REPORT ON SELECTED INVESTMENT ALTERNATIVES AVAILABLE IN INDIA

CHAPTER - 1
1.1 - General Introduction about Banking industry

The Indian Banking industry, which is governed by the Banking Regulation Act of India,
1949 can be broadly classified into two major categories, non-scheduled banks and
scheduled banks. Scheduled banks comprise commercial banks and the co-operative banks.
In terms of ownership, commercial banks can be further grouped into nationalized banks, the
State Bank of India and its group banks, regional rural banks and private sector banks (the
old/ new domestic and foreign). These banks have over 67,000 branches spread across the
country.

The first phase of financial reforms resulted in the nationalization of 14 major banks in 1969
and resulted in a shift from Class banking to Mass banking. This in turn resulted in a
significant growth in the geographical coverage of banks. Every bank had to earmark a
minimum percentage of their loan portfolio to sectors identified as “priority sectors”. The
manufacturing sector also grew during the 1970s in protected environs and the banking
sector was a critical source. The next wave of reforms saw the nationalization of 6 more
commercial banks in 1980. Since then the number of scheduled commercial banks increased
four-fold and the number of bank branches increased eight-fold.

After the second phase of financial sector reforms and liberalization of the sector in the early
nineties, the Public Sector Banks (PSB) s found it extremely difficult to compete with the
new private sector banks and the foreign banks. The new private sector banks first made
their appearance after the guidelines permitting them were issued in January 1993. Eight
new private sector banks are presently in operation. These banks due to their late start have
access to state-of-the-art technology, which in turn helps them to save on manpower costs
and provide better services.

During the year 2000, the State Bank Of India (SBI) and its 7 associates accounted for a 25
percent share in deposits and 28.1 percent share in credit. The 20 nationalized banks
accounted for 53.2 percent of the deposits and 47.5 percent of credit during the same period.
The share of foreign banks (numbering 42), regional rural banks and other scheduled
commercial banks accounted for 5.7 percent, 3.9 percent and 12.2 percent respectively in
deposits and 8.41 percent, 3.14 percent and 12.85 percent respectively in credit during the
year 2000.

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The industry is currently in a transition phase. On the one hand, the PSBs, which are the
mainstay of the Indian Banking system are in the process of shedding their flab in terms of
excessive manpower, excessive non Performing Assets (Npas) and excessive governmental
equity, while on the other hand the private sector banks are consolidating themselves
through mergers and acquisitions. 

PSBs, which currently account for more than 78 percent of total banking industry assets are
saddled with NPAs (a mind-boggling Rs 830 billion in 2000), falling revenues from
traditional sources, lack of modern technology and a massive workforce while the new
private sector banks are forging ahead and rewriting the traditional banking business model
by way of their sheer innovation and service. The PSBs are of course currently working out
challenging strategies even as 20 percent of their massive employee strength has dwindled in
the wake of the successful Voluntary Retirement Schemes (VRS) schemes.

The private players however cannot match the PSB’s great reach, great size and access to
low cost deposits. Therefore one of the means for them to combat the PSBs has been through
the merger and acquisition (M& A) route. Over the last two years, the industry has witnessed
several such instances. For instance, HDFC Bank’s merger with Times Bank Icici Bank’s
acquisition of ITC Classic, Anagram Finance and Bank of Madura. Centurion Bank,
Indusind Bank, Bank of Punjab, Vysya Bank are said to be on the lookout. The UTI bank-
Global Trust Bank merger however opened a pandora’s box and brought about the
realization that all was not well in the functioning of many of the private sector banks.

Private sector Banks have pioneered internet banking, phone banking, anywhere banking,
mobile banking, debit cards, Automatic Teller Machines (ATMs) and combined various
other services and integrated them into the mainstream banking arena, while the PSBs are
still grappling with disgruntled employees in the aftermath of successful VRS schemes.
Also, following India’s commitment to the W To agreement in respect of the services sector,
foreign banks, including both new and the existing ones, have been permitted to open up to
12 branches a year with effect from 1998-99 as against the earlier stipulation of 8 branches.

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1.2- Back ground of the study

The word "investment" can be defined in many ways according to different theories and
principles. It is a term that can be used in a number of contexts. However, the different meanings
of "investment" are more alike than dissimilar. Investment is the commitment of money or
capital to purchase financial instruments or other assets in order to gain profitable returns in form
of interest, income, or appreciation of the value of the instrument . It is related to saving or
deferring consumption. Investment is involved in many areas of the economy, such as business
management and finance no matter for households, firms, or governments. An investment
involves the choice by an individual or an organization such as a pension fund, after some
analysis or thought, to place or lend money in a vehicle, instrument or asset, such as property,
commodity, stock, bond, financial derivatives (e.g. futures or options), or the foreign asset
denominated in foreign currency, that has certain level of risk and provides the possibility of
generating returns over a period of time.
Current sacrifice --------- future reward
There are number of different alternative investments options in India. These investment options
however are for those who have made huge investments or have large amount of disposable
income to invest.
The most important feature of financial investments is that they carry high market liquidity. The
two key aspects of any investment are time and risk. The sacrifice takes place now and is certain.
The benefit is expected in future and tends to be uncertain in some investment (like government
bonds) the time element is the dominant attribute in yet another investment (like equity shares)
both time are risk are important.

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Essentials of investment refer to why investment, or the need for investment, is required. The
investment strategy is a plan, which is created to guide an investor to choose the most appropriate
investment portfolio that will help him achieve his financial goals within a particular period of
time.
There is a believe that high yielding return investment option will bear high risk and the option
which yield low return will bear low return risk. Most of the investors try to know the returns of
the investment before actually investment. And the judgment is done mostly based on the historic
performance of the particular investment alternative.

INTRODUCTION TO THE TOPIC

The ultimate investment objective of any investor is to maximize investors’ wealth. The objective
depends on the investor’s need (purpose) and attitude
Investment objectives:
Capital Appreciation:
Capital appreciation is concerned with long-term growth. This strategy is most familiar in
retirement plans where investments work for many years inside a qualified plan.
Income:
Income to provide a steady stream of income through regular interest/dividend payment.

Growth:
Growth to increase the value of the principal amount through capital appreciation.

Stability:
Stability to protect the principal amount invested from the risk of loss.

Marketability/ Liquidity:
Many of the investments we have discussed are reasonably liquid, which means they cannot be
immediately sold and easily converted into cash.

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Speculation:
The speculator is not a true investor, but a trader who enjoys jumping into and out of stocks as if
they were bad shoes. Speculators or traders are interested in quick profits.
Thus, any investment objectives should be stated in terms of both risk and return i.e. an investor
seeking higher returns must be willing to face higher levels of risk. Therefore, it should be further
clarifies on the basis of risk, time horizon and purposes.
These are the main investment objectives of any investor. Any investor would like to invest in
that option which gives him more or high return. But as known earlier risk and return goes hand
in hand. If the option results in high return it bears high and the option which gives low return
will have low risk.

An investor tries to achieve his investment objectives keeping in the mind these two important
key aspects i.e. risk and ret8urn. Generally, investors do the historic performance of the options
and make investment. There are many factors which influence in selection of the investment
alternatives. There are:
Disposable income of the investor
Willingness/attitude of the investor
Risk & return
Tax shelter
Liquidity
Growth
Time horizon
Knowledge of the investor

1.3- Statement of problem

The study entitled “REPORT ON SELECTED INVESTMENT ALTERNATIVES AVAILABLE

IN INDIA’ a study done in Bangalore City, Karnataka will be done to find out which all the
investment options are available for investors and which option is more suitable for which type of

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investor. This study also focuses on the risk and return involved in the different investment
modes. And which option is more volatile and which is more constant.

1.4- Need and importance of the study

Investment means putting your money to work to earn more money. Done wisely, it can help you
meet your financial goals like buying a new house, paying for college education of your children,
of your enjoying a comfortable retirement, or whatever is important to you.

You do not have to be wealthy to be an investor. Investing even a small amount can produce
considerable rewards over the long-term, especially if you do it regularly. But you need to decide
about how much you want to invest and where . To choose wisely, you need to know the
investment options thoroughly and their relative risk exposures.
There are many types of risk involved with investments. Let's consider two types: investment
risk and purchasing power risk.

Investment risk is the probability that the actual return on an investment will be different from
what you expect. This is the type of risk one usually thinks of when considering investments. For
example, CD's and EE savings bonds are considered safe investments because the probability
that the actual return on your investment will be what you expect is 100 percent. They are
guaranteed. On the other hand, stocks are considered more risky because you have no guarantee
about the actual return.
Of equal importance is a second type of risk associated with investments which is also important
to consider. Purchasing power risk is the risk that the value of the money you invest will not
keep up with inflation. In general, this risk is greatest with those investment alternatives with a
set, guaranteed rate of return. So while CD's have a low investment risk, they have a high
purchasing power risk

Today choosing a best investment plan is difficult because there are so many investment options
available. These days we are getting more money compared to last decades.

 Mutual Funds:

Mutual Fund companies collect money from investors and invest in share market. Investing in
mutual funds is also subject to market risks but return is good. Mutual Fund is a type of
collective investment method by which many people pool their money in a fund and invest in
various securities like stock, bonds or cash investments. Every mutual fund has a fund manager
or investment advisor so it is also called as managed funds. In world’s top stock markets
collective investments holds a major share because of its flexibility. Depends on the objective of

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the funds like long term growth and low risk factor or high income growth with high risk factor
or low growth rate and stability of principal, fund manager invests in respective fields on behalf
of shareholders. For individual investors it is very easy type of investment because someone else
manage their funds, take care of accounts and invest money over many different available
securities.

