SUMMER TRAINING REPORT ON

Preference of Individuals for Investment Options

For Master Trust

By Jeso P. James 28
In partial fulfillment for the award of Post Graduate Diploma in Management 2011-13

New Delhi Institute of Management

50 (B&C), 60, Tughlakabad Institutional Area, New Delhi-110062 E-mail: placement@ndimdelhi.org Website: www.ndimdelhi.org

SUMMER TRAINING REPORT ON

Preference of Individuals for Investment Options

For

Master Trust
Under the supervision Of

Mr. Ajay Pradhan

Submitted ByJeso P. James Roll number-28

Submitted toMs. Shivani Agarwal

ACKNOWLEDGEMENT

First of all, I would like to express my gratitude to my project guide Mr. Bhupender Singh, Sr. VP-Distribution, Master Capital Services Ltd. (Barakhamba Road, New Delhi), who supported and guided me throughout the project and gave me all necessary facilities and inputs to make this project a successful one and also made me as energetic and enthusiastic like him. I would also like to thank Mr. Ajay Pradhan , Sr. Manager, Master Capital Services Ltd. (Barakhamba Road, New Delhi) who provided me enough training and skills so that I can go into the market. I would like to thank Shri V.M. Bansal , Chairman, NDIM, Delhi, for providing me the opportunity to have such a good experience of an internship program and of course my faculty guide Ms. Shivani Agarwal, the guiding source of light in this vast journey of learning experience while doing the project that really made me learn the real application and management principles of the project. Her continuous advice has really transformed me into a much mature personality. And last but not the least, I would like to thank all the staffs of Master Capital Services Ltd. (Barakhamba Road, New Delhi), for helping me to complete this project successfully.

DECLARATION

I , Jeso P. James , student of New Delhi Institute of Management , Batch(201113) declare that every part of the Project R eport Preference of Individuals for Investment Options submitted by me is original. I was in regular contact with my faculty guide and contacted four times for discussing the project. Date of project submission: 9th July, 2012

Faculty Mentors Comments : __________________________________________________________________ __________________________________________________________________ __________________________________________________________________ ___________________

Ms. Shivani Agarwal

TABLE OF CONTENTS TOPICS EXECUTIVE SUMMARY INTRODUCTION Company Profile Industry Profile Research Methodology Job Assigned Stages Of The Project DETAILS OF WORK DONE Focus Of The Problem Investment Options o Fixed Deposits o Stock Market o Mutual Funds o Insurance o Gold o Real Estate o Forex DATA ANALYSIS LEARNINGS CONSTRAINTS and LIMITATIONS RECOMMENDATION CONCLUSION BIBLIOGRAPHY APPENDIX Questionnaire PAGE NUMBER 6 7 9 15 17 19 20 22 23 24 31 41 52 53 54 55 57 72 73 74 77 78 79

EXECUTIVE SUMMARY

The project Preference of Individuals for Investment Options gives the brief idea regarding the various investment options that are prevailing in the financial markets in India. With lots of investment options like banks, Fixed Deposits, Government bonds, stock market, real estate, gold and mutual funds the common investor ends up more confused than ever. Each and every investment option has its own merits and demerits. In this project I have discussed about few investment options available.

I have also analyzed the preference of the investors in different financial instruments by taking a sample of 75 individuals from different professions and qualifications in the Delhi-NCR area through the method of questionnaire.

Any investor before investing should take into consideration the safety, liquidity, returns, entry/exit barriers and tax efficiency parameters. We need to evaluate each investment option on the above-mentioned basis and then invest money. Today investor faces too much confusion in analyzing the various investment options available and then selecting the best suitable one. In the present project, investment options are compared on the basis of returns as well as on the parameters like safety, liquidity, term holding etc. thus assisting the companies as a guide for categorizing the customer/client segment for the investment purpose.

INTRODUCTION

Savings form an important part of the economy of any nation. With savings are invested in many forms of investment options available, the money acts as the driver for growth of the country. Indian financial scene too presents a plethora of avenues to the investors. We, Indians work hard for our entire life to earn our living. Out of that we save some part in a hope that it will be used for our future to make it happy and reliable. These savings are generally invested with a hope to get good returns from it. So, this invested money earns us profit in a regular course. These profit margins depend upon the different investment options available in the market. Below are mentioned some of the basic and most opted for investment options to suit all financial situations.

Investment options: We can divide investment options in two categories. They are mainly, real investments and financial investments. Real investments include investments made to buy house, car or machinery which are real assets. Financial investments include investing funds in buying some shares, mutual funds or bonds which are financial assets.

In a more generalized form there are the below mentioned investment options available.

PERSONAL INVESTMENTS: These are a type of financial investments wherein we can save our money as savings in a bank and get interest on the invested amount. These are very general form of investments.

STOCK MARKET INVESTMENTS: In these form of investments we can invest our money in stocks and earn profits or make losses depending on the stock's performance in the market. It is a complex form of investment wherein we are continuously required to keep an eye on the market performance.

REAL ESTATE INVESTMENTS: These are a type of property investments wherein we can invest our money in buying a house or a piece of land. We can use the real estate for personal residential or commercial use or can rent or lease it for commercial or residential purposes. Here we get a good profit margin and at the same time our assets are increased.

BUSINESS INVESTMENTS: We can invest our money in our own business instead of investing it with some other source. This is a good method of investing our money and at the same time setting something for ourselves.

COMPANY PROFILE
Overview: Master Trust Group is one of the leading financial services company in India. We have a strong belief in nurturing investment culture, attitude and inculcating a very strong approach towards value investing forms the central part of any sound investment philosophy. With an impeccable track record in client servicing of over two decades, we have now grown to 650+ strong employee organization with over 1,50,000+ client relationships. At Master Trust, our endeavor is to constantly meet every financial need of our esteemed clients. mastertrust - is a one point shop for all the investment needs of a customer. The one-stop destination is specifically targeted towards the retail customers who require a very strong relationship driven approach towards value investing. The philosophy of mastertrust has its genesis from Master Trust groups belief in nurturing the investment culture towards value investing. Mission To always earn the right to be our clients first choice through personal & social wealth maximization. Vision To be well diversified financial shop for wealth creation and being an ideal service provider in our domain of business

Corporate Philosophy Becoming an expert at anything takes a strong will, unyielding determination and pure ability Value System

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Group Milestones 2007 : Set up regional offices at Baroda, Kolkata and Hyderabad 2006 : Became SEBI registered Portfolio Manager

2005 :

Acquired the membership of Bombay Stock Exchange Ltd.(BSE) Commenced Internet Trading and margin funding against Shares. Became Member of NCDEX (National Commodity Derivatives

2004 :

Exchange Ltd) and MCX (Multi Commodity Exchange of India Ltd.)

Introduced Virtual Private Network (VPN) Became Insurance Broker under name of M/s Master Insurance

Brokers. 2002 : Entered into Insurance business as corporate agents for Life and General insurance. 2001 :

Launched Depository Services as a Depository Participant of

CDSL.

Commenced Trading in Derivatives Segments in NSE

1999 : Launched Depository Services as a Depository Participant of NSDL 1997 : Became RBI approved Fully Fledged Money Changers 1995 :

Master Trust Ltd. came out with the IPO (Initial Public Offer) of

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Equity Share & Fully Convertible Debenture.

Upgraded Dealership of OTCEI to Membership.

