A COMPARATIVE STUDY ON VARIOUS INVESTMENT AVENUES IN THE MARKET FOR WAY2WEALTH BY B.JAGADEESAN REG NO: 35103102 Of S.R.

M Engineering College

A PROJECT REPORT Submitted To The School Of Management In Partial Fulfillment of the Requirement For The Award of the Degree Of MASTER OF BUSINESS ADMINESTRATION S.R.M INSTITUTE OF SCIENCE AND TECHNOLOGY (Deemed University) June, 2005

BONAFIDE CERTIFICATE Certified that this project report titled A Comparative Study on Various Investment Avenues In The Market is the bonafide work of Mr B. JAGADEESAN who carried out the research under my supervision. Certified further, that too the best of my knowledge the work reported herein does not form part of any other projects report are dissertation on the basis of which a degree or award was conferred on an earlier occasion on this or any other candidate .

Signature of the guide

Signature of the H.O D

(Name of the Guide)

ACKNOWLEDGEMENT

I take this opportunity to express my deep sense of gratitude to the S.R M School of Management Studies for providing me an opportunity to do this project work and my sincere thanks to our principal Prof.VENKATARAMANI, B.E.,M.Tech.,F.I.E and Dr.JAYASHREE SURESH, Head of the Department of Management Studies, for allowing me to do the project work in the area of Finance.

Words at my command are not adequate to convey the depth of my feeling of gratitude to my esteemed faculty Mr. T. P.NAGESH, Professor, Department of Management Studies, for

his excellent and encouraging guidance. Last but not least I wish to express my deep feeling of gratitude to all my Family Members and Friends for their kind help extended to complete this project work successfully.

My profound thanks to the Management of WAY2WEALTH SECURITIES PVT Ltd, for permitting me to do the project in their organization. I would like to thank Mr. SELVA KUMAR [Regional Sales Manager], for his encouragement during my project work I would also like to thank Mr. SUBBURAMAN, Mr. VARADHARAJAN and Mr. SADAGOPAN [Business development Manager] for their guidance and help during the entire period of my project work.

CONTENTS I INTRODUCTION 1.2TYPES OF POLICIES 1.3CONCEPT OF MUTAL FUND 1.4DIFFERENT TYPES OF MUTUAL FUND SCHEMES 1.5FEATURES/ROLE/BENEFITS 1.6EQUITY MARKET 1.7ABSTRACT II RESEARCH DESIGN ` 1 3 5 6 7 10 12 14 15

1.1VARIOUS RISK INVOLVED WHILE INVESTING

2.1 STATEMENT OF PROBLEM 2.2 OBJECTIVE OF STUDY 2.3 REVIEW OF LITERATURE 2.4 SCOPE OF THE STUDY 2.5 SAMPLING DESIGN 2.6 TYPE OF SAMPLING 2.7 SOURCES OF DATA 2.8 TOOLS AND TECHNIQUES USED FOR ANALYSIS 2.9 LIMITATIONS OF STUDY III COMPANY PROFILE IV DATA ANALYSIS AND INTERPRETATION V FINDINGS & SUGGESTIONS BIBLIOGRAPHY APPENDICES

16 17 18 20 20 21 22 23 26 28 31 76

LIST OF TABLES T. No 4.1.1 4.1.2 4.1.3 4.1.4 4.1.5 4.1.6 4.1.7 4.1.8 4.1.9 4.2.1 4.2.2 4.2.3 Age of Respondents Educational Qualification Salary of the Respondent Investment Factors Perception About Insurance Plan Accumulation Products Opted in Insurance Plan Knowledge Level Of Investors In Mutual Funds Mutual Factors Risk and Return in Avenues Chi-Square Test ANOVA I ANOVA II TITLE Page No 32 34 36 38 40 42 44 46 48 50 53 56

4.2.4 4.2.5 4.2.6 4.2.7 4.2.8 4.2.9 4.3.1 4.3.2 4.3.3 4.3.4 4.3.5 4.3.6 4.3.7

Rank Correlation IRR Table Return From Equity Plan Balanced Fund Return Risk in Equity Fund Risk in Balanced Fund Sensex Movements 04-05 Nifty Movements 04-05 Calculation of Return ( Sensex) Calculation of Return (Nifty) Total Risk and Total Return Over all Risk and Return of Various Avenues Customer Preference towards Investment avenues

59 62 64 65 66 67 68 69 70 70 70 72 72

LIST OF GRAPHS

C. No 4.1.1 4.1.2 4.1.3 4.1.4 4.1.5 4.1.6 4.1.7 4.1.8 Age of Respondents Educational Qualification Salary of the Respondent Investment Factors

TITLE

Page No 33 35 37 39 41 43 45 47

Perception About Insurance Plan Accumulation Products Opted in Insurance Plan Knowledge Level Of Investors In Mutual Funds Mutual Factors

4.1.9 4.2.5 4.2.6 4.2.7 4.2.8 4.2.9 4.3.1 4.3.2 4.3.5 4.3.7

Risk and Return in Avenues IRR Table Return From Equity Plan Balanced Fund Return Risk in Equity Fund Risk in Balanced Fund Sensex Movements 04-05 Nifty Movements 04-05 Total Risk and Total Return Customer Preference towards Investment avenues

49 62 64 65 66 67 68 69 71 73

ABSTRACT This study analysis the investment portfolio of the individual and the various Risks and Returns calculation are made for the various avenues in order to suggest the suitable portfolio for the individual based on the risk appetite of the person. The methodology used is descriptive and exploratory research. The data were collected from 200 respondents using questionnaires. Most of the respondents were qualified and income group people.

It is shown from the analysis that the majority of the respondents feels that the risk and the return are more important factor in the investment and also in the insurance plan they prefer, accumulation plan, and in the case of mutual find they prefer Regular & Capital appreciation.

Statistical test shows that the occupation of the respondents have directly influence in the choice of the investment avenues and the ANOVA proves the risk and return are most important factor and the rank co-relation show that the investment Porto folio doesnt suit the scientific portfolio

Finally it has been suggested a that insurance should be viewed has a risk cover not an investment avenues,50 % should be in guaranteed addition, 30 % in mutual fund and 20% in stocks

CHAPTER I INTRODUCTION

INTRODUCTION An investment is a sacrifice of current money or other resources for future benefits. A sacrifice takes place now and it is certain but the benefits is expected in the future and tends to be uncertain. In the investment the risk elements and the time elements places a major role Investment avenues are classified as show in the chart:

Investments Avenues

Non-Marketable Financial Assets

Equity Shares

Bonds

Money Market Instruments

Mutual Funds

Life Insurance Policies

Real Estates

Precious Objects

Financial Derivatives

Almost every one has a portfolio of investments; the portfolio is likely to comprise financial assets and real assets. This project will be mainly focused on the financial assets such as insurance, stock, mutual fund, bonds etc.

1.1 VARIOUS RISK INVOLVED WHILE INVESTING THE RISK-RETURN TRADE-OFF:

The most important relationship to understand is the risk-return trade-off. Higher the risk greater the returns/loss and lower the risk lesser the returns/loss. Hence it is upto the investor to decide how much risk does he is willing to take- up. In order to take an in investment decision one should be aware about the various risk involved in it. MARKET RISK: Sometimes prices and yields of all securities rise and fall. Broad outside influences affecting the market in general lead to this. This is true, may it be big corporations or smaller mid-sized companies. This is known as Market Risk. A Systematic Investment Plan-SIP that works on the concept of Rupee Cost Averaging might help mitigates this risk.

