INDEX

Sr.No. CHAPTERS 1 2 Chp.1 Chp.2 2.1 2.2 2.3 3 Chp.3 3.1 3.2 3.3 3.4 3.5 3.6 4 Chp.4 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 4.10 5 Chp.5 5.1 5.2 5.3 5.4 5.5 5.6 6 7 8 Chp.6 Chp.7 Chp.8 -------

TITLE Executive Summery Objective Of Study Title Of The Project Objective Of The Project Scope Of The Project Profile Of The Industry Introduction Meaning Of Investment Financial & economic Meaning Of Investment Characteristics Of Investment Objective Of Investment Investment Process Theoretical Perspective (Investment Avenues) Introduction Stock Market Bank Deposits Real Estate Metals Mutual Funds Commodities Insurance Tax Savings Schemes National saving certificates Research Methodology Problem Statement Introduction To Research Research Design Sampling Techniques Source Of Data Method Of Analysis Data Analysis & Interpretations Findings Limitations APPENDIX COPY OF QUESTIONNAIRE BIBLIOGRAPHY

PAGE No.

CHAPTER 1 Executive Summery

Investment is the commitment of a persons funds to derive future income in the form of interest, dividend, premiums, pension, pension benefits or appreciation in the value of their capital purchasing of shares, debenture, post office savings certificate, insurance policies are all investments in the financial sense. Such investments generate financial assets. In the economic sense, investment means the net additions to the economys capital stock which consists of goods and services that are used in the production of other goods and services. Investment in this sense implies the formation of new and productive capital in

the form of new constructions, plant and machinery, inventories, etc. such investments generate physical assets. The two types of investments are, however, related and dependent. The money invested in financial investments are ultimately converted into physical assets. Thus, all investments are ultimately converted into physical assets. Thus, all investments result in the acquisition of some assets either financial or physical.

CHAPTER 2 OBJECTIVE OF THE STUDY TITLE OF THE PROJECT: INVESTMENT PATTERN OF THE INVESTOR. Research objective:Every project is started with keeping in mind specific objective. Without any objective researcher are not able to reach his goal & result. The following points reflect the core of the objectives which also directly focuses on the scope of the project work undertaken. The primary objective is to study the investment pattern of the investor. the form of new constructions, plant and machinery, inventories, etc. such investments generate physical assets. The two types of investments are, however, related and dependent. The money invested in financial investments are ultimately converted into physical assets. Thus, all investments are ultimately converted into physical assets. Thus, all investments result in the acquisition of some assets either financial or physical. To find priority for investment like Returns, Risk, Safety, liquidity, maturity of investment. To compare different investment avenues available for investor To help investor selecting the appropriate investment avenue for asset allocation according to needs. To find the strength and weakness of different avenues. To analyses Investment pattern through data interpretation.

2.3 Scope of the study: This study is limited to Delhi and NCR only. This study not includes other avenues such as diamond, retail textile & agricultural business. The scope of the study is limited to different selecting investment avenues. This study is limited to comparison of different investment avenues available to middle class & lower class family. Chapter-3 PROFILE INDUSTRY OF THE

1.1 ) INTRODUCTION
The income that a person receives may be used for purchasing goods and services that he currently requires or it may be saved for purchasing goods and services that he may require in the future. In other words, income can be what is spent for current consumption abstains from present consumption for a future use. The person saving a part of his income tries to find a temporary repository for his savings until they are required to finance his future expenditure. This results in investment.

1.2) Meaning of Investment

Investment is an activity that is engaged in by people who have saving, i.e. investments are made from saving, or in other words, people invest their savings. But all savers are not investors. Investment is an activity which is different from saving. Let us see what is meant by investment.

It may mean things to many persons. If one person has advanced some money to another, he may consider his loan as an investment. He expects to get back the money, long with interest at a future date. Another person may have purchase one kilogram of gold for the purpose of price appreciation and may consider it as an investment. Yet another person may purchase an insurance plan for the various benefits it promises in future. That is his investment. In all these cases it can be seen that investment involves employment of funds with the aim of achieving additional income or growth in values. The essential quality of an investment is that it involves waiting for a reward. Investment involves the commitment of resources which have been saved in the hope that some benefits will accrue in future. Thus, investment may be defined as a commitment of funds made in the expectation of some positive rate of return. Expectation of return is an essential element of investment. Since the return is expected to be realized in future, there is a possibility that the return actually realized is lower than the return expected to be realized. This possibility of variation in the actual return is known as investment risk. Thus, every investment involves return and risk.

1.3) FINANCIAL AND ECONOMIC MEANING OF INVESTMENT

In the financial sense, investment is the commitment of a persons funds to derive future income in the form of interest, dividend, premiums, pension, pension benefits or appreciation in the value of their capital purchasing of shares, debenture, post office savings certificate, insurance policies are all investments in the financial sense. Such investments generate financial assets.

In the economic sense, investment means the net additions to the economys capital stock which consists of goods and services that are used in the production of other goods and services. Investment in this sense implies the formation of new and productive capital in the form of new constructions, plant and machinery, inventories, etc. such investments generate physical assets.

The two types of investments are, however, related and dependent. The money invested in financial investments are ultimately converted into physical assets. Thus, all investments are ultimately converted into physical assets. Thus, all investments result in the acquisition of some assets either financial or physical.

1.4) CHARACTERISTICS OF INVESTMENT

All investments are characterized by certain features. Let us analyze these characteristic features of investments. Return All investments are characterized by the expectation of a return. Infact, investments are made with primary objective of deriving a return. The return may be received in the form of yield plus capital appreciation. The return may be received in the form of yield plus capital appreciation. The dividend or interest received from the investment is the yield. Different types of investments promise different rates of return. The return from a investment depends upon the nature of the investment, the maturity period and a host of other factors. Risk Risk is inherent in any investment. The risk may relate to loss of capital, delay in repayment of capital, non-payment of interest, or variability of returns. The risk of an investment depends on the following factors. 1. The longer the maturity period, the larger is the risk. 2. The lower the credit worthiness of the borrower, the higher is the risk. 3. The risk varies with the nature of investment. Investments in ownership securities like equity share carry higher risk compared to investments in debt instruments like debentures and bonds.

Safety The safety of an investments implies the certainty of capital without loss of money. Liquidity An investment which easily saleable or marketable without loss of money and without loss of time is said to possess liquidity.

1.5) OBJECTIVES OF INVESTMENT

An investor has various alternative avenues of investment for his savings to flow to. Savings kept as cash are barren and do not earn anything. Hence, savings are invested in assets depending on their risk and return characteristics. The objective of the investor is to minimize the risk involved in investment and max the return from the investment. Thus, the objective of investment can be stated as: Maximization of return, minimization of risk & hedge against inflation.

1.6) INVESTMENT PROCESS

The investment process is generally described in four stages. These stages are investment policy, investment analysis, valuation of securities, and portfolio construction. I. Investment policy: Determination of ingestible wealth determination of portfolio objectives. Identification potential investment assets consideration of attributes of investment assets allocation of wealth to asset categories. II Investment Valuation: Valuation of stocks, debentures, other assets and bonds.

III. Investment Analysis: Equity Screenings Analysis stock of of analysis industries industries

Quantitative analysis of stocks Analysis of the economy

Debentures and bond analysis Qualitative analysis of debentures Other assets analysis IV. Portfolio Construction: Determination of diversification level consideration of investment assets evaluation of portfolio for feedback

CHAPTER 4
THEORETICAL PERSPECTIVE

INVESTMENT AVENUES
INTRODUCTION There are Various investment avenues available to investor now a day. With the opening up of the economy the number of investments have also increased and the quality of the investments have improved due to the use of the professional activity of players involved in this segment. Today investment is no longer a process of trial and error and it become a systematized process, which involves the use of the professional investment solution provider to player greater role in the investment process.

Different investors have different objectives of investment and they have different risk capacities. The below lists down some of the Investment avenues on the basis of risk involved. Investments in Government bonds or bank deposits carry lesser risk whereas investment in equities has comparatively higher risk. From the following list we can also see that higher the risk higher the return. Thus every person would invest according to his requirements and risk tolerance.

STOCK MARKET
The Bombay stock Exchange (BSE) AND National stock Exchange (NSE) are the two Primary Exchange in India. In addition there are 22 regional stock exchanges. However the BSE and NSE have established themselves as the two leading exchange and accounts for about 90% of the equity volume trade in India. The primary index of BSE is BSE Sensex comprising 30 stocks. NSE has the S&P NSE 50 index (nifty) which consists of 50 stocks. The BSE Sensex is the older and more widely followed index. Both the exchanges have switched over from the open outcry trading system to a fully automed computerized mode of trading known as BOLT ( BSE on line trading) and NEAT ( national exchange automated trading) system. It facilities more efficient processing, automatic order matching, faster execution of trader and transparency

A) Equity share:
Ordinary shares are also known as equity shares and they are the most common form of share in the UK. An ordinary share gives the right to its owner to share in the profits of the company (dividends) and to vote at general meetings of the company. Since the profits of companies can vary wildly from year to year, so can the dividends paid to ordinary shareholders. In bad years, dividends may be nothing whereas in good years they may be substantial. Ordinary shareholders can vote on all of the issues raised at a general meeting of the company.

