Sneha Final Project Report

PROFIT MAXIMIZATION AND WEALTH CREATION FOR
INVESTORS
A Report of
Study on
Profit Maximization And Wealth Creation For Investors
For
Reliance Money Ltd
In partial fulfillment of the

Post Graduate Diploma in Management
Under the Guidance of

Prof.Jose Paul
By
SNEHA ANAND
BATCH 18
FK - 1941
S C M S
SCMS – COCHIN
SCMS CAMPUS, PRATHAP NAGAR, MUTTOM, ALUVA, COCHIN-06.
September 2010
1
INVESTORS
CONTENTS
2
INVESTORS
EXECUTIVE SUMMARY
The project contains a brief description of how an investor can increase his profit.
The project will help in knowing the way to maximize the profit of investors. It will
involve the Reliance initiative to do so.
A survey was conducted to gather primary data to judge the factors that influence
investors before they invest in any of the investment tools. With this back ground an
attempt has been made in this paper to categorize investors based on various
demographic factors such as age, sex, income level and occupation.
The study was based on both primary and secondary data. Primary data was used in order
to find out the factor that affect investors investment decision. For this 100 investors
were surveyed by using a questionnaire. Secondary data was collected from the different
websites including the company website and journals in order to understand the main
factors that affect the investment of the investors. It was found that the main factors that
influence the investment were rational decision making, risk appetite of the investors,
reputation of the management, company’s financial statement and government decisions .
However the primary factors were the risk appetite of the investors and government
regulaions.
3
INVESTORS
Chapter -1
INTRODUCTION AND THEORETICAL
BACKGROUND
4
INVESTORS
INTRODUCTION
5
INVESTORS
THEORETICAL BACKGROUND
PROFIT MAXIMIZATION AND WEALTH CREATION
The process of Wealth Creation is understood by knowing what Wealth Management is.
Wealth Management is classified as an advanced type of financial planning that provides
High net worth individuals and families with private banking, estate planning, asset
management, and investment management, with the goal of sustaining and growing long-
term wealth. The usefulness of and the need for wealth management is inherent in its
name.
Wealth Management is an extension of financial advisory services done under Financial
Planning and involves delivery of a suite of services and managing relationships with the
clients. Wealth Management encompasses the following aspects – a complete range of
financial planning services like Risk Management, Investment Management, Retirement
Planning, Real Estate Planning, Tax Planning, Inheritance Planning and charitable
giving. The difference between Financial Planning and Wealth Management is that the
former is a sole advisor’s effort while the latter is generally a team effort.
The Project involves the process of wealth creation of an individual through proper
financial planning at the right time depending on the objectives which an individual sets
before doing a financial planning. "Wealth" has come to mean an abundance of items of
economic value, or the state of controlling or possessing such items, and encompasses
money, real estate and personal property. In many countries wealth is also measured by
reference to access to essential services such as health care, or the possession of crops
and livestock. An individual who is wealthy, affluent, or rich is someone who has
accumulated substantial wealth relative to others in the society or reference group. In
economics, wealth refers to the value of assets owned minus the value of liabilities owed
at a point in time.
Wealth has two components i.e. Wealth Preservation and Wealth Creation.
Wealth Preservation involves just preserving the wealth or money which is invested into
it. Examples of Wealth Preservation are Fixed Income Instruments, Savings A/c, and
6
INVESTORS
Recurring Deposits, Investing in Post Office, PPF and other Bonds. In wealth
Preservation the returns are predictable and the returns are low.
Wealth Creation means creating wealth and it is not created overnight .It is a process
which takes its own time .But in Wealth Preservation we invest in certain instruments
and we reap the benefits out of it by earning returns. Wealth Creation instruments are
Investing in Metals like gold and silver, Real Estate, Equity, which is further divided into
Direct Equities and Mutual Funds, Foreign Exchange Instruments, Insurance which is
further divided into Market Linked and Traditional Endowment etc.
The process of wealth creation takes long time. It involves a process of asset allocation.
The assets are allocated based on its risk, safety, liquidity, returns and the tenure that one
is willing to hold. Then the holding capacity has to be decided i.e. short or medium or
long term. Low risk and high safety always ends up offering lower returns and high
degree of risk & safety gives way to higher rate of returns which is evident in the tools
we choose.
Forms of Wealth Creation:

There are many options for an investor to create wealth - one can invest in fixed income
instruments or invest in equities. The former one is called Wealth Preservation and the
latter is called Wealth Creation. In wealth preservation the money is invested in
instruments like Fixed Income Instruments, Savings A/c, and Recurring Deposits,
Investing in Post Office, PPF and other Bonds and we get a fixed return on the invested
amount. The latter one i.e. Wealth Creation is the process where in we actually create
wealth. An individual chooses to invest in equities and want to have return on his money
and create wealth If an individual invests in the equities i.e. shares of a company he
would definitely expects a return from it. The various forms or ways in which an
individual expects to create wealth by investing in equities are from dividend, bonus,
stock split, ESOP’s, right issue or any other monetary benefits availed by investor from
the company.
7
INVESTORS
CAPITAL MARKET:-
Capital Markets comprise of the Equities Market and the Debt Markets. Debt Markets are
markets for the issuance, trading and settlement in fixed income securities of various
types and features. Fixed income securities can be issued by almost any legal entity like
Central and State Governments, Public Bodies, Statutory corporations, Banks and
Institutions and Corporate Bodies.
Introduction to Fixed Income Instruments:-
Fixed Income securities are one of the most innovative and dynamic instruments evolved
in the financial system ever since the inception of money. Fixed Income securities offer
one of the most attractive investment opportunities with regard to safety of investments,
adequate liquidity, and flexibility in structuring a portfolio, easier monitoring, long term
reliability and decent returns. They are an essential component of any portfolio of
financial and real assets, whether in form of pure interest bearing bonds, innovative and
varied type of debt instruments or asset-backed mortgages and securitized instruments.
Wholesale Debt Market Segment (WDS):-

The Reserve Bank of India permitted the Banks, Primary Dealers and the Financial
Institutions in India to undertake transactions in debt instruments among themselves or
with non-bank clients through the members of Bombay Stock Exchange Limited (BSE).
This notification paved the way for the Exchange to commence trading in Government
Securities and other fixed income instruments. The Wholesale Debt Segment of the
Exchange commenced its' operations on June 15, 2001.
The Debt Segment offers the market participants in the Wholesale Debt Market an
efficient and transparent trading mechanism through its GILT System. The GILT system
is envisaged to become the single point trading platform for all types of Debt securities
and instruments. The GILT system will over a period of time provide trading facilities for
Central and State Govt. securities, T-Bills, Institutional bonds, PSU bonds, Commercial
Paper, Certificates of Deposit, Corporate debt instruments and the new innovative
instruments like municipal securities, securitized debt, mortgage loans and STRIPs.
GILT facilitates faster and efficient price dissemination through the Touchline of the
Trading System. All relevant information which are of crucial importance in the trading
8
INVESTORS
process like the Accrued Interest and Delivery Value are readily available in the
system(.) A Yield Calculator is made available both separately and as part of the various
order Entry and trade reporting screens.
Retail Debt Segment (REDS):-