CREDIT RISK: The debt servicing ability (may it be interest payments or repayment of principal) of a company through its cash flows determines the Credit Risk faced by you. This credit risk is measured by independent rating agencies like CRISIL who rate companies and their paper. A AAA rating is considered the safest whereas a D rating is considered poor credit quality. A welldiversified portfolio may help to mitigate this risk. INFLATION RISK: The root cause, Inflation. Inflation is the loss of purchasing power over time. A lot of times people make conservative investment decisions to protect their capital but end up with a sum of money that can buy less than what the principal could at the time of the investment. This happens when inflation grows faster than the return on your investment. A well-diversified portfolio with some investment in equities might help mitigate this risk. INTEREST RATE RISK: In a free market economy interest rates are difficult if not impossible to predict. Changes in interest rates affect the prices of bonds as well as equities. If interest rates rise the prices of bonds fall and vice versa. Equity might be negatively affected as well in a rising interest rate environment. A well-diversified portfolio might help mitigate this risk. POLITICAL/GOVERNMENT POLICY RISK:

Changes in government policy and political decision can change the investment environment. They can create a favorable environment for investment or vice vers

Can insurance be an investment avenue? Life is uncertain. But the perils faced by human life are certain. Death may take away a individual but disability is the worst. The scientific principles upon which life insurance is based upon are as follows: 1.Shared Risk 2.Law of Large Numbers 3.Predictable Mortality 4.Invested Assets 5.Fair and accurate Risk selection. The concept of Life Insurance has evolved over a period of time to meet the different needs of the customers. The two basic needs that are common for any individual are (a) Risk Coverage and (b) Future savings. Risk here means Death. The main types of insurance are: 1.Term Insurance 2.Endowment Insuranc 1.2 TYPES OF POLICIES

Term Insurance:

This type of policy covers the risk i.e., death. The person gets the Sum Assured only if death occurs and the money is paid to his nominee. Generally the period of coverage varies from 1,5,10,15 or 20 years. The advantage in this type of insurance is the low cost involved. The insured can renew the policy after expiry if such a n option is available in the policy. The policy can also be converted into a savings policy if that option is also available. Generally the companies do not insist on a medical test for renewal

ENDOWMENT INSURANCE:

In this type of insurance the insured can enjoy the sum assured even if he survives the policy term. It covers the family on the death of the insured. It is a sound plan for all type of customers. It can be utilized to accumulate a fund so that future events can be managed. The endowment plans have the choice of participating in the profits of the company for which a higher premium is charged. Another endowment plan variation is Money Back Policy which is also popular among parents who have children, as they get the money at regular intervals. Another version of this policy is Joint Life policy where both the husband and wifes life is covered. Another version is Unit Linked Insurance Plan where the premium paid consists of two parts (a) Risk premium and (b) Investment premium. The risk premium takes care of providing security to the family and the second part is invested in three different modes based on the choice of the insured as follows:

FUND NAME Secured Fund

EQUITY Not less than 10%

DEBT Not less than 80% Not less than 80% Not less than 75%

LIQUID Not less than 20% Not less than 20% Not less than 25%

Balanced Fund Not less than 30% Risk Fund Not less than 50%

Another type of life insurance product is the Whole Life Insurance. There are two variations to this policy. The first one is Pure whole Life where the premiums are continuously payable under the throughout the life of the insured till death. The second one is the Limited Payment Whole Life Insurance where premiums are payable for a limited and shorter period at the option of the insured or till death, whichever is earlier. The advantage of this policy is that the risk coverage is there till the end of the policy. 1.3 CONCEPT OF MUTUAL FUND

Mutual fund is a mechanism for pooling the resources by issuing units to the investors and investing funds in securities in accordance with objectives as disclosed in offer document. Investments in securities are spread across a wide cross-section of industries and sectors and thus the risk is reduced. Diversification reduces the risk because all stocks may not move in the same direction in the same proportion at the same time. Mutual fund issues units to the investors in accordance with quantum of money invested by them. Investors of mutual funds are known as unit holders. The profits or losses are shared by the investors in proportion to their investments. The mutual funds normally come out with a number of schemes with different investment objectives, which are launched from time to time. A mutual fund is required to be registered with Securities and Exchange Board of India (SEBI) which regulates securities markets before it can collect funds from the public.

1.4 DIFFERENT TYPES OF MUTUAL FUND SCHEMES SCHEMES ACCORDING TO MATURITY PERIOD:

A mutual fund scheme can be classified into open-ended scheme or close-ended scheme depending on its maturity period. OPEN-ENDED FUND/ SCHEME : An open-ended fund or scheme is one that is available for subscription and repurchase on a continuous basis. These schemes do not have a fixed maturity period. Investors can conveniently buy and sell units at Net Asset Value (NAV) related prices which are declared on a daily basis. The key feature of open-end schemes is liquidity. CLOSE-ENDED FUND/ SCHEME: A close-ended fund or scheme has a stipulated maturity period e.g. 5-7 years. The fund is open for subscription only during a specified period at the time of launch of the scheme. Investors can invest in the scheme at the time of the initial public issue and thereafter they can buy or sell the units of the scheme on the stock exchanges where the units are listed. In order to provide an exit route to the investors, some close-ended funds give an option of selling back the units to the mutual fund through periodic repurchase at NAV related prices. SEBI Regulations stipulate that at least one of

the two exit routes is provided to the investor i.e. either repurchase facility or through listing on stock exchanges. These mutual funds schemes disclose NAV generally on weekly basis. SCHEMES ACCORDING TO INVESTMENT OBJECTIVE: A scheme can also be classified as growth scheme, income scheme, or balanced scheme considering its investment objective. Such schemes may be open-ended or close-ended schemes as described earlier. Such schemes may be classified mainly as follows:

GROWTH / EQUITY ORIENTED SCHEME: The aim of growth funds is to provide capital appreciation over the medium to long- term. Such schemes normally invest a major part of their corpus in equities. Such funds have comparatively high risks. These schemes provide different options to the investors like dividend option, capital appreciation, etc. and the investors may choose an option depending on their preferences. The investors must indicate the option in the application form. The mutual funds also allow the investors to change the options at a later date. Growth schemes are good for investors having a long-term outlook seeking appreciation over a period of time. INCOME / DEBT ORIENTED SCHEME: The aim of income funds is to provide regular and steady income to investors. Such schemes generally invest in fixed income securities such as bonds, corporate debentures, Government securities and money market instruments. Such funds are less risky compared to equity schemes. These funds are not affected because of fluctuations in equity markets. However, opportunities of capital appreciation are also limited in such funds. The NAVs of such funds are affected because of change in interest rates in the country. If the interest rates fall, NAVs of such funds are likely to increase in the short run and vice versa. However, long term investors may not bother about these fluctuations. BALANCED FUND: The aim of balanced funds is to provide both growth and regular income as such schemes invest both in equities and fixed income securities in the proportion indicated in their offer documents. These are appropriate for investors looking for moderate growth. They generally invest 40-60% in equity and debt instruments. These funds are also affected because of fluctuations in share prices in the stock markets. However, NAVs of such funds are likely to be less volatile compared to pure equity funds.

MONEY MARKET OR LIQUID FUND: These funds are also income funds and their aim is to provide easy liquidity, preservation of capital and moderate income. These schemes invest exclusively in safer short-term instruments such as treasury bills, certificates of deposit, commercial paper and inter-bank call money, government securities, etc. Returns on these schemes fluctuate much less compared to other funds. These funds are appropriate for corporate and individual investors as a means to park their surplus funds for short periods. GILT FUND: These funds invest exclusively in government securities. Government securities have no default risk. NAVs of these schemes also fluctuate due to change in interest rates and other economic factors as is the case with income or debt oriented schemes.

