A PROJECT REPORT ON IDENTIFICATION OF PEOPLE PREFERENCE LEVEL REGARDING VARIOUS INVESTMENT AVENUES

UNDERTAKEN AT

SHAREKHAN LIMITED.

SUBMITTED BY JAWEDKHAN A PATHAN 06MBA44

SUBMITTED TO Mr. GOVIND DHINAIYA MBA PROGRAMME (2006-08) SHRIMAD RAJCHANDRA INSTITUTE OF MANAGEMENT AND COMPUTER APPLICATION

DECLARATION

I here by declare that the summer project report title Identification of People Preference Level Regarding Various Investment Avenues Based on original piece of work done by me for the fulfillment of the award of the degree of Master of Business Administration. And whatever information has been taken from any sources had been duly acknowledge. I further declare that the personal data & information received from any respondent during survey has not been shared with any one and is used for academic purpose only.

Date: 3rd October, 2007 Place: Gopal Vidyanagar

Javedkhan A Pathan (06MBA44)

PREFACE
The preference of Indian investor is changing rapidly. Previously they were investing into fixed income earning securities. In this fixed income earning securities Government securities, bonds and debentures and fixed deposits were common avenues. But with the passage of time inflation increased, so there was a great need of avenues where higher returns, more liquidity and better management of Investors fund needed. Initially people started investing in share market but it was highly volatile and it required constant watch over the fund. So people started shifting over mutual funds because they were professionally managed they were also having high liquidity good return and they were also helping in tax planning. From last few years mutual fund industry has shown phenomenon growth more and more people are attracting towards mutual funds. On insurance having purpose the any of other hand other sector, which is booming, is

sector. Because in India large chunk of people are not insurance risk cover and and those who are having insurance are tax planning, but now insurance

underinsured. Traditionally people used to have insurance for the companies are also providing benefits of market movement through Unit Linked Insurance Plans. This plan not only gives risk cover but also provides certain returns as well. So now Indian investors have started accepting this type of insurance plans rather then traditional insurance plans. As launched the competition increases and new products are

Indian customer is having sufficient choice between

different avenues, which provides market linked returns, so Indian investors are enabled with various option to suit their financial goals

and tax planning requirements.

ACKNOELEDGEMENT
Many individuals have rendered their helping hand to me in carrying out this project. I take this opportunity to express my gratitude to all of them. I express my heartfelt gratitude to eminent organization

Sharekhan co. ltd for providing me with such a glorious opportunity and furnishing me with much of the precious time and resources during my training. I am very much pleased to express my heartiest gratitude to our venerable Director Dr. Bankim C. Patel for providing me with such a glorious opportunity for learning practicality of bookies concepts. I am highly indebted to Mr. Mehul Jani (Branch Head), for giving best of his knowledge and precious time to me. His warm hearted guidance has acted like light house in share house during my training. I pay heartiest gratitude to my college mentor Mr. Govind Dhinaiya who has provided me with the valuable suggestions, support and guidance during my training to successfully complete my project work. My sincere thanks to company guide Mr. Ashish Bhakta who has spent his precious time with me and in fulfilling the requirement of this project. I am highly obliged to him for his Valuable support and guidance. Words of thanks to staff of Sharekhan ltd Bardoli branch for their co-operation and support. I would be failing in my duty, if I dont pay my gratitude to all important respondents as without their support the project would not have materialized

EXECUTIVE SUMMARY
Statement of the study A study on identification of people awareness, investment and preference level and their investment criteria regarding various investment avenues namely bank deposits, bullion, equity, Government securities, mutual funds, real estate, insurance and bonds and debentures Purpose of the study This study has been under taken to find out the preference level of people towards various investment avenues and the parameters that they consider crucial for investment decision. This study will provide inside to Sharekhan limited to understand market better and to come out with appropriate strategy for tap untapped market and also to understand preference of existing customer better. Research methodology Type of study

Descriptive research design Sampling frame

People of Bardoli town and surrounding area Sampling design

Convenience sampling method has been used. Sampling area

Bardoli town and surrounding area Sample size

100 respondents will be surveyed from the sampling area. Sampling unit

People of Bardoli and surrounding area. Research instrument 5

A disguise and structured questionnaire is used. Data collection method Primary data. Collected by conducting personnel interview of people. Secondary data. The secondary data h collected by books and thorough internet. Data analysis tools SPSS Software is used for T-test and Chi-Square test, Microsoft office is used for data typing and formatting Key findings Most of the people are aware regarding five investment avenues namely bank deposits, equity investment, mutual fund, insurance and real estate Most of the people are investing their fund in bank deposits and insurance. Return, safety and risk are considered as a most important investment parameter Majority of people believe that equity investment is better investment avenue compare to other investment avenues. Mutual fund is the best investment avenue followed by real estate second best, bank deposits third best, equity investment fourth best Key recommendations Return, safety, risk and marketability should be given more importance for any investment avenue. Broking firms or companies should promote Equity investment aggressively foe long term investment.

Promotional measures should be taken for increasing awareness for bullion, Government securities and bonds and debentures.

People first preference is mutual fund hence more emphasis should be given on mutual fund in promotional activities.

TABLE OF CONTENTS
Sr. No.
1 INTRODUCTION 1.1 Industry profile 1.2 Company profile 1.3 Overview of investment 1.4 Investment avenues 2 3 4 5 6 7 RESEARCH METHODOLOGY DATA ANALYSIS & INTERPRETATION FINDINGS CONCLUSION BIBLIOGRAPHY APPENDIX 7.1 Questionnaire

TOPIC

Page No.
08 08 10 20 21 54 57 113 115 116 117 117

INDUSTRY PROFILE
1.1: SHARE BROKING SERVICE SECTOR PROFILE: There are several national as well as local players in stock trading services which are providing various services to their customers like online trading, portfolio management system, stock broking etc. Among them several national level players. KEY PLAYERS:

5Paisa.com - Online trading, live stock quotes and market research Advani Share Brokers - Share broking and market research

services

Anand Rathi Securities - Portfolio management, corporate finance,

equity & fixed income brokerage services

Brescon Group - Advisory and broking services CIL Securities - Stock broking & merchant banking services CRN India - Trends of stock market, trading tips, chat etc Churiwala Securities - Stock trading, quotes and market analysis DSP Merrill Lynch - Investment banking and brokerage services Dalmia Securities - Stock broking & depository services EquityTrade - Stock trading, company news & market research Gandhi Securities - Stock broking and investment services Gogia Capital Services - Stock broking and market analysis Hasmukh Lalbhai - Stock trading services Idafa Investments - Stock broking services

India Market Access - Offers stock broking, portfolio management

and investment banking services

Investsmart India - Personal finance advisory & online brokerage

services

Kisan Ratilal Choksey Shares - Stock broking and e-trading

services

Kotak Securities - Brokerage services & retail distributor of

financial securities

Manubhai Mangaldas Securities - Stock broking and market

analysis

Moneypore - Investment and broking services Motilal Oswal - Online trading, live BSE and NSE quotes Navia Markets - Stock broking, IPO and mutual funds services Parag Parikh - Stock broking and portfolio management Parsoli Corporation - Investment management & stock trading

services

Pratibhuti Viniyog - Stock broking services Prudential - Investment management services Quantum Securities - Offers broking and portfolio management

services.

Sivan Securities - offers services related investment banking &

stock broking with a focus on South India.

Skindia Finance - Brokerage firm focusing on GDR arbitrage,

equities & debt

Stock Holding Corporation of India - Custody management,

safekeeping & stock broking services

StockMarkit.com - Stock quotes, news, market indicators etc Sunidhi Consultancy - Stock broking, portfolio management &

equity research

Techno Shares - Stock broking and portfolio management Valia Consultancy - Stock investment and trading consultancy1

1.2: COMPANY PROFILE: SSKI HISTORY Founded in 1922, it is one of Indias oldest brokerage houses

having over Eighty years of broking experience. Founding member of the Stock Exchange, Mumbai and pioneer

institutional broker. SSKI is the only domestic player in a market crowded by 44

multinational securities firm. Foray into institutional broking and corporate finance 20 years

ago. SSKI group also comprises Institutional broking division caters to the largest domestic and foreign institutional investors, the corporate finance division focuses on niche areas such as infrastructure, telecom and media. SSKI holds a sizeable portion of the market in each of these segments. Forerunner of investment research in the Indian market, SSKI

provide the best research coverage amongst broking houses in India. The companys research team was set up in December 1992 and is rated as one of the best in the country. Voted four times as the top domestic brokerage house by Asia money survey, SSKI is consistently ranked amongst the top domestic brokerage houses in India. Retail broking started in 1985. Research group was set up in December 1992.

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It acts as a pioneer if investment research in the Indian market aimed at generating quick investment ideas. Group interest Investment Banking, Institutional Broking and Retail Broking. It occupies 65% of business share from foreign institutional investors. SSKI named its online division as Sharekhan on February 8, 2000 coinciding with the launch of its website.

COMPANY PROFILE Share khan is a share broking and retail broking arm of SSKI, an organization with more than 80 years of trust and credibility in the stock market. Retail Distribution Started In 1998. SSKI is a veteran equities solutions company with over 8 decades of experience in the Indian stock markets. It helps the customers/people to make informed decisions and simplifies investing in stocks. Sharekhan brings to you a user- friendly online trading facility, coupled with a wealth of content that will help you stalk the right shares. SSKI named its online division as a Sharekhan and it is into retail broking. The business of the company overhauled 6 years ago on February 8, 2000. It acts as a discount brokerage house to a full service investment solution provider. It has specialized research product for the small investors and day traders. Sharekhan has a shop in 137 cities across India. Though the portal sharekhan.com, have been providing investors a powerful online trading platform, the latest news, research and other knowledge-based tools for over five years now. We have decided teams for fundamental and technical research so that you get all the information you need to take the right investment decisions.

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With branches and outlets across the country, our ground network is one of the biggest in India! They have talent pool of experienced professionals specially designated to guide you when you need assistance, which is why investigating with us is bound to be a hassle-free experience for you! The Sharekhan provides its customers First Step program, built specifically for new investors, is testament to our commitment to being your guide throughout your investing lifecycle They have 588 share shops across 213 cities in India to get a host of trading related services our friendly customer service staff will also help you with any account related queries you may have. ABOUT SHAREKHAN SSKI named its online division as SHAREKHAN and it is into retail broking. The business of the company overhauled 6 years ago on February 8, 2000. It acts as a discount brokerage house to a full service investment solutions provider. It has specialized research product for the small investors and day traders. Largest chain of share shops, 310 shares, shops in 137 cities across India. The site was also launched on February 8, 2000 and named it as www.sharekhan.com. The Speed Trade account of Sharekhan is the next generation technology product launched on April 17, 2002.

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 It offers its customers with the trade execution facilities on the NSE and BSE, for cash as well as derivatives, depository services. Ensures convenience in Trading Experience: Sharekhans trading services are designed to offer an easy, hassle free trading experience, whether trading is done daily or occasionally. The customer will be entitled to a host of value added services in the investment process depending on his investing style and frequency offers a suite of products and services, providing the customers with a multi-channel access to the stock markets. It gives advice based on extensive research to its customers and provides them with relevant and updated information to help him make informed about his investment decisions. Sharekhan offers its customers the convenience of a broker-DP. It helps the customers meet his pay in obligations on time thereby reducing the possibility of auctions. The company believes in flexibility and therefore allows accepting late instructions without any extra charge. And execute the instruction immediately on receiving it and thereafter the customer can view his updated account statement on Internet. Sharekhan depository services offer Demat services to individual and corporate investors. It has a team of professionals and the latest technological expertise dedicated exclusively to their Demat department. A customer can avail of Demat, repurchase and transmission facilities at any of the Sharekhan branches and business partners outlets. BRAND NAME The company as a whole in its offline business has named itself as SSKI Securities Private Limited Sevaklal Sevantilal Kantilal

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Ishwarlal Securities Private Limited. The company has preferred to name themselves under a blanket family name. But in its online division started since 1997, the company preferred to name itself as SHAREKHAN. The Brand name SHAREKHAN itself suggests the business in which the company is dealing so that the customer could easily identify the product or service category. CORE SERVICES OF SHAREKHAN

1. Equity and Derivative Trading on BSE and NSE. 2. Depository Services. 3. Online Trading. 4. IPO Services. 5. Commodities Trading on MCX and NSDEX. 6. Portfolio Management Services.
SERVICES PROVIDED BY SHAREKHAN Online Services Offline Services Depository Services Equity and Derivatives Trading Fundamental Research Technical Research Portfolio Management Commodities Trading

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Dial-n-trade Share shops

1. Online Services: Mutual Funds Commodity Futures PMS Technical PMS Demat Services Share shops

2. Offline Services: Trading with the help of Dealer Trading without credit By calling to the Share shops Credit facility (Only in Delivery-based) T+2 facility Special website for Offline Clients:

www.mysharekhan.com Physical contract notes Types of Account Classic A/c: Features of Classic A/c:

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Online trading account for investing in Derivatives via sharekhan.com.

Equities

and

Integration of: Online trading + Bank + Demat account.

Instant cash transfer facility against purchase & sale

of shares.

Make IPO bookings. You get Instant order and trade confirmations by e-mail Streaming Quotes.

Personalized Market Scan with your own customized

stock ticker.

Single screen interface for cash and derivatives.

