Jayashree Mam Guide Project

`A STUDY ON INVESTMENT AVENUES FOR INDIAN INVESTORS
Introduction to finance
Finance defined as the art and science of management of funds. Finance is the lifeblood of business economy. We cannot imagine a business without finance in modern world. It is the bases of all economic activities, no matter; the business is big or small.
Definition of finance
Finance can be broadly defined as the activity concerned with planning, raising, controlling and administering of funds in the business -H.E.Dougall and H.G.Guthmann
Financial management Meaning:

Financial management is the specialized directly associated with the top management. The significance of this function is not only seen in the line but also in the capacity of staff in the overall administration of a company
Definition:
Financial management is an area of financial decision making, harmonizing individual motives and enterprise goals -Weston and Brigham
Features of finance:
1. Investment opportunities 2. Profitable opportunities 3. Optimal mix of funds
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4. System of internal controls 5. Future decision making
Scope and Elements of financial management 1. Investment decision 2. Financial decision 3. Dividend decision Objectives of financial management 1. Provide support for decision making. Financial management provides managers
with the information and knowledge they need to support operational decisions and to understand the financial implications of decisions before they are made. It also enables managers to monitor their decisions for any potential financial implications and for lessons to be learned from experience, and to adapt or react as needed.
2. Ensure the availability of timely, relevant and reliable financial and nonfinancial information. Financial management gives managers the information that
either forms the basis for calculating financial information, or is used for management control and accountability purposes.
3. Manage risks. Financial management enables an organization to identify, assess and

consider the financial consequences of events that could compromise its ability to achieve its goals and objectives and/or result in significant loss of resources. Financial management is an important component of risk management and needs to be considered with the full range of business risks, such as operational and strategic risks as well as social, legal, political and environmental risks.
4. Use
resources
efficiently,
effectively
and
economically. Financial
management is necessary to ensure that an organization has enough resources to carry out
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its operations, and that it uses these resources with due regard to economy, efficiency and effectiveness.
5. Strengthen accountability. Financial management is essential for an organization to

understand and demonstrate how it has used the financial resources entrusted to it and what it has accomplished with them.
6. Provide a supportive control environment. Financial management contributes to

promoting an organizational climate that fosters the achievement of financial management objectives - a climate that includes commitment from senior management, shared values and ethics, communication and organizational learning.
7. Comply with authorities and safeguard assets. Financial management is essential

to ensuring that an organization carries out its transactions in accordance with applicable legislation, regulations and executive orders; that spending limits are observed; and that transactions are authorized. It also provides an organization with a system of controls for assets, liabilities, revenues and expenditures. These controls help to protect against fraud, financial negligence, violation of financial rules or principles and losses of assets or public money.
Functions of financial management

1. Estimation of capital requirements: A finance manager has to make estimation with regards to capital requirements of the company. This will depend upon expected costs and profits and future programmers and policies of a concern. Estimations have to be made in an adequate manner which increases earning capacity of enterprise. 2. Determination of capital composition: Once the estimation have been made, the capital structure have to be decided. This involves short- term and long- term debt equity analysis. This will depend upon the proportion of equity capital a company is possessing and additional funds which have to be raised from outside parties.
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3. Choice of sources of funds: For additional funds to be procured, a company has many choices likea. Issue of shares and debentures b. Loans to be taken from banks and financial institutions c. Public deposits to be drawn like in form of bonds. Choice of factor will depend on relative merits and demerits of each source and period of financing. 4. Investment of funds: The finance manager has to decide to allocate funds into profitable ventures so that there is safety on investment and regular returns is possible. 5. Disposal of surplus: The net profits decisions have to be made by the finance manager. This can be done in two ways: a. Dividend declaration - It includes identifying the rate of dividends and other benefits like bonus. b. Retained profits - The volume has to be decided which will depend upon expansion, innovational, diversification plans of the company. 6. Management of cash: Finance manager has to make decisions with regards to cash management. Cash is required for many purposes like payment of wages and salaries, payment of electricity and water bills, payment to creditors, meeting current liabilities, maintenance of enough stock, purchase of raw materials, etc.
7. Financial controls: The finance manager has not only to plan, procure and utilize the
funds but he also has to exercise control over finances. This can be done through many techniques like ratio analysis, financial forecasting, cost and profit control, etc.
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Concept of Investment
India has become one of the fastest growing economies. Investment growth is eventually linked to the growth of the economy. So most of the investors look for emerging markets like India, where the growth rate is higher than the developed economies. Investing in India is becoming a big attraction for the foreign investors especially due to the booming Indian economy. Every individual wants to invest his/her money in the right means. There are various wonderful investment options in India. The challenge is to find out the right option that can not only offer flexibility, but also provide good returns in the future.
Investment avenues in India

There are number of avenues available for foreign investment in India for both short term and long term. The major options are real estate, bonds, mutual funds, money markets, gold, and financial assets (non-marketable, LIC policies & equity shares). Today, there are businesses and industries that are even 100% open for such investment. Some of the sectors that are still not open for foreign investment include, rail transport, lottery business, tobacco business, certain agricultural activities, atomic energy, mineral oils, etc. Indian investors have greater opportunity as they have numerous options to select. Most people will find that their investment objectives change throughout their lives. Capital appreciation may be more important for the young investor, but once she enters her golden years, that same investor may place a greater emphasis on gaining income. Whatever your objective, knowing what investment options are out there is key. Furthermore, as most successful investors will tell you, diversification is king. A diversified portfolio not only reduces unwanted risk, but also contributes to a winning portfolio. And having a well-diversified portfolio doesn't necessarily mean just buying
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more than one stock; branching out into other areas of investment could be a viable alternative.. Investments are an integral part of any business. Every company has investments in many forms whether they are in projects or assets. Income from investments has a direct impact on profitability of the company and it is one of the primary responsibilities of a finance manager to effectively invest the companys funds to optimize its profits. Funds are invested for short term or long term depending on the availability or idleness of funds. To explain further, sometimes companys concern is to do expansion and therefore it looks out for both acquisition and investment of funds in profitable projects or else it uses its idle cash to invest in other assets or other companies through equity shareholding etc. On the contrary, sometimes in seasonal businesses, the excess of working capital is invested in short term investment options mostly consists of money market instruments. In essence, for effective investment, investment alternatives need to be analyzed or evaluated. Following attributes of investments can be taken into consideration for evaluating the investments.
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DIFFERENT TYPE OF INVESTMENT AVENUES TYPES OF INVESTMENT AVENUES
EQUITY CAPITAL
SMALL SCALE SCHEME
PROTECTED THOUGH INSURANCE
INVESTING IN GOLD AND SLIVER
FIXED INCOME SECURITIES:
BANK DEPOSITS
INVESTING IN REAL-ESTATE
1. EQUITY CAPITAL Why Investment in Equity Capital

The simple answer is to achieve returns in excess of inflation over a period of ten or more years. But if you would like to known a bit more
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What is an Equity Share?

An equity share is a right to (a share in) the profits of a large company. If you want to share in the company's profits, you have to buy an equity share. The prices of equity shares are widely available, for example they are quoted in daily newspapers.
How do I make a Profit?

Every year, when the company draws up its accounts, the company profit for the year will become apparent. The directors of the company will decide how much of the profit to plough back into the company, and how much to distribute to the owners of the equity - i.e. the shareholders. The profit is then distributed as an amount per share - called a dividend. Companies like to increase their dividend year on year. As well as the profit from the dividends, equity share owners will also benefit if the share price rises. This means that the shareholders can sell their equity shares at a higher price than they were bought originally. So the investment return from equity shares comes from two sources the dividends paid from the profits of the company, and the rise in the equity share price. This return, combining these two sources of profit, has comfortably exceeded the rate of inflation in the past.
Why does the Equity Investment Return Exceed the Rate of Inflation?
Companies make profits because they provide something that someone wants to buy, either a product or a service. The purpose of a company is to make bigger and bigger profits every year for its equity shareholders. To do this, the company charges for its products/services. This charge has to at least cover all the costs in providing the product (e.g. raw materials, people, advertising, distribution) and also make a profit.
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The costs in providing a product or service will increase with inflation year on year. The company has to make a profit, so it naturally increases its charges. So, in a good business, the profits will at the very least keep in line with inflation. Companies are well aware that investors could just keep their money in the bank, and watch it grow, practically risk free. The Directors therefore have to ensure that the return they provide to the equity shareholders is commensurate with the higher level of risk that their investors face - so they aim to achieve a return in excess of that which would otherwise be available from a bank account.
Why Does the Share Price Rise?

The price of equity shares is determined by supply and demand in the market. When a company's profits are expected to be particularly high, the equity share price normally rises - more people want to share in those profits. In a similar way, when one company makes a bid for another, the share price of the company being taken over generally rises, because the demand for the equity shares has risen (the market knows that the company doing the taking over has to buy out the existing holders of the equity shares).
Where Does Professional Investment Management Add Value?

Most investors do not have the time to constantly study individual companies and analyze their earnings potential across all market sectors. Instead, they delegate investment management to professional investment managers. These managers specialize in one sector or country. They analyze companies both individually and by comparing with other similar companies (for example, companies which make the same product or are in the same part of the World). From this careful analysis, the mangers will aim to spot those companies with good prospects before other investment managers. They then buy the equity shares whilst they
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are still cheap. In exactly the same way, the investment managers can sell those equity shares in companies where the profits have now peaked. Rather than invest in just one or two companies, the professional investment manager will have a fund of sufficient size to allow investment in a large number of top rated companies. This diversification means that the fund returns will be protected to a degree if the equity shares of a particular company were to fall rapidly in value. Investors feel that stocks involve too much risk. But there is some risk attached to every investment product. It's just that it is more apparent in some and not so in others. Take bank fixed deposits, the safest of them all. Abhishake Mathura, head of Investment Advisory Services, ICICI Securities, says fixed deposits may give regular income but will not beat inflation over the long term. For instance, at retirement, it may appear that with a fund of Rs 1 crore and expenses of Rs 8 lakh per annum, it is best to put all the money in a deposit that pays 8% per annum.In reality, considering inflation and tax on the interest earned, this is not a good investment decision," he says. This is because inflation will keep lowering the purchasing power of your interest income, which will remain fixed for years on end. That is why experts say that a person, even if he is nearing retirement, can invest 20% funds into equities for extra returns. However, factors such as risk profile, time horizon and standard of living must also be kept in mind while taking such decisions.
Reasons to Invest
There are a number of reasons to invest in stocks and other financial instruments:
To make money. Stocks can help shareholders gain a return on their investment in two ways: with capital gains from the stocks price rise; and with dividends, which companies may distribute to shareholders depending on annual income. Investors in bonds are repaid through interest, typically paid annually.
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Financial flexibility. You can buy or sell your shares anytime during the trading day. They are liquid assets, unlike other investments such as real estate. The financial structure of equities can give owners flexibility to be able to sell when cash is needed quickly such as during financial emergencies.
Tax advantages. Stock investments and related investments may offer tax rebates or other benefits. In France the Plan epergne en actions (PEA) or in Belgium the stocks capital gains tax regime are relevant examples. These tax benefits differ by European country and are governed by laws that are subject to change. While tax benefits for some may prove important to some investors, they are generally not considered the primary reason for investing in equities.
Portfolio diversity. Generally, the more potentially profitable an investment, the higher its risk. Stocks may generate huge earnings for a certain period of time, but can also present a high risk for financial loss. When building investment portfolio, individual investors often choose to mix distinct classes of assets to lower risk. They also consider an investment horizon: The longer the investment period, the more attractive it can be to invest in to invest in relatively risky assets, such as stocks, whose profits tend to exceed losses over time.
To help spur a companys or an economys growth. By investing in company shares, individual investors can contribute to their development; savvy investors often choose companies that show great promise.
Advantages of Investing in Equities