Opportunities for the Indian investors in the Retail Debt Markets in the new millennium,
presents a vast kaleidoscope of whose knowledge and participation hitherto has been
restricted to the Equities markets in India. The development of the Retail Debt Market
has engaged the attention of the policy makers, regulators and the Government in the past
few years. The potential of the Retail Debt Markets can be gauged from the investor
strength of more than 40 million in the Indian Equities market who have powered the
tremendous growth and transformation of the stock markets in recent times. Recognizing
this opportunity at a very early date, it has been consistently in the forefront of the
campaign for the creation of a Retail Debt Market and has consistently expounded the
potential and need for the retail trading in G-Secs in the past few years in various
important forums and to the key regulatory authorities.
Emergence of the Retail Market:-

It would be surprising to know that a retail debt market was at one point of time very
much present in India. Right through the forties and the fifties and until the early sixties,
a good proportion of the holdings of Govt. securities were concentrated with individual
investors. Available statistics indicate that more than half of the holdings in Govt.
securities were concentrated with retail investors in the early 50s.
Today, there exists an inherent need for households to diversify their investment portfolio
so as to include various debt instruments and especially Government securities. The
growing investments in the Bond Funds and the Money Market Mutual Funds are a sign
of the increasing recognition of this fact by the retail investors.
Retail investors would have a natural preference for fixed income returns and especially
so in the current situation of increasing volatility in the financial markets.
9
INVESTORS
INVESTMENTS
Savings form an important part of the economy of any nation. With the savings invested
in various options available to the people, the money acts as the driver for growth of the
country. Indian financial scene too presents a plethora of avenues to the investors.
Though certainly not the best or deepest of markets in the world, it has reasonable
options for an ordinary man to invest his savings.
An investment can be described as perfect if it satisfies all the needs of all investors. So,
the starting point in searching for the perfect investment would be to examine investor
needs. If all those needs are met by the investment, then that investment can be termed
the perfect investment.
Most investors and advisors spend a great deal of time understanding the merits of the
thousands of investments available in India. Little time, however, is spent understanding
the needs of the investor and ensuring that the most appropriate investments are selected for
him.
The Investment Needs of an Investor

By and large, most investors have eight common needs from their investments:
1. Security of Original Capital;
2. Wealth Accumulation;
3. Comfort Factor;
4. Tax Efficiency;
5. Life Cover;
6. Income;
7. Simplicity;
8. Ease of Withdrawal;
9. Communication.
10
INVESTORS
• Security of original capital: The chance of losing some capital has been a
primary need. This is perhaps the strongest need among investors in India, who have
suffered regularly due to failures of the financial system.
• Wealth accumulation: This is largely a factor of investment performance,

including both short-term performance of an investment and long-term performance of a
portfolio. Wealth accumulation is the ultimate measure of the success of an investment
decision.
• Comfort factor: This refers to the peace of mind associated with an investment.
Avoiding discomfort is probably a greater need than receiving comfort. Reputation plays
an important part in delivering the comfort factor.
• Tax efficiency: Legitimate reduction in the amount of tax payable is an important

part of the Indian psyche. Every rupee saved in taxes goes towards wealth accumulation.
• Life Cover: Many investors look for investments that offer good return with adequate
life cover to manage the situations in case of any eventualities.
• Income: This refers to money distributed at intervals by an investment, which are

usually used by the investor for meeting regular expenses. Income needs tend to be fairly
constant because they are related to lifestyle and are well understood by investors.
• Simplicity: Investment instruments are complex, but investors need to understand

what is being done with their money. A planner should also deliver simplicity to investors.
• Ease of withdrawal: This refers to the ability to invest long term but withdraw
funds when desired. This is strongly linked to a sense of ownership. It is normally
triggered by a need to spend capital, change investments or cater to changes in other
11
INVESTORS
needs. Access to a long-term investment at short notice can only be had at a substantial
cost.
• Communication: This refers to informing and educating investors about the

purpose and progress of their investments. The need to communicate increases when
investments are threatened.
• Security of original capital is more important when performance falls.
• Performance is more important when investments are performing well .
• Failures engender a desire for an increase in the comfort factor.
Perfect investment would have been achieved if all the above-mentioned needs had been
met to satisfaction. But there is always a trade-off involved in making investments. As
long as the investment strategy matches the needs of investor according to the priority
assigned to them, he should be happy.
The Ideal Investment strategy should be a customized one for each investor depending on
his risk-return profile, his satisfaction level, his income, and his expectations. Accurate
planning gives accurate results. And for that there must be an efficient and trustworth
roadmap to achieve the ultimate goal of wealth maximization.
Choosing the Right Investment Options
After understanding the concept of investment, the investors would like to know how to
12
INVESTORS
go about the task of investment, how much to invest at any moment and when to buy or
sell the securities, This depends on investment process as investment policy, investment
analysis, valuation of securities, portfolio construction and portfolio evaluation and
revision. Every investor tries to derive maximum economic advantage from his
investment activity. For evaluating an investment avenues are based upon the rate of
return, risk and uncertainty, capital appreciation, marketability, tax advantage and
convenience of investment. The following Table should give the clear picture relating to
the investors investment decisions in various financial market instruments. The choice
of the best investment options will depend on personal circumstances as well as general
market conditions. For example, a good investment for a long-term retirement plan may
not be a good investment for higher education expenses. In most cases, the right
investment is a balance of three things : Liquidity, Safety and Ret
Investment Options in India
13
INVESTORS
Fixed Deposits - They cover the fixed deposits of varied tenors offered by the
commercial banks and other non-banking financial institutions. These are generally a low
risk prepositions as the commercial banks are believed to return the amount due without
14
INVESTORS
default. By and large these FDs are the preferred choice of risk-averse Indian investors
who rate safety of capital & ease of investment above all parameters. Largely, these
investments earn a marginal rate of return of 6-8% per annum.
Government Bonds - The Central and State Governments raise money from the market
through a variety of Small Saving Schemes like national saving certificates, Kisan Vikas
Patra, Post Office Deposits, Provident Funds, etc. These schemes are risk free as the
government does not default in payments. But the interest rates offered by them are in
the range of 7% - 9%.
Money-back insurance - Insurance in India is mostly sold and bought as investment

