BAJAJ CAPITAL BROKING LIMITED

CHACK AND INCREASE AWARENESS 360 DEGREE

FINANCIAL PLANNING IN LUCKNOW

SUMMER TRAINING PROJECT REPORT

FF-1 RAJA RAM KUMAR PLAJA OPP- TEJ KUMAR PLAJA, HAZRATGUNJ,
LUCKNOW (U.P.) E-MAIL ID- lucvanue@bajajcapital.com, ph.:0522-6060222

Submitted to: Submitted by:

MANISH BAJPAI RISHI KUMAR

BAJAJ CAPITAL
PGDBM (MARKETING)
 PREFACE
There are number of forces that make marketing an endlessly changing activity.
The constantly changing activity sociological, psychological and political
environment may represent the uncontrollable marketing factors. To understanding
these factors in a better way marketing research is of utmost importance.
This Project Report has been completed in Partial fulfillment of my management
Program, Post Graduate Diploma in Business Management (PGDBM) in the
company “BAJAJ CAPITAL BROKING LTD.” The objective of my project
was “TO LEARN THE WORK AND SOME BENEFITIAL INVESTMENT
OPTIONS IN INVESTMENT INDUSTRY.” All students learn theoretical
subjects in their classroom, but as we are the management students, apart from
theoretical studies we need to get a deeper insight into the practical aspects of
those theories by working as a part of organization during our summer training.
Training is a period in which a student can apply his theoretical knowledge in
practical field. Basically practical knowledge and theoretical knowledge have a
very broad difference. So this training has high importance as to know how both
the aspects are applied together.
The study of management acquires most crucial position in the business
administration. In order to be successful, it is necessary to give priority to the
management in an organization. But it can’t be denied that the study of
management would be more educational, materialistic and even more interesting, if
it is to be paired with the work in organization as an employee.

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 ACKNOWLEDGEMENT

This project has been prepared as a part of an internship required during the
completion of PGDBM programmed at IIMT, Gr. Noida (U.P).
I was involved with BAJAJ CAPITAL BROKING LIMITED, LUCKNOW for
a period of 60 days, and I came across a lot of officials who devoted their time and
effort towards acclimatizing me to the workings of their organization.
I express my heartiest gratitude to Mr. FAIZULLAH KHAN (Regional Manager)
and my guide Ms. NITIN MISHRA (BRANCH MANAGER), who was there to
introduce me to the idea of BAJAJ CAPITAL & its processes. Also under her
guidance and leadership I was able to enhance my inter-personal skills.
I would also like to extend thanks to Mr. FAIZULLAH KHAN (Regional
Manager-Client Acquisition Team) & Ms. NITIN MISHRA, preparation of the
report.
These past 45 days were of utmost importance as they added value towards my
path of knowledge.
I would like to end this acknowledgement by thanking the customers, at large with
whom I have interacted during the course of my training.

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 DECLARATION

The summer training project on “CHACK AND INCRESS 360º FINANCIAL

PLANNING AWEARNESS OF BAJAJ CAPITAL IN LUCKNOW” under the
guidance of Ms NITIN MISHRA is the original work done by me. This is the
property of Institute & use of this report without prior information of the Institute
will be considered illegal & actionable.

DATE: SIGNATURE

RISHI KUMAR

EXECUTIVE SUMMARY
The PGDBM course offered by the ISHAN INSTITUTE OF MANAGEMENT &
TECHNOLOGY has its own unique syllabus which requires its PGDBM students
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to undertake an internship with any of the leading business houses for a period
ranging from 6 weeks to 8 weeks during the second semester. The purpose of this
internship is to enable the students to appreciate and understand the nuances of the
practical world vis-à-vis the theoretical input administered during regular academic
sessions. This helps in creating Managers who are equipped with the experience of
linking the theoretical inputs with those of practical exposure and come out with
creative solutions / ideas in enhancing the business. In partial fulfillment of
PGDBM degree of ISHAN INSTITUTE OF MANAGEMENT &
TECHNOLOGY, I took up this organizational study. Experience and knowledge
that I gained from Bajaj Capital Broking Limited are elaborated in the following
pages.
Investment is making the money work for you. Idle saved money will be eroded of
its value by reduction in purchasing power. Investing smartly makes money grow.
In other words, one must involve funds available in such avenues that may counter
balance the reduction of real value. Assets whose value increases over time must
be chosen for such purpose. The investments must offer maximum advantages to
the investor. Now there are a number of investments avenues available to common
man. Recently all financial products investment opportunities come with some or
other innovations. It is on investors choice for investing where he feel he would get
more returns for his invested money.
Bajaj Capital broking limited at Lucknow consists of all functions of Bajaj Capital
like registrar, mutual fund advisory, insurance & services like Initial Public Offers
(IPOs) processing, share holder servicing, effecting corporate actions, investor
information services and host of technology enabled services to facilitate efficient
and effective service delivery.

INTRODUCTION

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The Insurance sector in India 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. With such a large population and the untapped market area of
this population Insurance happens to be a very big opportunity in India. Today it
stands as a business growing at the rate of 15-20 per cent annually. Together with
banking services, it adds about 7 per cent to the country’s GDP .In spite of all this
growth the statistics of the penetration of the insurance in the country is very poor.
Nearly 80% of Indian populations are without Life insurance cover and the Health
insurance. This is an indicator that growth potential for the insurance sector is
immense in India. It was due to this immense growth that the regulations were
introduced in the insurance sector and in continuation
“Malhotra Committee” was constituted by the government in 1993 to examine
the various aspects of the industry. The key element of the reform process was
Participation of overseas insurance companies with 26% capital. Creating a more
efficient and competitive financial system suitable for the requirements of the
economy was the main idea behind this reform.

Since then the insurance industry has gone through many sea changes .The
competition LIC started facing from these companies were threatening to the
existence of LIC .since the liberalization of the industry the insurance industry has
never looked back and today stand as the one of the most competitive and
exploring industry in India. The entry of the private players and the increased use
of the new distribution are in the limelight today. The use of new distribution
techniques and the IT tools has increased the scope of the industry in the longer
run.

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 CONTENT

1. INTRODUCTON

2. COMPANY PROFILE

3. AIM AND OBJECTIVE

4. REACERCH METHOLOGY

5. PROBLEM AND LIMITATION

6. FINDING ANALISISS AND INTERPETATION

7. SWOT

8. SAGGETION/RECOMMENDATION

9. CONCLUTION

10. APPENDIX

11. BIBLIOGRAFHI

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Company Profile

Bajaj Capital is one of India’s leading Financial Services companies offering Free
Advice on Investments, Insurance, Tax Saving, Retirement Planning, Financial
Planning, Children’s Future Planning and other services. We also have a wide
range of products and services for Corporate, High Net worth Individuals, and
NRIs… all fewer than one roof.

At Bajaj Capital, we believe in dreaming big. Dreams inspire us to excel. They

ignite hope and kindle in us the passion to stretch our limits. We also believe that
nothing can or should stop us from realizing our dreams… and financial
constraints should be the last thing to stop anyone.

Four decades of excellence

For over four decades, we have been helping people realize their aspirations by
helping them make their wealth grow, and plan their financial lives.

Today, we are a one of the largest financial planning and investment advisory

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companies in India, with a strong presence all over the country. We take pride in
serving our customers – both individual and institutional – and are known for our
strong professionalism and work ethics.

Wide range of services

We offer a comprehensive range of services including financial planning and

investment advice, and the entire gamut of financial instruments and investment
products of almost all major companies, both public and private. In addition, we
also provide investment assistance by helping you complete all the formalities,
and help you keep regular track of your investments.

These services and products are delivered through our network of 134 Bajaj
Capital Investment Centers located all over the country.

We are also a SEBI-approved Category I Merchant Banker. We raise resources

for over 1,000 top institutions and corporate houses every year, and
offer specialized services to Non-Resident Indian (NRIs) and High Net worth
Clients.

What you can expect from us

 Sound, research-based advice

 Unbiased, independent and need-based advice
 Prompt, courteous service
 Honest, ethical dealings
 Accessibility

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 MILSTON
Bajaj Capital has contributed to the growth of the Indian Capital Market at every
step. In 1965, we were the first to innovate the Companies Fixed Deposit. Today,
we are playing an active role in the growth of the Indian Mutual Fund industry. We
are also working closely with private insurance companies to deepen India's
insurance market.

Here is a glimpse of our journey through the years.

1964
Bajaj Capital sets up its first Investment Centre™ in New Delhi to guide individual
investors on where, when and how to invest.
India's first Mutual Fund, Unit Trust of India (UTI) is incorporated in the same
year
1965
Bajaj Capital is incorporated as a Company. In the same year, the company
introduces an innovative financial instrument – the Company Fixed Deposit. EIL
Ltd. (Oberoi Hotels, then known as Associated Hotels of India Ltd.) becomes the
first company to raise resources through Company Fixed Deposits
1966

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Bajaj Capital expands its product range to include all UTI schemes and
Government saving schemes in addition to Company Fixed Deposits
1969
Bajaj Capital manages its first Equity issue (through an associate company) of
Grayer & Wells India Ltd.; right from drafting the prospectus to marketing the
issue
1975
Bajaj Capital starts offering 'need-based' investment advice to investors, which
would later be known as 'Financial Planning' in the investment world
1981
SAIL becomes the first government company to accept deposits, followed by IOC,
BHEL, BPCL, HPCL and others; thus opening the floodgates for growth of retail
investment market in India.