Speed-trade: Features of Speed-trade:

Instant order Execution & Confirmation Single screen trading terminal Real-time streaming quotes, tic-by-tic charts

Market summary (most traded scrip, highest value and

lots of other relevant statistics)

Hot keys similar to a brokers terminal Alerts and reminders Back-up facility to place trades on Direct Phone lines Single screen interface for cash and derivatives

Dial-n-trade: Features of Dial-n-trade:

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Two dedicated numbers for placing your orders with

your cell phone or landline. Toll free number: 1-800-22-7050. For people with difficulty in accessing the toll-free number, we also have a Reliance number 30307600 which is charged at Rs. 1.50 per minute for STD calls. Automatic funds transfer with phone banking (for

Citibank and HDFC bank customers). Simple and Secure Interactive Voice Response based

system for authentication. No waiting time. Enter your TPIN to be transferred to

our telebrokers. You also get the trusted, professional advice of our

telebrokers. After hours order placement facility between 8.00 am

and 9.30 am (timings to be extended soon. BANK AFFILIATION Sharekhan has affiliation with 7 banks, which allows its customers to enjoy the facility of instant credit and transfer of funds from his savings bank account to his Sharekhan trading account. The Affiliated banks are as follows: HDFC BANK UTI BANK ( Axis Bank) CITI BANK ORIENTAL BANK OF COMMERCE IDBI BANK UBI BANK

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 CORPORATION BANK

PROMOTION TOOLS AND ADVERTISEMENT OF SHAREKHAN 1. Promotion Online share trading is totally a new concept in Indian market. Generally investor doesnt like to come from conventional way of share trading. Sharekhan has introduced this product in the concept and products are still new in the market. Therefore the company has undertaken extensive promotion campaign to create awareness about the product. Sharekhan adopts the following tools for promoting the product. 2. Internet Tele Marketing Retail Share Shops Franchisee Owners Sales Force Advertising

Company advertises its product through TV media on channels like CNBC, Print Media-in leading dailies and outdoors media. It advertises itself as an innovative brand with a cartoon of tiger-called SHERU. Besides attractive and colorful brochures as well as posters are used

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giving full details about the product. Mails are sent to people togging on to sites like moneycontrol.com and rediff.com. SWOT ANALYSIS STRENGTHS Online Trading Facility Largest Chain of Retail Share Shops in India 80 years of Experience in securities market Dedicated and responsive workforce/staff Value added service for HNI client Research Center Membership of NSE & BSE Trading option like Future & Option and Commodities Volume based differentiated product.

WEAKNESSES Less informative website Does not have slab rate brokerage which is provided by competitors Problems due to network crash Unawareness Among Investors OPPORTUNITY Collaboration with international financial institution To tap the Untapped market To capture the market lost to its Competitors. To focus on developing a superior and powerful portal To spread awareness of its Brand Name. THREATS Follow government laws Severe Competition

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 Competitors develops Prolonged depression and high volatility in the market New Entrants.

ABOUT TOPIC

1.3 Overview of investment.

WHAT IS INVESTMENT? The money you earn is partly spent and the rest saved for meeting future expenses. Instead of keeping the savings idle, you may like to use savings in order to get return on it in the future is termed as investment. Investment is the employment of funds on assets with the aim of earning income or capital appreciation. For a layman, investment means some monetary commitments. In its broadest sense, an investment is a sacrifice of current money or other resources for future benefits. Numerous avenues of investment are available today. You can either deposit money in a bank account or purchase a long-term government bond or invest in the equity shares of a company or contribute to a provident fund account or buy a stock option or acquire a plot of land or invest in some other form. The two key aspects of any investment are time and risk. The sacrifice takes place now and is certain. The benefit is expected in the future and tends to be uncertain. In some investments (like government bonds) the time element is the dominant attribute. In other investments 20

(like stock options) the risk element is the dominant attribute. In yet other investments (like equity shares) both time and risk are important. Almost everyone owns a portfolio of investments. The portfolio is likely to comprise financial assets (bank deposits, bonds, stocks, and so on) and real assets (motorcycle, house, and so on). The portfolio may be the result of a series of haphazard decisions or may be the result of deliberate and careful planning. WHY SHOULD ONE INVEST?

(1) To earn return on your idle resources. (2) To generate a specified sum of money for a specific goal in life. (3) To make a provision for an uncertain future. One of the important reasons why one needs to invest wisely is to meet the cost of Inflation. Inflation is the rate at which the cost of living increases. The aim of investments should be to provide a return above the inflation rate to ensure that the investment does not decrease in value. INVESTMENT OBJECTIVES: The main investment objectives are increasing the rate of return & reducing the risk, safety, liquidity & hedge against inflation. 1.4 INVESTMENT AVENUES These may be classified as shown in below:

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Investment alternatives Non-Marketable Financial Assets Bonds Equity Shares Money Market Instrument Life Insurance Policies Precious Objects Financial Derivatives

Mutual Fund Schemes Real Estate

HOW DO VARIOUS INVESTMENT AVENUES COMPARE? How do various investment avenues like equity shares, fixed income securities, deposits, real assets, and so on compare? A summary evaluation of these investment avenues in terms of key investment attributes is given below. Return Current yield Equity Share Non convertibl e Debenture Equity Schemes Debt Schemes Bank Deposits Public Provident Fund Low High Risk Capital appreciatio n High Negligible Marketability Tax Liquidity shelter Fairly high Average High Nil Convenienc e High High

High Low

Low Moderat e Moderat e Nil

High Low

High Low

High High

High No tax on dividen d Nil Section 80 C benefit

Very High Very High

Nil Moderate

Negligibl e Nil

High Average

Very High Very High

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Life Insurance Policies Residentia l house Gold and silver

Nil Moderat e Nil

Moderate Moderate Moderate

Nil Negligibl e Average

Average Low Average

Section 80 C benefit High Nil

Very High Fair Average

(1) Bank Deposits The simplest of investment of avenue, opening a bank account and depositing money in it one can make a bank deposits, there are various kinds of bank accounts; current account, saving account, and fixed deposit account. While a deposit in a current account does not earn any fixed interest, deposits in other kinds of bank accounts earn interest. The important feature of bank deposit is as follows: Deposit in scheduled banks are very safe because of the regulation of the reserve bank of India and the guarantee provided by the deposit insurance corporation, which guarantees deposits up to Rs. 1,00,000 per deposit of a bank. There is a ceiling on the interest rate payable on deposit in the savings account. The interest rate on fixed deposits varies with the term of the deposit. If the deposit period is less than 90 days, the interest is paid on maturity; other wise it is paid quarterly. Bank deposits enjoy exceptionally high liquidity. Loan can be raised again bank deposits.

Fixed Deposit

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A fixed deposit is meant for those investors who want to deposit a lump sum of money for a fixed period; say for a minimum period of 15 days to five years and above, thereby earning a higher rate of interest in return. Investor gets a lump sum (principal + interest) at the maturity of the deposit. Bank fixed deposits are one of the most common savings scheme open to an average investor. Fixed deposits also give a higher rate of interest than a savings bank account. The facilities vary from bank to bank. Some of the facilities offered by banks are overdraft (loan) facility on the amount deposited, premature withdrawal before maturity period (which involves a loss of interest) etc. Bank deposits are fairly safer because banks are subject to control of the Reserve Bank of India. Features Bank deposits are fairly safe because banks are subject to control of the Reserve Bank of India (RBI) with regard to several policy and operational parameters. The banks are free to offer varying interests in fixed deposits of different maturities. Interest is compounded once a quarter, leading to a somewhat higher effective rate. The minimum deposit amount varies with each bank. It can range from as low as Rs. 100 to an unlimited amount with some banks. Deposits can be made in multiples of Rs. 100/-. Before opening a FD account, try to check the rates of interest for different banks for different periods. It is advisable to keep the amount in five or ten small deposits instead of making one big deposit. In case of any premature withdrawal of partial amount, then only one or two deposit need be prematurely encashed. The loss sustained in interest will, thus, be less than if one big deposit were to be encashed. Check deposit receipts carefully to see that all particulars have been properly and accurately filled in. The thing to consider before investing in an FD is the rate of interest and the inflation rate. A high inflation rate can simply chip away your real returns. 24

Returns The rate of interest for Bank Fixed Deposits varies between 4 and 11 per cent, depending on the maturity period (duration) of the FD and the amount invested. Interest rate also varies between each bank. A Bank FD does not provide regular interest income, but a lump-sum amount on its maturity. Some banks have facility to pay interest every quarter or every month, but the interest paid may be at a discounted rate in case of monthly interest. The Interest payable on Fixed Deposit can also be transferred to Savings Bank or Current Account of the customer. The deposit period can vary from 15, 30 or 45 days to 3, 6 months, 1 year, and 1.5 years to 10 years. Duration Interest rate (%) per annum 15-30 days 4 -5 % 30-45 days 4.25-5 % 46-90 days 4.75--5.5 % 91-180 days 5.5-6.5 % 181-365 days 5.75-6.5 % 1-2 years 6-8 % 2-3 years 6.25-8 % 3-5 years 6.75-8 Advantages Bank deposits are the safest investment after Post office savings because all bank deposits are insured under the Deposit Insurance & Credit Guarantee Scheme of India. It is possible to get a loans up to7590% of the deposit amount from banks against fixed deposit receipts. The interest charged will be 2% more than the rate of interest earned by the deposit. With effect from A.Y. 1998-99, investment on bank deposits, along with other specified incomes, is exempt from income tax up to a limit of Rs.12, 000/- under Section 80L. Also, from A.Y. 1993-94, bank

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deposits are totally exempt from wealth tax. The 1995 Finance Bill Proposals introduced tax deduction at source (TDS) on fixed deposits on interest incomes of Rs.5000/- and above per annum. (2) BULLION Bullion predominantly involves Precious objects. Precious objects are items that are generally small in size but highly valuable in monetary terms. The important precious objects are: Gold and silver Precious stones( Diamonds)

GOLD AND SILVER Gold and silver, the two most widely held precious metals, appeal to almost all kinds of investors for the following reasons. Historically, they have been good hedges against inflation. They are highly liquid with very low trading commissions. They are aesthetically attractive. They possess a high degree of 'moneyness. As against these advantages, investment in gold and silver has the following disadvantages. They do not provide regular current income. There is no tax advantage associated with them. There may be a possibility of being cheated. Due to the softening of their prices, gold and silver have not kept up with inflation in recent times. PRECIOUS STONES (DIOMOUNDS) Diamonds, rubies, emeralds, sapphires, and pearls have appealed to investors since times immemorial because of their aesthetic appeal and rarity. 26

Diamonds, in particular, have attracted interest because of their high per carat value.

The quality of a diamond is basically judged in terms of the 4C's, viz. carat, colour, cut, and clarity. While precious stones may have appeal for the affluent investors

and those who have skill in buying them, they are not suitable for the bulk of the investors for the following reasons: Precious stones can be very illiquid. It may not be easy to sell them quickly with out giving major price concessions. The grading process by which the quality and value of precious stones is deter mined can be quite subjective. For investment purposes, larger precious stones are suitable. Most investment grade precious stories, diamonds in particular, require huge investments. Precious stones do not earn a regular return during the period they are held. On the contrary, the investor has to incur the costs of insurance and storage

(3) EQUITY INVESTMENT Equity share is a share in the ownership of a companys assets and earnings. Companies usually issue equity when they require addition capital to fund their existing business or expand. At this point of time the company sells part of the ownership of the company to the public. Listed equities are generally highly liquid since they are traded in the stock exchange. An investor makes money from equity through dividends paid out by the company (from its profits) on a periodic basis as well as capital appreciation as reflected in the stock price, which fluctuates in the

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market. Hence investors returns are directly related to the performance of the companys business. Equity investment generally refers to the buying and holding of shares of stock on a stock market by individuals and funds in anticipation of income from dividends and capital gain as the value of the stock rises. It also sometimes refers to the acquisition of equity (ownership) participation in a private (unlisted) company or a startup (a company being created or newly created). When the investment is in infant companies, it is referred to as venture capital investing and is generally understood to be higher risk than investment in listed goingconcern situations. Current status of equity in India Private equity and venture capital investments in India surged more than threefold to a record $7.46 billion in 2006, compared to $2.3 billion in 2005, according to Venture Intelligence data, reports Dow Jones. Excluding investments in real estate sector, private equity funds invested nearly $2.6 billion in 67 deals in Indian during the last quarter of 2006 alone. Other Highlights from Venture Intelligence data: * 299 total deals in 2006, with 26 worth more than $50 million compared with 9 such deals a year earlier. * The information technology and IT-enabled services segment attracted the highest amount of investment with $1.47 billion spread over 87 deals in 2006. * The manufacturing industry drew $962 million of investments in 55 deals. * Investments in startup companies accounted for 20% of total deals in 2006 while investments in publicly traded companies made up 22%

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There has been an explosion in private equity investment in India with equity fund investment more than trebling in the last 12 months. Rohit Chawdhry investigates. The Indian economy has grown at an average of 8.5 percent over the last four years. This represents the highest four-year average growth in India's economic history. Even more critically, this growth has been led by the rise in investment rates (investment to GDP ratio). While data for Indian investment rates isn't available beyond 2005, related indicators on non-farm credit and corporate capital expenditure point to exceptionally high growth in investments. While non-farm credit has increased by 30 percent over the last two years, corporate capital expenditure has tripled. Indeed, various econometric estimates suggest that the investment rate for 2006 is likely to be in the range of 38-40 percent or closer to Chinese levels. Behind this sudden acceleration of growth, there has been a spurt in M&A deal flow and also investments coming in from the private equity space. Take for instance M&A activity in India. In 2005, Indian firms were involved in 467 deals worth $18bn in total. But in 2006, the number of deals soared to 740, with a total value of $26bn. In total, overseas deals were worth $16bn in 2006 and yet as recently as 2002, acquisitions by Indian groups in foreign countries were worth just $200m, according to Grant Thornton. A similar growth pattern is evident in the private equity space as well. Chart1 documents the value and number of deals in Indian private equity space. Private equity investment in India shot up by over 230 per cent in 2006, thanks to the growing interest of equity funds in domestic companies and high returns from the stock markets there. Private equity fund investment in 2006 was $7.46 billion, up from $2.26 billion a year earlier, according to industry tracking firm Venture Intelligence. Average deals size increased considerably from US$ 8 million in 2002 to US$24 million in 2006.

