SR No. Topic Page No.: Personal Wealth Management

Personal wealth management
TABLE OF CONTENTS
Sr no. Topic Page no.

1 Abstract 3
2 Introduction: Savings and Investments 4
3 Review of literature 6
4 Data Analysis and interpretation 11
5 Summary of findings 29
6 Conclusion 31
7 Suggestions 31
8 Questionnaire 32
9 Bibliography 34
Abstract
INDIAN BUSINESS ACADEMY 1

Personal wealth management- From Super rich to everyone…..
In general, wealth management is more than just investment advice, as it can encompass
all parts of a person's financial life.
Wealth management is acquiring more and more attention and importance in the new
economy. We can see many asset management companies coming up and offering tailor
made services to the individuals. But this was not the trend few years ago. The reasons
for this development primarily are increased disposable income amongst people,
increasing awareness about savings, investment and returns, high inflation which will
force people to save so that the future is secured, varied investment options available etc.
Wealth management means more than just sticking to a budget. It helps people to plan for
the future. Investors can find a customized solution for their assets and follow the right
avenue to ensure that they achieve their financial goals.
Especially, in the present economic scenario of global melt down, millions and millions
of investors’ money is eroded. So, personal wealth management is becoming more and
more important.
“Accumulating wealth—as distinct from just making a big income—is the key to your
financial independence. It gives you control over assets, power to help shape the
corporate and political landscape, and the ability to ensure a prosperous future for your
children and their heirs….” (Rev. Jesse L. Jackson, Sr. and Jesse L. Jackson, Jr.,
It’s About the Money!)
“If you make a good income each year and spend it all, you are not getting wealthier.
You are just living high”. (Thomas J. Stanley and William D. Danko, The Millionaire
Next Door).
The vital point for discussion - Is personal wealth management necessary for individuals?
If yes, their awareness, to what extent and how to construct a portfolio taking into
consideration different time horizons, risk, return relationship, income level etc.
Objectives:
The paper is aimed at discussing these important points with reference to personal wealth
management.
a) To analyse the awareness of investment avenues among the people.
b) To find the pattern of investment of the people.

c) To assess the risk taking capacity among the people in relation to different time
horizons, risk, return relationship, income levels.
Methodology:
In order to meet the above objectives a questionnaire would be designed for the
collection of primary data. Appropriate statistical tools would be used for the analysis of
the data collected. Few case studies will also be discussed regarding portfolio
construction of different income groups.
Key words:
Individuals, Investors, Wealth management, Return-Risk, Time horizon, Financial goals
Investment options, Portfolio construction, Income groups.
Introduction:
Savings And Investment:
Savings are the excess of Income over expenditure for any economic unit.
Thus, S=Y- E, where S is the savings, Y is the income and E is the expenditure.
Secondly excess funds or surplus in profits or capital gains are also available for
investment.
Thus, S=W2-W1, where W2 is wealth in period 2 and W1 is the wealth in period 1.
Savings is abstaining from present consumption for a future use. Savings are something
autonomous coming from households as a matter of habit. But bulk of the savings come
for specific objectives like interest income, future needs, contingencies, precautionary
purposes or growth in future wealth leading to rise in the standard of living etc.
When people start saving they search for various investment options t invest their
savings. During this process they consider various factors like risk, return, duration,
liquidity, tax planning, hedge against inflation, safety etc. In earlier days the investment
options available to investors were very limited like insurance, jewellery, fixed deposits,
debentures, shares etc. But in the liberalized economy there are many investment options,
which promises very high returns. After private players started operating in Insurance,
there are many policies available which not only cover the risk , but they also promise
high return with gook capital appreciation.
The unit linked Insurance plans (ULIP) is highly demanded by the investors. Even the
Jewellery and real estate has become very profitable investment options, as there is a
very good capital appreciation.