 Equity shares:

Stock typically takes the form of shares of either common stock or preferred stock. As a unit of
ownership, common stock typically carries voting rights that can be exercised in corporate
decisions. Preferred stock differs from common stock in that it typically does not carry voting
rights but is legally entitled to receive a certain level of dividend payments before any dividends
can be issued to other shareholders. Convertible preferred stock is preferred stock that includes
an option for the holder to convert the preferred shares into a fixed number of common shares,
usually anytime after a predetermined date. Shares of such stock are called "convertible preferred
shares" (or "convertible preference shares" in the UK)

Although there is a great deal of commonality between the stocks of different companies, each
new equity issue can have legal clauses attached to it that make it dynamically different from the
more general cases. Some shares of common stock may be issued without the typical voting
rights being included, for instance, or some shares may have special rights unique to them and
issued only to certain parties. Note that not all equity shares are the same.

Preferred stock may hybrid by having the qualities of bonds of fix return and common stock
having voting right. They also have preference in the payment of dividend over prefer stock and
also have given the preference at the time of liquidation over common stock. they have other
features of accumulation in dividend.

 Bonds:

A statement of debt, similar to an IOU (I own you). Bonds are issued by governments,

companies, other entities and individuals in return for cash from lenders and investors. The
borrower pays interest to the lender or investor throughout the life of the bond. Borrowers
seeking funds from the public through bond issues usually announce the issues through the
financial press and electronic media, and spell out the details in a prospectus available
from stockbrokers, banks and, in the case of commonwealth securities, the Reserve Bank. Bonds
are generally medium to long-term fixed-interest securities. An early definition of a bond was
'a coupon security offering more than one interest payment' but the emergence of zero-coupon

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bonds has complicated the picture. Australian commonwealth (Treasury) bonds are sold by
periodic tender, mostly to large-scale investors who set the price levels.

 Non-Marketable Financial Assets:

A good portion of the financial assets of individual is held in the form of non-marketable
financial assets like bank deposits, post office deposits company deposits, and provident fund
deposits. A distinguishing feature of these assets is that they represent personal transactions
between the investor and the issuer. For example, when you open a savings bank account at a
bank you deal with the bank personally. In contrast when you buy equity shares in the stock
market you do not know who the seller is and you do not care. The important non-marketable
financial assets held by investors are briefly described below.
 Bank Deposits:
 Perhaps the simplest of investment avenues opening a bank account and de-positioning
money in it, one can make a bank deposit. There are various kinds of bank accounts:
current accounts, savings account and fixed deposit account. While a deposit in a current
account does not earn any interest, deposits in other kinds of bank accounts earn interest.
The important features of bank deposits are as follows:
 Deposits in scheduled banks are very safe because of the regulations of the Reserve
Bank of India and the guarantee provided by the Deposit Insurance Corporation, which
guarantees deposits up to Rs 100,000 per depositor of a bank.
 There is a ceiling on the interest rate payable on deposits in the savings account.
 The interest rate on fixed deposits varies with the term of the deposit. In general, it is
lower for fixed deposits of shorter term and higher for fixed deposits of longer term.
 If the deposit is less than 90 days, the interest is paid on maturity; otherwise it is paid
quarterly.
 Bank deposits enjoy exceptionally high liquidity. They can be enchased prematurely by
incurring a small penalty.
 Loans can be raised against bank deposits
 Most banks calculate interest on the minimum deposit between the 10th and the last date
of the month. So the best way maximize returns on your savings account is to treat it like
a current account between the 1st and the 10th and a fixed deposit for the rest of the
month.
 Post Office Time Deposits (POTD)

Similar to fixed deposits if commercial banks, POTDs have features:

 Deposits can be made in multiples of Rs 50 without any limit.
 The interest rates on POTDs are in general slightly higher than those on bank deposit

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 The interest is calculated half yearly and paid annually.

 No withdrawal is permitted for up to six months.
 After six months, withdrawals are permitted. However, on withdrawals made between
six months and one year, no interest is payable. On withdrawal after one year, but before
the term of deposit, interest is paid for the period the deposit has been held, subject to a
penal deduction of 2 percent.
 A POTD account can be pledged
 Deposits in 10 years to 15 years Post Office cumulative Time Deposit Account can be
deducted before computing the taxable income under Secion80C.
 Monthly Income Scheme of the Post Office (MISPO):

A popular scheme of the post office, the MISPO is meant to provide regular monthly
income the depositors. The salient features of the scheme are as follows:
 The term of the scheme is 6 years.
 The minimum amount of investment is Rs 1,000. The maximum investment can be Rs
300,000 in a single account or Rs 600,000 in a joint account.
 The interest rate is 8.0 percent payable monthly A bonus of 10 percent is payable on
maturity
 There is no tax deduction at source.
 There is a facility of premature withdrawal after one year, with 5 percent deduction
before 3 years.

Kisan Vikas Patra (KVP):

Scheme of the post office, the Kisan Vikas Patra has the following features:
 The minimum amount of investment is Rs.1,000. There is no maximum limit.
 The investment doubles in 8 years and 7 months. Hence the compound interest rate
works out to 8.4 percent.
 There is no tax deduction at source.
 KVPs can be pledged as a collateral security for raising loans
 There is a withdrawal facility after 2½ years.

National Savings Certificate:

Issued at post offices, the National Saving Certificate offers the following features:
 It comes in denomination of Rs 100, Rs 500, Rs 1,000 , Rs 5,000 and Rs 10,000
 It has a term of 6 years. Over this period Rs 100 becomes Rs 160.1. Hence the
compound rate of return works out to 8.16 percent
 Investment in NSC can be deducted before computing the taxable income under Section
80C.
 There is no tax deduction at source

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 It can be pledged as collateral for raising loans.

 Money market investment:

The money market is the arena in which financial institutions make available to a broad
range of borrowers and investors the opportunity to buy and sell various forms of short-term
securities. The money market is not a physical place, but an informal network of banks and
traders linked by telephones, fax machines, and computers. Money markets exist both in the
United States and abroad.
The short-term debts and securities sold on the money markets—which are known as money
market instruments—have maturities ranging from one day to one year and are extremely
liquid. Some examples of common money market instruments include treasury bills, federal
agency notes, certificates of deposit (CDs), eurodollar deposits, commercial paper, bankers'
acceptances, and repurchase agreements. The suppliers of funds for money market
instruments are institutions and individuals with a preference for the highest liquidity and the
lowest risk.
The money market is important for businesses because it allows companies with a temporary
cash surplus to invest in short-term securities, and it also allows companies with a temporary
cash shortfall to sell securities or borrow funds on a short-term basis. In essence, it acts as a
repository for short-term funds. Large corporations generally handle their own short-term
financial transactions, participating in the money market through dealers. Small businesses,
on the other hand, often choose to invest in money-market funds, which are professionally
managed mutual funds consisting only of short-term securities.
Although securities purchased on the money market carry less risk than long-term debt, they
are still not entirely risk free. After all, banks do sometimes fail, and the fortunes of
companies can change rather rapidly. But, as Richard A. Brealey and Stewart C. Myers
explained in their book Principles of Corporate Finance, "the range of possible outcomes is
less for short-term investments. Even though the distant future may be clouded, you can
usually be confident that a particular company will survive for at least the next month.
Second, only well-established companies can borrow in the money market. If you are going
to lend money for only one day, you can't afford to spend too much time in evaluating the
loan. Thus you will consider only blue-chip borrowers."

TYPES OF MONEY MARKET INSTRUMENTS:

 TREASURY BILLS Treasury bills (T-bills) are short-term notes issued by the U.S.
government. They come in three different lengths to maturity:90, 180, and 360 days. The
two shorter types are auctioned on a weekly basis, while the annual types are auctioned
monthly. T-bills can be purchased directly through the auctions or indirectly through the
secondary market. Purchasers of T-bills at auction can enter a competitive bid (although

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this method entails a risk that the bills may not be made available at the bid price) or a
noncompetitive bid. T-bills for noncompetitive bids are supplied at the average price of
all successful competitive bids.

 FEDERAL AGENCY NOTES Some agencies of the federal government issue both

short-term and long-term obligations, including the loan agencies Fannie Mae and Sallie
Mae. These obligations are not generally backed by the government, so they offer a
slightly higher yield than T-bills, but the risk of default is still very small. Agency
securities are actively traded, but are not quite as marketable as T-bills. Corporations are
major purchasers of this type of money market instrument.

 SHORT-TERM TAX EXEMPTS These instruments are short-term notes issued by

state and municipal governments. Although they carry somewhat more risk than T-bills
and tend to be less negotiable, they feature the added benefit that the interest is not
subject to federal income tax. For this reason, corporations find that the lower yield is
worthwhile on this type of short-term investment.

 CERTIFICATES OF DEPOSIT Certificates of deposit (CDs) are certificates issued by

a federally chartered bank against deposited funds that earn a specified return for a
definite period of time. They are one of several types of interest-bearing "time deposits"
offered by banks. An individual or company lends the bank a certain amount of money
for a fixed period of time, and in exchange the bank agrees to repay the money with
specified interest at the end of the time period. The certificate constitutes the bank's
agreement to repay the loan. The maturity rates on CDs range from 30 days to six months
or longer, and the amount of the face value can vary greatly as well. There is usually a
penalty for early withdrawal of funds, but some types of CDs can be sold to another
investor if the original purchaser needs access to the money before the maturity date.
Large denomination (jumbo) CDs of $100,000 or more are generally negotiable and pay higher
interest than smaller denominations. However, such certificates are insured by the FDIC only up
to $100,000. There are also eurodollar CDs, which are negotiable certificates issued against U.S.
dollar obligations in a foreign branch of a domestic bank. Brokerage firms have a nationwide
pool of bank CDs and receive a fee for selling them. Since brokers deal in large sums, brokered
CDs generally pay higher interest rates and offer greater liquidity than CDs purchased directly
from a bank.