1994 : Master Capital Services Ltd. became Corporate Members of NSE (National Stock Exchange of India Ltd.) 1993 :

Acquired status of SEBI accredited Category I Merchant Bankers Became Dealer of OTCEI (Over the Counter Exchange of India)

1987 : Became members of DSE (Delhi Stock Exchange) under the name of M/s Harjeet Arora and Co., (later, converted into a Corporate Membership as MTL Share and Stock Brokers Ltd. 1986 : Acquired membership of Ludhiana Stock Exchange under the name of M/s H Arora and Co. (later converted into a Corporate Membership as Master Share and Stock Brokers Ltd.) 1985 : The seeds of the Group were sown as Arora Financial Consultants (P) Limited (later converted into Master Trust Ltd.)

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Board of Directors Mr. Harjeet Singh Arora (F.C.A., F.C.S.), is the Managing Director of the Company and has more than 25 years of experience in corporate, financial and merchant banking matters. He is one of the promoters of the company and has been involved in the secondary and primary markets right from the incorporation of the company.

Mr. R.K.Singhania (F.C.A.) is well known personality in the corporate circles. He is the Director of the Company and was formerly the Director (Finance) with Indias premier Oswal group for more than 10 years. He is one of the promoters and has rich experience in the corporate M&A space with deals worth Rs. 50 billion executed in FY 2005-06 alone. He is having more than 25 years experience in corporate strategy, tax planning & financial engineering internationally.

Mr. Pawan Chhabra (F.C.A.) is having a rich experience of more than 20 years in primary and secondary share market and merchant banking activities. His primary responsibility includes liasioning with SEBI, RBI, NSE, BSE, MCX, NCDEX and FI/ FII business

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development.

Mr. G.S. Chawla (B.E., M.B.A., D.B.F.) has worked with a public financial Institution for more than 12 years. He has 15 years rich experience of capital market, finance and other related activities. His primary responsibility involves development of PMS business, advisory & research, merchant banking, insurance broking and technology initiatives.

Mr. Harinder Singh (B.Com, I.C.W.A. inter) has been monitoring the secondary market operations of the company for the last 12 years. He looks after compliances, secondary & commodity market, margin funding, mutual fund distribution, IPOs, arbitrage and business development.

Mr. Sanjay Sood (F.C.A.) is having more than 15 years of experience in Merchant Banking, Foreign Exchange Management, Financial and Retail Services. He is responsible for looking after the FX business and the depository business.

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INDUSTRY PROFILE
An investment industry is on the gloomy side. As now a days maximum people are interested in investment in various instruments.

Behavior of Household Savings in India

Household savings in general and savings in the form of financial assets in particular exhibited remarkable growth since late eighties. The aggregate household savings as share to GDP, which was only 1.5 per cent during 1970-71, went up to 4.9 per cent in 1980-81. It went up sharply to 14.2 per cent in 1990-91 and further to 19.7 per cent in 1994-95 before coming down marginally to 18.5 per cent in 1998-99. The growth of household savings during the decade of eighties has been facilitated by a simultaneous increase in physical as well as financial assets. While household savings in physical assets increased from 3 per cent of GDP in 1980-81 to 7.8 per cent in 1990-91, savings in the form of financial assets increased from 2 per cent to 6.4 per cent for the corresponding period. Financial savings during first half of the nineties registered remarkable growth from 6.4 per cent of GDP in 1990-91 to 11.9 per cent in 1994-95. However, the share of financial savings to GDP fluctuated since 1995-96. The Indian financial sector is on a roll. Driven by a strong investor interest and an expanding market, the industry is also becoming more vibrant, with new types of products and services being offered to meet the needs of the booming economy. The buoyancy in the economy is estimated to lead to a four-fold increase in India's investable wealth from US$ 250 billion in 2007 to US$ 1 trillion by 2012. Simultaneously, according to a report by Celent, an international consultancy firm, India's wealth management segment will rise to an estimated 42 million households by 2012 from about 13 million households in 2007. Clearly, there is huge potential in this segment. Significantly, wealth management revenues are expected to account for 32-37 per cent of the total full-service financial institutions by the

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end of 2015. The market is also expected to undergo a structural transformation with organised players increasing their market share. The attractiveness of India in the global financial market is also reflected in the Indian cities - Mumbai, New Delhi and Bangalore - finding a place of pride in the list of the world's top 75 commercial centres, as per the 2008 'Mastercard Worldwide Centres of Commerce Index'
There are many companies which includes banks and nbfcs which helps in investment. The top five companies or major players in market including banks and nbfcs are:

1) Bajaj capital Ltd 2) DSP Merrill Lynch Limited 3) Birla Global Finance Limited 4) HDFC 5) ICICI Group 6) LIC Finance Limited

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RESEARCH METHODOLOGY

Nature of Research:

The study is descriptive and analytical in nature. It is descriptive as it describes the existing financial instruments available in the market. It is analytical as it analyses the perception of the investors.

Universe and Sample Size

NCR region have been taken as universe of the study. Convenient sampling technique is used and a sample of 75 investors has been taken for the purpose of the study.

Data Collection

The study is based on primary data collected.

Research Instruments: Interview and questionnaire have been used to conduct the study. A structured questionnaire consisting close-ended questions have been made, which is filled by the trainee during direct interaction with the respondents.

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ANALYSIS PATTERN:

Critical examinations of various investment instruments have been done and a comparison is made, based on their merits and demerit. The data collected form questionnaire is edited, tabulated and analyzed. Various graphical techniques have been used to present the data in more meaningful way.

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Job Assigned

Purpose-

The purpose of the project is to find out about the trends on how

individuals invest their savings in various instruments such as FDs, Mutual Funds, etc. The project also focuses on how individuals make their decision and what other factors are considered while making the investment. Method- Survey/Questionnaire Sample size: 75 Dependent Variable: Investment preferences of Savings by Individuals. Independent Variables: Income level Age of the Investor Return on Investment Safety of capital Wealth Creation Period of Investment Purpose of Investment Liquidity

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Stages of Project
1st Week(5th to 12th May,2011): In-house training given by Master Trust company mentors on Mutual Funds, FDs, Government securities, Debts, bonds, Commodity Arbitrage strategy, etc. 2nd Week(14th to 19th May,2011): Defining the purpose of the project. Defining the method of the project (questionnaire/survey). Defining dependent variable. Defining Independent variables. Constructing questions based on independent variables. Final Questionnaire Set-up and development. Approval of the Questionnaire by Industry Mentors. 3rd Week(21st to 26th May,2011): Beginning of the Survey Process. Personal Visits to individuals in Delhi and NCR. Meeting up the concerned person and filling up of the questionnaire. Daily 10-15 personal Visits done.

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 A total of 50(Approximate) personal visits made in a week. 4th Week to 8th Week(28th May,2012 to 30th June, 2012) Survey Process. Personal Visits to individuals in Delhi and NCR. Filling up of the questionnaire. A total of 75 personal visits made and questionnaires filled. 9th Week (2nd July-7th July,2012) Analysis of the data collected with the help of research methodology techniques after the survey of the required sample size was completed. Preparation of a detailed Project Report about the analysis of the data. Project conclusion and suggestions.

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Details Of Work Done

FOCUS OF THE PROBLEM

The present financial environment provides ample opportunities of investment to the investors. The decision to invest in right instrument is too complex which can meet their expectations perfectly. So a study has been done which explain about the perception of respondents what they exactly see at the time of investment which includes their tendency, preference and factors through which an investor influenced. The study also focuses on analyzing the investment patterns of the investment.