Even though it is said investors consider many things before investing most of the
investment decisions are influenced to some extent by prejudices and perceptions that do
not meet the criteria of rationality. Human beings often depart from rationality in a
consistent manner.
It becomes very important to understand why an investor behaves in a particular way and
why he gets prejudiced.
The study tries to understand the behavior of people while making investment decisions
by studying the behavior of investors in Bangalore city.
The primary investment options available before globalization were life insurance, fixed
deposits, shares and debentures, PPF, post office savings scheme etc. But now the
options are plenty.
There are number of private insurance players in the market, who offer ULIP products
which are widely in demand. Real estate is also most important investment option as
capital appreciation is very high. Apart from these there are many options like American
depositary receipts, global depositary receipts, mutual funds, general insurance,
commercial paper, stock and debentures etc.
Whenever an investor is investing his savings he has to keep few things in his mind like
liquidity, profitability, risk, and tax benefit etc.
Objectives of the study:
The paper is aimed at discussing these important points with reference to personal wealth
management.
a) To analyze the awareness of investment avenues among the people.
b) To find the pattern of investment of the people.
c) To assess the risk taking capacity among the people in relation to different time
horizons, risk, return relationship, income levels.
Methodology:
In order to meet the above objectives a questionnaire is used for the collection of primary
data. Appropriate statistical tools are used for the analysis of the data collected.
Limitations:
1. Since the time was short, the sample size chosen is small.
2. The investor’s knowledge about the topic was limited; hence getting required
information was difficult.
3. Limited time for the study.

Review of Literature
The topic “Personal wealth management” is covered under behavioral finance. The
researcher has reviewed the following literature for the study of the above stated topic.
1. A study on the investors’ behavior towards Securities Market in Bangalore.
This is a review of the case study conducted by A Mohammed Jaffar (Reader and
research coordinator, HKRH College, Uthamapalyam, Tamil nadu) and N Namasivayam
(professor and head, Dept of Commerce DDE, MKU, Madurai).
Retail investors’ participation in the Indian capital market is miniscule. There are many
reasons for their hesitation to invest in the market. This paper discusses research findings
in investors’ behavior with respect to the securities market.
The concept of investment means employment of funds to earn additional income or
growth in terms of value.
Investment in share market: A person can invest his money in the share market by
purchasing shares. A share market is a public institution and it serves the growth of the
capital market. In a stock market, purchase and sale of shares are made in conditions of
free competition. It is organized as voluntarily, non-profit making association of brokers
to regulate and protect their interests.
Whenever a company raises capital through public issue of securities, its securities are
required to be listed on the stock exchange within ten weeks of the closing of the
subscription list mainly to provide liquidity to the investors.
Profile of the Study area and sample investors: Bengaluru is the capital of the state of
Karnataka in India. Bangalore is India's third-largest city and has a population of
5,310,318 (2009). The sylvan surroundings of Bangalore are sure to soothe your weary
nerves.
Bangalore has earned sobriquets like 'Silicon Valley of India', 'Pub Capital of India', and
'City of Gardens'. With its beautiful parks, avenues, multiplexes and historical
monuments, Bangalore is bubbling with life and energy.
An attempt has been made to analyze the behavior of the selected investors regarding
their age, education, status, experience, family size, earnings etc.
Objectives:
1. To study the awareness of investors in the Bangalore city.

2. To analyze the attitude of investors in the study area
3. To find out investors behavior and stock market movement in the district

4. To offer valuable suggestions on the basis of findings.
Methodology:
Keeping in mind the objectives of the study, the study was based on a sample survey of
individual investors in the security market. The data used are the first hand information
collected with the help of questionnaire from the set of respondents.
Findings:
1. The investors in the study area are interested in earning high return with minimum
risk.
2. As per the age-wise classification, the investors in the age group of below 35 years are
actively participating in the speculation trade. The age groups above 55 hesitate to take
risk and are not at all interested in the share trade.
3. Technical degree/diploma holders and professional people are not interested to invest
their money in the security market.
4. There are more male investors than female investors.
5. Investors falling under income group below Rs 10000 show more interest in investing
their earnings in the security market.
6. Married persons are investing more than the unmarried people in the corporate
securities.
Conclusion:
Investing has been an activity confined to the rich and business class in the past. But,
today, it has become a household word and is very popular with people from all walks of
life.
2. Behavioral finance:
This is review of an article written by Arvind Agarwal, Radhika Jain, and Williams Paul
from IIM-Kolkata.
Behavioral finance is an emerging science that exploits the irrational nature of investors.
The base of behavioral finance is that humans often depart from rationality in a consistent
manner. Most of our investment decisions are influenced to some extent by our prejudice
and perceptions that do not meet the criteria of rationality. For decades, economists have
speculated, theorized and argued about the “rational actor”—a completely logical
creature who always makes the sensible financial choice. Now psychologists are
weighing in, and they are finding that real people often don’t act that way. “Psychology