The nominal value of a share is the issue value of the share - it is the value written on the share certificate that all shareholders will be given by the company in which they own shares. The market value of a share is the amount at which a share is being sold on the stock exchange and may be radically different from the nominal value.

3.1.1) Types of stock:

1. Common Stock: Common stock also referred to as common or ordinary shares, are, as the name implies, the most usual and commonly held form of stock in a company. 2. Preferred Stock: Preferred stock sometime called preferred shares, have priority over common stock in the distribution of dividends and assets.

3. Treasury stock: Treasury stock are shares that have been bought back from public. Treasury stock is considered issued, but not outstanding. 4. Dual class stock: Dual class stock is shares issued for a single company with varying classes indicating different rights on voting and dividend payments. each kind of shares has its own class of shareholders entitling different rights.

3.1.2) Advantages of Equity Financing:

You can use your cash and that of your investors when you start up your business for all the start-up costs, instead of making large loan payments to banks or other organizations or individuals. You can get underway without the burden of debt on your back. If you have prepared a prospectus for your investors and explained to them that their money is at risk in your brand new start-up business, they will understand that if your business fails, they will not get their money back. Depending on who your investors are, they may offer valuable business assistance that you may not have. This can be important, especially in the early days of a new firm. You may want to consider angel investors or venture capital funding. Choose your investors wisely!

3.1.3) Disadvantages of Equity Financing:

Remember that your investors will actually own a piece of your business; how large that piece is depends on how much money they invest. You probably will not want to give up control of your business, so you have to be aware of that when you agree to take on investors. Investors do expect a share of the profits where, if you obtain debt financing, banks or individuals only expect their loans repaid. If you do not make a profit during the first years of your business, then investors dont expect to be paid and you dont have the monkey on your back of paying back loans. Since your investors own a piece of your business, you are expected to act in their best interests as well as your own, or you could open yourself up to a lawsuit. In some cases, if you make your firms securities available to just a few investors, you may not have to get into a lot of paperwork, but if you open yourself up to wide public trading, the paperwork may overwhelm you. You will need to check with the Securities and Exchange Commission to see the requirements before you make decisions on how widely you want to open up your business for investment.

B) Preference Shares Preference shares offer their owners preferences over ordinary shareholders. There are two major differences between ordinary and preference shares: Preference shareholders are often entitled to a fixed dividend even when ordinary shareholders are not. Preference shareholders cannot normally vote at general meetings.

The preference dividend is fixed in the sense that preference shares are often issued with the rate of dividend fixed at the time of issue and you might see something like this:4% preference dividend $ 0.25 Note, that if by any chance a company cannot pay its preference share dividend then it cannot pay any ordinary share dividend since the preference shareholders have the right to receive their dividend before the ordinary shareholders under all circumstances - hence the term 'preference'.

3.1.4) Types of preference shares:

1. Cumulative preference shares: Preference shares are usually cumulative and this means that if this year's dividend wasn't paid, then it will be carried forward to next year.

2. Non-Cumulative preference shares: Some preference shares are non-cumulative, if the company cant pay the dividend for one particular year, the dividend for that year lapses. 3. Redeemable preference shares: A preference share may be redeemable which means that at some time in the future, the company will effectively buy if back. 4. Irredeemable preference shares: A preference share may be irredeemable which means that at some time in the future, the company will not effectively buy it back. 5. Convertible Preference Share Preference shares may be issued with the right of conversion into ordinary shares. These are called Convertible Preference Share.

6. Non Convertible Preference shares: Preference shares may be issued without the right of conversion into ordinary shares. These are called Convertible Preference Share.

7. Participating Preference Share If a preference share is a participating preference share then the owner of such a share has the right to participate in, or receive, additional dividends over and above the fixed percentage dividend.

3.1.5) Advantages of preference shares:

1. You are assured of a dividend: If you own ordinary shares, you are not automatically entitled to a dividend every year. The dividend will be paid only if the company makes a profit and declares a dividend. This is not the case with preference shares. A preference shareholder is entitled to a dividend every year. What happens if the company doesn't have the money to pay dividends on preference shares in a particular year?

The dividend is then added to the next year's dividend. If the company can't pay it the next year as well, the dividend keeps getting added until the company can pay.

2. They get priority over ordinary shares: Ordinary shareholders get a dividend only after the cumulative preference shareholders get theirs. Preference shareholders are given a preference over the rest. That's why it is called a preference share. 3. Preference shares are safer: In case the company is wound up and its assets (land, buildings, offices, machinery, furniture, etc) are being sold, the money that comes from this sale is given to the shareholders. After all, shareholders invest in a business and own a portion of it. Preference shareholders' get the money first. Their accounts are settled before that of the ordinary shareholders, who are the last to get paid.

3.1.6) Disadvantages of preference shares:

They are not easily available They are not traded on the stock exchange

BANK DEPOSIT
A) Fixed Deposit:
When you deposit a certain sum in a bank with a fixed rate of interest and specified time period, it is called a bank fixed deposit (FD). At maturity, you are entitled to receive the principal amount as well as the interest earned at the pre-specified rate during that period. The rate of interest varies between 4 and 6 per cent, depending on the maturity period of the FD and the amount invested. 3.2.1) How to apply in fixed deposit? One can get a bank FD at any bank, be it nationalized, private, or foreign. You have to open a FD account with the bank, and make the deposit. However, some banks insist that you maintain a savings account with them to operate a FD. When a depositor opens an FD account with a bank, a deposit receipt or an account statement is issued to him, which can be updated from time to time, depending on the duration of the FD and the frequency of the interest calculation. Check deposit receipts carefully to see that all particulars have

been properly and accurately filled in.

3.2.2) Features of bank deposit: 1. Safety Bank deposits are fairly safe because banks are subject to control of the Reserve Bank of India (RBI) with regard to several policy and operational parameters. The banks are free to offer varying interests in fixed deposits of different maturities. Interest is compounded once a quarter, leading to a somewhat higher effective rate 3. Deposit period fixed Before opening a FD account, try to check the rates of interest for different banks for different periods. It is advisable to keep the amount in five or ten small deposits instead of making one big deposit. In case of any premature withdrawal of partial amount, then only one or two deposit need be prematurely encashed. The loss sustained in interest will, thus, be less than if one big deposit were to be encashed. Check deposit receipts carefully to see that all particulars have been properly and accurately filled in. The thing to consider before investing in an FD is the rate of interest and the inflation rate. A high inflation rate can simply chip away your real returns. 3.2.3) Returns from Fixed bank deposit: The rate of interest for Bank Fixed Deposits varies between 4 and 11 per cent, depending on the maturity period (duration) of the FD and the amount invested. Interest rate also varies between each bank. A Bank FD does not provide regular interest income, but a lump-sum amount on its maturity. Some banks have facility to pay interest every quarter or every month, but the interest paid may be at a discounted rate in case of monthly interest. The Interest payable on Fixed Deposit can also be transferred to Savings Bank or Current Account of the customer. The deposit period can vary from 15, 30 or 45 days to 3, 6 months, 1 year, 1.5 years to 10 years. Example of bank deposit Duration 15-30 days 30-45 days 46-90 days 91-180 days 181-365 days 1-2 years 2-3 years Interest rate (%) per annum 4 -5 % 4.25-5 % 4.75--5.5 % 5.5-6.5 % 5.75-6.5 % 6-8 % 6.25-8 %

3-5 years

6.75-8

3.2.4) Advantages of fixed bank deposit: 1. Safest investment Bank deposits are the safest investment after Post office savings because all bank deposits are insured under the Deposit Insurance & Credit Guarantee Scheme of India. It is possible to get a loans up to75- 90% of the deposit amount. 2. Any Where in India One can get a bank FD at any bank, be it nationalized, private, or foreign. You have to open a FD account with the bank, and make the deposit. However, some banks insist that you maintain a savings account with them to operate a FD. When a depositor opens an FD account with a bank, a deposit receipt or an account statement is issued to him, which can be updated from time to time, depending on the duration of the FD and the frequency of the interest calculation. Check deposit receipts carefully to see that all particulars have been properly and accurately filled in.