products. They are preferred because of their add-on benefits like financial life-cover,
tax-savings and satisfactory returns. Even if one does not manage to save money and
invest regularly in financial instruments, with insurance, the policyholder has no choice.
If he does not pay his premiums on time, his insurance cover will lapse. Money-back
Insurance schemes are used as investment avenues as they offer partial cash-back at
certain intervals. This money can be utilized for children s education, marriage, etc.
Endowment Insurance - These policies are term policies. Investors have to pay the
premiums for a particular term, and at maturity the accrued bonus and other benefits are
returned to the policyholder if he survives at maturity.
Bullion Market - Precious metals like gold and silver had been a safe heaven for
Indian investors since ages. Besides jewellery these metals are used for investment
purposes also. Since last 1 year, both Gold and Silver have highly appreciated in value
both in the domestic as well as the international markets. In addition to its attributes as
a store of value, the case for investing in gold revolves around the role it can play as a
portfolio diversifier.
15
INVESTORS
Stock Market - Indian stock markets particularly the BSE and the NSE, had been a
preferred destination not only for the Indian investors but also for the Foreign investors..
Although Indian Markets had been through tough times due to various scams, but history
shows that they recovered very fast. Many types of scrip had been value creators for the
investors. People have earned fortunes from the stock markets, but there are people who
have lost everything due to incorrect timings or selection of fundamentally weak
companies.
Real Estate - Returns are almost guaranteed because property values are always on the
rise due to a growing world population. Residential real estate is more than just an
investment. There are more ways than ever before to profit from real estate investment.
Mutual Funds - There is a collection of investors in Mutual funds that have

professional fund managers that invest in the stock market collectively on behalf of
investors. Mutual funds offer a better route to investing in equities for lay investors. A
mutual fund acts like a professional fund manager, investing the money and passing the
ret urns to its investors. All it deducts is a management fee and its expenses, which are
declared in its offer document.
Unit Linked Insurance Plans - ULIPs are remarkably alike to mutual funds in terms of
their structure and functioning; premium payments made are converted into units and a
net asset value (NAV) is declared for the same. In traditional insurance products, the sum
assured is the corner stone; in ULIPs premium payments is the key component.
Chapter 2
16
INVESTORS
RESEARCH METHODOLOGY
In financial markets, expectations of the investors play a vital role. They influence the
price of the securities; the volume traded and determines quite a lot of things in actual
practice. These expectations of the investors are influenced by their perception and
17
INVESTORS
humans generally relate perception to action.
The objective of the survey was to categorize investors as being inclined towards
investment products based on certain characteristic such as sex, age, occupation, annual
income etc. In addition the time horizon of investment and the the real need/purpose of
investment were studied and categorized based on the above demographic factors.
Objective of the study:
1. To understand factors those decide investment.

2. To find the correlation between the risk appetite of the investors and proportion of
assets allocated in different instruments.
3. Factors that affect the profit maximization of investors.
SAMPLING
The sample consists of clients of the company and various investors outside the
company. For this purpose simple random sampling was used which include a random
selection of the investors.
DATA CAPTURE INTRUMENTS USED:
Information was collected by interview method, observation method etc. A structured

questionnaire was used.
RESEARCH TECHNIQUES AND APPLICATIONS:
The type of research was of descriptive in nature as it involves the study of factors that
affect the investors decision. This was done by studying how the investors analyze the
risks and returns associated with various funds. The study was also qualitative in nature
because it involves understanding the benefits of various investment option to the
investors.
18
INVESTORS
DATA COLLECTION METHODS:

METHODOLOGY
The data collected includes both primary and secondary sources.
• Primary source collection through interaction with investor and questionnaire, case
study.
Secondary sources include articles from business magazines, journals and internet
sources, individual corporate website, value research, CMIE Prowess, Ebsco
DESIGNING A QUESTIONAIRE
To understand the savings avenue preference, scheme preference, time horizon and
objectives for investment and to identify the information sources influencing investment
decision, and the preferred mode of communication, a questionnaire (ANNEXURE I)
was designed and the respondents were asked to rank their preferences on a ranking
scale.
The ranks were ascertained by obtaining the weighted mean value of the responses.
To identify the factors that influence the investors fund/scheme selection, 14 variables
were identified through evidence from past research. Based on theory, past research,
and personal judgment, the factors that could influence the investors in their selection of
investment was first grouped into 4 major groups – important factors, internal
environment of organization, external environment of organization and news. Then
the 14 identified variables were classified under the appropriate group as follows
IMPORTANT FACTORS
1. Age is an important factor in deciding the type of investment option.
2. Rational decision in stock market often leads to profit maximization and wealth
creation.
3. Income level of a person decides the type of investment option for you.
19
INVESTORS
4. Portfolio management by experts a good alternative to maximize your profit.

5. The risk appetite of the investors decide the proportion of assets allocated in different
instruments.
INTERNAL ENVIRONMENT OF THE ORGANISATION

6. The reputation of management and duration of operation.
7. The company’s M&A, innovations & ventures.
8. The company’s financial statements.
EXTERNAL ENVIRONMENT OF THE ORGANISATION

9. Past and the expected future trend of the industry.
10. Competitors.
11. Government Stability, support and fiscal incentives.
NEWS
12. Daily tips by brokers.
13. The performance of shares in the market in recent past is a good indicator of future.
14. Tips from the investment gurus, portfolio managers and stock analysts.
In the survey, the respondents were asked to rate the importance of the 14 specified
variables on a 5 point scale ranging from Strongly Agree (5) to Strongly Disagree (1).
The data for each of the 4 sub -groups were factor analyzed using Principal Component
Analysis with the objective of identifying the factor in the sub -group which turns out to
be significant in the investment selection.
DATA ANALYSIS PROCEDURE:
Data was analyzed on the basis of the questionnaire through frequency analysis and also
by using SPSS software.
20
INVESTORS
LIMITATIONS OF THE STUDY

• The time span for the study is short and hence only major aspects are considered
in this study.
• Number of factors included in this study is subject to high volatility such as
market position for instance change from time to time.
• Future prices of a stock or future rate of return or rate of interest cannot be
determined without proper research and hence the data may not give an accurate
picture.
Chapter 3
21
INVESTORS
PROFILES
INDUSTRY PROFILE
The financial services industry, or financial services, includes a wide range of
companies and institutions involved with money, including businesses providing money
management, lending, investing, and insuring and securities issuance and trading
services.
22
INVESTORS
Financial services refer to services provided by the finance industry. The finance
industry encompasses a broad range of organizations that deal with the management of
money. Among these organizations are banks, credit card, companies, insurance
companies, consumer finance companies, stock brokerages, investment funds and some
government sponsored enterprises.
PEST ANALYSIS OF THE INDUSTRY:
Political:
Politically speaking, funds are required for financing every activity and as India follows a
mixed economy pattern it is fair that private players be allowed in this industry with
some restrictions. As seen from the rise and fall of the financial institutions all over
America it can be seen to what extent are these companies able to influence the growth of
economy. Indian government has allowed a fair growth of these companies within the
guidelines of the finance ministry, SEBI, IRDA, etc.There are a lot of political and legal
restrictions when entering the financial services industry. Even though they have come
down in the past several years and it is expected that the government will increase the
FDI limit from 26% to 49% in the near future. But despite that there are several political
barriers.
• Indian government has allowed a fair growth of these companies within the
guidelines of the finance ministry, SEBI, IRDA, etc.
• As seen from the rise and fall of the financial institutions all over America it can
be seen to what extent are these companies able to influence the growth of
economy.
Economical:
There are no major economic barriers for entry into the financial services industry
especially when considering the distribution sector. The only investment to be made is in
infrastructure i.e. setting up offices. The main way to increase business for these firms is
through contacts. But care should be taken that the government should keep a check on
23
INVESTORS
the type of products nurtured by these companies so that they are not able to make excess
profit at the cost of public money.
Economically, as said in the introduction these companies may provide as a buffer in

case of the failure of the primary system. Also these companies help to tap a majority of
the public savings to be used as investments for larger activities such as infrastructure
development, industrial development and over all GDP growth and growth of the
economy.
But care should be taken that the government should keep a check on the type of
products nurtured by these companies so that they are not able to make excess profit at
the cost of public money.
Social:
People usually are not attracted towards such companies which sell insurance and mutual
funds. But the economy can grow only if the public starts taking interest in the markets.
The companies emerged a certain section of the society which started taking interest in
the stock market and other products available for the growth in savings parallel to the
growth of the economy.
Technological:
Technologically, trading and using all the products have been made extensively possible
due to the advent of internet. The share certificates have been dematerialized. India is
very sound as far as network security is concerned. But the internet penetration has still
to be worked upon.
People are finding it increasingly convenient to use the facilities provided online.
• The share certificates have been dematerialized.