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 COMMERCIAL PAPER Commercial paper refers to unsecured short-term promissory

notes issued by financial and nonfinancial corporations. Commercial paper has maturities
of up to 270 days (the maximum allowed without SEC registration requirement). Dollar
volume for commercial paper exceeds the amount of any money market instrument other
than T-bills. It is typically issued by large, credit-worthy corporations with unused lines
of bank credit and therefore carries low default risk.
Standard and Poor's and Moody's provide ratings regarding the quality of commercial paper. The
highest ratings are A1 and P1, respectively. A2 and P2 paper is considered high quality, but
usually indicates that the issuing corporation is smaller or more debt burdened than A1 and P1
companies. Issuers earning the lowest ratings find few willing investors.
Unlike some other types of money-market instruments, in which banks act as intermediaries
between buyers and sellers, commercial paper is issued directly by well-established companies,
as well as by financial institutions. "By cutting out the intermediary, major companies are able to
borrow at rates that may be 1 to 1 ½ percent below the prime rate charged by banks," according
to Brealey and Myers. Banks may act as agents in the transaction, but they assume no principal
position and are in no way obligated with respect to repayment of the commercial paper.
Companies may also sell commercial paper through dealers who charge a fee and arrange for the
transfer of the funds from the lender to the borrower.

 BANKERS' ACCEPTANCES "A banker's acceptance begins life as a written demand

for the bank to pay a given sum at a future date," Brealey and Myers noted. "The bank
then agrees to this demand by writing 'accepted' on it. Once accepted, the draft becomes
the bank's IOU and is a negotiable security. This security can then be bought or sold at a
discount slightly greater than the discount on Treasury bills of the same maturity."
Bankers' acceptances are generally used to finance foreign trade, although they also arise
when companies purchase goods on credit or need to finance inventory. The maturity of
acceptances ranges from one to six months.

 REPURCHASE AGREEMENTS Repurchase agreements—also known as repos or

buybacks—are Treasury securities that are purchased from a dealer with the agreement
that they will be sold back at a future date for a higher price. These agreements are the
most liquid of all money market investments, ranging from 24 hours to several months. In
fact, they are very similar to bank deposit accounts, and many corporations arrange for
their banks to transfer excess cash to such funds automatically.

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 Life Insurance:

Insurance is bought in order to hedge the possible risks of the future which may or may not take
place. This is a mode of financially insuring that if such a incident happens then the loss does not
affect the present well-being of the person or the property insured. Thus, through insurance, a
person buys security and protection.
A simple example will make the meaning of insurance easy to understand. A biker is always
subjected to the risk of head injury. But it is not certain that the accident causing him the head
injury would definitely occur. Still, people riding bikes cover their heads with helmets. This
helmet in such cases acts as insurance by protecting him/her from any possible danger. The price
paid was the possible inconvenience or act of wearing the helmet; this ie equivalent to
the insurance premiums paid.
Though loss of life or injuries incurred cannot be measured in financial terms, insurance attempts
to quantify such losses financially. Insurance can be defined as the process of reimbursing or
protecting a person from contingent risk of losses through financial means, in return for
relatively small, regular payments to the insuring body or insurance company.
Insurance can range from life to medical to general (residential, commercial property, natural
incidents, burglary, etc).
 Life Insurance
It insures the life of the person buying the Life Insurance Certificate. Once
a Life Insurance is sold by a company then the company remains legally entitled to make
payment to the beneficiary after the death of the policy holder.
 Medical Insurance
This is also known as mediclaim. Here, the policy holder is entitled to receive the amount
spent for his health purposes from the insurance company.
 General Insurance
This insurance type involves insuring the risks associated with the general life such as
automobiles, business related, natural incidents, commercial and residential properties,
etc.

 Real Estate:

Real estate that generates income or is otherwise intended for investment purposes rather
than as a primary residence. It is common for investors to own multiple pieces of real
estate, one of which serves as a primary residence, while the others are used to generate
rental income and profits through price appreciation. The tax implications for investment
real estate are often different than those for residential real estate.

Common examples of investment properties are apartment buildings and rental houses, in
which the owners do not live in the residential units, but use them to generate ongoing
rental income from tenants. Those who invest in real estate also expect to generate capital
gains as property values increase over time.

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 Gold:

A precious metal that has functioned as a currency or served as a long-

standing investment since the early days of civilization. Gold is a safe haven investment,
which means that investors will put their money in gold during times of extreme
uncertainty such as war, terrorist attacks, or financial uncertainty such as a sell-off in the
stock market, or during times of high inflation.

Investors can invest in gold by purchasing gold bullion, which is a precious metal that is
in a tradable form, typically a bar or wafer. Gold coins also are minted by governments or
by a private company as an investment piece. Popular gold coins issued by governments
include the American Eagle, the Canadian Maple Leaf, the South African Krugerrand, the
Isle of Man Gold Cat, the Australian Kangaroo, and the China Mint Panda Bear.

Gold future and options also provide a way to invest in gold. They trade on Comex, a
division of the New York Mercantile Exchange. They trade in a unit that is based on 100
troy ounces. Price quotations are in dollars, such as $360.70. Trade occurs from 8:20 a.m.
ET until 1:30 p.m. ET. Trade after hours occurs on NYMEX’s Internet-based electronic
trading platform, ACCESS. Gold futures and options also are traded on other exchanges
throughout the world.

 Others

As shown above, there are various investment alternatives available in market, the main
objectives of the study are to gain insight to investor’s preferences for various investment
alternatives. A perpetual mapping is used to explore consumer’s product perceptions.
Since the various alternatives of investment can be perceived in many dimensions such as
risk, return or time, this technique of mapping is multi dimensional in nature. It allows for
the influence of more than one character tics of investment are studies thoroughly. In
order to gain thorough insight to various investment alternatives, various books and
journals and post records have been analyzed, so as to have knowledge regarding the
various investment avenues.

1.5 Objectives of the research

 The basic objective of the study is to expose the student to the savings and
investments options available in India.
 To understand the importance of these investment alternatives that are available
India.

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 To study the investor preference towards the investment.

 To be aware of the factors that may hinder new initiatives.
 To know about the major role-played by these in the mobilization of the savings.
 To understand the risk and return involved in the various instruments.
 To compare the strength and weakness of different investment opportunity.

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Following are the Investments I am going to cover in my report:

EQUITY SHARES

The stock or capital stock of a business entity represents the original capital paid into or
invested in the business by its founders. It serves as a security for the creditors of a business since
it cannot be withdrawn to the detriment of the creditors. Stock is distinct from the property and
the assets of a business which may fluctuate in quantity and value.
Businesses procure money for their operations by issuing debt and equity capital. Companies are
legally bound to pay their creditors interest income along with the original capital amount. There
are two forms of equity capital: Preference (Preferred) Shares and Equity (Common) Shares. The
preference shareholders have priority over equity shareholders in payments of dividends and
when the company is terminated. 

Equity shareholders are the actual owners of the [Link] have voting rights and share all
the money remaining after the business' obligations are met. Equity shareholders have a voting
rights & there are oner of the campine they have right to select aboard of director these are the

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care takers of the campine & how many shares shareholder holding is represented intrest of the
shareholder, but they dont hove a fixed dividend these are risk takers when the campine in loss
they dn't get any dividend when the campine in profit's they get more dividend they get dividend
after taking of preference shareholders & debentures .

Classification of equity shares

 Blue chip shares: Shares of large, well established companies with an impressive track
record
 Growth shares: Shares of companies with fairly entrenched position in a growing market
with higher profitability and growing market share than the average
 Income shares: Shares of companies with fairly stable operations, relatively limited
growth opportunities and high dividend payouts.
 Speculative shares: Shares that tend to fluctuate widely as there is a lot of speculative
trading between them

Equity Market
Equity market is a place where a company can raise its fund and give an opportunity to investors
to invest in the companies listed on the market. Segments of the equity market are:
 Primary Market
 Secondary market

Primary Market
It is also called the new issues market where in a company can raise fresh capital for its use. It is
the market in which investors have the first opportunity to buy a newly issued security directly
through the company. All IPOs [Initial Public offerings] come under primary market.
Some of the objectives of an IPO are:
 To promote a new company
 To expand an existing business
 To diversify production
 To meet regular working capital requirements

There are 4 ways in which a company may raise equity capital in primary market:
 Public issue: A public issue involves sale of securities to public at large. In India, IPOs
are offered through the fixed price process or the book building process or a combination
of both. Public issues in India are governed by the provisions of the Company’s Act,
1956.
 Rights issue: A right issue is offered by a company that is listed on a stock exchange. The
listed company issues fresh securities to its existing shareholders on a particular date.
These issues are offered in a particular ratio, in proportion to the number o

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f securities held, prior to the issue date. This method is followed when companies want o
raise capital without diluting the stake of their existing shareholders.
 Private Placement: This involves sale of securities to a limited number of investors such
as financial institutions, mutual funds, venture capital funds, and banks. The identity of
the investors is not known when the offer document is prepared.
 Preferential Allotment: This involves the issue of shares to financial institutions, mutual
funds, ventures and banks. However, in this case, the identity of the investors is known
when the issuing company seeks approval of its shareholders.

Features
 They don't have no preferential right in respect of payment of dividend
 Equity shares are risk bearing shares because they are the actual owners of the company
when ever company run into losses they have to bear the losses.
 Equity share holders enjoys voting right whenever there is a meeting they will enjoy their
voting power, enjoys voting power in electing board of directors.
 Equity capital is the permanent capital for the company. The company needs not to
return capital. Company has to repay the capital only at the time of winding up.
 Equity shares are easily transferred from one person to another at the stock exchange
according to the procedure laid down in the article of association of the company.
 Company gives the bonus shares to the equity shareholders at a free cost on account of
reserves, undistributed profits and accumulated profit
 Equity shareholder is give first priority when ever company wants to raise fresh capital.