INDEX FUNDS : Index Funds replicate the portfolio of a particular index such as the BSE Sensitive index, S&P NSE 50 index (Nifty), etc these schemes invest in the securities in the same weight age comprising of an index. NAVs of such schemes would rise or fall in accordance with the rise or fall in the index, though not exactly by the same percentage due to some factors known as "tracking error" in technical terms. Necessary disclosures in this regard are made in the offer document of the mutual fund scheme. There are also exchange traded index funds launched by the mutual funds, which are traded on the stock exchanges. 1.5 FEATURES/ROLE/BENEFITS

MOBILISING SMALL SAVINGS:

Mutual funds mobilize funds by selling their own shares, known as units to an investor a unit in mutual fund means ownership of a proportional share of securities in the portfolio of a mutual fund. This gives the benefit of convenience and the satisfaction of owning shares in many industries.thus, mutual funds are primarily investment intermediaries to acquire individual investments and pass on the returns to small fund investors.

INVESTMENT AVENUE One of the basic characteristics of a mutual fund is that it provides as Ideal Avenue for investment for persons of small means, and enables them to earn a reasonable return with the advantages of relatively An investment is a sacrifice of current money or other resources for future benefits. Numerous avenues of investments are available today. The two key aspects of any investment are time and risk. Mutual funds also offer good investment opportunities to the investors. Like all investments, they also carry certain risks. The investors should compare the risks and expected yields after adjustment of tax on various instruments while taking investment decisions. The investors may seek advice from experts and consultants including agents and distributors of mutual funds schemes while making investment decisions. PROFESSIONAL MANAGEMENT: It is possible for the small investors to have the benefit of professional and expert management of their funds. Mutual funds employ professional experts who manage the investment portfolios efficiently and profitably. Investors are relieved of the emotional stress involved in buying or selling securities since mutual take care of this function. With their professional knowledge and experience, they act scientifically with the right timing to buy and sell for their clients. Moreover, automatic reinvestment of dividends and capital gains provides relief to the members of mutual funds. Expertise in stock selection and timing is made available to investors so that the invested funds generate returns. DIVERSIFIED INVESTMENT: Mutual funds have the advantage of diversified investment of funds in various industry segments spread across the country. This is advantageous to small investors who cannot afford having the shares of highly established corporate because of high market price. Thus, mutual funds allow millions of investors to have investment in a variety of securities of many different companies. Small investors therefore share the benefits of an efficiently managed portfolio and are free of the problem of keeping track of share certificates etc of various companies, tax rules, etc.

BETTER LIQUIDITY: Mutual funds have the distinct advantage of offering to its investors the benefit of better liquidity of investment. There is always a ready market available for the mutual funds units. In addition, there is also an obligation imposed by SEBI guidelines. For instance, in the case of open- ended mutual fund units, it is possible for the investor to divest holdings any time during the year at the Net Asset Value. REDUCED RISKS: There is only a minimum risk attached to the principal amount and return for the investments made in mutual fund schemes. This is usually made possible by expert supervision, diversification and liquidity of units. Mutual funds provide small investors the access to a reduced investment risk resulting from diversification, economies of scale in transaction cost and professional finance management. INVESTMENT PROTECTION: Mutual funds in India are largely regulated by guidelines and legislative provisions put in place by regulatory agencies such as the SEBI. The Securities Exchange Commission (SEC) in the USA allows for the provision of safety of investments. In order to protect the investor interest, it is incumbent on the part of mutual funds to broadly follow the provisions laid down in this regard. SWITCHING FACILITY: Mutual funds provide investors with flexible investment opportunities, whereby it is possible to switch from one scheme to another. This flexibility enables investors to shift from income scheme to growth schemes, or vice versa, or from a close-ended scheme to an open-ended scheme, all at will. 1.6 EQUITY MARKET: When we look the security market as an avenue we have these alternatives:

Securities Market

Equity Market

Debt Market

Derivatives Market

Government Securities Market

Corporate Debt Market

Money Market

Options Market

Futures Market

EQUITY SHARES

Equity Share represents ownership capital. As a Equity share holder, you have a ownership stake in the company. This Essentially means that you have a residual interest in income and wealth. The Share movements are reflected in the various index points o Bombay Stock Exchanges Sensitive Index o S&P Nifty Index

BOMBAY STOCK EXCHANGES SENSITIVE INDEX: Perhaps most widely followed stock market index in India, Bombay Stock Exchange Index, Popularly called sensex reflects the movements of 30 sensitive share from specified and non specified groups.

S&P Nifty Index:

Arguably the most rigorously constructed stock market index in India, the nifty index reflects the price movements of 50 stocks selected on the bases of market capitalization and liquidity

CHAPTER II RESEARCH DESIGN 2.1 STATEMENT OF PROBLEM: Based on the definition of problem, it is clearly understandable that a problem does not necessarily mean that something is seriously wrong with a current situation that needs to be rectified immediately. But a Problem could simply indicate an interest in an issue where findings the right answers might help to improve an existing situation.

In this scenario the investment portfolio should be mainly focused on availability of right amount of money at the right time to the right person can be called as an efficient portfolio. Here the problem of the study is mainly focused on finding out efficient portfolio of the individuals based on the risk appetite of the person 2.2 OBJECTIVE OF STUDY

PRIMARY OBJECTIVE To find out the various parameters that an investor look from an investment. To find out what a investor look from an insurance plan. To Find out the investors level of knowledge in Mutual Fund and the various factors that they look from the Mutual Funds To find out which Investment Avenue gives high return from the investor point of view. To Find out which Investment avenue gains more Risks from the investor point of view

SECONDARY OBJECTIVE:

To calculate the Risk and Return for Insurance plan, Mutual Funds Schemes and Stocks. To correlate the ranks and suggest the Portfolio. To the organization it is to get to know that which avenue attacks more number of investors in the type of portfolio they follow

2.3 REVIEW OF LITERATURE Security and constant search for security have been the unending endeavors of human race since the beginning of the civilization. Right from the stone-age man to the modern IT personality, this search for security has brought out innovative ideas.

HISTORY OF INSURANCE: The roots of insurance might be traced to Babylonia were traders were encouraged to assume the risks of the caravan trade through loans that were repaid only after the goods had arrived safely. This practice resembled bottomry and given legal force in the Code of Hammurabi With the growth of towns and trade in Europe, the medieval guilds undertook to protect their members from loss by fire and shipwreck, and to provide decent burial and support in sickness and poverty. By the middle of the 14th century, as evidenced by the earliest known insurance contract, marine insurance was practically universal among the maritime nations of Europe. In London Lloyds coffee house was a place where merchants, ship owners, and underwriters met to transact business. By the end of the 18th century, Lloyd had progressed into one of the first modern insurance companies. In 1693, the astronomer Edmond Halley constructed the first mortality table, based on the statistical laws of mortality and compound interest. The table was corrected in the year 1756 by Joseph Dodson, and made it possible too scale the premium rate to age; previously the rate had been the same for all ages. Insurance developed rapidly with the growth of British commerce in the 17 and the 18th century. Prior to the formation of corporations devote solely to the business of writing insurance, policies were signed by a number of individuals, each of whom wrote his name and the amount of