has a story to tell about investing, and it’s different from one the economics tell,” says
Princeton psychologist Daniel Kahneman. These humans’ flaws are often consistent,
predictable, and can be exploited for profit.
Traps into which investors fall:
1. Too self-confident: people are overconfident in their own abilities, and investors and
analysts are particularly overconfident in areas where they have some knowledge.
However, increasing levels of confidence frequently show no correlation with greater
success.
2. Too bold: Professional and amateur investors alike tend to have an “optimistic bias”,
believing that their chances are better than the next guy’s. This bias is the base for the
whole stock trading industry.
3. Too afraid of loss: People hang on to their losing stocks because they don’t want to
feel the pain of cost-loss discrepancy, which refer to the fact that investors are more
aversive to losses than costs.
4. Too quick to trade: A study shows that when an investor sells one stock and
immediately buys another stock, the one that was sold does better by an average of 3.4%
in the following year. People like to feel that they are actively bettering their financial
situation—but, “if you hold onto a stock for a while, your chances of making money in it
are greater”.
5. Casual reasoning: When confronting novel situations, people struggling to form a
coherent view are heavily influenced by the order in which they receive conflicting
information.
In layman’s terms, various studies have concluded that behavioral finance postulates the
following:
• Individual and institutional investors are susceptible to herd mentality, a tendency
at the root of many bubbles and crashes.
• The pain of losing is generally much greater than the pleasure of earning
• People tend to take a self-centered approach to investing.
• Overconfident investors tend to trade too much and under perform the market.
• People tend to be more optimistic when the market goes up and more pessimistic
when it goes down;
• People are afraid to admit an error in judgment and are thus more likely to sell
winners in their portfolios than losers.
Conclusion: An investor can’t be assumed to be a machine, always making logical

calculations and uninfluenced by psychological factors. People trade not only for profit
but for emotional and cognitive reasons as well.

3. Personal Tax planning for an Individual:
This is the review of an article written by R K Gupta (professor of finance Punjab

University) and Jyoti (Research scholar, Maharshi Dayanand University, Rohtak).
Some people have a wrong notion that tax planning is useful only once you are well
settled in life. Rather, the best time to start tax planning is right from the day you start
earning any income in your name.
For any individual tax planning occupies a prominent position in the investment planning
process.
Tax Planning: Everyone is entitled to so arrange his affairs to reduce his tax liability,
but the arrangement must be real and genuine and not a sham. Thus tax planning ensures
not only the accrual of tax benefits within the four corners of law but also that the tax
obligations are properly discharged to avoid penal provisions. It should not be mixed
with tax evasion and tax avoidance.
Tax planning at different stages of life through various investments.
1. When a person starts earning he should start saving and investing. The better course
would be to invest in savings in Public Provident Fund (PPF) so that the money is
blocked and saved for a minimum period of 15 years. It is totally exempt from tax.
Also Insurance policy can be planned as deduction can be availed u/s 80©
2. Next stage is to own a house. The biggest advantage of putting your money in
residential house property is tax haven in one hand while on the other hand; you get a
secure place of your own to live in. The repayment of principal is deductible up to one
lakh in a year u/s 80©.
3. Usually, a person has to spend a lot on the education of children. Tax planning can be
used as effective tool in this respect as it may ensure that the capital base is not eroded or
adversely affected. Sec 10(14) and rule 2BB provides for certain allowances that are
exempt according to the limit specified in respect of each such allowances.
4. Senior citizens can invest special Senior Citizens schemes launched by govt. of India.
Tax planning brings fiscal discipline in the functioning of a taxpayer and reduces the
transfer of money, from the person who has earned it by hard labor, to the govt. for waste
and ostentation. Thus the amount invested enhances the capacity of the taxpayers for
expansion and growth, which in turn increases the tax revenue of the govt.
4. Fundamentals of safe Investments: This article is written by Mr. Vikas Shrotriya

( Assistant professor, Finance, Yagyavalkya Institute of Technology, Jaipur)
Investments are not as simple as it sounds. Managing the same may be more perplexing.