Advantages

 Inflation rate is higher than commercial banks interest rate but lower than equity price
appreciation.
 You are protected from the eyes of the public. Nobody knows your worth except you tell
him/her. In other investments, people can easily look at the assets of the business or your
property (real estate) and come up with approximate worth of it.

 The rate of growth is far beyond the bank interest rate.

 Dividend: This is cash reward given to share holders as part of the profit made by the
company at the end of each financial year. It is declared at the annual general meeting
(AGM) of the company. The larger the units of your shareholding, the more money you

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receive at the end of each financial year. There are companies that have yearly dividend
policy. Your financial adviser should be able to tell you some of them.

 Bonus issues: This is free shares given to existing shareholders of a company.

Sometimes, company declares bonus instead of dividend or both. For instance, in the
third quarter of the year 2007, First Bank of Nigeria declared one-for-one bonus. This
means a unit for every unit you already hold. For example, a man who holds 100,000
units previously will be given an additional 100,000 units free after the declaration of the
First Bank bonus making the values of his shares 200,000 units.

 Capital appreciation: Price of shares move up or down responding to the forces of

demand and supply. For instance, few months ago there was a high demand of the shares
of Benue Cement Company of Nigeria which traded for about N6.00 per share. Due to
scarce nature of it and the good performance of the company, a unit of it now costs about
N [Link] This implies that there is about 700% increment in the value of the stock. If you
had bought N50, 000 units of the shares at N6.00 per share, it means that you spent
300,000.00 buying the shares. Now, that it costs N48.00 per share, if you are to self your
shares, your returns would be 48x50,000,which is equal to 2.4 million naira. Thus your
capital has appreciated from N300, 000.00 to 2.4 million naira. Indeed stock business has
the potential of making you a millionaire overnight.

Limitations
 Share prices fluctuate a lot, which short term oriented investors find very distressing.
 Some companies go broke, and due to the occasional dishonest auditor you won't be
able to see it coming. Therefore you need to diversify a lot, though this is easy to do
since you can buy small amounts of shares.
 Shares require analysis and hard work if you are going to do better than average. If you
don't feel you need to do better than average you can buy an index fund or a managed
fund and get a diversified basket of shares without any hard work for you.
 Shares are a high performance asset class, but there is no positive link between inflation
and corporate profits. Higher inflation does not mean higher profits, in fact it may be
quite the contrary. In times of high inflation shares may have trouble achieving high
returns above the inflationary rate, in these times property may provide superior returns.
 Crash in share prices: Due to one reason or the other, sometimes share prices drop so
much. A discerning investor should know what to do at any point in time.
 Sometimes companies go into liquidation thereby eroding the investments of ordinary
shareholders. For example, some banks in Nigeria that did not meet up with the N25
billion minimum capitals as directed by the central Bank of Nigeria (CBN) died with
investors’ money. You must be vigilant to watch over your investment if you consider it
important to you.
 Fraudulent stock brokers: some stockbrokers are unfaithful to their clients. They may
collect your money when there is perceived information that the shares of a particular
company is a good one and instead of making the transactions in your name may divert

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the money for their selfish interest, may be use it to make their own investments. When
the company has closed her book, they may call you for refund or may embezzle your
money like that. You must be careful in selecting your stockbroker.

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MUTUAL FUNDS

A mutual fund is a company that pools money investors and the money in stocks, bonds, short
term market instrument and other securities or assets, or some combination of these investments.
The combined holdings the mutual fund owns are known as its portfolio. Each share represents
an investor’s proportionate ownership of the fund’s holdings and the income those holding
generate.

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Just like this picture below:

In India mutual fund started with the setting up of Unit Trust of India (UTI) in 1964, the main
objective of UTI was to mobilize the savings of the house hold sector. UTI launched many
schemes. Today, mutual funds are sponsored by various private and public sector players.

Based on the investment policy, the more commonly offered schemes may be broadly classified
as follows:

 Growth schemes: the corpus of a growth fund is invested substantially in equity or

equity-related instruments, the balance in debt instruments. The objective is to achieve
long term capital growth for the unit holder.

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 Index schemes: it is an equity scheme that invest that invest its corpus in basket of
equity stocks that comprise a given stock market index. Thus an index fund appreciates
or depreciates the same way as the index.

 Sect oral schemes: it invests its corpus in the equity stocks of a given sector such as
pharmaceuticals, information technology and telecommunication and so on.

 Balanced schemes: it invests its corpus in two board assets classes, viz. Equity and Debt
in more or less balanced manner. The objective of a balanced scheme is to combine
growth with stability.

 Income schemes: the corpus of an income scheme is invested primarily in money

market fixed income securities such as Government of India securities, debt obligation of
state and local government, corporate debenture and money market instruments. A small
portion of the corpus, say 10 to 20%, may be invested in equity instruments.

 Gilt schemes: it invests its corpus in sovereign securities issued by the central and state
government for payment of principal and interest. The objective is to earn a modest
return without credit risk.

 Money market scheme: also called the liquid scheme, the corpus is primarily invested
in invested in money market instrument. They have negligible interest risk exposure as
well as credit risk.

Advantages
 Professional management: professional money managers’ research, select, monitor the
performance of the securities the fund purchases.

 Diversification: diversification is an investing strategy that can be neatly summed up as

“Don’t put all your eggs in one basket”, spreading your investments across a wide range
of companies and industry sector fails. Some investors find it easier to ownership of
individual stocks or bonds.

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 Affordability: some mutual funds accommodate investors who don’t have a lot of
money to invest by setting.

 Liquidity: mutual fund investors can readily redeem their shares at the current NAV-plus
any fees and changes assessed on redemption at any time.

Limitations
 Cost despite negative returns: investors must pay sales charges, annual fees and other
expenses regardless of how the fund performs. And, depending on their timing of their
investment, investors may also have to pay taxes on any capital gains distribution they
receive even if the fund went on to perform poorly after they bought shares.

 Lack of control: investor typically cannot ascertain the exact make up of a fund’s
portfolio at any given time, nor can they directly influence which securities the fund
managers buy and sell or the timing of the trade.

 Price uncertainty: with an individual stock, you can obtain real time (or close to real
time) pricing information with relative ease by checking financial websites or by calling
your broker. You can also monitor how a stock price changes from hour to hour or even
second to second. By contrast, with mutual fund, the price at which you purchase or
redeem shares will typically depend on the fund’s NAV, which the fund might not
calculate until many hours after you have placed your order. In general mutual funds must
calculate their NAV at least every business day, typically after the major US exchange
close.
Though the diversification associated with mutual funds reduces the risk to a minimum, risk does
not get completely eliminated. The market risk that affects the market as a whole continues to be
borne by the investor. The way this risk get reflected, depends on the type of scheme.

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Types of Mutual Funds:

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LIFE INSURANCE

A life insurance is a contract between an individual (termed as insured) and the insurance
company to pay the insured, or his nominated heirs, a specified sum of money on the happing of
event. The event could be the expiry of the insurance policy or the death of the insured before the
expiry (date of maturity) of the policy as per the term of the policy.

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OBJECTIVES OF THE LIFE INSURANCE POLICY:

Protection for family.

Regular savings.
Bonus.
Tax benefits.
Housing finance.
Annuities for regular income during retirement.

TYPES OF POLICIES:

 Whole life assurance plans: these are low cost insurance plan where the sum assured is
payable on the death of insured.

 Endowment assurance plan: this is basically a savings plan for an event like children’s
education, marriage etc… It encourages savings and ensures that these savings are

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protected as well as achieved at the end of the term. Under this plan, the sum assured is
payable on the maturity of the policy.

 Term assurance plan: this is a pure protection policy, which provides a benefit on the
death of the individual within a specified term. These plans are suitable for those
prospects that seek high insurance cover at low cost. The plan is a pure risk plan with no
saving element.

 Money back plan: this popular saving cum protection policy because it provides lump
sum at a periodic interval.

 Pension plan: These plans provide for either immediate or deferred pension for life. The
pension payment are made till the death of the annuitant (person who has a pension plan)
unless the policy has provision of guaranteed period.

Insurance policies have riders attached them. Riders are add-ons to the life insurance policies
described above. These add-ons can be purchased with the policy on payment of a small
additional premium. The commonly offered riders in the Indian context are:

 Accidental death benefit rider: it is usually attached to savings cum protection policy.
The rider pays out a specified sum over and above the sum assured under the base policy
in the event of the death resulting from accident during term of the plan.

 Critical illness rider: the rider pays out a specified sum on the diagnosis of a specified
“critical illness”. This amount could be used for nursing and the other forms of care. Thus
this rider meets an important need for finance security in the event of contracting illness.

 Waiver of premium rider: This rider provides for waiver of premium payable under the
base policy and the event of long term disability arising out of accident and illness.

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 Term rider: the term rider is usually attached to savings policy and pays out a specified
sum, over and above the sum assured under the base policy in the event of death of the
policy holder during the policy term.

Reasons why one should take insurance:

 To ensure continuity of income 

Say that your income is used to support yourself and your family. When the time comes
and your paychecks stop, the life insurance proceeds can be used to continue to support
the family members you’ve left behind

 To pay off any debts left behind

Home loans, car loans, medical bills, and credit card debts are often left unpaid when
someone dies. These obligations must be paid from the assets left behind. This can
deplete the resources that your family needs. Life insurance can be used to pay off
these debts, leaving your other assets intact for your family to use

 To provide liquidity to one’s assets

 When one dies, one may leave some liquid assets (such as cash, CDs, and savings
bonds), and some illiquid assets (such as real estate, an automobile, and stocks). The
illiquid assets may have to be sold in order to meet these obligations when they come
due. This may cause a financial loss if the assets must be sold cheaply in order to get
the money on time. Life insurance can avert this situation, because the proceeds are
available almost immediately upon the death of the insured.