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Sectorally, Indian private equity deals were led by the technology sector with 87 deals for $1.47 billion in 2006, up from 46 deals for $434 million in 2005. Other industries that attracted private-equity attention were manufacturing (19% of deal flow), health care (8%), banking and financial services (10%). Mega-deals like Idea Cellular's (Telecom service provider) pre-IPO placement ($960 million) and the Kohlberg Kravis Roberts buyout of the Indian software unit of Flextronics International ($725 million) significantly bumped up the total for 2006, which doesn't include real estate deals. Of the total private equity space, share of venture capital is on the rise. Table 1 given below provides a break-up of the total value of investments into early-stage investments (primarily by VCs) and latestage investments and PIPEs (primarily by PEs). Even within early-stage investments, seed investments declined the most during 2000-2003 and have essentially remained negligible during 2004-2006. While a recent Ernst and Young Study suggests that Early & Mid Stage VCs are to be watched for future activity, it is the late stage and PIPEs which still constitute the bulk of the deal flow. The same study concurs that the Indian early-stage investment is in a comeback mode, with the formation of new India-dedicated venture capital funds and an increasing focus among foreign venture capitalists on defining their India strategies. A new emphasis on IP driven products among Indian entrepreneurs and investors, along with announcements by Intel, Cisco, and Microsoft of significant development plans in India, suggest that the country is poised for a new wave of innovation. The trend for the venture capital industry is particularly striking in terms of regional flows. According to the Ernst and Young Study, the anticipated shakeout in the venture capital industry through a healthy consolidation in the number of funds is underway. Between 2000 and 2006, the overall number of firms making investments in US companies declined by 49%. During the same period, the number of firms investing in European companies dropped by 52%, while the count of active 30

investors in Israeli companies fell by 57%. Venture capital investments worldwide reached the level of US$31.3 billion. The United States, Canada, Europe, and Israel represent 93% of capital invested, while China and India account for the remainder. The study further states that 2005 was a milestone year for venture capital in China: Chinese venture-backed companies launched a second wave of successful IPOs on the NASDAQ; China-dedicated funds raised US$4 billion in committed capital; foreign venture capitalists advanced the deployment of various operating models in the country; and the government revised regulations that had temporarily restricted the ability of foreign venture capital investors to exit investments in Chinese companies, clearing the way for continued foreign investment. While the funds are focusing increasingly on India and China, raising country specific funds for the two is relatively difficult. It is challenging to convince investors while raising funds for an India-centric fund. It takes anywhere between 9 to 18 months to raise a $1 billion fund, the same time it would take for a global fund to raise about $5-6 billion. While investments for local PE funds vary from $25 million to $100 million, the foreign funds consider deals in the range of $80-200 million. In fact, to get a share of the growing sub-$75 million investment range, New Bridge, the Indian investment arm of Texas Pacific Group, recently created TPG Ventures in India for investments with ticket size of $70 million or less. Even the scale of buyouts differs by a wide margin. While buyout specialists like Blackstone and Carlyle do deals in the range of $250-300 million, domestic PE players have done buyouts for $30-40 million. It is apparent from the broader trends that the private equity space in India is only just warming up. Considering that the country received almost no Private Equity or Venture Capital funding a decade ago, the structural change has occurred ( in year 2003) not only in terms

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of growth but also in terms of funding received. The instruments to fund India's economic growth are several, from equity offerings to FCCBs; Private Equity is yet another route to fund and participate in this growth and it will likely take several years before this trend may peak out. This is just the start. (4) GOVERNMENT SECURITIES Debt securities issued by the central government, state

government, and quasi-government agencies are referred to as government securities or gilt-edged securities. Government securities have maturities ranging from 3-20 years and carry interest rates that usually vary between 8 and 10 percent. Even though these securities carry some tax advantages, they have traditionally not appealed to individual investors because of low rates of interest and long maturities and somewhat illiquid retail markets. Banks, financial institutions, insurance companies, and provident funds mainly because of certain statutory compulsions typically hold them. As Government guaranteed security is a claim on the government, it is secured financial instrument, which guarantees the income and the capital. The rate of interest on these securities is relatively lower because of their high liquidity and safety. (5) MUTUAL FUNDS A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these

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investments and the capital appreciations realized are shared by its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost. The flow chart below describes broadly the working of a mutual fund:

Different investment avenues are available to investors. Mutual funds also offer good investment opportunities to the investors. Like all investments, they also carry certain risks. The investors should compare the risks and expected yields after adjustment of tax on various instruments while taking investment decisions. The investors may seek advice from experts and consultants including agents and distributors of mutual funds schemes while making investment decisions. With an objective to make the investors aware of functioning of mutual funds, an attempt has been made to provide information in question-answer format which may help the investors in taking investment decisions The concept of investment in shares and securities of companies by individual investors has been prevalent in India since long. With the boom in the share market, the Mutual Funds play a big helping role to the companies as they pool the funds (savings) and resources of various individual investors, especially small investors and invest them in shares and securities of the companies. These funds act as an financial intermediary link between the investors and the companies. The investors generally find it difficult to directly invest in big companies because of their high share value. Also, due to lack of proper market

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knowledge, expertise and sufficiency of resources, these investors were always subjected to market risks. But these mutual funds are the organized bodies which function on behalf of such investors. They mobilises the savings and resources of so many investors under one roof by combining the skills of professionals. Due to the existence of mutual funds, the investors need not approach each company for investing their funds. They have to invest only a certain proportion of their funds. They are provided with various benefits as well like good return on their investments, tax benefits and so on. On the other hand, the companies also benefits as they are able to raise much greater capital at a much lower cost. They need not scrutinise the entire market to search for prospective investors and incur heavy expenditure in making advertisements for inviting them.Their work is reduced by the help of mutual funds. Thus,mutual funds acts an important financial support for the companies.It only appreciates their capital value but also enhances their goodwill and profitability condition. The first mutual fund to be established in India was the Unit Trust of India (UTI). It is the premier fund set up to mobilise the savings of the people and channelise them into productive corporate investments. For small investors, the UTI offers advantages of reduced risks, steady income and liquidity as well as knowledge of expert management because their funds are invested in a balanced and well distributed portfolio. Moreover, with the reforms in the country, many public and private sectors' insurance companies and banks have also set up their mutual funds to protect the interests of investors by providing them various mutual fund schemes and more benefits. For instance :- Fund, Reliance, Can bank Mutual Fund , Franklin templeton Mutual Fund ,etc. The schemes generally offered by various mutual funds may be classified as follows:BY MATURITY PERIOD

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Open-ended Fund or Scheme: - Mutual funds that can be entered into and exited at any point of time are known as open-ended mutual funds. Such funds or schemes do not have a fixed maturity period. It is available for subscription and repurchase on a continuous basis. Under this scheme, an investor can conveniently buy and sell units at net asset value (NAV) related prices. The key feature of such schemes is liquidity. Close-ended Fund or Scheme: - The close-ended funds are those where one has to stay invested for a specific period of time called lock-in period. Such fund or scheme has a stipulated maturity period, that is, 5 to 7 years. The fund is open for subscription only during a specified period at the time of launch of the scheme. Investors can invest in the scheme at the time of the initial public issue and thereafter they can buy or sell the units of the scheme on the stock exchanges where the units are listed. In order to provide an exit route to the investors, some closeended funds give an option of selling back the units to the mutual fund through periodic repurchase at NAV related prices. Interval Funds:-Interval funds combine the features of open-ended and close-ended schemes. They are open for sale or redemption during predetermined intervals at NAV related prices.

BY INVESTMENT OBJECTIVE 1. Growth Funds The aim of growth funds is to provide capital appreciation over the medium to long term. Such schemes normally invest a majority of their corpus in equities. It has been proved that returns from stocks, have outperformed most other kind of investments held over the long term. Growth schemes are ideal for investors having a long term outlook seeking growth over a period of time. 2. Income Funds

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The aim of income funds is to provide regular and steady income to investors. Such schemes generally invest in fixed income securities such as bonds, corporate debentures and Government securities. Income Funds are ideal for capital stability and regular income. 3. Balanced Funds The aim of balanced funds is to provide both growth and regular income. Such schemes periodically distribute a part of their earning and invest both in equities and fixed income securities in the proportion indicated in their offer documents. In a rising stock market, the NAV of these schemes may not normally keep pace, or fall equally when the market falls. These are ideal for investors looking for a combination of income and moderate growth. 4. Money Market Funds The aim of money market funds is to provide easy liquidity, preservation of capital and moderate income. These schemes generally invest in safer short-term instruments such as treasury bills, certificates of deposit, commercial paper and inter-bank call money. Returns on these schemes may fluctuate depending upon the interest rates prevailing in the market. These are ideal for Corporate and individual investors as a means to park their surplus funds for short periods. 5. Gilt Fund These funds invest exclusively in government securities. Government securities have no default risk. NAVs of these schemes also fluctuate due to change in interest rates and other economic factors as is the case with income or debt oriented schemes. 6. Index Funds Index Funds replicate the portfolio of a particular index such as the BSE Sensitive index, S&P NSE 50 index (Nifty), etc these schemes invest in the securities in the same weightage comprising of an index. NAVs of

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such schemes would rise or fall in accordance with the rise or fall in the index, though not exactly by the same percentage due to some factors known as "tracking error" in technical terms. Necessary disclosures in this regard are made in the offer document of the mutual fund scheme. OTHER SCHEMES 1. Tax Saving Schemes These schemes offer tax rebates to the investors under specific provisions of the Indian Income Tax laws as the Government offers tax incentives for investment in specified avenues. Investments made in Equity Linked Savings Schemes (ELSS) and Pension Schemes are allowed as deduction u/s 88 of the Income Tax Act, 1961. The Act also provides opportunities to investors to save capital gains u/s 54EA and 54EB by investing in Mutual Funds. 2. Special Schemes:Industry Specific Schemes Industry Specific Schemes invest only in the industries specified in the offer document. The investment of these funds is limited to specific industries like InfoTech, FMCG, and Pharmaceuticals etc.

Index Schemes Index Funds attempt to replicate the performance of a particular index such as the BSE Sensex or the NSE 50. Sector Specific Schemes These are the funds/schemes which invest in the securities of only those sectors or industries as specified in the offer documents. E.g. Pharmaceuticals, Software, Fast Moving Consumer Goods (FMCG), Petroleum stocks, etc. The returns in these funds are dependent on the performance of the respective sectors/industries. While these funds may 37

give higher returns, they are more risky compared to diversified funds. Investors need to keep a watch on the performance of those sectors/industries and must exit at an appropriate time. They may also seek advice of an expert. Advantages of Mutual Funds There are numerous benefits of investing in mutual funds and one of the key reasons for its phenomenal success in the developed markets like US and UK is the range of benefits they offer, which are unmatched by most other investment avenues. We have explained the key benefits in this section. The benefits have been broadly split into universal benefits, applicable to all schemes, and benefits applicable specifically to open-ended schemes. Universal Benefits Affordability A mutual fund invests in a portfolio of assets, i.e. bonds, shares, etc. depending upon the investment objective of the scheme. An investor can buy in to a portfolio of equities, which would otherwise be extremely expensive. Each unit holder thus gets an exposure to such portfolios with an investment as modest as Rs.500/-. This amount today would get you less than quarter of an Infosys share! Thus it would be affordable for an investor to build a portfolio of investments through a mutual fund rather than investing directly in the stock market. Diversification The nuclear weapon in your arsenal for your fight against Risk. It simply means that you must spread your investment across different securities (stocks, bonds, money market instruments, real estate, fixed deposits etc.) and different sectors (auto, textile, information technology etc.). This kind of a diversification may add to the stability of your returns, for example during one period of time equities might underperform but bonds and money market instruments might do well enough to offset the 38

effect of a slump in the equity markets. Similarly the information technology sector might be faring poorly but the auto and textile sectors might do well and may protect your principal investment as well as help you meet your return objectives. Variety Mutual funds offer a tremendous variety of schemes. This variety is beneficial in two ways: first, it offers different types of schemes to investors with different needs and risk appetites; secondly, it offers an opportunity to an investor to invest sums across a variety of schemes, both debt and equity. For example, an investor can invest his money in a Growth Fund (equity scheme) and Income Fund (debt scheme) depending on his risk appetite and thus create a balanced portfolio easily or simply just buy a Balanced Scheme. Professional Management Qualified investment professionals who seek to maximise returns and minimise risk monitor investor's money. When you buy in to a mutual fund, you are handing your money to an investment professional who has experience in making investment decisions. It is the Fund Manager's job to (a) find the best securities for the fund, given the fund's stated investment objectives; and (b) keep track of investments and changes in market conditions and adjust the mix of the portfolio, as and when required. Tax Benefits Any income distributed after March 31, 2002 will be subject to tax in the assessment of all Unit holders. However, as a measure of concession to Unit holders of open-ended equity-oriented funds, income distributions for the year ending March 31, 2003, will be taxed at a concessional rate of 10.5%. In case of Individuals and Hindu Undivided Families a deduction up to Rs. 9,000 from the Total Income will be admissible in respect of income from 39

investments specified in Section 80L, including income from Units of the Mutual Fund. Units of the schemes are not subject to Wealth-Tax and Gift-Tax. Regulations Securities Exchange Board of India (SEBI), the mutual funds regulator has clearly defined rules, which govern mutual funds. These rules relate to the formation, administration and management of mutual funds and also prescribe disclosure and accounting requirements. Such a high level of regulation seeks to protect the interest of investors. Benefits of Open-ended Schemes Liquidity In open-ended mutual funds, you can redeem all or part of your units any time you wish. Some schemes do have a lock-in period where an investor cannot return the units until the completion of such a lock-in period. Convenience An investor can purchase or sell fund units directly from a fund, through a broker or a financial planner. The investor may opt for a Systematic Investment Plan (SIP) or a Systematic Withdrawal Advantage Plan (SWAP). In addition to this an investor receives account statements and portfolios of the schemes. Flexibility Mutual Funds offering multiple schemes allow investors to switch easily between various schemes. This flexibility gives the investor a convenient way to change the mix of his portfolio over time. Transparency Open-ended mutual funds disclose their Net Asset Value (NAV) daily and the entire portfolio monthly. This level of transparency, where the investor himself sees the underlying assets bought with his money, is

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unmatched by any other financial instrument. Thus the investor is in the know of the quality of the portfolio and can invest further or redeem depending on the kind of the portfolio that has been constructed by the investment manager. (5) REAL ESTATE Real estate means managing the property right. Real estate investments require high initial investment. Real estate offers an attractive way to diversify an investment portfolio. In addition, it offers favorable risk-return trade-off due to the uniqueness of properties & the localized and relatively inefficient market in which they are traded. Real estate differs from security investments in two days.