risk he was assuming underneath the insurance proposal, hence the term underwriter. The first stock insurance company was chartered in England in 1720. Fire Insurance corporations were formed in the year 1787. In the year 1830s the practice of classifying risks began. The New York Fire of 1835 called attention to the need for adequate reserves to meet unexpectedly large losses. The business of life insurance in India in its existing form started in the year 1818 with the establishment of Oriental Life Insurance Company in Calcutta. HISTORY OF INSURANCE IN INDIA YEAR 1818 1870 1870 1912 DETAILS Europeans started the Oriental Life Insurance Co in Calcutta The first Indian Insurance Company Bombay Mutual Life Insurance The British Govt. enacted The Insurance Act First Indian Insurance Act was passed with an Enactment in 1938. business in India are: Year 1912 1928 1938 1956 Details The Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance business The Indian Insurance Companies Act enacted to enable the government to collect statistical information about both life and non-life insurance business Earlier legislation consolidated and amended to by the insurance act with the objective of protecting the interests of the insuring people 245 Indian and Foreign insurers and provident societies taken over by the central government and nationalized. LIC formed by an act of parliament. 2.4 SCOPE OF THE STUDY: The Scope of the study is to probe among the investor of Chennai. The study was conducted for the period of three months carrying various places in Chennai. Primary data was collected from the investors and Secondary data was collected from the Journals, Magazines and Web Site Som e of the impo rtant miles tones in the life insur ance

2.5 SAMPLING DESIGN: While Developing a Sampling Design. The Researcher must pay attention to the following points. Sampling units Sampling Frame Type of Sampling Size of Sample

SAMPLING UNITS: The Samples are derived from the list of Clients of WAY2WEALTH.

SAMPLING FRAME: Sampling Frame is Representation of elements of target population that consist of a list or set of direction for identifying the target population. This study done under the consideration of WAY2WEALTH clients. These lists of Clients are taken to the sampling frame.

2.6 TYPE OF SAMPLING: PROBABILITY SAMPLING: Under this Sampling procedure, every item of the universe has an equal chance of inclusion in the sample. The Suitable method for this study is probability sampling, In probability sampling technique, Simple Random Technique has been followed for this Study. DETERMINATION OF SAMPLE SIZE: The Sample survey was conducted with 10 clients of which 8 of them having the knowledge of products and 2 of them havent turn to be knowledgably. So, Sample Size Determination = p q / n P = 0.8,Q= 0.2

= 0.8 0.2 / 10 = 0.1265 As Normal Distribution, The Researcher prefer to limit the error of estimate to 2% as 95% confidence level (Z = 1.96). Z = error / SD / n N = [Z / error SD] N= [1.96 /.02 .1265] N= 153 For Better understanding Sample was rounded off to 200 samples

Research Design: The research design chosen for the project has been descriptive in nature. DESCRIPTIVE RESEARCH:

Descriptive research includes surveys and fact-finding enquiries of different kinds. The major purpose of descriptive research is description of the state of affairs as it exists at present. The questionnaires are used for collecting responses from the respondents.

2.7 Sources of Data: There are two different methods for collection of data to conduct this Descriptive Research study. 1. 2. Primary Data Collection Method Secondary Data Collection Method

In this study the primary data collection method have been used to collect data Primary Data Collection: Primary data are those which are collected a fresh and for the first time and thus happen to be original in character Primary data collection is nothing but the data that is directly collected from the people by the researcher himself. Primary data may pertain to demographic / socio economic characteristics or the customers, altitudes and opinions of people, their awareness and knowledge and other similar aspects In this study Primary Data collection method has helped the researcher to a great extent in arriving at the results METHODS OF PRIMARY DATA COLLECTION: The method used for collecting Primary data is Survey

SURVEY METHOD: Survey method is the systematic gathering of data from the respondents survey is the most commonly used method of primary data this is widely used because of its

Extreme Flexibility Reliability Easy Understandability

The main purpose of survey is facilitate understanding or enable prediction of some aspects of the population being surveyed

SURVEY TECHNIQUE: The technique used for conducting the survey is called Survey Technique. There are three techniques to conduct the survey Viz. 1. 2. 3. Personal Interview Telephone Interview Mail Survey

DATA COLLECTION METHOD: The instrument used to collect data for the study was the structured and non-disguised questionnaire through open ended and close ended questions

2.8 Tools and Techniques Used for Analysis: The statistical tools used for the study are as follows, Rank Correlation Risk & return Calculation One Way ANOVA Table Chi-Square

CHI SQUARE TEST: The chi square test is an important test amongst the several test of significance developed by statisticians. Chi square (Pronounced as Ki-square), is a statistical measure used in the context of sampling analysis for comparing a variance to a theoretical variance. As a non-parametric test, it can be used to determine if categorical data shows dependency or the two classifications are independent. Thus, the chi square test is applicable in large number of problems. The formula used for chi square is, 2 = (O E) 2/ E Where, O Observed frequency, E Expected frequency,

ANALYSIS OF VARIANCE (ANOVA): Analysis of variance (abbreviated as ANOVA) is an extremely useful when multiple sample cases are involved. Using this technique, one can draw inferences about whether the samples have been drawn from populations having the same mean. Variance is an important statistical measure and is described as the mean of the squares of deviations taken from the mean of the given series of data. It is frequently used measure of variation. RANK CORRELATION: Correlation studies the joint variation of two or more variables for determining the amount of correlation between two or more variables.

FORMULA: Rs = 1-

6(d) n(n 1)

2.9 LIMITATIONS OF STUDY: This study mainly depends on the current market perception, But the market perception is changing time to time so the recommendation and suggestions are subject to revises based on the market changes

This study required more data for knowledge about the market. The data collection, Data recording and data analysis are very difficulty to work in this study

Short Time Period was Inadequate for conducting detailed Study among the investors\ The study was Limited to the Capabilities and willingness of the respondents to appropriately and filling the questions.

CHAPTER III COMPANY PROFILE

COMPANY PROFILE INTRODUCTION: Way2Wealth is a premier Investment Consultancy Firm that has been launched with the aim of making investing simpler, more understandable and profitable for the investors. Way2Wealth brings a wide range of product offerings from Fixed Income Securities, Life Insurance and Mutual Funds to Equity and Derivatives (on the National Stock Exchange) for the convenience and benefit of it customers. Way2Wealth has over 40 easily accessible Investment Outlets spread across 20 major towns and cities in the country.

Mission: Way2Wealth is a premier Investment Consultancy Firm, launched with the mission to be the preeminent destination for personalized financial solutions helping individuals creates wealth.

PHILOSOPHY: The company believes that our knowledge combined with our investors trust and involvement will lead to the growth of wealth and make it an exciting experience.

HERITAGE: 9 Sivan Securities started in 1984, has a long and illustrious track record of being amongst the premier Financial Intermediaries in the country as well as being an incubator for IT start-up firms. 9 The Venture Capital division came to be known as Global Technology Ventures (GTV has provided venture capital to companies such as Kshema Technologies, Mind Tree, Ivega etc.) and the Financial Intermediary Division was spun off as Way2Wealth in the year 2000. 9 Way2Wealth is promoted by Sivan Securities and Global Technology Ventures Ltd. Prudential ICICI AMC provides further strength to Way2Wealth as strategic equity partner. 9 Over the years, Sivan has developed a strong reputation for navigating its investors through all the ups and downs in the market. Way2Wealth has inherited these same values in addition to a base of 75,000 individual customers, over 300 corporate/institutional clients. 9 Other companies in the group include Amalgamated Bean Coffee Trading Company Ltd. (one of the largest Coffee Exporters in India) and Caf Coffee Day, a chain of youth hangout coffee parlors. Way2Wealth has a very credible management team, who has well over 100 man-years of experience amongst themselves Way2Wealth Investment outlets are designed to be places where retail investors can come in touch with Investment opportunities in an atmosphere of convenience and comfort. The look and feel of the offices across India projects a consistent branch image for the company. The features that enable a unique facility for retailing financial services include among others: Easily visible branches set up in the commercial spaces of potential investment zones ranging between 750sft to 1000sft.