B) TIME DEPOST
A Time Deposit account can be opened at any post-office in the country. Account may be opened by an individual, i.e., Single, Joint A/B (not more than two adults) Trust, Regimental Fund and Welfare Fund. On opening a Time Deposit, you will receive an account statement stating the amount deposited and the duration of the account. The account can be closed after 6 months of opening the account. On such closure the amount invested is returned with/without interest depending on the time the deposit was maintained. 3.2.6) Features of Time Deposit Time Deposits can be made for the periods of 1 year, 2 years, 3 years and 5 years. The minimum investment in a post-office Time deposit is Rs 200 and then its multiples and there is no prescribed upper limit on your investment. Account may be opened by an individual, Trust, Regimental Fund and Welfare Fund. The account can be closed after 6 months but before one year of opening the account. On such closure the amount invested is returned without interest. 2 year, three year and five year accounts can be closed after one year at a discount. They involve a loss in the interest accrued for the time the account has been in operation. Interest is payable annually but is calculated on a quarterly basis at the prescribed rates. One can take a loan

against a time deposit with the balance in your account pledged as security for the loan.

3.2.7) Returns of Time Deposit

This investment option pays annual interest rates between 6.25 and 7.5 per cent, compounded quarterly. Example of return : Time deposit for 1 year offers a coupon rate of 6.25%, 2-year deposit offers an interest of 6.5%, 3 years is 7.25% while a 5-year Time Deposit offers 7.5% return. Duration of Account 1year 2years 3years 5 years 3.2.8) Advantages of Time Deposit In this scheme your investment grows at a pre- determined rate with no risk involved. With a Government of India-backing, your principal as well as the interest accrued is assured under the scheme. The rate of interest is relatively high compared to the 4.5% annual interest rates provided by banks. Quarterly Compound Interest 6.25% 6.5% 7.25% 7.5%

REAL ESTATE
Introduction: The growth curve of Indian economy is at an all time high and contributing to the upswing is the real estate sector in particular. Investments in Indian real estate have been strongly taking The growth curve of Indian economy up over other options for domestic as well as foreign investors. The boom in the sector has been so appealing that real estate has turned out to be a convincing investment as compared to other investment vehicles such as capital and debt markets and bullion market. It is attracting investors by offering a possibility of stable income yields, moderate capital appreciations, tax structuring benefits and higher security in comparison to other investment options. A survey by the Federation of Indian Chambers of Commerce and Industry (FICCI) and Ernst & Young has predicted that Indian real estate industry is poised to emerge as one of the most preferred investment destinations for global realty and investment firms in the next few years. The potential of Indias property market has a revolutionizing effect on the over all economy of India as it transforms the skyline of the Indian cities mobilizing

investments segments ranging from commercial, residential, retail, industrial, hospitality, healthcare etc. But maximum growth is attributed to its growth from the booming IT sector, since an estimated 70 per cent of the new construction is for the IT sector.

3.3.1) Factors Favoring Investments: Tremendous growth has been taking place in both residential as well as commercial segments that is attracting huge investments phenomenal price escalation (more than 100% in several places) in last couple of years . Lower interest rates, easy availability of housing finance, burgeoning income and better job prospects, increase of nuclear families have given a boost to the demand for residential properties in India. The net yields (after accounting for all outgoings) on residential property are currently at 4-6% p.a. However, these investments have benefited from the improving residential capital values. As such, investors can count on potential capital gains to improve their overall returns. Capital values in the residential sector have risen by about 25-40% p.a. in the last 2 years. The retail market in India has been growing due to increasing demand from retailers, higher disposable incomes and opening up of FDI in Retail. The capital appreciation in this sector is close to 20-35% p.a. However, the risks associated with this sector are higher as retailers are prone to cyclical changes typical of a business cycle. Changing consumer behavior combined with increasing disposable incomes will ensure further growth of the retail sector in India. In the present day scenario, it there is and powerful investment tool that brings burgeoning financial returns, it is INDIAN REAL ESTATE!!! Investors should consider the parameters minutely and meticulously to find out why investing in Indian real estate now is the best viable option. 1. High Demand for Commercial Real Estate: The commercial property market has been growing at an annual rate of approximately 30% over the past eight years across major locations in India. Moreover, there is an up shooting demand for 200 million sq. ft over the next five years. Real estate industry research has also thrown light on investment opportunities in the commercial office segment in India. The demand for office space is expected to increase significantly in the next few years, primarily driven by the IT and ITES industry tha requires an projected office space of more than 367 million sq ft till 2012-13

2. Retail Sector Facilitating Real Estate Growth: Apart from the IT and ITES industry influencing the Indian real estate sector, India is also getting into the knowledge based manufacturing industry on a large scale. Retail, one of India's largest industries, has presently emerged as one of the most dynamic and fast paced industries of our times with several players entering the market. The contemporary retail sector in India which is reflected in sprawling shopping centers and multiplex- malls is also contributing to large scale investments in the real estate sector with major national and global players investing in developing the infrastructure and construction of the retailing business. 3. SEZs -The Emerging Investment Option: Moreover, as real estate sector expands beyond the city limits with government promoting industrial belts, real estate developers are eyeing special economic zones (SEZs) as an extension of their business. Several upcoming special economic zones are also expected to provide the momentum to the commercial office space development in related area where the land comes cheaper; and a SEZ developer is entitled for tax exemptions like a I0-year corporate tax holiday. 4. FDI - Inviting Real Estate Investments: Not surprisingly, most foreign investors have aimed India in a big way, largely through joint ventures. Along with curtailing the risk factor, it provides the participating companies an exit route. Since 2005, when FDI in Indian real estate sector was permitted, US $7-8 billion have been parked in. The Government of India's liberalization and economic reforms programmed encourages industrial policy reforms that have reduced the industrial licensing requirements, removed restrictions on investment and expansion, and facilitated easy access to foreign technology and FDI. Increased inflow of investments arising out of flexible FDI policies is sure to have a direct and positive impact on the real restate scenario of India.

3.3.2) Why Invest in Real Estate in India? The Indian economy and the real estate sector in particular are high on its ride to prosperity. As India's economic growth curve rises, real estate India has emerged as one of the most appealing investment areas for domestic as well as foreign investors. Indian real estate has huge potential demand in almost every sector, but especially commercial, residential, retail, industrial, hospitality, healthcare etc. But maximum growth is attributed to its growth from the booming IT sector, since an estimated 70 per cent of the new construction is for the IT sector.

Key Facts 1. Sellingand buying Indian property is now considered as the most profitable and attractive business opportunity in the present real estate scenario in India. New demands have added to strength of real estate markets across the commercial, residential and retail sectors in India. Not surprisingly, demand for Indian property has been increasing steadily for the past few years and it has exceeded supply. 2. There has also been an upward swing on the real estate price values in the recent years. Due to the huge demand and rising prices, investment and speculative interest in real estate is growing while excess money supply, stock market gains and policy changes are adding to the trend in favor of the real estate sector. 3. In the last one year, the capital values of the commercial office spaces has increased by up to 40% owing to the increase in the demand from IT / ITES and BPO sector across major metros in India. 4. India has a distinct regulatory and financing management in place. 5. Real estate boom in India is supported by its own flourishing economy on a sustainable basis. Here, growth of the property market is not a result of renovation and overhauling; but rapid development that witness for India riding the high growth wave.

MUTUAL FUND
3.4) Mutual Funds in India
Mutual Fund is an instrument of investing money. A mutual fund is a group of investors operating through a fund manager to purchase a diverse portfolio of stocks or bonds. Mutual funds are highly cost efficient and very easy to invest in. By pooling money together in a mutual fund, investors can purchase stocks or bonds with much lower trading costs than if they tried to do it on their own. Also, one doesn't have to figure out which stocks or bonds to buy. But the biggest advantage of mutual funds is diversification. Diversification means spreading out money across many different types of investments. When one investment is down another might be up. Diversification of investment holdings reduces the risk tremendously. 3.4.1) On the basis of their structure and objective, mutual funds can be classified into following major types: 1. Open-ended funds An open-end fund is one that is available for subscription all through the year. These do not have a fixed maturity. Investors can conveniently buy and sell units at Net Asset Value ("NAV") related prices. The key feature of open-end schemes is liquidity 2. Closed-ended funds A closed-end fund has a stipulated maturity period which generally ranging from 3 to 15 years. The fund is open for subscription only during a specified period. Investors can invest in the scheme at the time of the initial public issue and thereafter they can buy or sell the units of the scheme on the stock exchanges where they are listed. In order to provide an exit route to the investors, some close-ended funds give an option of selling

back the units to the Mutual Fund through periodic repurchase at NAV related prices. SEBI Regulations stipulate that at least one of the two exit routes is provided to the investor. 3. Interval Funds Interval funds combine the features of open-ended and close-ended schemes. They are open for sale or redemption during pre-determined intervals at NAV related prices.