(1) It involves ownership of a tangible asset, real property rather than financial claims. (2) Managerial decisions about real estate greatly affect the returns earned from investment. The most important asset for individual investors is generally a residential house. In addition to this, the more affluent investors are likely to be interested in other types of real estate, like commercial property, agricultural land, semi-urban land, and time-share in a holiday resort. RESIDENTIAL HOUSE: A residential house represents an attractive investment proposition for the following reasons. The total return (rental savings plus capital appreciation) from a

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residential house is satisfactory. Loans are available from various quarters for buying/constructing residential property. For wealth tax purposes, the value of a residential property is reckoned at its historical cost and not at its present market price. Interest on loans taken for buying/constructing a residential house is tax deductible within certain limits. Ownership satisfaction. Due to these advantages, a residential property (independent house or flat) represents the most important part of the portfolio for the bulk of investors. Further, they may be interested in buying some semi-urban land and/or a share in some holiday home project because they involve relatively modest outlays. COMMERCIAL PROPERTY The more affluent investors may be interested in investing in of a residential property provides psychological

commercial property. This may take the form of constructing a commercial complex or

buying office or shop space in a commercial complex. The appeal of such an investment lies mainly in the form of

regular rental income, which can be revised upward periodically. Further, the commercial property may enjoy some capital

appreciation over a period of time. The disadvantage of such an investment is that it requires a large

outlay and may require time and effort in managing AGRICULTURAL LAND

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The appreciation in the value of agricultural land makes it an attractive investment proposition. Its appeal is further enhanced by the following factors. Agricultural income is not taxable. However, it is included in the total income for determining the tax rate applicable to the nonagricultural income of the assessed. Agricultural land is exempt from wealth tax. Loans are available for agricultural operations at a confessional rate. There is a charm in living in a farmhouse. Capital gains arising from the sale of agricultural land may be taxexempt in some cases (as certain types of agricultural land are not regarded as capital assets) or may be taxed at a confessional rate. As against the above attractions, investment in agricultural land has some problems associated with it. The principal ones are. In many states, land ceiling laws are quite restrictive. Moreover, in some states the law precludes non-agriculturists from acquiring agricultural land. Many states have laws that confer ownership to the cultivating tenant. Farmhouses, in general, are not very safe. Agricultural activity is often uneconomical or unprofitable,

particularly if it is done on a part-time basis. SUBURBAN LAND Land within city limits is often very costly. However, you can buy residential land (converted land) in private layouts in suburban areas at affordable prices. Such an investment offers scope for capital appreciation. Further, it gives you an opportunity to move to a quieter 43

location that may not be very far from the city as the city expands. If you are considering buying suburban land, make sure that the developer satisfies all zonal requirements and has a clear title. Many people have been cheated by fly-by night land developers. Why Invest in India? The Indian economy and the real estate sector in particular are high on its ride to prosperity. As India's economic growth curve raises, real estate India has emerged as one of the most appealing investment areas for domestic as well as foreign investors. Indian real estate has huge potential demand in almost every sector, but especially commercial, residential, retail, industrial, hospitality, healthcare etc. But maximum growth is attributed to its growth from the booming IT sector, since an estimated 70 per cent of the new construction is for the IT sector. Investment scenario has certainly undergone a paradigm shift in India. Gone are the days when potential investors used to sought after investment options like equity bonds and park money in shares where your return ranges between 5.55 to 6%. Data showcased by property surveys show that returns from rental incomes on investment in commercial property in Indian metros, is around 10.5%, the highest in the world.

Key Facts Selling and buying Indian property is now considered as the most profitable and attractive business opportunity in the present real estate scenario in India. New demands have added to strength of real estate markets across the commercial, residential and retail sectors in India. Not surprisingly, demand for Indian property has been increasing steadily for the past few years and it has exceeded supply. There has also been an upward swing on the real estate price values in 44

the recent years. Due to the huge demand and rising prices, investment and speculative interest in real estate is growing while excess money supply, stock market gains and policy changes are adding to the trend in favor of the real estate sector. In the last one year, the capital values of the commercial office spaces has increased by up to 40% owing to the increase in the demand from IT / ITES and BPO sector across major metros in India. India has a distinct regulatory and financing management in place. Real estate boom in India is supported by its own flourishing economy on a sustainable basis. Here, growth of the property market is not a result of renovation and overhauling; but rapid development that witness for India riding the high growth waves. Factors Favoring Investments Tremendous growth has been taking place in both residential as well as commercial segments that is attracting huge investments phenomenal price escalation (more than 100% in several places) in last couple of years. Lower interest rates, easy availability of housing finance, burgeoning income and better job prospects, increase of nuclear families have given a boost to the demand for residential properties in India. The net yields (after accounting for all outgoings) on residential property are currently at 4-6% p.a. However, these investments have benefited from the improving residential capital values. As such, investors can count on potential capital gains to improve their overall returns. Capital values in the residential sector have risen by about 25-40% p.a in the last 2 years. The retail market in India has been growing due to increasing demand from retailers, higher disposable incomes and opening up of FDI in Retail. The capital appreciation in this sector is close to 20-35% p.a. However, the risks associated with this sector are higher as retailers are prone to cyclical changes typical of a business cycle. Changing 45

consumer behavior combined with increasing disposable incomes will ensure further growth of the retail sector in India. In the present day scenario, if there is any powerful investment tool that brings burgeoning financial returns, it is INDIAN REAL ESTATE!!! Investors should consider the parameters minutely and meticulously to find out why investing in Indian real estate now is the best viable option. Real Estate in India With property boom spreading in all directions, real estate in India is touching new heights. However, the growth also depends on the policies adopted by the government to facilitate investments mainly in the economic and industrial sector. The new stand adopted by Indian government regarding foreign direct investment (FDI) policies has encouraged an increasing number of countries to invest in Indian Properties. India has displaced US as the second-most favored destination for FDI in the world. As the investment scenario in India changes, India which has attracted more than three times foreign investment at US$ 7.96 billion during the first half of 2005-06 fiscal, as against US$ 2.38 billion during the corresponding period of 2004-05, making India amongst the "dominant host countries" for FDI in Asia and the Pacific (APAC). The positive outlook of Indian government is the key factor behind the sudden rise of the Indian Real Estate sector - the second largest employer after agriculture in India. This budding sector is today witnessing development in all area such as - residential, retail and commercial in metros of India such as Mumbai, Delhi &NCR, Kolkata and Chennai. Easier access to bank loans and higher earnings are some of the pivotal reasons behind the sudden jump in Indian real estate. Why Invest In Indian Real Estate? Flying high on the wings of booming real estate, property in India has become a dream for every potential investor looking forward to dig

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profits. All are eyeing Indian property market for a wide variety of reasons: It's ever growing economy which is on a continuous rise with 8.1 percent increase witnessed in the last financial year. The boom in economy increases purchasing power of its people and creates demand for real estate sector. India is going to produce an estimated 2 million new graduates from various Indian universities during this year, creating demand for 100 million square feet of office and industrial space. Presence of a large number of Fortune 500 and other reputed companies will attract more companies to initiate their operational bases in India thus creating more demand for corporate space. Real estate investments in India yield huge dividends. 70 percent of foreign investors in India are making profits and another 12 percent are breaking even. Apart from IT, ITES and Business Process Outsourcing (BPO) India has shown its expertise in sectors like auto-components, chemicals, apparels, pharmaceuticals and jewellery where it can match the best in the world. These positive attributes of India is definitely going to attract more foreign investors in the near future. The relaxed FDI rules implemented by India last year has invited more foreign investors and real estate in India is seemingly the most lucrative ground at present. The revised investor friendly policies allowed foreigners to own property, and dropped the minimum size for housing estates built with foreign capital to 25 acres (10 hectares) from 100 acres (40 hectares). With this sudden change in investment policies, the overseas firms can now put up commercial buildings as long as the projects surpass 50,000 square meters (538,200 square feet) of floor space.

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Indian real estate sector is on boom and this is the right time to invest in property in India to reap the highest rewards. (7) INSURANCE In simple terms, insurance allows someone who suffers a loss or accident to be compensated for the effects of their misfortune. It lets you protect yourself against everyday risks to your health, home and financial situation. There are many different types of insurance: You are unlikely to need every single one of these, so read around, choose carefully and remember to read the small print. * Travel: Holidays can be dangerous occasions - especially abroad. If someone falls ill it is much more difficult than it would be at home to cope with the situation. Medical treatment is expensive. * Household contents and building insurance: Contents insurance covers the contents of a home such as furniture, carpets, clothes, television, refrigerators, jewellery and so on. In other words, what you would take with you if you moved. Buildings insurance protects against damage to the actual structure of the home and to its fixtures and fittings. Contents and buildings policies can be bought separately or together in one package. * Car insurance: Most people know something about motor insurance. This is because any vehicle driven on public roads must have a certain level of insurance. The Road Traffic Act ensures that drivers must meet liabilities they incur should they injure other people or cause damage in an accident. * Life insurance: A means of providing for your dependents should you die early, but also a way to save cash through endowment policies or similar.

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* Private medical insurance: This covers the costs of private medical treatment for curable short-term illness or injury. It means that should you become ill you could be treated immediately privately rather than being put on an NHS waiting list. * Critical illness insurance: This allows you to insure your income/ health were you to become too ill to work later on in life, and protects any dependents/ loved ones from the financial consequences of such unexpected events. * Accident, sickness and unemployment cover: According to Moneyextra: "In 1999, 30,000 properties were re-possessed by mortgage lenders... Many lost their homes because they could no longer afford to pay their mortgage payments through an accident, sickness or unemployment." If you are planning on buying a house it may be sensible to think about getting some mortgage payment protection insurance. *Pet insurance: This basically helps you foot the vet's bills if your pet gets poorly. By paying regularly into an insurance policy it means you have paid for the bill gradually rather than having to find the money for a steep bill when you can least afford it. More LIFE INSURANCE The basic customer needs met by life insurance policies are protection and savings. Policies that provide protection benefits are designed to protect the policyholder (or his dependents) from the financial consequence of unwelcome events such as death or long-term sickness/ disability. Policies that are designed as savings contracts allow the policyholder to build up funds to meet specific investment objectives such as income in retirement or repayment of a loan. In practice, many policies provide a mixture of savings and protection benefits.

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Types of life insurance policy The common types of life insurance policies are: (1) Money Back Plan (2) Whole Life Assurance (3) Unit Linked Plan (4) Term Assurance (5) Immediate Annuity (6) Deferred Annuity (7) Riders

(8) Bonds and debentures

Bonds or debentures represent long-term debt instruments. The issuer of a bond promises to pay a stipulated stream of cash flows. This generally comprises periodic interest payments over the life of the instrument and principal payment at the time of redemption(s). A bond is a legal document containing an acknowledgement of indebtedness. It contains a promise to pay a stated rate of interest for a defined period and then to repay the principal at a given date of maturity. Thus it denotes borrowing of a company and represents its loan capital. The bonds issued by the Government or the public sector companies in India are generally secured. While the private companies issue both secured and unsecured bonds. Bond-holders are the creditors of a company. If they do not receive interests on their bond, they have the right to foreclose, sell the company's assets and recover the principal amount. They play an important role in company's investment portfolio. They are required to provide continuity of income under all reasonably conceivable economic conditions for sustenance of a business. The salient features of bonds are as follows: A bond is issued at a face value which is called 'par value. The par

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value reflects the initial capital subscribed by a company. Returns on bonds are in the form of interests. Interest paid on bonds is fixed and regular. It is also called the 'coupon rate' and is paid on the par value of the bond. Interests are paid to the bond holders irrespective of the profits of the company. Such an interest rate is tax deductible. A bond may be traded in a stock exchange. The price at which it is currently sold or bought is called 'the market value' of the bond. Such a value may be different from par value or redemption value. A bond is issued for a specified period of time. It is repaid on maturity. The value which a bondholder will get on maturity is called redemption value. At the time of winding up, bond holders/debenture holders must be repaid before the shareholders of the company. Bonds do not carry any voting rights and thus its holders do not participate in the management of the company. Bonds are safer investment as compared to shares. The

underwriting commission, brokerage, etc. are also comparatively lower in the case of bonds. Most modern corporate bonds are callable at the discretion of the issuer. This gives the issuing company the right to recall a bond before it reaches maturity. It may be to the benefit of the company to recall the bonds, retire them and issue new bonds at a lower rate. The bonds issued by a band may be of the following types:Unsecured and Secured Bonds: - The bonds which do not create a change in the assets of the company are termed as unsecured or naked bonds. Such bonds are not secured because no property is pledged or

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mortgage on their issue and hence, the bondholders do not have any cover to guarantee the safety of their investment. On the other hand, the secured or mortgaged bonds are those which are issued by pledging some property against them. They create a fixed or floating charge on the company's assets. Hence, if the company makes a default in payment, the bondholders can recover their dues from the mortgaged property. Redeemable and Irredeemable Bonds: - A redeemable bond is issued for a certain period of time. The bondholder will be repaid the amount on the expiry of such period or at any time prior to their maturity at the option of the company. Whereas, bond without any aforesaid redemption period is termed as the irredeemable or perpetual bond. These are repayable either at the time of winding up of the company or on happening of certain specified uncertain or contingent events. Convertible and Non-convertible Bonds: - In case of convertible bonds, its holders are given the option to convert their bonds into equity shares after a specific period and on certain conditions. This serves as an incentive to the bondholders who can in course of time participate in the profits and management of the company. Whereas, non-convertible bonds do not carry any right to be converted into equity shares. Bearer and Registered Bonds: - Bearer bonds can be transferred by mere delivery as no record of such bonds is maintained. Such bonds require no legal formalities for their transfer and no formal notice is given to the company. But bond coupons are attached with them. The bondholders can claim interest by filling and sending the coupons to the company. Whereas, the registered bonds are recorded in the Register of Debenture holders. Interest is payable only to the registered holder. Such bonds can be transferred only by a transfer deed duly signed by both the buyer and the seller PRIVATE SECTOR DEBENTURES: 52

Akin to promissory notes, debentures are instruments meant for raising long-term debt. The obligation of a company towards its debenture holders is similar to that of a borrower who promises to pay interest and principal at specified times. The important features of debentures are as follows: When a debenture issue is sold to the investing public, a trustee is appointed through a deed. The trustee is usually a bank or a financial institution. Entrusted with the role of protecting the interest of debenture holders, the trustee is responsible for ensuring that the borrowing firm fulfils its contractual obligations. Typically, debentures are secured by a charge on the immovable properties, both present and future, of the company by way of an equitable mortgage. All debentures issued with a maturity period of more than 18 months must be necessarily credit-rated. Further, for such debenture issues, a Debenture Redemption Reserve (DRR) has to be created. The company should create a DRR equivalent to at least 50 percent of the amount of issue before redemption commences. Previously the coupon rate (or interest rate) on debentures was subject to a ceiling fixed by the Ministry of Finance. No such ceiling applies now. A company is free to choose the coupon rate. Further, the rate may be fixed or floating. In the latter case it is periodically determined in relation to some benchmark rate. Earlier the average redemption period for non-convertible

debentures was about seven years. Now there is no such restriction. A company has the freedom to choose the redemption (maturity) period. Debentures sometimes carry a 'call' feature, which provides the issuing company with an option to redeem the debentures at a certain price before the maturity date. Sometimes, the debentures

53

may have a 'put' feature which gives the holder the right to seek redemption at specified times at predetermined prices. Debentures may have a convertible clause which gives the debenture holder the option to convert the debentures into equity shares on certain terms and conditions that are pre-specified

54

RESEARCH METHODOLOGY
RESEARCH STATEMENT

A study on identification of people awareness, investment and preference level and their investment criteria regarding various investment avenues namely bank deposits, bullion, equity, Government securities, mutual funds, real estate, insurance and bonds and debentures

RESEARCH OBJECTIVES To know the people preference towards different investment avenues. To know the awareness and investment level of Bank Deposits, Bullion, Equity, Government securities, Mutual fund, Real estate Insurance and Bonds and Debentures. To know the purposes of investors for investing their funds namely in Bank Deposits, Bullion, Equity, Government securities, Mutual fund, Real estate Insurance and Bonds and Debentures. To know people preference between equity investment and other investment avenues. To identify the risk return expectancy of investors. To identify key investment criteria. Type of study Descriptive research study is used to know the awareness level, investment level and Preference level and the different investment parameter of people.