Most branches are located in the ground floor sporting huge glass frontage promoting easy accessibility and reflecting our attitude of complete transparency.

The major portion of the branch area dedicated for customer use. The CKD formats to add flexibility in using the branch for Investors purposes.

furniture is in

Connectivity to NSE for trading facilities.

TV and other electronic mediums to facilitate real time update and dissemination of information to our customers.

Each branch comprises of trained and qualified Investment advisors to take care of the needs of the customers.

BACKGROUND: Way2Wealth is in the financial services industry, where holistic knowledge is at a premium, change is constant and inevitable, and the speed of response determines creation of wealth. Individuals who are dynamic and result oriented find their own niche in this environment. The growing crop of professionals in this industry mandates the new entrants to have a pleasing personality, excellent communication skills and a willingness to do good to the customers. Most importantly the individuals should possess a natural flair for understanding and selling financial products. Amidst this backdrop Way2Wealth is at the forefront redefining, pioneering and setting benchmark for the way financial intermediaries should function in the future. Their aim is to bring investment services to the doorstep of the consumer and be an integral part of their life cycle.

CHAPTER IV DATA ANALYSIS AND INTERPRETATION DATA ANALYSIS AND INTERPERTATION

TABLE 4.1.1 AGE OF THE RESPONDENTS AGE 20 25 years 25 35 years 35 45years 45 55 years Above 55 years TOTAL (SOURCE: PRIMARY DATA) No. Of Respondents 40 44 60 40 16 200 Percentage 20 22 30 20 8 100

INFERENCE: From the above table it can be inferred that 30% of the respondents belongs to age between 35-45 years of age. Very few belong to the age group of above 55 years.

CHART 4.1.1 AGE OF THE RESPONDENTS

40

30

30

22
% OF RESPONDENT

20

20

20

8
10

20- 25

25-35

35-45

45-55

Above 55

AGE IN YEARS

TABLE 4.1.2 EDUCATIONAL QUALIFICATION OF THE RESPONDENTS

QUALIFICATION UG PG Professional Others Total (SOURCE: PRIMARY DATA)

No. Of Respondents 74 56 46 24 200

Percentage 37 28 23 12 100

INFERENCE: From the above table it can infer that 37% of the respondents possess UG qualifications. 10% are however professionals

CHART 4.1.2 EDUCATIONAL QUALIFICATION OF THE RESPONDENTS

40

35

30

% OF RESPONDENT

25

20

15

10

0
UG PG Professional Others

EDUCATION QUALIFICATION

TABLE 4.1.3

SALARY OF RESPONDENTS:

SALARY SLAB 50,000 1,00,000 1,00,000 3,00,000 3,00,000 & Above TOTAL DATA)

No. Of Respondent 112 56 32 200

Percentage 56 28 16 100

(SO UR CE: PRI MA RY

INFERENCE: From the above table it can be inferred that 56%of the respondents belongs to50,000 1,00,000 Salary Slab. Very few (i.e.) 16 % belong to the Salary Slab 3,00,000 & above

CHART 4.1.3 SALARY OF RESPONDENTS

60

50

40

30

SALARY SLAB

20

10

0
50,000 1,00,000 1,00,000 3,00,000 Above 3,00,000

TABLE: 4.1.4

INVESTMENT FACTORS (As per Investors choice):

HIGHLY IMPORTANT NEITHER NOT HIGHLY IMPORTANT IMPORTANT IMPORTANT NOT OR NOT IMPORTANT IMPORTANT RETURN 86 82 13 19 NIL LOW RISK 91 74 27 8 NIL SAFETY 19 18 80 58 25 SAVINGS 2 13 60 45 80 TAX 2 13 20 70 95 BENEFITS (SOURCE: PRIMARY DATA)

FACTORS

INFERENCE: From the above table that the risk and the return are considered to be the most important factor for an investment about 43% have said that returns are important and around 45% says that low risk in investment places a major role. Safety, Savings and Tax benefits are also taken in to consideration for making an investment decision.

CHART : 4.1.4 INVESTMENT FACTORS (As per Investors choice):

100

90

80

70

60

50

40

30

20

10

RETURN

RISK

SAFETY

SAVINGS

TAX BENEFITS

HIGHLY IMPORTANT IMPORTANT NEITHER IMPORTANT OR NOT IMPORTANT NOT IMPORTANT HIGHLY NOT IMPORTANT

TABLE : 4.1.5

PERCEPTION ABOUT INSURANCE PLAN

FACTORS No. Of Respondent TAX BENEFITS 32 PROTECTION 48 ACCUMULATION 120 TOTAL 200 (SOURCE: PRIMARY DATA)

Percentage 16 24 60 100

INFERENCE From the above table it can be inferred that 60% of the respondents look for Accumulation, 24% and 16% look for protection and Tax benefits from insurance

CHART : 4.1.5 PERCEPTION ABOUT INSURANCE

60

50

40

30 PERCENTAGE

20

10

0
ACCUMULATION PROTUCTION TAX BENEFITS

BENEFITS

TABLE : 4.1.6

ACCUMULATION PRODUCTS IN INSURANCE PLAN:

AVENUES ENDOWMENT MONEY BACK ULIP WHOLE LIFE RERTIRMENT (SOURCE: PRIMARY DATA)

(% Of respondent) BUDGET 04-05 25 23 17 15 20

INFERENCE: From the above table it can be seen that there is a more important given to Endowment and Money Back policies in the case of Accumulation

CHART : 4.1.6

INVESTOR PREFERENCE IN INSURANCE POLICY

25

20

% OF RESPONDENT

15

TYPE OF POLICY

10

0
ENDOWMENT MONEY BACK ULIP WHOLE LIFE RETIRMENT

TABLE : 4.1.7

KNOWLEDGE LEVEL IN MUTUAL FUNDS

SOME KNOWLEDGE MUTUAL FUND 36 (SOURCE: PRIMARY DATA)

AVENUE

SUFFICENT KNOWLEDGE 43

MORE KNOWLEDGE 21

INFERENCE:

From the above chart it is clearly stated that the knowledge level of the investor in Mutual Fund is considerably low, since it is a recent avenue.

CHART : 4.1.7

KNOWLEDGE LEVEL IN MUTUAL FUNDS

45

40

35

30

25
% OF RESPONDENT

20

15

10

0 SOME SUFFICENT MORE KNOWLEDGE KNOWLEDGE KNOWLEDGE

TABLE: 4.1.8

MUTUAL FUND FACTORS (As per Investors choice):

FACTORS

HIGHLY IMPORTA NT

IMPORTA NT

REGULAR INCOME CAPITAL APPRECIATTION

78 86

80 74 18 13 15

NEITHER IMPORTA NT OR NOT IMPORTA NT 10 27 78 62 23

NOT IMPORTA NT

HIGHLY NOT IMPORTA NT 13 7 15 80 85

19 6 60 45 70

SAFETY 29 SAVINGS 0 TAX BENEFITS 7 (SOURCE: PRIMARY DATA)

INFERENCE: From the above table that the risk and the return are considered to be the most important factor for an investment about 43% have said that returns are important and around 45% says that low risk in investment places a major role. Safety, Savings and Tax benefits are also taken in to consideration for making an investment decision.