OBJECTIVES OF STUDY The various objectives of the study are: 1) To study the various financial opportunities available for investment. 2) To study about the investors perception regarding various investment opportunities available in the market. 3) To analyze the investment patterns of the investment. 4) To examine the investors changing behavior regarding various investment opportunities.

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INVESTMENT OPTIONS

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There are many investment options available for the people in the market, but there are mainly five investment options, which are considered to be as most popular and most effective investment options available in the current market scenario. In general, almost 95-98% people do invest in these, since the Expected Rate of Return is much higher than any other investment options, irrespective of the amount of risk is very high in some of the cases. These investment options are:

Fixed Deposits This investment option is most popular and safest option available in the market. With almost every working people invest in fixed deposits; this investment option leads the chart of four investment options because of its safety and popularity. Though the amount of return is much lesser than the other three options, this option heads the table as it has almost no risk of losing the invested amount. Also, it is the oldest among the other three, so the trust factor of people is very high. There are mainly three types of fixed deposits available in the market, namely, viz. 1. Fixed deposits offered by Banks 2. Fixed deposits offered by Post Offices 3. Company fixed deposits Now, well see these three fixed deposit schemes in details .

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1. Fixed deposits offered by Banks: Considered as the safest of all options, banks have been the roots of the financial systems in India. Promoted as the means of social development, banks in India have indeed played an important role in not only urban areas, but also in rural upliftment. For an ordinary person though, banks have acted as the safest avenue wherein a person deposits money and earns interest on it. The two main modes of investment in banks, savings accounts and fixed deposits have been effectively used by one and all. However, today the interest rate structure in the country is headed southwards, keeping in line with global trends. With the banks offering just above in their fixed deposits for one year, the yields have come down substantially in recent times. Add to this, inflammatory pressure in the economy and we have a position where the savings are not earning. The inflation is creeping up almost 8% at times, this means the value of money saved goes down instead of going up. This effectively mars any chance of gaining investments from the banks.

Banks in India can be categorized into non-scheduled banks and scheduled banks. Scheduled banks constitute of commercial banks and co-operative

banks. There are about 67,000 branches of Scheduled banks spread across India. During the first phase of financial reforms, there was a nationalization of 14 major banks in 1969.

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As far as the present scenario is concerned the banking industry is in a transition phase. The Public Sector Banks (PSBs), which are the foundation of the Indian Banking system account for more than 78 per cent of total banking industry assets. On the other hand the Private Sector Banks in India is witnessing immense progress. They are leaders in Internet banking, mobile banking, phone banking, ATMs. On the other hand the Public Sector Banks are still facing the problem of unhappy employees. There has been a decrease of 20 percent in the employee strength of the private sector in the wake of the Voluntary Retirement Schemes (VRS).

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List of the banks and their fixed deposit rates:

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28

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Source: www.onemint.com 2. Fixed deposits offered by Post Offices: Just like banks, post offices in India have a wide network. Spread across the nation, they offer financial assistance as well as serving the basic requirements of communication. Among all saving options, Post office schemes have been offering the highest rates. Added to it is the fact that the investments are safe with the department being a Government of India entity. So the two basic and most sought features, those of return safety and quantum of returns were being handsomely taken care of. Though certainly current market position is not the most efficient systems in terms of service standards and liquidity; these have still managed to attract the attention of small, retail investors. However with the government investing its intention of reducing the interest rates in small savings options, this avenue is expected to lose some of the investors. Public Provident Funds act as options to save for the post retirement period for most people and have been considered good option largely due to the fact that returns were higher than most other options and also helped people gain from tax benefits under various sections. This option too is likely to lose some of its sheen on account of reduction in the rates offered.

3. Company fixed deposits: Another oft-used route to invest has been the fixed deposit schemes floated by companies. Companies have used fixed deposit schemes as a means of mobilizing

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STOCK MARKET

funds for their options and have paid interest on them. The safer a company is rated, the lesser the return offered has been the thumb rule.

However, there are several potential roadblocks are there. Firstly, of all the danger of financial positions of the company not being understood by the investor lurks. The investors rely on intermediaries who more often than not, dont reveal the entire truth.

Secondly, liquidity is a major problem with the amount being received months after the due dates. Premature redemption is generally not entertained without cuts in the returns offered and though they present a reasonable option to counter interest rate risk (especially when the economy is headed for a low interest regime), the safety of amount has been found lacking. Many cases like the Kuber Group and DCM Group fiascoes have resulted in low confidence in this option. Now let us look at the Indian Stock Market in details.

The Indian Stock Market is also the other name for Indian Equity Market or Indian Share Market. The forces of the market depend on the monsoons, global funding flowing into equities in the market and the performance of various companies. The market of equities is transacted on the basis of two major stock indices, National Stock Exchange of India Ltd. (NSE) and The Bombay Stock Exchange (BSE), the trading being carried on in a dematerialized form. The physical stocks are in liquid form and cannot be sold by the investors in any market.

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The equity indexes are correlated beyond the boundaries of different countries with their exposure to common calamities like monsoon which would affect both India and Bangladesh or trade integration policies and close connection with the foreign investors. From 1995 onwards, both in terms of trade integration and FIIs India has made an advance. Indian Equity Market at present is a lucrative field for the investors and investing in Indian stocks are profitable for not only the long and medium-term investors, but also the position traders, short-term swing traders and also very short term intra-day traders. In terms of market capitalization, there are over 2500 companies in the BSE chart list with the Reliance Industries Limited at the top. The SENSEX today has rose from 1000 levels to 8000 levels providing a profitable business to all those who had been investing in the Indian Equity Market. There are about 22 stock exchanges in India which regulates the market trends of different stocks. Generally the bigger companies are listed with the NSE and the BSE, but there is the OTCEI or the Over the Counter Exchange of India, which lists the medium and small sized companies. In the Indian market scenario, the large FMCG companies reached the top line with a double-digit growth, with their shares being attractive for investing in the Indian stock market. Such companies like the Tata Tea, Britannia, to name a few, have been providing a bustling business for the Indian share market. Other leading houses offering equally beneficial stocks for investing in Indian Equity Market, of the SENSEX chart are the two-wheeler and three-wheeler maker Bajaj Auto and second largest software exporter Infosys Technologies.

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Thus, the growing financial capital markets of India being encouraged by domestic and foreign investments is becoming a profitable business more with each day. If all the economic parameters are unchanged Indian Equity Market will be conducive for the growth of private equities and this will lead to an overall improvement in the Indian economy. Now apart from all these, the first question that comes in our mind is, Why do so many people invest in shares? Simply put, you want to invest in order to create wealth. While investing is relatively painless, its rewards are plentiful. To understand why you need to invest, you need to realize that you lose when you just save and do not invest. That is because the value of the rupee decreases every year due to inflation. Historically shares have outperformed all the other investment instruments and given the maximum returns in the long run. In the twenty-five year period of 1980-2005 while the other instruments have barely managed to generate returns at a rate higher than the inflation rate (9.50%), on an average shares have given returns of about 17% in a year and that does not even take into account the dividend income from them. Were we to factor in the dividend income as well, the shares would have given even higher returns during the same period. [Inflation: general rise in prices and wages caused by an increase in the money supply and demand for goods, and resulting in a fall in the value of money. Inflation occurs when most prices rise by some degree across the economy.