55

Sampling frame People of Bardoli town and surrounding area

Sampling design

Looking into the time and money constraints non probability sampling method is used. In which convenience sampling method has been used. Sampling area

The location for the research will be Bardoli town and surrounding area Sample size

100 respondents will be surveyed from the sampling area. Sampling unit

The sampling unit is consisting of the existing investors in town Bardoli and surrounding area. Research instrument

A disguise and structured questionnaire has been used with open ended and close ended questions. Data collection method Primary data. The primary data has been collected by conducting personnel interview of people. Secondary data. The secondary data has been collected by books and thorough internet.

56

 Data analysis tools SPSS Software is used for T-test and Chi-Square test, Microsoft office is used for data typing and formatting As it is descriptive research study, the data is of descriptive characteristic and hence percentage method and graphs for representing the nominal scale data are used. Appropriate statistical test is applied to colleted data for accepting or rejecting the null hypothesis. The SPSS software has been used for such statistical test

57

Q.1 From the listed below which, investment avenues are you aware? Awareness for bank deposits investment

Aware Not aware Total

Frequenc y 94 6 100

Percen t 94.0 6.0 100.0

Awareness for Bank deposits investment

100 80

Percent

60 40 20 0 Aware
6.00% 94.00%

Not aware

Awareness for Bank

Interpretation

Above data shows that 94% of respondents are aware regarding bank deposits investment where as only 6% are ignorant about it. Thus, it can 58

be said that there is high awareness prevailing in people regarding bank deposits investment. Awareness for Bullion investment

Frequenc y Valid Awar e Not awar e Total 64 36 100

Percen t 64.0 36.0 100.0

Awareness for Bullion investment

60

Percent

40
64.00%

20 0 Aware

36.00%

Not aware

Awareness for Bullion

Interpretation

Above data shows that 64% of respondents are aware regarding bullion investment where 36% respondents are still not aware, hence it can be said that majority of the people are aware regarding bullion investment. Awareness for Equity investment

Aware Not aware Total

Frequenc y 84 16 100

Percen t 84.0 16.0 100.0 59

Awareness for Equity investm ent

100 80

Percent

60 40 20
16.00% 84.00%

0 Aware Not aware

Aw areness for Equity

Interpretation Above data shows that 84% of people are aware regarding equity investment while 16% are not aware regarding it. Hence it indicates that high awareness is prevailing regarding equity investment in people. Awareness for Government securities investment

Awareness for G.secs.inveatment

Percent

Aware 60 Not aware 40 Total

20 0

Frequenc y 67 33
67.00%

Percen t 67.0 33.0 100.0

100

33.00%

Aware

Not aware

Awareness for G.secs.

Interpretation

Above data shows that 67% respondents are aware regarding G.secs investment where as 33% are ignorant about it, hence it can be said that majority of people are aware regarding G.secs investment. Awareness for Mutual fund investment

60

Awareness for Mutual fund investment

Percent

Aware Not aware Total

Frequenc y 91 9 100

Percen t 91.0 9.0 100.0

100 80 60 40 20 0 Aware
9.00% 91.00%

Not aware

Interpretation

Awareness for Mutual fun

Above data indicates that 91% respondents are aware regarding mutual fund investment while only 9% is ignorant about it, thus it can be said that there is high level of awareness prevailing in people regarding mutual fund investment. Awareness for Real estate investment

Awareness for Real estate investment

Percent

Aware 80 Not 60 aware Total 40

20

Frequenc y 79 21
79.00%

Percen t 79.0 21.0 100.0

100

21.00%

0 Aware Not aware

Awareness for Real estat

61

Awareness for Insurance investment

Awareness for Insurance investment

Percent

Aware 100 Not 80 aware 60 Total

40 20 0

Frequenc y 86 14 100
86.00%

Percen t 86.0 14.0 100.0

14.00%

Aware

Not aware

Awareness for Insurance

Interpretation Above data indicates that 86% respondents are aware regarding insurance investment while 14% are ignorant about it, hence it can be said that three is high level of awareness prevailing in people regarding insurance investment. Awareness for Bonds and debentures investment
Awareness for Bonds and debentures investment

Percent

Aware 60 Not aware 40 Total

20 0

Frequenc y 62 38
62.00%

Percen t 62.0 38.0 100.0

100
38.00%

Aware

Not aware

Awareness for Bonds and

Interpretation

Above data shows that 62% of respondents are aware regarding bonds and debenture investment while 38% respondents are not aware about it, thus it can be said that majority of people aware regarding bonds and debentures investment.

62

Q.2 From listed below in which investment avenue are you investing your funds? Bank deposits investment
Bank deposits investment

Percent

100 Invested 80 Not invested 60 Total 40 20 0

Frequenc y 89 11
89.00%

Percen t 89.0 11.0 100.0

100

11.00%

Invested

Not invested

Interpretation

Bank deposits investment

Above data indicates that 89% respondents have invested their funds in bank deposits while 11% respondents have not invested in it, hence it can be said that most of the people prefers to invest their funds in bank deposits. Bullion investment
Bullion investment

Frequenc y Investe d Not investe d Total 29 71 100

Percen t 29.0 71.0 100.0

Percent

80 60 40 20 0 Invested Not invested

71.00%

29.00%

Bullion investment

Interpretation Above data shows that only 29% respondents have their investment in bullion while 71% respondents have not invested in it so it is lucid from this data that most of the people avoid to invest in bullion.

63

Equity investment

Frequenc y Investe d Not investe d Total 54 46 100

Percen t 54.0 46.0 100.0

Equity investment

60 50

Percent

40 30 20 10 0 Invested Not invested

54.00%

46.00%

Equity investment

Interpretation

Above data indicates that 54% respondents have their investment in equity where as 46% respondents have not invested in it, thus it can be said that majority of people invest their fund in equity.

Government securities investment

64

G.secs. investment

Frequenc y Investe d Not investe d Total 29 71 100

Percen t 29.0 71.0 100.0

Percent
80 60 40 20 0 Invested Not invested

71.00%

29.00%

G.secs. investment

Interpretation Above data shows that 29% of respondent have their investment in government securities where as 71% respondents have not invested in it, hence it can be said that most of the people are not investing their fund in government securities. Mutual fund investment
Mutual fund investment

Frequenc y Investe d Not investe d Total 60 40 100

Percen t 60.0 40.0 100.0

Percent
60 50 40 30 20 10 0 Invested Not invested
60.00% 40.00%

Mutual fund investment

Interpretation Above data indicates that 60% respondents have their investment in mutual funds while 40% respondents havent invested in mutual funds, hence it can be said that majority of people are investing their fund in mutual fund. Real estate investment

65

Real estate investment

100

100.0

Percent

Invested Not invested Total

Frequenc y 60 40

Percen t 60.0 40.0

60 50 40 30 20 10 0 Invested Not invested

60.00% 40.00%

Real estate investment

Interpretation Above data shows that 60% of respondents have their investment in real estate where as 40% havent invested in real estate, hence it can be said that majority of the people have their investment in real estate. Insurance investment
Insurance investment

Frequenc y Investe d Not investe d Total 74 26 100

Percen t 74.0 26.0 100.0

Percent
80 60 40 20
26.00%

74.00%

0 Invested Not invested

Insurance investment

Interpretation Above data shows that 74% respondents have their investment in insurance while 26% have not invested their fund in insurance hence we can say that most of the people are investing their fund in insurance.

66

Bonds and debentures investment

Bonds and debentures investment

Percent

Invested Not invested Total

Frequenc y 35 65 100

Percen t 35.0 65.0 100.0

60 40
65.00%

20 0

35.00%

Invested

Not invested

Bonds and debentures

Interpretation Above data shows that 35% respondents have their investment in bonds and debentures where as 65% respondents havent their investment in it, thus it can be said that majority of people are investing their fund in bonds and debentures.

SUMMRISING CHART FOR COMPERISION

Awareness and investment level of investment avenues

100 percentage (%) 80 60 40 20 0

B. de po s

94 89 64

84 67 54 29 29

91 79 60 60

86 74 62 35 Awareness Investment

Bu llio n Eq ui t G .se y cu rit y M .fu nd R. es ta te In su ra nc e B an d D

its

Investm ent avenues

67

Interpretation From above graph we can see that high awareness is prevailing for bank deposits, mutual fund, insurance and equity while high investment is existing in bank deposits, insurance mutual fund and real estate.

Q.3 Which parameters do you consider when you invest your funds? 1) Capital appreciation as an investment parameter Statistics N Mean 100 3.83 Frequenc y Valid Very unimportant 1 Unimportant 7 Neutral 25 Important 42 Very important 25 Total 100

Percen t 1.0 7.0 25.0 42.0 25.0 100.0

68

Capital appriciation as an investment parameter

50 40

Percent

30 20 10 0
25.00% 42.00%
25.00%

1.00%
Very unimportant

7.00%
Unimportant Neutral Imporatant Very important

s Interpretation Above data shows that 42% respondents consider capital appreciation as an important investment parameter, 25% consider it very important parameter where as other 25% respondents are in neutral stage so on the basis of this data it can be said that most of the people consider capital appreciation as an important parameter for investment. The value of mean is 3.83 hence it can be said that most of the people consider capital appreciation a near about important parameter. 2) Marketability as an investment parameter Statistics N Mean 100 3.95 Frequenc y Valid Very unimportant 1 Unimportant 8 Neutral 16 Important 45 Very important 30 Percen t 1.0 8.0 16.0 45.0 30.0

69

Total

100

100.0

Marketability as an investment perameter.

50 40

Percent

30 20 10 0
45.00%
30.00%

16.00%

1.00%
Very unimportant

8.00%
Unimportant Neutral Imporatant Very important

Interpretation Above data shows that 45% respondents consider marketability as an important parameter for investment, 30%consider it very important where as 16% respondent are in neutral stage so on the basis of this data it can be said that most of the people consider marketability as an important investment parameter. The value of mean is 3.95 which is quit close to 4 for and hence it can be said that most of the people consider marketability as an important investment parameter. 3) Return as an investment parameter Statistics N Mean Valid Unimportant Neutral Important 100 4.45 Frequenc y 1 9 34 Percen t 1.0 9.0 34.0

70

Very important Total

56 100

56.0 100.0

Return as an investment parameter

60 50

Percent

40 30 20 10 0

56.00% 34.00%

1.00%

9.00%
Neutral Imporatant Very important

Interpretation Above data shows that 56% respondents consider return as an very important investment parameter, 34% consider it important and while 9% respondents are in nuetral stage so on the basis of this data it can be said that most of the people consider return as a very important investment parameter. The mean value is 4.45 which fall almost in between important and very important and hence it can be said that almost all of the people consider return as a crucial parameter. 4) Risk as an investment parameter Statistics N Mean Valid Unimportant Neutral Important 100 4.11 Frequenc y 3 24 32 Percen t 3.0 24.0 32.0 71

Very important Total

41 100

41.0 100.0

Risk as an investment parameter

50 40

Percent

30 20

41.00% 32.00% 24.00%

10 0

3.00%
Unimportant Neutral Imporatant Very important

Interpretation Above data shows that 42% respondents consider risk as a very important investment parameter, 32% consider it important and only 3% consider it unimportant while 24% respondents are in neutral stage so on the basis of this data it can be said that most of the people consider risk as a very important investment parameter. The mean value is 4.11 which is little more than important stage and hence it can be said that almost all of the people consider risk as a crucial parameter. 5) Safety as an investment parameter Statistics N Mean Valid Unimportant 100 4.20 Frequenc y 6

Percen t 6.0

72

Neutral Important Very important Total

7 48 39 100

7.0 48.0 39.0 100.0

Safety as an investment parameter

50 40

Percent

30

48.00%
20 10 0

39.00%

6.00%
Unimportant

7.00%
Neutral Imporatant Very important

Interpretation Above data shows that 48% respondents consider safety as a important investment parameter where as 39% consider it very important so on the basis of this data it can be said that most of the people consider safety as an as an important investment parameter. The mean value is 4.20 which is little more than important stage and hence it can be said that almost all of the people consider safety as a crucial parameter. 6) Tax minimisation as an investment parameter Statistics N Mean 100 3.18 Frequenc y Percen t

73

Valid Very unimportant Unimportant Neutral Important Very important Total

8 24 25 28 15 100

8.0 24.0 25.0 28.0 15.0 100.0

Tax minimisation as an investment parameter

30

Percent

20
28.00%

10

24.00%

25.00%

15.00%

8.00%
0
Very unimportant Unimportant Neutral Imporatant Very important

Interpretation Above data shows that 28% respondents consider tax

minimisation as an important investment parameter, 15% consider it very important, 24% consider it unimportant and 8% consider it very unimportant while 24% respondents are in neutral stage so on the basis of this data it can be said that tax minimisation is not important parameter for investment. The mean value is 3.18 which is little more than neutral stage and hence it can be said that people do not consider tax minimisation as an important investment parameter. 7) Investment horizon as an investment parameter Statistics

74

N Valid Mean

100 3.32 Frequenc N y Valid Very unimportant 13 Unimportant 11 Neutral 25 Important 33 Very important 18 Total 100