There are several benefits derived from investment in shares. Below are some of them: Inflation rate is higher than commercial banks interest rate but lower than equity price appreciation.
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You are protected from the eyes of the public. Nobody knows your worth except you tell him/her. In other investments, people can easily look at the assets of the business or your property (real estate) and come up with approximate worth of it.
The rate of growth is far beyond the bank interest rate. Dividend: This is cash reward given to shareholders as part of the profit made by the company at the end of each financial year. It is declared at the annual general meeting (AGM) of the company. The larger the units of your shareholding, the more money you receive at the end of each financial year. There are companies that have yearly dividend policy. Your financial adviser should be able to tell you some of them.
Bonus issues: This is free shares given to existing shareholders of a company. Sometimes, company declares bonus instead of dividend or both. For instance, in the third quarter of the year 2007, First Bank of Nigeria declared one-for-one bonus. This means a unit for every unit you already hold. For example, a man who holds 100,000 units previously will be given an additional 100,000 units free after the declaration of the First Bank bonus making the values of his shares 200,000 units.
Capital appreciation: Price of shares move up or down responding to the forces of demand and supply. For instance, few months ago there was a high demand of the shares of Benue Cement Company of Nigeria which traded for about N6.00 per share. Due to scarce nature of it and the good performance of the company, a unit of it now costs about N 48.oo This implies that there is about 700% increment in the value of the stock. If you had bought N50, 000 units of the shares at N6.00 per share, it means that you spent 300,000.00 buying the shares. Now, that it costs N48.00 per share, if you are to self your shares, your returns would be 48x50,000,which is equal to 2.4 million naira. Thus your capital has appreciated from N300, 000.00 to 2.4 million naira. Indeed stock business has the potential of making you a millionaire overnight.
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Disadvantages of investing in shares

The benefits of investing in share are many but there are few pitfalls to avoid. These include: Crash in share prices: Due to one reason or the other, sometimes share prices drop so much. A discerning investor should know what to do at any point in time. Sometimes companies go into liquidation thereby eroding the investments of ordinary shareholders. For example, some banks in Nigeria that did not meet up with the N25 billion minimum capitals as directed by the central Bank of Nigeria (CBN) died with investors money. You must be vigilant to watch over your investment if you consider it important to you. Fraudulent stock brokers: some stockbrokers are unfaithful to their clients. They may collect your money when there is perceived information that these hares of a particular company is a good one and instead of making the transactions in your name may divert the money for their selfish interest, may be use it to make their own investments. When the company has closed her book, they may call you for refund or may embezzle your money like that. You must be careful in selecting your stockbroker. Only institutional investors and ultra-high-net-worth individuals can access alternative investments. Fraudulent stock brokers: some stockbrokers are unfaithful to their clients. They may collect your money when there is perceived information that these hares of a particular company is a good one and instead of making the transactions in your name may divert the money for their selfish interest, may be use it to make their own investments. When the company has closed her book, they may call you for refund or may embezzle your money like that. You must be careful in selecting your stockbroker.. Alternatives invest in derivatives, which in turn, increase their risk.
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Reality: Derivatives are commonly used investment tools designed to manage or hedge out risks. 5. Myth: Investors do not have access to their capital if they invest in Alternatives will always outperform stocks. Reality: Just like traditional assets, alternatives are subject to inherent risks and will outperform (or underperform) at different periods in time. It is easy to pick the right alternative - all I need to do is look at historical performance. Reality: Investors need to consider a wide array of factors beyond performance when selecting which alternatives are best suited for them. Investing in one type of hedge fund or private equity fund will diversify my portfolio. Reality: Investing in only one type of alternative strategy may provide some diversification benefits, but can also concentrate risk exposures. Alternatives failed to protect investors during the financial crisis. Reality: In general, investors with exposure to alternatives fared better during the financial crisis than those with traditional portfolios. Alternatives are too expensive. Reality: Although fees for alternatives are typically higher than they are for traditional investments, the fees pay for broader access to investments and are intended to align manager and investor interests alternatives.
2. FIXED INCOME SECURITIES:

An investment that provides a return in the form of fixed periodic payments and the eventual return of principal at maturity. Unlike a variable-income security, where payments change based on some underlying measure such as short-term interest rates, the payments of a fixed-income security are known in advance. Fixed income refers to any type of investment under which the borrower/issuer is obliged to make payments of a fixed amount on a fixed schedule: for example, if the borrower
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has to pay interest at a fixed rate once a year, and to repay the principal amount on maturity. Fixed-income securities can be contrasted with equity securities, often referred to as stocks and shares that create no obligation to pay dividends or any other form of income. In order for a company to grow its business, it often must raise money: to finance an acquisition, buy equipment or land or invest in new product development. The terms on which investors will finance the company will depend on the risk profile of the company. The company can give up equity by issuing stock, or can promise to pay regular interest and repay the principal on the loan (bond, bank loan, or preferred stock). The term "fixed" in "fixed income" refers to both the schedule of obligatory payments and the amount. "Fixed income securities" can be distinguished from inflation-indexed bonds, variable-interest rate notes, and the like. If an issuer misses a payment on a fixed income security, the issuer is in default, and depending on the relevant law and the structure of the security, the payees may be able to force the issuer into bankruptcy. In contrast, if a company misses a quarterly dividend to stock (non-fixed-income) shareholders, there is no violation of any payment covenant, and no default. The term fixed income is also applied to a person's income that does not vary materially over time. This can include income derived from fixed-income investments such as bonds and preferred stocks or pensions that guarantee a fixed income. When pensioners or retirees are dependent on their pension as their dominant source of income, the term "fixed income" can also carry the implication that they have relatively
limited discretionary income or have little financial freedom to make large or discretionary expenditures. Fixed Income can be a very important investment class by which one can diversify his/her portfolio to reduce risk. Putting all your money into equities can give you more returns but it does carry high risk as well. Diversification is a basic concept of financial planning and fixed income products come in handy to help us achieve this objective.
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Different types of Fixed Income Securities:
TYPES OF FIXED INCOME SECURITIES
COMPANY BONDS
FIXED MATURITY PLAN (FMP)
FIXED INCOMEMUTUAL FUNDS
FIXED DEPOSITSBANK AND COMPANY
PUBLIC PROVIDENT FUND (PPF)
NATIONAL SAVING CERTIFICATE (NSC)
POST OFFICE MONTHLY INCOME SCHEME (POMIS)
A. Bonds
In finance, a bond is an instrument of indebtedness of the bond issuer to the holders. It is a debt security, under which the issuer owes the holders a debt and, depending on the terms of the bond, is obliged to pay them interest (the coupon) and/or to repay the principal at a later date, termed the maturity date. Interest is usually payable at fixed intervals (semiannual, annual, and sometimes monthly). Very often the bond is negotiable, i.e. the ownership of the instrument can be transferred in the secondary
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market. This means that once the transfer agents at the bank medallion stamp the bond on the second market the bond is highly liquid. Thus a bond is a form of loan or IOU: The holder of the bond is the lender (creditor), the issuer of the bond is the borrower (debtor), and the coupon is the interest. Bonds provide the borrower with external funds to finance long-term investments, or, in the case of government bonds, to finance current expenditure. Certificates of deposit (CDs) or short term commercial paper are considered to be money instruments and not bonds: the main difference is in the length of the term of the instrument. Bonds and stocks are both securities, but the major difference between the two is that (capital) stockholders have an equity stake in the company (i.e. they are investors), whereas bondholders have a creditor stake in the company (i.e. they are lenders). Being a creditor, bondholders have absolute priority and will be repaid before stockholders (who are owners) in the event of bankruptcy. Another difference is that bonds usually have a defined term, or maturity, after which the bond is redeemed, whereas stocks are typically outstanding indefinitely. Ultimately the reason people invest in anything is to earn a return on their investment, and bonds are no exception. Bonds as an asset class offer several unique attributes that make them attractive to a wide variety of individuals. To Earn a predictable stream of income While there are exceptions, bonds pay a fixed rate of interest, at regular intervals, and on pre-determined dates. The income stream that you earn when buying a bond is predictable. Come rain or shine, as long as the issuer of your bond doesnt go bankrupt, you get your interest payment. Generally interest is paid every 6 months but there are variations depending on the type of bond you buy.
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To diversify their portfolio Bond prices and stock prices tend to move in opposite directions. When bond prices
are rising, often the stock market is performing poorly, and vice versa. Because of this lack of correlation many investors who hold a lot of stocks in their portfolio, will add some bonds into the mix to cushion the blow if the stock market does poorly. Tax Savings As we discuss in greater detail in our article on bonds and taxes, certain bonds, such as Treasury and Municipals, offer some unique tax benefits which include not having to pay federal, state, and or local government taxes. Interest Rate Speculation As we discuss in greater detail in our lesson on interest rates, one of the largest factors that affects the price of a bond is movement in interest rates. As many types of bonds are very sensitive to changes in interest rates, often times individuals find them a good instrument to speculate on the future direction of interest rates.
A. Fixed maturity plans (FMP):

A closed-end fund that invests in debt and money market instruments of the same maturity as the stated maturity of the plan. The focus of a fixed maturity plan is to provide a stream of income through interest payments, while exposing the investor to a lower level of risk. In todays investment world, FMP are considered better than Fixed deposits FMPs, as they are popularly known, are the equivalent of a fixed deposit in a bank, with a caveat. The maturity amount of a fixed deposit in a bank is 'guaranteed', but only 'indicated' in the FMP of a mutual fund. The regulator does not allow fund companies to guarantee returns, and hence the 'indicated returns' in FMPs. Typically, the fund house fixes a 'target amount' for a scheme, which it ties up informally with borrowers before the scheme opens. Since the fund house knows the interest rate
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that it will earn on its investments, it can provide 'indicative returns' to investors .FMPs are debt schemes, where the corpus is invested in fixed-income securities. The tenure can be of different maturities, from one month to three years. They are closed-ended in nature, which means that once the NFO (new fund offer) closes, the scheme cannot accept any further investment. These FMP NFOs are generally open for 2 to 3 days and are marketed to corporates and well-heeled, high net-worth individuals. Nevertheless, the minimum investment is usually Rs 5,000 and so a retail investor can comfortably invest to FMPs usually invest in certificate of deposits (CDs), commercial papers (CPs), money market instruments, corporate bonds and sometimes even in bank fixed deposits. The fund received is for a pre-specified tenure and the exit load from this plan is high (usually 1 per cent to 3 per cent, depending on the time of redemption). So, the fund manager has the liberty to deploy most of the funds mobilized under the scheme. The actual return can vary slightly, if at all, from the indicated return. Against that, a bank fixed deposit exactly prints the amount which is due to you on maturity on the FD receipt. However, FMPs do earn better returns than fixed deposits of similar tenure. FMPs are classified under the debt scheme category and enjoy certain tax benefits, such as:
Dividend in the hands of the investor is tax-free. But the mutual fund has to deduct a dividend distribution tax of 14.025 per cent in the case of individuals and Hindu Undivided Families (HUFs), and 22.44 per cent in the case of corporates.
Long-term capital gains (investment of more than a year) enjoy indexation benefit. Short-term capital gains are added to the income of the investor and taxed as per his/her slab, whereas the interest on a bank deposit (except where special 80C approved) is added to the income of the investor and taxed as per his/her slab.
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B. Mutual funds
A Mutual Fund in India is an entity which pools in peoples money and invests in stocks, bond and other securities to generate a return. Each investor is given units of the mutual fund in exchange for cash he then becomes an owner of the funds asset. The entity which does the collection and investing on behalf of all investors mutually is called Asset Management Company (AMC).The AMC releases a detailed prospectus of what the objectives are of the mutual fund, where it will invest the collected money, for how long and who the fund manager will be. The process by which a new mutual fund is launched to collect money from investors is called New Fund Offer (NFO). This was, until some years back, called IPO which lead to a lot of confusion and mistake of selling to the investors bought into mutual funds mistaking these pseudo IPOs of mutual funds with those of stocks when a company goes public.
How does it earn?

A mutual fund generates profits by using the investors money to buy and sell its holdings. The Net Asset Value (NAV) of a mutual fund is calculated by summing up the value of all its holdings (shares), subtracting the liabilities, and dividing the result by the total number of securities it holds. The NAV is the value at which investors buy and sell units of the mutual fund. When a mutual fund makes profits by buying low and selling high, it can distribute its earnings in two ways. First is by way of dividends which the investor receives. The second is by way of growth of the mutual fund itself. This is the capital gain the mutual fund generates for the investor over a period of time. As an investor, these are the two ways you can make money from a mutual fund.
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Where do they invest?

