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A Project Report on
PROS & CONS OF INVESTMENT IN MUTUAL FUNDS AS
COMPARED TO
BANK FIXED DEPOSITES.
Submitted by
NAME
ROLL NO
Prashantha Poojary
Sonali Salve
F.Y.MMS
MS141546
F.Y.MMS
MS141549
Chanchal Sharma
F.Y.MMS
MS141552
Deepak Shinde
F.Y.MMS
MS141554
Pooja Singh
F.Y.MMS
MS141559
CERTIFICATE
Certified that the Project work entitled TO DO COMPARATIVE ANALYSIS
IN MUTUAL
FUND INVESTMENT AS AGAINST BANK FIXED DEPOSIT. Submitted by
Group no.03 (finance) having Roll nos. 46, 49,52,54 & 59 for internal
assessment of MMS 1st YEAR course for Semester IInd offered by
IMCOST, Thane affiliated to Mumbai University during the academic
year 2014 2016 is a original work carried out by the students under
my supervision, and this work has not formed the basis for the award
of any Degree, Diploma or such other titles.
Date:
Institution Address:
IMCOST, C-4, Near Mulund Check Naka,
Opp. APLAB Co, Thane (W) 400604.
DECLARATION
We, the undersigned, hereby declare that the project report entitled TO DO
COMPARATIVE ANALYSIS IN MUTUAL FUND INVESTMENT AS AGAINST
BANK FIXED
DEPOSIT.
is our original work and the conclusions drawn therein are based on the material collected
by ourselves.
The Report submitted is our own work and has not been duplicated from any other source.
We shall be responsible for any unpleasant moment/situation.
Place: Mumbai
Date:
Roll No.MS141559
ACKNOWLEDGEMENT
A successful Project is the result of team work and co-ordination that
includes not only the group of developers who put forth the ideas, logic
and efforts but also those who guide them. So, at the completion of the
project, we feel obliged to extent our gratitude towards all those who
made valuable contributions throughout our various stages in Project
draft period.
We express our profound sense of gratitude and sincere thanks to our
Director, Dr.J.N.SHAH for enabling us to undertake such an excellent
project, which made us to acquire tremendous knowledge and selfconfidence.
We extend our special thanks to Prof. Shripad Bapat, (Project Guide)
who gave us a wonderful opportunity to select and work on this topic
and understand the challenges which we face in our career path while
dealing with people and the complexities of the job and for his valuable
guidance and inputs which helped us to select and focus our work on
this project.
We would also like to thank all teaching and non-teaching staff of
IMCOST, for their valuable guidance and inputs which helped us to
select and focus our work on this project.
Also we would like to thanks to our entire professor who are not directly
supported for the project but indirectly made support on the way of
improvement in presentation skills, deep knowledge sharing against
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INDEX
SR NO.
TABLE OF CONTENTS
PAGE NO.
1.
2.
3.
4.
5.
6.
6
15
32
34
LIST OF TABLES
TABLE NO.
PAGE NO.
2.1
2.2
2.3
3.1
8
14
14
18
3.2
3.3
3.4
3.5
3.6
3.7
3.8
3.9
3.10
3.11
22
23
24
25
26
27
28
29
30
31
EXECUTIVE SUMMARY
A growing India offers opportunity across the various investments, a
substantial part of financial wealth. Therefore investment plays an
important role in growth of these economies. Also there is rapid growth
in income of peoples in India due to some factors because of this
investment is increased day by day in various investment options. As
income range rapidly increasing there is need to increase awareness
among the people related with various investment option and different
schemes.
The project is an attempt to study or awareness among the people
related with some investment option and also the preference of people
while implementing the same. It provides thorough knowledge of
different aspects related with the behavior of people for mutual fund as
compare to bank fixed deposit. The report is divided in four parts. The
first part is dealing with information related with advantage and
disadvantage Bank fixed deposit. Second is concept of advantage and
disadvantage mutual fund. Third is concept of research methodology.
Fourth deals with interpretation of data collected.