Percen t 13.0 11.0 25.0 33.0 18.0 100.0

Investment horizon as an investment parameter

40

30

Percent

20
33.00%
25.00%
18.00%

10
13.00% 11.00%

0
Very unimportant Unimportant Neutral Imporatant Very important

Interpretation Above data shows that 38% respondents consider investment horizon as an important investment parameter, 18% consider it very important where as 25% respondents are in neutral stage so on the basis of this data it can be said that investment horizon is not a much important parameter for investment. The mean value is 3.32 which is somewhat more than neutral stage and hence it can be said that people do not consider investment horizon as an important investment parameter. 8) Volatility as an investment parameter Statistics

75

N Valid Mean

100 3.81 Frequenc N y Valid Very unimportant 4 Unimportant 13 Neutral 16 Important 32 Very important 35 Total 100

Percen t 4.0 13.0 16.0 32.0 35.0 100.0

Volatility as an investment parameter

40

30

Percent

20
32.00%

35.00%

10
13.00%

16.00%

4.00%
Very unimportant Unimportant Neutral Imporatant Very important

Volatility as an investment parameter

Interpretation Above data shows that 35% respondents consider volatility a very important investment parameter where as 32% consider it important so on the basis of this data it can be said that most of the people consider volatility as a very important parameter for investment. The mean value is 3.81 which is close to important stage and hence it can be said that people consider volatility as an important investment parameter

76

T-Test
One-Sample Statistics N Capital appreciation Marketability Return Risk Safety Tax minimisation Investment horizon Volatility Mean Std. Deviation .92 .94 .70 .87 .82 1.19 1.26 1.17 Std. Error Mean 9.22E-02 9.36E-02 7.02E-02 8.75E-02 8.16E-02 .12 .13 .12

100 3.83 100 3.95 100 4.45 100 4.11 100 4.20 100 3.18 100 3.32 100 3.81

Statistical

Test:

one

sample

t-test

is

chosen

because

the

measurement of data is interval in nature. Significance level: 0.05

One-Sample Test Test Value = 4 Sig. (2- Mean tailed) Difference 95% Confidence Interval of the Difference Lower Upper

Df

77

Capital appreciation

-1.844

99 99 99 99 99 99 99 99

.068 .594 .000 .212 .016 .000 .000 .107

-.17 -5.00E-02 .45 .11 .20 -.82 -.68 -.19

-.35 -.24 .31 -6.36E02

1.29E-02 .14 .59 .28

Marketability -.534 Return Risk Safety 6.413 1.257 2.449

3.80E-02 .36 -1.06 -.93 -.42 -.58 -.43 4.20E-02

Tax -6.877 minimisation Investment horizon Volatility -5.387 -1.625

One

Sample

T-Test

Hypothesis

and

Interpretation
Capital appreciation.
Null Hypothesis (HO): There is no significant difference between calculated mean and hypothesized mean (4.0) In other words; we investment parameter for investment decision. i.e. Ho: x = = 4 Alternative Hypothesis (H1): There is significant difference between calculated mean and hypothesized mean. In other words, we can say that people do not consider capital appreciation as an important investment parameter for investment decision. i.e. H1: x , i.e. H1: x 4 Inference Here the test is performed at 95% significance level and the P-value comes out .068 which is grater than 0.05, it means that the null can say that people consider that Capital appreciation as an important

78

hypothesis H0 is accepted and thus, it can be said that there is no significant difference between calculated mean and hypothesized mean.

Marketability
Null Hypothesis (HO): There is no significant difference between calculated mean and hypothesized mean (4.0) In other words; we can say that people consider marketability as an important investment parameter for investment decision. i.e. Ho: x = = 4 Alternative Hypothesis (H1): There is significant difference between calculated mean and hypothesized mean. In other words, we can say that people do not consider marketability as an important investment parameter for investment decision. i.e. H1: x , i.e. H1: x 4 Inference Here the test is performed at 95% significance level and the P-value comes out .068 which is grater than 0.05, it means that the null hypothesis H0 is accepted thus, it can be said that there is no significant difference between calculated mean and hypothesized mean.

Return
Null Hypothesis (HO): There is no significant difference between calculated mean and hypothesized mean (4.0) In other words; we can say that people consider return as an important investment parameter for investment decision. i.e. Ho: x = = 4 Alternative Hypothesis (H1): There is significant difference between calculated mean and hypothesized mean. In other words, we can say

79

that people do not consider return as an important investment parameter for investment decision. i.e. H1: x , i.e. H1: x 4 Inference: Here the test is performed at 95% significance level and the P-value comes out .000 which is lesser than 0.05, it means that the null hypothesis H0 is rejected thus, it can be said that there is significant difference between calculated mean and hypothesized mean.

Risk
Null Hypothesis (HO): There is no significant difference between calculated mean and hypothesized mean (4.0) In other words; we can say that people consider risk as an important investment parameter for investment decision. i.e. Ho: x = = 4 Alternative Hypothesis (H1): There is significant difference between calculated mean and hypothesized mean. In other words, we can say that people do not consider risk as an important investment parameter for investment decision. i.e. H1: x , i.e. H1: x 4 Inference: Here the test is performed at 95% significance level and the P-value comes out .212 which is grater than 0.05, it means that the null hypothesis H0 is accepted thus, it can be said that there is no significant difference between calculated mean and hypothesized mean.

Safety
Null Hypothesis (HO): There is no significant difference between calculated mean and hypothesized mean (4.0) In other words; we can 80

say that people consider safety as an important investment parameter for investment decision. i.e. Ho: x = = 4 Alternative Hypothesis (H1): There is significant difference between calculated mean and hypothesized mean. In other words, we can say that people do not consider risk as an important investment parameter for investment decision. i.e. H1: x , i.e. H1: x 4 Inference: Here the test is performed at 95% significance level and the P-value comes out .016 which is grater than 0.05, it means that the null hypothesis H0 is accepted thus, it can be said that there is no significant difference between calculated mean and hypothesized mean.

Tax minimisation
Null Hypothesis (HO): There is no significant difference between calculated mean and hypothesized mean (4.0) In other words; we can say that people consider tax minimisation as an important investment parameter for investment decision. i.e. Ho: x = = 4 Alternative Hypothesis (H1): There is significant difference between calculated mean and hypothesized mean. In other words, we can say that people do not consider tax minimisation as an important investment parameter for investment decision. i.e. H1: x , i.e. H1: x 4 Inference: Here the test is performed at 95% significance level and the P-value comes out .000 which is lesser than 0.05, it means that the null

81

hypothesis H0 is rejected thus, it can be said that there is significant difference between calculated mean and hypothesized mean.

Investment horizon
Null Hypothesis (HO): There is no significant difference between calculated mean and hypothesized mean (4.0) In other words, we can say that people consider investment horizon as an important investment parameter for investment decision. i.e. Ho: x = = 4 Alternative Hypothesis (H1): There is significant difference between calculated mean and hypothesized mean. In other words, we can say that people do not consider investment horizon as an important investment parameter for investment decision. i.e. H1: x , i.e. H1: x 4 Inference: Here the test is performed at 95% significance level and the P-value comes out .000 which is lesser than 0.05, it means that the null hypothesis H0 is rejected thus, it can be said that there is no significant difference between calculated mean and hypothesized mean.

Volatility
Null Hypothesis (HO): There is no significant difference between calculated mean and hypothesized mean (4.0) In other words; we can say that people consider volatility as an important investment parameter for investment decision. i.e. Ho: x = = 4 Alternative Hypothesis (H1): There is significant difference between calculated mean and hypothesized mean. In other words, we can say

82

that people do not consider volatility as an important investment parameter for investment decision. i.e. H1: x , i.e. H1: x 4 Inference: Here the test is performed at 95% significance level and the P-value comes out .107 which is grater than 0.05, it means that the null hypothesis H0 is accepted thus, it can be said that there is no significant difference between calculated mean and hypothesized mean.

Q.4 If you are investing your funds in below given investment avenues than give key objective(s) for investment in it.

83

1) Purpose of bank deposits investment Statistics Frequenc y 20 11 41 1 2 1 3 3 2 2 1 2 Percen t 20.0 11.0 41.0 1.0 2.0 1.0 3.0 3.0 2.0 2.0 1.0 2.0 Valid Percent 22.5 12.4 46.1 1.1 2.2 1.1 3.4 3.4 2.2 2.2 1.1 2.2 Cumulative Percent 22.5 34.8 80.9 82.0 84.3 85.4 88.8 92.1 94.4 96.6 97.8 100.0

Safety Assured return Safety, Assured return. Safety High return Safety. Partiality Assured return, Convenience Safety, Assured return, High return. Safety, Assured return, Convenience Safety, Assured return, Convenience. Safety, Convenience, Partiality Safety, Convenience, partiality Safety, Assured return, Convenience, Partiality Total Missing System Total

89 11 100

89.0 11.0 100.0

100.0

84

Purpose of bank deposits investment

Purpose of bank deposits investment
Safety,Assured return,Conviniance, Partiality Safety,Conviniance,partiality Safety,Conviniance,Partiality Safety,Assured return,Conviniance. Safety,Assured return,Conviniance Safety,Assred return,High return. Assured return,Conviniance Safety.Partiality Safety,High return Safety,Assured return. Assured return Safety

2.25% 1.12% 2.25% 2.25% 3.37% 1.12% 1.12% 46.07% 12.36% 22.47%
0 10 20 30 40 50

3.37% 2.25%

Percent
Interpretation Above data shows that among valid, 22.4% respondents investing their fund in bank deposits for safety, 12.4% for assured return and 46.1% for both safety and assured return. If we look in cumulative percentage, it shows that 80.9% of respondents have invested their fund in bank deposits for safety and assured return, hence it can be said that the major purposes of investing in bank deposits is safety of funds and assured return.

85

2) Purpose of bullion investment Statistics Frequenc y Valid Safety 8 Assured return 6 High Return 7 Safety, Assured 4 return. Safety, High 3 return Assured return, 1 High return Safety, Assured 2 return, High return. Total 31 Missing System 69 Total 100 Percen t 8.0 6.0 7.0 4.0 3.0 1.0 2.0 31.0 69.0 100.0 Valid Percent 25.8 19.4 22.6 12.9 9.7 3.2 6.5 100.0 Cumulative Percent 25.8 45.2 67.7 80.6 90.3 93.5 100.0

Purpose of bullion investment

Purpose of bullion investment

Safety,Assred return,High return. Assured return,High return Safety,High return Safety,Assured return. High Return Assured return Safety

6.45% 3.23% 9.68% 12.90% 22.58% 19.35% 25.81%

0 10 20 30

Percent

Interpretation Above data shows that among valid, 25.8% respondents have invested their fund in bullion for safety of funds, 19.4% for assured return, 22.6% for high return and 12.9% for safety and assured return.

86

If we look in cumulative percentage 80.6% of respondents have invested their funds in bullion for safety, assured return and high return, hence it can be said that the major purpose of investment in bullion is safety of funds, assured and high return. 3) Purpose of equity investment Statistics Valid Safety High Return Safety, Assured return. Safety, High return Assured return, High return High return, Partiality. Safety, Assured return, High return. Safety, Assured return, High return, Partiality Total Missing System Total Frequenc y 1 21 3 3 12 3 9 3 55 45 100 Percen t 1.0 21.0 3.0 3.0 12.0 3.0 9.0 3.0 55.0 45.0 100.0 Valid Percent 1.8 38.2 5.5 5.5 21.8 5.5 16.4 5.5 100.0 Cumulative Percent 1.8 40.0 45.5 50.9 72.7 78.2 94.5 100.0

Purpose of equity investment

P rp se o eq ity in estm t u o f u v en
S afety ssured retu ,H .A rn igh retu artiality rn,P S afety ssred retu ,A rn,H h ig retu rn. H h retu ,P ig rn artiality . A ssured retu ,H h retu rn ig rn S afety ighreturn ,H S afety ssured return ,A . H h R rn ig etu S afety 0

5 5 .4 % 1 .3 % 6 6 5 5 .4 % 2 .8 % 1 2 5 5 .4 % 5 5 .4 % 3 .1 % 8 8 1 2 .8 %
1 0 2 0 3 0 40

P ercen t

87

Interpretation Above data shows that among valid, 38.2% respondents have invested their fund in equity for high return, 21.8% for assured and high return and 16.4% for safety, assured and high return, thus it can be said that the major respondents have invested in equity for high return where as some respondents have invested in equity for high return with safety and assured return. 4) Purpose of government securities Frequenc y 3 6 13 1 23 77 100 Percen t 3.0 6.0 13.0 1.0 23.0 77.0 100.0 Valid Percent 13.0 26.1 56.5 4.3 100.0 Cumulative Percent 13.0 39.1 95.7 100.0

Valid

Safety Assured return Safety, Assured return. Safety, High return Total Missing System Total

Purpose of goverment securities

Purpose of goverment securities

Safety,High return

4.35%

Safety,Assured return.

56.52%

Assured return

26.09%

Safety

13.04%

10

20

30

40

50

60

Percent

88

Interpretation Above data shows that among valid, 13% respondents have invested in G.secs for safety of fund, 26.1% for assured return while 56.5% have invested for both safety and assured return, hence it can be aid that the major purpose of investing in G.secs is safety and assured return. 5) Purpose of mutual fund investment Statistics Frequ ency Valid Safety Assured return High Return Safety, Assured return. Safety, High return Assured return, High return Assured return ,Professional management Safety, Assured return, High return. Assured return, high return, Professional management. High return, Partiality, Professional management Safety. Assured return, High return, Partiality Safety, Assured return, High return, Professional management. Assured return, High return, Convenience, Partiality. Safety, Assured return, High return, Partiality, Professional management 4 1 4 7 10 13 1 17 2 1 Perc ent 4.0 1.0 4.0 7.0 10.0 13.0 1.0 17.0 2.0 1.0 Valid Perc ent 6.1 1.5 6.1 10.6 15.2 19.7 1.5 25.8 3.0 1.5 Cumula tive Percent 6.1 7.6 13.6 24.2 39.4 59.1 60.6 86.4 89.4 90.9

1 2

1.0 2.0

1.5 3.0

92.4 95.5

1 1

1.0 1.0

1.5 1.5

97.0 98.5

89

Safety, Assured return, High return, Convenience ,Partiality, Professional management Total Missing System Total

1.0

1.5

100.0

66 34 100

66.0 34.0 100. 0

100. 0

P u rp o se o f m u tu a l fu n d in v estm en t

S afety ,A ssu red retu rn,H ig h retu rn,C on v in iance, P artiality ,P ro ffessio n al m an ag em ent S afety ,A ssured retu rn ,H ig h return ,P artiality , P ro ffession al m an ag em en t A ssu red retu rn ,H igh retu rn ,C o nv inian ce, P artiality. S afety,A ssu red retu rn ,H igh retu rn ,P roffesio n al m an ag em ent.