4. Growth Funds The aim of growth funds is to provide capital appreciation over the medium to long term. Such schemes normally invest a majority of their corpus in equities. It has been proved that returns from stocks, have outperformed most other kind of investments held over the long term. Growth schemes are ideal for investors having a long term outlook seeking growth over a period of time. They promise pure capital appreciation with equity shares They buy shares in companies with high potential for growth (some of which might not pay dividends). The NAV of such a fund will tend to be erratic, since these so-called growth shares experience high price volatility. They also make quick profits by investing in small cap shares and by investing in initial public offerings of small companies. However, growth strategy may differ from one fund to another. Not all growth funds operate similarly. 5. Income Funds The aim of income funds is to provide regular and steady income to investors. Such schemes generally invest in fixed income securities such as bonds, corporate debentures and Government securities. Income Funds are ideal for capital stability and regular income. They aim to provide safety of principal and regular (monthly, quarterly or semi annually) income by investing in bonds, corporate debentures and other fixed income instruments. The AMC in this case will also be guided by ratings given to the issuer of debt by credit rating agencies. Wherever a debt instrument is not rated, specific approval of the board of the AMC is required. Since most corporate debt is illiquid, the fund tries to provide liquidity by investing in debt of varying maturity. 6. Balanced Funds The aim of balanced funds is to provide both growth and regular income. Such schemes periodically distribute a part of their earning and invest both in equities and fixed income securities in the proportion indicated in their offer documents. In a rising stock market, the NAV of these schemes may not normally keep pace, or fall equally when the market falls. The investors looking for a combination of income and moderate growth. The idea is to get the best of both the worlds, equity shares and debt. The proportion of the two asset classes depends on the fund managers' preference for risk against return. But

because the investments are highly diversified, investors reduce their market risk. Normally about 50 to 65 per cent of a portfolio's assets are invested in equity shares.

7. Money Market Funds The aim of money market funds is to provide easy liquidity, preservation of capital and moderate income. These schemes generally invest in safer short-term instruments. Returns on these schemes may fluctuate depending upon the interest rates prevailing in the market. These are ideal for Corporate and individual investors as a means to park their surplus funds for short periods. Also known as Liquid Plans, these funds are a play on volatility in interest rates. Most of their investment is in fixed-income instruments with maturity period of less than a year. Since they accept money even for a few days, they are best used to park short-term money, which otherwise earns a lower return in a savings bank account.

3.4.2) Advantages Of Mutual Funds: There are numerous benefits of investing in mutual funds and one of the key reasons for its phenomenal success in the developed markets like US and UK is the range of benefits they offer, which are unmatched by most other investment avenues. We have explained the key benefits in this section. The benefits have been broadly split into universal benefits, applicable to all schemes and benefits applicable specifically to open-ended schemes

Professional Management The primary advantage of funds (at least theoretically) is the professional management of the money. Investors purchase funds because they do not have the time or the expertise to manage their own portfolios. A mutual fund is a relatively inexpensive way for a small investor to get a full-time manager to make and monitor investments. Mutual Funds provide the services of experienced and skilled professionals, backed by a dedicated investment research team that analyses the performance and prospects of companies and selects suitable investments to achieve the objectives of the scheme. Diversification Mutual Funds invest in a number of companies across a broad cross-section of industries and sectors. This diversification reduces the risk because seldom do all stocks decline at the same time and in the same proportion. Customers can achieve this diversification through a Mutual Fund with far less money than you can do on your own. By owning shares in a mutual fund instead of owning individual stocks or bonds, your risk is spread out. The idea behind diversification is to invest in a large number of assets so that a loss in any particular investment is minimized by gains in others Liquidity Just like an individual stock, a mutual fund allows the customers to request that your shares be converted into cash at any time. In open-end schemes, the investor gets the money back promptly at net asset value related prices from the Mutual Fund. In closedend schemes, the units can be sold on a stock exchange at the prevailing market price or

the investor can avail of the facility of direct repurchase at NAV related prices by the Mutual Fund. Flexibility Through features such as regular investment plans, regular withdrawal plans and dividend reinvestment plans, you can systematically invest or withdraw funds according to your needs and convenience. Choice of Schemes Mutual Funds offer a family of schemes to suit the customers varying needs over a lifetime. Mutual funds offer a tremendous variety of schemes. This variety is beneficial in two ways: first, it offers different types of schemes to investors with different needs and risk appetites; secondly, it offers an opportunity to an investor to invest sums across a variety of schemes, both debt and equity.

Tax benefits Any income distributed after March 31, 2002 will be subject to tax in the assessment of all Unit holders. However, as a measure of concession to Unit holders of open-ended equity-oriented funds, income distributions for the year ending March 31, 2003, will be taxed at a concessional rate of 10.5%. In case of Individuals and Hindu Undivided Families a deduction upto Rs. 9,000 from the Total Income will be admissible in respect of income from investments specified in Section 80L, including income from Units of the Mutual Fund. Units of the schemes are not subject to Wealth-Tax and Gift-Tax

3.4.3) Limitations of Mutual funds

No Control over Costs Investor has to pay investment management fees as long as he remains in the fund. Investors who invest on their own can build their own portfolios of shares, bonds and other securities Investing through funds means he delegates this decision to fund managers Managing Portfolio of Funds Availability of large number of funds can actually mean too much of choice for the investor. He may again need advice on how to select a fund to achieve his objectives No Guarantee - When the entire stock market goes down, the Mutual Fund shares will also go down even if the portfolio is balanced though the risk is low

Administrative fees or sales commissions is charged by all the funds to compensate brokers and financial planners

METALS
A) Gold
3.5.1) Introduction Gold has long been considered one of the most precious metals, and its value has been used as the standard for many currencies as civilisations and empires have risen and declined. Due to its rarity and durability gold has historically been used as a method of payment because of its unique properties. Recent years have seen gold return to grace: against a backdrop of declining equity markets, geopolitical tension, and inflationary fears, the dollar price of gold has soared and with it we have witnessed renewed interest in the yellow metal as an investment. Gold, traditionally seen as a safe haven against uncertainty, has proved very attractive to investors. Gold has been highly valued for thousands of years and is as popular now as it has ever been; as jewellery, as a financial asset and as an industrial product. However, the social value that the gold industry adds to societies around the world, especially in poorer countries, is less understood. Gold mining is vital to the fragile economies of many developing countries, which

account for over 70% of global gold production. In addition to generating export revenue in these countries, gold production provides royalty and tax income to their governments, technology transfer, worker training and the creation of a skilled workforce. Gold mining can also bring substantial improvements in physical, social, legal and financial infrastructure. In many of these countries, gold mining is a foundation industry that often provides the critical mass for the development of electricity, water, road and rail transport in a region, factors that are the essential foundations of an economy. This characteristic of the industry is particularly important in Africa where lack of infrastructure has been identified as one of the major hindrances to economic development. The majority of the jewellery purchased in the Middle East and Asia is used as a means of saving in addition to its function as an adornment. The use of jewellery as savings is often important in rural areas where access to a reliable and appropriate banking system is difficult or impossible. Gold also offers protection against a weak currency or high domestic inflation levels, which are prevalent and presistant problems in the developing world.

3.5.2) Investment in gold - why? The real value of gold is not that it provides a quick, speculative fix, but that it can provide a sure and steady means of protecting wealth and enhance the consistency of returns. With gold's role as a portfolio diversifier, a hedge against inflation and exposure to the dollar, there are several compelling arguments for investing a portion of one's portfolio in the yellow metal. 1. Portfolio Diversification: Most investment portfolios are invested primarily in traditional financial assets such as stocks and bonds. The reason for holding diverse investments is to protect the portfolio against fluctuations in the value of any single asset class. Portfolios that contain gold are generally more robust and better able to cope with market uncertainties than those that don't. Adding gold to a portfolio introduces an entirely different class of asset. Gold is unusual because it is both a commodity and a monetary asset and is an effective diversifier because its performance tends to move independently of other investments. 2. Dollar hedge: Gold is often cited as being an effective hedge against fluctuations in the US dollar, the world's main trading currency. If the dollar appreciates, the dollar gold price falls and similarly a fall in the dollar relative to the other main currencies produces a rise in the

gold price. Like all physical commodities, gold is an asset that bears no credit risk. Holding assets in the yellow metal involves no counterparty and is no one's liability. In addition to that, the physical properties of the metal make it an excellent alternative to money. 3. Durable: Gold is durable. Unlike many of the other commodities examined, other things remaining equal (i.e. assuming no changes in price), there is no depreciation in the value of gold, other than any storage costs that might apply. Gold is fungible. It is, at least in theory, infinitely divisible with virtually no losses (other than any operational costs the process might incur). Furthermore, gold has a high value to volume ratio, which makes it easily transferable, with low transport and storage costs. Moreover, gold is one of the deepest commodity markets with the highest levels of liquidity, second only to oil

4. Inflation: The purchasing power of gold has not bread. Today, an ounce of gold still buys 350 loaves. The value of gold therefore, in terms of real goods and services that it can buy, has remained remarkably stable. In contrast, the purchasing power of many currencies has generally declined. There is a growing body of research to bolster gold's reputation as a protector of wealth against the ravages of inflation. Market cycles come and go, but gold has maintained its long term value. 5. Safe haven: In volatile and uncertain times, we often witness a flight to quality', as investors seek to protect their capital by moving it into assets considered to be safer stores of value. Gold is among only a handful of financial assets that is not matched by a liability. It can provide insurance against extreme movements on the value of traditional asset classes that can happen in unsettled times. 6. Liquidity

Gold's liquidity is one of its critical investment attributes. Gold can be traded around the clock in larger size, at narrower spreads and more rapidly than many competing diversifiers or mainstream investments.