Mutual Funds invest in a wide variety of securities. The ones that buy and sell shares of companies are called equity mutual funds. So for example, Reliance Growth Mutual Fund could buy shares of Infosys (among others) and expect to make a profit by the capital appreciation of this stock. Equity mutual funds can take a lot of risk by investing all of their money into stocks. In this sense, their returns are tied to the fate of the stock market. So these are meant for investors who can take some amount of risk. Debt Mutual Funds are ones that invest in government securities, fixed deposits, corporate debt and other short and medium term debt products. These are marked by lower risk and high liquidity. Debt mutual funds are for risk adverse investors who want to stay away from the volatility of the stock market.
WHAT ARE VARIOUS TYPES OF MUTUAL FUNDS?

A common man is so much confused about the various kinds of Mutual Funds that he is afraid of investing in these funds as he cannot differentiate between various types of Mutual Funds with fancy names. Mutual Funds can be classified into various categories under the following heads:(A) ACCORDING TO TYPE OF INVESTMENTS: - While launching a new scheme, every Mutual Fund is supposed to declare in the prospectus the kind of instruments in which it will make investments of the funds collected under that scheme. Thus, the various kinds of Mutual Fund schemes as categorized according to the type of investments are as follows :(A) EQUITY FUNDS / SCHEMES
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(B) DEBT FUNDS / SCHEMES (ALSO CALLED INCOME FUNDS) (C) DIVERSIFIED FUNDS / SCHEMES (ALSO CALLED BALANCED FUNDS) (D) GILT FUNDS / SCHEMES (E) MONEY MARKET FUNDS / SCHEMES (F) SECTOR SPECIFIC FUNDS (G) INDEX FUNDS B) ACCORDING TO THE TIME OF CLOSURE OF THE SCHEME : While launching new schemes, Mutual Funds also declare whether this will be an open ended scheme (i.e. there is no specific date when the scheme will be closed) or there is a closing date when finally the scheme will be wind up. Thus, according to the time of closure schemes are classified as follows:(a) OPEN ENDED SCHEMES (b) CLOSE ENDED SCHEMES Open ended funds are allowed to issue and redeem units any time during the life of the scheme, but close ended funds cannot issue new units except in case of bonus or rights issue. Therefore, unit capital of open ended funds can fluctuate on daily basis (as new investors may purchase fresh units), but that is not the case for close ended schemes. In other words we can say that new investors can join the scheme by directly applying to the mutual fund at applicable net asset value related prices in case of open ended schemes but not in case of close ended schemes. In case of close ended schemes, new investors can buy the units only from secondary markets.
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C) ACCORDING TO TAX INCENTIVE SCHEMES: Mutual Funds are also allowed to float some tax saving schemes. according to this also:(a) TAX SAVING FUNDS (b) NOT TAX SAVING FUNDS / OTHER FUNDS (D) ACCORDING TO THE TIME OF PAYOUT: Sometimes Mutual Fund schemes are classified according to the periodicity of the pay outs (i.e. dividend etc.). The categories are as follows:(a) Dividend Paying Schemes (b) Reinvestment Schemes The mutual fund schemes come with various combinations of the above categories. Therefore, we can have an Equity Fund which is open ended and is dividend paying plan. Before you invest, you must find out what kind of the scheme you are being asked to invest. You should choose a scheme as per your risk capacity and the regularity at which you wish to have the dividends from such scheme. Therefore, sometimes the schemes are classified
Common types of Mutual funds in India:
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Money market funds These funds invest in short-term fixed income securities such as government bonds and treasury bills. They are generally a safe investment, but you cant expect your money to grow quickly.
Fixed income funds These funds buy investments that pay a fixed rate of return like government and corporate bonds, and mortgages. They aim to have money coming into the fund on a regular basis, mostly through interest that the fund earns. They are usually riskier than money market funds, and the price can go up and down.
Mortgage funds These funds invest in mortgages to create income for investors. The income comes from the payments the mortgage holders make. Mortgage funds usually offer a higher level of interest income than bonds and other fixed income investments due to the default risk of mortgages. The type of mortgage varies, based on the objectives of the fund. Examples: insured or government-guaranteed first mortgages on family homes and other properties, mortgages on residential and commercial properties.
Growth or equity funds These funds invest in equities like stocks and income trusts. These funds aim to grow faster than money market or fixed income funds, so there is usually a higher risk that you could lose money.
Balanced funds These funds invest in a mix of equities and fixed income securities. They try to balance the aim of achieving higher returns against the risk of losing money. Most of these funds follow a formula to split money among the different types of investments. They tend to have more risk than fixed income funds, but less risk than pure equity funds.
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Index funds These funds invest in equities or fixed income securities chosen to mimic a specific index such as the S&P/TSX Composite Index. The value of the units or shares of the fund will go up or down as the index goes up or down. Some funds may track a large number of the investments on an index, or a selection of the investments. Index funds typically have lower costs than actively managed funds because the portfolio manager doesnt have to do as much research or make as many investment decisions.
Active vs. passive management

Active management means that the portfolio manager buys and sells investments, attempting to outperform the return of the overall market. Passive management involves buying a portfolio of securities designed to track the performance of a market index. Specialty funds These funds invest in equities or fixed income securities in a specific region (for example, Asia), or a specific sector (for example, information technology). Or, they may focus on an emerging market, like eastern Europe, or a theme like socially responsible investing. These funds sometimes have very high returns. At the same time, there is a very high risk that you could lose money. Real estate funds These funds may invest directly in property or indirectly through real estate management companies or real estate income trusts (REITs). REITs invest in properties that earn income, such as shopping malls and office buildings. The risks of a real estate fund are often higher than other types of funds, as are the returns. Before you invest, understand the funds investment goals and make sure you are comfortable with the level of risk. Learn more about how mutual funds work. You may also want to speak with a professional adviser to help you decide which types of funds best meet your needs.
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Mutual funds provides the following benefits

Automatic diversification at various levels. Access to financial markets worldwide. Access to all major asset classes. A broad selection of fund types. A diversity of investing styles. Professional management. Elimination of the need for individuals to perform detailed and ongoing securities analysis.
The option of making automatic investments and withdrawals. Many funds can be purchased with small initial and subsequent investments. No transaction fees if you pick the right place to open your account. No sales commissions if you choose no-load mutual funds or invest through a retirement plan that offers no-load funds.
Disadvantages of mutual funds:
No Insurance: Mutual funds, although regulated by the government, are not insured
against losses. The Federal Deposit Insurance Corporation (FDIC) only insures against certain losses at banks, credit unions, and savings and loans, not mutual funds. That means that despite the risk-reducing diversification benefits provided by mutual funds, losses can occur, and it is possible (although extremely unlikely) that you could even lose your entire investment.
Dilution: Although diversification reduces the amount of risk involved in investing in

mutual funds, it can also be a disadvantage due to dilution. For example, if a single security held by a mutual fund doubles in value, the mutual fund itself would not double in value because that security is only one small part of the funds holdings. By holding a
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large number of different investments, mutual funds tend to do neither exceptionally well nor exceptionally poorly.
Fees and Expenses: Most
mutual that pay for the funds management expenses
(usually around 1.0% to 1.5% per year for actively managed funds). In addition, some mutual funds charge high sales commissions, 12b-1 fees, and redemption fees. And some funds buy and trade shares so often that the transaction costs add up significantly. Some of these expenses are charged on an ongoing basis, unlike stock investments, for which a commission is paid only when you buy and sell .
Poor Performance: Returns on a mutual fund are by no means guaranteed. In fact, on

average, around 75% of all mutual funds fail to beat the major market indexes, like the S&P 500, and a growing number of critics now question whether or not professional money managers have better stock-picking capabilities than the average investor.
Loss of Control: The managers of mutual funds make all of the decisions about which
securities to buy and sell and when to do so. This can make it difficult for you when trying to manage your portfolio. For example, the tax consequences of a decision by the manager to buy or sell an asset at a certain time might not be optimal for you. You also should remember that you trust someone else with your money when you invest in a mutual fund.
Trading Limitations: Although mutual funds are highly liquid in general, most
mutual funds (called open-ended funds) cannot be bought or sold in the middle of the trading day. You can only buy and sell them at the end of the day, after theyve calculated the current value of their holdings.
Size: Some mutual funds are too big to find enough good investments. This is especially
true of funds that focus on small companies, given that there are strict rules about how much of a single company a fund may own. If a mutual fund has $5 billion to invest and
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is only able to invest an average of $50 million in each, then it needs to find at least 100 such companies to invest in; as a result, the fund might be forced to lower its standards when selecting companies to invest in.
Inefficiency of Cash Reserves: Mutual funds usually maintain large cash reserves
as protection against a large number of simultaneous withdrawals. Although this provides investors with liquidity, it means that some of the funds money is invested in cash instead of assets, which tends to lower the investors potential return.
Too Many Choices: The advantages and disadvantages listed above apply to mutual
funds in general. However, there are over 10,000 mutual funds in operation, and these funds vary greatly according to investment objective, size, strategy, and style. Mutual funds are available for virtually every investment strategy (e.g. value, growth), every sector (e.g. biotech, internet), and every country or region of the world. So even the process of selecting a fund can be tedious.
Tax aspects of mutual funds help the investors:
Choose the most tax-advantaged way to determine the cost of your mutual fund shares.
When you sell shares of a mutual fund, you owe tax on your gain. But determining the gain can be tricky, especially if you've invested at various times. The IRS allows you to choose among several methods to determine the cost of your initial investments, which is called your cost basis. Learn more about cost basis.
Keep your Records

As a long-term investor, you may find yourself selling shares that are five, 10, 15 or more years old. That's why it's important to keep your annual mutual fund statements with your other important papers. These statements include the price of the mutual fund shares you bought through the years.
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Don't forget reinvested dividends.

When you automatically reinvest dividends, you increase the cost of your shares (cost basis) and decrease the taxes owed upon sale. If you forget to include dividends in the cost of your investment, you might pay taxes on gains you never realized.
Avoid check writing features on mutual funds other than money market funds.
If you write a check against a bond fund, for example, you have sold bond fund shares and caused a taxable event. Write several of these checks and the recordkeeping can become difficult. Money market funds seek to preserve the value of a share price at $1. When you sell $1 shares that you bought at $1, there is less of a chance that the sale will be a taxable event.
Consider the tax implications of exchanging from one fund to another .

Even if you're electronically transferring shares of one mutual fund to another mutual fund, you are selling the shares of the first fund and buying shares of the second. The sale of the first fund is a taxable event unless the funds are in a retirement plan or other taxdeferred account.
Review your withholding or estimated tax payments if you make a big sale.
If you do not have enough tax withheld by the end of the year, you could owe taxes on your gain as well as an IRS penalty. If you're making a sizeable sale, consider talking to your company payroll department about adjusting your withholding to accommodate the taxes you'll owe. Another option is to make an estimated tax payment to cover the additional taxes.
Check out year-end distribution dates.

This often occurs in December. You may want to delay purchasing shares in a fund until after this date, which is called the ex-dividend date, to avoid taxes on an investment you just made.
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C. Public provident funds (PPF)

PPF is a 30 year old statutory scheme of the Central Government started with the objective of providing old age income security to the unorganized sector workers and self-employed persons. Presently, there are nearly 30 lakh PPF account holders in India across banks and post offices. If you are looking for a safe investment that gives you tax benefits and decent returns, PPF could be the answer for you. Let us find all about PPF in this article.
What are public provident funds?