1 .5 2% 1 .5 2 % 1 .5 2 % 3 .0 3 % 1 .5 2 % 1 .5 2% 3 .0 3 % 2 5 .7 6 % 1 .5 2% 1 9 .70 % 1 5 .1 5 % 1 0 .6 1 %

Purpose of mutual fund investment

S afety .A ssu ed retu rn ,H igh retu rn,P artiality H ig h return ,P artiality,P ro ffession al m anag em en t A ssu red return ,h ig h retu rn ,P ro ffessio n al m ang em en t. S afety ,A ssred retu rn ,H igh retu rn . A ssu red retu rn ,P roffessio nal m an agem en t A ssu red retu rn ,H igh retu rn S afety ,H ig h return S afety,A ssu red retu rn . H ig h R etu rn A ssu red retu rn S afety

6 .0 6 % 1 .5 2 % 6 .0 6 %

10

20

30

P ercen t
Interpretation Above data shows that among valid, 25.8% respondents have invested their funds in mutual fund for safety of funds and assured and

90

high return, 19.7% for assured and high return, 15.2% for safety and high return and 10.6% for safety and assured return thus, on the bass of this data it can be said that majority of respondents invest their funds in mutual fund for high return with safety and surety of return. 6) Purpose of real estate investment Statistics Valid Safety Assured return High Return Convenience Safety, Assured return. Safety, High return Safety, Farm Assured return, High return Assured return, Convenience Safety, Assured return, High return. Safety, High return, Convenience safety, High return, Partiality Safety, Assured return, High return, Convenience Total Missing System Total Frequenc y 3 3 8 1 3 9 4 7 1 18 2 1 1 Percen t 3.0 3.0 8.0 1.0 3.0 9.0 4.0 7.0 1.0 18.0 2.0 1.0 1.0 Valid Percent 4.9 4.9 13.1 1.6 4.9 14.8 6.6 11.5 1.6 29.5 3.3 1.6 1.6 Cumulative Percent 4.9 9.8 23.0 24.6 29.5 44.3 50.8 62.3 63.9 93.4 96.7 98.4 100.0

61 39 100

61.0 39.0 100.0

100.0

91

Purpose of real estate investment

Safety,Assured return,High return, Conviniance safety,High return,Partiality Safety,High return,Conviniance

1.64% 1.64% 3.28% 29.51% 1.64% 11.48% 6.56% 14.75% 4.92% 1.64% 13.11% 4.92% 4.92%

Purpose of real estate investment

Safety,Assred return,High return. Assured return,Conviniance Assured return,High return Safety,Farm Safety,High return Safety,Assured return. Conviniance High Return Assured return Safety

10

20

30

Percent

Interpretation Above data shows that among valid, 29.51% respondents have invested their fund in real estate for safety of funds and assured and high return, 14.75% for safety and high return, 13.11% for high return and 11.48% for assure and high return, hence it can be said that majority of people invest their fund in real estate for high return with safety and assured return. 7) Purpose of insurance investment Statistics

92

Frequenc y Valid Safety 22 Assured return 22 Safety, Assured 25 return. Safety, Assured 1 return, High return. Total 70 Missing System 30 Total 100

Percen t 22.0 22.0 25.0 1.0 70.0 30.0 100.0

Valid Percent 31.4 31.4 35.7 1.4 100.0

Cumulative Percent 31.4 62.9 98.6 100.0

Purpose of insurance investment

P rpose of insuran in u ce vestm ent

S afety,A ssred return,H igh

return.

1.43%

Safety,A ssured return.

35.71%

A ssured return

31.43%

S afety

31.43%

10

20

30

40

P ercen t

Interpretation Above data shows that among valid 31.4% respondents invest their funds in insurance for safety purpose similarly 31.4% for assured return while 35.7% for both safety of funds and assured return, thus it is evident that majority of respondents invest their funds for safety of funds and surety of return only.

93

8) Purpose of bonds and debentures investment Statistics Frequenc y 8 6 20 34 66 100 Percen t 8.0 6.0 20.0 34.0 66.0 100.0 Valid Percent 23.5 17.6 58.8 100.0 Cumulative Percent 23.5 41.2 100.0

Valid

Safety Assured return Safety, Assured return. Total Missing System Total
Purpose of bonds and debentur

P r o o b n s a dd b n r s in e e t u p se f o d n e e tu e v stm n

S fe ,A re retu . a ty ssu d rn

5 .8 % 8 2

A re re rn ssu d tu

1 .6 % 7 5

S fe a ty

2 .5 % 3 3

1 0

2 0

3 0

4 0

5 0

6 0

P r en ec t

Interpretation Above data shows that among valid, 23.5% respondents invest their funds in bonds and debentures for safety of funds, 17.6% for assured return while 58.8% for both safety and assured return hence it is lucid that majority of respondents invest their funds in bonds and debentures for both safety of funds and surety of return.

Q.5 Please give your opinion on following statement. 94

1) I will recommend other to invest their funds in equity. Recommendation in equity investment Statistics N Mean Median Mode Valid Strongly disagree. Disagree Neutral Agree Strongly agree Total 100 3.12 3.00 4 Frequenc y 11 24 21 30 14 100

Percen t 11.0 24.0 21.0 30.0 14.0 100.0

R ecom endation in equity investm m ent

30

Percent

20
30.00% 24.00%

10
11.00%

21.00% 14.00%

0
Strongly disagree. D isagree Neutral Agree Strongly agree

Recom endation in equity m

Interpretation Above data shows that 30% respondents are strongly agree with statement,14% are agree, 24% are disagree and 11% are strongly disagree with statement where as 21 % respondents are neutral with respect to statement so it indicates that people are tend to recommend more in equity compare to other investment avenues.

95

If we consider mean as a parameter than mean stands at 3.12 which is little above than neutral stage and hence it can be said that people recommend little more for equity investment than other investment avenues. If we consider median as a parameter than it stand at 3 which is exactly the value of neutral stage and hence it can be said that people are indifferent between equity investment and other investment avenues. If we consider Mode as a parameter than mode stands at 4 which is exactly the value of agree stage and hence it can be said that people will more likely to recommend in equity investment than any other investment avenues.

2) I will recommend others to invest their funds in other investment avenues except equity. Recommend in other investment avenues Statistics N Mean Median Mode Valid Strongly disagree. Disagree Neutral Agree Strongly agree Total 100 3.38 4.00 4 Frequenc y 3 17 29 41 10 100

Percen t 3.0 17.0 29.0 41.0 10.0 100.0

96

Recommend in other investment avenues

50 40

Percent

30 20
29.00% 41.00%

10 0

3.00%

17.00% 10.00%

Strongly disagree.

Disagree

Neutral

Agree

Strongly agree

Recommend in other investment

Interpretation Above data indicates that 41% respondents are agree with statement, 10% are strongly agree, 17 % are disagree and 3% strongly disagree where as 29% respondents are at neutral stage. As majority of responses lurching towards agree and strongly agree, hence it can be said that people will recommend others to invest in other investment avenues compare to equity. If we considered mean as a parameter than mean stands at 3.38 which fall in stage of agree and hence according to mean it can be said that people are tend to recommend more in other investment avenues against equity. If we consider median and mode as a parameter than it is 4 which falls exactly in agree stage hence it can be said that people are more eager to recommend in other investment avenues against equity investment.

97

3) Investing in equity is superior to invest in other investment avenues. Is equity investment superior to other investment avenues? N Valid Missing 100 0 3.19 3.00 3 Frequenc y 5 20 38 25 12 100

Mean Median Mode Valid Strongly disagree. Disagree Neutral Agree Strongly agree Total

Percen t 5.0 20.0 38.0 25.0 12.0 100.0

Is equity investm ent superior to other investm ent avenues?

40

Percent

30

20

38.00% 25.00%

10
5.00%

20.00% 12.00%

0 Strongly disagree. Disagree N eutral Agree Strongly agree

Is equity investm ent superior to

Interpretation Above data shows that 25% respondents are agree with statement,12% are strongly agree, 20% are disagree and 5% are 98

strongly disagree with statement where as 38% respondents are neutral with respect to statement so it indicates that people feel equity investment superior to other investment avenues. If we consider mean as a parameter than mean stands at 3.19 which is little above than neutral stage and hence it can be said that people feel equity investment superior to other investment avenues. If we considered value of median and mode than it stands at 4 which falls exactly in agree stage and thus it can be said that people feels equity investment superior to other investment avenues.

T-Test
One-Sample Statistics N Recommendation in equity investment Mean Std. Deviation 1.24 .98 1.05 Std. Mean .12 9.82E-02 .11 Error

100 3.12

Recommend in other investment 100 3.38 avenues Equity investment is superior One-Sample Test Test Value = 4 100 3.19

95% Confidence Interval of the Sig. (2- Mean df tailed) Difference Difference Lower Upper -.88 -.62 -.81 -1.13 -.81 -1.02 -.63 -.43 -.60

Recommendation in equity investment Recommend in other investment avenues Is equity investment superior to other investment avenues?

99 .000 7.089 99 .000 6.311 99 .000 7.706

T-test Hypothesis and Interpretation

99

 Recommendation for equity investment.

Null Hypothesis (HO): There is no significant difference between calculated mean and hypothesized mean (4.0) In other words; we can say that people agree to recommend for equity investment. i.e. Ho: x = = 4 Alternative Hypothesis (H1): There is significant difference between calculated mean and hypothesized mean. In other words, we can say that people do not agree to recommend for equity investment. i.e. H1: x , i.e. H1: x 4 Inference Here the test is performed at 95% significance level and the P-value comes out .000 which is lesser than 0.05, it means that the null hypothesis H0 is rejected thus, it can be said that people will not recommend others to invest their fund in equity investment.

Recommendation except equity.

for

other

investment

avenues

Null Hypothesis (HO): There is no significant difference between calculated mean and hypothesized mean (4.0) In other words; we can say that people will recommend other to invest their fund in other investment avenues except in equity. i.e. Ho: x = = 4 Alternative Hypothesis (H1): There is significant difference between calculated mean and hypothesized mean. In other words, we can say that people will not recommend other to invest their fund in other investment avenues except in equity. i.e. H1: x , i.e. H1: x 4 Inference 100

Here the test is performed at 95% significance level and the P-value comes out .000 which is grater than 0.05, it means that the null hypothesis H0 is rejected thus, it can be inferred that people will not recommend others to invest their fund in other investment avenues except in equity.

Equity is superior to other investment avenues.

Null Hypothesis (HO): There is no significant difference between calculated mean and hypothesized mean (4.0) In other words; we can say that equity investment is superior to other investment avenues. i.e. Ho: x = = 4 Alternative Hypothesis (H1): There is significant difference between calculated mean and hypothesized mean. In other words, we can say that equity investment is not superior to other investment avenues. i.e. H1: x , i.e. H1: x 4 Inference Here the test is performed at 95% significance level and the P-value comes out .000 which is lesser than 0.05, it means that the null hypothesis H0 is rejected thus, it can be said that equity investment is not superior investment avenue.

Q.6 How much risk are you willing to take to earn return on your investment? Risk expectancy
101

Statistics
N Mean Median Mode N Valid Valid 100 1.95 2.00 2 Valid Percent 26.0 53.0 21.0 100.0 Cumulative Percent 26.0 79.0 100.0

High Moderat e Low Total

Frequency Percent 26 26.0 53 21 100 53.0 21.0 100.0

R ke p c n y is x e ta c

6 0

Percent

5 0 4 0 3 0 2 0 1 0 0 H h ig M d ra o e te Lw o
2 .0 % 6 0 2 .0 % 1 0 5 .0 % 3 0

Interpretation
Above data shows that 26% respondents are willing to take high risk to yield return on their investment, 53% are willing to take moderate risk while 21% are willing to take low risk, thus it can be said that most of the people are willing to take moderate risk for their investments. The value of mean is 1.95 which is very close to 2 (moderate) while the value of median and mode is 2 which indicates that majority of people are willing to take moderate risk for their investments.

Q.7

How

much

return

do

you

expect

on

your

102

investments? Return expectancy

N Mean Median Mode Statistics Valid 100 2.41 2.00 2 Percen t 16.0 41.0 29.0 14.0 100.0

Frequenc N y Valid 05% to 15% 16 15% to 25% 41 25% to 35% 29 35% or above 14 Total 100

Valid Percent 16.0 41.0 29.0 14.0 100.0

Cumulative Percent 16.0 57.0 86.0 100.0

Return expectancy

50 40

Percent

30 20 10 0 05% to 15% 15% to 25% 25% to 35% 35% or above

41.00% 29.00% 16.00% 14.00%

Return expectancy

Interpretation
Above data shows that 16% respondents are expecting 5% to 15% return on their investment, 41% expecting 15% to 25% return, 29% expecting 25 %to 35% return where as 14% expecting 35% or above return so on the basis of this data it can be said that most of the respondents expecting 15% to 35% return on their investment. 103

The value of mean is 2.41 which falls almost in between of 2nd and 3rd option and it indicates that majority of people expect 15% to 35% return on their investments, where as value of median and mode is 2 which indicates that most of the people aim at 15% to 25% return on their investment. NPAR TEST Descriptive Statistics Std. Minimu Maxim Mean Deviation m um 1.95 2.41 .687 .922 1 1 3 4

N Risk expectancy Return expectancy 100 100

Chi-Square Test Frequencies Risk expectancy

High Moderate Low Total Observed N Expected N Residual 26 33.3 -7.3 53 33.3 19.7 21 33.3 -12.3 100

Return expectancy
Observed N 16 41 29 14 100 Expected N 25.0 25.0 25.0 25.0 Residual -9.0 16.0 4.0 -11.0

05% to 15% 15% to 25% 25% to 35% 35%or above Total

Test Statistics

104

Chi-Square(a,b) df Asymp. Sig.

Risk expectancy 17.780 2 .000

Return expectancy 18.960 3 .000

Null Hypothesis (HO): There is association between risk expectancy and return expectancy. Alternative Hypothesis (H1): There is no association between risk expectancy and return expectancy. Inference: Here the value of Pearson chi-Square is 0.000, since the significant value is less than 0.05. So the null hypothesis is rejected and we can say that there is difference between expected frequency and actual frequency. There is some bias in collecting the response.