• The internet penetration has still to be worked upon but People are finding it
increasingly convenient to use the facilities provided online.
24
INVESTORS
Company Profile: Reliance Money
Introduction:-
Reliance Capital Limited (RCL) is a Non-Banking Financial Company (NBFC)

registered with the Reserve Bank of India under section 45-IA of the Reserve Bank of
India Act, 1934. RCL was incorporated as a public limited company in 1986 and is now
listed on the Bombay Stock Exchange and the National Stock Exchange (India).
Reliance Capital (RCL), a member of the Reliance Group, is a private sector

financial services company. Reliance Capital is engaged in asset management and mutual
funds, life and general insurance, private equity and proprietary investments, stock
broking and other financial services.
Reliance Money:-
Reliance Money is the financial services division of the Anil Dhirubhai Ambani
Group. The broking arm of reliance Capital is Reliance Money. Reliance Money is to
offer a common platform for investors to invest in all equity products, commodities,
forex, IPOs, insurance and other financial products.
. Thus Reliance Money is an endeavor to change the way India trades in financial
markets and avails of various financial services. Reliance Money ensures maximum
security with a unique security token to keep the online account safe.
Reliance Money is the fast growing financial broking business through the
introduction of its much awaited Reliance Money broking business. The company is
proposing a variation of the fixed flat fee structure that it claimed was the most
competitive in the industry.
Vision Statement of Reliance Money:-
“To be world leader in the business by providing a convenient transparent and

trustworthy online platform for effective wealth management”
25
INVESTORS
Business Objectives of Reliance Money:-
• To provide a wide variety of products to the market.

• To enable the low income group also to participate in the business cycle.
• To occupy the top slot in the minds of the public and prove to be a brand to rely
upon.
ORGANISATION STRUCTURE:-
PRODUCTS:
The company has a very broad product mix with a variety of product lines. The
product lines broadly, are:
 Trading
 Portfolio Management Services (PMS)
 Wealth Management
 Charting
 NRI services
26
INVESTORS
 Insurance
 Easy loans
 Gold coins
The markets it caters to are:
 Equity
 Commodities
 Derivatives
 Currency
 IPO
 Mutual fund
 Global market
The company has come up with various platforms for trading. They are:
 Insta trade
 Fast trade
 Commodities Insta trade
 Easy trade
 Transfer funds for commodity trade
 Mobile trading
Customers:-
The company segmented the market into three and provides services to suit the needs of
each segment. The basis of segment is as below;
• The market which is new to online trading.

• The market which has some experience investing online.
• The market which is investing heavily online and which has good knowledge and
expertise in this field.
27
INVESTORS
• Thus the company has concentrated on each segment individually and brought the
whole market under its coverage.
28
INVESTORS
Chapter 4
ANALYSIS AND INTREPRETATION OF DATA
FACTOR ANALYSIS
Data was collected from the dealers and investors of the company and outside the
company. They were asked to rate the factors in terms of their preference on 5 point
scale. The factors that were taken into consideration were:
1. Age
2. Rational Decision Making
29
INVESTORS
3. Income
4. Portfolio Management By Experts
5. Risk Appetite Of Investors
6. Reputation Of Management
7. Company’s M&A
8. Company’s Financial Statement
9. Trend Of Industry
10. Competitors
11. Government Decision
12. Daily Tips By Brokers
13. Performance Of Share
14. Tips From Investment Gurus
INVESTOR PROFILE NUMBER OF RESPONDENTS
30
INVESTORS
GENDER
Male 78
Female 22
AGE
Below 30 14
31 – 40 36
41 – 50 30
Above 50 20
MARITAL STATUS
Married 58
Unmarried 42
OCCUPATION
Salaried 60
Business 26
Retired 14
ANNUAL INCOME (Rs.)
Below 1,50,000 14
1,50,000 – 3,00,000 54
3,00,000 – 4,00,000 14
Above 4,00,000 18
ANNUAL SAVING
Below 50,000 39
50,000 – 1,00,000 24
1,00,000 – 1,50,000 10
1,50,000 – 2,50,000 12
Above 2,50,000 15
Gender Distribution Sample
Gender Respondents %
Male 78 78
Female 22 22
31
INVESTORS
Gender Distribution
Female
22%
Male
Female
Male
78%
As from the above chart we came to know that majority of the respondents are the male
respondents i.e. 78% and 22% were the female respondents.
Age Distribution
Age Group Respondents %

Below 30 14 14
31 – 40 36 36
41 – 50 30 30
Above 50 20 20
Age Distribution
Above50 Below 30
20% 14%
Below 30
31-40
41-50
31-40 Above50
41-50 36%
30%
32
INVESTORS
ANALYSIS: - As it is very much clear from the above chart that majority of the
investors were from the age range of 31-40 and 41-50 i.e. 36 and 30 percent respectively.
Investment in the market requires some experience and the cycle of market. So after
having some better experience in market one can invest his or her money in a efficient
manner.
Income Distribution
Income Level Respondents %

Less Than Rs.1,50,000 14 14
Rs. 1,50,000 – Rs. 3,00,000 56 56
Rs. 3,00,000 – Rs. 4,00,000 14 14
More Than 4,00,000 18 18
Annual Income Distribution

Below 150000
Above 400000
14%
18%
Below 150000
300000 - 400000 150000 - 300000
14%
300000 - 400000
Above 400000
150000 - 300000
54%
The above chart shows that major respondents i.e., 54 % fall in the slab of income
ranging from Rs 1.5-3 lakh and followed by 18% of the
respondents fall under the range of more than 4 lakh. 14% of the respondents were in the
range 3-4 lakh and below 1.5 lakh
33
INVESTORS
ANALYSIS: - It is very much clear from the research that most of the respondents are
belong to middle class income. And people from lower level income are investing a small
part of their income in the market.
.
Annual Saving Distribution
Annual Saving Respondents %