In today’s fast changing and highly competitive world, it is quite difficult to earn an
impressive rate of return on personal investments. Personal investments arise out of the
funds saved by an ordinary individual. The quantum is usually not comparable to the
amount invested by large players such as the corporate houses. As individuals, we are
less aware of the risks associated with the investment avenues we select for investment.
Hence as intelligent investors we need to clearly grasp the major criteria of any personal
investment. Safety, returns, liquidity and value appreciation are the four major
parameters that we should keep in mind while making an investment decision.
Can we reduce risk?
We cannot eliminate the risk factor totally. The effort should be in the direction of
minimizing the risk to the possible extent. We can diversify the risk by investing in
varying investment avenues. The amount of risk we undertake should be commensurate
with the age, income, responsibilities and the financial needs. The amount of risk we take
will decide whether we are risk taker, risk averse or are indifferent to risk. Depending on
the risk level, we can select the investment avenues.
Data analysis and interpretation:
The data collected is through primary source i.e. with the help of a questionnaire. The
sampling is random sampling and sample size is 20. The parameters that were used are:
a) Age
b) Income
c) Marital status
d) Gender
Using the above parameters an analysis has been constructed for all the questions of the
questionnaire.
This table & graph shows the age of the respondents
Table 1: Represents the age of the respondents:
Age No. of respondents

20 – 30 8
30 – 40 3
40 – 50 2
50 – 60 2
60 – 70 3
70 – 80 2
Total 20

Graph 1: Shows the age of respondents:
Ag e o f th e R esp ond ents
9
8
7
6
No. of 5
re sponde nts
4
3
2
1
0
20 - 30 30 - 40 40 - 50 50 - 60 60 - 70 70 - 80
Age
No. of res pondents
This table & graph shows the income of the respondents
Table 2: Represents the income of the respondents:
Income (Rs. In Lakhs) No. of respondents

1.5 - 2.5 3
2.5 - 3.5 5
3.5 - 4.5 3
4.5 - 5.5 6
5.5 - 6.5 3
Total 20

Income of Respondents
7
6
No of respondents
5
4
3
2
1
0
1.5 - 2.5 2.5 - 3.5 3.5 - 4.5 4.5 - 5.5 5.5 - 6.5
Income (Rs. in Lakhs)
No. of respondents
This table & graph shows the Marital Status of the respondents
Table 3: Represents the Marital Status of the respondents:
Marital Status No. of Respondents

Married 12
Unmarried 8
Total 20
Marital Status of the Respondents
14
No. of Respondents
12
10
8
6
4
2
0
Married Unmarried
Marital Status
No. of Respondents

This table & graph shows the gender of the respondents
Table 4: Represents the Gender of the respondents:
Gender No. of Respondents

Male 7
Female 13
Total 20
Graph 4: Shows the Gender of the respondents:
Gender of the Respondents
14
No. of respondents
12
10
8
6
4
2
0
Male Female
Gender
No. of Respondents
1. Do you maintain funds for long and short term investments?
- Long Term - Short Term
The respondents replied in the following manner:
a) Based On Age
Table 1.1
Age Long Term Short Term
20 – 30 4 4
30 – 40 2 1
40 – 50 2 0

50 – 60 0 2
60 – 70 2 1
70 – 80 1 1
Total 11 9
b) Based On Income (Rs. In Lakhs)
Table 1.2
Income (Rs. In Lakhs) Long Term Short Term
1.5 - 2.5 1 1
2.5 - 3.5 2 4
3.5 - 4.5 2 0
4.5 - 5.5 4 3
5.5 - 6.5 2 1
Total 11 9
c) Based On Marital Status
Table 1.3
Marital Status Long Term Short Term
Married 6 6
Unmarried 5 3
Total 11 9
d) Based On Gender
Table 1.4
Gender Long Term Short Term
Male 3 4
Female 8 5
Total 11 9
2. What is the amount of savings of the family per annum?
o Below 1 lakh

o 1 to 2 laks
o more than 2 to 3 lakhs
o Above 3 lakhs
a) Based on Age
Table 2.1
Age Below 1 lakh 1 - 2 lakhs > 2 -3 lakhs > 3 lakhs
20 – 30 6 3 0 0
30 – 40 1 2 0 0
40 – 50 0 2 0 0
50 – 60 0 1 0 0
60 – 70 3 0 0 0
70 – 80 2 0 0 0
Total 12 8 0 0
b) Based on Income (Rs. In Lakhs)
Table 2.2
Income (Rs. In Lakhs) Below 1 lakh 1 - 2 lakhs > 2 -3 lakhs > 3 lakhs
1.5 - 2.5 3 0 0 0
2.5 - 3.5 4 1 0 0
3.5 - 4.5 1 1 0 0
4.5 - 5.5 1 6 0 0
5.5 - 6.5 2 1 0 0
Total 11 9 0 0
c) Based on Marital Status:
Table 2.3
Marital Status Below 1 lakh 1 - 2 lakhs > 2 -3 lakhs > 3 lakhs
Married 5 7 0 0
Unmarried 6 2 0 0
Total 11 9 0 0
d) Based on Gender:
Table 2.4
Gender Below 1 lakh 1 - 2 lakhs > 2 -3 lakhs > 3 lakhs
Male 4 3 0 0
Female 7 6 0 0
Total 11 9 0 0

