it becomes difficult to invest.

2. There is as such no significant relationship between gender because we have considered

gender equality.

3. Basically the age group which invests are highest of 41-50. Least are for above 50. This it is
also important to spread awareness in the youth.

4. We have considered both the categories of people who work in Private as well as in Govt
Sector. Males are found more for Private sector and Females more are found in Govt sector.

5. Considering the monthly income , it is found that the group between 10,000 to 30,000 is
highest. Thereby saving and expenditure ratio is to be considered by proper planning.

6. Most of the individuals file Income Tax returns on time.

7. It is observed that the experience is majority of less than 5 years. Hardly 1 person among 20
has experience of more than 15 years.Thus it is important to spread awareness and increase the
facilities for attraction of the investors.

8. For the types of investments, the maximum category of females invest in short term
investments. As compared to males, females investment for short term category is higher and
that for the long term investments the male investment is higher.

9. both male and females prefer to change the investments in 1 year or above 1 year. So we can
say that mostly the investments preferred are medium term or long term investments.

10. Mostly people are influenced by family members and friends . The expert opinion is hardly
taken by the people. This thereby increases the risk and minimizes the return . Thus proper
analysis of the investment and systematic planning is required.

11. Preference shares also get traded in the market and give liquidity to investor. Investor can opt
for this type of investment when their risk performance is very low. Debentures and Bonds It is
a fixed income (debt) instrument issued for a period of more than one year with the purpose of
raising capital.

12. Many types of debenture and bonds have been structured to suit investors with different time
needs. Though having higher risk as compared to bank fixed deposits, bonds and debentures do
offer higher returns. Debenture instruments require scanning the market and choosing specific
securities that will cater to investment objectives of the investor.

13. Depository Receipts (GDRs/ADRs) Global depository receipts are the instrument in the form
of a depository receipts or certificate created by the overseas depository bank outside India and
issued to non-resident investors against ordinary shares.

14. Fixed Deposits in banks are for those investors, who have low risk appetite. Bank FDs is
likely to be lower than money market fund returns. Fixed deposits may be recurring deposits
where in savings are deposited at regular intervals or fixed deposits of varying maturities or with
the varying notice periods such as 15 days, etc.
15. On the basis of objective we can categories mutual funds as equity funds/growth funds,
diversified funds, sector funds, index funds, tax saving funds, debt/income funds, liquid
funds/money market funds, gift funds, balanced funds. And on the basis of flexibility we can
categories them as open-ended funds, close-ended funds and interval funds.

16. Real Estate Investment in real estate also made when the expected returns are very attractive.
Buying property is an equally strenuous investment decisions.

REASONS:

1. To understand the investment considerations of semi urban investors.

2. To examine the investors awareness level and their preferences of investment.

3. To compare the investment behavior of semi urban with urban and rural investors.

4. To make some suggestions in order to enhance investment awareness amon everyone.

CONCLUSION:
This paper is a reflection of the behavior of various categories of investors. Selection of a perfect
investment avenue is a difficult task to any investor. An effort is made to identify the tastes and
preferences of a sample of investors selected randomly out of a large population. Despite of
many limitations to the study I was successful in identifying some investment patterns, there is
some commonness in these investors and many of them responded positively to the study. This
report concentrated in identifying the needs of current and future investors, investors͛ preference
towards various investment avenues are identified based on their occupation. Investors risk in
selecting a particular avenue the individual investor still prefers to invest in financial products
which give risk free returns. This confirms that Indian investors even if they are of high income,
well educated, salaried, independent are conservative investors prefer to play safe. The
investment product designers can design products which can cater to the investors who are low
risk tolerant .

The financial industry plays a significant role in the Mainland China and Hong Kong economies
and has aroused increasing managerial and academic interest in recent decades. Unfortunately,
after the financial crisis of 2008 and the global crisis of 2009, investors are becoming more
cautious towards investments, especially in high-risk financial products. Furthermore, Hong Kong
is the top offshore investment destination for the Mainland Chinese investors. Investors in Hong
Kong are mainly mixed, with Mainland Chinese investors and local investors having different
characteristics. These make it more difficult for financial service providers to understand
customers’ financial investment behaviour and investment preferences.

Attempting to address the real-world challenges and research gap, this study has (i) empirically
identified that demographic, psychological and sociological factors cause different investment
behaviour and (ii) identified that the major attributes that explain and predict investment
behaviour/preferences of Mainland Chinese and Hong Kong investors are age, income level,
educational level, gender, investment experience and marital status. Regression analyses and data
provided by one of the Asia’s leading financial service providers were used to help the financial
industry formulate strategic and marketing strategies.

This exploratory study helps to fill the identified research gap and enable financial service
providers to better understand their customers’ financial investment behaviour and investment
preferences from the perspective of investors’ characteristics. With the huge volumes of
confidential transaction data and investors’ characteristics available, the research results are
believed to be able to reflect the real behaviour of individual investors from Mainland China and
Hong Kong and can offer financial service providers a foundation for sustainable strategies
formulation. In future research, it is suggested to extend the regression results to build a data
mining model to market the most appropriate products to individual investors from Mainland
Chinese and Hong Kong and to gain a better understanding of their financial investment behaviour
in an effective and efficient manner.