Below Rs.50,000 39 39
Rs.50,000 – Rs.1,00,000 24 24
Rs.100000 – Rs.150000 10 10
Rs.150000- Rs.2,50,000 12 12
Above Rs.2,50,000 15 15
Annual Saving Distribution
Above 250000
15%
Below 50000
39% Below 50000
150000 - 250000
12% 50000 - 100000
100000 - 150000
150000 - 250000
100000 - 150000
10% Above 250000
50000 - 100000
24%
From the above chart it is clear that 39% of the people save below Rs.50000 followed by
24% of the people who save Rs.50000 – Rs.100000. 15% of the people save above
Rs.250000.
ANALYSIS: - It is very much clear from the research that most of the respondents
belong to lower level income and some lower middle class people.
34
INVESTORS
Occupation Distribution
Occupation Respondents %
Salaried 60 60
Businessman 26 26
Retired 14 14
Occupation Distribution
Retired
14%
Salaried
Business
Business Retired
26% Salaried
60%
From the above Chart it is clear that a majority of the sample who are interested in making
investment are salaried people i.e.60% followed by businessmen i.e. 26%.
ANALYSIS: - It is very much clear from the research that the salaried people are more
ready to take the risk than those who are businessman as the businessmen are always
under the risk of liquidity.
And the retired people don’t want to take much risk because their source of income is
very less.
Investment Type Distribution
35
INVESTORS
Investment Option Respondents %

Equity 30 30
Bnds 7 7
Mutual Fund 8 8
Real Estate 15 15
Others 40 40
Investment Type Distribution
Equity
Others 30%
40% Equity
Bonds
Mutual Fund
Bonds
7% Real Estate
Others
Real Estate Mutual Fund
15% 8%
The above chart explains about the respondents investment in different options, a
majority of the investors invest in others i.e. FD, Insurance, Gold, etc. 30% of the
investors invest in equity and 15% of the investors invest in Real Estate. Very few people
have invested in the mutual fund and bonds.
Inferences: In India, people invest more into FD, Gold, and Insurance as these are more
popular in India and people feel it to be a more safe investment option. The young
generation people want fast money and are ready to take more risk so they invest into
equity.
Investment Distribution Based On Experience
Investment Respondents %
Mutual Fund 26 21
Bank F. D 52 41
Insurance 14 11
Real Estate 34 27
36
INVESTORS
Investment Distribution Based On Experience
Real Estate Mutual Fund

27% 21%
Mutual Fund
Bank F.D.
Insurance
Insurance Real Estate
Bank F.D.
11% 41%
As we can infer from the above graph that when it comes to safe return most of the
investors believes that Bank F.D. is the most secured investment. But when it is asked to
respondent that if they want safety with maximum return among these four option then,
the opinion of the respondent were deviated.
Inference: as it is very much clear from the above chart that when it comes to safety with
maximum return then also around 41% of the respondents believe that Bank F.D. is the
only option.
Investment Purpose
Investment Purpose Respondents %

Listing Gains 2 2
Long Term Gains 80 80
Short Term Gains 18 18
37
INVESTORS
Investment Purpose
Listing Gains
Short Term Gains 2%
18%
Listing Gains
Long Term Gains
Short Term Gains
Long Term Gains

80%
Option On ETF
Option On ETF Respondents %

Yes 38 38
No 20 20
Can’t Say 42 42
Opinion On ETF's
Yes
Can't Say Yes
38%
42%
No
Can't Say
No
20%
An exchange-traded fund (or ETF) is an investment vehicle traded on stock exchanges,

much like stocks. An ETF holds assets such as stocks or bonds and trades at
approximately the same price as the net asset value of its underlying assets over the
course of the trading day. Most ETFs track an index, such as the S&P 500 or MSCI
38
INVESTORS
EAFE. ETFs may be attractive as investments because of their low costs, tax efficiency,
and stock-like features.
ANALYSIS: As we can see from the above graph that though ETF’s has become a very
good investment option now days but still majority of the people are not aware of ETF’s.
And around 38% of the respondents said that yes ETF’s can be a good tool making
money in market.
And around 20% of the respondents said that ETF’s can’t be a useful instrument for
making money.
Factor Affecting Investment Decision
Factor Affecting Investment Respondents %

Random Pick 4 4
Friend’s Advice 21 21
Own Research 40 40
Newspaper 22 22
Broker Advice 13 13
39
INVESTORS
Factor Affecting Investment Decision

Broker Advice Random Picks
13% 4%
Friends Advice Random Picks

21% Friends Advice
Newspaper/TV
22% Own Research
Newspaper/TV
Broker Advice
Own Research
40%
Sector
Sectors Respondents %
Power 18 10
Capital Goods 8 4
Infrastructure 40 22
Banking 44 25
Real Estate 28 16
Pharmaceutical 10 6
Insurance 6 3
Retail 6 3
FMCG 8 4
Steel 3 2
Oil & Gas 5 3
IT 4 2
40
INVESTORS
FMCG Steel
Sector
4% 2% Oil & Gas IT Power
3%
2% Capital Goods Capital Goods
Insurance 4%
Power Infrastructure
3%
Retail 10% Banking
Pharmaceutical 3% Real Estate
6%
Pharmaceutical
Infrastructure Insurance
22% Retail
Real Estate
FMCG
16%
Steel
Banking Oil & Gas
25% IT
ANALYSIS: As it is very much clear from the above chart and the statistics that most of
the respondents said that the Infrastrusture and the banking sector will give the maximum
return in the upcoming next year. 22% of the respondents selected the banking sector as
the most and 20% of the respondents feels that Infrastructure sector will give the
maximum return.
Since after this slowdown government of india has given some bailout packages to the
economy and out of that sizeable proportion will be given to infrastructure development
segment. Despite the slowdown specially in the rual segment and in semi-urban area
many of new Infrastructure project has started and also the government of india has
alloted 40,000 crores for the “Bharat Nirman Yojana”.
So the investors are thinking of that Infrastructure sector will lead the market rally in the
future.
Since, all the Infrastructure project are based on power and energy so 9% of the investors
are thinking that power and energy sector will give them maximum return.
And also we have seen that from the jan 2009 to may 2009 both the sector infrastructure
and real estate has given almost 85 and 78 percent return respectively in just period of 5
months.
FMCG sector in india is growing at 16% y-o-y basis. And recession has not affected
much this industry so its keep on growing as its pace. Around 8% of the respondents
feels that FMCG sector can give them maximum return.
41
INVESTORS
5% of the respondents believes that pharmaceutical sector will give them maximum
return in the next year.
Income Vs Saving
Income Vs Saving
100
90
80
70
60
Percentage 50
40
30
20
10 Above 400000
300000-400000
0 150000-300000
Annual Income Below 150000
Below 150000
Below 50000
50000-100000
150000-300000
100000-150000
150000-250000
Above 250000
300000-400000
Above 400000
Annual Saving
50000- 100000- 150000- Above

Below 50000
100000 150000 250000 250000
Below 150000 100 0 0 0 0
150000-300000 88 9 3 0 0
300000-400000 30 47 15 8 0
Above 400000 12 18 25 28 17
42
INVESTORS
Age Vs Time Horizon
43
INVESTORS
Age Vs Time Horizon
50
45
40
35
30
Pe rcentage 25
20
15 Below 30
10 31-40
Above 50
41-50
5 41-50
Above 50
0 31-40 Age
Below Below 30
1-3 Year
1Year 3-5 Year
Above 5
Years
Time Of De posit
Below 1Year 1-3 Year 3-5 Year Above 5 Years