3. Do you seek professional investment advice before making a decision on your

portfolio?
a. Yes
b. No

a) Based on Age
Table 3.1
Age Yes No
20 – 30 5 3
30 – 40 2 1
40 – 50 0 2
50 – 60 2 1
60 – 70 1 1
70 – 80 2 0
Total 12 8
Table 3.2
Income (Rs. In Lakhs) Yes No
1.5 - 2.5 2 1
2.5 - 3.5 4 1
3.5 - 4.5 1 1
4.5 - 5.5 4 3
5.5 - 6.5 1 2
Total 12 8
c) Based on Marital Status:
Table 3.3
Marital Status Yes No
Married 8 5
Unmarried 4 3
Total 12 8
d) Based on Gender:
Table 3.4

Gender Yes No
Male 5 2
Female 7 6
Total 12 8
4. Which statement best describes your level of understanding about different types
of investment options and their behavior over long term?
a. No knowledge. I know nothing about investing and have little interest in

learning about different investment options. Don’t find the subject that
interesting.
b. Minimal knowledge. I understand the basic terms, but don’t understand
the differences among different types of investment. Don’t know much
about the financial world.
c. Somewhat knowledgeable. I am comfortable with general investing
concepts, but look to experts for more in-depth knowledge. Have a fair
comprehension of investing, but I would like to know more.
d. Highly knowledgeable. I have a very good understanding of different
investment options and the relative risks inherent in the markets, and about
the functioning of stock markets. I spend a considerable time keeping up
with the financial happenings.
a) Based on Age
Table 4.1
No Minimal Somewhat Highly
Age
knowledge Knowledge Knowledge Knowledgeable
20 - 30 1 2 4 1
30 - 40 0 1 2 0
40 - 50 1 0 1 0
50 - 60 0 1 1 0
60 - 70 0 1 2 1
70 - 80 0 0 1 0
Total 2 5 11 2

Table 4.2
Income (Rs. In No Minimal Somewhat Highly
Lakhs) knowledge Knowledge Knowledge Knowledgeable
1.5 - 2.5 0 1 1 1
2.5 - 3.5 0 1 3 1
3.5 - 4.5 1 1 0 0
4.5 - 5.5 1 0 6 0
5.5 - 6.5 0 2 1 0
Total 2 5 11 2
c) Based on Marital Status
Table 4.3
Marital Status
Married 1 2 8 1
Unmarried 1 3 3 1
Total 2 5 11 2
d) Based on Gender

Gender
Male 0 3 3 1
Female 2 2 8 1
Total 2 5 11 2
5. What is the duration of investment preferred by you?
o Less than 2 years

o 2-5 years
o More than 10 years
a) Based on Age
Table 5.1
Age < 2 years 2 - 5 years > 10 years
20 - 30 5 4 0
30 - 40 0 2 0
40 - 50 0 2 0

50 - 60 2 0 0
60 - 70 2 1 0
70 - 80 2 0 0
Total 11 9 0
b) Based on Income
Table 5.2
Income (Rs. In Lakhs) < 2 years 2 - 5 years > 10 years
1.5 - 2.5 2 1 0
2.5 - 3.5 4 1 0
3.5 - 4.5 1 1 0
4.5 - 5.5 2 5 0
5.5 - 6.5 2 1 0
Total 11 9 0
Table 5.3
Marital Status < 2 years 2 - 5 years > 10 years
Married 7 5 0
Unmarried 4 4 0
Total 11 9 0
d) Based on Gender
Table 5.4
4
Gender < 2 years 2 - 5 years > 10 years
Male 7 0 0
Female 4 9 0
Total 11 9 0
6. Rank the following factors you consider before making an investment in the
order of your preference.[1-6; 1- Good, 6-Poor]

