ACKNOWLEDGEMENT

This project has been finished towards partial fulfillment of MBA of

ICFAI Business School.
I feel it expedient to express my profound indebtedness and
sincere thanks to Cluster head of the organization Mr. Mohit,
Company guide Mr. Lokesh Arora and Guide Prof. Dilraj Kaur
Bhatia, as they gave me a chance to write a report and I chose
this topic.
I acknowledge with deep sense of gratitude for their support &
invaluable suggestions. It was only because of them that this
project had been a learning experience for me.
I thank all the persons who co-operated with me in giving their
valuable points from time to time and all those persons who
participated in this project by way of questionnaires or personal
interviews. This project would also help me in the future as I learn
about the most speedily booming sector of Economy which has
the

capacity

to

India

from

developing

country

to

revolutionized developed country.

Page 1 of 77

Table of Contents
1.

Acknowledgement

1
2.

Abstract

4
3.

Introduction

5
4.

(Part-1):

Selling

Of

Life

Insurance

6
4.1

Direct

selling

Method

6
4.2

Telecalling

Method

9
4.3 Internet Method
13
4.4 Survey Method
16
4.5 Canopy Method
18
4.6 Event
21
5. (Part-2): Analysis of Wealth Management Instruments
24
Page 2 of 77

5.1 Definition of Wealth Management

24
5.2 Analysis of Wealth Management Instruments
25
5.2.1 Mutual Fund
25
5.2.2 Real Estate (Property)
28
5.2.3 Unit Linked Insurance Plans
31
5.2.4 Stock (Equity)
35
5.2.5 Portfolio Management Services (PMS)
37
5.2.6 Structured Savings Products
40
5.2.7 Commodities
45
5.3. Scope of Wealth Management in India
46
6. (Part-3) Scope of Wealth Management in Middle Class
48
6.1 Conclusion
64
7. (Part-4) Mutual Fund and Inclusiveness
66

Page 3 of 77

7.1 Conclusion
70
8. Appendices
71
9. References
76

ABSTRACT
This report is basically divided into Four Parts.
Part One: Selling of life insurance
Salesmanship offer adventure, excitement and the competition
we all need to lead a full and enjoyable life. During course of this
Page 4 of 77

period I have used six methods of selling which are- Direct selling,
Tele-calling, Internet, Canopy, Survey, and Event. These are
explained in this report with their benefits, limitations, learnings
and suggestions if any.
The second part of the report is about wealth management that is
an advanced type of financial planning that provides High net
worth individuals and families with private banking, estate
planning, asset management, legal resources, and investment
management, with the goal of sustaining and growing long-term
wealth. The various instruments under it are equity, mutual fund,
real estate, equity linked instruments, Portfolio Management
Services. I have analyzed all of these instruments in this report
and share my ideas regarding what are the best instruments in
various conditions.
The third part of the report is about scope of wealth management
in middle class. For this part I did survey to find out how many
people are aware about wealth management, how many of them
taking wealth management companies services and how many
are willing to take services of wealth management company for
the minimal fee of Rs. 365 annually.
The fourth part of the report speaks about Mutual Fund and
Inclusiveness. Inclusiveness means not excluding any section of
society. In this part I tried to find out can mutual fund include
lower income section of society to provide the benefits of growth?

Introduction
Page 5 of 77

This first quarter of the report is aimed at to find out which

method of insurance selling is best in which situations and which
the most effective method of selling is and is there any scope of
improvement in implementation of method to improve its
efficiency. So to achieve the desired aim of report each of the
methods have been used by me for the considerable period of
time to judge each of the method. The suggestions made are on
my personal experience while implementing each of the methods
and the only limitation I found is lack of time and trying methods
under different conditions.
The second quarter of the report is aimed at to understand what
wealth management is, different instruments under it and
suitability of each of the method with different people. Each of the
instruments has been analyzed to frame who should invest after
consideration benefits and limitation of each of the instruments.
The third quarter of the report is aimed to understand how big the
scope of wealth management in middle class, What the middle
class understand by wealth management and would they like to
take a services of wealth management companies. For this a
survey is done to frame out the scope of wealth management.
The Last quarter of the report is aimed to know can mutual fund
improve the standards of lower income class of people to make
them inclusive to the growth of country. It is also aimed to know
whether they have capacity to invest in mutual fund and what can
be done to make mutual fund accessible to them so they could
also bear the fruits of higher growth.

Page 6 of 77

PART-1
SELLING OF LIFE INSURANCE
Sales methods:
1) Direct Selling:
Under this method, sales leads are generated by telesales girls and I was
required to visit the client and sale the insurance. This was a scientifically
correct method as according to one research people like much to talk to
opposite sex on phone than to people of same sex. As in India mainly
financial decision making power vests with male so it is the scientifically
correct that girls make calls and boys are required to go to field as they are
more mobile and it is risky to send girl alone to field.

Peculiarities of this Sales Method:

The success of this system depends upon team work as lead cannot be
succeed if there is any mistake in service to customer either on behalf
of telecalling girl or field boy
A good coordination is required between telecallers and field boys
Telecallers share a grand responsibility as she is the first person from
organization with whom client contacts. She is to establish a good
image of her and organization.
But sales are not closed at telecalling level only. Second responsibility
of carrying that good image is lie with the field boy he is required to
persist with the impression that is developed by telecallers.

My role:
I work under this method for 10 days and I visit 20 people during this period.
According to system I was required to visit clients whose leads are generated
by telecallers.

Learnings:
Little things matters most:
I learned that how little things such as your dressing sense, shoes are
polished or not, whether your hairs are well combed or not matters a
lot as these things create first impression about the person selling in
Page 7 of 77

the mind of client. As before we sell the product we are required to sell
our self.

Product knowledge is not enough:

I learned that it is not enough that you know well about the product
and you explains benefits of the product clearly as you are required to
emphasis more on the benefits to the client rather than what product is
all about as it is the benefits in which client has interest and not in
what my product is all about. So I realize the line form the book sell
your way to success by Alfred tack that dont sell the steak, sell the
sizzle

Importance of sales story:

I also learned that there must be a sequence in which you are to
present while selling the product. As I was selling in my own way
earlier but I didnt get any success but later on after reading the book
SELL YOUR WAY TO SUCCESS as suggested by my company mentor I
understand the importance of sequence in which sales story is to be
presented and according to quotes of the book the following is
the sales sequence that should be followed:

Step 1- The approach:

The approach should be such which hold the attention of the client as it is
the first few words you spoke that counts most.

Step 2- Creation of interest:

It is not enough that you have raise attention by a good approach but you
are required to sustain that story by creating interest of customer and his
interest can be created only through the benefits he will avail by product.
The following are the main reasons because of which anybody
purchases any good:
I.
II.
III.
IV.
V.
VI.

Gain of money
Caution: fear of prospect of losing something
Utility value: utility of product
Pride
Sentiment
Pleasure
Page 8 of 77

VII.

Benefits to health

Step 3- Creation of confidence:

Now you have gain the attention of customer and you have created the
interest but still it is not enough to sell the product now you got to create
confidence about you and your organization in the mind of customer because
it is well proved customer wont purchase or listen to you unless he has
confidence in whatever you are saying so it is very important to create
confidence

Step 4- The product:

Here at this step you got to sell the product by emphasizing upon the
advantages the product will bring to the customer.

Step 5- Creation of desire to buy:

In this step you are required to tell A Verbal Proof Story (A.V.P.S.) a story of
which actually happened to somebody else for using or not using the
product.
Step 6: the Close- after you have gone through all the steps from the
approach to creation of desire to buy, you should not stop yourself you
should go for closing the sale directly moving form creation of desire to
straight for the order as once decision is delayed all work done can result in
lost state.
So, on the basis of these steps I developed a sales story which results in
sales for me.

But I also found some limitation regarding the above

system applied in JRG Insurance Broking P Ltd. Which are
as follows
The target of TELECALLERS is to generate at least 4 leads daily but
the quality of leads is not matter as I found that TELECALLERS just
concentrate on that they are to generate four leads whom with field
executives can meet. They didnt take into consideration whether the
customer is genuinely I interested to purchase the product or not

Page 9 of 77

whether he has required documents or not but they are supposed to

verify these things also.
Sometimes telecallers even go for false promises regarding utility of
product just to make a lead which result in contradictory information
given by telecallling girls and field boy
So all this limitation results in fake calls, not interested calls which
undermine the performance of field boys
I also find that some of the telecalling and field boys also lacks
product knowledge
Some times while calling customers they forget some of the highlights
of the product that are needed to be told which also affect their
performance

Suggestions:
Target of telecallers should be quality calls and they should be
explained what are the things to verify to judge quality of their lead.
I observed that telecallers indulge in non quality leads as they fear of
non completion of their targets so they should be motivated to achieve
targets but if they dont achieve once a while they shouldnt be cursed
and if they fail to achieve this targets on regular basis then on first
basis it should be understand why they are unable to achieve their
targets
They should be provided a standard sales script which is based on the
basis of rule AIDA that is attention interest, desire, action. A standard
script based on this will improve their performance and will also take
out the possibility of missing something while talking to customer
Any news related to their industry which they can be used by them
should be explained by senior on regular basis to improve their skills
In office, telecallers should be provided daily NAV of product, Share
market position to update them and improve quality of their calls
They should also be explained uses of annuity table and be provided
the same so that they could solve the investment queries of customers
skillfully.

2) Telecalling:
Under this method I was to call 100 people daily for a week. I called 30% of
them using life insurance pitch. 30% of them on investment pitch and 40% of
them on financial planning pitch.
Page 10 of 77

I developed sales script for each of the pitches that are insurance pitch,
investment pitch and financial planning pitch on the basis of formula AIDA
(Attention, Interest, Desire, and Action). I also call without sales script in 25%
of cases to understand the usefulness of sales script.