1986
Public Sector Undertakings (PSUs) begin making public issues of bonds MTNL,
NHPC, IRFC offer a series of Bond Issues. Bajaj Capital is among the top ranks of
resource mobilizes.
1987
SBI leads the launch of Public Sector Mutual Funds in India. Bajaj Capital plays a
significant role in fund mobilization for all these players
1991
SBI issues India Development Bonds for NRIs. Bajaj Capital becomes the top
mobilize with collections of over US $20 million
1993
The first private sector Mutual Fund – Kothari Pioneer – is launched, followed by
Birla and Alliance in the following years. Bajaj Capital plays an active role and is
ranked among the top mobilizes for all these schemes
1995

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IDBI and ICICI begin issuing their series of Bonds for retail investors. Bajaj
Capital is the co-manager in all these offerings and consistently ranks among the
top five mobilisers on an all-India basis
1997
Private sector players lead the revival of Mutual Funds in India through Open-
ended Debt schemes. Bajaj Capital consolidates its position as India's largest retail
distributor of Mutual Funds
1999
Bajaj Capital begins marketing Life and General Insurance products of LIC and
GIC (through associate firms) in anticipation of opening up of the Insurance
Sector. Bajaj Capital achieves the milestone of becoming the top 'Pension Scheme'
seller in India and launches marketing of GIC's Health Insurance schemes
2000
Bajaj Capital implements its vision of being a 'One-stop Financial Supermarket.'
The Company offers all kinds of financial products, including the entire range of
investment and insurance products through its Investment Centers. Bajaj Capital
offers 'full-service merchant banking' including structuring, management and
marketing of Capital issues. Bajaj Capital reinvents 'Financial Planning' in its
international sense and upgrades its entire team of Investment Experts into
Financial Planners

2002
The company focuses on creating investor awareness for Financial Planning and
need-based investing. To achieve this goal, the company introduced the
International College of Financial Planning. The graduates of this institute become
Certified Financial Planners (CFPs), a coveted professional qualification
2004
Bajaj Capital obtains the All India Insurance Broking License. Simultaneously, a
series of wealth creation seminars are launched all over the country, making Bajaj
Capital a household name
2005

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Bajaj Capital launches 360° Financial Planning, a software-based program me
aimed at encouraging scientific and holistic investing
2007
Bajaj Capital launches Stock Broking and Depository(Demat) Services
2008
Bajaj Capital launches Just Trade, an online Platform for investing in Equities,
Mutual Funds, IPO’S

MISSION AIM & OBJECTIVE

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 Bajaj Capital aims to be the most useful, reliable and efficient provider of
Financial Services. It is our continuous endeavor to be a trustworthy advisor to our
clients, helping them achieve their financial goals.
Our Aims

• To serve our clients with utmost dedication and integrity so that we exceed their
expectations and build enduring relationships.
• To offer unparalleled quality of service through complete knowledge of products,
constant innovation in services and use of the latest technology.
• To always give honest and unbiased financial advice and earn our cilent's
everlasting trust.
• To serve the community by educating individuals on the merits of Financial
Planning and in turn help shape a financially strong society.
• To create value for all stake holders by ensuring profitable growth.
• To build an amicable environment that accords respect to every individual and
permits their personal growth.
• To utilize the power of teamwork to function as a family and build a seamless
organization.

VISION

To be the most preferred financial planning and investment advisory company in

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India by providing consumers with informed choices of lasting value, create wealth
for them to make their tomorrow better than today.
WHO’s AT BAJAJ CAPITAL

Mr. K.K. Bajaj

Chairman

A visionary par excellence, a pioneer and a leader, Mr

K.K. Bajaj has been instrumental in shaping Bajaj Capital's emergence as one of
India's largest Investment Advisory companies.

He is a highly respected figure in the field of institutional and personal finance

and Company FDs. His emphasis on honesty, ethics and values are the guiding
principles of the organization.

Mr. Bajaj is also a prolific writer and has written over 200 articles on diverse
issues such as Personal Finance, Economic Affairs, and Health.

Mr. Rajiv Deep Bajaj

Vice Chairman & Managing Director

Mr. Rajiv Deep Bajaj is the Vice Chairman & Managing Director of Bajaj
Capital Ltd. He is also the Founding Chairman of Financial Planning Standards
Board, India and has been one of the key people involved in bringing the
globally recognized Certified Financial Planner TM professional designation to
India.

Mr. Bajaj has over 20 years of strategic management experience in the fields of
Investment Banking, Investment Advisory, Insurance Brokerage and Financial
Planning. He had spent his initial years in setting up of the investment banking

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 business for Bajaj Capital. He also played an important role in expanding the
distribution reach of Bajaj Capital from 20 offices in 1990 to around 200 now.

In the last few years, Mr. Bajaj has spent a lot of time in upgrading the
operating system and processes of the company. Under his leadership, the
company has won various category awards and recognition nationally like Great
Places to Work (2008 and 2009) and 'Best Financial Advisor – Retail' Award
for 2009 by CNBC TV18.

Mr. Bajaj has done his MBA (International Wealth Management) from
University of Geneva, Switzerland and an Executive MBA (International
Wealth Management) from Carnegie Mellon University, Pittsburgh, USA. He
holds an 'International Certificate for Financial Advisors' from the Chartered
Insurance Institute (CII), London, UK. He is also amongst the first batch of 25
Certified Financial Planner (CFPTM) designation holders in India.

Mr. Bajaj is a member of CII Mutual Fund Committee, Entrepreneurs'

Organization (Delhi Chapter) and a Council Member of European Business
Group. An active speaker and writer on Investment Strategy and Financial
Planning in leading print and electronic media, Mr. Bajaj is extremely
passionate about spreading financial literacy among the masses. His interests
include Golf, Yoga, fitness training and Meditation.

Mr. Sanjiv Bajaj

Managing Director

Mr. Sanjiv Bajaj is the Managing Director of Bajaj Capital Ltd. In his role, he is
involved in planning and implementing of several important future projects of
the company. He has been instrumental in conceptualizing and implementing a
highly successful distribution model for Life and General Insurance, through
what are known as 'Insurance Planning Centers’.

Under the able guidance of Mr. Sanjiv Bajaj, Bajaj Capital Insurance Broking
has emerged as one of India's leading Insurance Broking Houses within a short

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 span since its inception in January 2004. He also has a keen interest in the
Information Technology area and heads the function for the company.

Mr. Sanjiv Bajaj started his career in 1995, when he worked on various projects
which included developing Alternate channels of distribution like Associate
Model, etc. From here, he moved on to Investment Advisory services, which
included understanding the client's needs and offering them solutions to meet
their requirements by using various financial planning tools.

Apart from being a Post Graduate in Business Management, Mr. Sanjiv Bajaj
also holds an International Certificate for Financial Advisor's from the
Chartered Insurance Institute (CII), London, and is a certified Financial Planner
from Financial Planning Standards Board India (FPSB).

Mr. Bajaj is an active speaker on Financial Planning, Investments, Insurance

Planning and careers in the financial services industry.

Mr. Anil Chopra

Group CEO & Director

Mr. Anil Chopra is the Chief Executive Officer & Director of Bajaj Capital
Limited. He joined the Company in 1984. Mr. Chopra has been instrumental in
expanding the branch network of Bajaj Capital Ltd. all over India.

A Chartered Accountant and a Certified Financial Planner, Mr Chopra is

credited with introducing international accounting and HR practices in the
organization. His most valuable contribution, however, has been in building up
a financially literate society and making Bajaj Capital a strong retail brand. He
is considered an authority, and is widely sought after by the media for quotes on
key developments in the industry.

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 CHACK AND INCRESS 360º FINANCIAL PLANNING
AWEARNESS OF BAJAJ CAPITAL

Financial Planning is becoming increasingly popular in developed countries all

over the world. Now, with a little help from Bajaj Capital, you too can give
yourself the 360° Financial Planning edge!

• What is 360° Financial Planning?

• Why do you need Bajaj Capital's 360° Financial Planning?
• How will 360° Financial Planning help you?
• Who needs 360° Financial Planning?
• How do I get my personalized 360° Financial Plan created?

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 Why do you need Bajaj Capital's 360° Financial Planning?
You may have many dreams, needs and desires. For example, you could be
dreaming of:

• Owning a new car

• Buying a dream house
• Providing your children with the best education
• Planning a grand wedding for your children
• Having a great time after your retirement
But in today's world of skyrocketing costs and increasing inflation, how many of
these dreams can you hope to turn into reality? By planning well, you can utilize
your limited resources to the fullest. 360° Financial Planning helps you see the big
picture and invest for specific long-term and short-term goals well in time.

Don’t just dream... Plan!

Financial Planning is becoming increasingly popular in developed countries all
over the world. Now, with a little help from Bajaj Capital, you too can give
yourself the 360° Lifetime Financial Planning edge!

Financial Planning is becoming increasingly popular in developed countries all

over the world. Now, with a little help from Bajaj Capital, you too can give
yourself the 360° Financial Planning edge! The question will reuse up that why ?

Get your Financial Plan prepared absolutely free, only at Bajaj Capital!
Financial Planning is a paid service abroad, requiring investors to pay up to US
$100 per session and up to US $1,000 for a complete financial plan.
Now, Bajaj Capital brings you the same standard of service ABSOLUTELY
FREE!

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 Why do you need Bajaj Capital's 360° Financial Planning?
You may have many dreams, needs and desires. For example, you could be
dreaming of:

• Owning a new car

• Buying a dream house
• Providing your children with the best education
• Planning a grand wedding for your children
• Having a great time after your retirement
But in today's world of skyrocketing costs and increasing inflation, how
many of these dreams can you hope to turn into reality? By planning well,
you can utilize your limited resources to the fullest. 360° Financial Planning
helps you see the big picture and invest for specific long-term and short-term
goals well in time.

Who needs 360° Lifetime Financial Planning?

Everyone does! Because everyone has a right to dream. And realizing dreams is
easier when you work to a plan that's:
• Reliable
• Realistic
• Proven
Bajaj Capital's 360° Lifetime Financial Planning Programme could make a
difference to all those who wish to lead a worry-free, financially secure life.
What is 360° Lifetime Financial planning all about?
360° Lifetime Financial Planning is a unique software-based process that takes a
holistic view of your life-long financial needs and charts a personalised investment
strategy to help you meet them. Broadly, it involves:
• Identifying your current financial status
• Listing and prioritizing your goals

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 • Creating a sound investment plan to achieve them
• Monitoring the plan to facilitate swift corrective action, if needed
360° Lifetime Financial Planning is based on the premise that every individual has
certain basic financial needs that are expressed at various stages of life (getting
married, buying assets like homes, vehicles, or providing for your children's
education and wedding). With the help of 360° Lifetime Financial Planning, you
can prepare yourself well in time for all these goals.
How will 360° Lifetime Financial Planning help me?
Instead of investing in an ad-hoc manner, 360° Lifetime Financial Planning helps
you take a holistic, all-round view. Briefly, 360° Lifetime Financial Planning
comprises:
• Investment Planning: To make your wealth grow
• Cash Flow Planning: To provide for assets and meet the periodic cash
requirements
• Tax Planning: To save on taxes and increase your income
• Insurance Planning: To protect yourself, your family and your assets
• Children's Future Planning: To give your children a financially secure
future

• Retirement Planning: Because retirement is a time to relax, not to get

worried

How do I get my FREE personalized 360° Lifetime Financial Plan created?

Here’s how Financial Plans are prepared:
• The process begins with identifying your needs with the help of the Need
Analysis Form.
• Our Financial Planners then use the especially-created 360° Financial
Planning software to generate a personalized Snapshot.
• The Snapshot gives you a graphic account of all your financial requirements,
at every stage of your future life.
• Based on the Snapshot, our experts work out an investment strategy.
• Once implemented, our experts keep regular track of your investments.