The Public Provident Fund or PPF, as it is called is a central government backed investment scheme that allows the risk-conscious investor to invest his money for the long term and earn interest on it. Public Provident Fund is an excellent way to get tax Net in our country; the PPF is an excellent tool for retirement planning, especially for the exemptions under Section 80C of the Income Tax Act. Since there is no Social Security non-salaried person. This article will explain what PPF actually is and the next article will guide you through the process of opening a PPF account for yourself.
Advantages of public provident fund:

Lowest Risk than any other Government or private sector schemes in India Tax Benefits You are eligible for 20% tax rebate. The Maximum you can invest is Rs.20,000. 1. Great Returns 8.7% Compounded Annually No Tax on Interest Earned This is perhaps the great feature. Unlike other Schemes, the Tax on Interest earned from PPF is NIL, Flexibility of Investment You can invest from Min. Rs.500 per annum to Maximum Rs.1, 00,000 per Annum by this Scheme.
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Exempt from All Wealth Tax The Corpus accumulated under PPF is exempt from all types of Wealth Taxes.
The Disadvantages of the Public Provident Fund

The Interest rate keeps changing Once upon a time (In 80s), the interest rate from PPF was as high as 17% per annum. The Government has gradually reduced the interest rate to 12%, 10%, 9.5% and today it is 8% only. Long Locking Period The Long locking period of 15 years is another disadvantage. Because if one have to put aside money for 15 Full years than why to go for Fixed return Instruments? Instead of that why not go for Equity because in the long run (More than 10 years), the risk from equity becomes almost ZERO. Lack of Liquidity Your money is stuck for years on end. It is not as easy as selling some shares or mutual fund units.
Tax benefits
Public Provident Fund scheme stands out in terms of benefits offered. This is because investment in PPF scheme falls under triple E (Exemption) regimen i.e. Principal, Interest and outflow all are tax exempted. This means that you get tax benefits from investing your money and also the interest and maturity payments are tax exempt.
D. National saving certificate:

National Savings Certificate or NSC certificate is the most popular and safest tax saving plan in India. It is considered as the long term tax saving investment plan for the
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investors. National Savings Certificate (NSC certificate) is financially supported by Indian government and this tax saving Certificate issued by postal department of India.
Tax benefit
Investors have a investment process into a NSC is that there is a tax benefit that is available when the investment is made into the instrument. The amount invested is allowed as a deduction under Section 80C of the Income Tax Act and this is part of the overall Rs. 1 lakh limit that is present here. At the same time there is an amount that is earned as interest every year and this figure is reinvested because it is not paid out. The amount that is reinvested is also considered as a part of the overall tax deduction and hence this can be added on to the deduction figure which is a good benefit for the investor. The interest earned is however taxable and hence this has to be considered on a yearly basis in the tax workings. In most other instruments the tax benefit is available only on the initial amount invested and not the interest earned
Advantages of NSC for the investors

NSC is short term investment and best for tax saving especially for Government employees, salaried people and businessmen. One can take loan by keeping NSC as collateral security. There is no maximum limit of investment, though tax benefit under 80cc is up to 1 lakh. There is no tax deduction at source. It can be purchased on behalf of a minor too. It can be purchased at any post office and can be transferred to any post office to collect maturity amount. Rate of interest is more than fixed deposits and once taken at any rate will not change in subsequent years.
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Interest is compounded 6 monthly and the interest is reinvested and provide tax rebate under 80cc
Disadvantages of NSC investments

Trusts cannot buy NSC. There is lock in period of 5 years for NSC VIII issue and 10 years for NSC IX issue. If rate of interest increases in next year, here it will be fixed on same rate of interest at which it was purchased, however it is more an advantage as the rates are in fact going to decrease in coming years. Thus if NSC is purchased every month for 5 years and is reinvested on maturity one can get a handsome amount of monthly pension on retirement
E. Post office monthly income scheme (POMIS):

If you are looking for a decent capital gain with a secured investment option then Post of Monthly Income Scheme (POMIS) may end your search. Generally, we end up parking our funds in fixed deposits and in other debt investments plans but POMIS promises better benefits as compared to others. Lets have a look at what POMIS is, how it functions and what all it offers. Post Office Monthly Income Scheme plan is one of the many investment options offered by Post Office in India. Apart from delivering mails, post office offers a bouquet of services that include sale of forms, bill collection, savings schemes, life insurance cover etc. Schemes offered by Post Offices are risk free as there is no touch of equity in them. POMIS is also one such scheme. Let us have a look at the features and benefits of POMIS.
Post Office MIS Interest Rate

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This is a scheme from the Indian postal service that earns you an interest of 8% per annum, and generates a monthly income for you. So if you invest Rs. 100,000 in it your annual interest at 8% will be Rs. 8,000, and you will get Rs. 666.67 monthly.
Post Office MIS Tenure

The maturity period of the scheme is 6 years, at the end of which you will get your money back. You cannot redeem your money within a year, but you can redeem it after that upon paying a penalty.
Minimum and Maximum Investment

The minimum sum you can invest is Rs. 1,500, and you can go up to Rs. 450,000 in case of a single account and Rs. 900,000 in case of a joint account.
Tax on Post Office MIS

There is no TDS on the Post Office MIS, but the interest income is taxable in your hands. The interest income from post office MIS used to be tax free under section 80L, but that section has been withdrawn from April 1 2005.
Interest can be automatically credited to your bank

At the time of opening the scheme you can give in your bank account details, and interest will be automatically credited to your bank every month.
Transfer from one post office to another

There is a provision that allows you to transfer your money from one post office to another. So, if you opened your account in one post office, and moved to another place you can fill up a transfer form with them, and move your scheme to another post office.
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Benefits & Features of Post Office Monthly Income Scheme Account

Minimum investment amount is Rs.1500/- or in multiple thereafter. A single account can hold maximum amount up to Rs. 4.50 lakhs and in case of a joint account Rs.9 lakhs is permissible. Interest rate of 8.5% per annum payable monthly i.e. 01.04.2012 Maturity period is 5 years. Claiming Bonus on Maturity has been undone i.e. 01.12.2011. Account can be opened by an individual, two/three adults jointly, and a minor through a guardian. You can avail a facility of premature closure of account after 1 year but on or before 3 years @ 2.00% discount. There would be a Deduction of 1% if account is closed prematurely at any time after three years. There is no Tax rebate Tax Deduction at Source (TDS) is not applicable. This scheme provides minors with a separate limit of investment of Rs. 3 lakhs and the same is not compiled with the limit of guardian. It also provides you with auto credit facility of monthly interest to saving account if both accounts are at the same post office. Deposits are also exempt from wealth tax. Opening of this account by Non-Resident Indian / HUF is not permissible. Nomination facility is also available under this scheme. You can also avail the facility of reinvesting your amount on maturity of the account.
Inflation Protection
The POMIS is not inflation protected, which means whenever inflation is above the current guaranteed interest rate of 8.50 per cent; the return from the scheme earns no real
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returns. However, when the inflation rate is below 8.50 per cent, it does manage a positive real rate of return.
Guarantees
The interest rate in the POMIS is guaranteed and is currently 8.50 per cent per annum and paid out monthly. The interest rates on this scheme will be notified before April 1 of that year, and is aligned with G-Sec rates of similar maturity, with a spread of 0.25 per cent.
Liquidity
The POMIS is liquid, despite the 5-year stipulated lock-in. The liquidity is offered in the form of withdrawals subject to conditions and penalties. The facility of pledging the deposit in the POMIS account to obtain loan is not permitted as it defeats the purpose of regular income. 1. Premature withdrawal or closure of the POMIS account is permitted after completion of one year from the date of opening of the account after deducting a penalty for early withdrawal or closure that varies from 1-2 per cent depending on the completed tenure of the account. 2. If the account is closed on or before the completion of three years of opening the account, an amount equal to 2 per cent of the deposit is deducted and the remainder paid to you. 3. If the account is closed after completion of three years from opening the account, an amount equal to 1 per cent of the deposit is deducted and the remainder paid to you. The savings and MIS account have passbooks with rules applicable to the accounts stated in them.
3. SMALL SCALE SCHEME:

The small saving schemes presently in operation have significant relevance, especially for salaries people and other fixed income investors like retired persons.
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Tax Benefits:
All these small savings schemes are entitled to some tax benefits or the other, like Income tax etc. the actual quantum of benefits varies from scheme to scheme. In fact it is mainly these Tax benefits which attract people to invest in these benefits which attract people to invest in this scheme since the rate of return on them may be fixed and is usually not very high. The schemes are also often advantageous for those in high tax brackets.
4. BANK DEPOSITS:
Banks needs two things to survive 100% for your money and 90% of your faith. Investors invest in both Saving Accounts and Term Deposits Bank can pay 4% interest on Saving Accounts and 7.0% to 8.5% p.a. on term Deposits.
5. PROTECTED THOUGH INSURANCE:

Insurance is a just a way of spreading financial risk from individual shoulders to the shoulders of us all as a group The LIC offers several types of Life Insurance Policies. Recently it reduced the premium rates and increased bonus rates. Strictly speaking these schemes are for protection only, not for annual yields and capital appreciation.
Tax benefits:
There is a tax rebate under section 88on Life Insurance Premium. Many investors especially those in higher tax brackets, used to buy Life insurance mainly to take advantages of these tax benefits. Insurance premium along with contributions to provident fund etc. are eligible for tax rebate up to a maximum of Rs 70000. One may like to take full advantages of this option every year.
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Take a Loan from LIC

Wherever possible take a loan from LIC under its various schemes provided you intend to use the amount for productive purpose, like house construction, investment in real estate and financial assets.
6. INVESTING IN REAL-ESTATE:
The greatest attraction of real estate investments is that it acts as a partial hedge against inflation. Accordingly real estate prices go up during inflationary times. Real estate investment includes Agricultural land, Farm house, urban land, House property and Commercial property. In the late eighties and early nineties, property development or investments in property emerged as an alternative and profitable mode of investment. The was due to increased urbanization.
The different types of real estate investments are as follows
TYPES OF REAL ESTATE INVESTMENTS
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RENTAL
TRADING
LONG TERM INVESTMENT
Rental The aim of this form of investment is to rent out Property to a tenant and earn
a continuous stream of rent from the tenant. The value of the property also increases over a period of time. The risk in this form of investment is the owner of the property has to find out a tenant and also need to pay for the maintenance expenses.
Trading Basically traders in real estate in order to make a quick profit buy properties
for a short tem ( six months) and sell them at a profit. Traders look out for buying undervalued properties/very hot properties and sell them at a profit.
Long Term Investment There is a certain group of investors who invests in real
estate basically plot of land from a long term perspective. The objective is over a period of time the value of the property will rise and the owner will make a profit by selling it. The biggest flaw in this investment is money is blocked for an indefinite period.
7. INVESTING IN GOLD AND SLIVER:

These are traditional investments in all countries, but perhaps more so in India, they offer fairly good protection in long run against inflation. However, though for investment purposes it may not be good mode of investment still it has to be purchased in small quantity for social and other obligations etc.. earlier gold prices used to run diametrically
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opposite to share prices. But this is not so now because of the other variable modes of investment. Gold remains our cherished desire but cant be a source of rich returns on our investment made out of our hard-earned savings.
INTRODUCTION
The chapter research design includes the following contents: Title of the study. Statement of the study. Objectives of the study.
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Methodology. Sampling technique. Sources of data collection. Limitations of the study. Research design is concerned with turning the research question into a testing project. Best design depends on your research questions. Every design has its positive and negative side. Research design can be divided into fixed and flexible research designs (Robson, 1993 other have referred to this distinction with quantitation research designs and qualitative research designs. However, fixed designs need not be quantitative, and flexible design needs not to be qualitative. in fixed designs the design of the study is fixed before the main stage of data collection take place. Fixed designs are normally theory-driven; otherwise it is impossible to know in advance which variables need to be controlled and measured. Often these variables are quantitative. Flexible designs allow for more freedom during the data collection. One reason for using a flexible research design can be that the variable of interest is not quantitatively measurable, such as culture. In other cases, theory might not be available before one starts the research.
Title of the study

The study is entitled A Study on best investment options for Indian investors.
Statement of the problem

The research is titled A study on best investment options for Indian investors with reference to top investment company of India.
Objectives of study
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Every investment comes with risks; it is impossible to speak about return without motioning the risks inherited in it. So an investor must analyze various investments vehicles available to him with risk involving in it and must come to a decision, whether to go for it or not. A prospective investor can also collect information from various sources such as interview, magazines, newspaper, reports, etc.
PRIMARY OBJECTIVES
The Primary Objectives of the study are, 1. To know the various investment avenues available to a prospective investor. 2. To analyze those investment avenues. 3. To report the performance of these Investment vehicles. 4. To understand the risk and return patterns of various Investment vehicles. 5. To study the preferences of the investor.
SECONDARY OBJECTIVES
1. To assist a prospective investor in investing. 2. To know in depth knowledge of various investment vehicles. 3. To present information about investment avenue
Research Methodology
The system of collecting data for research projects is known as research methodology. The data may be collected for either theoretical or practical research. For example management research may be strategically conceptualized along with operational planning methods and change management. Formulating of research
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questions along with sampling whether probable or non-probable is followed by measurement that includes surveys and scaling. This is followed by research design, which may be either experimental or quasi-experimental. The last two stages are data analysis and finally writing the research paper, which is organized carefully into graphs and tables so that only important relevant data is shown.
Sources of data
There are two important sources to collect the information needed, they are:
1. Primary sources 2. Secondary sources Primary sources