Sales pitches:
Investment Sales Pitch:
Good morning sir, am I talking to Mr. XYZ? This is Ravi from Bharti Axa. I
have called you regarding the newly launched investment plan which can
give you return of more than double which you earn through banks.
Is this the right time to talk to you?
The product is Aspire Life in which you are required to deposit money for a
minimum period of 7 years. Suppose you invest Rs. 30000 for a period of 7
years at the end of 20 years you will get around Rs. 3000000. Plus you will
get free life insurance cover of 15 times of your annual premium. Plus you
will get a guaranteed amount of 160% of your first year premium. Moreover
it will provide you flexibility as if you need money in between you can
withdraw money in between but your plan will continue.
The biggest benefits of all is that whatever the premium you pay is tax
deductible under Section 80C of Income Tax Act,1961 and the amount you
get at maturity or amount you withdraw in between is totally tax free.
So if you like the plan I will like to meet you to explain the plan in detail and
collect documents.

Insurance Sales Pitch:

Good morning sir, am I talking to Mr. XYZ, This is Ravi from Bharti Axa Life
Insurance Company ltd. I have called you regarding the newly launched
insurance cum investment plan which can give you return of more than
double of what you earn through banks plus it provides you insurance cover
for financial security.
If you have time I would like to explain about the plan.
The product is Aspire Life in which you are required to deposit money for a
minimum period of 7 years. Suppose you invest Rs. 30000 for a period of 7
Page 11 of 77

years at the end of 20 years you will get around Rs. 3000000. Plus you will
get free life insurance cover of 15 times of your annual premium with no
allocation charges and you will also get free guaranteed gift of 160% of your
first year premium. Moreover it will provide you flexibility as if you need
money in between you can withdraw money in between but your plan will
continue.
The biggest benefits of all is that whatever the premium you pay is tax
deductible under Section 80C of Income Tax Act,1961 and the amount you
get at maturity or amount you withdraw in between is totally tax free.
We have some other products also so I will like to meet you so that I can offer
you best product according to your needs.

Financial Planning Pitch:

Good morning sir, this is Ravi from JRG wealth Management Company. We
provide financial planning services to help people to secure their future and
live their dreams without any financial difficulties.
Suppose you need Rs. 1000000 at the end of 10 years, we advised on the
basis of your income how you should invest your money to achieve this
target.
Can we assist you in living your dreams?
It is not possible me to do your financial planning on phone so I will like to
meet you. Please tell me your age, occupation, income, family status so that
I could think over your case in advance before meeting you and offer you
best of financial planning.

Findings of this method:

I try to find out under which pitch customer listen most. I called on 500
numbers but could contact to only 300 people as data was old.

Method
Life Insurance pitch

Calls
88

Listen
7

7.95
Page 12 of 77

Investment pitch
Financial planning pitch

100
112

14
51

14
45.53

So I find out that under financial planning pitch people listen most. The
success rate was 45.53% under this method so it was the most successful
method.

Challenges to this method:

This method will provide result only if sales field executive are trained
to articulate their sales story in financial planning way.
Sales field are needed to be trained for more products and some
techniques to understand customer needs although they can still focus
on Aspire Life- the most revenue generating product for us.
As our OCR lacks experience and deep knowledge so our most
experienced and quality work force that is Branch and Territory
Managers should teach OCR how to tackle customer with this pitch and
how to make customer belief that Aspire Life cater to different needs.
OCR should also be provided some regular knowledge about markets
and different financial instruments available in market.
A little effort of mentioning Daily NAVs And Sensex on notice board in
branch should also be done as it improves quality of OCRs

Observations:
I find out that people from middle class or people with less income and
low designation listen more on all methods compared to people with
high income and high designations.
there were some people who were interested under Financial Planning
pitch but do lacks money as this moment so they have promised to call
whenever they wished to invest
I observed that mood also affects the success of call.
No. of people who disconnected phone or do not listen my full sales
script was highest in case of life insurance pitch and lowest in case of
financial planning pitch.

Page 13 of 77

 I also observed that no. of people who give me time to meet was
highest in case of financial planning pitch.
My conversion rate was less when I was calling without script when
compared to with script.
I also observed that sales story for financial planning should be
different from insurance pitch as in that case emphasis should be on
understanding the needs of customer and then suggesting product
according to their needs but in case of insurance pitch our emphasis
should be on benefits of having policy.

Limitation of method:
Data: there were some people on data which dont have much
capacity to invest.
Quality of sales pitch can also affect calls
I feel girls making calls could increase the success rate of people
listening calls.

Suggestions:
Sales script must be used as it improves success rate
Financial planning pitch is most successful as that gives the person
impression that his needs are judged and product suggested is tailor
made to his needs
Sales script must be according to AIDA rule

Learnings:

Importance of sales script.

Need of patience
Smile must for calling as a dull voice dont attract the listener
Phone call manners must to be followed while making call

3) Internet:
Under this method I develop an advertisement on the financial
planning pitch and send it to 100 persons on their e -mail id for a
Page 14 of 77

week. Advertisement was again developed on the basis of AIDA

formula.

Findings:
The response I get was nothing as I got only 4 responses and only one out of
these 4 was positive and that too didnt follow up.
The message I sent was.

Dear
sir/madam,
Dear sir/madam,
A
to assist
assist you
you in
in achieving
achievingyour
yourdreams.
dreams.
A friend
friend to
Plz find the attached document.
Plz find the attached document.

And attached document was below shown advertisement.

The advertisement

Sapne sabke apne apne but to

achieve them, we all need money
Hello,
Your dream could be anything owning a lavish house, education in
foreign, big Mercedes car etc.
You work very hard to live these dreams.
But does your money works that hard?
Page 15 of 77

If, no?
And money is stopping you to live these dreams,
Dont worry just contact us we can help you to live these dreams
through good financial planning.

Ravi Gumber
E-mail: ravigumber1985@gmail.com
Mobile: 9873801272

Responses got:
1. Thank you very much
2. Who are you and how did you get my no.
3. What it is?
4. This is nice, I will catch you later.
But again this person didnt contact me again and I couldnt as I didnt has
his number only e-mail id.

Results:
Responded

4/500= .8%

Positive response

1/500=.1%

Achievement

0/500=0%

Learnings and achievements:

Page 16 of 77

 This method not of much use

I learn how to make advertisement and I followed AIDA(attention,
interest, desire, action) formula while making this advertisement
I learn how to get email ids data.

Limitation:
Quality of advertisement could be a limitation

Recommendation:
A more attractive advertisement should be used again to verify the result of
this method.

4) Survey:
Objective:
I prepared a questionnaire on wealth management and surveyed around 200
people to judge the effectiveness of survey as method of sales.

The Questionnaire
Survey for Wealth Management
1. Do you invest?
Yes

No

2. Where do you invest and rank these options according to amount of

investment in each option? (For maximum-1 and minimum-6)
Bank FDs
Post Office (Kisan Vikas Patra)
Mutual Fund

RANK

Page 17 of 77

Insurance
Shares
Property
All
3. How do you invest?
Self
Financial Advisor
Family/Friends advice
Wealth Management Company
(If Wealth Management Company is not selected in Q.N.3, then move to
Q.N.7)
4. Which wealth management companys services are you taking?

5. How do you select this wealth management company?

Brand
Advertisement
Friends/Family advice
6. How do you rate services of your wealth management company?
Highly satisfied
Satisfied
Dissatisfied
Highly dissatisfied
Cant say
7. Have you heard about wealth management companies?
Yes

No

8. If yes, why dont you take services of wealth management companies?

Lack of confidence
Fees
Lack of awareness

Page 18 of 77

9. Would you like to take services of wealth Management Company with

minimal fees?
Yes

No

10. Your annual income

Rs.150000-300000
Rs.300000-500000
Rs.500000-600000
>Rs.600000
11. What % of income, do you really save?

12. Personal details:

Name:
Address:
Gender:
Age:
Mobile:
Education Qualification:
Occupation:
Organization Name:

Service/Profession/Business

Finding:
No lead generation
No sales

Observations:
it is a good method for collecting data, introduce company and share
ideas but not a good method for sales
female refuse to give mobile no. and other details in most cases
people avoid to give their details for the fear of misuse

Page 19 of 77

Limitations:
survey is done in busy places so there is less time to sales
people dont give that much time that required for sales
people wont even pay heed when you approach for sales

Learnings:

how to conduct survey

how to prepare questionnaire
importance of first impression while conducting survey
need to be patient as some people wont behave with you properly

5) Canopy:
Under this method, I was to establish canopy at different places and sit there
daily for promoting company and to assess usability of this method for sales
For the conduct of this method the first decision is: location of canopy

Requirements of ideal location:

a place where large no. of people visit
place must attract the people which are target of product
people must have time there to give to canopy persons

Other things to be considered:

cost-benefit analysis:
We must ascertain expected lead generation from a location and then
compare it with the cost of operating canopy from that place before
choosing any location

Conduct of canopy:
We establish canopy at three different places 2 days each. The places
were.
1. Japanese Park, Rohini
2. Netaji Subhash Place, Pitampura
3. Kamla Nagar
Page 20 of 77

1. Japnaese Park, Rohini:

Here we establish our canopy near entry gate of park. Our targeted
customers were young and middle aged working people as we sale insurance
products.

Suitability of location:
Location choice was prove to be good as it was a very famous and big
park, around 1000 people visit daily there.
People again has time there as they came for relaxation there
50% of people coming here were from our target group

Achievements:
In two days, 100 people visit our canopy and we introduced our
company, our product to them.
We generated 5 leads out of these 100 people.
1 policy was sold later on to the one of person contacted there and
another one is in follow up
We get reliable data of 100 people through which we can understand
their needs and their risk appetite
We also promoted our company as 1000 people visit there

2. Netaji Subhash Place, Pitampura:

Suitability of location:
Location choice was as it was a commercial complex where a
thousands of people visit there
Most of people visiting there was from our target group

Achievements:
In two days, 80 people visit our canopy and we introduced our
company, our product to them.
We generated just two leads from here
No sales till now
But it was a very good place for promoting company as thousands of
people visit there.

3. Kamla Nagar Market:

Page 21 of 77

Suitability of location:
Location was good as thousands of people visit there but people didnt
have much time there as they were busy in shopping
25% of people visiting there was from our targeted sales group as most
of the people there was either young not working people, housewives
etc.