Below 30 25 50 25 0
31-40 29 29 43 0
41-50 38 38 23 0
Above 50 29 29 24 19
44
INVESTORS
Age
Age Respondents %
Strongly Agree 15 15
Agree 25 25
Neither Agree Nor Disagree 8 8
Disagree 32 32
Strongly Disagree 20 20
Age
Strongly Disagree Strongly Agree

20% 15%
Strongly Agree
Agree
Agree
Neither Agree Nor Disagree
25%
Disagree
Disagree Strongly Disagree
32% Neither Agree Nor
Disagree
8%
From the above chart it is clear that a majority of the investors i.e. 32% believe that age
does not affect the investment decision of the investors and 25% of the investors believe
that age affect the investment decision of the investors.
45
INVESTORS
Rational Decision
Rational Decision Respondents %

Agree 65 65
Disagree 5 5
Rational Decision
Strongly Disagree
8% Strongly Agree
18%
Disagree
5% Strongly Agree
Agree
Neither Agree Nor
Disagree Disagree
4% Strongly Disagree
Agree
65%
From the above chart it is clear that more than half of the investors i.e. 65% believe that
rational decision making help in profit maximization of the investors. And there are only
few people who believe that rational decision making does not help in profit
maximization of the investors.
46
INVESTORS
Income Level
Income Level Respondents %

Strongly Agree 3 3
Agree 4 4
Disagree 68 68
Income Level
Strongly Agree
Agree Neither Agree Nor
3%
4% Disagree
10%
Strongly Disagree
15% Strongly Agree
Agree
Disagree
Strongly Disagree
Disagree
68%
From the above chart it is clear that a majority of the investors i.e.68% believe that
income level of the people does not affect the investment decision of the investors. And
there are only few investors who believe that income level of the people affect the
investment decision of the investors.
Portfolio Management By Experts
47
INVESTORS
Portfolio Management By Respondents %

Experts
Agree 10 10
Disagree 40 40
Portfolio management By Experts

Strongly Agree
Strongly Disagree 12%
20%
Agree Strongly Agree
10%
Agree
Disagree Disagree
Neither Agree Nor
40% Disagree Strongly Disagree
18%
From the above chart it is clear that a majority of the investors i.e.40% of the investors
believe that portfolio management by expert does not affect the investment decision of
the investors. And there are only few investors who believe that portfolio management by
expert affect the investment decision of the investors.
Risk Appetite Of Investors
48
INVESTORS
Risk Appetite Of Investors Respondents %

Strongly Agree 3 3
Agree 4 4
Disagree 68 68
Risk Appetite Of Investors

Strongly Disagree
Disagree 2% Strongly Agree
8% 12%
Strongly Agree
Neither Agree Nor
Agree
Disagree
6% Neither Agree Nor Disagree
Disagree
Strongly Disagree
Agree
72%
are ready to take the risk as they feel that the more risk they will take the more return
they will get.
There are only few investors who believe in making safe investment and are not ready to
take any risk.
49
INVESTORS
Reputation Of Management
Reputation Of Management Respondents %

Agree 61 61
Disagree 19 19
50
INVESTORS
Reputation Of Management

6% 10%
Strongly Agree
Disagree
19% Agree
Disagree
Neither Agree Nor Strongly Disagree
Disagree
Agree
4%
61%
Focus on the reputation of the company before making any investment decision. And
there are only few investors for whom the reputation of the company does not affect their
investment decision.
Company’s M&A
Company’s M&A Respondents %

Strongly Agree 7 7
Agree 10 10
Disagree 52 52
51
INVESTORS
Company's M&A
Strongly Agree
Strongly Disagree 7% Agree
18% 10%
Strongly Agree
Agree
Neither Agree Nor
Disagree Disagree
Disagree
52%
Does not focus on the company’s merger and acquisition before making any investment
decision. And there are only few investors for whom the company’s merger and
acquisition affect their investment decision.
Company’s Financial Statement
Company’s Financial Respondents %

Statement
Strongly Agree 7 7
Agree 10 10
Disagree 52 52
52
INVESTORS
Company's Financial Statement

Strongly Agree
9% 1%
25%
Strongly Agree
Neither Agree Nor Agree
Disagree Neither Agree Nor Disagree
1%
Disagree
Strongly Disagree
Agree
64%
The financial statement of a company shows the performance of the company and thus
helps in the investment decision. The performance of the industry affect the investment
of the investors as everyone wants to make secure investment with more return.
Give importance to company’s financial investment before making any investment
decision. And there are only few investors for whom the company’s financial investment
does not affect their investment decision.
.
Industry Trend
Industry Trend Respondents %

Strongly Agree 2 2
Agree 8 8
Disagree 68 68
53
INVESTORS
Industry Trend
Strongly Agree
Agree Neither Agree Nor
2%
8% Disagree
Strongly Disagree 10%
12% Strongly Agree
Agree
Disagree
Strongly Disagree
Disagree
68%
Does not give importance the industry trend before making any investment decision. And
there are only few investors for whom the industry trend does not matter.
Competitors
Competitors Respondents %
Strongly Agree 4 4
Agree 13 13
Disagree 58 58
54
INVESTORS
Competitors
Strongly Agree
Strongly Disagree 4% Agree
5% 13%
Strongly Agree
Neither Agree Nor Agree

Disagree 20% Disagree
In the market there are various competitors and they offer different products of different
variety. So the investors opt for those products which give the maximum return. And
there are many investors for whom the company matter. They are loyal to the company.
Does not give importance to the competitors. And there are only few investors for whom
the competitors matter.
Government Decision
Government Decision Respondents %

Strongly Agree 6 6
Agree 71 71
Disagree 4 4
55
INVESTORS
Government Decision
Strongly Disagree
Strongly Agree
10%
6%
Disagree
4%
Strongly Agree
Agree
Neither Agree Nor Neither Agree Nor Disagree
Disagree Disagree
9%
Strongly Disagree
Agree
71%
The government decision affects the investor’s decision a lot. Due to the fluctuation
in the tax policies by the government there are changes in the % of savings by
individuals, simultaneously giving an impact on their investment decisions.
From above chart it is clear that a majority of investors i.e. 71% focus on the government
policies before making investment decision. There are only few investors who does not
give importance to the government decision.
Tips By Broker
Tips By Broker Respondents %

Strongly Agree 1 1
Agree 17 17
Disagree 47 47
56
INVESTORS
Tips By Broker
Strongly Agree
1% Agree
Strongly Disagree
17%
13%
Strongly Agree
Agree
Neither Agree Nor
22% Disagree
47%
From above chart it is clear that a majority of investors i.e. 47% focus on the tips given
by the broker before making investment decision. There are only few investors who
agree that tips given by the broker are fruitful.
Performance Of Share
Performance Of Share Respondents %

Agree 5 5
Disagree 46 46
57
INVESTORS
Performance Of Share
Agree
5% 10%
5%
Strongly Agree
Agree