B) Silver
3.5.3) Introduction Silver is a white colored shiny element that is highly ductile and malleable and is used in making jewelry, coins and tableware. It is also used in chemical experiments as it provides a high electrical and thermal conductivity. It is found in the metallic state and also in a large amount of minerals mainly in argentite. That is why it is called argentum in Latin Silver is a metal that is associated with metals like gold, lead, zinc and copper, though its unusual properties makes it very different from them. It is used in making various kinds of jewelry, as it is considered as a precious metal second to gold but its contribution in the various industrial sectors as a raw material makes it unmatchable. No other metal can replace silver as it has an endless number of uses.

Silver is produced throughout the world but an interesting fact remains that the primary source of silver is not the silver mines but the other sources of silver. Silver mines produce a small amount of silver that is 25% of the worlds total production and the rest of it is derived as a by-product from gold mines (15%), copper mines (24%), lead and diminished since Biblical times. According to the Old Testament, during the reign of King Nebuchadnezzar, an ounce of gold bought 350 loaves of

zinc mines (34%) and other sources. The total production of silver in the world figures to be around 615 million ounces and Mexico is the leading silver producing country. The total demand of silver in the world amounts to be around 29 thousand tons. About 95% of this demand is contributed largely by three industrial sectors namely photography, jewelry and silverware sectors. The idea of silver as a holding asset and as a source of coinage is losing popularity to the idea of silver as an industrial commodity. The demand of silver in 2002 from these sectors was: Photography sector 342 million ounces Jewelry sector 205 million ounces Silverware sector 259 million ounces The countries that are the major consumers of silver are: - United states, Canada, Mexico, United Kingdom, France, Germany, Italy, Japan and India. 3.5.4) Production of silver in India India hardly produces any silver and is basically a silver importing country. It holds the 20th place in the list of silver producing countries and the total production of silver in India in 2004 was around 2.1 million ounces. The three major silver producing states in India are: - Rajasthan, Gujarat, Jharkhand. Rajasthan is the leading silver producing state in India with a production of around 32 thousand tons. Gujarat follows on the second place with a production of around 20 thousand tons. 3.5.5) Indian Silver Market: As mentioned above, India is primarily a silver importing country, as the production of India is not sufficient to satisfy the ever-growing domestic demand. The production of silver in India stands out at the figure of around 2.1 million ounces placing it at the 20th position in the list of major silver producing countries. The import of silver in India hovers over 110 million ounces that shows the huge size of Indian domestic demand. However, this import level fell sharply as a result of the decline in demand due to rise in silver prices and inconsistent monsoon on which the income of the rural sector depends. India stands third after United States and Japan among the leading consumers of silver in the world. 3.5.6) Major trading centers of Silver: London Zurich New York (COMEX) Chicago (CBOT) Hong Kong Tokyo Commodity Exchange (TOCOM)

In India, silver is traded at the following places 1) Delhi 2) Indore 3) Rajasthan 4) Madhya Pradesh 5) Mathura (Uttar Pradesh) 6) Rajkot (Gujarat). Also, silver is traded in the Indian commodity exchanges like National Commodity & Derivatives Exchange ltd, Multi Commodity Exchange of India ltd. and National Multi Commodity Exchange of India ltd.

COMMODITY
3.6) Introduction A physical substance, such as food, grains, and metals, which is interchangeable with another product of the same type, and which investors buy or sell, usually through futures contracts. The price of the commodity is subject to supply and demand. Risk is actually the reason exchange trading of the basic agricultural products began. For example, a farmer risks the cost of producing a product ready for market at sometime in the future because he doesn't know what the selling price will be. 3.6.1) Definition Commodity is defined as any bulk good traded on an exchange or in the cash market. One of the first forms of trade between individuals began by what is called the barter system wherein goods were traded for goods. Lack of a medium for exchange was the sole initiator of this system. People sold what they had in excess and bought what they lacked. Animals were the first few commodities to be exchanged. Some examples of commodities include grain, oats, gold, oil, beef, silver, and natural gas. 3.6.2) Commodities exchanges in India:In India, there are 26 registered commodities exchanges. Out of them only 3 commodities exchanges offer online screen based trading system. They are 1. National Multi Commodities Exchange of India Limited (NMCE) 2. National Commodities and Derivatives Exchange of India Limited (NCDEX) 3. Multi Commodities Exchange of India Limited (MCX)

INSURANCE
3.7.1) Defination: The insurance that covers loss of an interest in a property due to legal defects and that is required if the property has a mortgage. Title insurance is a police issued by title insurance company, assuring that the title is a clear in the name of title owner. That means if owner wish to sale the property, that time he don't have any problem to sell that. If any problem creates after selling the property to the new owner that time title insurance company will pay the damage for that or take action to solve that problem. 3.7.2) Origin and growth of Insurance Sector in India Insurance sector in India is one of the booming sectors of the economy and is growing at the rate of 15-20 per cent annum. Together with banking services, it contributes to about 7 per cent to the country's GDP. Insurance is a federal subject in India and Insurance industry in India is governed by Insurance Act, 1938, the Life Insurance Corporation Act, 1956 and General Insurance Business (Nationalisation) Act, 1972, Insurance Regulatory and Development Authority (IRDA) Act, 1999 and other related Acts. The origin of life insurance in India can be traced back to 1818 with the establishment of the Oriental Life Insurance Company in Calcutta. It was conceived as a means to provide for English Widows. In those days a higher premium was charged for Indian lives than the non-Indian lives as Indian lives were considered riskier for coverage. The Bombay Mutual Life Insurance Society that started its business in 1870 was the first company to charge same premium for both Indian and non-Indian lives. In 1912, insurance regulation formally began with the passing of Life Insurance Companies Act and the Provident Fund Act. By 1938, there were 176 insurance companies in India. But a number of frauds during 1920s and 1930s tainted the image of insurance industry in India. In 1938, the first comprehensive legislation regarding insurance was introduced with the passing of Insurance Act of 1938 that provided strict State Control over insurance business. Insurance sector in India grew at a faster pace after independence. In 1956, Government of India brought together 245 Indian and foreign insurers and provident societies under one nationalised monopoly corporation and formed Life Insurance Corporation (LIC) by an Act of Parliament, viz. LIC Act, 1956, with a capital contribution of Rs.5 crore.

The (non-life) insurance business/general insurance remained with the private sector till 1972. There were 107 private companies involved in the business of general operations and their operations were restricted to organised trade and industry in large cities. The General Insurance Business (Nationalisation) Act, 1972 nationalised the general insurance business in India with effect from January 1, 1973. The 107 private insurance companies were amalgamated and grouped into four companies: National Insurance Company, New India Assurance Company, Oriental Insurance Company and United India Insurance Company. These were subsidiaries of the General Insurance Company. 3.7.3) Insurance as Investment Agreed, insurance may not be the best place to invest your hard-earned money. But there are sufficient reasons for one to believe that it can be a highly lucrative avenue to facilitate savings. People often talk about yield on investment and tend to compare their values with those available on various insurance schemes. This is particularly typical within the Indian sub-continent where one conveniently forgets the element of risk covered by life insurance. It is extremely unfair to compare the performance of insurance against other investments without considering the core features of insurance. The very essence of insurance is to protect your family from the uncertainty of your life. Hence it proves very logical to evaluate the costs involved towards this feature. Ask yourself this question When you pay insurance premium for your car, do you get anything if fortunately no mishap happens? This means that you spent the amount to secure a valuable property. Hence you must accept that out of the total amount paid by you for your life insurance, a certain amount is used for providing the risk cover and only the balance can be utilised as savings. In other words, the total premium you pay minus the amount evaluated as the cost of insurance must be considered as the amount invested to get the maturity amount. If you calculate the yield from returns, you will be in for a surprise. 3.7.4) Indian Insurance Industry: Insurance may be described as a social device to reduce or eliminate risk of life and property. Under the plan of insurance, a large number of people associate themselves by sharing risk, attached to individual. The risk, which can be insured against include fire, the peril of sea, death, incident, & burglary. Any risk contingent upon these may be insured against at a premium commensurate with the risk involved.

Insurance is actually a contract between 2 parties whereby one party called insurer undertakes in exchange for a fixed sum called premium to pay the other party happening of a certain event. Insurance is a contract whereby, in return for the payment of premium by the insured, the insurers pay the financial losses suffered by the insured as a result of the occurrence of unforeseen events. With the help of Insurance, large number of people exposed to a similar risk make contributions to a common fund out of which the losses suffered by the unfortunate few, due to accidental events, are made good.