o Safety of income is my primary concern. The amount of capital

appreciation and income my investment earn are secondary objectives.
_______
o My investment should be relatively safe and emphasize current
income. _________
o My investments can be exposed to a moderate level of risk with the
primary goal of generating current income. Capital appreciation over
time is a secondary objective.________
o My investment can be exposed to a risk and should emphasize growth
over time, but should also generate some current income.______
o My investments should be covered by tax benefit. _________
o My investments should be en-cashed within a short notice, (Liquidity).
Safety:
a) Based on Age
Table 6.1
Safety (Ranks 1-6; 1 - Good, 6 -
Poor)
Age 1 2 3 4 5 6
20 - 30 5 1 0 1 1 0
30 - 40 2 0 0 0 1 0
40 - 50 2 0 0 0 0 0
50 - 60 1 0 0 0 1 0
60 - 70 3 0 0 0 0 0
70 - 80 2 0 0 0 0 0
Total 15 1 0 1 3 0
b) Based on Income
Table 6.2
Safety (Ranks 1-6; 1 - Good, 6 - Poor)
Income (Rs. In
1 2 3 4 5 6
Lakhs)
1.5 - 2.5 3 0 0 0 0 0
2.5 - 3.5 4 0 0 0 1 0
3.5 - 4.5 1 0 0 1 0 0
4.5 - 5.5 5 1 0 0 1 0

5.5 - 6.5 2 0 0 0 1 0
Total 15 1 0 1 3 0
Table 6.3
Marital Status 1 2 3 4 5 6
Married 10 0 0 0 2 0
Unmarried 5 1 0 1 1 0
Total 15 1 0 1 3 0
d) Based on Gender
Table 6.4
Gender 1 2 3 4 5 6
Male 5 0 0 1 1 0
Female 10 1 0 0 2 0
Total 15 1 0 1 3 0
Current Income
a) Based on Age
Table 6.5
Current Income (Ranks 1-6; 1 - Good, 6 - Poor)
Age 1 2 3 4 5 6
20 - 30 0 1 0 2 1 4
30 - 40 0 0 0 0 1 2
40 - 50 0 0 0 1 0 1
50 - 60 0 0 0 0 1 1
60 - 70 0 0 0 0 1 2
70 - 80 0 0 0 0 0 2
Total 0 1 0 3 4 12
b) Based on Income

Table 6.6
Income (Rs. In
1 2 3 4 5 6
Lakhs)
1.5 - 2.5 0 0 0 0 1 2
2.5 - 3.5 0 0 0 0 1 4
3.5 - 4.5 0 0 0 1 0 1
4.5 - 5.5 0 0 0 2 1 4
5.5 - 6.5 0 1 0 0 1 1
Total 0 1 0 3 4 12
Table 6.7
Married 0 0 0 1 2 9
Total 0 1 0 3 4 12
d) Based on Gender
Table 6.8

Gender 1 2 3 4 5 6
Male 0 0 0 1 1 5
Female 0 1 0 2 3 7
Total 0 1 0 3 4 12
Capital appreciation
a) Based on Age
Table 6.9
Capital Appreciation (Ranks 1-6; 1 - Good, 6 - Poor)
Age 1 2 3 4 5 6
20 – 30 1 2 0 0 4 1
30 – 40 0 1 1 0 1 0
40 – 50 0 0 1 0 1 0
50 – 60 0 0 2 0 0 0

60 – 70 0 0 0 3 0 0
70 – 80 0 0 0 2 0 0
Total 1 3 4 5 6 1
b) Based on Income
Table 6.10
Income (Rs. In
1 2 3 4 5 6
Lakhs)
1.5 - 2.5 0 0 0 3 0 0
2.5 - 3.5 1 0 1 2 1 0
3.5 - 4.5 0 1 1 0 0 0
4.5 - 5.5 0 2 0 0 5 0
5.5 - 6.5 0 0 2 0 0 1
Total 1 3 4 5 6 1
c) Based on Martial Status

Table 6.11
Married 0 1 3 5 3 0
Total 1 3 4 5 6 1
d) Based on Gender
Table 6.12
Gender 1 2 3 4 5 6
Male 0 1 2 3 1 0
Female 1 2 2 2 5 1
Total 1 3 4 5 6 1
Growth:
a) Based on Age
Table 6.13
Growth (Ranks 1-6; 1 - Good, 6 -
Poor)