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Investment options Stock market Bank fixed deposits Gold

Returns per annum 17% 9% 5.7%

Advantages of investing in shares: There are lots of advantages of investment in share market. Some of these are:

Dividend income: investments in shares are attractive as much for the appreciation in the share prices as for the dividends their companies pay out.

Tax advantages: shares appear as the best investment option if you also consider the unbeatable tax benefits that they offer. First, the dividend income is tax-free in the hands of investors. Second, you are required to pay only a 10% short term capital gains tax on the profits made from investments in shares, if you book your

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profits within a year of making the purchase. Third, you don't need to pay any long-term capital gains tax on the profits if you sell the shares after holding them for a period of one year. The capital gains tax rate is much higher for other investment instruments: a 30% short-term capital gains tax (assuming that you fall in the 30% tax bracket) and a 10% long-term capital gains tax.

Easy liquidity: shares can also be made liquid anytime from anywhere (on sharekhan.com you can sell a share at the click of a mouse from anywhere in the world) and the gains can be realized in just two working days. Considering the high returns, the tax advantages and the highly liquid nature, shares are the best investment option to create wealth.

How people earn from the investment in shares? Shares can give us returns in two forms.

A. Appreciation in share prices: You buy shares with the belief that their price will increase and that when this happens you will be able to sell off your shares and earn profit. For example, if you bought a share for Rs100 three years ago and it is Rs500 today, then you have earned Rs400 in three years.

B. Dividend: when a company makes profits, it can choose to share part of its profits with its shareholders by paying out dividend. This dividend is paid as a percentage of the face value of the share. For example, a company may declare a

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dividend of 25%. Then if the face value of its share is Rs10 you will get Rs2.50 for every share you own of that company, irrespective of the market price. In itself this might not be much, but over a longer period of time or if you have a lot of shares, you could earn quite a bit from the dividend itself. The best thing about dividends is that they are tax-free in the hands of investors. Dividend yield stocks are known to give returns higher than fixed deposits [dividend yield = (dividend per share / market price of the share) x 100].

What are the expenses during transaction? Every share transaction attracts some tax or the other. Some of the main expenses are as follows.

A. Capital gains tax: If you purchase a share and sell it at a price higher than the purchase price and if this sale is within a year of the purchase, then a 10% capital gains tax is levied on the profit that you make. For example, if you bought a share for Rs100 on January 1, 2005 and sold it for Rs150 on July 1, 2005, then you have to pay a tax of 10% on the Rs50 profit that you make. If you sell after a year of purchase, there is no tax on the long-term gains.

B. Securities transaction tax: Securities transaction tax (STT) is levied by the government on every transaction you do on a stock exchange. You dont have to pay this separately; its collected by your broker. As per the Union Budget 2005 the STT will be 0.10% on delivery-based transactions and 0.02% on intra-day transactions.

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C. Brokerage: Brokers get a commission on every trade that they do for you. This commission varies from broker to broker; at sharekhan.com the brokerage is 0.5% for delivery-based transactions and 0.10% for intraday transactions. On the brokerage amount you are required to pay a service tax to the government (to be collected by the broker). The brokerage varies depending on the service that the broker provides you. Some brokers, such as Sharekhan, offer its clients regular updates on companies, multiple means to transact and customer service support.

D. Depository fees: Since most of the shares exist in a dematerialized form, every time you buy or sell shares the transactions are being noted by your DP. The DPs normally levy a charge which is an annual charge or a charge on each transaction.

Risks ---the only disadvantage in investing in shares: There are two types of risk associated with this kind of investment: company specific risk and market risk.

Set of risks that deals with a company and its sector are referred to as company specific risk. Examples of company specific risk: bad management, bad marketing strategies, sector disturbances that have an impact on industry etc.

External factors (economic, global factors) that affect the market as a whole are referred to as market risk.

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Examples of market risk: political instability, high inflation, rupee depreciation, rising interest rates, global incidents like wars and disasters that throttle the nation's economy etc.

How company specific risk can be identified? With careful scrutiny and proper homework, it might be easy to identify and be forewarned of the risks a company may be carrying. Specifically check out for the mergers and acquisitions that do not have a real synergy or are a nightmare after reconciliation (A O L - Time Warner, Hewlett Packard-Compaq).

Also is suspicious of diversifications that do not really add value to a company's core offering. A third kind of risk would be with the companies that have bet their stakes on a single product offering and are high on debt. Likewise companies that depend on research could be prone to higher risk, if the research doesn't come to fruition. How to identify sector driven risk? If steel prices rise, auto companies get affected. If low cost Chinese products invade the country's market, then local fast moving consumer goods companies might find no takers for their products. The changing nature of the industry itself may lead to dipping stock prices; a print publication may see revenue loss if everyone moves to reading on the Internet.

How to predict market risk?

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It is difficult to predict market risks. The only thing we can say here is that start noticing all the small signs early. If the election results are feared to lead to a fall in the stock market, notice the signals beforehand. Read Sebi's bulletins and track companies whose shares prices are very volatile.

How people can minimize their risk and maximize their return? Buy when stocks are falling, sell when these are rising. This works well when you are a long-term investor and there is an extended bear or Bull Run. Don't try to second guess or predict that the market will fall today and rise tomorrow. Even seasoned investors cannot do that!

2. Don't try to guess the market's favorites Your instincts might tell you that pharma or technology stocks are hot due to certain policies or events, but remember millions of investors have already guessed that and bought these stocks. The prices of these stocks would therefore be at a higher level when you buy them. Instead focus on the long term and don't get swayed by short-term events.

3. Aim for the long haul Short-term investing is prone to higher risks. When investing in stocks, aim to get good returns after a period of three to five years at the minimum. Also churn your portfolio periodically and based on the progress that a company makes in a quarter or in six months, decide whether to hold the stock or get out of it.

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4. Avoid hot tips You may have overheard some news about a stock or your friend may advise that a particular stock is all geared to move up. Avoid such tips like the plague and your investments will remain safe.

5. Blue-chips are safe bets Blue-chip companies are there because they have done well in the past and have a high market capitalization. It is a likely guess that they will maintain their track record and give you higher returns even in future. Therefore invest in companies that have a good track record.

6. Slow and steady stream of investments Set aside a certain portion of your earnings every month and invest that sum in shares irrespective of the market conditions. This way, over a period of time you can amass a substantial number of shares of the stocks in your portfolio.

7. Think portfolio Don't put all your earnings in a single stock. Try to have a diverse portfolio of stocks. This way even if one stock doesn't do well, you are still well protected. Also invest across sectors, since any problem in one sector would affect all stocks in the sector. As a thumb rule, if you have investments of up to Rs50, 000 invest in two to three stocks. For about Rs150, 000 invest in three to five stocks, for around Rs500, 000 have five to seven stocks and around ten stocks for higher amounts.

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8. Dont invest all your savings Always maintain a core set of reserves. You should never touch these reserves for investing, so that even in the worst case you still have some money. Typically these reserves should be your salary of about six months.

9. Be level-headed Invest wisely, don't get swayed by rumors and allow Sharekhan to be your guide at all times. Investment success won't happen overnight, so avoid overreacting to short term market swings.

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MUTUAL FUNDS

Mutual Funds are essentially investment vehicles where people with similar investment objective come together to pool their money and then invest accordingly. Each unit of any scheme represents the proportion of pool owned by the unit holder (investor).