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A Financial Planning session takes just 15 minutes, and is absolutely FREE!
Make a life be happy for a future and any time.

INVESTMENT PLANNING

Everyone needs to save for a rainy day. Once you have saved enough to take care
of emergencies, you should start thinking about investing and to make your money
grow. We can help you plan your investments so that you can reap adequate
benefits and achieve your financial goals.

Bajaj Capital's Investment Planning Service includes:

Risk Profiling Asset Allocation and Portfolio Construction

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• Creation and Accumulation of Wealth through Systematic Investment Plans (SIP)
• Regular review of progress and Portfolio Rebalancing
Essentially, Investment Planning involves identifying your financial goals
throughout your life, and prioritizing them. Investment Planning is important
because it helps you to drive the maximum benefit from your investments.

Your success as an investor depends upon your ability to choose the

right investment options. This, in turn, depends on your requirements, needs and
goals. For most investors, however, the three prime criteria of evaluating any
investment option are liquidity, safety and return.

Investment Planning also helps you to decide upon the right investment strategy.
Besides your individual requirement, your investment strategy would also depend
upon your age, personal circumstances and your risk appetite. These aspects are
typically taken care of during investment planning.

Investment Planning also helps you to strike a balance between risk and returns.
By prudent planning, it is possible to arrive at an optimal mix of risk and returns,
that suits your particular needs and requirements.
What Is Cash Flow Planning?
In simple terms, cash flow refers to the inflow and outflow of money. It is a record
of your income and expenses. Though this sounds simple, very few people actually
take the time out to find out what comes in and what goes out of their hands each
month

Cash flow planning refers to the process of identifying the major expenditures in
future (both short-term and long-term) and making planned investments so that the
required amount is accumulated within the required time frame.

Cash flow planning is the first thing that should be done prior to starting an
investment exercise, because only then will you be in a position to know how your
finances look like, and what is it that you can invest without causing a strain on
yourself. It will also enable you to understand if a particular investment matches
with your flow requirement.

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So does it involve looking at future cash flows only? Not really. You should
always do a cash flow for yourself as on date, and you will realize that you could
have a potential savings amount within each month of your working life. This is
the amount that you should look at saving for meeting your financial goals. The
best way of doing this is to have a personal budget.

Why is Cash Flow Planning important?

Cash flow plans are commonly used by business houses. Without a viable cash
flow plan, a company could easily spend more than its revenue, putting it in peril.
Unfortunately, most of us do not realize that a cash flow plan is as important for
people like us as well. The principles that apply to corporate finance and to our
personal lives are largely the same.

There has never been a bigger need than today for families and individuals to work
out cash flow plans. Without proper cash flow planning one could easily get caught
in the debt trap. Of course, it goes without saying that creating a plan is not
enough. One also needs to implement the plan, besides bringing about a change in
the spending habits.

Cash flow plan brings you face-to-face with what you should ideally be saving,
and investing in a systematic and regular manner, and what would it mean to you
to withdraw from your portfolio after a couple of years. It brings down in numbers

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what your financial future has in store for you, and gives a crystal clear view (as
much as is possible with inflation and the interest rate scenario).

TEX OLANNING INTRODUCTION

Proper tax planning is a basic duty of every person which should be carried out
religiously. Basically, there are three steps in tax planning exercise. They are as
follows:
1. Calculate your taxable income under all heads i.e. Income from Salary,
House Property, Business & Profession, Capital Gains and Income from
other Sources.
2. Calculate tax payable on gross taxable income for whole financial year (i.e.
from 1st April to 31st March) using a simple tax rate table, given on next
page.
3. After you have calculated the amount of your tax liability. You have two
options to choose from:
A) Pay your taxes
B) minimize the amount of tax you pay with prudent tax planning.

Most people rightly choose Option 'B'. Here you have to compare the advantages
of several tax saving schemes and depending upon your age, social liabilities, tax
slabs and personal preferences, decide upon a right mix of investments, which shall
reduce your tax liability to zero or the minimum possible.
Every citizen has a fundamental right to avail all the tax incentives provided by the
Government. Therefore, through prudent tax planning not only income-tax liability

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is reduced but also a better future is ensured due to compulsory savings in highly
safe Government schemes. We sincerely advise all our readers and clients to plan
their investments in such a way, that the post-tax yield is the highest possible
keeping in view the basic parameters of safety and liquidity

INVESTMENTS

Mutual Funds are among the hottest favorites with all types of investors.
Investing in mutual funds ranks among one of the preferred ways of
creating wealth over the long- t erm .
I n f a ct , m u t u a l fu n d s r e pr es ent t he hands- of f approa ch t o ent er i ng
the equity market.
There are a wide variety of mutual funds that are viable investment
avenues to m e e t a wi d e vari et y of f i nanci al goal s. Thi s sect i on
e x p l a i n s t h e v a r i o u s a sp e c t s of Mutual Funds.
•What are Mutual Funds? •Why choose Mutual Funds?•Funds Schemes
Choosing •How to calculate the growth of your Mutual Funds Investments?•Points
to Remember •Glossary
What are Mutual Funds ?
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A Mutual Fund is a trust that pools together the savings of a number of
investors who share a common financial goal. The fund manager invests this pool
of money in securities-- ranging from shares and debentures to money
market instruments or in a mixture of equity and debt, depending upon
the objectives of the scheme

WHY CHOOSE MUTUAL FUNDS?

Investing in Mutual Funds offers several benefits:
•Professional expertise: Fund managers are professionals who track the market
ona n o n g o i n g b a s i s . W i t h t h e i r m i x o f p r o f e s s i o n a l q u a l i f i c a t
i o n a n d m a r k e t k n o wl e d g e, t hey ar e bet t er pl aced t han t he aver age
i n v e st o r t o u n d e r st a n d t h e markets
•Diversification: Since a Mutual Fund scheme invests in number of stocks
and/or debentures, the associated risks are greatly reduced.
•Relatively less expensive: When compared to direct investments in the
capital market, Mutual Funds cost less. This is due to savings in
brokerage costs, dematcosts, depository costs etc.
•Liquidity: I n v e s t m e n t s i n M u t u a l F u n d s a r e c o m p l e t e l y l i q u i d
a n d c a n b e redeemed at their Net Assets Value-related price on any working
day.
•Transparency: Yo u wi l l al ways have access t o up- t o- dat e
i n f or m a t i o n o n t h e value of your investment in addition to the complete

27 | P a g e
portfolio of investments, the proportion allocated to different assets and the fund
manager’s investment strategy.
•Flexibility: Through features such as Systematic Investment Plans,
Systematic Withdrawal Plans and Dividend Investment Plans, you can
systematically invest or withdraw funds according to your needs and convenience.

• SEBI regulated market: All Mutual Funds are registered with SEBI and
function within the provisions and regulations that protect the interests of
investors. Mafias is the supervisory body of the Mutual Funds industry

TYPES OF FUNDS
There are a wide variety of Mutual Fund schemes that cater to your needs,
whatever your age, financial position, risk tolerance and return expectation.
Whether as the foundation of your investment program or as a supplement, Mutual
Fund schemes can help you meet your financial goals. The different types of
Mutual Funds are as follows:

DIVERSIFIED EQUITY MUTUAL FUND SCHEME

A mutual fund scheme that achieves the benefits of diversification by
investing in the stocks of companies across a large number of sectors. As a
result, it minimizes the risk

28 | P a g e
of e x p o s u r e t o a s i n g l e c o m p a n y o r s e c t
o r .

SECTORAL EQUITY MUTUAL FUND SCHEME

A mutual fund scheme which focuses on investments in the equity of companies
across a
limited number of sectors usually one to three.

INDEX FUNDS
These funds invest in the stocks of companies, which comprise major indices such
as these S e n se x o r th e S& P CNX Nif t y i n t he sam e wei ght age as
t h e r e sp e c t i v e i n d i c e .

EQUITY LINKED TAX SAVING SCHEMES (ELSS)

Mutual Fund schemes investing predominantly in equity, and offering tax
deduction to investors under section 80 C of the Income Tax Act.
Currently rebate u/s 80C can be availed up to a maximum investment of Rs
1,00,000. A lock-in of 3 years is mandatory.

MONTHLY INCOME PLAN SCHEME

A mutual fund scheme which aims at providing regular income (not necessarily
monthly, d o n ' t g e t m i s l e d b y t h e n a m e ) t o t h e u n i t h o l d e r , u s u a l l y
b y w a y o f d i v i d e n d , w i t h investments predominantly in debt securities (up
to 95%) of corporate and the government, to ensure regularity of returns, and
having a smaller component of equity investments (5% to 15%)to ensure
higher return.

INCOME SCHEMES
Debt oriented schemes investing in fixed income securities such as
bonds,
corporated e b e n t u r e s , G o v e r n m e n t s e c u r i t i e s a n d m o n e y m a r k e t i n s
truments.

FLOATING-RATE DEBT FUND

A fund comprising of bonds for which the interest rate is adjusted periodically
according
29 | P a g e
to a predetermined formula, usually linked to an index
.

GILT FUNDS -
These funds invest exclusively in government securities.

BALANCED FUNDS
The aim of balanced funds is to provide both growth and regular income as such
schemes invest both in equities and fixed income securities in the
proportion indicated in
their o f f e r d o c u m e n t s . T h e y g e n e r a l l y i n v e s t 4 0 - 6 0 % i n e q u i t y a n d
debt instruments.

FUND OF FUNDS
A Fund of Funds (FoF) is a mutual fund scheme that invests in other mutual fund
schemes. Just as fund invests in stocks or bonds on your behalf, a FoF invests in
other mutual fund schemes.

SNAPSHOT OF MUTUAL FUND SCHEMES

Mutua Who Investme

Investment
l Fund Objective Risk should nt
Portfolio
Type invest horizon

Those
Treasury who park
Liquidity + Bills, their
Moderate Certificate funds in
Money 2 days - 3
Income + Negligible of Deposits, current
Market weeks
Reservation Commercial accounts
of Capital Papers, Call or short-
Money term bank
deposits

30 | P a g e
 Call
Short- Money,
term Commercial Those
Funds Liquidity + Little Papers, with
3 weeks -
(Floati Moderate Interest Treasury surplus
3 months
ng - Income Rate Bills, CDs, short-term
short- Short-term funds
term) Governmen
t securities.