 To create an asset for one’s heirs

After the debts and expenses are paid, there may not be much left over for the family.
Life insurance can automatically provide assets for them after the death of the insured.

 A great investment vehicle.

 Some types of life insurance policies may actually make money for you, as well as provide
the benefits described above. This can help with long-term financial goals.

Advantages

 Risk Cover - Life today is full of uncertainties; in this scenario Life Insurance ensures
that your loved ones continue to enjoy a good quality of life against any unforeseen

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event. 

 Planning for life stage needs - Life Insurance not only provides for financial support in
the event of untimely death but also acts as a long term investment. You can meet your
goals, be it your children's education, their marriage, building your dream home or
planning a relaxed retired life, according to your life stage and risk appetite. Traditional
life insurance policies i.e. traditional endowment plans, offer in-built guarantees and
defined maturity benefits through variety of product options such as Money Back,
Guaranteed Cash Values, Guaranteed Maturity Values. 

 Protection against rising health expenses - Life Insurers through riders or stand alone
health insurance plans offer the benefits of protection against critical diseases and
hospitalization expenses. This benefit has assumed critical importance given the
increasing incidence of lifestyle diseases and escalating medical costs.

 Builds the habit of thrift - Life Insurance is a long-term contract where as policyholder,
you have to pay a fixed amount at a defined periodicity. This builds the habit of long-
term savings. Regular savings over a long period ensures that a decent corpus is built to
meet financial needs at various life stages.

 Safe and profitable long-term investment - Life Insurance is a highly regulated sector.
IRDA, the regulatory body, through various rules and regulations ensures that the safety
of the policyholder's money is the primary responsibility of all stakeholders. Life
Insurance being a long-term savings instrument, also ensures that the life insurers focus
on returns over a long-term and do not take risky investment decisions for short term
gains.

 Assured income through annuities - Life Insurance is one of the best instruments for
retirement planning. The money saved during the earning life span is utilized to provide
a steady source of income during the retired phase of life.

 Protection plus savings over a long term - Since traditional policies are viewed both by
the distributors as well as the customers as a long term commitment; these policies help
the policyholders meet the dual need of protection and long term wealth creation
efficiently. 

 Growth through dividends - Traditional policies offer an opportunity to participate in

the economic growth without taking the investment risk. The investment income is
distributed among the policyholders through annual announcement of dividends/bonus.

 Facility of loans without affecting the policy benefits - Policyholders have the option
of taking loan against the policy. This helps you meet your unplanned life stage needs
without adversely affecting the benefits of the policy they have bought.

 Tax Benefits-Insurance plans provide attractive tax-benefits for both at the time of entry

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and exit under most of the plans.

 Mortgage Redemption- Insurance acts as an effective tool to cover mortgages and loans

taken by the policyholders so that, in case of any unforeseen event, the burden of
repayment does not fall on the bereaved family.

Disadvantages

 Inconsistent premiums: Most policies contain mandatory premiums that increase in due

course. For an insured on a budget, who desires to buy coverage adequate to profit his
relations upon his decease, this policy can be quite costly. The unstable inflation
guarantees a steep climb.
 Deduction of funds: While policies include conditions in which shares from cash
accounts can be used to disburse premiums, such a request practically always results in
deducting funds from the cash value / investment account.
 Insufficient funds: There is a lack of assurance that ample finance will be accessible to
cover unpaid premiums when the policyholder holds inadequate funds.
 Expiration of term insurance: This kind of insurance in not permanent; it is either for a
fixed number of years or until a certain age. On completion of the term or when the
insured reaches a certain age the policy expires compelling them to qualify for another
insurance program, which may require higher premium depending on the age and other
factors.
 Language of premium: It is usually difficult to resolve precisely how costly
commissions truly are. The cost is commonly concealed within the fine print of the terms
and conditions, and it is normally explained in language that is complex for someone who
is unfamiliar to insurance policies.

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REAL ESTATE

 
Real estate investing involves the purchase, ownership, management, rental and/or sale of real
estate for profit. Improvement of realty property as part of a real estate investment strategy is
generally considered to be a sub-specialty of real estate investing called real estate development.
Real estate is an asset form with limited liquidity relative to other investments, it is also capital
intensive (although capital may be gained through mortgage leverage ) and is highly cash flow
dependent. If these factors are not well understood and managed by the investor, real estate
becomes a risky investment.
Indian real estate has huge potential demand in almost every sector especially commercial,
residential, retail industrial, hospitality, healthcare etc.

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The main growth thrust is coming due to favorable demographics, increasing purchasing power,
existence of customer friendly banks & housing finance companies, professionalism in real estate
and investors are likely invest in
Urban land
Semi urban land
Residential properties
Agricultural land
Commercial properties for Hotel Development, Building Resorts, Building Hospitals, Building
Educational institutions, Building Recreational facilities

Advantages
 Diversification Value - The positive aspects of diversifying your portfolio in terms
of asset allocation are well documented. Real estate returns have relatively low
correlations with other asset classes (traditional investment vehicles such as stocks and
bonds), which adds to the diversification of your portfolio. (To read more about
diversifying, see Allocation, Introduction, The Importance Of Diversification and A
Guide To Portfolio Construction.)

 Yield Enhancement - As part of a portfolio, real estate allows you to achieve higher
returns for a given level of portfolio risk. Similarly, by adding real estate to a portfolio
you could maintain your portfolio returns while decreasing risk.

 Inflation Hedge - Real estate returns are directly linked to the rents that are received from
tenants. Some leases contain provisions for rent increases to be indexed to inflation. In
other cases, rental rates are increased whenever a lease term expires and the tenant is
renewed. Either way, real estate income tends to increase faster in inflationary
environments, allowing an investor to maintain its real returns. (To find out more about
inflation, see All About Inflation, The Importance Of Inflation And GDP and Curbing
The Effects Of Inflation.)

 Ability to Influence Performance - In previous chapters we've noted that real estate is a
tangible asset. As a result, an investor can do things to a property to increase its value or
improve its performance. Examples of such activities include: replacing a leaky roof,
improving the exterior and re-tenanting the building with higher quality tenants. An
investor has a greater degree of control over the performance of a real estate investment
than other types of investments.

Limitations

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 Costly to Buy, Sell and Operate - For transactions in the private real estate market,
transaction costs are significant when compared to other investment classes. It is usually
more efficient to purchase larger real estate assets because you can spread the transaction
costs over a larger asset base. Real estate is also costly to operate because it is tangible
and requires ongoing maintenance.

 Requires Management - With some exceptions, real estate requires ongoing management
at two levels. First, you require property management to deal with the day-to-day
operation of the property. Second, you need strategic management of the property to
consider the longer term market position of the investment. Sometimes the management
functions are combined and handled by one group. Management comes at a cost; even if
it is handled by the owner, it will require time and resources.

 Difficult to Acquire - It can be a challenge to build a meaningful, diversified real estate

portfolio. Purchases need to be made in a variety of geographical locations and across
asset classes, which can be out of reach for many investors. You can, however, purchase
units in a private pool or a public security, and these units are typically backed by a
diverse portfolio.

 Cyclical (Leasing Market) - Not unlike other asset classes, real estate is cyclical. Real
estate has two cycles: the leasing market cycle and the investment market cycle. The
leasing market consists of the market for space in real estate properties. As with most
markets, conditions of the leasing market are dictated by the supply side, which is the
amount of space available (or, vacancies), and the demand side, which is the amount of
space required by tenants. If demand for space increases, then vacancies will decrease,
and the resulting scarcity of space will cause an increase in market rents. Once rents
reach economic levels, it becomes profitable for developers to construct additional space
so that supply can meet demand.

 Cyclical (Investment Market) - The real estate investment market moves in a different
cycle than the leasing market. On the demand side of the investment market are investors
who have capital to invest in real estate. The supply side consists of properties that are
brought to market by their owners. If the supply of capital seeking real estate investments
is plentiful, then property prices increase. As prices increase, additional properties are
brought to market to meet demand. 

FEATURES:
 Capital appreciation over period of time.
 Agriculture land is exempt from wealth tax and agriculture income as per Income Tax
Act is not taxable.
 For wealth tax purpose, the value of residential property is reckoned at its historical cost

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and not its present market price.

 Interest on loans taken for buying / constructing a residential house is tax deductible
within a certain limit.
CHAPTER – 2

REVIEW OF LITRATURE

2.1- Purpose

The main purpose of the study is to gain insight to investor’s preferences for various investment
alternatives. A perpetual mapping is used to explore consumer’s product perceptions. Since the
various alternatives of investment can be perceived in many dimensions such as risk, return or
time, this technique of mapping is multi dimensional in nature. It allows for the influence of more
than one character tics of investment are studies thoroughly. In order to gain thorough insight to
various investment alternatives, various books and journals and post records have been analyzed,
so as to have knowledge regarding the various investment avenues.

2.2- Methodology

This report entitled “REPORT ON SELECTRD INVESTMENT ALTENATIVES AVAILABLE

IN INDIA” will done taking into consideration the data obtained from the questionnaire and
secondary data available from the various sources like internet, journals and information from the
related persons. Most of the information will from publicly available data and various publishers.

2.3-Conclusion
Each investment alternatives have their own pros and cons related to it. As per the analysis done,
the results show that the bank deposits attracted more investors than any other alternative
because of its low risk even though there is low returns.