Primary sources refer to those sources where the information is directly collected from the population by the researcher. The primary data is a combination of descriptive and exploratory was undertaken to study was done by taking 50 sample size, using sample techniques, sampling methods and preparation of questionnaire were used to gather data for survey.
Secondary sources
Secondary data is the information collected is drawn from the various sources such as: Books
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Internet Magazines
Sampling
Sampling is that part of statistical practice with the selection of a subset of individual observations within a population of individuals intended to yield some knowledge about the population of concern, especially for the purposes of making predictions based on statistical inference. Sampling is broadly divided into probability sampling and non-probability sampling.
Probability sampling
A probability sampling scheme is one in which every unit in the population has a chance (greater than zero) of being selected in the sample, and this probability can be accurately determined. The combination of these traits makes it possible to produce unbiased estimates of population totals, by weighting sampled units according to their probability of selection. Probability sampling includes: Simple random sampling Systematic sampling stratified sampling Probability proportional to size sampling Cluster or Multistage sampling.
Non-probability sampling
Non-probability sampling is any sampling method where some elements of the population have no chance of selection (these are sometimes referred to as out of coverage / under covered), or where the probability of selection cant be accurately
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determined. It involves the selection of elements based on assumptions regarding the population of interest, which forms the criteria for selection. Non-probability sampling includes: Accidental sampling Quota sampling Purposive sampling Judgmental sampling.
Sampling technique
The sampling technique includes both internal and external data. Internal data were the company manuals, annual reports, brochures, etc. external data are current information regarding the company obtained from online sources, magazines etc. Non-probability sampling technique is used to conduct this study. Judgmental sampling technique has been implemented
Sampling size
For this research sample size of 50 respondents was used.
Data collection
Data collection is a term used to describe a process of preparing and collecting data for example as part of a process improvement or similar project. The purpose of data collection is to obtain information to keep on record, to make decisions about important issues, to pass information on to others. Primarily, data is collected to provide information regarding a specific topic.
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Data collection usually takes place early on in an improvement project, and is often formalized through a data collection plan which often contains the following activity. Pre collection activity- agrees on goals, target data, definitions, methods etc. Collection data collection Present findings usually involves some form of sorting analysis and/or presentation
Limitations of study
Since this study is restricted to Bangalore it cannot be generalized to all the places. More information and time might have yielded better result.
Introduction:
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The company profile can be summarized in this chapter. The chapter gives a brief idea about the study of best investment options for Indian investors. It gives the history of the investors of different industry.
Bajaj capital Bajaj Group

is an Indian conglomerate founded by Jamnalal Bajaj in
1926, Mumbai. Bajaj Group is one of the oldest & largest conglomerates based in Mumbai, Maharashtra. The group comprises 34 companies & its flagship company Bajaj Auto is ranked as the world's fourth largest two- and three-wheeler manufacturer. Some of the notable companies are Bajaj Electricals, Mukand Ltd & Bajaj Hindustan Ltd. Involvement in various industries that include automobiles (2- and 3wheelers), home appliances, lighting, iron and ste45el, insurance, travel and finance. The group is headed by Rahul Bajaj.
History:
Bajaj Capital Limited ("Bajaj Capital") is India's premier "Investment Services" Company, with nearly 50 years of experience in helping people protect and grow their wealth. We've helped to create more millionaires than any other firm in India. But it's our deep personal relationships with clients that truly set us apart. No other firm can match the depth of our experience and our dedication to personal service. The markets may fluctuate, but our dependability never does. Bajaj Capital holds the Certificate of Registration [INM000010544] to act as Merchant Banker (Cat-I), Underwriter, Dealer on the OTC Exchange of India, Depository Participant [IN-DP-NSDL-267-2006] of NSDL, granted by the Securities and Exchange Board of India. Further, Bajaj Capital is an AMFI Registered ARN [0010] holder and has also been granted the Certificate of Registration [Regn.No.03310] to act as Point of Presence by the Pension Fund Regulatory Authority for the NPS Schemes.
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Bajaj Capital Limited, a financial services company, provides investment advisory and financial planning services to individual investors, corporate houses, institutional investors, non-resident Indians, and high net worth clients in India. It offers investment, insurance, tax saving, retirement, financial, cash flow, and childrens future planning services. The company also distributes various financial and investment products, such as mutual funds, life and general insurance, bonds, post office schemes, fixed deposits, initial public offerings, and real estate property investments. In addition, it provides investment banking services for private and public sector enterprises. The company operates through a network of investment centers. Bajaj Capital Limited was founded in 1964 and is based in New Delhi, India.
Milestone
Establishing company milestones is a necessity for anyone negotiating an agreement with a venture capital investor, to fund a biotech startup. When you think about it, though, all this talk about milestones is just another way of saying setting goals or planning an agenda, and you dont have to be involved with a VC company to do that. In fact, having a clear picture of what you want to accomplish and in what timeframe is an important part of running any business, and a requirement for writing a business plan. To get you started, Ive created a list of suggested milestones to consider, specific to the biotech industry, including goals focused on R&D, business management and financial targets.
Objectives
To serve our clients with utmost dedication and integrity so that we exceed their expectations and build enduring relationships. To offer unparalleled quality of service through complete knowledge of products, constant innovation in services and use of the latest technology. To always give honest and unbiased financial solutions and earn our clients everlasting trust.
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To serve the community by educating individuals on the merits of investments and in turn help shape a financially responsible citizen. To create value for all stake holders by ensuring profitable growth. To build an amicable environment that accords respect to every individual and permits their personal growth. To utilize the power of teamwork to function as a family and build a seamless organization.
360 financial planning

360 financial planning is a unique software-based simulation that takes a holistic view of your life-long financial needs and charts a personalized investment strategy to help you meet them. Broadly, it involves: Identification your current financial status Listing and prioritizing your goals Creating a sound investment plan to achieve them Monitoring the plan to facilitate swift corrective action 360 financial planning is based on the premise that every individual has certain basic financial needs that are expressed at various stages of life (getting married, buying assets like homes, vehicles, or providing for your childs education and wedding and retiring finally). With the help of 360 financial planning, you can prepare yourself well in time for all these goals.
Why do you need Bajaj capitals 360 financial planning?

You may have dreams, needs and desires. For example, you could be dreaming of:
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Owing a new car Buying a dream house Providing your children with the best education Planning a grand wedding for your children Having a great time after your retirement But in todays world of skyrocketing costs and increasing inflation, how many of these dreams can you hope to turn into reality? By planning well, you can utilized your limited resources to the fullest 360 financial planning helps you see the big picture and invest for specific long-term and short-term goals well in time
Who needs 360 financial planning?

Everyone does! Because everyone has a right to dream. And realizing dreams in easier when you work to plan thats Reliable realistic Proven Bajaj capitals 360 financial planning program could make a difference to all those who wish to lead a worry-free. Financially secure life Heres is how financial plans are prepared: The process begins with identifying your needs with the help of the need analysis form Our financial planners then use the especially-created 360 financial planning software to generate a personalized snapshot The snapshot gives you a graphic account of all your financial requirements, at every stage of your future life. Based on the snapshot, out experts work out an investment strategy. Once implemented, our experts keep regular track of your investments.
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Briefly 360 financial planning comprises:

Investment planning: to make wealth grow Cash flow planning: to provide for assets and meet the periodic cash requirements
Tax planning: to save on taxes and increase your income Insurance planning: to protect yourself, if your family and your assets

Childrens future planning: to give your children a financially secure future Retirement planning: because retirement is a time to relax, not to get worried Investment planning:
Everyone needs to save for a rainy day. Once you have saved enough to take care of emergencies, you should start thinking about investing and to money grow. We can help you plan your investments so that you can reap adequate benefits and achieve your financial goals Bajaj capitals investment planning services includes:
Risk profiling Asset allocation and portfolio rebalancing Creation and accumulation of wealth through systematic investment plans (SIP) Regular review of progress and portfolio rebalancing Essentially, investment planning involves identifying your financial goals throughout your life, and prioritizing them investment planning is important because it helps you to derive the maximum benefit from your investments. Your success as an investors depend upon your ability to choose the right investment options. This, in turn, depends on your requirements, needs and goals. For most investors. However, the three prime criteria of evaluating any investment option are liquidity, safe and return.
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Investment planning also helps you to decide upon the right investment strategy. Besides your individual requirement, your investment strategy would also depend upon your age. Personal circumstances and your risk appetite. These aspects are typically taken care of during investments planning. Investment planning also helps you to strike a balance between risk and returns. By prudent planning. It is possible to arrive at an optimal mix of risk and returns that suits your particular needs and requirements.
Cash flow planning

In simple terms, cash flow refers to the inflow and outflow of money. It is a record of your income and expenses. Though this sound simple, very few people actually take the time out to find out what comes in and what goes out of their hands each month. Cash flow planning refers to the process of identifying the major expenditures in future (both short-term and long term) and making planned investments so that the required amount is accumulated within the required time frame. Cash flow planning is the first thing that should be done prior to starting an investment exercise. Because only then will you be in a position to know how your finances look like, and what is it that you can invest without causing a strain on yourself. It will also enable you to understand if a particular investment matches with your flow requirement. So does it involve looking at future cash flows only? Not really. You should always do a cash flow for yourself as on date, and you will realize that you could have a potential savings amount within each month of your working life. This is the amount that you should look at saving for meeting your financial goals. The best way of doing this is to have a personal budget.
Why is cash flow planning important?

Cash flow plans are commonly used by business houses. Without a viable cash flow plan, a company could easily spend more than its revenue, putting it in peril. Unfortunately,
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most of us do not realize that a cash flow plan is as important for people like us as well. The principle that apply to corporate finance and to our personal lives are largely the same. There has never been a bigger need than today for families and individuals to work out cash flow plans. Without proper cash flow planning one could easily get caught in the debt trap of course, it goes without saying that creating a plan is not enough. One also needs to implement the plan, besides bringing about a change in the splendid habits. Cash flow plan brings you face-to-face with what you should ideally be saving, and investing in a systematic and regular manner, and what would it mean to you to withdraw from your portfolio after a couple of years. It brings down in numbers what your financial future has in store for you. And gives you and give a crystal clear view (as much as in possible with inflation and the interest rate scenario
Tax Planning
Proper tax planning is a basic duty of every person which should be carried out religiously. Basically, there are three steps in tax planning exercise. These three steps in tax planning are: Calculate your taxable income under all heads i.e. Income from salary .House property , business & Profession , Capital Gains and income from other sources Calculate tax payable on gross taxable income for whole financial year. After you have calculated the amount of your tax liability , you have two options to choose from: 1. Pay your tax 2. Minimize your tax through prudent tax planning. Most of the people rightly choose option B here you have to compare the advantages of several taxes saving schemes and depending upon your age. Social liabilities, tax slabs and personal preferences, decide upon a right mix of investments, which shall reduce your tax liability to zero or the minimum possible.
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Every citizen has a fundamental right to avail all the tax incentives provident by the government. Therefore, through prudent tax planning not only income-tax liability is reduced but also a better future is ensuring due to compulsory savings in highly safe government schemes. We sincerely advise all our readers and clients to plan their investments in such a way that the post-tax yield is the highest possible keeping in view the basic parameters of safety and liquidity.
Insurance planning
Insurance is not for the persona who passes away, it for those who survive goes a popular saying that explains the important of insurance planning. It is extremely important that every person, especially the breadwinner, covers the risks to his life, so that his familys quality of life does not undergo any drastic c hange in case of an unfortunate eventuality. Insurance planning is concerned with ensuring adequate coverage against insurable risks. Calculating the right level of risk cover is a specialized activity, requiring considerable expertise. Proper insurance planning can help you look at the possibilities of getting a wider coverage for the same amount of premium or the same level of coverage for a reduced premium. Hence, the need for proper insurance planning, insurance, simply put, ease the cover for the risk that we run during our lives. Insurance enables us to alive our lives to the fullest , without worrying about the financial impact of the events that could hamper it, in other words, insurance protects us from the contingencies that could affect us, so what are the risk that we run? To name few- the risk on our lives that is, the worries of replacement of the income that will contribute the running of household. The risk of medical contingency (since they have the capability of depleting our wealth considerably) and risks to assets (since the replacement of these can have tremendous financial implication). If we can imagine a situation where our goals are disturbed by acts beyond our control, we can realize the relevance of insurance in our lives. Insurance planning
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takes in to an account the risk that surround you and then provides an adequate coverage against those risks, there is no risk not worth insuring yourself against, and insurance should first and foremost be looked as a measure to guard a risk the risk of your dreams going away due to events beyond your control
Children Future Planning