46% Disagree
Neither Agree Nor
34%
From above chart it is clear that 46% of the investors give importance to the performance
of the share followed by 34% of the investors who neither agree nor disagree that
performance of share affect their investment decisions. There are only few who feel that
performance of share help them in there their investment decision.
Tips From Investment Gurus
Tips From Investment Respondents %

Gurus
58
INVESTORS
Agree 5 5
Disagree 46 46
Tips From Investment Guru's

Strongly Agree
Strongly Disagree
4% Agree
8%
8%
Strongly Agree
Agree
Neither Agree Nor Neither Agree Nor Disagree
Disagree Disagree
Disagree
50% 30%
Strongly Disagree
There are many investors who does not go with the investment tips given by the
investment guru’s. They themselves keep an eye on what is happening in the market and
accordingly take decision.
From the above chart it is clear that 50% of the investors does not invest based on tips
given by the gurus followed by 30% who neither agree nor disagree with this. Only few
investors give importance to the tips given by the investors and go with it.
59
INVESTORS
Chapter 5
FINDINGS &SUGGESTIONS
60
INVESTORS
FINDINGS
• Before constructing a portfolio, thorough research of investment options are
required.
• Allocate assets to obtain the desired portfolio characteristics to suit distinct

investor profile.
• Select individual securities and build a portfolio for each of the asset class under
consideration.
• Diversify portfolio to lower investment risk.
• Investor should track portfolio by following the performance of his selection.
• Observe a few Do’s and Don’ts of Investing.
• There is no specific investment vision for a customer though he has lifestyle

aspirations
61
INVESTORS
• Safety over returns is still practiced where risk-return trade off is not seen and
understood from the right perspective
• Investment decisions are made on random basis or on gossip/rumors rather than

taking advice or paying for right advice.
SUGGESTIONS
PORTFOLIO CONSTRUCTION: -
An individual after deciding his financial goals he would understand the terms long-term,
short-term, intermediate goals and then decide on as to how much of money he need to
get to achieve his financial goal. Then the individual should decide upon various avenues
for investment like equities, FDs, metals, post office, speculative and real estate etc.
STEPS INVOLVED IN PORTFOLIO CONSTRUCTION:
In today's financial marketplace, a well-maintained portfolio is vital to any investor's
success. As an individual investor, you need to know how to determine an asset
allocation which best conforms to your personal investment goals and strategies. In other
words, your portfolio should meet your future needs for capital and give you peace of
mind. Investors can construct portfolios aligned to their goals and investment strategies
by following a systematic approach. Here we see some essential steps for taking such an
approach.
Step 1: Determining the Appropriate Asset Allocation
Ascertaining your individual financial situation and investment goals is the first task in
constructing a portfolio. Important items to consider are age, how much time you have to
grow your investments, as well as amount of capital to invest and future capital needs.
62
INVESTORS
A second factor to take into account is your personality and risk tolerance. The
possibility of greater returns comes at the expense of greater risk of losses (a principle
known as the risk/return tradeoff) - you don't want to eliminate risk so much as optimize
it for your unique condition and style. Generally, the more risk you can bear, the more
aggressive your portfolio will be, devoting a larger portion to equities and less to bonds
and other fixed-income securities. Conversely, the less risk that's appropriate, the more
conservative your portfolio will be. Here are two examples: one suitable for a
conservative investor and another for the moderately aggressive investor.
The main goal of a conservative portfolio is to protect its value. The allocation shown
above would yield current income from the bonds, and would also provide some long-
term capital growth potential from the investment in high-quality equities.
A moderately aggressive portfolio satisfies an average risk tolerance, attracting those

willing to accept more risk in their portfolio in order to achieve a balance of capital
growth and income.
Step 2: Achieving the portfolio designed in step 1
63
INVESTORS
Once you've determined the right asset allocation, you simply need to divide your capital
between the appropriate asset classes. On a basic level, this is not difficult: equities are
equities, and bonds are bonds.
But you can further break down the different asset classes into subclasses, which also
have different risks and potential returns. For example, an investor might divide the
equity portion between different sectors and market caps, and between domestic and
foreign stock. The bond portion might be allocated between those that are short term and
long term, government versus corporate debt and so forth.
There are several ways you can go about choosing the assets and securities to fulfill your
asset allocation strategy:
• Stock picking - Choose stocks that satisfy the level of risk you want to carry in the
equity portion of your portfolio - sector, market cap and stock type are factors to
consider. Analyze the companies using stock screeners to shortlist potential picks,
than carry out more in-depth analysis on each potential purchase to determine its
opportunities and risks going forward. This is the most work-intensive means of
adding securities to your portfolio, and requires you to regularly monitor price
changes in your holdings and stay current on company and industry news.
• Bond picking - When choosing bonds, there are several factors to consider
including the coupon, maturity, the bond type and rating, as well as the general
interest rate environment.
• Mutual funds - Mutual funds are available for a wide range of asset classes and
allow you to hold stocks and bonds that are professionally researched and picked
by fund managers. Of course, fund managers charge a fee for their services,
which will detract from your returns. Index funds are another choice as they tend
to have lower fees since they mirror an established index and are thus passively
managed.
• Exchange-traded funds (ETFs) - If you prefer not to invest with mutual funds,
ETFs can be a viable alternative. You can basically think of ETFs as mutual funds
that trade like a stock. ETFs are similar to mutual funds in that they represent a
large basket of stocks - usually grouped by sector, capitalization, country and the
64
INVESTORS
like - except they are not actively managed, but instead track a chosen index or
other basket of stocks. Because they are passively managed, ETFs offer cost
savings over mutual funds while providing diversification. ETFs also cover a
wide range of asset classes and can be a useful tool to round out your portfolio.
Step 3: Re-assessing Portfolio Weightings
Once you have an established portfolio, you need to analyze and rebalance it
periodically because market movements may cause your initial weightings to change. To
assess your portfolio's actual asset allocation, quantitatively categorize the investments
and determine their values' proportion to the whole.
The other factors that are likely to change over time are your current financial situation,
future needs and risk tolerance. If these things change, you may need to adjust your
portfolio accordingly. If your risk tolerance has dropped, you may need to reduce the
amount of equities held. Or perhaps you're now ready to take on greater risk and your
asset allocation requires a small proportion of your assets to be held in riskier small-cap
stocks.
Essentially, to rebalance, you need to determine which of your positions are over-
weighted and those that are under-weighted. For example, say you are holding 30% of
your current assets in small-cap equities, while your asset allocation suggests you should
only have 15% of your assets kept in that class. You need to determine how much of this
position you need to reduce and allocate to other classes.
Step 4: Rebalancing Strategically
Once you have determined which securities you need to reduce and by how much, decide
which under-weighted securities you will buy with the proceeds from selling the over-
weighted securities. To choose your securities, use the approaches discussed in step 2.
When selling assets to rebalance your portfolio, take a moment to consider the tax
implications of readjusting your portfolio. Perhaps your investment in growth stocks has
appreciated strongly over the past year, but if you were to sell all of your equity positions
to rebalance your portfolio, you may incur significant capital gains taxes. In this case it
might be more beneficial to simply not contribute any new funds to that asset class in the
future while continuing to contribute to other asset classes. This will reduce your growth
stocks' weighting in your portfolio over time without incurring capital gains taxes.
65
INVESTORS
At the same time, however, always consider the outlook of your securities. If you suspect
that those same over-weighted growth stocks are ominously ready to fall, you may want
to sell in spite of the tax implications. Analyst opinions and research reports can be
useful tools to help gauge the outlook for your holdings. And tax-loss selling is a strategy
you can apply to reduce tax implications.
Rebalancing is the process of buying and selling portions of your portfolio in order to
set the weight of each fund in your overall investment back to its original state.
In case a distortion happens in the markets three times in a year, rebalance your portfolio.
If the markets gain, decrease the exposure to equity by a suitable percentage.
If the markets dip, increase the exposure to equity by a suitable percentage.
Consider you have an investment amount of Rs.100 of which –
Equity exposure: 60; Debt exposure: 40