Achievements:
In two days, 64 people visit our canopy and we introduced our
company, our product to them.
We generated just one leads from here
No sales till now

Observation:
It is a good method for promoting company, generating leads, reliable
data.
But sales cant be closed through canopy method as far as canopy
method for insurance product is concerned as people neither come
with required finance nor with required documents in these places
Insurance is a financial product so people take time to decide while
taking any product so it cant be sold on spot in canopy
Location suitability is must for success of this method

Limitation:
Under Canopy method, people are expected to visit on our on their
own.
If brand of the company is not well known then people visit less to
canopy
Doing cost benefit analysis before selecting any location is difficult.

Learnings:
Formalities for organizing canopy
How to conduct canopy method

Suggestions:
Canopy must be attracted enough to attract people
Page 22 of 77

 Canopy must offer some incentive to people visiting canopy to attract

more people like discount to close deals and generate more leads.
6) Event:
Under this method, we organize a drawing competition in Mann Public School
on May 12, 2008. This competition was for the students of class 4 to class 8.
We asked these students to paint their life dream on paper. We also asked
students to give following details in one form..
NAME
CLASS
FATHER NAME
ADDRESS
MOBILE NO.
LIFE DREAM

Objective:
Objective of this method was to collect data, promote our company, and
build up relationship with families of children to generate sales later on.

Conduct:
200 students sit for this competition and each of the participating students
was given pencil, sharpener, eraser, colors to attract maximum students

Achievements:
Promoted our company
Get reliable data

Page 23 of 77

 Form a relationship with students which can help us to generate sales

in future

Observations:
This is a good method for collecting data, promoting company but at
the same time it is a costly method
It cant give result in short term but it will prove to be very successful
in long run as it helps to bond a relationship between company and
potential customers

Suggestions:
Prize should be related to discounts in insurance premium as it can
entice parents to have policy and will show result in short term
It should be organized on yearly basis in last half of financial year as it
is the time when most people invest for tax planning so it will grow
chances of making sales if prize are linked to discounts
Annual organization of event will build a permanent bond with
emotions of parents.

Learnings:
How to conduct competition
How the company work with innovation to make sales, collect data,
promote company

Limitation:
Ability of this method to give result in short period
Success is not guaranteed
Costly method

CONCLUSION:
Conducting sales through above six methods was a learning and exciting
experience I learn how all of these method work, what are the things that
affect effectiveness of each of these method. But if I were to rate success of
these methods I will say.

Page 24 of 77

1. Direct sales: This is the most effective method as telecallers (mostly

girls) explain product and field boys are to go and close sales

2. Telecalling sales: It is also a good method for sales but it against the
rule of perfection as same person is making calls and going to field
3. Internet method: I feel this is not at all effective method for sale
4. Survey: This is a good method for collecting data and promoting
company but not for sales

5. Canopy: This is good method for generating leads, collecting data and
promoting company but very difficult to make sales as product is financial
one. For success of this method selection of suitable location is most crucial.

6. Event: This is good method for collecting reliable data, promoting

company, building relationship with perspective customers but it cant result
in instant sales

Hence direct sales and Telecalling sales are good method

for sales. Survey, Canopy and Event method are good for
generating reliable data and promoting company. Internet
method was not attractive on any counts.

Part 2
Page 25 of 77

Analysis of Wealth Management

Instruments
Wealth Management:
Wealth Management is classified as an advanced type of financial planning
that provides High net worth individuals and families with private banking,
estate planning, asset management, legal resources, and investment
management, with the goal of sustaining and growing long-term wealth.

Where
Financial Planning:
Financial planning is the task of determining how a business or individual will
afford to achieve its strategic goals and objectives. The Financial Plan
describes each of the activities, resources, equipment and materials that are
needed to achieve these objectives, as well as the timeframes involved.

High Net Worth Individuals (HNWIs):

(HNWI) is a person with a high net worth. Typically these individuals are
defined as having investable assets (financial assets not including primary
residence) in excess of US$1 million

Private Banking:
Private banking is a term for banking, investment and other financial
services provided by banks to private individuals disposing of sizable assets.
The term "private" refers to the customer service being rendered on a more
personal basis than in mass-market retail banking, usually via dedicated
bank advisers.

Estate Planning:
Estate planning is the process of accumulating and disposing of an estate to
maximize the goals of the estate owner. The various goals of estate planning
include making sure the greatest amount of the estate passes to the estate
Page 26 of 77

owner's intended beneficiaries, often including paying the least amount of

taxes and avoiding or minimizing probate court involvement. Additional goals
typically include providing for and designating guardians for minor children
and planning for incapacity.

Investment Management:
Investment management is the professional management of various
securities (shares, bonds etc) assets (e.g. real estate), to meet specified
investment goals for the benefit of the investors. Investors may be
institutions (insurance companies, pension funds, corporations etc.) or
private investors (both directly via investment contracts and more commonly
via collective investment schemes e.g. mutual funds).

Services offered by Wealth Management Industry:

Portfolio Management and Portfolio Rebalancing
Investment Management and Strategies
Private Banking and Financing
Tax Advice

Products/Instruments offered:

Stocks and Stock Trading

Equity Linked Investments ( Unit Linked Insurance)
Structure Savings Products
Mutual Funds
Property (Real Estate)
Alternative Investments including:
o Art
o Precious Metals

Now analysis of each product one by one:

1) Mutual funds:

Page 27 of 77

A mutual fund is simply a financial intermediary that allows a group of

investors to pool their money together with a predetermined
investment objective. The mutual fund will have a fund manager who
is responsible for investing the pooled money into specific securities
(usually stocks or bonds). When you invest in a mutual fund, you are
buying shares (or portions) of the mutual fund and become a
shareholder of the fund.

Benefits of Mutual Fund:

Professional Management:
The major advantage of investing in a mutual fund is that you get a
professional money manager to manage your investments for a small
fee. You can leave the investment decisions to him and only have to
monitor the performance of the fund at regular intervals.

Diversification:
Considered the essential tool in risk management, mutual funds make
it possible for even small investors to diversify their portfolio. A mutual
fund can effectively diversify its portfolio because of the large corpus.
However, a small investor cannot have a well-diversified portfolio
because it calls for large investment. For example, a modest portfolio
of 10 blue-chip stocks calls for a few a few thousands.
Convenience:
Mutual funds offer tailor-made solutions like systematic investment
plans and systematic withdrawal plans to investors, which is very
convenient to investors. Investors also do not have to worry about
investment decisions; they do not have to deal with brokerage or
depository, etc. for buying or selling of securities. Mutual funds also
offer specialized schemes like retirement plans, children's plans,
industry specific schemes, etc. to suit personal preference of investors.
These schemes also help small investors with asset allocation of their
corpus. It also saves a lot of paper work.
Cost Effectiveness:
A small investor will find that the mutual fund route is a cost-effective
method (the AMC fee is normally 2.5%) and it also saves a lot of
transaction cost as mutual funds get concession from brokerages. Also,
the investor gets the service of a financial professional for a very small
Page 28 of 77

fee. If he were to seek a financial advisor's help directly, he will end up

paying significantly more for investment advice. Also, he will need to
have a sizeable corpus to offer for investment management to be
eligible for an investment adviser's services.

Liquidity:
You can liquidate your investments within 3 to 5 working days (mutual
funds dispatch redemption cheques speedily and also offer direct credit
facility into your bank account i.e. Electronic Clearing Services).
Tax breaks:
You do not have to pay any taxes on dividends issued by mutual funds.
You also have the advantage of capital gains taxation as proceeds from
sale of mutual fund after one is long term capital gain which is tax free.
Tax-saving schemes and pension schemes give you the added
advantage of benefits under section 88.
Transparency:
Mutual funds offer daily NAVs of schemes, which help you to monitor
your investments on a regular basis. They also send quarterly
newsletters, which give details of the portfolio, performance of
schemes against various benchmarks, etc. They are also well regulated
and SEBI monitors their actions closely

Disadvantages of mutual funds:

No Guarantees:
No investment is risk free. If the entire stock market declines in
value, the value of mutual fund shares will go down as well, no
matter how balanced the portfolio. Investors encounter fewer risks
when they invest in mutual funds than when they buy and sell
stocks on their own. However, anyone who invests through a mutual
fund runs the risk of losing money.

Fees and commissions:

All funds charge administrative fees to cover their day-to-day
expenses. Some funds also charge sales commissions or "loads" to
compensate brokers, financial consultants, or financial planners.
Even if you don't use a broker or other financial adviser, you will pay
a sales commission if you buy shares in a Load Fund.

Taxes:
During a typical year, most actively managed mutual funds sell
anywhere from 20 to 70 percent of the securities in their portfolios.
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If your fund makes a profit on its sales, you will pay taxes on the
income you receive, even if you reinvest the money you made

Management Risk:
When you invest in a mutual fund, you depend on the fund's
manager to make the right decisions regarding the fund's portfolio.
If the manager does not perform as well as you had hoped, you
might not make as much money on your investment as you
expected. Of course, if you invest in Index Funds, you forego
management risk, because these funds do not employ managers.
Return and Tax Implications:
For long period I calculated the average return on diversified mutual
funds on a period of 5 years on 58 diversified schemes
Average Return= 47.53% compounded annually
Suppose you invested Rs. 10000 on March 15, 2007 in XYZ Mutual
Fund and purchase 1000 units at Rs. 10 each
You redeemed these units on March 18, 2008 at Rs. 15 per unit so
you earn a profit of Rs. 5000 on it you are not required to pay any
tax on it as long term capital tax is free.
So you earn return of 5000/10000*100= 50% on your return
So your post tax return is 50%
But now suppose you redeemed units on March 10, at the same
NAV of Rs. 15 and your other taxable income is Rs. 500000. Now
your income of Rs. 5000 will be added in Rs. 500000 and you will be
tax of 30.9% on this Rs. 5000
TOTAL INCOME MF INCOME
AFTER TAX RETURN
Rs.500000
34.55%
Rs.250000
39.70%
Rs.150000
44.85%

TAX RATE

TAX

NET INCOME

5000

30.9%

1545

3455

5000

20.6%

1030

3970

5000

10.3%

515

4485

So it is better to invest in Mutual Fund for more than 1 Year.