Like every parent, you too must be overjoyed to watch your child grow. All parents want to give the best possible upbringing to their children. This includes all good education and securities in case of any eventuality soon, your little bundle of joy will grow up, and it will be thank to provide for his or her higher education and wedding. The purpose of children future planning is to create a corpus for foreseeable expenditures such as those on a higher education and wedding to provide an adequate security cover during their growing year. Childrens future planning acquires other added importance because children education and wedding are not high priority life goals, which can be postponed nor can they be a compromise on the amount. Good education as always been the passport to secure future. Today, career opportunities have grown manifold, and there are many professional courses that your child aspires forever. Cost of higher education have also increased exponentially Like most parents, you might be saving regular lily to ensure a safe tomorrow for your child. However, savings alone is no longer enough. For ensuring adequate funding of your child education, you as a parent need to do two things Invest appropriate amount systematically and at regular intervals Provide for a financial security blanket to cover any eventuality It is never too early to start saving and investing for your childs future. Especially in today context, for example, the cost of professional degree is approximately
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Rs 2.5 lakhs. If your child is one year old today, after seventeen years when he or she goes to college, you may require a sum of Rs 6.3 lakhs assuming an annual rate of inflation of 6% There are many products which your financial planner can use to achieve the above objectives. For example, he could suggest a childrens future plan offered by good insurance company, to build a corpus for our childs higher education and provide for a security cover in the event of the parents unfortunate demise. Childrens plans are also available under unit-linked option. Being unit-liked, they offer access to investments in all kind of asset classes equity, debt and cash.
Retirement planning
Some like it. Some dont. But retirement is a really for every working person. Most young people today think of retirements as a distant reality. However, it is important to plan for your post-retirement life if you wish to retain your financial independence and maintain a comfortable standard of living even when you are no longer earning. This is extremely important, because, unlike developed nation. India does not have a social security net. Retirement planning acquires added importance because of the fact that though longevity has increased, the number of working year havent
Retirement planning services involves:

Computing that amount that would be required post-retirement. This is done after taking inflation and time value of money into account. Building your retirement corpus using systematic investment plans(SIPs) and other longterm growth orient products Ensuring adequate post-retirement income through safe investments. The assets allocation and selection of investment vehicles keep changing as your risk-bearing capacity diminishes.
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Plan for a worry free retirement:

In simple words, retirement planning means making sure you will have enough money to live on after retiring from work. Retirement should be the best period of your life, when you can literally sit back and relax or enjoy your life by reaping benefits of what you earn in so many years of hard work. But it is easier said than done. To achieve a hussies-free retired life, you need to make prudent investment decisions during your working life, thus putting your hard-earned money to work for you in future.
TATA CAPITAL
Tata Capital Limited is a subsidiary of Tata Sons Limited. The Company is registered with the Reserve Bank of India as a Systemically Important Non Deposit Accepting Core Investment Company. A trusted and customer centric one-stop financial services provider, Tata Capital Limited, and its subsidiaries cater to the diverse needs of retail, corporate and institutional customers by offering a wide range of fund and fee based financial services. Tata Group is an Indian multinational conglomerate company headquartered in Mumbai, Maharashtra, India.[3] It encompasses seven business sectors: communications and information technology, engineering, materials, services, energy, consumer products and chemicals. Tata Group was founded in 1868 by Jamsetji Tata as a trading company. It has operations in more than 80 countries across six continents. Tata Group has over 100 operating companies with each of them operating independently. Out of them 32 are publicly listed.[4] The major Tata companies are Tata Steel, Tata Motors, Tata Consultancy Services (TCS), Tata Power, Tata Chemicals, Tata Global Beverages, Tata Teleservices, Titan Industries, Tata Communications and Taj Hotels.[5] The
combined market capitalization of all the 32 listed Tata companies was INR 6 Trillion
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($96.87 billion) as of Sep 2013.[6] Tata receives more than 58% of its revenue from outside India.[7] Tata Group remains a family-owned business, as the descendants of the founder (from the Tata family) own a majority stake in the company. The current chairman of the Tata group is Cyrus Pallonji Mistry, who took over from Rattan Tata in 2012.[8] Tata Sons is the promoter of all key Tata companies and holds the bulk of shareholding in these companies. The chairman of Tata Sons has traditionally been the chairman of the Tata group. About 66% of the equity of Tata Sons is held by philanthropic trusts endowed by members of the Tata family. The Tata Group and its companies & enterprises is perceived to be India's best-known global brand within and outside the country as per an ASSOCHAM survey.[9] The 2009, annual survey by the Reputation Institute ranked Tata Group as the 11th most reputable company in the world.[10] The survey included 600 global companies. The Tata Group has helped establish and finance numerous quality researches, educational and cultural institutes in India.[11][12] The group was awarded the Carnegie Medal of Philanthropy in 2007 in recognition of its long history of philanthropic activities. The company has grown from an asset financier to diversified financial services company organized under fee and fund based business lines, which are operated through the company and its seven subsidiaries Tata Capital is a customer centric organization, with the capability to offer a comprehensive suite of products and services to retail, corporate and institutional customers Reinforcing this commitment towards customer centricity. We have created a unique common sales and service structure - a one stop shop for the customer, servicing his entire financial requirements through a single window .At the heart of this unique model lies the concept of presenting a one-point interface to the customers through which all their financial needs get serviced
Tata Capital Limited

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Public issue of secured Non-Convertible Debentures (NCDs) aggregating Rs 5,000 Million. With an option to retain over-subscription of Rs 10,000 Million. For issuance of additional NCDs.
Background
Tata Capital Ltd (TCL) is a customer centric diversified financial services company in India, providing services either directly or through subsidiaries, to retail, corporate and institutional clients in the areas of retail finance, corporate finance, investment banking, retail broking and distribution, wealth management and private equity. The company was incorporated on March 8, 1991 and actively commenced business operations since September, 2007. The company is a wholly owned subsidiary of Tata Sons Ltd, the apex holding company of the Tatas.
Objects of the Issue

The funds raised through this issue, will be used for a) Lending and investments, b) Repay existing loans and c) Business operations (capital expenditure and working capital requirements)
Purpose of Tata capital

Attain leadership through business excellence in the sectors we operate in, while upholding our values and integrity, to improve the quality of life of the communities we serve
Recommendation
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Rating agencies like ICRA and CARE have assigned LAA+ and AA+ rating to the NCD. ICRA rating of LAA+ indicate high-credit quality and low credit risk and rating by CARE of AA+ indicates high safety for timely servicing of debt obligations. However in the current economic scenario we consider the issue of Tata Capital to be a high risk and moderate return proposition. We therefore recommend investors to adopt a cautious approach.
Values of Tata capital Integrity: We must conduct our business fairly, with honesty and transparency.
Everything we do must stand the test of public scrutiny.
Understanding: We must be caring, show respect, compassion and humanity for our
colleagues and customers around the world, and always work for the benefit of the communities we serve.
Excellence: We must constantly strive to achieve the highest possible standards in our
day-to-day work and in the quality of the goods and services we provide.
Unity: We must work cohesively with our colleagues across the group and with our
customers and partners around the world, building strong relationships based on tolerance, understanding and mutual cooperation.
Responsibility: We must continue to be responsible, sensitive to the countries,

communities and environments in which we work, always ensuring that what comes from the people goes back to the people many times over
Observations with respect to Tata Capital NCD issue Positives

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Lower leverage: The Company has a debt to equity ratio of 2.7 times as on
September 2008. This is therefore quite low as compared to other finance companies which have debt equity ratio in the range of 5-8 times. Also the company intends to repay a portion of the debt with the issue proceeds thereby lowering cost for the company.
Sufficient capital: Despite risk of higher NPAs that the company faces in light of the
slowing economy, the company is adequately capitalized with a Capital adequacy ratio (CAR) of 26.1% as on September 2008. Also the company is subject to the capital adequacy requirements prescribed by the RBI where it is currently required to maintain a minimum ratio of 10% as prescribed under the Non-Banking Financial norms. As per the latest RBI circular, this limit has been increased to 12% by March 31, 2009 and to 15% by March 31, 2010. However as a part of its corporate governance policy the company maintains capital adequacy ratio higher than the statutorily prescribed limit.
Better liability management: The sources of funds for the company mainly were
in the form of loan funds from bank and commercial papers. Through this issue, the company will be able to diversify its sources of funds which in turn will result in better asset- liability management.
Strong parentage: TCL in owned 100% by Tata Sons Limited. This strong parentage
would allow the company to grow by leveraging the strength of the Tata brand and by exploiting the synergies with other Tata Group companies. The strong parentage also provides comfort on the ability of the company to remain adequately capitalized in relation to the risk embedded in its portfolio. Despite the expected pressure of rising NPAs in the current scenario, TCLs position in the TATA group would ensure strong support from the Group
Concerns
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Losses in the past: The Company has incurred a net loss of Rs. 2273 lakhs (before
tax) for the nine months period ended December 31, 2008. The loss up to September 2008 was only Rs 299 lakh which imply that the company has incurred a loss of Rs.1974 lakh in the last quarter ending December 2008. According to the company these losses are primarily due to the prevailing market conditions and high cost of borrowing. It the company continues to incur further losses, the companys results of operations and financial condition will be adversely affected.
Asset quality: As on September 2008, the company had a loan book of Rs.68280
million, out of which loans to construction equipment and SME formed approximately 70% of the loans. The slowdown in industrial activity is likely to expose the loan book of TCL to a higher credit risk. This may in turn lead to an increase in the number and value of companys NPA. Although the company was incorporated in 1991, active commencement of business operations began only in September, 2007. As a result, there is limited historical financial and operating information available to evaluate its past performance. The return that the company has generated in the past from advances and investments stands at 8.5% and 8.6% respectively in FY08.Also the cost of funds stands at 8.3%. Because of limited operating history, the historical financial results may not accurately predict its future performance. Therefore limited operating history may make it difficult for prospective investors to evaluate its business.
No details on deployment of issue proceeds: The Company has indicated that

the funds raised through the issue will be used for its various financing activities including lending and investments, to repay its existing loans and for future capital expenditures; however the company has not given any details with respect to the same. The company has indicated that it would have flexibility to deploy the proceeds received from the Issue. Pending utilization of the proceeds out of the issue the company intends
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to temporarily invest funds in high quality interest bearing liquid instruments including money market mutual funds, deposits with banks or temporarily deploy the funds in investment grade interest bearing securities as may be approved by the Board.
Introduction
This chapter deals with the analyzing of the data, where, based on the data obtained the tables and figures. The table shows the data in numbers and the figures are graphical representation of the data.
Table no 4.1:Table showing occupation of respondents Occupation

Private job
Respondents
20
Percentage
40%
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Government job Business Retire
5 19 6
10% 38% 12%
Total
50
100%
Analysis:
The question covers the target repondents who were chosen for this study. The reason behind asking this question was to find the occupation of the respondents where it was found that 20 reponendents beloanged to private sector, 5 respondents to public sector , 19 owned their business and the rest 6 were retired. Another reson for asking this question to people of different occupations was to know what level the occupation of the people would effect yhe investment decision.
Figure 4.1:Graph showing occupation of repondents
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40
38
Respondents
20 19 12 6
Percentages
10 5
Private job
Government job
Business
Retire
Interpretation:
The graph depicts the different occupation of the respondents, where 40% of the population belong to private sector, 10% belong to public sector 38% of respondents are business people and rest 12% are retired persons.
Table no 4.2: Table showing annual income of respondents