CHART : 4.1.8

MUTUAL FUND FACTORS

90

80

70

60

50

40

30

20

10

REGULAR INCOME

SAFETY

TAX BENEFITS

HIGHLY IMPORTANT IMPORTANT NEITHER IMPORTANT OR NOT IMPORTANT NOT IMPORTANT HIGHLY NOT IMPORTANT

TABLE 4.1.9

RISK AND RETURN IN AVENUES Ranks Of Respondent PLANS STOCK MUTAL FUND INSURANCE FIXED DEPOSIT GOVT.SECURITES (SOURCE: PRIMARY DATA) RISK 1 2 3 5 4 Ranks Of Respondent RETURN 1 2 3 4 5

INFERENCE: From the above table it can be seen thatn the risk and return for the mutal fund stocks are ranked same by the investors. The ranking factors of the individuals has been critically verified by the ANOVA.

CHART : 4.1.9 RISK AND RETURN IN AVENUES (As per Investors choice)

STOCKS

INSURANCE

MUTUAL FUNDS

GOVT SECURITIES

FIXED DEPOSITS

1 1

2 2

3 3

4 4

5 5

6 RISK RETURN

STATISTICAL ANALYSIS

4.2.1CHI-SQUARE TEST: PURPOSE:

It is to know whether the choices of the investments are made according to the income of the individual. CROSS TABULATION BETWEEN INCOME OF THE INDIVIDUAL AND CHOICE OF INVESTMENT AVENUE TABLE 4.2.1 AVENUES SALARY SLAB 1,00,0003,00,000 INSURANCE STOCKS MUTUAL FUNDS GOVT BONDS REAL ESTATES GOLD FIXED DEPOSITS Total 112 56 32 200 4 40 6 8 0 8 10 56 0 0 14 14 4 16 0 20 6 0 40 2 8 4

50,000-1,00,000

Above 3,00,000 12 12 16

Total 20 20 60

HYPOTHESIS: Ho: There is no significant relationship between the Income of the Individual and the choice of Investment Avenues. H1: There is significant relationship between the Income of the Individual and the choice of Investment Avenues. Oi Ei {(Oj Eij) 0.5}2 {(Oj Ej ) 0.5}2/ Ej

6 2 12 0 8 12 40 4 16 4 16 0 0 0 14 4 6 0 40 8 8

11.2 5.6 3.2 11.2 5.6 3.2 33.6 11.2 16.8 11.2 5.6 3.2 2.24 3.92 7.84 5.6 2.8 1.6 31.36 15.68 8.96 Total

-2.6 -1.8 4.4 -5.6 1.2 4.4 5.2 -3.6 -0.04 -3.6 5.2 -1.6 -1.12 -1.96 3.08 -0.08 1.6 0.8 4.32 -3.84 -0.48

1.207 1.157 12.1 5.6 0.514 12.100 1.610 2.314 0.019 2.314 9.657 1.600 1.920 1.960 2.420 0.229 1.829 0.800 1.190 1.881 0.051 64.160

Degree of freedom

(r 1) (c 1) = 12

(Table value at 5% level of significance is 64.160 whereas the calculated value is 21.03.) Since the calculated value is greater than the table value, the null hypothesis is rejected.

INFERENCE: There is significant relationship between the income of the individual and the choice of investment Avenues

4.2.2 ONE-WAY ANOVA:

PURPOSE: It is in order to find whether the ranks given by the respondent with respect to Risk for the investment have any significant difference or not. HYPOTHISES: Ho: There is no significant difference between the ranks of the Respondent regarding the Risk for the investment H1: There is significant difference between the ranks of the Respondent regarding the Risk for the investment TABLE 4.2.2 RANKS AVENUES STOCKS INSURANCE 82 40 78 22 82 18 0 40 57 40 42 21 0 20 0 100 80 0 61 0 40 99 1 2 3 4 5

MUTUAL 78 FUNDS GOVT 0 SECURITIES FIXED 0 DEPOSITS (SOURCE: PRIMARY DATA) N (Total No of Responses) = 25,

We Shift the origin to 100

RANKS AVENUES MUTUAL FUNDS STOCKS INSURANCE FIXED DEPOSISTS GOVT SECURITIES SUB TOTAL TOTAL

-18 -60 -22 0 0 -100

-22 -28 -18 -72 0 -190

-60 -53 -60 -58 -79 -310

0 -80 0 0 -20 -100

0 -39 0 -60 -1 -100 -800

T ( Total of All Observations )= -800 CF( Correction Factor) = T / N = (-800) / 25 = 25600 SST (Sum of Square of Table ) = (-18) + (-22) + (-60) +(-1) = 47736 25600 = 22136

SSC (Sum of Square of Column) = [(-100) + (-190) + (-310) + (-100) + (-100) ] / 5 = 32440 25600 = 6840 SSE (Sum of Square of Errors) = 22136 6840 = 15296 SOURCE OF VARIATION Between Ranks Within Ranks Total 24 the 15296 20 SUM OF SQUARE 4 DEGREE OF FREEDOM MEAN SUM OF SQUARE 6840 / 4 = 1710 = 2.235 15296/20 =764.8 RATIO (F TEST) = 1710 / 764.8

the 6840

From the table at 0.05 for (20, 4) of the critical value is 5.80 Calculated value of F is Less than Critical value of F , We Cannot Reject the Null Hypothesis. INFERENCE: There is no significant difference between the ranks of the individuals with respect to Risk for Investment

4.2.3 ONE-WAY ANOVA: PURPOSE: It is in order to find whether the ranks given by the respondent with respect to Return in the investment have any significant difference or not. HYPOTHISES: Ho: There is no significant difference between the ranks of the Respondent regarding the Returns from the investment H1: There is significant difference between the ranks of the Respondent regarding the Returns from the investment TABLE 4.2.3 RANKS AVENUES MUTUAL FUNDS INSURANCE STOCKS 78 42 80 82 20 79 19 0 40 54 41 40 25 0 23 0 97 80 0 61 0 44 95 1 2 3 4 5

FIXED 0 DEPOSISTS GOVT 0 SECURITIES (SOURCE: PRIMARY DATA) N = 25, We Shift the origin to 95

RANKS AVENUES MUTUAL FUNDS STOCKS INSURANCE FIXED DEPOSISTS GOVT SECURITIES SUB TOTAL TOTAL

-17 -53 -15 0 0 -85

-13 -75 -16 -76 0 -180

-55 -41 -54 -55 -70 -275

0 -72 0 2 -15 -85

0 -34 0 -51 0 -85 -710

T (Total of All Observations )= -710 CF ( Correction Factor) = T / N = (-710) / 25 = 20164 SST (Sum of Square of Table ) = (-17) + (-13) + (-55) +(-85) = 39866 20160 = 19702

SSC (Sum of Square of Column) = [(-85) + (-180) + (-275) + (-85) + (-85) ] / 5

= 25940 - 20164 = 5776

SOURCE OF VARIATION Between Ranks Within Ranks Total

SUM OF SQUARE

DEGREE OF FREEDOM 4

MEAN SUM OF SQUARE 5776 / 4 = 1444

RATIO (F TEST) = 1444 / 985.1 = 1.465

the 5776

the 19702

20 24

19702/20 =985.1

From the table at 0.05 for (20, 4) of the critical value is 5.80 Calculated value of F is Less than Critical value of F , We Cannot Reject the Null Hypothesis. INFERENCE: There is no significant difference between the ranks of the individuals with respect to Return for Investment