Predominan
Bond
tly Salaried
Funds Credit More
Debentures, &
(Floati Regular Risk & than 9 -
Governmen conservati
ng - Income Interest 12
t securities, ve
Long- Rate Risk months
Corporate investors
term)
Bonds

Salaried
& 12
Gilt Security & Interest Governmen
conservati months &
Funds Income Rate Risk t securities
ve more
investors

Aggressiv
Long-term e
Equity Capital investors 3 years
High Risk Stocks
Funds Appreciatio with long plus
n term out
look.

Index To generate NAV Portfolio Aggressiv 3 years

Funds returns that varies indices like e

31 | P a g e
 are
commensur with
ate with index BSE,
investors. plus
returns of performan NIFTY etc
respective ce
indices

HOW TO CHOOSE MUTUAL FUND SCHEME

Once you are comfortable with the basics, the next step is to understand your
investment choices, and draw up your investment plan relevant to your
requirements. Choosing your i n v e s t m e n t m i x d e p e n d s o n f a c t o r s s u c h
as your risk appetite, time horizon of
your i n v e s t m e n t , y o u r i n v e s t m e n t o b j e c t i v e s ,
age, etc
WHAT SHOULD BE KEPT IN MIND BEFORE INVESTING IN MUTUAL
FUNDS ?
Mutual Fund investment decisions require consistent effort on the part of
the investor. Before investing in Mutual Funds, the following steps must
be given due weight age to
d e c i d e o n t h e r i g h t t y p e o f
S c h e m e :

1. Identifying the Investment Objective

2. Selecting the right Scheme Category

3. Selecting the right Mutual Fund

32 | P a g e
 4. Evaluating the Portfolio

(A) IDENTIFYING THE INVESTMENT OBJECTIVE

Your financial goals will vary, based on your age, lifestyle, financial
independence, family commitments, level of income and expenses, among many
other factors. Therefore, the first step is to assess your needs. Begin by
asking yourself these simples question.

WHY DO I WANT TO INVEST?

The probable answers could be:

•"I need a regular income"

•"I need to buy a house/finance a wedding"

•"I need to educate my children," or

•A combination of all the above

How much risk am I willing to take?
The risk-taking capacity of individuals varies depending on various factors. Based
on their risk bearing capacity, investors can be classified as:

•Very conservative

•Conservative

•Moderate

33 | P a g e
•Aggressive

•Very Aggressive

To ascertain your risk appetite, try out our Risk There

momentary.

WHAT ARE MY CASH FLOW REQUIREMENTS?

For example, you may require:

•A regular Cash Flow

•A lump sum after a fixed period of time for some specific need in the future

•Or, you may have no need for cash, but you may want to create fixed
assets for the future

A) SELECTING THE SCHEME CATEGORY

The next step is to select a scheme category that matches your investment
objectives:

•For Capital Appreciation go for equity sect oral funds, equity diversified funds
or balanced funds.

•For Regular Income and Stability you should opt for income funds/MIPs

•For Short-Term Parking of Funds go for liquid funds, floating rate funds,
short-term funds.

•For Growth and Tax Savings go for Equity-Linked Savings Schemes.

34 | P a g e
 B) SELECTING THE RIGHT MUTUAL FUND

Once you have a clear strategy in mind, you now have to choose which Mutual
fund and scheme you want to invest in. The offer document of the scheme tells you
its objective sand provides supplementary details like the track record of
other schemes managed by the same Fund Manager. Some important factors to
evaluate before choosing a particular Mutual Fund are: The track record of
performance over that last few years in relation to the appropriate
yardstick and similar funds in the same categ
o r y . How well the Mutual Fund is organized to provide efficient,
prompt and personalized service.The degree of transparency as reflected in
frequency and quality of their communications.

D) EVALUATION OF PORTFOLIO

Evaluation of equity fund involve analysis of risk and return, volatility,

expense ratio, fund manager’s style of investment, portfolio diversification, fund
manager’s experienced. Good equity fund should provide consistent returns over a
period of time. Also expense ratio should be within the prescribed limits. These
days fund house charge around 2.50%as management fees.

Evaluation of bond funds involve it's assets allocation analysis, return's

consistency, it’s rating profile, maturity profile, and it’s performance over a period
of time. The bond fund with ideal mix of corporate debt and gilt fund should
be selected.
HOW TO CALCULATE THE GROWTH OF YOUR MUTUAL
FUND INVESTMENTS?
Let's assume that Mr. Gupta has purchased Mutual Fund units worth Rs. 10,000 at
an NAV of Rs. 10 per unit on February 1. The Entry Load on the Mutual Fund was
2%. On September 15, he sold all the units at an NAV of Rs 20. The exit load was
0.5%.

His growth/ returns is calculated as under:

• 1. Calculation of Applicable NAV and No. of units purchased:

35 | P a g e
 1. Amount of Investment = Rs. 10,000
2. Market NAV = Rs. 10
3. Entry Load = 2% = Rs. 0.20
4. Applicable NAV (Purchase Price) = (b) + (c) = Rs. 10.20
5. Actual Units Purchased = (a) / (d) = 980.392 units
• 2. Calculation of NAV at the time of Sale
1. NAV at the time of Sale = Rs 20
2. Exit Load = 0.5% or Rs.0.10
3. Applicable NAV = (a) – (b) = Rs. 19.90
• 3. Returns/Growth on Mutual Funds
1. Applicable NAV at the time of Redemption = Rs. 19.90
2. Applicable NAV at the time of Purchase = Rs. 10.20
3. Growth/ Returns on Investment = {(a) – (b)/(b) * 100} = 95.30%

Points to Remember

• Do not speculate: Always evaluate risk-taking capacity.

• Do not chase returns: Because what goes up must come down.
• Do not put all eggs in one basket: Diversification reduces the risk.
• Do not stop working on Mutual Funds: Continuous evaluation of funds is a must.
• Do not time the market: Every time is good for investments.
• Mutual Funds are subject to market risks and there is no assurance that the fund
objective will be achieved.
• NAVs fluctuate depending on forces affecting the Capital market.
• Past performance may or may not be sustained in the future.
1. Assets Management Company: A highly regulated organization that pools
money from many people into portfolio structured to achieve certain
objectives. Typically an AMC manages several funds–open ended/ close
ended across several categories- growth, income, balanced. Balanced Fund:
A hybrid portfolio of stocks and bonds.
2. Close Ended Fund: They neither issue nor redeem fresh units to investors.
Some closed ended funds can be bought or sold over the stock exchange if

36 | P a g e
 the fund is listed. Else, investor has to wait till redemption date to exit. Most
listed close ended funds trade at discount to the NAV.
3. Open Ended Fund: A diversified and professionally managed scheme, it
issues fresh units to incoming investors at NAV plus any applicable sales
charge, and it redeems shares at NAV from sellers, less any redemption fees.
4. Entry/ Exit Load: A charge paid when an investor buys/sells a fund. There
could be a load at the time of entry or exit, but rarely at both times.
5. Expense Ratio: The annual expenses of the funds, including the
management fee, administrative cost, divided by the fund under
management.
6. Growth/Equity Fund: A fund holding stocks with good or improving profit
prospects. The primary emphasis is on appreciation.
7. Liquidity: The ease with which an investment can be bought or sold. A
person should be able to buy or sell a liquid asset quickly with virtually no
adverse price impact.
8. Net Assets Value: A price or value of one unit of a fund. It is calculated by
summing the current market values of all securities held by the fund, adding
the cash and any accrued income, then subtracting liabilities and dividing
the result by the number of units outstanding.
9. Interest Rate Risk: The risk borne by fixed-interest securities, and by
borrowers with floating rate loans, when interest rates fluctuate. When
interest rates rise, the market value of fixed-interest securities declines and
vice versa.
10. Credit Risk: Credit risk involves the loss arising due to a customer’s or
counterparty’s inability or unwillingness to meet commitments in relation to
lending, trading, hedging, settlement and other financial transactions.
11. Capital Market Risk: Capital Market Risk is the risk arising due to
changes in the Stock Market conditions.

37 | P a g e
 INTRODUCTION

Investment options

1. Insurance

2. PPF- Public provident fund

38 | P a g e
 3. NSC-National Saving Certificate

4. Post Office Saving schemes

5. Mutual fund

6. Bank Saving Schemes

7. Securities

8. Real Estate

RESEARCH OBJECTIVE

This research was undertaken with the following scope of work:

•To know the current strategy of investment.

•To know why salaried employees do investment {need of investment}.

•To know when they invest

.

39 | P a g e
•To know where they prefer to invest.

•To identify the whether they are aware about the Tax structure.

•To give suggestion related to their investment strategy

DEFINITIONS OF INVESTMENT

•I n v e s t i n g : t h e a c t o f i n v e s t i n g ; l a y i n g o u t m o n e y o r c a p i t a
l i n a n enterprise with the expectation of profit.

•Money that is invested with an expectation of profit.

40 | P a g e
•The use of money for the purpose of making more money, to gain income or
increase capital, or both.

•The use of money through various vehicles, or an individual's time and

effort, to make more income or increase capital, or both
T h e t e r m “investment" infers that the safety of principal is important. On the
other hand, speculation connotes that risking principal is acceptable.

•A n y t h i n g o f v a l u e p u r c h a s e d t o p r o v i d e c a p i t a l a p p r e c i a t i o n a n d /
o r income. Examples include stocks, bonds, mutual funds, unit
investmentt r u s t s , c e r t i f i c a t e s o f d e p o s i t , m o n e y m a r k e t f u n d s a n d c
o l l e c t i b l e s . Investments may also include artwork, antiques and real estate. But
why do we save and then invest our savings somewhere? The answer seems to be
too simple. We save to earn more money.

We always invest for a specific purpose. For instance, we i

n v e s t i n l i f e insurance to save on taxes. We put money into recurring deposits
to, say, part-finance the down payment for a house. We invest for our children’s
education, for their imminent weddings. We also invest to take care of our own
needs after retirement.

Motives for investment may vary, but there are some common desires.
People want investments to give some return.

•Safety

•Liquidity

•Returns

We have to use these criteria to assess our investment needs .For instance, if
people want to put away money for retirement, safety will be t h e m o s t
important criterion. A safe investment avenue that gives people a
decent annual return will be good enough for people. What about the
money their father sent people for the down payment on their car? People haven’t
41 | P a g e
even decided on the model! People’ll probably keep the money in their savings
bank account so that people can withdraw it quickly .At different stages of life
their needs for financial security and plans for the future are likely to
change. Here is a simple introduction to common financial needs as they relate to
different lifestyles and life stages.

PROTECTION

Families with peopling, dependent children need adequate protection

against losing their primary wage earners income if and when premature and
unexpected death occurs.

EMERGENCY FUND

42 | P a g e
Life insurance provides an additional consideration by providing an emergency
fund to provide money for survivors. It busy the time so essential or necessary that
is needed to adjust to the death of the parent or spouse.