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Annual income
1-1.5 Lacks
Respondents
Percentage
23
46%
1.5 lacks
to
15
30%
3 lacks and Above
12
24%
Total
50
100
Analysis:
The reason behind asking this question was to find out the annual income of the respondents. It was found that 23 respondents were getting annual income between 1-1.5 lacks, 15 respondents belonged to income group 1.5- 3 lacks and 12 respondents belonged to the income group 3 lacks and above. This also tells that the annual incomes of the respondents place an important role for to obtain the benefits of investment options in India.
Figure 4.2: Graph showing annual income of respondents

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25
23
20 15 15 12
Respondents Percentage
10
5 46% 0 1-1.5 Lacks 1.5 to 3 lacks 3 lacks and Above 30% 24%
Interpretation:
This graph depicts that 46% of the respondents belonged to the income group of 11.5 lacks, 30% belonged to income group of 1.5-3 lacks and rest of 24% belonged to income of 3 lacks and above.
Table no 4.3: Percentage of annual income the respondents save to invest

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Options
5 to 10% 10 to 20% 20% and above
Respondents
19 25 6
Percentage
38% 50% 12%
Total
50
100
Analysis:
The main aim of asking this question was to find out the percentage of respondents annual income do they save to invest. Of 50 respondents it was found that 19 people will save 5-10% of their income to invest , 25 people will save 10-20% to invest and 6 people will save 12% of their income to invest.
Figure 4.3: Percentage of respondents annual income do they save to Invest

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25 25 19
20
Respondents
15
Percentage
10 6 5 38% 0 5 - 10 % 10 - 20 % 20% and above 50% 12%
Interpretation:
This graph depicts that 38% of the respondents will save 5-10% of their annual income for investments, 50% of respondents will save 10-20% of their annual income for investments and rest of the 12% of respondents will save 20% and above of their annual income to invest in future.
Table no 4.4: Percentage of respondents preferring the different investment options

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Options
Returns Minimum Amount Locking Period Risk Type of investment Option Other Factors Investment
Respondents
6 12
Percentage
12% 24%
8 9 8 7
16% 18% 16% 14%
Total
50
100%
Analysis:
As given in the above table 6 respondents prefers main at returns, 12 respondents prefers to get minimum investment amount, 8 respondents prefers locking period, 9 respondents prefers on risk taking, 8 respondents prefers other type of investment options and the rest 7 respondents prefers other factors before investing in a particular investment options.
Figure no 4.4: Respondents preferring before investing in a particular investment option

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Interpretation:
From the above table we can understand that 22 respondents prefer to invest for long term and 28 respondents prefer to invest for short term.
Table no 4.5: Table showing the duration preferred by the respondents to invest
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Options
Long term
Respondents
22
Percentage
44%
Short term
28
56%
Total
50
100
Analysis:
From the above table we can understand that 22 respondents prefer to invest for long term and 28 respondents prefer to invest for short term.
Figure no 4.5: Graph showing the duration preferred by respondents to invest

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Respondents
Percentage
56% 44%
28 22
Long term
Short term
Interpretation:
From this above table we can clearly understand that 44% of respondents prefer to invest their money in long term and 56% of respondents prefer to invest their money in short term according to their requirements.
Table no 4.6: Table showing preference of respondents to invest their money Options Respondents Percentage
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Mutual Funds ULIP Plans Fixed Deposit Post Office Deposit Real-estate Share Market Other Options Investment / Commodity
11 6 16 8 6 1
22% 12% 32% 16% 12% 2%
4%
Total
50
100%
Analysis:
This question was asked to find out the percentage of respondents preferring to invest money in different investment options. Therefore 11 respondents preferred to invest in mutual funds, 6 respondents preferred to invest in ULIP Plans, 16 respondents preferred to invest in fixed deposits, 8 respondents preferred to invest in post office deposits, 6 respondents preferred to invest their money in real-estate, 1 respondents preferred to invest their money in share/ commodity market and rest of respondents prefers to invest their money in other investment options.
Figure no 4.6: Graph showing preference of respondents to invest their money
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2% 4% 12% 22%
Mutual funds
ULIP Plans Fixed deposit Post office deposit
16% 12%
Real-estate Share\ Commodity market Other investment options
32%
Interpretation:
From the above graph we can understand that 22% of respondents prefer to invest their money in mutual funds, 12% of respondents prefer to invest their money in ULIP Plans, 32% of respondents prefer to invest their money in fixed deposits, 16% of respondents prefer to invest their money in post office deposits, 12% of respondents prefer to invest their money at real-estate, 2% of respondents prefer to invest their money at shares/ commodity market and rest of 4% of respondents prefer to invest their money at other type of investment options.
Table no 4.7: Table showing the investment options which has less risk Options Respondents Percentage
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Mutual Funds ULIP Plans Fixed Deposit Post Office Deposit Real-estate Share / Commodity Market Other Options Investment
17 4 19 3 4 1
34% 8% 38% 6% 8% 2%
4%
Total
50
100%
Analysis:
The intension of asking this question for the respondents is to know that which investment options has less risk according to their view. We came to know that 17 respondents t mutual funds, 4 respondents for ULIP Plans, 19 respondents prefers to fixed deposits, 3 respondents prefers post office deposits, 4 respondents prefers realestate, 1 respondents prefers share/commodity market and last 2 respondents prefers other investment options.
Figure no 4.7: Graph showing the investment option which has less risk
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10% 18% 6%
Mutual funds ULIP Plans
12%
Fixed deposits Post office deposits Real-estate