Otherwise Pretax Return = 50%
And After Tax Return will vary from 34.55% to 44.85% based on your
other taxable income

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2) Real Estate (Property):

Benefits of Investment in Real Estate:
Higher return and sustainable returns:
If you select a right property at a right price then you can earn very
handsome unbelievable returns and moreover these returns are
sustainable as they are not volatile like stock market.

Cash flow from property:

This means the difference between your income and your expenses
on that specific piece of property. Of course, this can be either
negative or positive. You feel a lot better when its positive, but
negative cash flow isnt necessarily bad if its a planned part of your
investment program. But be careful of the temptation to use up
your whole cash flow on rapid debt reduction.

Appreciation in the value of a Property:

There are two kinds of appreciation, which we can call external
and internal. External appreciation has nothing to do with the
actual property itself but comes from economic conditions, land
scarcity etc. Some people have made good deals by predicting
where the next property hotspot will be and buying in hopes of
quick appreciation but of course, if you get it wrong, you are in
trouble. Internal appreciation comes from improvement in the
actual property itself and is easier for you to control. You can buy a
piece of property in need of repair at its as is value, improve it
and sell it on at a profit.

Leverage:
Being able to buy a piece of property by borrowing a percentage of
its value. No other type of investment offers such a high degree of
leverage. It is not unusual for investors to purchase a single family
house by obtaining 100 percent finance i.e. no money down real
estate investing. This of course is very attractive if you can flip
the property at a profit, quickly repay the loan and pocket the
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difference. But of course this can also be extremely risky. If the

property doesnt prove to be a good investment, you are in trouble.
Never forget the loan is a loan and has to be repaid somehow.

Amortizing:
You have bought the property with other peoples money, but as
you repay, your principal is being reduced. That means your equity
your level of ownership of the property - is being increased.

Tax advantages:
There are several ways in which property ownership can be used for
legitimate tax avoidance though this should not be your first and
foremost reason for buying the property, more a side benefit.
These are the main tangible benefits of property investing. There
are many more associated with the satisfaction and enjoyment,
and the residual nature of the income as opposed to linear
income i.e. the money comes in even when youre not actually
working. Above all theres the buzz which many claim beats the
excitement of any other type of investment!

Disadvantages of Investment in Real Estate:

Huge money :
To invest in real estate huge money is required so this is not
possible for everybody and anybody

High risk:
If you choose a wrong property or property at wrong price it is very
difficult to recover from that loss.
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 Technical Knowledge:
Before selecting a piece of property a lot of things are to be look
after like documents, location, ownership so it requires a technical
knowledge to invest in real estate.

Time Consuming:
Looking for a perfect piece of land is a tough job as it takes a lot of
time to purchase a property.

Unscrupulous persons:
It is also important to verify the credibility of the person whom with
you is dealing as there are lots of scrupulous persons who are
involved in the real estate market.

Return and Tax Implication:

Return:
I try to measure return from property market by comparing prices of
property in various area of Delhi with its one year old and five year old
prices. Following were the Results..
Places
2008

Price in 2003

Price in 2007

Price in

Narela

600000

1500000

2500000

Rithala

2200000

5000000

8200000

Pitam Pura
Bankner

1700000
300000

3500000
500000

5000000
800000

So prices of Property are increasing at a very high speed in Delhi but

return are uneven there were some are where in just one year prices
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has doubled but there are again some areas where prices has just
increased by 10-20% in the same period.

Tax Implication:
If property is kept for more than three years then profits from property
are long term capital gain so taxed at 20.6% otherwise profit is added
in normal income and taxed according to applicable tax rate.

3) Equity linked investment plans(Unit Linked Insurance

Policies):
Benefits:
ULIP investments qualify for deductions under Section 80C of the
Income Tax Act. This holds well, irrespective of the nature of the plan
chosen by the investor. But in case of mutual funds, only investments
in tax-saving funds (also referred to as equity-linked savings schemes)
are eligible for Section 80C benefits.
Maturity proceeds from ULIPs are tax free under Section 10(10) D on
the Income Tax Act.

Insurance cover:

It also provides insurances cover to human being so it also cover the

loss of income to family of deceased person in case death. So help in
maximizing wealth.

Flexibility:
It also offers the flexibility of withdrawing some money in between if
required.

Higher Post Tax Returns:

Post tax returns of ULIP Plans are higher because of tax benefits under
section 80C and 10(10) D

Disadvantages:
Higher charges:
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ULIP plans carry a very high allocation charges and other charges
which wipe out a good amount of return

Lock in period:

Every ULIP plan has an lock in period of 3 years which is also an

disadvantages as there is no liquidity for first three years

Less Returns:

Returns are less in case of ULIP as a large part of premium is wipe out
in allocation charges so higher the allocation, lower is the amount
invested and lower the return.

Tax Benefits:

Total income after

benefits under 80C
Investment
Rs. 500000
30900
Rs.250000
20600
Rs.150000
10300

Investment

Tax Rate

Rs. 100000

30.9%

Rs. 100000

20.6%

Rs. 100000

10.3%

Tax

ULIPs vs. Mutual Funds:

Investment
amounts
Expenses

ULIPs

Mutual Funds

Determined
by the
investor and
can be
modified as
well

Minimum investment amounts are determined

by the fund house

No upper
limits,
expenses
determined
by the
insurance

Upper limits for expenses chargeable to

investors have been set by the regulator

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company
Portfolio
disclosure

Not
mandatory*

Modifying
asset
allocation

Generally
permitted for
free or at a
Entry/exit loads have to be borne by the
nominal cost investor

Tax benefits

Section 80C
benefits are
available on
all ULIP
investments

Quarterly disclosures are mandatory

Section 80C benefits are available only on

investments in tax-saving funds

Difference between ULIP and Mutual Fund:

Mode of investment/ investment amounts:
Mutual fund investors have the option of either making lump sum
investments or investing using the systematic investment plan (SIP)
route which entails commitments over longer time horizons. The
minimum investment amounts are laid out by the fund house.
ULIP investors also have the choice of investing in a lump sum (single
premium) or using the conventional route, i.e. making premium
payments on an annual, half-yearly, quarterly or monthly basis. In
ULIPs, determining the premium paid is often the starting point for the
investment activity.
This is in stark contrast to conventional insurance plans where the sum
assured is the starting point and premiums to be paid are determined
thereafter.
ULIP investors also have the flexibility to alter the premium amounts
during the policy's tenure. For example an individual with access to
surplus funds can enhance the contribution thereby ensuring that his
surplus funds are gainfully invested; conversely an individual faced
with a liquidity crunch has the option of paying a lower amount (the
difference being adjusted in the accumulated value of his ULIP). The
freedom to modify premium payments at one's convenience clearly
gives ULIP investors an edge over their mutual fund counterparts.

Expenses:

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In mutual fund investments, expenses charged for various activities

like fund management, sales and marketing, administration among
others are subject to pre-determined upper limits as prescribed by the
Securities and Exchange Board of India.
For example equity-oriented funds can charge their investors a
maximum of 2.5% per annum on a recurring basis for all their
expenses; any expense above the prescribed limit is borne by the fund
house and not the investors.
Similarly funds also charge their investors entry and exit loads (in most
cases, either is applicable). Entry loads are charged at the timing of
making an investment while the exit load is charged at the time of
sale.
Insurance companies have a free hand in levying expenses on their
ULIP products with no upper limits being prescribed by the regulator,
i.e. the Insurance Regulatory and Development Authority. This explains
the complex and at times 'unwieldy' expense structures on ULIP
offerings. The only restraint placed is that insurers are required to
notify the regulator of all the expenses that will be charged on their
ULIP offerings.
Expenses can have far-reaching consequences on investors since
higher expenses translate into lower amounts being invested and a
smaller corpus being accumulated. ULIP-related expenses have been
dealt with in detail in the article "Understanding ULIP expenses".

Portfolio disclosure:

Mutual fund houses are required to statutorily declare their portfolios

on a quarterly basis, albeit most fund houses do so on a monthly basis.
Investors get the opportunity to see where their monies are being
invested and how they have been managed by studying the portfolio.
There is lack of consensus on whether ULIPs are required to disclose
their portfolios. During our interactions with leading insurers we came
across divergent views on this issue.
While one school of thought believes that disclosing portfolios on a
quarterly basis is mandatory, the other believes that there is no legal
obligation to do so and that insurers are required to disclose their
portfolios only on demand.
Some insurance companies do declare their portfolios on a
monthly/quarterly basis. However the lack of transparency in ULIP
investments could be a cause for concern considering that the amount
invested in insurance policies is essentially meant to provide for
contingencies and for long-term needs like retirement; regular portfolio
disclosures on the other hand can enable investors to make timely
investment decisions.

Flexibility in altering the asset allocation:

Offerings in both the mutual funds segment and ULIPs segment are
largely comparable. For example plans that invest their entire corpus
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in equities (diversified equity funds), a 60:40 allotment in equity and

debt instruments (balanced funds) and those investing only in debt
instruments (debt funds) can be found in both ULIPs and mutual funds.
If a mutual fund investor in a diversified equity fund wishes to shift his
corpus into a debt from the same fund house, he could have to bear an
exit load and/or entry load.
On the other hand most insurance companies permit their ULIP
inventors to shift investments across various plans/asset classes either
at a nominal or no cost (usually, a couple of switches are allowed free
of charge every year and a cost has to be borne for additional
switches).
Effectively the ULIP investor is given the option to invest across asset
classes as per his convenience in a cost-effective manner.
This can prove to be very useful for investors, for example in a bull
market when the ULIP investor's equity component has appreciated,
he can book profits by simply transferring the requisite amount to a
debt-oriented plan.

Tax benefits:

ULIP investments qualify for deductions under Section 80C of the

Income Tax Act. This holds well, irrespective of the nature of the plan
chosen by the investor. On the other hand in the mutual funds domain,
only investments in tax-saving funds (also referred to as equity-linked
savings schemes) are eligible for Section 80C benefits.
Maturity proceeds from ULIPs are tax free. In case of equity-oriented
funds (for example diversified equity funds, balanced funds), if the
investments are held for a period over 12 months, the gains are tax
free; conversely investments sold within a 12-month period attract
short-term capital gains tax @ 15%.
Similarly, debt-oriented funds attract a long-term capital gains tax @
10%, while a short-term capital gain is taxed at the investor's marginal
tax rate.
Despite the seemingly similar structures evidently both mutual funds
and ULIPs have their unique set of advantages to offer. As always, it is
vital for investors to be aware of the nuances in both offerings and
make informed decisions.
4) Stock(Equity):
Investment in stock or equity means investing in equity or stock of
different companies.