Mutual Funds in India are financial instruments. These funds are collective investments which gather money from different investors to invest in stocks, shortterm money market financial instruments, bonds and other securities and distribute the proceeds as dividends. The Mutual Funds in India are handled by Fund Managers, also referred as the portfolio managers. The Securities Exchange Board of India regulates the Mutual Funds In India. The share value of the Mutual Funds in India is known as net asset value per share (NAV). The NAV is calculated on the total amount of the Mutual Funds in India, by dividing it with the number of shares issued and outstanding shares on daily basis. Mutual funds in India advantages:

The Mutual Funds in India offer flexibility by means of dividend reinvestment, systematic investment plans and systematic withdrawal plans.

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

The fees charged for to the custodial, brokerage and others services are very low in case of Mutual Funds in India.

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These funds have the option of redeeming or withdrawing money at any point of time.

The Mutual Funds in India have low risk as it is managed professionally.

Like most developed and developing countries the mutual fund cult has been catching on in India. The important reasons for this interesting occurrence are:

Mutual funds make it easy and less costly for investors to satisfy their need for capital growth, income and/or income preservation.

Mutual fund brings the benefits of diversification and money management to the individual investor, providing an opportunity for financial success that was once available only to a select few.

Understanding Mutual funds is easy as it's such a straightforward concept. A mutual fund is a company that pools the money of many investors, its shareholders to invest in a variety of different securities. Investments may be in stocks, bonds, money market securities or some combination of these. For the individual investor, mutual funds propose the benefit of having someone else manage your investments and diversify your money over many different securities that may not be available or affordable to you otherwise. A mutual fund, by its very nature, is diversified -- its assets are invested in many different

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securities. Beyond that, there are many different types of mutual funds with different objectives and levels of growth potential, furthering your odds to diversify. Benefits of mutual funds: Investing in mutual has various benefits, which makes it an ideal investment avenue. Professional investment management : One of the primary benefits of mutual funds is that an investor has access to professional management. A good investment manager is certainly worth the fees you will pay. Good mutual fund managers with an excellent research team can do a better job of monitoring the companies they have chosen to invest in than you can, unless you have time to spend on researching the companies you select for your portfolio. That is because Mutual funds hire full-time, high-level investment professionals. Funds can afford to do so as they manage large pools of money. The managers have real-time access to crucial market information and are able to execute trades on the largest and most cost-effective scale. When you buy a mutual fund, the primary asset you are buying is the manager, who will be controlling which assets are chosen to meet the funds' stated investment objectives.

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Diversification : A crucial element in investing is asset allocation. It plays a very big part in the success of any portfolio. However, small investors do not have enough money to properly allocate their assets. By pooling your funds with others, you can quickly benefit from greater diversification. Mutual funds invest in a broad range of securities. This limits investment risk by reducing the effect of a possible decline in the value of any one security. Mutual fund unit-holders can benefit from diversification techniques usually available only to investors wealthy enough to buy significant positions in a wide variety of securities. Low Cost : A mutual fund let's you participate in a diversified portfolio for as little as Rs.5, 000, and sometimes less. Convenience and Flexibility : Investing in mutual funds has its own convenience. While you own just one security rather than many, you still enjoy the benefits of a diversified portfolio and a wide range of services. Fund managers decide what securities to trade collect the interest payments and see that your dividends on portfolio securities are received and your rights exercised. It also uses the services of a high quality custodian and registrar. Another big advantage is that you can move your funds easily from one fund to another within a mutual fund family.

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Liquidity : In open-ended schemes, you can get your money back promptly at net asset value related prices. Transparency : Regulations for mutual funds have made the industry very transparent. You can track the investments that have been made on your behalf and the specific investments made by the mutual fund scheme to see where your money is going. In addition to this, you get regular information on the value of your investment.

Variety : There is no shortage of variety when investing in mutual funds. You can find a mutual fund that matches just about any investing strategy you select. There are funds that focus on blue-chip stocks, technology stocks, bonds or a mix of stocks and bonds. The greatest challenge can be sorting through the variety and picking the best for you. Mutual fund risks: Having understood the basics of mutual funds the next step is to build a successful investment portfolio. Before you can begin to build a portfolio, one should understand some other elements of mutual fund investing and how they can affect the potential value of your investments over the years. The first thing that has to be

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kept in mind is that when you invest in mutual funds, there is no guarantee that you will end up with more money when you withdraw your investment than what you started out with. That is the potential of loss is always there. Even so, the opportunity for investment growth that is possible through investments in mutual funds far exceeds that concern for most investors. Here's why. At the cornerstone of investing is the basic principal that the greater the risk you take, the greater the potential reward. Risk then, refers to the volatility -- the up and down activity in the markets and individual issues that occurs constantly over time. This volatility can be caused by a number of factors -- interest rate changes, inflation or general economic conditions. It is this variability, uncertainty and potential for loss, that causes investors to worry. We all fear the possibility that a stock we invest in will fall substantially. Different types of mutual funds have different levels of volatility or potential price change, and those with the greater chance of losing value are also the funds that can produce the greater returns for you over time. You might find it helpful to remember that all financial investments will fluctuate. There are very few perfectly safe havens and those simply don't pay enough to beat inflation over the long run. Number of available options: Diversification Professional Management Potential of returns

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 Liquidity

Besides these important features, mutual funds also offer several other key traits. Important among them are:

Well Regulated Transparency Flexible, Affordable and a Low Cost affair

Structure of the Indian mutual fund industry: The Indian mutual fund industry is dominated by the Unit Trust of India, which has a total corpus of Rs. 700bn collected from more than 20 million investors. The UTI has many schemes in all categories i.e. equity, balanced, income etc with something open ended and some being closed ended. The unit scheme 1964 commonly referred to as US 64, which is a balanced fund, is the biggest scheme with a corpus of about Rs. 200bn. UTI was floated by financial institution and is govern by a special act of parliament. Most of its investors believe that the UTI is government owned and controlled, which, while legally uncorrected, is true for all practical purposes.

Recent trends in mutual fund industry: The most important trend in the mutual fund industry is the aggressive expansion

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of the foreign owned mutual fund companies and the decline of the companies floated by nationalized banks and smaller private sector players. Many nationalized banks got into the mutual fund business in the early nineties and got off to a good start due to the stock market boom prevailing them. These banks did not really understand the mutual fund business and they just viewed it as another kind of banking activity. Few hired specialized staff and generally chose to transfer staff from the parent organizations. The performance of most of the schemes floated by these funds was not good. Some schemes had offered guaranteed returns and their parent organizations had to bail out these AMCs by paying large amounts of money as the difference between the guaranteed and actual returns. The service levels were also very bad. Most of these AMCs have not been to retain staff, float new schemes etc, and it is doubtful whether, barring a few exceptions, they have serious plans of continuing the activity in a major way.

The foreign owned companies have deep pockets and have come in here with the expectation of a long haul. They can be credited with introducing many new practices such as new product innovation, sharp Improvement in service standards and disclosure, usage of technology, broker education and support etc. In fact, they have forced the industry to upgrade itself and service levels of organizations like UTI have improved dramatically in the last few years in response to the competition provided by these.

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Schemes of a Mutual Fund: The asset management company shall launch no scheme unless the trustees approve such scheme and a copy of the offer document has been filed with the Board. Every mutual fund shall along with the offer document of each scheme pay filing fees. The offer document shall contain disclosures which are adequate in or der to enable the investors to make informed investment decision including the disclosure on maximum investments proposed to be made by the scheme in the listed securities of the group companies of the sponsor A close-ended scheme shall be fully redeemed at the end of the maturity period. Unless a majority of the unit holders otherwise decide for its rollover by passing a resolution.