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CHAPTER - 3

RESEARCH METHODOLOGY

3.1 Type of research:

DISSERTATION
Topic- REPORT ON SELECTRD INVESTMENT ALTENATIVES AVAILABLE IN INDIA

3.2 Sampling techniques:

Data collection techniques: survey and personal interview method.

Secondary data will be used in the case of these alternatives investments and the main source of
data is from various
 Web site
 Books
 Journals
 And other various publicly available information.

The comparative analysis will be done on the basis of marketing research procedure and different
strategies.

3.3 Instruments

Tables
Bar chart
Graphs

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3.4 Actual data

Equity Shares as an investment alternative

Stocks are among the best long-term investments. The stock market offers a vary stable and
reliable method of building wealth long-term. This means stocks can potentially be top
performers as a part of your overall financial plan.
These shares give the investors ownership rights like voting right, right over the profit and also in
decision making. They enjoy the preemptive right which enables them to maintain their
proportional ownership. They become partners in progress of the company.
Stocks are generally considered a risky investment because, among other things, their values can
decline if the stock market goes down (market risk) or the issuing company does poorly
(company risk). As owners of the company, stockholders are paid after all creditors, including
bond holders, are paid. In theory at least, a stock’s value can go to zero. Historically, stock prices
have been the most volatile of all the different types of investments, meaning their prices can
move up and down quickly, frequently and not always in a predictable way.

 Mutual Fund as an investment alternative

In India mutual fund started with the setting up of Unit Trust of India (UTI) in 1964, the main
objective of UTI was to mobilize the savings of the house hold sector. UTI launched many
schemes. Today, mutual funds are sponsored by various private and public sector players.
Mutual fund companies collect money from investors and invest in share market. Investing in
mutual funds is also subject to market risks but return is good.
TYPES OF MUTUAL FUND
According to the type of investment:
While launching a new scheme, every Mutual Fund is supposed to declare in the prospectus the
kind of instruments in which it will make investments of the funds collected under that scheme.

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Thus, the various kinds of Mutual Fund schemes as categorized according to the type of
investments are as follows :-
(a) equity funds/schemes
               (b) Income Funds
               (c) Balanced Funds
               (d) Gilt funds
               (e) Money market funds
               (f) Sector specific funds
               (g) Index funds
B) ACCORDING TO THE TIME OF CLOSURE OF THE SCHEME:- 
While launching new schemes, Mutual Funds also declare whether this will be an open ended
scheme (i.e. there is no specific date when the scheme will be closed) or there is a closing date
when finally the scheme will be wind up.  Thus, according to the time of closure schemes are
classified as follows:-
          (a) Open ended schemes
(b) Close ended schemes

(C) ACCORDING TO TAX INCENTIVE SCHEMES:- 

Mutual Funds are also allowed to float some tax saving schemes.   Therefore, sometimes the
schemes are classified according to this also:-
         (a) Tax saving funds
         (b) Non tax saving funds
(D) ACCORDING TO THE TIME OF PAYOUT:- 
Sometimes Mutual Fund schemes are classified according to the periodicity of the pay outs (i.e.
dividend etc.).  The categories are as follows:-
         (a) Dividend Paying Schemes
         (b) Reinvestment Schemes

 Life Insurance Policies as an investment alternative

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A life insurance is a contract between an individual (termed as insured) and the insurance
company (insurer) to pay the insured, or his nominated heirs, a specified sum of money on the
happening of an event. The event could be the expiry of the insurance policy or the death of the
insured before the expiry (date of maturity) of the policy as per the term of the policy.
The various plans available in the life insurance are as follows:

Insurance plans.
Plans for handicapped dependents.
Endowment assurance plans.
Plans for high worth individuals.
Money back plans.
Special money back plan for women.
Whole life plans.
Term assurance plans.
Joint life plans.
Decreasing term assurance to cover home loan repayment.
Children plans.
Pension plans.
Unit plans.
Special plans.

 Real Estate an investment alternative

Real estate offers an attractive way to diversity an investment portfolio. In addition it offers
favorable risk-return tradeoffs due to the uniqueness of properties and the localized and relatively
inefficient market in which they are traded. Real estate differs from security investments in two
ways;
 It involves ownership of tangible asset real property rather than a financial claim.
 Managerial decisions about real estate greatly affect the return earned from investment
in it.
New Projects

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 Zuri Group Global is planning to invest about US$ 247.5 million towards setting up five-
star business hotels and luxury residential properties over the next three years.
 An investment of US$ 627.3 million will be made by industries in the Aerospace and
Precision Engineering Special Economic Zone at Adibatla, Andhra Pradesh.
 Unitech will invest US$ 853.42 million in construction of up to 30 million sq ft of
residential and commercial spaces to be launched by next year.
 Real estate developer The 3C Company will develop an affordable housing project over
41 acres of land in Noida at an investment of US$ 519.93 million.
 A consortium consisting of the Essel Group and Delhi-based Bhushan Steel and Power
will develop an amusement, theme and knowledge city over 250 acres at Kharghar in
Navi Mumbai. The total value of the transaction is US$ 454.95 million making it, in
absolute terms, one of the largest real estate transactions in India.
 Tata Realty and Infrastructure Limited (TRIL) will develop a US$ 758.47 million IT
Special Economic Zone (SEZ) in Chennai.

You should not follow the principles of investing in a stock market for a real estate
market. In a stock market you generally take wild risks and invest blindly on the basis of
some speculations. When you are planning to enter the real estate market you must have
adequate cash at all times because the investment is very huge and moreover the returns
are generally reaped in the long term. Similarly you will have to posses adequate reserves
to maintain the properties for a considerable period of time. This is a prerequisite when it
comes to real estate investment. You must carefully consider these factors before
investing in real estate.

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CHAPTER-4

DATA ANALYSIS AND INTERPRETATION

The analysis is been done among selected investments with the help of questionnaire.

Current income range of the respondents:

SALARY RANGE NO. OF RESPONDENTS % OF RESPONDENTS
< 10000 34 34%
10000 – 25000 46 46%
>25000 20 20%
Total 100 100

Table No.1: Showing respondents income level of distribution.

INFERENCE:

The above table shows the various income levels of respondents. In this graph the majority of the
respondents were in income bracket of Rs.10000-25000 per month. The next week group is the
Rs.10000 classification and at last is the 25000 classification.

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NO. OF RESPONDENTS

50
45
40
35
NO. OF RESPONDENTS
30
25
20
15
10
5
0
< 10000 10000 - 25000 Ø 25000

Graph No.1: Showing respondents income level of distribution.

Age range of the respondents:

AGE RANGE NO. OF RESPONDENTS

< 25 Years 24

25– 30 Years 22

31– 50 Years 38

<50 Years 16

Total 100

Table No.2: Showing age group among respondents.

INFERENCE:

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The above table shows the different age distribution of respondents. In this graph the
majority of the respondent belonged to the group of 31 to 50 years. This group is mostly to think
of investments, especially from a perspective of saving for the future, including education of
investments, especially from a perspective of saving for the future, including education of
children, self-employment, retirement etc

NO. OF RESPONDENTS

< 25 Years
25 – 30 Years
31 – 50 Years
Ø 50 Years
Total

Graph No.2: Showing age group among investors

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The investments in which the investors currently invested in:

INVESTMENTS NO. OF RESPONDENTS
1. Stocks / Shares 10
2. Bonds / Debentures 6
3. Bank Deposits 30
4. Mutual Funds 15
5 Gold 10
6. NSCs 8
7. Vikas Patras 7

8. Real Estate 6

9. Life insurance 8

Table no: 3 showing the number respondents to the alternative investment

INFERENCE:
As seen above, in the graph the maximum number of people (30 out of 100) have invested
in Bank Deposits. Respondents have chosen multiple investments; no one person has less than
four investments in various investments.

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NO. OF RESPONDENTS
30

25

20

15
NO. OF RESPONDENTS
10

0
es es its nd
s ld Cs tra
s te ce
h ar tur pos u Go NS a Esta r an
S
be
n
De lF s P
al su
s/ e k tua ka Re in
oc
k D n u Vi Lif
e
St
/ Ba M
nds
Bo

Graph No.3: Showing investments categories of respondents

SL NO. PARTICULARS MALE FEMALE TOTAL

1. Stocks/Shares 2 0 2
2. Bonds/Debenture 2 0 2
3. Bank deposits 10 2 12
4. Mutual Funds 4 1 5
5. Gold 3 2 5
6. NSCs 2 0 2
7. Vikas Patras 2 0 2
8. Real Estate 1 0 1
9. Life insurance 3 0 3

Table No.4: Showing gender distribution of income level 1(<10000)

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INFERENCE:

In the above table it can be seen that the respondents who belonged in the income level of
less than Rs.10000 a month have invested in bank deposits. When compare to the investments the
women and male respondents have invested more in bank deposits.

The income group did not have the benefits of much advice from investment professionals,
so banks and other institution should regularly, hold meetings, seminars camps for the people to
become more aware of the various available for investment.

12

10

6
MALE
4 FEMALE
TOTAL

0
s e s s ld Cs s te ce
are tur o sit und Go NS atra sta an
h en p F P E r
/S eb de al s al su
cks D k tu ka Re in
o s/ n u Vi fe
St nd Ba M Li
B o

Graph no. 4: showing gender distribution of income level (< 10000)

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SL NO. PARTICULARS MALE FEMALE TOTAL

1 Stocks/Shares 5 0 5

2 Bonds/Debentures 3 0 3

3 Bank deposits 9 4 13

4 Mutual funds 6 2 8

5 Gold 2 2 4

6 NSCs 2 2 4

7 Vikas pathras 3 0 3

8 Real estate 2 1 3

9 Life insurance 2 1 3

TABLE NO.5: Showing Gender distribution of income level 2 (Rs.10000- 25000)

INFERENCE:

In the above table, the income group between Rs.10000- 25000 the most number of
respondents preferred the bank deposits. This could be due to bank deposits being considered as
risk free investments, and interest rate have been fluctuating giving we can see more number of
women respondents are showing keen interest in investing in bank deposits.