Benefits of stock (equity):

Higher Returns:
By investing directly in stock the investor can earn very high returns.

Bet against inflation:

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In times of increasing inflation equity is the best bet to combat

inflation as it gives very high returns.

Regular Income:

The investor can earn regular income in forms of dividends, bonus, etc.

Capital Appreciation:

Investor earns not only in terms of regular income but also in terms of
income from capital appreciation

Liquidity:

Stock offers a great liquidity as they can be sold anytime in the

secondary market.

Benefits of growth of economy:

As Sensex is called barometer of economy so share markets

performance show performance of economy so by investing in equity
investor grow with the economy

Tax benefits:

On capital appreciation short term capital tax is just 15% and long
term capital gain tax is nil

Voting right:

Conceptually speaking shares provides ownership rights to its holder

so they enjoy decision making power

Disadvantages of Investing in Stock (Equity):

High Risk:
It is very risky to invest money in stock as stocks are very volatile.

Technical Knowledge:

To invest in share market one must a very sound technical knowledge

of stock market and share prices, their movement only then one can
make money in share market

High cost:

It is very costly to invest in shares as one is required to pay brokerage

and different other charges

No Guaranteed Return:

There is no guaranteed return from share market as one can even wipe
out its principal if money is not invested in right stocks and at right
time.

Return and Tax Implication:

Performance of indices as on 31st MARCH, 08
Compounded Annualized Returns (%)
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Index Name
BSE Sensex
BSE MID Cap
BSE SMALL CAP
BSE 200

1 Year
2 Year
46.83
46.84
68.15
48.62
92.97
49.78
60.03
49.56

3 Year
45.37
48.1
57.26
44.16

5 Year
43.10
46.44

Tax Implication:
Suppose you invested Rs. 100000 on March 15, 2007 in XYZ Company
and purchase 10000 shares at Rs. 10 each
You sale these shares on March 18, 2008 at Rs. 15 per unit so you earn
a profit of Rs. 50000 on it you are not required to pay any tax on it as
long term capital tax is free.
So you earn return of 50000/100000*100= 50% on your return
So your post tax return is 50%
But now suppose you redeemed units on March 10, at the same Price
of Rs. 15 and now you will be required to pay short term capital gain
tax @15%

But there is debate whether one should invest in

individual stocks or equity funds so lets find out what is
Stock Vs Fund:

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5) Portfolio management services(PMS):

Portfolio management service is provided by wealth Management
Company to its HNIs clients. Under it client handover a min. of around Rs.
20 Lakh to wealth Management Company in return build a personalized
portfolio according to needs, financial goals and risk appetite of the client.
This is suitable for those who money in bagfuls, but don't have the time
or inclination to manage it.

Mutual Fund Vs PMS:

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But why should you opt for PMS instead of a mutual fund? Here are a few
aspects on which portfolio managers say they score over the
standardized products offered by mutual funds:

Asset Allocation:
You may know what stocks, equity funds or bonds you would like to
own, but do you know how much of your savings you should allocate to
each of these? The decision on asset allocation will be crucial in
determining investment returns over the long term. With PMS, an asset
allocation plan is tailor-made for you, after a detailed check on your
investment goals, savings pattern and appetite for risk.

Timing:
Have you ever kicked yourself for switching your entire portfolio into
equities just before they tanked? If you have, you probably need help
with regard to timing of investments. Once you hire a portfolio
manager, you can expect assistance on when you should be investing
more money into equities and when you should be bailing out. A
portfolio manager may also switch a portion of your portfolio into cash,
if he perceives a big risk to stock prices. The focus is on preserving
value.

Flexibility:
You are bullish on FMCG stocks, but find that equity funds have
marginal exposures to the sector. In a PMS, you can expect the
portfolio manager to accommodate your sector preferences when he
invests. But don't expect to completely dictate what stocks or sectors
your portfolio manager will buy for you, as he will be the best judge of
that.
Also, portfolio managers do not have to stick to any rigid rules on what
proportion of your money will be invested in each sector or stock. They
can also use liberal doses of cash or derivative instruments to pep up
your returns. Mutual fund managers have their hands tied on these
aspects by SEBI regulations.
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Benefits:
Personalized Approach:
More handholding from your portfolio manager than you have been
accustomed to from your mutual fund. You can expect to have a
personal relationship manager through whom you can interact with the
fund manager at any time of your choice. You can also expect frequent
(maybe monthly) interaction with the portfolio manager to discuss any
concerns that you might have. Expect to be consulted on any major
changes in asset allocation or in the investment strategy relating to
your portfolio. All administrative matters, including operating a bank
account and dealing with settlement and depository transactions, will
be handled by the PMS.

Transparency:
If you are the type who likes to watch over your money like a baby, the
disclosures offered by a PMS may be just right for you. On handing
over your money, you will receive a user-ID and password from the
PMS, which will grant you online access to your portfolio details. You
can use these to check back on your portfolio as often as you like.

Hassle Free Investment:

Keeping track of capital gains (and losses) for the taxman can be a
depressing chore, when you have furiously churned your investments
through the year. Opting for PMS will free you of this chore, as a
detailed statement of the transactions on your portfolio for tax
purposes comes as a part of the package.

Fees:
Most portfolio managers allow you to choose between a fixed and a
performance-linked management fee. If you opt for the fixed fee, you
may pay between 2-2.5 per cent of portfolio value; this is usually
calculated on a weighted average basis. The structure for the
performance-linked fee differs across players; usually, this includes a
flat fee of 0.5-1.5 per cent. The portfolio manager also gets to share a
percentage of your profit usually 15-20 per cent earned over and
above a threshold level, which may range between 8 per cent and 15
per cent. Apart from management fees, separate charges will be levied

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towards brokerage, custodial services and towards meeting tax

payments.
There are wide variations in fee structure between players and across
products. For instance, Birla Sun Life charges only a performancelinked fee for its portfolio services. Way2Wealth has a differential fee
structure for its debt and equity dominated portfolios.
When you opt for a performance-based fee, the profits are reckoned on
the basis of "high watermarking". That is, you pay the fee only on the
positive returns on your portfolio. For instance, if you invest Rs 100 in
a PMS and its value appreciates to Rs 150 at the end of the year, you
pay a fee on the profit of Rs 50. Subsequently, a fee will be levied only
on gains over and above the Rs 150 mark. If the value of your portfolio
slumps to Rs 70, and climbs back to Rs 110, the Rs 40 you earn will
not be reckoned as profit. You will again be charged a fee only if the
value of your portfolio recovers to over Rs 150, the previous "high
watermark."

Suitability of PMS:
Anybody with a nest egg, which meets the minimum investment
requirement, can consider using a PMS. However, a PMS may only

add significant value in the following cases:

Equity Bias:
Portfolio management services may be ideal for a person who seeks a
substantial investment in the stock markets. An equity portfolio also
offers greater scope for a manager to add value than does a debt
portfolio. Several of the established players in the PMS business focus
on equity investments, though some also offer hybrid products.

Large surplus to invest:

The minimum portfolio size that portfolio managers accept for a

customized portfolio ranges from Rs 25 lakh to Rs 5 crore. So consider
a PMS only if you have a substantial surplus to invest in stocks. If you

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don't, evaluate if you can use the services of a financial planner or an

advisor, instead of a PMS.
If you are willing to handle the paperwork associated with investing,
you can get a financial planner or advisor to construct an asset
allocation plan and guide you on the choice of investments for a onetime fee of Rs 5,000-15,000.
YOU earn money in bagfuls, but don't have the time or inclination to
manage it. If this description fits you, do consider entrusting your
money to a professional portfolio management service (PMS). In return
for a fee, portfolio managers offer to craft a basket of stocks, bonds or
even mutual funds that would fit your personal investment goals and
risk preferences. Though a few portfolio managers offer standardized
packages for a sum as small as Rs 5-10 lakh, it may take a minimum
investment size of Rs 25-50 lakh to fetch you a customized portfolio.
Apart from cash, you can also hand over an existing portfolio of stocks,
bonds or mutual funds to a PMS that could be revamped to suit your
profile.

6) Structured Saving Products:

I.

Public Provident Fund(PPF)

National Saving Certificates(NSC)
Tax Saving Fixed Deposits
Fixed Deposits
Fixed Maturity Plans(FMPs)
Kisan Vikas Patra

Public Provident Fund(PPF):

Investments in PPF are of a recurring nature and run over a 15-Yr
period. Investors are required to make annual contributions to keep
their PPF accounts active. The minimum and maximum investment
amounts are Rs 500 and Rs 70,000 per annum respectively. Only
contributions of up to Rs 70,000 per annum are eligible for a tax
benefit. Any amount invested over the aforementioned sum is returned
without interest. At present, investments in PPF earn a return of 8.0%
per annum, compounded yearly. It should be noted that investments in
PPF offer an assured return, but the rate of return is subject to change.
Liquidity: PPF scores poorly on the liquidity front. Withdrawals are
permitted only from the seventh financial year. The amount of
withdrawal is limited to 50% of the balance at credit at the end of 4th

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year immediately preceding the year in which the amount is withdrawn

or at the end of the preceding year whichever is lower.

Tax Benefits: Apart from Section 80C tax benefits at the time of
investing, interest
income from investments in PPF
is exempt from tax under Section 10(11) of the Income Tax Act.
Illustration: suppose you invest Rs. 50000 in your PPF account.
Tax

Benefits
Total Income PPF
N. Income
10(10) D Total savings ATR*

Interest Tax Rate

(80C)

Rs.550000
50000
16686
41.37%

500000

4000

30.9%

15450

1236

Rs.300000
50000
11124
30.25%

250000

4000

20.6%

10300

824

Rs.200000
50000
5562
19.12%

150000

4000

10.3%

5150

412

*ATR means After Tax Return= Total Savings+Interest Income

PPF Investment
II.