Rules Regarding Advertisements: The offer document and advertisement materials shall not be misleading or contain any statement or opinion, which are incorrect or false.

Investment Objectives and Valuation Policies: The price at which the units may be subscribed or sold and the price at which such units may at any time be repurchased by the mutual fund shall be made an available to the investors.

Restrictions on Investments:

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 A mutual fund scheme shall not invest more than 15% of its NAV in debt instrument issued by a single issuer, which are rated not below investment grade by a credit rating agency authorized to carry out such activity under the Act. Such investment limit may be extended to 20% of the NAV of the scheme with the prior approval of the Board of Trustees and the Board of Asset Management Company. A mutual fund scheme shall not invest more than 10% of its NAV in unrated debt instruments issued by a single issuer and the total investment in such instruments shall not exceed 25% of the NAV of the scheme. All such investments shall be made with the prior approval of the Board of Trustees and the Board of Asset Management Company. No mutual fund under all its schemes should own more than ten percent of any companys paid up capital carrying voting rights. Such transfers are done at the prevailing market price for quoted instruments on spot basis. The securities so transferred shall be in conformity with the investment objective of the scheme to which such transfer has been made.

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INSURANCE Life insurance has traditionally been looked upon pre-dominantly as an avenue that offers tax benefits while also doubling up as a saving instrument. The purpose of life insurance is to indemnify the nominees in case of an eventuality to the insured. In other words, life insurance is intended to secure the financial future of the nominees in the absence of the person insured.

The purpose of buying a life insurance is to protect your dependants from any financial difficulties in your absence. It helps individuals in providing them with the twin benefits of insuring themselves while at the same time acting as a compulsory savings instrument to take care of their future needs. Life insurance can aid your family on a rainy day, at a time when help from every quarter is welcome and of course, since some plans also double up as a savings instrument, they assist you in planning for such future needs like childrens marriage, purchase of various household items, gold purchases or as seed capital for starting a business.

Traditionally, buying life insurance has always formed an integral part of an individuals annual tax planning exercise. While it is important for individuals to have life cover, it is equally important that they buy insurance keeping both their long-term financial goals and their tax planning in mind. This note explains the role of life insurance in an ind ividuals tax planning exercise while also evaluating the various options available at ones disposal.

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Life is full of dangers, but with insurance, you can at least ensure that you and your dependents dont suffer. Its easier to walk the tightrope if yo u know there is a safety net. You should try and take cover for all insurable risks. If you are aware of the major risks and buy the right products, you can cover quite a few bases. The major insurable risks are as follows: Life

Health Income Professional Hazards Assets Outliving Wealth Debt Repayment.

GOLD

In India, gold has traditionally played a multi-faceted role. Apart from being used for adornment purpose, it has also served as an asset of the last resort and a hedge against inflation and currency depreciation. India has more than 13,000 tones of

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hoarded gold, which translates to around Rs.6, 50,000 crores. Gold is an asset class thats associated with safety. However, the ups and down that the yellow metal has seen over the last few months, has made it look similar to other market investment assets. This is due to an unprecedented demand for gold as an investment avenue since the last couple of years. Gold has attracted a high level of attention in last couple of years, with an image shift from a non-volatile asset to a hot investment avenue. The future outlook for the metal looks positive given its proven linear relationship with the crude oil and non-linear with the US dollar. The much-awaited gold exchange-traded funds would provide a very good vehicle to the investors and a sensible alternative to the current forms available for investment

REAL ESTATE Real estate is a great investment option, as it gives you capital appreciation and rental income. Its an investment option since it fights inflation. The fundamentals for investing in property markets remain strong in India - relatively low interest rates, strong capital flows, high employment growth, abundant liquidity, attractive demographics (young population and migration from West), increase in affordability, and a large supply of stock to keep up with demand and focus on quality. The price you pay for a property should reflect the future rent/income at

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which you let it. As in the stock market, the prices in real estate are also driven by sentiments. All that is required to reverse a price movement is a change in sentiment.

Start saving for a home the moment you begin your career. Early acquisition helps you to repay your home loan well within your working life. Also, the EMI as a percentage of your salary decreases as your pay increases making the outflows more affordable. If you lock into the interest rate for the loan, the interest outflow will be less than the compounding effect of inflation. You should be very clear about why you want to invest in real estate. It is a very good tool for wealth creation but like all other assets, has its share of risks. Careful planning, however, can minimize the risks. FOREX

If you read about investing, you've seen the word forex trading. But because forex doesn't get much publicity in the major publications and websites, many investors don't know that forex is just short for "foreign exchange". So trading the forex market is simply trading foreign currencies.

As recently as ten years ago, currency trading had high barriers to entry, so only large banking and institutional firms had access to the tools and systems required to play in the forex trading game. Recently, however, technology has developed to

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the point that any individual investor can hop right in and trade with one of the many online platforms. When buying and selling in the forex currency trading system market, you'll see that there are four "currency pairs" that dominate the percentage of trades. Those four are the Euro vs U.S. Dollar, US Dollar vs Japanese Yen, US Dollar vs Swiss Franc, and US Dollar vs British Pound.

The goal when investing in currency is to be holding a currency that appreciates in value in relation to the other currencies. To use an overly simplistic example, if you bought 50 British Pounds for 100 US Dollars, held the Pounds for 1 week, and in that period the value of Pounds increased in relation to US Dollars, you could then convert those Pounds back into dollars for, say, $12. Unlike the domestic stock markets, the forex currency trading is open for trades 24 hours a day. Much like the phrase "it's always noon somewhere," it's always business hours at some region of the globe. Since every country trades on the FX market, and it's open all day, the daily volume is roughly $1.2 trillion, which dwarfs that of the NYSE. Another comparison to make in order to truly realize the magnitude of the forex market is with the currency futures market (which has around 1% of the daily volume.

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DATA ANALYSIS

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Sample Details
75 people belonging to different fields, who do investment, were asked to fill the questionnaire, on the basis of which an attempt is made to study the prospects of Financial Planning in the market. The sample unit consists of those people who are trading in secondary markets, mutual funds, initial public offer, insurance, debt instruments as they can give the accurate information about financial planning. A sampling frame has been developed so that everyone in the target population has an equal chance of being sampled.

Personal Information:
Sex Ratio: From the total 75 respondents 13 were females and 62 were males.

Geographical Distribution:
Majority of the respondents were from Delhi followed by Gurgaon. The percentage is 82% from Delhi, 18% from Gurgaon.

Occupational Structure: Samples include responses from Businessmen and a good number of service class which includes Chartered Accountant, Engineer, Banker, CEO, Software Professionals, etc so as to include their perception and awareness Regarding financial planners. The percentage of businessman is 40% and servicemen are 60%.

Income Levels: Income levels were classified into 3 levels, namely below less than 5 lac, 5-10 lac , more than 10 lac

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Figure 4: Classification of Income Levels of the Sample

5) Age of Investor: The survey includes the people having different age levels from 18 to above 60. The age between 35 45 includes 28 investors, which is followed by 45 60 which includes 30 investors. The different age levels show their perception about investment. The younger investor which is between 18 35 are likely to take risk and generally invest in more in equity than the people who are between 45 60. The service man in age between 25 35 also plan their future planning by invests in P.P.F, insurance and gold.