EDUCATION

Yet another priority need for peopling families is building adequate fund for higher
education cost. The need for highly specialized education is greater than ever
before.

Every year, the cost of education rises beyond estimated limited.

Retirement
Peopling family should also plan for retirement in the long run. Investment and
pension plans are not adequate to fund the retirement need at times. Once family
attains specific standards of living, it is very hard to adjust to a reduced the
standard during the retirement years.

Systematic saving over a working lifetimes it’s the key towards supplementing
other retirement programs. The old of saving 10% annual income still holds true
for single income must commence with at least a 10 % guideline if they cannot
make a total commitment immediately.

Disability
A single income peopling family would be in an extremely perilous situation if
there would be a loss of income owing to a disability. In case an income provides
is unable to work, the economy consequence could be severing for the family. Not
only does the family have the maintain established standard of living, it also has to
solder the additional burden of a disabled member within itself. Disability is the
major need that is to be addressed and protection against this loss is a priority.

43 | P a g e
TAX PLANNING

Generally speaking, after a decade of their family would be complete. People

should look at tax planning in a more serious manner. It is time to plan for some
investment and fund in the name of minor children and to take some insurance
policy the name of minor children for their education and marriage purpose. This
should be a long term policy with a small amount of premium payment year after
year.

The need of mature adults tend to emphasis on their successor as well as their
elders. These generally include:
• Providing fund for higher specialized studies for their children.

• Assisting their children with payment on their new home.

• Loaning or granting money by way of gifts to other needy family members

or relatives.

• Ensuring health care and attention for their aged and dependent parents.

• Planning for a dependent that might have specific needs.

• Guaranteeing loans and financial obligation for their children.

• Building a savings fund to provide additional income during retirement.

44 | P a g e
 MARRIAGE AND EDUCATION COSTS

The cost of marriage and higher education for children from major expense during
the mature adult’s life cycle. The cost of living increase year after year. And to
meet these rising cost require sacrifice and considerable effort of the part of most
families.
CHILDREN'S FIRST HOME
Since costs of housing have to be met with a large percentag
e f r o m o u r incomes, newly married couples are finding it harder than ever
before to pay the minimum down payment or even acquire the necessary resources
to qualify for housing finance. Needless to say, these peopling couples need
their parent’s help for providing the necessary funds. When a peopl i ng
c o u p l e a p p l i e s f or a lo a n , t hey shoul d pur chase dual- l i f e i nsur ance
p o l i c i e s, n a m i n g t h e ir p a r ent s as benef i ci ar i es. If by chance, t he
couple expires before the housing loan is paid off, the proceeds of the
policyc a n e a s i l y s u f f i c e i n m e e t i n g t h e r e p a y m e n t i n s t a l l m e n t
s . In case the couple lives happily ever after, the cash value in the policies can be
used to pay off the remainders of the loan after a while. The tax
advantage is offered are extremely advantageous for the peopling couple
and their parents. Many other financial options are available, but the
flexibility offered by life insurance policies is unmatched by any of them.

GIFTS AND LOANS

45 | P a g e
Adults in their mature years are usually confronted with financial demands from
ge n e r a t i o n s p r o c e e d i n g a s w e l l a s s u c c e e d i n g t h e m
providing funds for children, elderly parents, or relatives, either as a loan or an
outright gift, may create a change in the financial planning
considerations.

DEPENDED WITH SPECIAL NEEDS

Just like elderly parents, children how are physically or mentally handicapped
require special consideration and are a source of major and expensive concern. A
provision there needs must be considered and plane made as early as possible.
Needless to say, the dependency period never ends with these dependents.

Providing necessary care for dependents having special need can be extremely
strenuous, both emotionally and financially. At times, people who are caring for
the disable sacrificed their own health and financial security at the expense of the
other member of the family. The emotional pull generated can create terse
atmosphere within the household.

Parents of a dependent with special needs wish to see that these expenses
are t a k e n c ar e o f o n a l o n g- t erm and guar ant eed basi s. Wi t h t i m el y
a n d p r o p e r planning, such expenses can be met easily regardless of what
happens to the provider of support.

46 | P a g e
 INTRODUCTION OF INSURANCE

Insurance is a form of risk management in which the insured transfers the cost of
potential loss to another entity in exchange for monetary compensation known as
the premium. (For background reading, see The History of Insurance in America.)

Insurance allows individuals, businesses and other entities to protect themselves

against significant potential losses and financial hardship at a reasonably
affordable rate. We say "significant" because if the potential loss is small, then it
doesn't make sense to pay a premium to protect against the loss. After all, you
would not pay a monthly premium to protect against a $50 loss because this would
not be considered a financial hardship for most.

Insurance is appropriate when you want to protect against a significant monetary

loss. Take life insurance as an example. If you are the primary breadwinner in your
home, the loss of income that your family would experience as a result of our

47 | P a g e
premature death is considered a significant loss and hardship that you should
protect them against. It would be very difficult for your family to replace your
income, so the monthly premiums ensure that if you die, your income will be
replaced by the insured amount. The same principle applies to many other forms of
insurance. If the potential loss will have a detrimental effect on the person or
entity, insurance makes sense. (For more insight, see 15 Insurance Policies You
Don't Need.)

Everyone that wants to protect themselves or someone else against financial

hardship should consider insurance. This may include:
• Protecting family after one's death from loss of income
• Ensuring debt repayment after death
• Covering contingent liabilities
• Protecting against the death of a key employee or person in your business
• Buying out a partner or co-shareholder after his or her death
• Protecting your business from business interruption and loss of income
• Protecting yourself against unforeseeable health expenses
• Protecting your home against theft, fire, flood and other hazards
• Protecting yourself against lawsuits
DEFINITION OF INSURENCE

1. the act, system, or business of insuring property, life, one's person, etc., against
loss or harm arising in specified contingencies, as fire, accident, death,
disablement, or the like, in consideration of a payment proportionate to the risk
involved.

2. coverage by contract in which one party agrees to indemnify or reimburse

another for loss that occurs under the terms of the contract.

3. The contract itself, set forth in a written or printed agreement or policy.

4. The amount for which anything is insured.

48 | P a g e
5. An insurance premium.

6. Any means of guaranteeing against loss or harm

Insurance or Assurance, device for indemnifying or guaranteeing an individual

against loss.

Reimbursement is made from a fund to which many individuals exposed to the

same risk have contributed certain specified amounts, called premiums.

Payment for an individual loss, divided among many, does not fall heavily upon
the actual loser. The essence of the contract of insurance, called a policy, is
mutuality.

The major operations of an insurance company are underwriting, the determination

of which risks the insurer can take on; and rate making, the decisions regarding
necessary prices for such risks.

The underwriter is responsible for guarding against adverse selection, wherein

there is excessive coverage of high risk candidates in proportion to the coverage of
low risk candidates. In preventing adverse selection, the underwriter must consider
physical, psychological, and moral hazards in relation to applicants.

Physical hazards include those dangers which surround the individual or property,
jeopardizing the well-being of the insured.

The amount of the premium is determined by the operation of the law of averages
as calculated by actuaries. By investing premium payments in a wide range of
revenue-producing projects, insurance companies have become major suppliers of
capital, and they rank among the nation's largest institutional investors

49 | P a g e
 CLASSIFICATION OF INSURANCE

Insurance, like any other sphere of human activity, any other system of knowledge
requires internal structural logic of regularity. Without this regularity cannot
organize complex cases, develop a research methodology, to build a learning

50 | P a g e
process. Dye achieve the required regularity classification used. The more complex
the object, which requires classification, the urgent need is felt in it.
The term "classification" derives from the Latin - grade class. Latin root
determines the "essence" of this concept, its quintessence, the most important
value: the division of subjects for a particular set of common characteristics with
the formation of classes of the population. Thus, under the classification system of
understanding is subject to certain concepts (classes) in a particular branch of
knowledge or human activity, used as a means of establishing linkages between
these concepts (classes).

Such a system of subordinate concepts is based on the use of certain common

features inherent in these notions. They are called attributes and classifications
play a crucial role in obtaining the results of classification. There are natural
classification as a sign of classification are essential features of the concepts that
are classified (eg, classification of objects of insurance), and an artificial
classification, when it is used for minor features (e.g., classification in alphabetical
order).

Depending on what purpose you need to do natural classification, choose one or

the other classification attributes.

Insurance as a science, a discipline and as a business area is characterized by many

specific concepts. No classification of these concepts cannot perform or theoretical
research or practical work in this area. Therefore, the classification of insurance
paid close attention.

The classification of insurance on the differences in the areas of insurance

companies in the approaches to provide insurance protection for property interests
of individuals and entities in determining the objects of insurance, insurance cover,
in the form of insurance, etc.. In this regard, can distinguish most serious
classification features that are most important both in theoretical and practical
sense, namely:

* historic features;
* economic features (activities, or specialization, the insurer, insurance facilities,
family dangers, the status of the insured, the insurer's status)

51 | P a g e
GANRAL INSURANCE
Life is full of uncertainty. Trials and tribulations abound in each and every aspect
of life. No one can truly predict or even estimate what the future has in store for
him. Life offers no guarantees by itself, except the incidences of death and
taxation.
This lack of security present throughout life can be overcome partially through
insurance. Insurance can never replace or repair a loss. But the monetary value
offered by insurance helps in adjusting to the new circumstances.
Despite offering innumerable options and immense scope, insurance can be
classified into four main categories.
• Insurance of Person

• Insurance of Property
• Insurance of Interest
• Insurance of Liability
Insurance of Person:
Under the purview of this class of insurance, the risks associated with human life
in general can be covered up to the limit specified. A person can insure his or her
life and his health against any unplanned contingencies.
In event of his death, his dependants will be reimbursed to the full amount that he
was insured for. Or if the insured person meets with an accident or suffers from an
illness that cripples him forever, he will be compensated with the complete sum
assured anyway since he may not be able to lead a normal life again.
In case, the accident is not that severe, he should be able to recover after medical
treatment and rehabilitation. If he has opted for medical cover, then his medical
expenses, treatment and medication will be paid for by his insurance policy.
Insurance of Property:
Everyone possesses material value in the form of tangible assets. Assets can be in
the form of a landed estate or a vehicle, share holdings or plain old paper money.