National Saving Certificate(NSC):

NSC offers the opportunity to make lump sum investments for a 6-Yr
period. The minimum investment amount is Rs 100, while there is no
upper limit. Presently, investments in NSC earn a return of 8.0% per
annum, compounded on a half-yearly basis. Hence Rs 100 invested in
NSC will grow to Rs 160.1 on maturity. The rate of return is locked in at
the time of investment. Hence investments are insulated from any
subsequent change in rates.

Liquidity:
NSC scores poorly on the liquidity front. The interest income is received
on maturity. Furthermore, premature withdrawals are only permitted
under specific circumstances like death of the holder(s), forfeiture by
the pledgee or under courts order.
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Tax Implication:
Interest income from NSC investments is chargeable to tax. However,
the interest accruing annually is also deemed to be reinvested, hence
it qualifies for deduction under Section 80C.
Illustration: suppose you invest Rs. 50000 in your NSC.
Total Income
Total Savings*

NSC
ATR**

N. Income

Interest

Tax Rate

(80C)

Rs.550000
19530

50000
39.06%

500000

4080

30.9%

15450

Rs.300000
14380

50000
28.76%

250000

4080

20.6%

10300

Rs.200000
9230

50000
18.46%

150000

4080

10.3%

5150

III.

*Total Savings= Interest Income+ Tax Savings u/s 80C

**ATR means After Tax Return

Tax Saving Fixed Deposits:

Tax-saving fixed deposits are conventional fixed deposits offered by

banks; however investments therein (up to Rs 100,000 per annum) are
eligible for tax benefits under Section 80C. These fixed deposits have
investment tenure of 5 years and the minimum investment amount is
generally Rs 100. At present, most banks offer a rate of return in the
range of 8.0%-8.5% per annum. A higher rate of return (additional
0.5%) is offered on investments made by senior citizens.

Liquidity:
Premature withdrawals are not permitted. However, investors can
choose the regular interest payout options (subject to the same being
offered by the bank) for liquidity.

Tax Implication:
Interest income from tax-saving fixed deposits is chargeable to tax.
Also unlike PPF and NSC, the same is subject to TDS (tax deduction at
source).
Illustration: suppose you invest Rs. 50000 in your Tax Savings
Fixed Deposits.

Page 47 of 77

Total Income
Total Savings*

FDs
ATR**

N. Income

Interest

Tax Rate

(80C)

Rs.550000
19450

50000
38.90%

500000

4000

30.9%

15450

Rs.300000
14300

50000
28.60%

250000

4000

20.6%

10300

Rs.200000
9150

50000
18.30%

150000

4000

10.3%

5150

*Total Savings = Interest Income+ Tax Savings u/s 80C

**ATR= After Tax Return

IV.

Fixed Deposits:
If we take simple Fixed Deposits with Banks, their
Duration: Duration varies from 7 days to 5 or more years
Tax Implication: these are not exempt u/s 80C and interest Income is
chargeable to tax.

Illustration:

Suppose you invest Rs. 10000@8% for one Year Fixed Deposit.
Total Income Interest
Tax rate
Tax payable
N. Interest
ATR*
500000
800
30.9%
247
553
5.53%
250000
800
20.6%
165
635
6.35%
150000
800
10.3%
82
718
7.18%
*ATR= After Tax Return
This is not a tax efficient instrument of investment but it gives pre tax
higher return as it offer 8%-9% even for one year FD.

V.

Fixed Maturity Plans(FMPs):

FMPs are actually close-ended debt funds (investments can be made
only during the new fund offer period) with a fixed maturity offering an
indicative yield (both the maturity and yield is known upfront). Here
the keyword is indicative. That means, on maturity, there is a
possibility of the actual returns deviating from what has been indicated
to investors at the time of investing.

Page 48 of 77

FMPs Vs FDs:
Fixed Maturity Plans (FMPs) can be termed as the mutual fund
industrys answer to Fixed Deposits (FDs). Over the years, FMPs have
established themselves as an option for debt fund investors (i.e. riskaverse investors). In many cases, they occupy the slot that used to
belong to FDs. This is not surprising given that both the avenues cater
to the same investor category. Having said that, it is worth noting that
FMPs and FDs also vary across a few critical parameters.

Differentiating Parameters:
Assured returns vs. Indicative returns:
The defining feature of both FMPs and FDs is that investors know in
advance how much return they will earn on maturity. The difference is,
while the returns on FDs are assured, returns on FMPs are indicative.

Varying tax treatment:

The tax treatment on interest income is different for FMPs and FDs. In
FDs, the interest income is added to the investors income and is
taxable at the applicable tax slab (or the marginal rate of tax).
As far as FMPs are concerned, the tax implication depends upon the
investment option dividend or growth. In the dividend option,
investors have to bear the Dividend Distribution Tax. Whereas in the
growth option, returns earned are treated as capital gains (short-term
or long-term depending on the investment tenure). In the case of
short-term capital gains (i.e. if investments are held for less than 365
days), the interest income is added to the investors income and is
taxed at the marginal rate of tax.
As for long-term capital gains (if investments are held for more than
365 days), the tax liability is computed using two methods i.e. with
indexation (charged at 20% plus surcharge) and without indexation
(charged at 10% plus surcharge); the tax liability will be the lower of
the two. Thanks to the indexation benefit, FMPs end up delivering more
tax efficient returns than FDs.

Conclusion:

VI.

While FMPs offer superior post-tax returns vis--vis FDs, returns offered
by them are only indicative and not assured. Given the fact that
returns are not assured, FMPs are riskier than FDs

Kisan Vikas Patra:

Kisan vikas patra are the certificates which doubles the initial
investment at maturity which is for 8 years and 7 months.
Page 49 of 77

Interest Rate: 8.25% compounded annually

Tax Implication: Interest is exempt from tax
Amount of Investment: Certificates are available in dominations of
Rs. 100/-, Rs. 500/-, Rs. 1000/-, Rs. 10000/- , Rs. 50000/Flexibility: Kisan vikas Patra premature after 2 years and 6 months

7) Commodities:

The long-term fundamentals of most commodities are trustworthy. The

worlds population and infrastructure is growing at a rapid pace and
will continue to require massive quantities of natural resources to meet
growing demand. Population growth means that by 2020 the world will
need 40% more food. And in Asia, which is considered as movers and
shakers in the commodities, growth has only just begun. So for
investors looking to tap into the commodities markets, it is simply a
matter of knowing how and where to invest. In the table below, we can
judge the return of various asset classes:
20- Feb-08
Last
Year
5 Year
Gold
10.97%
Silver
18.17%
Oil
-0.12%

1 Month

YTD

924.75
4.72%
40.17%
162.56%
26.20%

17.45
8.09%
275.35%

69.25%

99.05
9.37%
173.61%

Conclusion:

After analyzing most of the financial products available in the market I

feel there is no one best product in the market. Goodness of an
investment instrument depends upon the needs of investor, risk
appetite, market conditions.
For example, if you are looking for an investment for a long
period like 15 years.
Risk Profile
Instrument suggested
Conservative
PPF
Page 50 of 77

Medium Risk Taker

Balance Fund/Property
High Risk Taker

Diversified Equity Mutual Fund/

Equity/Property

If you are looking for investment Horizon of 5 years or more

Risk Profile
Instrument suggested
Conservative
NSC/ Tax Saving FDs
Medium Risk Taker
Diversified Equity Mutual Fund/
Balance Fund/Property
High Risk Taker
Equity/Property

If you are looking for investment for short term..

Risk Profile
Conservative
Mutual Fund
Medium Risk Taker
Balance Fund/Property
High Risk Taker

Instrument suggested
FDs/ Money Market Instrument/Debt
Diversified Equity Mutual Fund/
Equity/Property/Commodities

But some alternative investment avenues are also coming

which also needed to give a look like..
Gold ETF, Art, Precious Metals etc. before investing as they can also
prove to be a very good tool.

Scope of Wealth Management in India:

India is one of the fastest growing Countries in World. It is the fastest

growing country after china in BRIC countries. HNWIs Growth rate is
highest in the World. With the economic boom catapulting stock and
real estate prices to an all-time high and salaries hitting the roof, the
wealth and disposable incomes of several million Indian have grown
substantially during the past two decades.

Driving Forces:

Page 51 of 77

GDP and Sector Growth rates

14
12
10
8
%

GDP
Agriculture
Industry
Services

6
4
2
0

Scope of wealth management services is very bright

in India because of following factors:

12th largest economy of the world

2nd fastest growing economy with a GDP of $1tn
Last 8 quarters GDPs avg. growth rate @ of 9.3%
GDP Growth rate for FY-07 was 9.4% as compared to 9% for FY-06
India - one of 10 fastest-growing population of HNWIs globally
There are at least 23 Indian citizens amongst the richest people on the
planet
No. of HNWIs in India 100,000 (19.3% growth in 2005)
Salary increases in India 13.9% is the highest in the world
According to study, 2005 World Wealth Report, by Capgemini and
Merrill Lynch, indicating that the number of High Net worth Individuals
(HNWI) in India grew at 14.6 per cent twice that of the world's growth
of 7.3 per cent in 2004 augurs well for some of these banks.
Penetration level of wealth management services in India - 10% in
comparison to European markets (60-90%)
Progressive integration of financial markets - banking, insurance,
mutual funds, securities, commodities
Indian customer demanding TOTAL FINANCIAL SOLUTIONS
Page 52 of 77

PART-3
Scope of wealth Management in
Middle Class
Indian Middle Class is said to number today between 320-350 million
people. This amounts to nearly 30% of Indias total population. The
management consultancy firm, Mckinsey, predicts that Indias middle class
will reach 583 million by the year 2025. India will reach Aristotles ideal by
then, when the middle class will constitute 50 per cent of total population.
According to survey conducted by Max New York Life and the National
Council for Applied Economic Research (NCAER), 81 per cent of Indian
households save for the future
This promotes me to think if 81 per cent of Indian households save for the
future. Do they not need wealth management services to boost their earning
from investments?
Wealth Management Services (WMS) are meant for High Net Worth
Individuals (HNIs). But there is a very big untapped Middle Class with
increasing incomes to tap. So I conducted survey to determine scope of
wealth management in middle class.