4.2.4 RANK CORELATION: PURPOSE: It is to find whether the Rank based on findings and rank based on survery are

correlate each other

TABLE 4.2.4 AVENUES INSURANCE MUTUAL FINDS STOCK FIXED DEPOSITS GOVT SECURITIES& OTHERS TOTAL RANK BASED RANK BASED ON ON SURVEY FINDINGS 1 4 -3 4 5 2.5 2.5 2 1 3 5 2 4 -.5 -2.5 d (2-3) 9 4 16 .25 6.25 35.5 d *d

(R s Rank correlation) FORMULA: Rs = 1n(n 1) HYPOTHESIS: H o : Their is no correlation Between the rank of the portfolio H 1: Their is correlation Between the rank of the portfolio 6(d)

6(35.5) = 15(5^2-1) = 1- 1.775 = -.775 INFERENCE: Since n = less than 30 we use Spearman Rank correlation value table. For n = 5, = 0.05 the critical values are + or 0.7871 since R s = -.775.Lies in the acceptance region , We accept H o (Their is no correlation in the rank data of the portfolio)

RISK AND RETURN CALCULATION: RISK: Risk refers to the possibility that the actual out come of an investment will differ from the expected out come, to put differently risk refers to the variability or dispersion if an assets return has no variability, it is risk less. Suppose you are analyzing the total return of an equity stock over a period of time. Apart from knowing the mean return, you would also like to know about the variability in returns. The most commonly used measure of risk in finance is variance or its square root. Standard deviation. The standard deviation of the historical return series are defined as follows

EQUATIONS FOR CALCULATING THE ERROR AMOUNT (STANDARD DEVIATION): Where: s = series number i = point number in series s m = number of series for point y in chart n = number of points in each series = data value of series s and the ith point = total number of data values in all series M = arithmetic mean

STANDARD ERROR

RETURN: Investment decisions are influenced by various motives; Mostly investors are largely guided by the pecuniary motive of earning a return on their investment. INSURANCE RETURNS CALCULATION (IRR): TABLE 4.2.5 PLANS ENDOWMENT MONEY BACK ULIP RETIREMENT RETURNS 12% 8% 10% 10%

CHART 4.2.5
14 12 10 8 6 4 2 0
ENDOWMENT MONEY BACK ULIP RETIRMENT

ENDOWMENT MONEY BACK ULIP RETIRMENT

INFERENCE: From the above table we can able to see that all Insurance Products generates an average return of ranging from 8 % 12%, When the Tax Benefits are taken in to account it may extend to 14%.

RISK: Since the Insurance products are not based on speculation, The risk attached towards are normal risk which are explained above.

MUTUAL FUND As a participant in a mutual fund scheme we should understand the following: Net Asset Value Rate of Return

NET ASSET VALUE: Net asset value is the actual value of a share /or unit on any business day. It is computed as follows:

Market Value of the funds investments + Receivables + Accrued incomes NAV= Liabilities Accrued Expenses No. Of Shares or units out standings RATE OF RETURN: Periodic rate of return on a mutual fund scheme is calculated as follows:

Rate of Return for the Period =

NAV at the end NAV Beginning of of the period - the period

Dividend paid + during the period

NAV at the beginning of the period

RETURNS FOR EQUITY PLAN:

TABLE 4.2.6 RELIANCE(%) NIL 96.73 30.23 TATA (%) -13.97 104.11 26.29

YEAR 2003 2004 2005

HDFC (%) -1.05 95.07 21.64

FRANKLIN(%) -4.57 95.22 13.25 CHART 4.2.6

MUTUAL FUND EQUITY PLAN

120 100 RETURNS 80 60 40 20 0 -20 HDFC EQUITY FRANKLIN RELIANCE INDIA VISION BLUE CHIP AMC TATA PURE EQUITY 2003 2004 2005

(SO URCE: FACT SHEET) INFERENCE: From the above table it can be seen that in the year 2003 their was negative returns,2004 it raised up to 95% (avg) in the year 2005 it was ranging between 25% - 30%.

BALANCED FUND RETURNS:

TABLE 4.2.7 TEMPLETON 11.37 8.11 -0.99 CHART 4.2.7 SUNDARAM 12.10 8.23 -1.06

YEAR 2003 2004 2005

HDFC 11.98 8.64 0.12

14 12 10 8 6 4 2 0 -2 HDFC TEMPLETON SUNDARAM 2003 2004 2005

(SO URCE: FACT SHEET) INFERENCE: From the above table it can be seen that in the year 2003 the returns are ranging between 11% - 12% ,2004 it was up to 9% (avg) in the year 2005 it was negative returns.

RISK IN EQUITY FUND (%):

TABLE 4.2.8 FRANKLIN 11.36 16.56 14.07 RELIANCE NIL 22.95 15.37 TATA 12.15 19.55 15.60

YEAR 2003 2004 2005

HDFC 10.86 16.77 15.83

CHART 4.2.8

RISK IN EQUITY (%)

25 20 RISK 15 10 5 0 HDFC EQUITY FRANKLIN INDIA BLUE CHIP RELIANCE VISION TATA PURE EQUITY 2003 2004 2005

AMCs (SO URCE: FACT SHEET) INFERENCE: From the above table it can be seen that the risk for all period are ranging between 10% - 25%.

RISK IN BALANCED FUND (%):

TABLE 4.2.9 TEMPLETON 3.47 1.33 1.01 Table 4.2.9 SUNDARAM 3.25 1.53 1.12

YEAR 2003 2004 2005

HDFC 2.72 1.48 1.47

RISK INBALANCED FUND

4 3.5 3 RISK 2.5 2 1.5 1 0.5 0 HDFC TEMPLETON AMCs (SO URCE: FACT SHEET) SUNDARAM 2003 2004 2005

INFERENCE: From the above table it can be seen that the risk for all period are ranging between 1% - 3%.

4.3STOCKS RETURNS INDEX :( 2004-2005) TABLE 4.3.1 1-Apr 1-May 1-Jun 1-Jul 1-Aug 1-Sep 1-Oct 1-Nov 1-Dec 1-Jan 1-Feb 5599.12 5645.86 4792.01 4813.76 5193.25 5202.16 5587.46 5678.65 6259.28 6626.49 6565.21

1-Mar

6492.82

CHART 4.3.1

SENSEX OF 04-05
7000 6000 5000 INDEX 4000 3000 2000 1000 0 Nov-04 Jun-04 Jan-05 Jul-04 Aug-04 Sep-04 May-04 Dec-04 Mar-05 Feb-05 Apr-04 Oct-04 Series1

PERIOD

(SOURCE:BSE INDIA .COM) INFERENCE: From the above table it is clear that the index has increased by 893.7 points NIFTY MOVEMENTS :( 2004-2005) TABLE 4.3.2

CHART 4.3.2

YEAR 1-Apr-04 2-May-04 3-Jun-04 4-Jul-04 1-Aug-04 3-Sep-04 3-Oct-04 01-Nov-04 01-Dec-04 01-Jan-05 01-Feb-05 01-Mar-05

INDEX 1771.45 1796.1 1483.9 1506.65 1631.55 1631.7 1744.4 1787.3 1960.75 2080 2057.75 1994.5

NIFTY MOVEMENTS 04-05

2500 2000 INDEX 1500 Series1 1000 500 0 Nov-04 Jun-04 Jan-05 Jul-04 May-04 Dec-04 Aug-04 Sep-04 Mar-05 Feb-05 Apr-04 Oct-04

PERIODS

(SOURCE:NSE INDIA .COM) INFERENCE: From the above table it is clear that the index has increased by 223.05 points