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14

12

10

6 MALE
FEMALE
4 TOTAL

0
es es its nd
s ld Cs as te nc
e
h ar tur pos fu Go NS thr esta r a
/S en e al a su
sp al
cks
Deb nkd utu ki a Re e in
o s/ Lif
St Ba M V
o nd
B

Graph 5: Showing Gender distribution of income level 2(Rs.10000-25000)

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SL NO. PARTICULARS MALE FEMALE TOTAL

1 Stocks/Shares 3 0 3

2 Bonds/Debentures 1 0 1
3 Bank deposits 3 2 5
4 Mutual funds 2 0 2
5 Gold 1 0 1
6 NSCs 2 0 2
7 Vikas patras 1 1 2
8 Real estate 2 0 2
9 Life insurance 2 0 2

Table No.6: Showing distribution of income level 3(>Rs.25000)

INFERENCE:
It can be observed from the preceding graph has maximum investment in the category of Vikas
patras, Bank deposits, Mutual funds followed by investment in the market in the form of
Stocks/Shares. This could be that the income they earn them to pat on the market, trading risk off
return and cash on in the bearish market and earn high dividends, at the cost of growth.

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4.5

3.5

2.5

2 MALE
FEMALE
1.5 TOTAL

0.5

0
es es its s ld Cs s te ce
ar ur os nd Go ra sta
Sh nt p fu NS pat e r an
s/ e e al s al su
ck eb kd tu ka Re in
o s/
D n u Vi fe
St Ba M Li
o nd
B

Graph 6: Showing Gender distribution of income level 3(>Rs.25000)

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SL NO. PARTICULARS MALE FEMALE TOTAL

1 Stocks/Shares 10 0 10
2 Bonds/Debentures 6 0 6
3 Bank deposits 22 8 30
4 Mutual funds 12 3 15
5 Gold 6 4 10
6 NSCs 6 2 8
7 Vikas patras 6 1 7
8 Real estate 5 1 6
9 Life insurance 7 1 8

Table 7: showing the gender distribution in the investment alternatives

30

25

20

15

10 MALE
FEMALE
5 TOTAL

0
es es sit
s
nd
s ld Cs tra
s te nc
e
h ar tur o fu Go NS a sta r a
/S en ep al sp le su
cks eb kd tu ika Rea in
o D n u V e
St ds
/ Ba M Lif
o n
B

Graph no 7: showing the gender distribution in the investment alternatives

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SL INVESTMENTS INCOME INCOME INCOME TOTAL

NO. LEVEL 1 LEVEL 2 LEVEL 3
1 Stocks/Shares 3 5 2 10
2 Bonds/Debentures 2 3 1 6
3 Bank deposits 12 13 5 30
4 Mutual funds 4 8 3 15
5 Gold 3 4 3 10
6 NSCs 2 4 2 8
7 Vikas patras 2 4 1 7
8 Real estate 1 3 2 6
9 Life insurance 3 3 2 8

TABLE NO.8: Showing Income distribution among investment alternatives.

INFERENCE:

In the above table it can be observed that of all the investment categories, the three income
groups have preferred, with the bank deposits the most popular one, second by Mutual funds
rounding off the 3rd category of vikas patrikas, NSCs, Shares/stocks

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30

25

20

15
INCOME LEVEL 1
INCOME LEVEL 2
10
INCOME LEVEL 3
TOTAL
5

0
es es sit
s
nd
s ld Cs tra
s te nc
e
har tur o u Go NS a sta r a
/S n
de
p lf sp le su
cks ebe k tua ika Rea in
o /D n u V e
St ds Ba M Lif
o n
B

Graph 8: Graph showing income distribution among investment categories.

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SOURCES OF INFORMATION % OF RESPONDENTS

Brokers/investment banker 22%

Friends/family/ co-workers 28%

Media/ advertising 32%

Other sources 18%
Total 100

TABLE NO.9: Showing sources of information.

INFERENCE:

As in the above table, we can see that the respondents were able to get information about
investment opportunities was from various sources, though most of them (32%) were
influenced by media / advertising. Friend / family /co-workers influenced by another group
(28%) and around (22%) were influenced by broker /investment banker.

The other sources include awareness camps, bill boards, news papers, articles and other
media

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% OF RESPONDENTS

Brokers/investment banker
Friends/family/ co-workers
Media/ advertising
Other sources
Total

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Current employment position of the respondents:

EMPLOYMENT NO. OF RESPONDENTS % OF RESPONDENT

SITUATION
Full-time/part time 80 80%

Retired 15 15%

Student 5 5%

Total 100 100%

TABLE NO.10: Showing respondent’s current employment position.

INFERENCE:

In the above table, we can see that different employment situation of respondents. Around 80%
of full-time/part time employees has been shown keen interest in investing various instrument
and 2nd is the retired employee around 15% have invested in various instruments and next is the
student respondents around 5% have invested.

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NO. OF RESPONDENTS
Full-time/part time Retired
Student Total
80

100

15

GRAPH NO.10: Showing respondent’s current employment situation.

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Description of investor’s investment knowledge:

[Link]. INVESTMENT KNOWLEDGE [Link] RESPONDENTS

1 Rely exclusively on my financial advisor 16

2 Understand basic investment principles 28

3 General understanding of financial markets 38

4 Good working knowledge, manage my own 18

portfolio

TABLE NO.11: Showing investors investment knowledge.

INFERENCE:

The above table shows the statement which describes the investors’ investment knowledge.
We can see that most of the investors’ investment knowledge relies on the general understanding
of financial market and less number of investors exclusively on financial advisors this may be
due to the investors lack in the knowledge of various investments.

Objective of the investors for the investment:

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SL NO. OBJECTIVES [Link] RESPONDENTS

1 Capital appreciation 12

2 For some steady income 22

3 Retirement plan. 16

4 For future large expenses 14

5 Savings for child’s education 30

6 Expansion of business 6

TABLE NO. 12: Showing objective of investors for investment.

INFERENCE:

In the above table, we can see that the main objective of investors in investing various
instruments. The table clearly shows that the more number of investors objective is savings for
child’s future and leave an estate for their family but the least objective of investor is that
expansion of business.

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[Link] INVESTMENT NO. OF RESPONDENTS

1 Bank deposits 30

2 Mutual funds 16

3 Stock / shares 10

4 Vikas patras 10

5 NSCs 10

TABLE NO.13: Showing investments that have performed well according to investors.

INFERENCE:

In the above table, we can see that, amongst the respondents the instrument “BANK DEPOSITS”
was the one with most preferences, second come “MUTUAL FUND”, third comes the
“STOCK/SHARES”, and forth comes the “VIKAS PATRIKA” and last is the “NSC”.

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NO. OF RESPONDENTS
30

25

20

15 NO. OF RESPONDENTS
10

0
its ds re
s
ra
s Cs
pos fun ha pat NS
l s
de ua k /
ka
s
nk ut oc Vi
Ba M St

Graph No.11: Showing investments performed well according to investors.

STOCK / SHARES:

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RISK RETURN HIGH MODERATE LOW DURATION

LT ST

HIGH 3 4 7 11
MODERATE 6 2 3

TABLE NO.14: Showing rating of stocks/shares.

INFERENCE:

In the above table, we can see out of 18 respondents, who have invested in stocks/shares i.e.,
who are invested in the market, 3 respondent perceive the instrument as HIGH in risk and 2
respondent perceive MODERATE in risk and 6 respondents perceive the instrument as
MODERATE 3 respondent in LOW in return. The stocks/shares are generally long-term
instruments (i.e., more than 3 years), but those who are speculative can pay in the market for a
short-term (lesser than 1 year), 7 have chosen the long-term in stocks/shares owing to the long-
term nature and 11 have chosen the short-term in stocks/shares, providing for capital gains and
growth in investment.

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MUTUAL FUNDS

RISK – HIGH MODERATE LOW DURATION

RETURN LT ST
HIGH 3 4 0 6 6
MODERATE 2 1 2

TABLE NO.16: Showing rating of Mutual Fund.

INFERENCE:

Observing the table, it can see that the respondents feel that the risk would be HIGH to some
extent and they feel that the returns would be MODERATE. But very less number of respondents
feels that the returns would be LOW. Again the option is divided over the categories into long-
term or short-term, since a mutual fund can exists anywhere between 1-3 years.

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Description of investor’s investment knowledge:

[Link]. INVESTMENT KNOWLEDGE [Link] RESPONDENTS

1 Rely exclusively on my financial advisor 17

2 Understand basic investment principles 29

3 General understanding of financial markets 35

4 Good working knowledge, manage my own 21

portfolio

TABLE NO.19: Showing investors investment knowledge.

INFERENCE:

The above table shows the statement which describes the investors’ investment knowledge.
We can see that most of the investors’ investment knowledge relies on the general understanding
of financial market and less number of investors exclusively on financial advisors this may be
due to the investors lack in the knowledge of various investments.

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PERIOD OF TIME NO. OF RESPONDENTS %OF RESPONDENTS

< 5years 16 16%

5-10 years 34 34%

11-19 years 44 44%

20 years 6 6%

TABLE NO. 20: Showing period of time for investing.

INFERENCE:

Showing the above table we can see different period of investors in investing their instruments
but most of investors have invested in the period 11-19 years i.e. 44% of them are invested under
this period of time and next is around 34% have been invested in the period of time from 5-10
years and the least is the period of time around 20 years of more. This is because the investors
may feel that their investment won’t be safe in the long-term.