Most of metro cities people like to put the money in market related
schemes instead of dumping it in the bank lockers, so it is quite
obvious that they want to invest their money in profitable venture. But
7
still people prefer to go for traditional schemes as well for safety and
security purpose.
Now a days people become more sensible while choosing any type of
investment. It is more important to have good knowledge and
understanding related with such scheme which will help to choose
better and safety investment tools.
CHAPTER I
INTRODUCTION
1.1 BANK FIXED DEPOSIT:
A fixed deposit is a financial instrument provided by banks which
provides investors with a higher rate of interest than a regular
saving account, until the date of maturity date. It may or may not
require the creation of a separate account.
It is also term as TERM OR TIME Deposit. They are considered to
be very safe investment as it denotes a larger class of
investments with varying levels of liquidity. Here, interest rate
varies between from 4 to 11 percent. The tenure of a Fixed
Deposit a vary from 7, 15, or 45 days to 1.5 years and can be high
as 10 years.
10
11
1.5 IN SHORT
The risk faced when investing in bank deposits is the interest
rate risk. This is associated with the lost opportunity to invest
in an instrument that has a higher return. Getting out of a
fixed deposit can be costly (up to 1 per cent of the principal),
when we exit prematurely. So we may have to forgo potential
earnings when the interest rate has risen only by about 1 per
cent.
The highest risk faced with fixed deposits is the effect of
inflation. The real return after adjusting for inflation is very
less or sometimes negative for fixed deposits of banks. This is
a big burden, particularly for retired people, who have
invested their retirement proceeds to get regular income.
Their income may be regular and steady but the money's
worth keeps going down during the tenure of the fixed
deposit.
The bank deposit primarily serves us to preserve capital.
Banks now-a-days have added a lot of additional benefits to
the traditionally benign service. Retired people could make
the best use of this avenue for securing a fixed and steady
income.
The caution is not to use the fixed deposit as a long term
investment avenue. The reason is that the real return is very
less when adjusted for inflation. The tax treatment of the
interest also eats into the returns.
12
CHAPTER II
INTRODUCTION
2.1 MUTUAL FUND
The first introduction of a mutual fund in India occurred in 1961,
when the Government of India launched Unit Trust of India (UTI).
Until 1987, UTI enjoyed a monopoly in the Indian mutual fund
market. Then a host of other government-controlled Indian
financial companies came up with their own funds. These included
State Bank of India, Canara Bank, and Punjab National Bank. This
market was made open to private players in 1993.
As a result of the historic constitutional amendments brought
forward by the then Congress-led government under the existing
regime of Liberalization, Privatization and Globalization (LPG). The
first private sector fund to operate in India was Kothari Pioneer,
which later merged with Franklin Templeton.
An investment vehicle that is made up of a pool of funds collected
from many investors for the purpose of investing in securities
such as stocks, bonds, money market instruments and similar
assets. Mutual funds are operated by money managers, who
invest the fund's capital and attempt to produce capital gains and
income for the fund's investors. A mutual fund's portfolio is
structured and maintained to match the investment objectives.
One of the main advantages of mutual funds is that they give
small investors access to professionally managed, diversified
portfolios of equities, bonds and other securities, which would be
quite difficult (if not impossible) to create with a small amount of
capital. Each shareholder participates proportionally in the gain or
13
loss of the fund. Mutual fund units, or shares, are issued and can
typically be purchased or redeemed as needed at the fund's
current net asset value (NAV) per share, which is sometimes
expressed as NAVPS.
14
A. DEBT/ INCOME:-
equities and fixed income securities; the proportion is predetermined and disclosed in the scheme related offer
document. These are ideal for the cautiously aggressive
investors
17
Mutual funds have been a popular investment vehicle for investors. Their simplicity along
with other attributes provides great benefit to investors with limited knowledge, time or
money. To help us decide whether mutual funds are best for us, we are going to look at
some reasons to consider investing in mutual funds.