Q.8 Among below given investment avenues which according to you best? (Give rank according to your preference)

105

1)

Bank

deposits Best Second best Third best Fourth best Fifth best Sixth best Seventh best Eighth best Total

investment according to investors N Mean Statistics 100 3.89

Frequenc y 23 8 13 16 16 9 7 8 100

Percen t 23.0 8.0 13.0 16.0 16.0 9.0 7.0 8.0 100.0

B n d p s in e tm n a c rd g to in e to a k e o its v s e t c o in v s rs
B st e S co d b st e n e T ird b st h e F u b st o rth e F b st ifth e S ixth b st e S ve th b st a n e E h b st ig tth e

8.00% 7.00 % 9 0% .0 8 0% .0 1 6.00% 1 3.00% 1 6.00% 2 .00% 3

Interpretation From the above data it is seen that 23% investors has ranked bank deposits as a first best investment avenue, 8% has ranked second Best, and 13% has ranked third best where as 16% has ranked it fourth best, hence it can be said that large group of people considerably prefer to invest in bank deposits. Value of mean is 3.89 which stands at third after mutual fund and real estate in ascending order, thus on this base of mean value it can be said that bank deposits is best investment avenue according to people. 2) Bullion investment according to investors

106

N Mean

Statistics Valid 100 Missing 0 5.37

Frequenc y Best 3 Second best 7 Third best 7 Fourth best 11 Fifth best 23 Sixth best 19 Seventh 14 best Eighth best 16 Total 100

Percen t 3.0 7.0 7.0 11.0 23.0 19.0 14.0 16.0 100.0

107

B ullion investm ent according to investors

Best Second best Third best Fourth best Fifth best Sixth best Saventh best Eightth best

3.00% 16.00%

7.0 0% 7.00% 11.00%

14.00%

19.00%

23.00%

Interpretation From the above data it is lucid that most of the investors have shown less preference in investing their funds in bullion. Only 3% investors has ranked it first best, 7% has ranked it as second best and third best while 14% investors has ranked it fourth best. The value of mean is 5.37 which stands at seventh in ascending order and therefore on the basis of mean value it can be said that bullion is seventh best investment avenue according to people. 3) Equity investment according to investors N Mean Statistics Valid 100 Missing 0 3.95 Frequenc y Best 23 Second best 9 Third best 13 Fourth best 15 Fifth best 13 Sixth best 8 Seventh 10 best Eighth best 9 Total 100 Percen t 23.0 9.0 13.0 15.0 13.0 8.0 10.0 9.0 100.0

108

Equity investment according to investors

Best Second best Third best Fourth best Fifth best Sixth best Saventh best Eightth best

9.00% 10.00 % 8.00% 9.00% 13.00% 13.00% 15.00% 23.00%

Interpretation
Form the above data it is candid that investment in equity considerably preferred by investors as 23% of investors have ranked it first best, 9% has ranked it second best, 13% has ranked it third best while 15% has given it fourth best. It would be more clear if we consider the value of mean that is 3.95 and in ascending order it stands at four, hence on the basis of this data it can be said that equity is fourth best investment avenue for investment according to people. 4) Government securities investment according to investors Statistics N Mean Valid Missing 100 0 5.25 Frequenc y Best 4 Second best 7 Third best 13 Fourth best 14 Fifth best 10 Sixth best 17 Seventh 20 best Eighth best 15 Total 100 Percen t 4.0 7.0 13.0 14.0 10.0 17.0 20.0 15.0 100.0 109

Gv eu o t.s c rityin e tm n a c rd gtoin e to v s e t c o in v s rs

B st e S co d b st e n e T ird b s h et Fu bs o rth e t F bs ifth e t S th b s ix e t S ve th b s a n et E h bs ig tth e t

4 0 .0 % 1 .0 % 5 0

7 0 .0 %

1 .0 % 3 0 2 .0 % 0 0 1 .0 % 4 0

1 .0 % 7 0

1 .0 0 0 %

Interpretation
From the above data it is seen that 4% respondents have ranked first best to government securities for investing their funds, 7% have ranked it second best, 13% have ranked it third best while 14% have ranked it fourth best hence, on the basis of this data it can be said that very small group of people consider government securities as a prime avenue of investment. The value of mean for government security is 5.25 which stands on 5th position in ascending order hence it can be said that government security is fifth best investment avenues for investment according to people. 5) Mutual fund investment according to investors

Statistics N Mean Valid Missing 100 0 2.99

Frequenc y Best 28 Second best 21 Third best 16 Fourth best 14 Fifth best 9 Sixth best 7 Seventh 2 best Eighth best 3 Total 100

Percen t 28.0 21.0 16.0 14.0 9.0 7.0 2.0 3.0 110 100.0

M t l f n in e t e t a c r in t in e t r ua u d v smn c od g o v sos
Bs et Sc n b s eo d et T ir b s h d et F uthb s o r et F bs ifth e t S thb s ix e t Sv n b s a e th e t E h bs ig tth e t

2 0 .0 % 7 0 .0 %

3 0 .0 %

9 0 .0 %

2 .0 % 8 0

1 .0 % 4 0

2 .0 % 1 0 1 .0 % 6 0

Interpretation
Form above data it is quiet explicit that mutual fund has gained high preference as an investment avenue as 28% respondents has ranked it first best 21% have ranked it second best, 16 have ranked it third best while 14% has ranked it fourth best. If one see at the mean value of mutual fund that is 2.99 a lowest mean value among all eight investment avenue and thats why on the basis of mean value mutual funds top the list of investment avenues. Thus, mutual fund is a best investment avenue according to people. 6) Real estate investment according to investors Statistics Valid 100 Missing 0 3.43 Frequenc y Best 12 Second best 31 Third best 18 Fourth best 11 Fifth best 9 Sixth best 9 Seventh 8 best Eighth best 2 Total 100 Percen t 12.0 31.0 18.0 11.0 9.0 9.0 8.0 2.0 100.0 111

Mean

R estate investm eal ent according to investors

B est S econd best Third best Fourth best Fifth best S ixth best S aventh best E ightth best

2.00% 8 .00 % 9.0 0%

12.00 %

9.0 0% 3 1.00 % 11.0 0%

18 .00%

Interpretation Form the above data it is seen that 12% respondents have ranked real estate first best, 31% have ranked it second best and 18% have ranked it third best while 11% have ranked it fourth best, thus on the basis of this data it can be said that real estate has gained high preference as an investment avenue. The mean value of real estate is 3.43 which stands at 3rd position in ascending order and therefore it can be said that real estate is third best investment avenue according to people. 7) Insurance investment according to investors Statistics N Valid 100 Mean 5.26 Frequenc y Best 5 Second best 9 Third best 12 Fourth best 11 Fifth best 11 Sixth best 14 Seventh 20 best Eighth best 18 Total 100 Percen t 5.0 9.0 12.0 11.0 11.0 14.0 20.0 18.0 100.0 112

In ran in su ce vestm t acco in to in en rd g vesto rs

B est S econd best T hird best F ourth best F best ifth S ixth best S aventh best E htth best ig

5 % .00 18.00%

9.0 0%

1 0% 2.0 20.0 0% 1 0% 1.0

1 0% 4.0

11.0 0%

Interpretation
From the above data it is seen that 5% respondents have ranked insurance first best, 9 % has ranked it second best and 12% has ranked it third best while 11% has ranked it fourth best, hence it can be said that insurance as an investment avenue preferred very less by most of the people. The value of mean is 5.26 which stand at 6th position in ascending order of mean value and on this base it can be said that insurance is sixth best investment avenue in the list of eight investment avenues according to people. 8) Bonds and debentures investment according to investors Statistics N Valid 100 Mean 5.89 Frequenc y Best 3 Second best 7 Third best 7 Fourth best 8 Fifth best 8 Sixth best 18 Seventh 21 best Eighth best 28 Total 100 Percen t 3.0 7.0 7.0 8.0 8.0 18.0 21.0 28.0 113 100.0

B n s a d d en re in tm t acco in to in sto o d n eb tu s ves en rd g ve rs

B st e S co d b s e n et T ird b st h e F u b st o rth e F bs ifth e t S ixth b st e S ve th b st a n e E h bs ig tth e t

7 0 .0 % 3 0 .0 % 2 .0 % 8 0 7 0 .0 % 8 0 .0 %

8 0 .0 %

2 .0 % 1 0 1 .0 % 8 0

Interpretation
From the above data it is seen that only 3% respondents have ranked bonds and debenture first best, 7% have ranked it second best and third best while 8% have ranked it fourth best, hence it can be said that most of the people dont preferred bonds and debenture as a prime investment avenue. The mean value is 5.89 which stands on 8th, on the last, position in ascending order in the list of eight investment avenues and hence it can be said that bonds and debenture is last best investment avenue according to people.

PERSONAL DETAIL ANALYSIS

1) Occupation of respondents

114

Frequenc y Government employee Private firm employee. Businessman Professional Farmer Student Total 18 16 23 18 17 8 100

Percen t 18.0 16.0 23.0 18.0 17.0 8.0 100.0

Occupations of respondents.
Occupations of
Student Farmer Professional Bussinessman Private firm employee. Goverment employee
16 18 8 17 18 23

10

15

20

25

Frequency

Interpretation Above data shows the occupations of respondents whose responses were under taken in the study.

2) Education of respondents
Statistics Frequ ency Val SSC or less id than SSC. HSC and equivalent. Graduation Post graduate and above Total 12 15 37 36 100 Perce nt
Education of

Education of respondents.
Post graduate and above Graduation HSC and equivalent. SSC or less than SSC. 0
15 12 36 37

12.0 15.0 37.0 36.0 100.0

10

20

30

40

Frequency

115

Interpretation Above data shows the educational backgrounds of respondents whose Freq responses were under taken in the uen Percen study. cy t Less than 20 3 3.0 years 21 years to 30 39 39.0 years 3) Age of respondents 31 years to 40 23 23.0 years Statistics 41 years to 50 27 27.0 years 51 years or 8 8.0 above Total 100 100.0

Age of respondents
51 years or above
8 27 23 39

Age of

41 years to 50 years 31 years to 40 years 21 years to 30 years Less than 20 years 3

10

20

30

40

Frequency
Interpretation Above data shows the age of respondents whose responses were under taken in the study.

4) Income of respondents
Statistics

116

Frequ ency Percent Less than 1 lack 1 lack to 2 lacks. 2 lacks to 3 lacks. 3 lacks to 4 lacks. 4 lacks to 5 lacks 5 lacks or above Total 9 21 27 19 14 10 100 9.0 21.0 27.0 19.0 14.0 10.0 100.0

Incom e of respondents
5 lacs or above

10 14 19 27 21 9

Income of respondents

4 lacs to 5 lacs 3 lacs to 4 lacs. 2 lacs to 3 lacs. 1 lac to 2 lacs. L ess than 1 lac 0

10

20

30

Frequency

Interpretation Above data shows the educational backgrounds of respondents whose responses were under taken in the study.

FINDINGS
This study has brought following findings. 117

Most of the people are aware regarding five investment avenues namely bank deposits, equity investment, mutual fund, insurance and real estate.

Majority

of

people

are

aware

regarding

remaining

three

investment avenues namely bullion, government securities and bonds and debentures. Most of the people are investing their fund in bank deposits and insurance. Majority of people are investing their fund in mutual fund, real estate and equity. Small group of people are investing their fund in bonds and debentures, government securities and bullion. Return, safety and risk are considered as a most important investment parameter where as liquidity, capital appreciation and volatility are considered as an important investment parameter. Safety and surety of return are together key objective behind investment in bank deposits, government securities insurance and bonds and debentures. Even few people invest in equity for getting high return with safety of funds and/or surety of return., a key objective behind equity investment is only high return Though there are varieties of objectives behind mutual fund investment, the key objective found is high return with safety of fund and surety of return. The key reason found behind real estate investment is safety of funds and high return where as there is no clear cut objective behind bullion investment almost same percentage of people invest in bullion for Safety of funds or/and for surety of return or/and for high return

118

People are likely to recommend others for equity investment. Compare to equity investment people are more likely to recommend for other investment avenues.

Majority of people believe that equity investment is better investment avenue compare to other investment avenues.

Majority of people prefer to take moderate risk to earn return on their investment.

Majority of people expect 15% to 25% return on their investment. Mutual fund is the best investment avenue followed by real estate second best, bank deposits third best, equity investment fourth best, government securities fifth best, insurance sixth best, bullion seventh best and bonds and debentures eighth best.

CONCLUSION

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Though mutual fund investment, real estate investment and equity investment are growing rapidly now a day, bank deposits are still dominating the field of investment.

Mutual fund has emerged as and most convincing investment avenue as it shows high potential for high return with surety of return and safety of funds where as growth of real estate comes next to mutual fund and bank deposits on a third position due to its popularity as safe avenue yielding assured return.

Risk, return and safety are still acting as a crucial parameter for investment.

High awareness is prevailed for equity investment with bank deposits, mutual fund and insurance but compare to these popular avenues investment in equity is lesser, in other word ratio of awareness to investment is lesser of equity compare to leading investment avenue namely bank deposits, mutual fund, real estate and insurance.

RECOMMENDATIONS

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Return, safety, risk and marketability should be given more importance for any investment avenue.

Investors should invest their funds in mutual funds and real estate for getting high return with safety of funds.

Broking firms or companies should promote Equity investment aggressively foe long term investment.

Investment avenues should be framed in such a way that it gives 15% to 25% return annually at a moderate risk.

Promotional measures should be taken for increasing awareness for bullion, Government securities and bonds and debentures.

People first preference is mutual fund hence more emphasis should be given on mutual fund in promotional activities.

BIBLIOGRAPHY
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BOOKS Frank K Reilly and Keith C. Brown (2004), Investment Analysis and Portfolio Management, Shroff Publishers and Distributors Pvt. Ltd, Mumbai. Punithavathy Pandian (2007), Security Analysis and Portfolio Management, Vikas Publishing House Pvt. Ltd. Cooper, D.R. & Schindler, P.S. (2007), Business Research Methods, Tata McGraw Hill, New Delhi.

WEBSITES http://www.metrics2.com http://www.wikipedia.com http://www.investmentz.co.in http://www.sharekhan.com www.amfiindia.com http://www.rbi.com http:// www.sebi.comS http://www.nseindia.com http//www.investopedia.com. http//www.investordaily.com

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