CALCULATION OF RETURN (Based on the Sensex Movements from 00-05): TABLE 4.3.3 YEAR 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 OPENING 5070.5 3491 3482.94 3037.59 5599.12 CLOSING 4288.33 3551.56 3330.16 5649.3 6492.82 % IN RETURNS -15.42 1.73 -4.38 85.98 15.96

CALCULATION OF RETURNS (Based on the Nifty Movements from 00 05) TABLE 4.3.4 YEAR 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 OPENING 1528.7 1148.1 1129.85 977.4 1771.45 CLOSING 1195.05 1123.6 1000.6 1744.6 2043.6 % IN RETURNS -21.8 -2.13 -9.84 78.49 15.36

TOTA RISK AND TOTAL RETURN (PERCENTAGE): TABLE 4.3.5 INDEX SENSEX NIFTY RISK 39 40 RETURN 28 34

CHART 4.3.3

TOTA RISK AND TOTAL RETURN (PERCENTAGE)

40

35

30

25

20

RISK RETURN

15

10

0 SENSEX NIFTY

OVER ALL RISK & RETURNS OF VARIOUS AVENUES: TABLE 4.3.6

AVENUES INSURANCE MUTUAL FUNDS STOCK FIXED DEPOSITS GOVT SECURITIES

RISK NIL 10 25 30 40 NIL NIL

RETURNS 8 15 26 35 35 50 3 6.5 6-7

RANK (based on calculation) 1 4 5 2.5 2.5

CUSTOMERS PREFERENCE TOWARDS INVESTMENT AVENUES: TABLE 4.3.7 AVENUES MUTUAL FUNDS STOCKS INSURANCE FIXED DEPOSITS GOVT SECURITIES & OTHERS RANKINGS 2 1 4 3 5

CHART 4.3.4 CUSTOMERS PREFERENCE TOWARDS INVESTMENT AVENUES:

45 40 35 30 25 20 15 10 5 0
MUTUAL FUND STOCKS INSURANCE FIXED DEPOSITS GOVT BONDS & OTHERS

preference of investors

INFERENCE: From the above mutual funds and stocks are mostly preferred by the investors

CHAPTER V SUMMARY OF FINDINGS AND SUGGESTIONS

FINDINGS

From the above calculation we can able to inference that: 9 Most of the respondent belongs to the age of 35 and 45 and very few belong to the age group of above 55 years. (Table- 4.1.1) 9 Many of the respondents possess UG qualification and very few are belong to Professional qualification. (Table- 4.1.2)

9 The Salary of the respondent are between 50,000 1,00,000 and very few are above 3,00,000. ( Table- 4.1.3) 9 To first and fore most findings is that the investor is looking Risk and Return as foremost factors in investment(Table-4.1.4)

9 In Insurance Accumulation is considered to be the most important factor(Table- 4.1.5) 9 It is found out that the investment pattern is followed by the income of the individual(Table4.2.1)

9 In mutual fund the Regular income and Capital Appreciation is considered to be important(Table-4.1.8) 9 From the ANOVA table we can infer that Stock and Mutual fund ranks first both on Risk and Return(Table-4.2.2) 9 The Rank co relation shows that portfolio of the individual is based on their own risk appetite (Table-4.2.3) 9 The insurance sector gives around 15% of returns where all the tax benefits are taken to consideration, when we consider the inflation factor, which is accleratring at 6%, makes the returns to be much lower. But the risk concern for the insurance avenue is nil. Since there are lot of guarantee products and also investment patterns for life insurance companies are guide by IRDA.

9 The mutual fund industry, which is considered to be flourishing avenue, has got lot of products, which produce regular returns as well as capital appreciation. From our calculations we can see the returns from mutual fund are not so consistent and having wide fluctuations since it is based on the movements of markets. The returns are varying from 26% to 35% and also the risk attached is 10% to 25% for 3 years. Considering the inflation factor the returns are fair enough. In the new budget the tax benefit under section 80c are also available to mutual fund. 9 When we take stock market into consideration, the knowledge plays a vital role. The stock markets give around 30% to 50% of returns where the risk attached is also vary from 30% to 40%. But when we take inflation factor into account this avenue will generate more return than any other avenue 9 The bank fd and government securities will consistently give 3% to 6.5% and the risk attached is nil, (expect interest rate risk which is external)

SUGGESTIONS For the investors

IDEAL PORTOFOLIO FOR INVESTMENTS

20% IN STOCKS

30% IN MUTUAL FUNDS (EQUITY & BALANCED SCHEME)

50% IN GURANTEED RETURNS PRODUCTS (FIXED DEPOSITS) ADEQUATE LIFE INSURANCE

9 For constructing an efficient portfolio the investor should have adequate amount of insurance cover. 9 Adequate insurance cover = (monthly expenses *36 times +current

liabilities + future liabilities) * inflation factor.

9 The investment should start from investing in those products which give additions such as government bonds and fixed deposits

guaranteed

9 The third step is to invest in products which generates more returns, here the investor must be ready to take risk and look for capital appreciation (mutual funds) 9 The next step is to invest in stock markets where the investor will gain some knowledge by dealing with mutual funds. We can invest in those scripts, which is performing well. For the company 9 It is necessary to concentrate on these products, which the investor likes to invest more such as mutual funds and stocks.

QUESTIONNAIRE 1. Name: 2. Age :

25-35 36-45 46 55 Above 55

3. Educational Qualification: Graduate Post Graduate Others 4. Designation: 5. Your Gross Annual Income Will Be? (p.a) 50,000 1,00,000 1,00,000 3,00,000 3,00,000 & Above 6. What do you expect from an Investment? FACTORS HIGHLY IMPORTANT NEITHER NOT HIGHLY IMPORTANT IMPORTANT IMPORTANT NOT OR NOT IMPORTANT IMPORTANT RETURN LOW RISK SAFETY SAVINGS TAX BENEFITS

7. Till now, Your Investment made in? Fixed DepositsMutual FundsStocks -

InsuranceOthers -

8. How do you see an insurance plan ? Essential Protection Accumulation: Tax Benefits: 9. Incase if you invest in Insurance, Which would you opt for Accumulation?

Not essential

Endowment Money Back ULIP Whole Life Plan Retirement Plan

10. Do you have the Knowledge about the Mutual Fund Market? O Some Knowledge O Sufficient Knowledge O More Knowledge

11. What Do you look in from a Mutual Fund ? FACTORS HIGHLY IMPORTA NT IMPORTA NT NEITHER IMPORTA NT OR NOT IMPORTA NT NOT IMPORTA NT HIGHLY NOT IMPORTA NT

REGULAR INCOME

CAPITAL APPRECIATTION SAFETY SAVINGS TAX BENEFITS 12. Do you think Stock Market Knowledge is necessary for Trading? Essential Not essential Brokers Knowledge is enough

13. Convey your idea about nature of Return in the following investment Avenues (Rank 1 = High Returns) Rank Mutual Fund Stock Insurance Fixed Deposits Government Securities

14. Convey your idea about nature of Risk in the following investment Avenues (Rank 1 = High Risk) Rank Mutual Fund Stock Insurance Fixed Deposits Government Securities 15. Where would you advice to your friend to invest? ________________________________________________________________________

________________________________________________________________________

BIBLIOGRAPHY:

For Calculation of Risk and Return in MUTUAL FUND: INVESTMENT MANAGEMENT

Prasana Chandra

For Calculation of Risk and Return in STOCKS: INVESTMENT MANAGEMENT S M Maheshwari

For Statistical Analysis: STATISTICAL METHOD S.P.Gupta

For Research Design:

RESEARCH METHODOLOGY

C.R.KOTHARI