19
20
MUTUAL FUNDS
FIXED DEPOSITS
A. Rate Of Returns
No Assured Returns
Fixed Returns
B. Inflation Adjusted
Returns
Usually Low
InflationAdjusted
Returns
C. Risk
Low Risk
D. Liquidity
Liquid
Medium To Low
Liquidity
F. Cost Of Investment
Management Cost
No Cost
G. Tax Status
4
5
6
7
8
9
10
Average
1,034.42
952.28
853.03
12.70%
11.69%
10.48%
773.44
9.50%
700.57
595.58
448.12
8.60%
7.31%
5.50%
396.65
352.99
4.87%
4.34%
304.86
3.74%
CHAPTER III:
RESEARCH METHODOLOGY
Research refers to search for knowledge. One can also define research
as a scientific and systematic search for pertinent information on a
specific topic. It is an art of scientific investigation.
3.1 OBJECTIVES:
The study will give an overview about mutual funds and bank
fixed deposit. And also will give brief comparison between mutual
fund and bank fixed deposit. It will help investors to take effective
investment decision.
22
The research has been undertaken from the investor point of view
and hence will be important to investors as follow:
1.
2.
3.
3.2 DATA COLLECTION METHOD:To achieve the objectives of to do comparative analysis of mutual fund
investment as against bank fixed deposit data has to be collected from
different sources.
http://mutualfund.birlasunlife.com
http://www.tatamutualfund.com
23
https://www.valueresearchonline.com
http://www.moneycontrol.com
http://economictimes.indiatimes.com
Secondary data
sources may provide you with vast amount of information,
but quantity is not synonymous of appropriateness. This is
simply because it has been collected to answer a different
research question or objectives.
High risk
Medium risk
Low risk
83
13
19
77
18
78
41
46
13
24
53
23
26
51
23
13
38
59
39
52
30
52
18
20
77
25
scrutiny of
secondary data
because
it may be a
26
to
C. MORE NUMBER OF RESOURCES ARE REQUIRED:Leaving aside cost and time, other resources like
human resources and materials too are needed in
larger quantity to do surveys and data collection.
3.4 METODS OF COLLECTING PRIMARY DATA:A. SAMPLING:- It represents whole population. It is the
processes of choosing a sample from whole population .We
have chosen a sample of high class & middle class people
who have invested either in mutual funds or Bank Fixed
Deposits.
B. CENSUS SURVEY:- It is a systematics method. It covers entire
population or universe and not very practical as it requires
enormous huge amount of time, manpower and money.
27
3.4 DATA ANALYSIS AND INTERPRETATION:Data analysis and interpretation is the process of inspecting,
cleaning, transforming and modeling data with the goal of
discoveries useful information, suggesting conclusion and
supporting decision making.
Data interpretation is that in which we analysis the whole
collected data & tries to give it in simple words to be
understandable.
We have used some charts (Pie chart, column chart, cylinder
chart, cone chart) and hypothesis tests (chi-square one
sample T- test etc.)
3.5 LIMITATIONS:-
28
21-30 31-40
24
51
11
24
41-50
Above 50
Total
11
51
24
100
The above schedule and the diagram mentioned below explain the
relationship between different ages of respondents investing either in
Mutual Fund or Bank Fixed Deposits.
FIG.3.2
29
AGE GROUP
1%
24%
21-30
31-40
51%
41-50
Above 50
24%
The above figure shows that the age group of 21-30 respondents
investing more either in Mutual Fund or Bank Fixed Deposits i.e. (51%)
and age group of above 50 makes less investment i.e. (1%).
Table 3.3 Date Was Collected For Analyzing Whether Customer Have Ever
Invested In Any Kind Of Investment:
Yes/No
Yes
No
Total
Frequency
45
51
Percentage
88
12
100
The above schedule and the diagram mentioned below reflects whether
customer have ever Invested in any kind of Investment.