Income status of respondents from middle class was as

follows.

Page 53 of 77

11%
7%

1.5-3L
3-5L

26%

5-6L

56%

>6L

56% of people were in Rs.1.5L-3L

26% of people were in Rs.3L-5L
7% of people were in Rs.5L-6L
11% of people were in above Rs.6L

If I apply this composition to our strong 330 million middle

class populations then.
185 million comes in Rs.1.5L-3L

Rs.27750 billion

85.8 million Comes in Rs.3L-5L

Rs.25740 billion

23.1 million Comes in Rs.5L-6L

Rs.11550 billion

36.3 million Comes in above Rs.6L =

Rs.21780 billion

Total income power with middle class

Rs.86820 billion

Saving pattern of respondents in survey was:

Page 54 of 77

9%

3%
0%-20%

9%

20%-30%
49%

30%-40%
40%-50%

30%

ABOVE 50%

And mode that is most frequent value is 20% and applying this
representative value of saving to above income power of middle class
suggest that.

Investible capacity of middle class is 20% of Rs. 86820

Billion which comes out to be Rs. 17364 billion.
This is size of untapped market which is waiting to be tapped. This Rs. 17364
could be money which can be managed by Wealth Management Companies
if tapped properly with proper strategy

Objective of survey:
Objective of survey was to know how many people are aware about wealth
management companies. How many people are taking their services if not
taking why? and will they like to take services of wealth management
companies with a minimum fee of Rs. 365 annually.

Target population:
Target population was young working people from middle class with annual
income of Rs. 150000 or more.

Page 55 of 77

Sample Size:
I choose the sample size of 200

Selection of sample:
The sample was chosen randomly at selected office complexes and shops.

Profile of sample (Respondents):

Gender wise:

7%

no. of female
no. of male

93%

The sample size was biased towards male because in India still financial
decisions are taken by male and female were also reluctant to discuss their
details in survey.

Qualification wise:

Page 56 of 77

6%

1% 4%

GRA
PG

1%
41%

MBA
10TH

32%

12TH
BELOW 10TH
Professional

14%

Age wise:

7% 4%
UNDER 30
30-40
32%

57%

41-50
ABOVE 50

Page 57 of 77

Occupation wise:

13%

service
business

87%

Findings:
How many people invest their money?

1%

Invest
Not Invest

99%

Page 58 of 77

Where do they invest their money?

70%

64%

60%
50%

46%

46%

41%

40%
30%

32%

27%

20%
10%
0%

They were also asked to rank their various investment

avenues from their highest investment to lowest
investment to judge their risk appetite
Formula to judge their Risk Taking Ability:
INVESTMENT

RISK
PROFILE

WEIGHTAGE FOR RISK TAKING

ABILITY

CLASS

OF ASSET

RANKS

EQUITY

MUTUAL
FUND

INSURANCE

PROPERTY

BANK FDs

POST OFFICE

Page 59 of 77

According to this formula we will judge Risk Taking Ability

in the following way:
Suppose one person respondent in following way:

Asset
RANK
FOR RISK TAKING ABILITY

SCORE

EQUITY

MUTUAL FUND

INSURANCE (ULIP)

PROPERTY

BANK FD

POST OFFICE

TOTAL RISK TAKING ABILITY SCORE

12

Now this Total Risk Taking Score of 12 suggest that Person

is High Risk taker as per following formula.
Risk taking ability score
profile

Risk

0-5

Risk Averse

6-10

Medium Risk Takers

11-15

High Risk Takers

These categories has been made on the basis of score of ideal portfolio for
each of the Risk Averse, Medium Risk Taker and High Risk Taker
Page 60 of 77

Now Risk Taking Profile of Respondents:

Now how the respondents make investment decisions:

Only 5% of people are taking services of Wealth Management Companies

Awareness regarding Wealth Management Companies

among Wealth Management Companies:

Thanks to emerging wealth management industry 51% respondents were

aware about wealth management companies

Profile of respondents who are aware about wealth

management companies:
Gender Wise:

Page 61 of 77

Age wise:

Qualification wise:

Occupation wise:

But now the question is if respondents were aware about

wealth management companies then why they are not
taking their services as only 5% of respondents are taking
their services
The answer lies here:

They above were reason for not taking wealth

management company service but who are the persons
which are taking wealth management companies:
Gender Wise:

Respondents taking services of WMC are.

80% Male and 20% Female

Age Wise:
Page 62 of 77

The respondents who are taking services are mostly young as

80% are under age 30, rest 10% each from 30-40 and 41-50 age group

Qualification Wise:

The respondents who are taking services of WMC are mostly highly educated
as
80% of them are MBA and rests 20% are graduates

Occupation Wise:

100% Respondents who are taking WMS were not from business class but
from service class.

Which companies Services are these respondents taking:

On What basis do they select these companies?

Whats their feedback to services they are availing?

These suggest that Wealth Management companies are doing good work so
other should also avail their services.

Now the real question how many people are willing to take
services of wealth management companies:
Page 63 of 77

The service I offered was for minimal fee of Rs. 365

annually and the services offered for this were

Alerts for good investment opportunities

Any time call facility for investment
Alerts for emergencies sale needs
Financial planning services
Honest analysis of products

The responses verdict was:

A whopping 78% of respondents show interest to avail services
But those who says NO why they said so.

Now profile of people who are willing to avail

services:

Gender Wise:
Age wise:

Qualification Wise:

Occupation Wise:
Page 64 of 77

CONCLUSION:
With 320 million current population in middle class and according to
Mckinsey Report, it will touch 583 million by 2025. So it is a very very big
market to be tapped but challenge remains there. The biggest challenge is to
develop confidence among people as a whopping 34% of people dont trust
the services of Wealth Management Companies. Even one respondent touted
that there is no wealth management companies in India, all which are in the
industry are brokers/agents but not advisor or financial advisors
The second big challenge is to provide quality services to people at the lower
cost possible as a whopping 56% of population is income group of Rs.1.5 to
Rs.3 Lacs so they wont be able to pay high fees.
Challenges are big but the opportunity is much bigger than challenges.
Understanding this some companies has started tapping this sector but still
they are concentrating on higher segment of this sector. Equity Intelligence
is one such company as it offers Portfolio Management Services from Rs.
500000 onwards. The less than three-year-old Equity Intelligence has already
built up a client base of 540 and an asset portfolio of Rs 100 crore and its
client bases growth rate is 300%.
But much more growth rate is in lower segment of middle class which is
mammoth in numbers and also willing.

Page 65 of 77

PART 4
MUTUAL FUND AND INCLUSIVENESS
Inclusiveness:
Inclusiveness means not excluding any one. Diversity between rich and poor
are getting bigger and bigger. Poor is becoming poorer not because he not
only earn less but also he does not know where to put his money. He put his
money in post office and banks RDs. He invest systematically every month,
even daily with discipline in post office schemes banks but not in Mutual
Funds which can give him higher profits with almost same security. So higher
profits will increase his standard of living so will bring inclusiveness.

But question is: isnt Mutual Fund risky to invest?

Should a person with limited financial capabilities invest
in Mutual Funds?
The answer is: he must invest in Mutual Funds as they are risk free in
long period but only in long run.

Long Run: Period of 5 years or more

Objective: To judge whether mutual fund are risk free in long run or not.
Page 66 of 77

Null Hypothesis: Mutual funds are risk free in long run.

Methodology:
I take out all the mutual fund schemes which are operational for more than 5
years and find out average of return of those schemes. Moreover I found out
the probability of return of below 9% that is current interest rate on Bank FDs
for 5 years or more.

Conduct:
I took all the 58 schemes of diversified equity mutual fund and calculate
average return for 5 years.

Average Return:
5 years:
Average return was 47.53% compounded annually
More than 5 years:
If we took the return of these schemes from inception date that is more
than 5 years it turns out to be 25.16% compounded annually.
PROBABILITY OF LESS THAN 9% RETURN:
5 YEARS:
PROBABILITY= 0 which means all the 58 schemes give more than 9% return
in 5 years

For more than 5 years:

Probability=0 which means all the 58 schemes give more than 9%
compounded return in more than 5 years
(Calculation shown in Annexure)

Balanced Schemes:

Page 67 of 77

Balanced schemes are the schemes which invest both in equity and debt
market.

Average Return:
I took all 19 schemes which have track record of 5 years or more.

5 years:
Average return=31.76% compounded annually

More than 5 years

Average return= 16.7% compounded annually

Probability of Less than 9% Return:

5 years:
Probability= 0 which means every balanced in last 5 years has given more
than 9% return compounded annually

More than 5 Years:

Probability= 0 which means every balanced scheme in last more than 5
years has given more than 9% return compounded annually
So no equity diversified and balanced scheme has given less than 9%
compounded return in last 5 years or more so it is risk free although not
assured return.
So Null Hypothesis is accepted
Moreover average return for last 5 years are 47.53% and 31.76% for equity
diversified and balanced schemes without any default that is return of less
than 9%. So it is suggested to invest in these funds as these schemes
provide higher return with no default rate. In other words promote
inclusiveness.

Page 68 of 77

This is fine that People with low incomes must

invest in Mutual Funds but do they have the
capacity to invest in mutual funds?
This is answered here the lowest Monthly Systemic Investment Plan (SIP)
starts with Rs. 100 with Reliance Mutual Fund. It is the amount which is in
reach of almost all people

Even to test this I interviewed 100 People. These people

were rickshaw pullers, sweepers, rehdi walas, daily
workers etc. and ask them..
Do they save any money for future?

91% of respondents said that they save although their saving vary from as
low as Rs. 100 to Rs.1000

When I told them if there is some avenue where they can

earn return of around 20% in long run. Can they invest as
low as Rs. 100 monthly for longer periods like 5 years or
more?

So they have the capability to invest as low as Rs. 100 per month, they also
have the opportunity to invest in form of Reliance Mutual Fund SIP.
So they must invest it will improve their standard of living and so the
inclusiveness.
This is also a very big opportunity for mutual fund companies to tap this
market.
But is it enough to introduce one scheme which is in affordable limit to tap
Bottom of Pyramid segment.