30% 16%
Share/ Commodity markets Other investment options
8%
Interpretation:
In this above graph we can understand that 18% of respondents prefers mutual funds, 30% of respondents prefers ULIP plans, 8% of respondents prefers fixed deposits, 16% of responds prefers post office deposits, 12% of respondents prefers real-estate, 6% of respondents prefers shares/commodity market and rest of 10% of respondents prefers to other investment options, so that they have less risk to obtain in investing their money.
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Tables no 4.8: Table showing the investment option which gives more returns Options
Mutual Funds ULIP Plans Fixed Deposit Post Deposit Real-estate Share Commodity Market Other Investment Options 5 10% / 6 3 12% 6% Office
Respondents
9 15 4 8
Percentage
18% 30% 8% 16%
Total
50
100%
Analysis:
In above table we observe that 9 respondents prefers more returns from mutual funds, 15 of respondents from ULIP plans, 4 respondents from fixed deposits, 8 respondents from post office deposits, 6 respondents from real-estate, 3 of respondents from share/commodity markets and rest of 5 respondents from other investment options. All the respondents made their own choice to get more returns.
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Figure no 4.8: Graph showing the investment option which gives more returns
18 16 30% 14 12 10 18% 8 6 4 2 0 9 8% 4 8 6 6% 3 5 15 16% 12% 10%
Respondents
Percentage
Mutual funds ULIP Plans
Fixed deposits
Post office deposits
Real-estate
Share/ Other commodity investments market options
Interpretation:
The above graph shows that 18% of respondents prefer mutual funds, 30% prefer ULIP Plans, 8% prefer Fixed Deposits, 16% prefer Post office, 12% prefer Real Estate, 6% prefer Share and commodities, and10% prefer other investment options to get more returns.
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Table no 4.9: Table showing the investment options which does not require minimum investment amount Options
Mutual Funds ULIP Plans Fixed Deposit Post Office Deposit Real-estate Share / Commodity Market Other Options Investment 8 16%
Respondents
10 2 13 9 5 3
Percentage
20% 4% 26% 18% 10% 6%
Total
50
100%
Analysis:
As seen in the above table 10 respondent said Mutual Funds, 2 respondents said ULIP Plans, 13 respondents said Fixed Deposits, 9 respondents said post office, 5 respondents said real estate, 3 respondents said share and commodity market and 8 respondents said other investment options does not require minimum investment amount.
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Figure no 4.9: Table showing investment which does not require minimum investment amount
Mutual funds 16% 6% 4% 10% Fixed deposit Post office deposit 26% 18% Real-estate Share/Commodity market Oter investments options 20% ULIP Plans
Interpretation:
The graph depicted that 20% of respondents prefer mutual funds,4% of respondents prefer ULIP plans,26% of respondents prefer fixed deposits, 18% of respondents prefer post office deposits, 10% of respondents prefer real-estate, 6% of respondents prefer share/commodity market and rest of 16% of respondents prefer options which does require to minimum investments. other investments
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Table no 4.10: Table showing which Mutual Fund give better returns Options Franklin Templeton Reliance ICICI Prudential SBI Others Total 10 15 50 20% 30% 100% 8 5 16% 10% Respondents 12 Percentage 24%
Analysis:
As shown in the above table 12 respondents prefer Franklin Templeton, 8 respondents prefer Reliance, 5 respondents prefer ICICI Prudential, 10 respondents prefer SBI and 15 respondents prefer other Mutual Fund for better returns.
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Figure no 4.10: Graph showing which Mutual Fund give better returns
Respondents
Others, 30% Franklin Templeton, 24% SBI , 20% Reliance, 16% ICICI Prudential, 10%
Interpretation:
From above seen graph we can understand that 24% of respondents go to Franklin Templeton, 16% of respondents to Reliance, 10% of respondents to ICICI Prudential, 20% of respondents prefers to SBI and 30% of respondents to other Mutual Funds for better returns.
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Table no 4.11: Table showing reason for not investing in Mutual fund Options
Risk Return Other reasons
Respondents
18 12 20
Percentage
36% 24% 40%
Total
50
100
Analysis:
There are some people who do go for Mutual Funds. 18 respondents say risk is the main factor, 12 respondents say returns is the main reason, and 12 respondents prefer other reasons for not investing in Mutual Fund.
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Figure no 4.11: Graph showing reason for not investing in Mutual Fund
Other reasons
20
40%
Respondents
12 24%
Return
Percentage
Risk
18
36%
Interpretation:
In the above graph depicts we can understand that 36% of respondents prefer the risk, 24% of respondents prefer returns and rest of 40% of respondents prefer other reasons for which they are not interested in investing at mutual funds.
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Table no 4.12: Table showing percentage of respondents who do proper analysis before investing in share market Options
Yes No
Respondents
33 17
Percentage
66% 34%
Total
50
100
Analysis:
From the above table we can observe that 33 out of 50 respondents said that they will do proper analysis before investing their amount in share market and rest of the 17 respondents said that they will not do proper analysis before investing in share market
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Figure no 4.12: Graph showing percentage of respondents who do proper analysis before investing in share market
66%
34%
Percentage Respondents
33
17
Yes
No
Interpretation:
Form the above table we can understand that 66% of people do proper analysis and the rest will not do proper analysis before investing in share market.
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Table no 4.13: Table showing reason for not investing in share or commodity market Options
Risk Lack Knowledge Return Factor 14 28% of
Respondents
16 20
Percentage
32% 40%
Total
50
100
Analysis:
From the above table we can get to know that out of 50 respondents 16 prefer risk as the main factor, 20 prefer lack of knowledge as the main factor and remaining 20 prefer returns as the main factor for not investing money in share market.
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Figure no 4.13: Graph showing reasons for not investing in share market
32%
40%
28%
Percentage Respondent s
16
20
14
Risk
Lack of knowledge
Retrun factor
Interpretation:
From the above graph we can understand that 32% of respondents are not interested to invest their money due to risk, 40% of respondents are not interested due to lack of knowledge in them and rest of respondents due to returns factors in share/ commodity market.
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Table no 4.14: Table showing the experience of investing in share/commodity market Options
Face Losses Earned Profit No Profit No Loss
Respondents
12 15 23
Percentage
24% 30% 46%
Total
50
100
Analysis:
The table clearly shows the experience of investing in share market. 12 respondents faced losses, 15 respondents have earned profit and rest of the respondents experienced no profit and no loss in investing in share/commodity market.
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Figure no 4.14: Graph showing the experience of investing in share market
24% 12
Face losses
46%
23
Earned profit
No profit no loss
15 30%
Interpretation:
From above graph it can be observed that 24% of respondents experienced facing loss, 30% of respondents earned profit and rest of respondents experienced no profit no loss in share/commodity market.
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Table no 4.15: Table showing reason for investing in real estate Options
Gives returns Has Less Risk Loan Facility is available investment for 11 23 22% 46% Good
Respondents
16
Percentages
32%
Total
50
100
Analysis:
From the above table 16 respondents say that they can get good returns, 11 respondents say that there is less risk and 23 respondents say that the loan facility is available for investing in real estate.
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Figure no 4.15: Graph showing reason for investing in real estate
32%
22%
46%
Percentage Respondents
16
11
23
Gives good returns
Has less risk
Loan facility is available for investment
Interpretation:
From the above graph we can understand that 32% of respondents prefer because of good returns, 22% of respondents prefer due to less risk and rest of 46% of respondents gave reasons about loan facilities is available for investments.
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Table no 4.16: Table showing reason for investing in Fixed Deposits/Post office Schemes Options Returns No Risk Respondents 22 28 Percentage 44% 56%
Investment Total 50 100
Analysis:
From the above table we can conclude that the 22 respondents believe for investing in fixed deposits/ post office deposits scheme because of more returns and on the other hand 28 respondents believe in investing in fixed deposits/ post office deposits schemes because of no risk investment.
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Figure no 4.16: Table showing the reason for investing in Fixed deposits/Post office deposits
Percentage
44%
56%
Returns No risk investment
Interpretation:
The intension behind asking this question is to know the reason behind investing in fixed deposits/post office deposits schemes .It was found that 44% of respondents prefers because of more returns and rest of 56% of respondents because of no risk in investments.
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5.1 Findings:
1. It was found that the respondents will save more than 50% of their annual income to invest in different investment options because they think that it will give better returns 2. It was found that 24% of respondents preferred to invest in investment option which has minimum investment amount as it gives more profits. 3. It was also found that 56% of respondents preferred to go for short term investments due to the knowledge of profit and loss. 4. This study revealed that the 32% of respondents preferred to invest their money in fixed deposit rather than any of the investment options. 5. This study also revealed fact that 38% of respondents preferred to have a less risk in respect of all investment options to investors. 6. It was found that 30% of respondents said that they prefer ULIP plans because they get more profit in investing in it. 7. It was found from 26% of respondents that fixed deposits does not require minimum investment amount. 8. This study revealed that 24% of respondents prefer Franklin Templeton Mutual fund to invest their money as it yield better returns. 9. It was found that 40% of respondents preferred not investing in mutual funds because of various other reasons. 10. This study revealed the fact that 66% of respondents will invest their money in share market by properly analyzing before investing in it. 11. It was found that 40% of respondents dont have interest in investing in share/commodity market due to lack of knowledge in investing there. 12. This study also revealed that 46% of respondents have experienced of investing in share/commodity market. 13. Form this study 46% of respondents gave their reasons of availability of loan facility for investing in real-estate.
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14. We can conclude that 56% of respondents invest their amount in Fixed Deposit / Post Office Deposit Schemes due to no risk in investing and gain more return. 15. It was found that only 6% of investors invest in share and commodity market as it involves high risk. 16. As per the study we can conclude that all investors prefers less risk and high returns in their investment options we can see in the form of percentage.
5.2 Suggestions:
It has been found from this study was investors can invest their funds to get more return with help of getting more knowledge about the options of investments. However they are the some suggestions that could be followed by the investors in order to make the use of the different options provided for the investors to give more effective participations. They are: 1. Clearly investors have to define about their goals in which they want to invest in different options. So that tit will be no confusions to investors to invest in that. 2. The investors should have look at income on the investments options to gain more profits because people are giving up on potential income. 3. With any investment, there is always the risk involved. It should be overcome by having expertise to guide or to collect the information to avoid risk it will help the investors to get more profit with less risk. 4. Some investments options like real-estate, shares etc..., have the potential for earnings and growth in value. 5. Some investments perform better than others in certain situations the investors can put their money in a variety of investment options can help to reduce their risk.
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6. Investing in such instruments like National Savings Certificates (NSCs), public provident fund (PPF) and post office deposits small-savings scheme will fetch higher returns for the investors. 7. Mutual funds that invest in short-term bonds, usually pays better interest rates than a savings account but not as much as a certificate of deposit (CD). 8. In mutual fund investors can invest their money without any hindrance of minimum investment amount or past experience. 9. For the investors probably don't need to worry about alternative investments options at the start of their new investing career. They are generally got high-risk/high-reward securities that are much more speculative than plain old stocks and bonds. But they gradually get the opportunity for big profits, but they require some specialized knowledge. 10. The investors to not fear to invest their money in shares and commodity market. The only thing needed is to have adequate knowledge about it. 11. If investors want invest in share and commodity market it is better to have a broker who has adequate knowledge about it. 12. The investors should update with daily process in shares and commodity market as it involves high level of fluctuations.
5.3 Conclusion:
To conclude, in a country like India where there is a huge investors to invest their funds to different options to get more profits there are also many investment options which has its own sets of advantages and disadvantages. Every person in the country would like to invest in different investment options for one or the other reasons. The main reason why people invest the money is to make their future safe for uncertainties and also to meet their family future demands. Many people invest in fixed deposits, post offices,
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Mutual funds, real estates, gold and other jewelers etc. but there are very few who invest in shares and commodities market The main reason for this is the fear of high. The share market involves high volatility because of which one cannot make the predictions whether the share prices will rise or fall. The share market which yields high returns at the time falls to that extent where the investor cannot get back his own money which he has invested. Another reason is the lack of knowledge. The investor should have adequate amount of knowledge and should keep updating about the day to day share market. The above study also shows that there are very few who make the courage of investing in shares and commodities. Sometimes even people dont invest because of the fraud happens in share market. To overcome these hindrances the government has set up the organization called Securities Exchange board of India. This is the organization which protects the interest of investors by setting up rules and regulations for all financial market. It has also providing knowledge about the market how it functions and what precautions should be taken while investing. Its ultimately the people who should take knowledge about the market and avoid the risk at list to some extent.
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ANNEXURE
I, Namratha.N, am a student of Malleswaram Ladies Association- Academic of Higher Learning, undertaking a project titled Best Investment Option for Indian Investors with reference to top players of different industrial segments in partial fulfillment of the requirements of the Bachelor of Business Management (BBM) program of Bangalore University. I request you to help me in completing the project by answering the enclosed questionnaire. I assure you that all the information provided by you will be treated in strict confidential and used for academic purposes only. Thanking you, Namratha. N
Questionnaire: Questionnaire to analyze the best investment option available to the investors:
1. What is your Occupation? a. Private Job b. Govt. Job c. Business d. Retired 2. What is your annual Income? a. 1-1.5 Lacks b. 1.5 to 3 lacks c. 3 lacks and Above 3. What percentage of your annual income do you save to Invest? a. 5 to 10%
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b. 10 to 20% c. 20% and above 4. What do you look before investing in a particular investment option? a. Returns b. Minimum Investment Amount c. Locking Period d. Risk e. Type of investment Option f. Other Factors 5. Do you prefer to invest for long term or short duration? a. Long Term b. Short Term 6. Where do you prefer to invest your money? a. Mutual Funds b. ULIP Plans c. Fixed Deposit d. Post Office Deposit e. Real-estate f. Share / Commodity Market g. Other Investment Options 7. Which Investment Option has less risk? a. Mutual Funds b. ULIP Plans c. Fixed Deposit d. Post Office Deposit e. Real-estate f. Share / Commodity Market g. Other Investment Options
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8. Which option gives more returns? a. Mutual Funds b. ULIP Plans c. Fixed Deposit d. Post Office Deposit e. Real-estate f. Share / Commodity Market g. Other Investment Options 9. Which option dont require minimum investment amount? a. Mutual Funds b. ULIP Plans c. Fixed Deposit d. Post Office Deposit e. Real-estate f. Share / Commodity Market g. Other Investment Options 10. If you invest in mutual fund which mutual fund gives better returns? a. Franklin Templeton b. Reliance c. ICICI Prudential d. SBI f. Others 11. Reason for not investing mutual funds? a. Risk b. Returns c. Other Reasons
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12. If you invest in Share Market you do proper analysis before investing? a. Yes b. No 13. Why you have not invested in Share / Commodity Market? a. Risk b. Lack of Knowledge c. Return Factor 14. Your experience of investing in share / commodity market? a. Face Losses b. Earned Profit c. No Profit No Loss 15. Reason for investing in Real Estate? a. Gives Good returns b. Has Less Risk c. Loan Facility is available for investment 16. Reason for investing in Fixed Deposit / Post Office Deposit Schemes? a. Returns b. No Risk Investment
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Portfolio Management- Inderpal Singh Jaswinder Kaur Gurpreet Singh www.google.com www.bajaj capital.com www.mbaskool.com/brandguide/banking-and.../1251-bajaj-capital.html en.wikipedia.org/wiki/Tata Group www.projects4mba.com
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`A STUDY ON INVESTMENT AVENUES FOR INDIAN INVESTORS

Financial management Meaning:

`A STUDY ON INVESTMENT AVENUES FOR INDIAN INVESTORS

4. System of internal controls 5. Future decision making

3. Manage risks. Financial management enables an organization to identify, assess and

`A STUDY ON INVESTMENT AVENUES FOR INDIAN INVESTORS

5. Strengthen accountability. Financial management is essential for an organization to

6. Provide a supportive control environment. Financial management contributes to

7. Comply with authorities and safeguard assets. Financial management is essential

Functions of financial management

`A STUDY ON INVESTMENT AVENUES FOR INDIAN INVESTORS

`A STUDY ON INVESTMENT AVENUES FOR INDIAN INVESTORS

Investment avenues in India

`A STUDY ON INVESTMENT AVENUES FOR INDIAN INVESTORS

`A STUDY ON INVESTMENT AVENUES FOR INDIAN INVESTORS

DIFFERENT TYPE OF INVESTMENT AVENUES TYPES OF INVESTMENT AVENUES

SMALL SCALE SCHEME

PROTECTED THOUGH INSURANCE

INVESTING IN GOLD AND SLIVER

FIXED INCOME SECURITIES:

1. EQUITY CAPITAL Why Investment in Equity Capital

`A STUDY ON INVESTMENT AVENUES FOR INDIAN INVESTORS

What is an Equity Share?

How do I make a Profit?

`A STUDY ON INVESTMENT AVENUES FOR INDIAN INVESTORS

Why Does the Share Price Rise?

Where Does Professional Investment Management Add Value?

`A STUDY ON INVESTMENT AVENUES FOR INDIAN INVESTORS

`A STUDY ON INVESTMENT AVENUES FOR INDIAN INVESTORS

Advantages of Investing in Equities

`A STUDY ON INVESTMENT AVENUES FOR INDIAN INVESTORS

`A STUDY ON INVESTMENT AVENUES FOR INDIAN INVESTORS

Disadvantages of investing in shares

`A STUDY ON INVESTMENT AVENUES FOR INDIAN INVESTORS

2. FIXED INCOME SECURITIES:

`A STUDY ON INVESTMENT AVENUES FOR INDIAN INVESTORS

`A STUDY ON INVESTMENT AVENUES FOR INDIAN INVESTORS

Different types of Fixed Income Securities:

TYPES OF FIXED INCOME SECURITIES

FIXED MATURITY PLAN (FMP)

FIXED INCOMEMUTUAL FUNDS

FIXED DEPOSITSBANK AND COMPANY

PUBLIC PROVIDENT FUND (PPF)

NATIONAL SAVING CERTIFICATE (NSC)

POST OFFICE MONTHLY INCOME SCHEME (POMIS)

`A STUDY ON INVESTMENT AVENUES FOR INDIAN INVESTORS

`A STUDY ON INVESTMENT AVENUES FOR INDIAN INVESTORS

A. Fixed maturity plans (FMP):

`A STUDY ON INVESTMENT AVENUES FOR INDIAN INVESTORS

`A STUDY ON INVESTMENT AVENUES FOR INDIAN INVESTORS

How does it earn?

`A STUDY ON INVESTMENT AVENUES FOR INDIAN INVESTORS

Where do they invest?

WHAT ARE VARIOUS TYPES OF MUTUAL FUNDS?

`A STUDY ON INVESTMENT AVENUES FOR INDIAN INVESTORS

`A STUDY ON INVESTMENT AVENUES FOR INDIAN INVESTORS

Common types of Mutual funds in India:

`A STUDY ON INVESTMENT AVENUES FOR INDIAN INVESTORS

`A STUDY ON INVESTMENT AVENUES FOR INDIAN INVESTORS

Active vs. passive management

`A STUDY ON INVESTMENT AVENUES FOR INDIAN INVESTORS

Mutual funds provides the following benefits

Disadvantages of mutual funds:

Dilution: Although diversification reduces the amount of risk involved in investing in