52 | P a g e
Since tangible property has a physical shape and consistency, it is subject to many
risks ranging from fire, allied perils to theft and robbery. An individual's lifetime
of hard work can be wiped out in a blink of an eye.
But if a person judiciously invests in insurance for his property prior to any
unexpected contingency then he will be suitably compensated for his loss as soon
as the extent of damage is ascertained.
Insurance of Interest:
Every individual has to discharge certain specific duties. Everyone is expected to
maintain a standard of conduct. But then, it is an intrinsic part of human nature to
err. No one is infallible and no one will ever be.
Owing to an occasional error or omission committed by us, our clients or
customers might suffer a loss. In turn we might have to pay them damages or
compensation out of our own personal resources.
However, if our chosen profession qualifies for insurance of interest, then our
insurance policy will more than suffice in arranging for the funds and court
formalities that might ensue in the aftermath of legal libel.

Insurance of Liability:
Every person has to regulate his actions and behavior so as not to cause injury or
damage to other people and their property. Everyone is personally responsible and
liable for his actions.
If due to lack of control over his actions or prejudiced behavior, a person incurs
any liability then he has to provide compensation out of his personal resources.
Liabilities: legal, civil or criminal can have severe repercussions on social standing
and prestige besides the financial status.
By investing in liability insurance, an individual can ward off any liabilities he
might incur due to his actions and behavior. Besides, the premiums payable on
liability insurance are fairly minimal when compared to the damages that have to
be compensated in the long run.

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 INTRODUCTION OF LIFE INSURANCE

You think twice before taking the plunge into buying insurance. Is buying
insurance a necessity now? Spending an 'extra' amount as premium at regular
intervals where you do not see immediate benefits does not seem a necessity at the
moment. May be later.
Well you could be wrong. Buying Insurance cannot be compared with any other
form of investment. Insurance gives you a lifelong benefit and the returns will

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definitely come but only when you need it the most i.e. at the right time. Besides
buying insurance early in life is one of the wise decisions you could take. Because
the premium you would be paying would be comparatively lower.
Insurance is not about how much more it can offer you when the stock market is at
its peak. It may not be an attractive investment option. But weigh the pros and cons
and consider how much more it offers at a small price.
Most important of all it provides you with that unique sense of security that no
other form of investment provides. It gives you a sense of financial support
especially during that time of crisis irrespective of the fluctuations in the stock
market. Insurance provides for your career goals right from your childhood years.
If the earning member of the family is no more your child's educational needs will
not suffer. In fact his higher education too will be provided for. You need not
spend sleepless nights thinking about how to save for your child's marriage. Life
Insurance will take care of that typical once-in-a-life-time spending on marriages.
An accident or a disability may be devastating but an insurance policy can be of
utmost support for the family during such times too. Besides it provides for
additional benefits such as bonuses. You need not worry about your retirement
years. The rising prices, taxes, and your lifestyle will be taken care of easily. And
you can relax and spend your old age in comfort and peace.
Life insurance today plays a major role in one’s life at various stages. Considering
the benefits it offers one cannot but give a thought to buying an insurance policy at
the earliest.

HISTORY OF LIFE INSURANCE

Risk protection has been a primary goal of humans and institutions throughout
history. Protecting against risk is what insurance is all about.
Over 5000 years ago, in China, insurance was seen as a preventative measure
against piracy on the sea. Piracy, in fact, was so prevalent, that as a way of
spreading the risk, a number of ships would carry a portion of another ship's cargo
so that if one ship was captured, the entire shipment would not be lost.

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In another part of the world, nearly 4,500 years ago, in the ancient land of
Babylonia, traders used to bear risk of the caravan trade by giving loans that had to
be later repaid with interest when the goods arrived safely. In 2100 BC, the Code
of Hammurabi granted legal status to the practice. It formalized concepts of
“bottom” referring to vessel bottoms and “respondent” referring to cargo. These
provided the underpinning for marine insurance contracts. Such contracts
contained three elements: a loan on the vessel, cargo, or freight; an interest rate;
and a surcharge to cover the possibility of loss. In effect, ship owners were the
insured and lenders were the underwriters.
Life insurance came about a little later in ancient Rome, where burial clubs were
formed to cover the funeral expenses of its members, as well as help survivors
monetarily. With Rome's fall, around 450 A.D., most of the concepts of insurance
were abandoned, but aspects of it did continue through the Middle Ages,
particularly with merchant and artisan guilds. These provided forms of member
insurance covering risks like fire, flood, theft, disability, death, and even
imprisonment.
During the feudal period, early forms of insurance ebbed with the decline of travel
and long-distance trade. But during the 14th to 16th centuries, transportation,
commerce, and insurance would again reemerge.
Insurance in India can be traced back to the Vedas. For instance, yogakshema, the
name of Life Insurance Corporation of India's corporate headquarters, is derived
from the Rig Veda. The term suggests that a form of "community insurance" was
prevalent around 1000 BC and practiced by the Aryans.
And similar to ancient Rome, burial societies were formed in the Buddhist period
to help families build houses, and to protect widows and children.
Modern Insurance
Illegal almost everywhere else in Europe, life insurance in England was vigorously
promoted in the three decades following the Glorious Revolution of 1688. The
type of insurance we see today owes its roots to 17th century England. Lloyd's of
London, or as they were known then, Lloyd's Coffee House, was the location
where merchants, ship owners and underwriters met to discuss and transact
business deals.
While serving as a means of risk-avoidance, life insurance also appealed strongly
to the gambling instincts of England's burgeoning middle class. Gambling was so

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rampant, in fact, that when newspapers published names of prominent people who
were seriously ill, bets were placed at Lloyd’s on their anticipated dates of death.
Reacting against such practices, 79 merchant underwriters broke away in 1769 and
two years later formed a “New Lloyd’s Coffee House” that became known as the
“real Lloyd’s.” Making wagers on people's deaths ceased in 1774 when parliament
forbade the practice.
Insurance moves to America
The U.S. insurance industry was built on the British model. The year 1735 saw the
birth of the first insurance company in the American colonies in Charleston, SC.
The Presbyterian Synod of Philadelphia in 1759, sponsored the first life insurance
corporation in America for the benefit of ministers and their dependents. And the
first life insurance policy for the general public in the United States was issued, in
Philadelphia, on May 22, 1761.
But it wasn't until 80 years later (after 1840), that life insurance really took off in a
big way. The key to its success was reducing the opposition from religious groups.
In 1835, the infamous New York fire drew people's attention to the need to provide
for sudden and large losses. Two years later, Massachusetts became the first state
to require companies by law to maintain such reserves. The great Chicago fire of
1871 further emphasized how fires can cause huge losses in densely populated
modern cities. The practice of reinsurance, wherein the risks are spread among
several companies, was devised specifically for such situations.
With the creation of the automobile, public liability insurance, which first made its
appearance in the 1880s, gained importance and acceptance?
More advancements were made to insurance during the process of
industrialization. In 1897, the British government passed the Workmen's
Compensation Act, which made it mandatory for a company to insure its
employees against industrial accidents.
During the 19th century, many societies were founded to insure the life and health
of their members, while fraternal orders provided low-cost, members-only
insurance. Even today, such fraternal orders continue to provide insurance
coverage to members as do most labor organizations. Many employers sponsor
group insurance policies for their employees, providing not just life insurance, but
sickness and accident benefits and old-age pensions. Employees contribute a
certain percentage of the premium for these policies

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IMPORTANT OF LIFE INSURANCE
One of my good friends had a small argument with me, that she would not invest
in Term Plan of Insurance, because she will not get any “returns” out of it. I
believe investing in a term plan looked a very unprofitable thing to her as she
never gets back the money she paid as “premiums” , if she survives.
Endowment plans looked nice to her, because they provide money if you are
dead and even if you survive. You get back money as the prize for not dying !!!.
With respect to Term insurance, she understood the fact that her family will get
the money from insurance company in case of her death, but she was
concentrating on the fact that she would not get back anything if she survives.
What is the return in that case? Nothing!!! , and looked like someone
is fooling you with a product called “Term Insurance” , where you are
“investing” premiums to get nothing at the end.
Let me now tell why this happens and some give you some insight on this
matter.

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 I have already talked earlier in my last post “Life Insurance and how to go about
it” , about Term Insurance. Let me now take deeper dive into it and talk about
the reasoning part.
I will first talk about fundamentals of Insurance and then talk about Endowment
Policies and why they are popular, and what people don’t realize about them.
And how Term insurance is the right thing for most of the people.

Basics of Life Insurance

What happens in a average family : There is someone who earns and his
family comprises of wife , kids , parents . if not all there is a subset of these
family members. The head of the family earns and his family lives happily. All
the expenses are met from the earnings of this main member , most of the time
the husband. Now consider this person dies in an accident or for that matter
because of any event. What happens? What happens to his family members
other than the psychological trauma. If they don’t have money to take care for
themselves ,either someone from family have to take up the job and start
working which may not be possible for them, or They have to decrease their
standard of life to maintain the expenses . They are now totally unsecured from
future’s point of view. In short they are totally messed up , which should not
have happened. I gave this detailed explanation for the circumstances because i
wanted you to understand how bad can happen and proper measures must be
taken care for this.

What is the Solution?

Adequate Coverage!!! , this can’t be compromised… You must have a backup

plan which can give your family the same kind of income which confirms that
they are not short of money in case the main earner is gone. If there are some
debts like Home Loan, or any other tasks which need money apart from regular
income, the cover must be good enough to cover that too..
For example: Robert has family expenses of 25,000 per month and there is a
Home loan of Rs 25 laces to be paid within 10 yrs. He is 27 yrs old. He has a
wife, 2 kids and parents. All of them are dependent on him financially. He has
investments of 5 laces. Now in this case. In case he dies, who will take care of
Home loan, how will provide them enough money to live life comfortably. They
need 25k * 12 = 3 laces per year. Which they can get per month if they have 35-
40 Laces of money. If they put this in bank, they will get Rs 25,000 per month
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 as interest which they can use. Considering inflation it will not be enough after
some years, but let’s leave it now for this example. Add home loan of 25 laces to
this 40 laces and what we come to know is that this family must be covered with
minimum Rs 65 laces. Rs 75-80 Laces is a decent cover for this family. Now if
he takes a cover of 80 laces for his family, from that day he can happily live all
his life without any tension, thinking what will happen if he is not there. He will
be attaining peace of mind, and not be worried for it. He must get a lot of
internal peace because his Family is protected with a good enough cover to take
care for them. And this is what you get in “return” from Insurance. No monitory
return can give you more satisfaction than peace of mind.
So before doing anything else, his first step is to give adequate cover to his
family and that’s the most important responsibility for him as a Husband, Father,
Son. He must understand that this is not an investment for monitory benefit later
in his life, but it’s for his family happiness and future.

One point to remember and not forget is that this is the minimum cover required
for family and anything less than this will be taking risk with family future.