Age 1 2 3 4 5 6
20 - 30 1 3 3 1 0 0
30 - 40 1 0 0 1 0 0
40 - 50 0 1 0 0 0 1
50 - 60 0 2 0 0 0 0
60 - 70 0 1 3 0 0 0
70 - 80 0 1 0 0 1 0
Total 2 8 6 2 1 1
b) Based on Income
Table 6.14
Growth (Ranks 1-6; 1 - Good, 6 - Poor)
Income (Rs. In
1 2 3 4 5 6
Lakhs)
1.5 - 2.5 0 1 1 0 1 0
2.5 - 3.5 0 4 1 0 0 0
3.5 - 4.5 1 1 0 0 0 0
4.5 - 5.5 1 1 3 0 0 1
5.5 - 6.5 0 1 1 2 0 0
Total 2 8 6 2 1 1
Table 6.15
Married 1 5 4 1 1 1
Total 2 8 6 2 1 1
d) Based on Gender
Table 6.16
Gender 1 2 3 4 5 6
Male 1 3 1 1 1 0
Female 1 5 5 1 0 1
Total 2 8 6 2 1 1

Tax Benefit
a) Based on Age
Table 6.17
Tax Benefit (Ranks 1-6; 1 - Good, 6 - Poor)

Age 1 2 3 4 5 6
20 - 30 1 1 2 2 0 2
30 - 40 0 1 0 1 0 0
40 - 50 0 0 1 0 2 0
50 - 60 0 0 0 1 0 1
60 - 70 0 0 0 0 2 1
70 - 80 0 1 0 0 1 0
Total 1 3 3 4 5 4
b) Based on Income
Table 6.18
Income (Rs. In
1 2 3 4 5 6
Lakhs)
1.5 - 2.5 0 1 0 0 1 1
2.5 - 3.5 0 0 1 1 1 1
3.5 - 4.5 0 0 0 0 1 1
4.5 - 5.5 1 1 2 1 1 1
5.5 - 6.5 0 1 0 2 1 0
Total 1 3 3 4 5 4

Table 8.19
Married 0 2 1 2 4 2
Total 1 3 3 4 5 4
d) Based on Gender

Table 6.20
Gender 1 2 3 4 5 6
Male 0 2 0 1 2 2
Female 1 1 3 3 3 2
Total 1 3 3 4 5 4
Liquidity:
a) Based on Age
Table 6.21
Liquidity (Ranks 1-6; 1 - Good, 6 -

Poor)
Age 1 2 3 4 5 6
20 - 30 0 0 3 3 1 1
30 - 40 0 0 2 0 0 1
40 - 50 0 1 1 0 0 0
50 - 60 1 0 0 1 0 0
60 - 70 0 2 1 0 0 0
70 - 80 0 0 2 0 0 0
Total 1 3 9 4 1 2
b) Based on Income
Table 6.22
Liquidity (Ranks 1-6; 1 - Good, 6 - Poor)
Income (Rs. In
1 2 3 4 5 6
Lakhs)
1.5 - 2.5 0 1 2 0 0 0
2.5 - 3.5 0 1 2 2 0 0
3.5 - 4.5 0 0 2 0 0 0
4.5 - 5.5 0 1 3 2 0 1
5.5 - 6.5 1 0 0 0 1 1
Total 1 3 9 4 1 2

Table 6.23
Married 1 3 6 2 0 0

Total 1 3 9 4 1 2
d) Based on Gender
Table 6.24
Gender 1 2 3 4 5 6
Male 1 1 4 1 0 0
Female 0 2 5 3 1 2
Total 1 3 9 4 1 2
7. Which of the following statements best reflect your views towards investment
risk and the effect of inflation (Price rise)?
Option 1. My main goal is to avoid loss, even though I may only keep pace with
the inflation.
Option 2. My main goal is to earn slightly more than inflation, while still
keeping risk to minimum.
Option 3.My main goal is to increase my portfolio value. To that end, I am
willing to accept short-term losses, but I am comfortable with extreme
performance volatility in my portfolio value.
Option 4.My main goal is to maximize my portfolio value and I am willing to
assume higher risk to do so.
a) Based on Age
Table 7.1
Age Option 1 Option 2 Option 3 Option 4

20 - 30 2 4 1 1
30 - 40 0 2 1 0
40 - 50 1 0 1 0
50 - 60 1 0 1 0
60 - 70 2 1 0 0
70 - 80 2 0 0 0
Total 8 7 4 1
b) Based on Income
Table 7.2
Income (Rs. In Lakhs) Option 1 Option 2 Option 3 Option 4