TAX SAVING SCHEME

A) Public Provident Fund (PPF ):
3.8.1) Introduction: Under this scheme, there is a return at the -interest rate of 8% p.a. The minimum investment limit is Rs. 500/- and maximum limitation is Rs. 70,000/-. It can be opened any time throughout the year. It can be operated either single or jointly. In case of minor, with parent/guardian. There is also a facility of nomination in this scheme. 3.8.2) Highlights: The Public Provident Fund Scheme is a statutory scheme of the Central Government of India. The Scheme is for 15 years. The rate of interest is 8% compounded annually. The minimum deposit is 500/- and maximum is Rs. 70,000/- in a financial year. One deposit with a minimum amount of Rs.500/- is mandatory in each financial year. Public

 The deposit can be in lump sum or in convenient installments, not more than 12 Installments in a year or two installments in a month subject to total deposit of Rs.70,000/-. It is not necessary to make a deposit in every month of the year. The amount of deposit can be varied to suit the convenience of the account holders. The account in which deposits are not made for any reasons is treated as discontinued account and such account can not be closed before maturity. The discontinued account can be activated by payment of minimum deposit of Rs.500/- with default fee of Rs.50/- for each defaulted year. Account can be opened by an individual or a minor through the guardian. The deposits shall be in multiple of Rs.5/- subject to minimum amount of Rs.500/-.

The deposit in a minor account is clubbed with the deposit of the account of the Guardian for the limit of Rs.70, 000/-. The PPF scheme is operated through Post Office and Nationalized banks. Deposits in PPF qualify for rebate under section 80-C of Income Tax Act Deposits are exempt from wealth tax. Nomination facility available. Best for long term investment.

3.8.3) Why You Should Invest in a Public Provident Fund Account? Your money in the PPF account is perfectly safe, earns 8% (at the moment), qualifies for Section 80C of the Income Tax Act, and at the moment is EEE (Exempt Exempt Exempt - the money you invest, the interest earned, and the final withdraw able amount are all tax exempt). You can invest a low of 500 rupees and a high of 70,000 rupees a year (over a maximum of twelve installments per year). You are allowed to withdraw money or take a loan; there's a weird formula to compute the same, but 1 advise against doing so ever. If you invest 10.000 rupees a year your final balance stands at 293,243 rupees; If you invest 35,000 rupees a year the final balance becomes 1,026,350 rupees; At 70,000 rupees a year, the final balance is a whopping 2,052,700 rupees. At the end of 15 years, You can extend your subscription in blocks of 5 years or else close the account and reap the benefits. The RPF is a great way to set aside money for say your child's higher education. You can open a PPF account at State Bank of India (SBI) or any of its subsidiaries or at the local post office. An individual is allowed to have only one PPF account.

NATIONAL SAVING CERTIFICATE

B) National Savings Certificate:
3.8.4) What is National Savings Certificate? National Savings Certificates (NSC) is certificates issued. by Department of post, Government of India and is available at all post office counters in the country. It is a long term safe savings option for the investor. The scheme combines growth in money with reductions in tax liability as per the provisions of the Income Tax Act, 1961. The duration of a NSC scheme is 6 years. National Savings Certificate, popularly known as NSC, is a timetested tax saving instrument that combines adequate returns with high safety. National Savings Certificate can be purchased by the following: An adult in his own name or on behalf of a minor. A minor, A trust Two adults jointly, Hindu Undivided Family 100, Rs

National Savings Certificates are available in the denominations of Rs.

500, Rs. 1000, Rs. 5,000 & Rs. 10,000. There is no maximum limit on the purchase of the certificates. Period of maturity of a certificate is six years. Presently, maturity value of a certificate of Rs. 100 denomination is Rs. 160.10. Maturity value of a certificate of any other denomination is at proportionate rate. Premature encashment of the certificate is not permissible except at a discount in the case of death of the holder(s), forfeiture by a Pledge and when ordered by a court of law. Interest accrued on the certificates every year is liable to income tax but deemed to have been reinvested. Income Tax rebate is available on the amount invested and interest accruing under Section 88 of Income Tax Act, as amended from time to time.

Income tax relief is also available on the interest earned as per limits fixed vide section 80L of Income Tax, as amended from time to time.

3.8.5) Highlights : Minimum investment Rs. 500/- No maximum limit. Rate of interest 8% compounded half yearly. Rs. 1000/- grow to Rs. 1601/- in six years. Companies, Trusts, Societies and any other Institutions not eligible to purchase. Non-resident Indian/MF can not purchase. No pre-mature encashment. Annual interest earned is deemed to be reinvested and qualifies for tax rebate for first 5 years under section 80 C of Income Tax Act. Maturity proceeds not drawn are eligible to Post Office Savings account interest for a maximum period of two years.

Facility of reinvestment on maturity, encashment of certificates through banks, purchase/ payment to the holder of Power of attorney and Nomination. Certificate can be pledged as security against a loan to banks/ Govt. Institutions. Certificates are transferable from one Post office to any Post office. Certificates are transferable from one person to another person before maturity. Duplicate Certificate can be issued for lost, stolen, mutilated or de faced certificate. Tax Saving instrument - Rebate admissible under section 80 C of Income tax Act. Interest income is taxable but no TDS. Deposits are exempt from Wealth tax. 3.8.6) Advantages of NSC: 1. Tax Benefits are available on amounts invested in NSC under section Exemption can be claimed under section 80L. 88 and destroyed,

2. For interest accrued on the NSC. Interest accrued for any year can be treated as fresh investment in NSC for that year and tax benefits can be claimed under section 88.

3. NSCs can be transferred from one person to another through the post office on the payment of a prescribed fee. 4. They can also be transferred from one post office to another.

OTHER INVESTMENT INCLUDS

3.9.1) Post Office Saving Scheme : It is one of the best Income Tax Saving Scheme. It can be operated by either single or jointly. In case of minor, with parent/guardian. It is available throughout the year. There are several types of post office schemes depending upon the type of investment and maturity period. Post office schemes can be divided into following categories: Monthly Deposit Saving Deposit Time Deposit Recurring Deposit

Postal Services in India India possesses the largest postal network in the world with 1, 55,000 post offices spread all over the country as on March 31, 2001, of which 89 per cent are in the rural sector. Post offices in India play a vital role in the rural areas. They connect these rural areas with the rest of the country and also provide banking facilities in the absence of banks in the rural areas. Post Offices also offer various saving and tax saving instruments such as, National saving certificate, Public Provident Fund , and Kisan Vikas Patra Highlight: Minimum amount Rs20/- in case of non- cheque account, Rs.5001- in case of cheque account. Minimum balance of Rs.500/- is to be maintained for a cheque account. Account is opened with cash only. Maximum balance permissible Rs. 1,00,000/- in a single account and 2,00,000/in Joint account.

 A Minor having 10 years of age can also open an account directly. One individual account and one joint account can only be opened at a post office.

CHAPTER 5

RESEARCH METHODOLOGY

This section indicates what is to be researched and also shows which method is to be adopted for the research methodology.

2.1 Problem statement:To study the investment pattern and selecting the best avenue according to the need of investment.

Introduction to Research:The following methodology will be used to state and justify the reason for using the different methods selected for the research of the project. In order to achieve the aims and objectives of the study, it is very important that researcher should use sound research tools and techniques and know how best to analyze the results. Here, the combination of research methods has been utilized in gaining an insight to a complex and changing area. As in the research, the theory is already created which is the concept of Investment Avenue for investor easily available minimizing risk and maximizing return as one of the part of Investment pattern hence the researcher needs to find the Preference of investor invest in different avenues or alternative by survey.

Research Design:This section carry out the topics such as research sector, research population and Instrument used for the research.

Research Sector:Researcher is going to carry out the research on Investment Avenue available to investor because the aim of the research is to study Investment pattern of the Investor.

Research Population:Research population comprises of the survey are Salaried, Professional, Business owner, Student, Housewife, Retired & Pensioner, trader, share broker, NRI and others. This survey will be analyzed in terms of factors like Safety, Liquidity, Diversification, Simplicity, Tax saving and Affordability.

Research instrument:The questionnaire is been carefully prepared by using all experience and skills of the knowledgeable person of the company to get the most of the required information from the financial advisors & Investor. A research design is simply the framework or plan for a study used as a guide in collecting & analyzing data. It is the blue print that is followed in completing the study. Research would be conducted in the context of this project report. I have utilize descriptive research design.

2.4 Sampling Techniques:In random sampling each population has an equal chance of being selected into the sample. This method is very easy method of sampling technique. But it requires a listing of population. In this study samples have been taken as randomly on the basis of group, income level, no of dependents, risk taking capacity etc. sample size of the study is 100.