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45

40

35

30

25
NO. OF RESPONDENTS
20 %OF RESPONDENTS

15

10

0
< 5years 5-10 years 11-19 years 20 years

GRAPH NO.13: Showing investors period of time in investing.

[Link] STATEMENT [Link] RESPONDENTS

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1 Very concerned about inflationary risk. 22

2 Not concerned about inflation over the near term 24

but over the long-term I am concerned.
3 I know prices are rising, but I am overly concerned 25
about prices changing into the future.
4 These days, inflation is low enough not to be a 29
serious concern.

TABLE NO.21: Showing the feel about risk of inflation eroding the purchasing power of
investors’ investment.

INFERENCE:

The table shows the risk of inflation eroding the purchasing power of investor’s investments. Out
of 100 respondents around 29 respondents give top priority to the statement in these days,
inflation is low enough not to be serious concern and next around 25 respondents believe to the
statement “know prices are rising”. Around 24 respondents believe to the statement “Not
concerned about inflation over the near term but over the long-term I am concerned”. Last is
around 22 respondents believe to the statement vary concerned about inflationary risk.

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TIME PERIOD [Link] RESPONDENTS %OF RESPONDENTS

< 12 months 13 13%

1-2 years 34 34%

3-4 years 19 19%

5-7 years 34 34%

TABLE NO.22: Showing the investors preference time in deciding the change of their
investment strategy.

INFERENCE:

The table shows the investor’s time in deciding the change before the investment strategy. The
graph clearly shows that around 34% of respondents want to go for a time period of 1-2 years and
5-7 years whereas 19% of respondents want to go for a time period of 3-4 years and last is around
13% of the respondents want to go for a time period of <12 months.

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35

30

25

20
[Link] RESPONDENTS
%OF RESPONDENTS
15

10

0
< 12 months 1-2 years 3-4 years 5-7 years

GRAPH NO.13: Showing investors’ time in deciding investment strategy.

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TABLE NO.23: Showing total return, liquidity, risk of different investment alternatives.

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CHAPTER - 5

SUMMARY OF FINDINGS

5.1- The complete analysis:

 Every investors have their own perceptions, and investor do select the based on their
perceptions. .

 Mutual funds was preferred

For investors with low risk appetite and who are satisfied with low returns.

 Real estate
Real estate was the preferred of the income level of respondents, and provided high
returns for low moderate risks.

 Other modes of investments that the respondents have listed include Insurance, Gold and
Pubic Provident Funds.

 Mutual funds
Mutual funds work on more or less the same principles. Investors pool together their
money to buy stocks, bonds, or any other investments.

 Life insurance
Life insurance policies is preferred by all the class of the people as risk coverage
investment

 Equities

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Maximum returns over the long-term with high level of risk

There are two ways in which you can invest in equities-

 through the secondary market (by buying shares that are listed on the stock exchanges)

 Through the primary market (by applying for shares that are offered to the public)

5.2- SWOT Analysis

Strength

 Profit ratio
The advantages of alternative investments lie primarily in the possibility of achieving
a profit ratio higher than that normally found in traditional investments. More often than
not, an alternative investment carries a high degree of risk, and is frequently encountered
in the fields of new or emerging technologies. Inherent to alternative investments is the
possibility of both minor and major financial loss. On the other hand, the lure of
potentially quick and high returns leads many an investor to take a roll of the dice and
engage in a speculative plunge

 Diversification
Although each alternative investment differs in its risk/return characteristics, adding
alternative investments to a traditional long-only stock and bond portfolio may provide
the potential for diversification

Weakness
Investing in alternative investments is speculative, not suitable for all clients, and intended
for experienced and sophisticated investors who are willing to bear the high economic risks of
the investment, which can include:

 Loss of all or a substantial portion of the investment due to leveraging, short-selling or

other speculative investment practices;

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 Lack of liquidity in that there may be no secondary market for the fund and none
expected to develop;
 volatility of returns;

 restrictions on transferring interests in the fund;

 potential lack of diversification and resulting higher risk due to concentration of trading
authority with a single advisor;

 absence of information regarding valuations and pricing;

 delays in tax reporting;

 less regulation and higher fees than mutual funds;

 advisor risk.

Opportunities

Real Estate Investing

 Investing in commercial and residential rental properties and/or a personal residence
comes with an abundance of tax advantages, which enhance the investment return.
Investing in mortgages can provide good income sources. The three most popular ways to
invest in mortgages are buying mortgage-backed securities, investing in mortgage-
lending limited partnerships, and purchasing shares in a mortgage-making Real Estate
Investment Trust (REIT).
Hedge Funds

 Hedge Funds are different from regular investment funds, as they are allowed by
regulators to implement a broad array of trading strategies that other funds are simply not
permitted to do. For example, hedge funds can use options, futures and short sales to
hedge their holdings. Those holdings can include a wide variety of investments like
equity shares, debt instruments, commodities and currencies.
Venture Capital

 For individuals with higher net worth, venture capital investing is a viable alternative.
Venture capital uses private equity to fund early-stage growth companies in an effort to
realize a big return on investment when the company eventually goes public. It is
possible for a smaller investor to participate in this space by buying into a venture capital
fund, which is much like a mutual fund for venture capital investing.

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Commodities and Currencies

 Commodities and currencies are popular alternative investments primarily due to the
wide variety of choices. Popular commodities are sugar, soybeans, corn, wheat, gold,
silver, platinum, oil, natural gas and pork bellies.
Currencies also have a wide selection such as the US dollar, Japanese yen, Australian
dollar, Canadian dollar and Euro, just to name the most frequently traded currencies.
Both commodities and currencies can be traded in the futures market as well as through
mutual funds and exchange traded funds (ETFs), which specifically track a particular
segment within these sectors.

Oil and Gas Investing

 One of the alternative investment opportunities that offers some tax benefits is investing
in the oil and gas energy sector. As an investor, you can invest in private, independent
projects. Oil and gas investing provides special tax benefits allowing you to deduct from
your tax return a part of the expenses, such as drilling costs, depreciation and depletion
allowances.

Threats
 Lack of knowledge among people about alternative investments available in India.

 Other risks like absence of information regarding valuations and pricing, delays in tax
reporting, less regulation and higher fees than mutual funds and advisor risk.

CHAPTER – 6

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SUGGESTIONS AND RECOMMENDATIONS

There are many alternatives available in India. Each option has their own advantages and
disadvantages which attracts the investors’ interest.
As we know most of the investors are risk averse and they always wish to maximize the returns
with minimum risk. And these are the two key aspects of any investment alternatives.
Before investing in the any investment alternatives,
 the investor has to have his checklist prepared which includes

What is my current investment status?

 Do I currently have any savings and investments?
If yes, what percentage of my investments are in:
 % Cash or cash equivalents (savings accounts, CDs, money market funds)
 % Bonds or Bond funds
 % Stocks, stock funds, or stock in the company I work for?

 What are my investment objectives?

 To provide income to use toward my current expenses?
 To save for retirement?
 To save for children’s college education?
 To accumulate capital?
 To preserve capital?
 Other (such as a short-term goal):

 When do I need my money back?

1 year or 5 years or 20 years or 30 years or more

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How much risk am I willing to take?

 Very little risk. I want the safest investments possible.
 Modest risk. I’m willing to accept moderate risk of losing my investment if it means I
will earn a higher return.
 Substantial risk. I want the highest possible yield and I’m willing to accept the chance
that I may lose my investment.

What will be the impact of taxes on my investment?

How should be the Asset Allocation?

 For this type of effective investment strategy, investors have to be educated regarding the
alternatives available.
 Based on the economic status of the investors the investment have to be made
 As per the primary data bank deposits play a major role. Because even today majority of
the people whether salaried people are not believe the bank. Therefore, banks can go for
better innovative in bank deposits which can attract more and more investors.
 Mutual funds have their own role to play in the economy. But the awareness regarding
these is very less among the investors. So people should be made aware.
 Don't buy life insurance solely as an investment. This implies , you are incurring costs
that you would not incur in alternate investment options.
 While you might find some high-yielding options in the secondary market, if you do not
want the problems associated with bad deliveries and the transfer process or you want to
invest a large sum of money, the primary market is the better option.
 Today, real estate having its boom in the investment but an investor has to be very careful
in dealing with the real estate because this involves lots of manipulation and duplication.
 Any investors can invest in bonds and mutual funds as they are safe and have regular
incomes.
 Investors who prefer to take risk and who patience to wait for the long period can the
reap the benefit of the shares and real estate

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CHAPTER – 7

CONCLUSIONS

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We know investment means sacrifice of the current holdings for future returns with minimal risk.
Investors’ choice and preferences were analyzed through the questionnaire which gave insight
knowledge regarding the proper utilization of savings in the right investment or investment
portfolio by knowing the various investment opportunities opened for different type of investor
according to their preference.

Each investment alternatives have their own pros and cons related to it. As per the analysis done,
the results show that the bank deposits attracted more investors than any other alternative
because of its low risk even though there is low returns.

Investors’ does not have sufficient knowledge regarding the investments. Each individual and
each class of investors have own way of the analyzing the alternatives.

Thus, we have many alternatives which can suit the preference of the investors, investor to –

 Avail the services of a professional money manager (who manages the mutual fund)

 Access a diversified portfolio despite making a limited investment

BIBLIOGRAPHY

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 INFORMATION COLLECTED THROUGH

 TEXT BOOK
 SUHINDRA BHATT: SECURITIES AND INVESTMENT ANALYSIS
 PRASANNA CHANDRA : INVESTMENT ANALYSIS

 INTERNET

 [Link]
 [Link]
 [Link]
 [Link]
 [Link]

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