Asset Equity Debt Total
class
Initial 60 40 100
allocation
When markets gain:

distortion 66 41 107
10% 2.5%
rebalance 61.68 38.32 100
(excess
1.68)
When markets dip:
distortion 54 39 93
10% 2.5%
66
INVESTORS
rebalance 58.06 41.93 100
Rebalancing portfolio will not only help to maintain original asset-allocation strategy but
also implement any change in investing style. Essentially, rebalancing will help one to
stick to his investing plan regardless of what the market does.
Financial Discipline: -
An individual should have a proper financial discipline. The following points would
explain what financial discipline is all about: -
• Identify the difference between your earning potential minus your expenditure
• Identify your short / medium / long / very long term goals
• Identify your dreams with those goals
• Look at Inflation as the biggest threat
• Set achievable goals
• Allocate funds on low risk / high risk basis
• Increase quantum towards high risk when you are young and keep decreasing as
you age
Asset Allocation Process: -

 It is important to differentiate assets or investment instruments based on its risk,
safety, liquidity, returns and the tenure that one is willing to hold
 Further these instruments should be segregated based on the horizon of
investments (holding capacity or holding period) – short/medium/long or ultra
long term.
 Each investment class has its own restrictions in terms of safety, liquidity, returns
and tenure; low risk and high safety always ends up offering lower returns and
high degree of risk & safety gives way to higher rate of returns which is evident
in the tools we choose.
Allocation Methods: -
The allocation of his investment into various asset classes also depends on his age as
when he is young he can take a lot of risk compared to when he is growing old. When his
67
INVESTORS
age is between 25-28 years he should invest more in equities and aggressive SIPs i.e.
(Systematic Investment Plan) etc. When his age is between 28-30 years he should start
off with real estate and should have more than 75% of his investment in equities. When
his age is between 30-35 years then he should have 60-65% of his investments in equities
and should continue with the SIPs. When his age is between 35-45 years he should have
50% in equities, insurance premiums etc.
CONCLUSION
CONCLUSION:-
It’s indeed a great pleasure to learn the micro and macro prospective of profit
maximization & wealth preservation. Though a layman who wishes to multiplied his
investment with a short span of time but is unaware of the macro factors like inflation,
interest rate, govt. policies, industry competitiveness, sector performance and the like.
On the micro front, by means of carefully keeping track of corporate quarter results,
business plan, future prospective, growth, return on investment, management
effectiveness etc
By means of this project, I understand the various investment avenues with respect to
safety, liquidity and return. It definitely adds a new dimension of analyzing investment
option and tailoring according to the need of investor.
In India, only 3% of entire population invests in equities which are due lack of
awareness, low risk appetite, fear of losing money, unable to attend stock market and
economic factor as a whole etc.
68
INVESTORS
Once an investor makes an attempt to learn the basic fundamental of the investment, he
will minimize his risk and will be able to meet his financial requirement as and when
arrive.
69

Sneha Final Project Report

Transféré par

Informations du document

Description originale:

Copyright

Formats disponibles

Partager ce document

Partager ou intégrer le document

Options de partage

Avez-vous trouvé ce document utile ?

Ce contenu est-il inapproprié ?

Droits d'auteur :

Formats disponibles

Sneha Final Project Report

Transféré par

Droits d'auteur :

Formats disponibles

PROFIT MAXIMIZATION AND WEALTH CREATION FOR

Reliance Money Ltd

In partial fulfillment of the

Under the Guidance of

PROFIT MAXIMIZATION AND WEALTH CREATION

Forms of Wealth Creation:

Wholesale Debt Market Segment (WDS):-

Retail Debt Segment (REDS):-

Emergence of the Retail Market:-

The Investment Needs of an Investor

• Wealth accumulation: This is largely a factor of investment performance,

• Tax efficiency: Legitimate reduction in the amount of tax payable is an important

• Income: This refers to money distributed at intervals by an investment, which are

• Simplicity: Investment instruments are complex, but investors need to understand

• Communication: This refers to informing and educating investors about the

• Security of original capital is more important when performance falls.

• Performance is more important when investments are performing well .

• Failures engender a desire for an increase in the comfort factor.

Choosing the Right Investment Options

Investment Options in India

Money-back insurance - Insurance in India is mostly sold and bought as investment

Mutual Funds - There is a collection of investors in Mutual funds that have

humans generally relate perception to action.

Objective of the study:

1. To understand factors those decide investment.

DATA CAPTURE INTRUMENTS USED:

Information was collected by interview method, observation method etc. A structured

RESEARCH TECHNIQUES AND APPLICATIONS:

DATA COLLECTION METHODS:

4. Portfolio management by experts a good alternative to maximize your profit.

INTERNAL ENVIRONMENT OF THE ORGANISATION

EXTERNAL ENVIRONMENT OF THE ORGANISATION

11. Government Stability, support and fiscal incentives.

DATA ANALYSIS PROCEDURE:

LIMITATIONS OF THE STUDY

PEST ANALYSIS OF THE INDUSTRY:

Economically, as said in the introduction these companies may provide as a buffer in

• The share certificates have been dematerialized.

Company Profile: Reliance Money

Reliance Capital Limited (RCL) is a Non-Banking Financial Company (NBFC)

Reliance Capital (RCL), a member of the Reliance Group, is a private sector

Vision Statement of Reliance Money:-

“To be world leader in the business by providing a convenient transparent and

Business Objectives of Reliance Money:-

• To provide a wide variety of products to the market.

The markets it caters to are:

• The market which is new to online trading.

INVESTOR PROFILE NUMBER OF RESPONDENTS

Gender Distribution Sample

Age Group Respondents %

Income Level Respondents %

Annual Income Distribution

Annual Saving Respondents %

Annual Saving Distribution

Investment Type Distribution

Investment Option Respondents %

Investment Type Distribution

Investment Distribution Based On Experience

Real Estate Mutual Fund

Investment Purpose Respondents %

Long Term Gains

Option On ETF Respondents %

An exchange-traded fund (or ETF) is an investment vehicle traded on stock exchanges,