Endowment or Money back Policies

Let’s discuss the problems with these plans with respect to the above example.

High Premium: For an 80 laces cover for say 30 yrs, the premium payable will
be At least 2-2.5 laces/year (this is a conservative figure). So now premium so
high is not possible for anyone like Robert, so what they do? They go with a
kind of cover for which they can pay premium easily, can then they take cover
for 5 laces, 10 laces or maximum 20 laces. And guess who suffers in case of his
death: HIS LOVED ONE’s.
It might also happen that they are compromising on a lot of small things which
are important at that moment in time, like buying a bike for son, which they
can’t buy because of the insurance they have to premium, or some vacation they
could have gone to with family, but compromise on that because of premium.

Money back at the end of the maturity is like a penny after so many years:

This is something most of the people overlook. They just see the numbers, 5
laces 10 lacks or 20 laces. And at the time of taking Insurance it looks good
figure to them, because they see numbers, Theydon see its value after many
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 years, and they don’t consider Inflation into account. In case of above example,
if Robert takes a cover of 15 laces by money back policy, what happens if he
survives the tenure? He gets 15 laces at the end, Great Money after 30
yrs . Isn’t!!!
Let’s see how great this money is? His monthly expenses will grow from 25,000
per month to 1.5 laces per month (considering inflation of 6%) . Now this
money will help him survive for not more than 10 months … For so many years
he pays high premium each year, just to get back money to cover his 10 months
monthly expenses. ? What the hell!!!
Under Insurance : Because of the fact that people want money back on
survival and because of high premium , people end up taking policy for which
they have to pay premium under their budget , which means less cover.
Without realizing the fact that they are highly under insured, the reason for this
is that they see Insurance as investment product and not a protection cover for
their family. When they die, there family gets the money from Insurance
company, but most of the time it’s not enough for them and it erodes very soon.

Term Insurance Policies

Let’s discuss the features of Term Policies with respect to above example.

Cheap Premium: The premium is very low for Term insurance Policies. For
above example. The yearly premium for Rs 75 laces cover for 25 yrs is just Rs
20,000 yearly or just 1,600 per month!!! . This is in any way affordable for most
of the people. It’s providing the fundamental requirement of Good cover and
low premium and if you think of returns, Good cover and low premium can
themselves be seen as good enough return. You family protection at low cost is
the return you get.
Opportunity to invest rest of the money in High return Investments :

With term Insurance you save a lot of money in premium and now you can
invest this money as per your wish in high return instruments , anyways in
Endowment policies you put money for long term and you get it after so long
time. So you can now always put your saved money in things which are long
term investment products and return great returns.
One of those things is Equity Diversified Mutual funds and Direct Equity
(depending on person’s ability and interest). In long term Equity Diversified
gives fabulous returns (15-20 yrs) and the risk is minimized because of long
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 term. And if you consider India growth story, it looks great in long term, hence
Equities for long term is the most obvious choice. They will give you return of
15%+CAGR. (15-20 yrs)
Also it will be flexible; you cannot invest for a year or two, if you want to use
the money for your family vacation or some important event.

ADVANTEG OF LIFE INSURANCE

It is a general belief that life insurance is meant only for those with families. It is
true that Life Insurance Policies like whole-life insurance, joint-life-insurance,
pension-life-insurance etc are essential for family's financial security, but they are

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equally important for individuals. Term Insurance policies protect your financial
resources against the uncertainties of life so you can protect your family's future.
Some of the life insurance advantages are:
• If an estate owner has not accumulated enough assets for his family,
• Insurance quote helps create an instant estate for the sake of the Family’s
security.
• Life Insurance provides the option to pass equal assets to the children who
are not active in the Family business at the time the family business is
passed on.
• Life Insurance policies can help secure the future of children for
college/educational purposes as the amount of life Insurance Policy
increases on a minor’s or parent’s life.
• The growth of a cash-value policy is tax-deferred - you do not pay taxes on
the cash value accumulation until you withdraw funds from the policy.
• Life Insurance can be useful in paying estate taxes, along with other estate
settlement amounts. Federal Estate Taxes are due nine months after death.

• If there’s a Business Transfer, life insurance can provide ready cash to

finance a transaction between business owners who are ready to buy the
deceased owner’s share from his or her estate after death.
• If there’s a home mortgage, one can pass the family residence to their
spouse/children to free them of any mortgage if one has a Life Insurance
Policy for the same. It is preferred to have a decreasing term policy that
decreases in face amount as the mortgage balance is paid down.
• Life Insurance helps retain your Business from the loss of a key employee.
Untimely death of a key employee can pose severe financial loss to the
business.
• The right insurance proceeds can provide liquidity to pay off personal loans
or business loans.
• Charitable Remainder Trusts provide tax benefits. Life Insurance helps
replace a charitable gift.

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 • A lot of Insurance products presently provide good returns, which could be a
beneficial way for saving necessary funds for retirement years.
• Benefits are available immediately and may be used to help pay expenses
such as final illness and funeral costs, eliminating the need to sell estate
assets to cover these costs.

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 THE DUTIES, POWERS AND FUNCTIONS OF IRDA
Subject to the provisions of this Act and any other law for the time being in force,
the Authority shall have the duty to regulate, promote and ensure orderly growth of
the insurance business and re-insurance business.
1. Without prejudice to the generality of the provisions contained in sub-section
(1), the powers and functions of the Authority shall include, -

➢ issue to the applicant a certificate of registration, renew, modify, withdraw,

suspend or cancel such registration;
➢ protection of the interests of the policy holders in matters concerning assigning
of policy, nomination by policy holders, insurable interest, settlement of
insurance claim, surrender value of policy and other terms and conditions of
contracts of insurance;
➢ specifying requisite qualifications, code of conduct and practical training for
intermediary or insurance intermediaries and agents
➢ specifying the code of conduct for surveyors and loss assessors;
➢ promoting efficiency in the conduct of insurance business;
➢ promoting and regulating professional organizations connected with the
insurance and re-insurance business;
➢ levying fees and other charges for carrying out the purposes of this Act;
➢ calling for information from, undertaking inspection of, conducting enquiries
and investigations including audit of the insurers, intermediaries, insurance
intermediaries and other organizations connected with the insurance business;
➢ control and regulation of the rates, advantages, terms and conditions that may
be offered by insurers in respect of general insurance business not so controlled
and regulated by the Tariff Advisory Committee under section 64U of the
Insurance Act, 1938 (4 of 1938);
➢ specifying the form and manner in which books of account shall be maintained
and statement of accounts shall be rendered by insurers and other insurance
intermediaries;
➢ regulating investment of funds by insurance companies;
➢ regulating maintenance of margin of solvency;
➢ adjudication of disputes between insurers and intermediaries or insurance
intermediaries;
➢ supervising the functioning of the Tariff Advisory Committee;

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➢ specifying the percentage of premium income of the insurer to finance schemes
for promoting and regulating professional organizations referred to in clause
(f);
➢ specifying the percentage of life insurance business and general insurance
business to be undertaken by the insurer in the rural or social sector; and
➢ exercising such other powers as may be prescribed

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 RESEARCH METHODOLOGY

RESEARCH DESIGN: Descriptive Research Design

SAMPLE DESIGN :Probability Sampling – Stratified Sampling, Employees are

divided into three strata on the basis of their age.

a) Employees of age group 40 to 45 (120 employees)

b) Employees of age group 46 to 50 (80 employees)

c) Employees of age group 51 to 55 (40 employees)

SAMPLING UNIT: Salaried Employees.

SAMPLE SIZE: Sample of 240 salaried employees is chosen.

METHOD OF DATA COLLECTIONPRIMARY DATA

1. Interview Method: personal interview involve asking questions in face to

face contact.
2. Questionnaire: it is the most popular and common instrument used in
research. The basic objective of the questionnaire was to collect adequate
information

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SECONDARY DATA

1.Internet Search www.google.com

2. Publish material
3.Books Direct Taxes Law & Practice Tax Planning
PROCESSING OF DATA
Different techniques are used for processing
Editing to detect errors and omit it
Classification to reduce the data into homogenous groups
Tabulation to arrange it into concise and logical order
ANALYSIS OF DATA
Data collected through above method has been analyzed statistically. Result of
analysis is shown in the form of Bar Chart

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WHERE DO YOU SERVICE IN PUBLIC SECTOR OR PRI
V A T E SECTOR

INFERENCES

•SALARIED EMPLOYEE OF AGE GROUP 40 TO 45

70% said they are working in Private Organization

30% said they are working in Public Organization.

•SALARIED EMPLOYEE OF AGE GROUP 46 TO 50

80% said they are working in Private Organization

20% said they are working in Public Organization

SALARIED EMPLOYEE OF AGE GROUP 51 TO 55

90% said they are working in Private Organization

10% said they are working in Public Organization
YOUR MONTHLY SALARY

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R s . 1 0 - 2 0 , 0 0 0 R s . 2 1 - 3 0 , 0 0 0 Rs 31 - 35,000

INFERENCES

•SALARIED EMPLOYEE OF AGE GROUP 40 TO 45

60% said their monthly salary is Rs.10,000 to 20,000

30% said their monthly salary is Rs.21,000 to 30,000

10% their monthly salary is Rs.31,000 to 35,000

•SALARIED EMPLOYEE OF AGE GROUP 46 TO 50

20% said their monthly salary is Rs.10,000 to 20,000

70% said their monthly salary is Rs. 21,000 to 30,000

10% said their monthly salary is Rs. 31,000 to 35,000

•SALARIED EMPLOYEE OF AGE GROUP 51 TO 55

5% said their monthly salary is Rs.10,000 to 20,000

90% said their monthly salary is Rs. 21,000 to 30,000

5% said their monthly salary is Rs. 31,000 to 35,000

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YOUR ANNUAL SAVING

INFERENCES

• SALARIED EMPLOYEE OF AGE GROUP 40 TO 45

60% said their annual saving is Rs.1.0 lace. To 1.5 lace.

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30% said their annual saving is Rs.1.5 lac. to 2.0 lac.

10% said their annual saving is Rs.2.0 lac. to 2.5 lac.

• SALARIED EMPLOYEE OF AGE GROUP 46 TO 50

20% said their annual saving is Rs.1.0 lac. to 1.5 lac.

70% said their annual saving is Rs.1.5 lac. to 2.0 lac.

10% said their annual saving is Rs.2.0 lac. to 2.5 lac.

• SALARIED EMPLOYEE OF AGE GROUP 51 TO 55

100% said their annual saving is Rs.1.0 lac. to 1.5 lac.

40% said their annual saving is Rs.1.5 lac. to 2.0 lac.