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Analysis of the Response

Given below are the graphical representations of the responses received on questions asked through the questionnaire. The interpretation derived and the model adopted will be explained in detail in the later part of the report. On asking the following questions, the replies were received accordingly:

1. What is your objective behind investments?

Investing is a conscious decision to set money aside for a long enough periods in an avenue that suits your risk profile. The questionnaire asked the respondents to reveal their objective behind investments, majority of the respondents disclosed growth of capital/ returns as their prime objective while safety of capital stands secondary. This response reflects the investor willingness to take calculated risks for growth of their capital as also highlighted in Figure 6.1

Interpretation: The research has highlighted that growth of capital is the most important factor which they consider while investing as evident by the response where in 76% of the respondents voted for the same. However, it can also be seen that 68% of the investors prefer safety of their capital as their secondary objective which depicts that investors give greater emphasis to the returns and willing to adjust with safety of capital. Liquidity is the least important factor as only 15% of the respondents voted for it which signifies that the financial planner should designed the portfolio giving more importance to growth and safety of capital as per individual financial goals while liquidity should have the minimum focus.
In our sample, inflation has only been given 18% of the total sample which reflects that people are still not giving much consideration to inflation even due to a sharp rise in the inflation rate.

The people who are business man are generally seen RETURNS/ GROWTH + TAX

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BENEFIT at the time of investment. The 7.5% of business people keeps liquidity and beating inflation in mind at the time of investment.

Serviceman generally gives preference to SAFETY and RETIREMENT BENFITS. 21.66% and 25% people who are serviceman also keep in mind the liquidity and beating inflation at the time of investment. 36.67 people invest to get benefit from tax
Figure 1: Readers response towards Objective behind their Investments

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2) Readers response on whether they plan their investment: Interpretation

This question is asked to all investors to see whether they plan their investment. The Response from the surveying people shows that 82% people plan or get planned their portfolio of their investment in order to invest safely and get good returns. Most of the people prefer to invest through NBFCs as they think are specialized in their work and provide good suggestions.

The 18% people who do not plan just follow the trends of others investors and invest what their friends, relatives, office mates and their bankers said to them. But they invest by keep in mind their future, as they invests in insurance, P.P.F to make their future safe or keep retirement planning in their mind. Figure 2: Readers response on whether they plan their investment:

18%

No yes

82%

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3. What is your practice on saving money?

To determine the saving habits of the investors, the questionnaire enquired the respondents as about their practice of savings. The greater the inclination of saving the more will be the funds available for investment. Interpretation:
Around 48% of the respondents try to save from their income, while only 30% of the respondents always make an effort to save some part of their income, as depicted in Figure 3 below

No one respondent response that he dont believe in savings, which substantiate high Importance of savings in Indian households. However, it was also observed that majority of the women respondents had high inclination for savings and try to save the maximum out of their available income. Figure 3 Respondents response practice on their saving:

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4) Type of instrument prefers for investment? On enquiring from the respondents about which instruments they prefer most for their investment. Interpretation: The surveyed people give priority top to Insurance, which is followed by Mutual funds. The businessmen people generally give preference to EQUITY + MUTUAL FUNDS + INSURANCE. 55% businessmen also invest in property as they think investment in real estate creates more growth/profit. As real estate needs huge amount as investment so only those people whose income level is more than 10 lac invests in real estate. According to the surveyed people response the Gold is also a safer and growth investment opportunity as its price is rising fastly. Both service and business people invests in gold. Figure 4) Respondents response about instrument they prefers for investment

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5. What do you feel is considered to be the fundamentally safe form of investment? Interpretation: On enquiring from the respondent about what are the fundamental secure forms of investments, 35.4% of the respondents feel that investing in property is the safest form of investment followed by Insurance as depicted in Figure 5 below.

The least secured form of investment as revealed by respondents is investment in equity as secondary market is subject to huge volatility & uncertainty. It can be seen from the response that people are more willing to put their money in property or real estate in spite of the economy experiencing a major climb in the property prices. About 14.4% of the respondents feel that Bank deposits is also the safe form of investments as it gives assured returns on the sum invested.

Figure 5: Readers response on fundamentally safe form of investment

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6. How do you take financial decisions?

An individuals decision has a vital role to play in achieving investment objectives and thereby making investments in a systematic manner. Decisions can make or break investment avenues as wrong decisions would merely lead to wrong investments resulting in major loss.

Interpretation: On enquiring from the respondents about how they take their financial decisions, majority of the respondents take their financial decisions independently which depicts they are not taking any advisory services from financial experts. There are majority of respondents who feel that they can handle their portfolio on their own and hence make their own decisions regarding investments. On analyzing the response 48% of the respondents take their financial decisions independently while only 6% of the respondents take investment decisions from financial advisors, as also disclosed in Figure 6.6. This opens up the door for various financial advisors who can target these investors and can give advisory services. Figure 6.6: Readers response regarding taking financial decisions

1%
6%

16%

1%

48%

Independently Friends Advice From Banks NBFC's Financial Advisor/CA Others

28%

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7) Readers response if they take Decisions Independently:

To know how they take financial decisions if independently then what they see at time of investment. Interpretation:
Analyzing the response of investors every investor keep in mind the future growth of investment instrument, is that instrument can give the good growth or returns on their invested money. Generally they make assumption of future growth on the basis of history of instrument and invest accordingly. 95% investors also keep Risk Factor at time of investment in their mind, as they want to invest in safer instrument as they said no one wants to lose their money. They also accepts investment in equity is more risky but it adds higher returns.

34% investors doesnt want to take risk of volatility they think of fixed returns by investing in fixed deposits also they invests in insurance and P.P.F and gold. Figure 7: Readers response if they take Decisions Independently

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8) READERS RESPONSE TOWARDS INSURANCE POLICY

Response from investors discloses that they are wants to invest in insurance so this question is asked from all investors why they want to invest in insurance. Interpretation:

34% of the investors Response about investment in insurance discloses that they want safety/security of their family in terms of money if any mishappening happens to him. Security is followed by means of saving and saving tax. 28% investors invest in insurance to save tax and keep it as investment. As they think by investment in insurance they can save themselves by not paying tax. And after maturity period they will get the handsome amount of money collectively.

Figure 8: Readers response for buying an insurance policy

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9) Readers response towards preference of Investment: Readers response about what way they prefer for their investment. Private banks, NBFCs or through government banks Interpretation: 78% respondents prefer NBFCs for their investment as they think they are sp ecialize in their work of giving advice, and they knows very well about various investment opportunities available in market. Respondents who prefer private and public banks are only 22% they think government bank gives reliable news.

But generally they prefer banks if someone is their known to them or if there is any good relationship, which is made by giving them services at the time of their current and savings accounts. Figure: 9 Readers response towards preference of Investment:

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10) Readers Response towards Tendency they prefer: Respondents response towards which tendency they prefer at time of investment shown in fig 10 Interpretation:
Respondents response shows 39% people like the tendency high risk high return , as they believe unless and until we would not take risk how can we earn or get return more. That tendency is generally prefer by business and servicemen whose income level is more than 10 lac.

The income level of 5 to 10 lac generally prefer moderate risk or low risk to invest in insurance, mutual fund, gold .