2.5 Source of data:After research design, next step is to determine data source, which are mainly of two types:1. Primary data 2. Secondary data Primary data is the one which is collected at first hand either by research survey or by someone else for purpose of some study. Primary sources are original works of research or raw data without interpretation or pronouncements that represent an official opinion or position. Included among the primary sources are memos, letters, complete interviews, court decision and questionnaire. Primary sources are always the most authoritative because the information has been filtered or interpreted by a second party. Eg. By observation method By interview method By questionnaire method Secondary date is any data gathered earlier for some other purpose & available hand in carrying out project. Eg By websites. By public researches. By newspapers By libraries By magazines etc. Thereby, here in the survey primary data is collected by using Questionnaire method to get the main theme of project and the primary data is obtained from library study, company booklets, manuals & internet websites as well as relevant newspapers.

2.6Method of analysis:The raw data is jot fruitful if it is not analyze properly. There are various tools available is statistical field. Some statistical tools use for this study is as follow: Graphical & tabulation method

CHAPTER 6

DATA ANALYSIS AND INTERPRETATION

Q5 Age Group:
Age Group Less than 26 yrs 26 - 45 yrs 46 - 65 yrs More than 65 yrs Total % of Investor 13 44 38 05 100

% of Invest

50 40 30 20 10 0 Less than 13

44

38

26 - 45 yrs

46 - 65 yrs

26 yrs Age Group (yrs)

More than 65 yrs

Interpretation:
From the above graph, it is clear that 13% of the respondents belong to >26 years age group, 44% belong to 26-45 years age group, 38% belong to 46-65 years age group and only 5% belong to more than 65 years age group. So we can say 26-45 year age group investor are active age group while only 5% investor belong to senior citizen age group

Q6 Martial Status :
Martial Status Married Unmarried Widow(er) Divorced Total % of investor 84 11 03 02 100

2% 3%

Martial Status

11%
Married Unmarri ed Widow( er) Divorce d

84%

Interpretation:
Above Status graph, we can see that 84% investors are married, 11% are unmarried, 3% are widow(er) and 2% are divorced. So we can say Majority of the investor are married while Minority of the investor are Divorced

Q7 Education :
Education Post Grad. & above Graduate\ Diploma HSC\SC Below 10 th Total % of Investor 29 46 20 05 100

Education(% of Investors)
Post Grad. & above 29% Graduat e\ Diplom a HSC\SC Below 10 th

20%

5%

46%

Interpretation:
From the above graph, it is clear that 29% of the respondents are Post Graduate & above, 46% of the respondents are Graduate \ Diploma, 20% of the respondents are HSC\SC and only 5% of the respondents are below 10th . So we can say 26-45 year age group investor are active age group while only 5% investor belong to senior citizen age group.

Q8 Qualification :
Qualification MBA CA ICWA\CFA\CS DR Engineer LLB Others Total
% Of Investor 80 60 40 20 0 MBA

% of Investor 07 04 03 04 08 07 67 100
67

4 CA

3 ICWA\CFA\ CS

4 Engineer DR LLB

8 Others

Qualification

Interpretation:
The graph describe that majority of the respondents are having qualification other than the given. Here, 7% investor are MBA, 4% are CA, 3% are having professional 2 year course like ICWA \ CFA \ CS, 4% DR with specialized course OF Phd., 8% are Engineer into different fields, 7% are LLB and remaining are qualified into different fields like DMFF, BSC (Chemistry), LLM, Home Science, MSC, M.A etc.

Q9 You Are :
You Are Salaried Professional Business Owner Student Housewife Retired\pensioner Others Total
You are
% of Investo 50 40 30 20 10 0 31 13 Professional 3 Business Student Owner Salaried 40

% of Investor 31 13 40 03 06 07 00 100

6 Housewife

7 Retired\pensi

0 Others

Occupation

Interpretation:
The Occupation status show 31% of investor are Salaried, 13% of investor are Professional, 40% Majority of investor are Business Owner or Business Man, 3% investor are student, 6% are housewife, 7% Retired people \ Pensioner and the others category is nil.

oner

Q10 No Of Family Member :

Family Member 2 3 4 More than 4 Total % of Member 13 26 30 31 100

FamilyMember
13%

31%

26% 30% 2 3 4 More than 4

Interpretation:
Pie chart above show the no of family member depend on the income of the investor. We can see that 13% investor has a 2 member family, 26% has a 3 member family, 30% has a 4 member family and 31% investor has a more than 4 member in family.

Q11 Annual Income :

Annual Income Less than 1,00,000 1,00,001 - 3,00,000 3,00,001 - 5,00,000 More than 5,00,001 Total % of Investor 13 48 21 18 100

48 50 40 30 21 % of I nv es 18 20 13 10 0 L e s s t h a 1n , 0 0 , 0 0 1 3-, 0 0 , 0 0 1 Mo re t h a n 1 , 0 0 , 0 0 0 3 , 0 0 , 0 0 0 5 , 0 0 , 0 0 05 ,00,001 Annual inc o

Interpretation:
With the help of above graph, we can say that 13% investors have an annual income less then 1,00,000 , 48% investors have an annual income between 1,00,001-3,00,000 , 21% investors have an annual income between 3,00,0015,00,001 and 18% investors have an annual income more than 5,00,001. So we can say majority of investors belong to middle class category and only few % say 21% investors belong to upper middle class, 18% investor belong to higher class category and minority of investor belong to lower class category. We can clearly see that highly unequal income distribution in Delhi city.

Q12 Do You Save : 1. Yes 100%

Saving(%ofInvestor)
Yes 0% No

2.

No

0%

100%

If Yes, what amount of your total annual income

SAVING Less than 1,00,001 1,00,001 - 3,00,000 Total % of Annual Income 41 41 82 SAVING 3,00,001 - 5,00,000 More than 5,00,001 Total % of Annual Income 13 5 18

40 20 10 0 Saving

41

41 Less than1,00,001 1,00,001 - 3,00,000 13 3,00,001 - 5,00,000 More than5,00,001

5 % of Annual Income

Interpretation:
With the help of above given first graph, we can say that 100% investor are saving their money from annual income. With the help of above given second graph, we can see equal % of investor are saving in the category upto 3,00,000. 13% of investor are saving between 3,00,0005,00,00 and 5% of investor are saving more than 5,00,001. In short, we can say investor of Mumbai city have good habit of saving money from annual income.

Q13 Do You Invest:

1. Yes 100% 2. No 0%

Investment(%ofInvestor)

0% Ye s No 100%

If Yes, In which Avenues (Give Rank).

Sr. No 1 2 3 4 5 6 7 8 9 INVESTMENT AVENUES Stock Market Bank Deposit Real Estate Mutual Fund Metals Commodity Insurance Tax Saving Scheme Others RESPONSE 13 23 8 12 8 0 27 6 4 RANK 3 2 5 4 5 8 1 6 7

Interpretation: According to Rank

According to first chart, 100% citizens are investing in various investment avenues. According to second given chart through rank one, Insurance got first rank; bank deposit got second; stock market got third; mutual fund got fourth rank; real

estate and metals get equal priority as fifth rank; at sixth rank comes tax saving scheme; further others got seventh rank and finally commodity got eight rank. Thus it can be concluded that insurance is the first choice of the investor were as commodity as last choice. Life insurance is the first choice of the investor. That is insurance is the present need of the investor.

Commodity

Tax Saving

Insurance

Deposit Real

Mutual

Metals

Market

Scheme

Bank

Rank wise Investment Avenue (Response)

Interpretation: According to Rank

According to chart, 27 respondents are investing in Insurance, while 23 respondent are investing in bank deposit, 13 respondents are investing in stock market, 12 respondents investing in mutual funds, 8 respondent equally invest in both real estate and metals, 6 respondent invest in tax saving scheme, 4 respondent either invest in business or other category and finally no one like to invest commodity as first preference. So it can be said that either people like to invest in insurance, gold and bank that provide regular or fixed income.

Others 9

Estate

Stock

Fund

30 25 20 15 10 5 0

Rank N

23 13 8 12 8 0

27

Q14 Factor taken into consideration while selecting above mention avenues (Give Rank).
Factor Safety Tax Saving Simplicity Liquidity Diversification Affordability
Affordability Factors Diversification Liquidity Simplicity Tax Saving Safety 0 10 20 30 Rank No 40 50 6 24 50 60 3 11 8

Rank 1 2 5 3 6 4

Interpretation: According to Rank 1

Above graph show that safety got first rank, Tax saving got second rank, Liquidity got third rank, Affordability got fourth rank, Simplicity got fifth rank and last sixth one got by affordability. Safety got highest rank so we can say now a day investor more focus on safety, investor also want tax saving scheme, through tax saving scheme investor can reduce risk level and can improve the safety level. Investor also focusing on tax planning factor which is more important now a days

Q15 Objective of Investment :

Objective Future Security Tax Savings Short term/Long term gain Children Carrier Speculation Others (Not specific) Total Responses % 45 20 14 12 7 2 100

Objective
Future Security 12% 14% 20% Others 7% 2% 45% Tax Savings Short term/Long term gain Children Carrier Speculation

Interpretation:
According to above mention pie chart majority of % say 45% investors Objective is Future security and then comes tax planning, 20% investors have this objective, third comes to short term / long term gain say 14% investor have this objective. According to above mention pie chart 12% have children career as objective similarly very near say 7% investor have speculation objective and only 2% have other objective say expansion of present business while investing money in others investment avenues. Finally, we can say that majority of investor are saving their future through long term objective.