FIG.3.3
30
INVESTMENT
12%
Yes
No
88%
Table 3.4 Date was collected for analyzing Investment Options most
preferable for investment either in Mutual Fund or in Bank Fixed Deposits:
Investment
Options
Frequency
Percentage
Bank Fixed
Deposits
31
61
Mutual Fund
Total
20
51
39
100
FIG.3.4
31
INVESTMENT OPTION
39%
Mutual Fund
61%
The above figure shows that Bank fixed deposits is more preferable
(61%) than Mutual Funds (39%).
Table 3.5 Date Was Collected For Analyzing Reasons For Selecting Mutual
Fund Or Bank Fixed Deposits:
Reasons
Rate Of
Interest
Low risk
Tax Saving
Total
Frequency
Percentage
21
41
24
47
6
12
51
100
The above schedule and the diagram mentioned below reflects number
of respondents reason for investing either in Mutual Fund or in Bank
Fixed Deposits.
FIG.3.5
32
Low risk
Tax Saving
47%
The above figure shows that bank fixed deposit is more preferable if
Risk is Low i.e.
(47%) then Tax Saving (12%).
Table 3.6 Date Was Collected For Analyzing What Factors Considered By
Customers For Investment In Mutual Fund Or Fixed Deposits:
Factors
Frequency
Percentag
e
Preservati
on of
Capital
20
39
Increase in
current
income
13
24
33
8%
Increase in current
12%
income
40%
Aggressive Growth
16%
Growth and Income
24%
Conservation Growth
Table 3.7 Date Was Collected For Analyzing Which Investments Option Is
More Risky:
Investment
Options
Frequency
Percentage
Bank Fixed
Deposits
2
Mutual Fund
Total
49
51
96
100
34
INVESTMENT OPTION
4%
96%
The above figure shows about 96% of Customer finds more risk in
investment in Mutual Fund then Bank Deposits.
35
YES
NO
TOTAL
Frequency
27
24
51
Percentage
53
47
100
FIG.3.8
KNOWLEDGE OF SCHEMES
Yes
47%
No
53%
The above figure shows that about 53% customers have knowledge of
Schemes available in Mutual Fund and Bank Fixed Deposits and 47%
dont have idea about schemes.
36
Table 3.9 Date Was Collected For Analyzing Investment In Which Sector
Will Make Benefit For Customers:
Sector
Public Sector
Private Sector
Total
Frequency
31
20
51
Percentage
61
39
100
FIG.3.9
BENEFICIAL SECTOR
Public Sector
39%
Private Sector
61%
The above figure shows that Public Sector (61%) is more beneficial
than Private Sector (39%).
37
Table 3.10 Date Was Collected For Analyzing Investment Type Preferred By
Investors:
INVESTMENT
TYPE
Frequency
Percentage
SHORT TERM
LONG TERM
TOTAL
21
30
51
41
59
100
Fig.3.10
INVESTMENT TYPE
41%
Short term
Long Term
59%
The above figure shows that Long Term investment (59%) is more
preferred than Short term investment (41%).
Investment
Option
Frequency
Bank Fixed
Deposits
32
Percentage
63
Mutual Fund
Total
19
51
37
100
FIG.3.11
37%
Mutual Fund
63%
39
CHAPTER IV:
CONCLUSION & RECOMMEDATION
4.1 CONCLUSIONS
40
I. More people are investing their money in bank fixed deposit for a
long term.
J. People are recommending bank fixed deposit as good investment
to others.
4.2 RECOMMEDATIONS:
A. Seminars and promotional activities should be held to increase
knowledge and awareness among the peoples related with
market related schemes.
B. For long term investments mutual funds is best option and it can
beat inflation of the economy.
C. People regularly invest part thereof income to mutual fund for
longer term.
D. From
the
advance
technology
now
people
improve
their
41
H. Mutual funds are a tax saving tools if people invest their money in
tax saving funds.
BIBLIOGRAPHY
BOOK REFERRED
MAGAZINES
ET WEALTH
BRUNCH
WEBSITES
http://mutualfund.birlasunlife.com
http://www.tatamutualfund.com
https://www.valueresearchonline.com
http://www.moneycontrol.com
42
http://economictimes.indiatimes.com
http://www.sebi.gov.in
43