Followings things are must to tap this market according to

Bottom of Pyramid Book written by Prof C.K. Prahlad..
Affordability:
Page 69 of 77

Affordability is there with Rs. 100 SIP

Access:
Access is lacking as mutual fund can be subscribed only with the PAN
Card Holders and very few people especially lower income people have
PAN Cards so a solution should be find to make Mutual Fund accessible
for them
Availability;
Availability is there
Education: as poor people do not have access to media or are illiterate
so they need to be educated about benefits of investing in mutual
funds
Hybrid Solutions: although probability shows there is no instance where
mutual fund has given negative or very low returns in long run but
there is no surety so mutual fund should be innovated to address this
concern as these poor people can never afford to lose their money.

CONCLUSION:
Mutual Fund gives very good return with very low probability of default but
still there is no assured return. But seeing past performance of mutual funds,
it could prove to be a tool for bringing inclusiveness in society as poor will
also take part in equity market which is barometer of Economy. In other
words the poor will also grow with country so it will bring inclusiveness. At
the same time it is a very big opportunity for mutual fund companies but
they are required to address accessibility, education of product, and security
of money concerns to tap the actual potential of market.

Page 70 of 77

Appendices
APPENDICE- 1
Calculation of return from mutual fund and probability of less than 9%
compounded return annually.

Equity Diversified Schemes:

S.N.

SCHEME NAME

5 Years

Since
Inception

Probability

SBI MAGNUM SECTOR UMBRELL-CONTRA FUND- GROWTH

65.41

21.77

RELIANCE GROWTH-GROWTH

64.62

33.36

SBI MAGNUM GLOBAL FUND 94-GROWTH

62.88

13.36

SUNDRAM BNP PARIBAS SELECT MIDCAP- GROWTH

59.87

51.68

SBI MAGUM MULTIPLIER PLUS 93- GROWTH

59.43

14.07

TAURUS STARSHARE

58.33

18.87

TATA EQUITY OPPORTUNITIES FUND-GROWTH

57.96

24.98

HSBC EQUITY FUND- GROWTH

56.24

52.39

BIRLA SUN LIFE EQUITY FUND- GROWTH

55.75

38.4

10

TAT PURE EQUITY FUND- GROWTH

53.83

25.08

11

HDFC TOP 200- GROWTH

52.36

26.03

12

TATA SELECT EQUITY FUND- APPRECIATION

52.31

20.5

13

BIRLA MID CAP FUND - GROWTH

52.29

47.29

14

DSP MERRIL LYNCH OPPORTUNITIES FUND- GROWTH

52.11

27.49

15

RELIANCE VISION- GROWTH

51.83

28.11

16

KOTAK 3O- GROWTH

51.55

27.64

Page 71 of 77

17

HDFC GROWTH FUND- GROWTH

51.1

28.22

18

DWS ALPHA EQUITY FUND- GROWTH

50.64

45.58

19

DSP MERRIL LYNCH TOP 100 EQUITY FUND- GROWTH

50.6

49.16

20

ICICI PRDENTIAL DYNAMIC PLAN- GROWTH

49.76

45.97

21

HDFC EQUITY FUND - GROWTH

49.73

24.08

22

FRANKLIN INDIA OPPORTUNITIES- GROWHT

49.62

15.31

23

SUNDRAM BNP PARIBAS SELECT FOCUS- GROWTH

49.55

44.76

24

HDFC CAPITAL BUILDER FUND- GROWTH

49.49

15.59

25

FRANKLIN INDIA PRIMA PLUS- GROWTH

49.19

23.45

26

SBI MAGNUM EQUITY FUND- GROWTH

49.17

12.65

27

TEMPETON INDIA GROWTH FUND- GROWTH

48.48

21.28

28

SUNDRAM BNP PARIBAS GROWTH FUND- GROWTH

48.07

22.53

29

FRANKLIN INDIA PRIMA FUND- GROWTH

47.92

23.95

30

ICICI PRDENTIAL POWER- GROWTH

47.73

18.06

31

SAHARA GROWTH FUND- GROWTH

47.49

40.16

32

PRINCIPAL RESURGENT INDIA EQUITY FUND- GROWTH

47.44

32.57

33

FRANKLIN INIDA BLUECHIP -GROWTH

47.44

27.52

34

TAURUS DISCOVERY STOCK

46.57

10.27

35

BIRLA SUN LIFE FRONTLINE EQUITY FUND- GROWTH

45.73

21.81

36

TATA GROWTH FUND-GROWTH

45.59

30.32

37

ESCOERTS GROWTH PLAN- GROWTH

45.25

32.98

38

DBS CHOLA GROWT FUND- GROWTH

44.68

35.98

39

JM EQUITY- GROWTH

43.57

12.09

40

UTI MASTER GROWTH UNIT SCHEME 1993- GROWTH

43.23

13.25

41

ICICI PRUDENTIAL GROWHT PLAN- CUMULATIVE

43.15

27.92

42

ING CORE EQUITY FUND- GROWTH

43.09

15.02

43

BIRLA ADAVANTAGE FUND- GROWTH

43.06

23.05

Page 72 of 77

44

PRINCIPAL GROWTH FUND- GROWTH

42.78

26.09

45

UTI MASTERPLUS UNIT SCHEME 91- GROWTH

42.65

14.05

46

UTI EQUITY FUND- GROWTH

42.57

10.23

47

TAURUS BOBABZA EXCLUSIVE GROWTH SCHEME 95

42.48

15.43

48

UTI INDEX SELECT FUND

41.74

16.64

49

UTI MASTER EQUITY PLAN UNIT SCHEME

41.18

37.87

50

DBS CHOLA OPPORTUNITIES FUND- CUMULATIVE

40.94

14.86

51

UTI MASTER VALUE FUND- GROWTH

39.08

19.88

52

JM BASIC FUND- GROWTH

38.92

18.15

53

UTI UNIT SCHEME 1986(MASTERSHARE)- GROWTH

38.89

13.71

54

BIRLA DIVIDEND YIELD PLUS- GROWTH

37.64

36.53

55

LIC MF GROWTH FUND- GROWTH

37.62

12.29

56

LIC EQUITY FUND- GROWTH

35.61

14.02

57

BIRLA INDIA OPPORTUNITIES FUND- GROWTH

32.97

9.43

58

UTI VARIABLE INVESTMENT SCHEME - GROWTH

17.98

13.63

47.53724

25.1269

Average Return
Probability of less than 9% return compounded annually

BALANCE FUNDS
S.N.

SCHEME NAME
1

SBI MAGNUM BALANCED FUND- GROWTH

HDFC PRUDENCE FUND- GROWTH

5 Years

since
inception

Probability

42.08

17.99

38

19.8

TATA BALANCED FUND- GROWTH

36.92

16.21

DSP MERRIL LYNCH BALANCED FUND- GROWTH

35.97

19.48

KOTAK BALANCE -GROWTH

35.41

17.49

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BIRLA SUNLIFE 95- GROWTH

35.27

26.09

ESCORTS BALANCED FUND - GROWTH

34.99

27.91

CANARA RBECO BALANCE- GROWTH

33.56

10.54

FRANKLIN TEMPLETON BALANCEFUND- GROWTH

33.17

17.67

10

PRINCIPAL BALANCED FUND- GROWTH

32.75

12.51

11

ICICI PRUDENTIAL BALANCED - GROWTH

31.59

17.12

12

SUNDRAM BNP PARIBAS BALANCED FUND- GROWTH

29.77

18.48

13

ING BALANCED FUND- GROWTH

29.28

10.31

14

BIRLA BALCNCE FUND - GROWTH

28.33

14.34

15

HDFC BALANCED FUND- GROWTH

27.95

18.08

16

JM BALANCED - GROWTH

27.2

11.41

17

UTI BALANCED FUND- GROWTH

26.74

15.62

18

LICF BALANCED- PLAN C GROWTH

25.75

10.43

19

ESCORTS OPPORTUNITIES FUND- GROWTH

18.85

15.88

31.76737

16.70316

Average Return
Probability of less than 9% return compounded annually

Appendice-2
Questionnaire for wealth management survey:
Survey for Wealth Management
13. Do you invest?
Yes

No

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14. Where do you invest and rank these options according to amount of
investment in each option? (For maximum-1 and minimum-6)
RANK

Bank FDs
Post Office (Kisan Vikas Patra)
Mutual Fund
Insurance
Shares
Property
All
15. How do you invest?
Self
Financial Advisor
Family/Friends advice
Wealth Management Company

(If Wealth Management Company is not selected in Q.N.3, then move to

Q.N.7)
16. Which wealth management companys services are you taking?

17. How do you select this wealth management company?

Brand
Advertisement
Friends/Family advice
18. How do you rate services of your wealth management company?
Highly satisfied
Satisfied
Dissatisfied
Highly dissatisfied
Cant say
19. Have you heard about wealth management companies?
Yes

No

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20. If yes, why dont you take services of wealth management companies?
Lack of confidence
Fees
Lack of awareness
21. Would you like to take services of wealth Management Company with
minimal fees?
Yes

No

22. Your annual income

Rs.150000-300000
Rs.300000-500000
Rs.500000-600000
>Rs.600000
23. What % of income, do you really save?

24. Personal details:

Name:
Address:
Gender:
Age:
Mobile:
Education Qualification:
Occupation:
Organization Name:

Service/Profession/Business

References:
Page 76 of 77

1. Life Insurance Pre- Recruitment Examination Book from Insurance

Institute of India.
2. Sell Your Way To Success written by Alfred Tack
3. The Fortunes at the Bottom of Pyramid written by C.K.Prahlad
4. Bulls Bears and Blue Chips written by Ram K. Piparaiya
5. Students Guide To Income Tax by Vinod K. Singhania
6. www.moneycontrol.com
7. www.amfi.com
8. www.economicstimes.com
9. www.mutualfundindia.com
10.
Ritu Nanda Insurance Services Journal
11.
Portfolio Organizer, august 2007

Page 77 of 77