Q16 Mention the return expected on total amount of Investment :

Expected Return Less than 11 % 11 - 20 % 21 - 30 % More than 30 % Total % of Investor 15 48 21 16 100

50 40 30 20 10 0 11 % % Of Investor 15

48

21

16

Less than 11 - 20 % 21 - 30 % More than 30 % Return

Interpretation:
Mention graph clearly show that 40% investor expect 11-20% return on annual basis, 21% investor expect 21-30%, 16% expect more than 30% and 15% investor expect less than 115 return on annual basis. Finally, we clearly say majority of investor expect 11-20% return on annual basis on an average on different alternatives of investment.

Q17 Mention the affordable risk on your investment :

RISK Less than 11 % 11 - 20 % 21 - 30 % More than 30 % Total % of Investor 27 44 18 11 100

50 40 30 20 10 0 Less than 11 %

44 % of Investor 27 18

11

11 - 20 %21 - 30 % More than 31 % Risk

Interpretation:
Mention graph clearly show that 44% investor expect 11-20% risk on annual basis, 27% investor expect less than11%, 18% investor expect 21-30%and 11% investor expect more than risk on annual basis. Finally, we clearly say majority of investor expect 11-20% risk on annual basis on an average on different alternatives of investment.

Q18 Mention your preferred investment period :

INVESTMENT PERIOD Less than 1 yrs 1 - 5 yrs 5 - 10 yrs More than 10 yrs Total % of Investor 11 49 27 13 100

% Of Inv e stor 20 10 0

50 40 30 11

49 27 13

Less 1 - 5 5 - 10 More than 1 yrs yrs than yrs 10 yrs Inv e stme nt Pe riod

Interpretation:
According to graph we clearly see that majority of investor say 49% invest for 15 years, 27% investor invest for 5-10 years, 13% investor invest for more than 10 years and 11% investor invest for less than 1 years. So we can say investor generally want to invest for 1 to 5 years period

Q19 Preferred interval of investment level :

INTERVAL OF INVESTMENT Monthly Quarterly Half Yearly Yearly Total % of Investor 15 31 15 39 100

Interval Of Investment
15%

39%

31%

Monthly Quarterly Half Yearly Yearly

15%

Interpretation:
The interval of investment basically remain annually for every investment options. Here also 39% investor invest on yearly basis, 31% investor invest quarterly, and remaining 15% equally investor invest monthly and half yearly. Hence we conclude that investor invest on yearly basis.

Q20 Minimum investment level :

INVESTMENT LEVEL Less than Rs 5000 Rs 5,000 - 10,000 Rs 10,00 - 20,000 More than Rs 20,000 Total % of Investor 13 30 20 37 100

Investment Le

More than Rs 20,000 Rs 10,00 - 20,000 Rs 5,000 - 10,000 Less than Rs 5000 0 10 13 20 30 40 20 30

37

%Of Investor

Interpretation:
According to above mention chart very few % say 13% investor have minimum investment is less than Rs 5000, 30% level more than Rs 20,000. We clearly see majority of investor have good capacity of minimum investment. investor have Rs 5,000-10,000 , 20% investor have Rs 10,000-20,000 and majority investor have minimum investment

Q21 Do you make Research before investment : 1. Yes 84%

Resear ch
Yes No No, 16

2. No 16%

Yes, 84

If Yes, kindly mention types of research

Types Of Investor )
21%

Research

of

25%

16% 6%

32%

Studying Annual Reports of Co. Monitoring share markets Getting information through broker All Others

Interpretation:
According to above mention first graph we can see 84% investor doing Research work and 16% investor are not doing research work. In second graph, we also can see 6% studying annual reports of Company, 16% investor monitoring share markets, 21% investor getting information through broker while the majority category does all the above research before investment The highest % category of investor does research work like reading newspaper, magazine etc before investment.

Q22 Do You reinvest :

1.
72

Yes 72%

2.

No 28%

80 60 %Of Investor 40 20 0 Yes No Reinve st 28

Interpretation: 90
80 70 60 50 40 30 20 10 0

Above mention chart show that 72% people reinvest and 28% investor withdraw 100% profit from the market. 1. Yes 21% 2.
E a s t W es t N orth

Q23 Advise to invest in investment avenue other than riskless securities:

No 79%
1s t Qtr 2ndQtr 3rdQtr 4thQtr

80 60 40 20 0 y es N o

Interpretation:
21% investor advise to invest in different alternative like present business (like ploughing back of profit), Bonds of mutual funds, RBI bonds, Nationalized banks, while some advise that the return provided by such securities is higher than riskless securities. 79% investor do not advise about the same.

CHAPTER 7

FINDINGS

The null hypotheses is rejected and it is proved that (accept) there is no significant influence of socio-economic profile on Saving, objective, Return, Risk, Preferred Investment period, Interval of investment, Minimum Investment Level, Research & Type of research for investment, reinvest and advise. According to rank wise analyses we can say Insurance is the first preference for investment, Insurance is the present need of the investors. Second Preference of Investor is Bank deposit and third preference is the Stock Market. As today Insurance is getting very good response as an investment avenues, it is opening wide door for the investors as well as for the agents and subagents who can offer various investment avenues with their concern avenues to their clients. Further, people are very much concern about Savings, Tax saving and Liquidity. So these factors give them freedom of thinking and option to invest in more than one avenue. It help investor selecting the appropriate investment avenue for asset allocation according to needs. Investor can diversify its portfolio according to risk and return on investment. At last the survey concludes with more requirement of financial advisor who provides more knowledge to the investors regarding various avenues.

CHAPTER 8 LIMITATIONS

Limitation of the study: As every study has some benefits, limitation is not exemption to a study. The limitations here are; The first & foremost is time limitation. As there were only three months for the study. The study includes information & concept of different investment avenues but not every concept of Investment Avenues

ANNEXURE
A survey on investment pattern of investors
Assurance: A. The information will be used to study the investment pattern of investors. B. The information will be strictly kept confidential. Personal Information: 1. Name: 2. Resident of: 3. Phone No: 5. Age group: Less than 25 yrs 6. Marital status: Married 4. Email: 25 - 45 yrs 45 - 65 yrs More than 65 yrs

Unmarried

Widow(er)

Divorced

7. Education: Post Grad.& above Graduate\Diploma HSC\SC Below 10th 8. Qualification: MBA CA ICWA/CFA/CS Dr. Engineer LLB Others 9. You are: Salaried Housewife Professional Business Owner Retired/ Pensioner Other 2 3 4 student

10. No of family members: 11. Annual income:

More than 4 Rs 1,00,000 - 3,00,000 More than Rs 5,00,000

Less than Rs1,00,000 Rs 3,00,000 - 5,00,000

12. Do you save:

Yes

No

(If yes, what amount of your total annual 1,00,000 - 3,00,000

income) Less than 1,00,000 3,00,000 - 5,00,000

More than 5,00,000

13. Do you invest : A Stock Market a. Equity b. Preference c. Others B Bank Deposit a. Fixed Deposit b. Time Deposit c. Others C Real Estate a. Land b. Building D Mutual fund a. ELSS b. Systematic Investment Plan E Metals a. Gold b. Silver

Yes

No

.If yes, Avenues (write preference)

F Commodity a. Agriculture b. Crude (Oil) G Insurance a. Medical b. Life c. Retirement H Tax Saving Scheme a. Public Provident Fund b. National Saving Certificate I Debt Market a. Debenture b. Bonds J Others

14. Which factor you consider while selecting above mention avenues. (write preference) A Safety D Liquidity B Tax saving C Simplicity 15. Objective of investment: Future security Tax savings Children carrier Speculation E Diversification F Affordability

Short term\Long term gain Others

16. Kindly mention the return you expect on your total amount of investment (In %): Less than 10 % 10 % - 20 % 20 % - 30 % More than 30 %

17. Kindly mention the affordable risk on your investment (In %): Less than 10 % 10 % - 20 % 20 % - 30 % More than 30 % 18. Kindly mention your preferred investment period: Less than 1 yrs 1 5 yrs 5 10 yrs More than 10 yrs 19. Preferred interval of investment: Monthly Quarterly Half yearly yearly

20. Minimum investment level: Less than Rs 5000 Rs. 5000 - Rs 10000 Rs 20000 or More

Rs 10000 - Rs 20000

21. Do you make market Research before investment: Yes No (If Yes, kindly Mention) Studying Annual Reports of Co. Monitoring Share Markets Getting information through Broker All Others 22. Do you Reinvest: Yes No

23. Would you advise someone to invest in investment avenue other than riskless securities: Yes No (If Yes) specify

Thanks for your Co-operation.

BIBLIOGRPHY

/.