The age level also influence the tendency the age level between 18 30 likes to take risks but above 45 they prefer low risk low return. Figure 10) Readers Response towards Tendency they prefer:

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11) Readers response towards Factors consideration at time of investment: Respondents response about what factors they considered at the time of investment. Interpretation: According to respondents response they keep the CRR, Inflation and Global economy at 53%, 42%and 46%. As inflation rate increases the prices of goods and reduces value of money. Global economy also affects their investment instruments. So according to them they invests in their mon Figure 11) Readers response towards Factors consideration at time of investment:

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LEARNINGS Corporate Exposure: Interaction with the Corporate Personnel. Knowledge about various Financial Instruments. Procedures for making the investment in Different Financial Instrument. Learn to work in a group in a professional environment. Learned to be more disciplined, organized and punctual.

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 Constraints and Limitations

1) The research is restricted to Delhi and NCR.

2) The sample size comprised of 150 respondents from different sectors and average annual investments, and their responses are presumed to represent the wealth management market.

3) The time period of the research is May-June 2012.

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RECOMMENDATIONS AND SUGGESTIONS

On studying the peculiarities of the wealth management industry and analyzing the responses of the investors on their perception, the following points are recommended which a general financial advisor should consider while approaching the people.

India is seeing as a maturing financial environment. Options to attract savings exist through a spate of financial products and services that have differing risk/growth and asset accretion propositions. It is becoming increasingly obvious to people that their money, in real terms, would fall in value if they were to keep their money in the bank. And hence the keenness to find out the right avenue that would help grows their savings or assets.

While this is becoming a universally undeniable desire, the fact is that some people dont h ave the knowledge and inclination to understand the financial markets and others dont have the time to follow them. This then leads to financial decisions being taken by individuals based on either relationship hearsay or the sales call of a vendor Unbiased Advisory Investment Advisory Services are in this business of managing the assets of individuals and corporations. However, the distinct model of services should enable the advisors to offer unbiased advice on the entire spectrum of personal finance, keeping the clients interest foremost while doing so. The investment strategies developed across perpetuity should outline a detailed financial plan with frequent reviews of investment decisions made to ensure that portfolios are in line with what was planned. Id like to add here that the financial advisory should not only be unbiased with respect to an asset class but it should also be independent of biases across manufacturers within an asset class.

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Investment in Foreign Markets

A recent pioneering initiative is to facilitate for the clients investment in foreign markets, adding to the advisory capability that spreads across the widest range of asset classes in the country. One needs to be

cautious while investing and it is now important to hire a financial planner to plan your wealth better.

Financial Planning Should Be Encouraged

Financial planning is the process of charting out the money course of your life. Its like having a financial roadmap that guides your every step till you pass on the baton to the next generation. In other words, it is a process in which an individual sets long-term financial goals through investments, tax planning, asset allocation, risk management, retirement planning and estate planning. Most of us approach our financial lives like the disorganized traveller who gets to his destination eventually and perhaps even enjoys the rough ride. We think we have a clear roadmap in mind, but our financial lives are marked by ad-hoc decisions and capitulation to the temptations of the flavors of the financial season.

One of the myths regarding financial planning is that only rich individuals and HNIs can undertake this. This perception exists because most players in the market target these people, as they are very profitable customers. However, anyone can use financial planning. In fact, individuals should use effective financial planning to build their wealth over the years.

Awareness of the Benefits of Planning Early for Retirement

Anyone who will retire needs to plan for it. There is more than one reason to save for retirement. The all-important reason is the rising cost of living. Its called inflation. If you start planning for retirement early on, you can bridge the gap between what you have in your hand today and what you would like to have when you retire. If you begin saving for retirement early on in your life, you can set aside smaller amounts. You can also take on more risk by investing larger amounts in equities i.e.,

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stocks and equity funds. If you delay saving for retirement, you will have to invest larger sums of money to save for the same amount; also the share of equity investments as a portion of your retirement savings will have to be lower. The older you are when you start, the more risk averse you will have to be. Your retirement portfolio will actually be a mix of stocks, debt securities, index funds and other money market instruments. This mix will change as you do, moving increasingly toward low-risk guaranteed investments as you age. Unless planned well, retirement phase will be a downhill ride.

People should come out of the concept of just keeping their money in banks & should concentrate on doing financial planning to maximize their returns by taking proper guidance from financial planner.

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CONCLUSION
As it could be seen from the above factors that: Investors are having low saving potential. Growth of capital acts as a primary objective behind investments. Investors taking financial decisions independently, which depicts that there is a need of financial planners to approach these investors in a proper manner so as to provide value additions to the saving potential and portfolio. Changing behavior of Investor:

More awareness: now the investors have more awareness about the benefits of various instruments like insurance benefits, so investors behavior is changed towards insurance.

More income level: After globalization the incomes of the people in india has risen, so they have more money in their hands. To which they want to invest where they can get good returns and they are ready to take risk for that.

Changing mind set: due to more income level their mind set up is changed as they are ready to take higher risks in order to get returns. Now they invest their money not only to keep, also they want good returns from that.

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BIBLIOGRAPHY
BOOKS: 1. Khan M.Y. and Jain P.K (2001), Financial Management, Tata McGraw Hill. 2. Kothari, C. R. (1978), Quantitative Technique, Vikas Publishing House Pvt. Limited, New Delhi. 3. Pandey I.M. (2003), Financial Management, Tata McGraw Hill. WEBSITES

http://en.wikipedia.org/wiki/Investment www.ibef.org www.ibef.org/industry/financialservic es.aspx Various banks websites www.investsmartindia.com www.mastertrust.co.in www.moneycontrol.com

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QUESTIONNARIE Name of the Investor Education Contact No. -

Q.1 What is the occupation of the investor? a) Service b) Business Q.2 What is the age of the investor? a) 18-25 years b) 25-35 years c) 35-45 years d) 45-60 years e) Above 60 years Q.3 What is the annual income of the investor? a) Less than 5 lac b) 5 10 lac c) More than 10 Lac Q 4. What is your practice on saving money? b) I dont believe in saving.
c) Id like to save, but my expenses & financial commitments do not permit me.

d) I try to save whenever & wherever possible. e) I always save some percentage of my take-home salary without exception. e) Others Q.5 What is the annual savings of the investor? a) 10 % to 20 % b) 20 % to 30 % c) 30 % to 40 %

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d) More than 40 % Q.6 Which type of instrument you prefer for your investment?
a) Public Provident Fund b) Fixed Deposits c) Mutual Funds d) Equity Shares e) Post Office Schemes k) Government Bonds f) Gold g) Real estate h) Forex i) Initial public Offer
j) Insurance l) Bank deposits

m) Others Q.7 What is the purpose of the investment?

a) Safety b) Returns c) Retirement Planning d) Tax Benefits e) Beating Inflation f) Liquidity

g) Others Q.8 Where do you prefer for investment? a) Government banks b) Private banks c) NBFC's d) Public sector e) Private sector f) Others Q.9 How do you take Financial Decisions? a) Independently b) Advise from Friends/Relatives c) Advise from banks d) NBFC's advisers e) Financial advisor f) Others
Q 10 If independently, then what do you see while investing?

a) Risk Factor b) Fixed returns

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c) History of instrument d) Future growth e) Trend of other investors Q11. Which Tendenacy do you prefer the most? a) Low risk, low return b) Moderate risk, moderate return c) High risk, high return Q.12 Which factors do you considered the most at time of investment? a) Global Economy/prices b) Inflation rates c) CRR d) Repo rate e) Others

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