50% said their annual saving is Rs.2.0 lac. to 2.5 lac

WHERE DO YOU LIKE TO INVEST

Pu b lic Pr iv a te Pu b lic an d Pr iva t e bo t h

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INFERENCES

•SALARIED EMPLOYEE OF AGE GROUP 40 TO 45

10% said they prefer to invest in Public

40% said they prefer to invest in Private

BAJAJ CAPITAL BROKING LIMITED CIMT

50% said they prefer to invest in both Public and Private

•SALARIED EMPLOYEE OF AGE GROUP 46 TO 50

20% said they prefer to invest in Public

20% said they prefer to invest in Private

60% said they prefer to invest in both Public and Private SALARIED

EMPLOYEE OF AGE GROUP 51 TO 55

10% said they prefer to invest in Public

10% said they prefer to invest in Private

80% said they prefer to invest in both Public and Private

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HOW MUCH RISK YOU LIKE TO TAKE

High Risk Medium Risk Low Risk

INFERENCES

•SALARIED EMPLOYEE OF AGE GROUP 40 TO 45

30% said they would like to take High Risk

50% said they would like to take Medium Risk

20% said they would like to take Low Risk

SALARIED EMPLOYEE OF AGE GROUP 46 TO 50

10% said they would like to take High Risk

80% said they would like to take Medium Risk

10% said they would like to take Low Risk

SALARIED EMPLOYEE OF AGE GROUP 51 TO 55

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10% said they would like to take High Risk

20% said they would like to take Medium Risk

70% said they would like to take Low Risk

ARE YOU AWARE ABOUT TAX STRUCTURE

INFERENCES

•SALARIED EMPLOYEE OF AGE GROUP 40 TO 45

90% said Yes they are aware about Tax Structure

10% said No they are not aware by Tax Structure

•SALARIED EMPLOYEE OF AGE GROUP 46 TO 50

80% said Yes they are aware about Tax Structure

20% said No they are not aware by Tax Structure

•SALARIED EMPLOYEE OF AGE GROUP 51 TO 55

80% said Yes they are aware about Tax Structure

20% said No they are not aware by Tax Structure.

WHERE YOU LIKE TO INVEST

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Insurance PPF NSC KVP Securities Bank

INFERENCES

•SALARIED EMPLOYEE OF AGE GROUP 40 TO 45

55% said they prefer to invest in Insurance

10% said they prefer to invest in PPF

15% said they prefer to invest in NSC

5% said that they prefer to invest in KVP

17% said that they prefer to invest in Securities

8% said that they prefer to invest in Bank

•SALARIED EMPLOYEE OF AGE GROUP 46 TO 50

50% said they prefer to invest in Insurance

15% said they prefer to invest in PPF

5% said they prefer to invest in NSC

10% said that they prefer to invest in KVP

7% said that they prefer to invest in Securities

8% said that they prefer to invest in Bank

•SALARIED EMPLOYEE OF AGE GROUP 51 TO 55

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55% said they prefer to invest in Insurance

10% said they prefer to invest in PPF

5% said they prefer to invest in NSC

10% said that they prefer to invest in KVP

10% said that they prefer to invest in Securities

10% said that they prefer to invest in Bank

FINDINGS

In this research salaried employees are classified in three strata

•One strata is of employee of age between 40 to 45

•Second strata is of employee of age between 46 to 50

•Third strata is of employee of age 51 to 55.These three groups of employees

Respond differently. This difference is because of different perception

➢ Ge n e r a l l y m o st p e o p l e pr ef er t o keep t hei r m oney fl oat i n t he

m a r k e t despite keeping in bank of the low rate of return as bank provides.

➢ From the survey we come to know about the increasing popularity

of investment among people due to the following reasons:

➢ Increase in working population, larger family incomes and

consequent higher savings.

➢ Increase in tendency of people to hedge against inflation.

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 ➢ Availability of large and attractive investment alternatives.

➢ Ability of investments to provide income and capital gains.

➢ P r o v i si o n o f t a x i n c e nt i ves i n r espect of i nvest m ent s i nspecifie

d channels
Mo st p e o p l e pr e f e rr e d a r e a for i nvest m ent by peopl e i s i nsur ance
Sector.

People also prefer to invest in post office because of the saving in tax sand there
return and security as a government investment instrument.

➢ In the coming future people would like to invest in Insurance along

with fixed deposit, real estate, mutual funds and primary market.

➢ According to the survey done, most of the people invest money to get higher
returns and to gain on there savings.

➢ Most of the public sector employees at present invest their money in

banks as they consider to be the safest financial institutions,
although they would prefer primary market and mutual funds if they
invest in future.

➢ Generally people deposit money in bank for the purpose of immediate

withdrawal as per their need of money.

➢ Government servants at present mostly invest in banks and post office.

However , in future they would like to make investment in insurance.

➢ Private sector employees mostly make investments in banks but in the future
they would prefer to invest their money in fixed deposits.

➢ People of income group 10,000-15,000 presently invest in banks and in the

future they would like to invest in fixed deposits and to pay for the
investment purpose in which they get higher return on their investment.

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 ➢ People who fall under income group of 15,000-20,000 presently make their
investments in Insurance and other tax saving investments to save there tax
labiality.

➢ According to the survey done, most of the people who fall under the
income group of 20,000-25,000 invest in different investments and in
f u t ur e th e y wo u l d li ke t o invest i n t ax savi ngs i nst r um ent s.
( Bo n d s NSC mutual fund etc.)

➢ Most of the investors falling under the category of income group which
is above Rs. 25,000 presently invest in insurance while in future
their choice of investment would preferably be real estate and fixed
deposits.

➢ People who are above the age of 51-55 presently make maximum
of their investments in Insurance as well as PPF and banks

RECOMMENDATIONS

Today’s environment is very competitive hence to survive in such environment

people need both power and wealth. Earlier people prefer to keep their money

either on home or keep in bank but today people to see their money grow

and today a lot of options are present which are not only attractive but fast

growing too. People who can bear high risk for that person the security

market are good. There is high risk and high return according to their investment

amount. S a l a r i e d p e o p l e wa nt s t he secur i t y i n t hei r savi ngs so f or

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t h o se p e o p l e wh o wants high security Insurance and other Government

instruments of Investments is better option in which there is a fix growth up to

certain amount. Today’s market is so fluctuating for this type of market security is

important as well as growth so Insurance is good option for them in which there is

return as well as security

LIMITATIONS

This study is based on reaction hence it is not an indication that

everything is true t its fullest sense. Time is act as constraint. Some employees
refuse to fill the questionnaire because they do not free time Some employee
does not read the questions carefully as a result they give the wrong
response Most of employees do not give answer of the personal question related to
PAN number and Accurate Salary

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 CONCLUSION

Many years ago people used to hold money means that they kept their money as
cash in hand or other safe places But today people are more aware of different
investment option, which are the key of growth of money Inst ead of a r ange
o f i n v e st m e n t o p t i o n sa l a r i ed em pl oyees pr ef er t o t ake m edi um
r i sk a n d t h e y wi l l i n v e st t hei r m oney i n t hat opt i on wher e t hey get
maximum tax benefit like insurance and PPF

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 BIBLIOGRAPHY

Books:

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 • Kothari C.R. Research Methodology
• Kilter Philip, Marketing Management
• Pandey I.M. Financial Management
• Bajaj Capital publication
• Investor India Web Site
• www.google.com
• www.Bajaj Capital .com
• www.nseindia.com
• www.Bajaj Capital mutualfund.com
• www.amfi.com
• www.mutualfundofinsa.com

NESW PAPERS (ECONOMIC TIMES, BUSINESS WORLD, TIMESOF

INDIA)

BAJAJ CAPITAL BROKING LIMITED COMPANY

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Dear Sir/Madam,
We Rishi Kumar Gupta Student of PGDM (MM) ISHAN
INSTITUTE OF MANAGEMENT & TECHNOLOGY ; (GREATER NOIDA)
We are conducting a survey on the topic of

CHACK AND INCREASE AWEARNESS 360°

FINANCIAL PLANNING IN LUCKNOW

Kindly extend your co-operation in filling up this

questionnaire and enables us to conduct the research successfully.

Respondent Personal Detail:-

Name………………………………………………………………………………
Age………………… Sex……………………..
Address……………………………………………………………………………
Email Id……………………………………
Contact no………………………………….

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 QUESTIONNAIRE:

Which statement best describes your approach as an investor?

I am very cautious about taking risks, and I want to avoid losses.

I am somewhat cautious about taking risks, and I can handle relatively

small losses.

I can take some risks that are generally associated with greater account
growth potential but i wish to minimize short-term losses in my account.

I am open to taking risks for growth potential. I am less concerned about

short-term (less than one year) losses or gains; I am more interested in long-
term growth..

I am risk taker and want to maximize the growth of my account over the
next decade or longer. I am not concerned about short-term losses.

When is your next big spending due/expected?

Less than 1 year

Between 1 year – 3 years

Between 3 years – 5 years

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 More than 5 years

Do you have an emergency fund set aside to meet any unexpected

requirement?

No, I do not have any money for emergencies.

I have enough to meet one month's expenses.

I have enough to meet two to three months' expenses.

I have enough to meet four to six months' expenses.

I have more than six month's worth.

You receive an unexpected bonus equivalent to three months'salary,Will

you:

Put it in a bank deposit at 5% guaranteed return?

Invest it in an instrument which gives a return in the range of 4 -7%.

Invest it in an instrument that gives a return of around 15% p.a. with a

downside 3 risk of 10%.

How often do you monitor your investments?

Daily or Weekly

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 Monthly

Occasionally

When you make an investment decision, you

Decide on gut feel.

Seek advice from friends and well-wishers.

Rely on your investment advisor.

Analyze all options thoroughly.

Investments with higher short-term volatility are more likely to have a

greater chance of meeting long-term goals. Conversely, investments likely to
provide stable returns and minimum short-term losses are less likely to meet
long-term investment goals. With this in mind, which of the following is most
consistent with your investment attitude.

Avoiding short-term losses is more important to me than meeting long-

term goals.

I am equally concerned about avoiding short-term losses as well as

meeting long-term goals.

I am willing to bear short-term fluctuations to maximize the chance of

meeting my long-term goals.

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The chart below shows possible growth of Rs. 100 over a five-year period for
a series of different investment strategies. Which of the five scenarios are you
most comfortable with as an investor?

130 to 160

110 to 176

90 to 200

77 to 250

59 to 280

What percentage (%) of your portfolio is allocated to Equtiy currently

No investment in Equity

Upto 10%

Between 10% to 30%

Between 30% to 60%

More than 60%

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