1.5 - 2.5 2 1 0 0

2.5 - 3.5 3 1 1 0
3.5 - 4.5 1 0 0 1
4.5 - 5.5 2 3 2 0
5.5 - 6.5 0 2 1 0
Total 8 7 4 1
c) Based on Gender
Table 7.3
Gender Option 1 Option 2 Option 3 Option 4

Male 4 1 1 1
Female 4 6 3 0
Total 8 7 4 1
8. The chart below shows the highest one year gain and the highest one year loss on
four different hypothetical investments of Rs.100000. Given the potential gain or
loss in any one year, where would you invest your money?
o Portfolio one: You could gain up to Rs.4000 (4%)
o Portfolio two: You could lose RS.2000 (-2%) but gain up to Rs.7000 (7%)
o Portfolio three: You could lose Rs.50000 (-5%) but gain up to Rs.10000
(10%)
o Portfolio four: You could lose Rs.120000 (-12%) but gain up to Rs.14000
(14%)

a) Based on Age
Table 8.1
Age Portfolio 1 Portfolio 2 Portfolio 3 Portfolio 4
20 – 30 3 3 1 1
30 – 40 1 1 1 0
40 – 50 0 1 1 0
50 – 60 1 0 1 0
60 – 70 3 0 0 0
70 – 80 1 0 1 0
Total 9 5 5 1
b) Based on Income
Table 8.2
Income (Rs. In Lakhs) Portfolio 1 Portfolio 2 Portfolio 3 Portfolio 4

1.5 - 2.5 2 0 1 0
2.5 - 3.5 3 2 0 0
3.5 - 4.5 0 1 0 1
4.5 - 5.5 3 1 3 0
5.5 - 6.5 1 1 1 0
Total 9 5 5 1
c) Based on Marital status
Table 8.3
Portfolio Portfolio Portfolio Portfolio

Marital Status
1 2 3 4
Married 6 3 4 0
Unmarried 3 2 1 1
Total 9 5 5 1
d) Based on Gender
Table 8.4

Gender Portfolio Portfolio Portfolio Portfolio

1 2 3 4
Male 4 0 1 1
Female 6 6 2 0
Total 10 6 3 1
Summary of findings
Most of the respondents are in the age group of 20 – 30. The respondents income
is 4.5 – 5.5 lakhs. The respondents are mostly married and they are mostly women.
The age group of 20 – 30 prefers both long term & short term investments
equally. But long term investments are more preferred to short term investments for all
age groups. Even based on income, marital status & gender long term investments are
most favored.
The amount of saving p.a of the family was mostly below 1 lakh. This was the
amount of savings most of the respondents have. This amount varies with income i.e. if
the respondent is earning more than they can save more.
60% of the respondents are seeking professional advice. The age group of 20 – 30
seeks more advice than the other groups. Even based on income, marital status & gender
they all prefer to seek professional advice.
55 % of the respondents have some knowledge of the various investment options.

The 25% of them have minimal knowledge. The remaining 20 % is equally divided
between respondents who have no knowledge and those who are highly knowledgeable.
55% of the respondents invest their funds separately. The age group of 20 – 30
prefers to invest separately. The income group of 4.5 – 5.5 invests separately. The
married respondents prefer to invest separately; most of the women respondents invest
separately.
Once again 55% of the respondents prefer to invest for a period of less than 2 yrs.
While none of the respondents preferred to lock their money for more than 10 yrs.

90% of the respondents have a separate savings to cover major expenses; the most
popular form of investments was the bank deposits and 80% wanted to investments made
for a period of 1yr.
75% of the respondents ranked safety as no. 1. Liquidity, growth, capital

appreciation, tax benefit & current income were the other factors that are taken into
consideration by the respondents before making the investment.
Option 1: My main goal is to avoid loss, even though I may only keep pace with
the inflation, was highly favored by most of the respondents.
Option 2: My main goal is to earn slightly more than inflation, while still keeping
risk to minimum. This option was the next most favored option.
75% of the respondents play by using only these 2 options. The other 25% are
risk takers.
45% of the respondents chose Portfolio one. 50% of the respondents were equally
divided between portfolio two & three. Only 1 respondent chose portfolio four. Even
based on income, marital status & gender most of them preferred portfolio one.
80% of the respondent’s portfolio consists of less than 25% of their income. This
was highly favored across all age groups, levels of income, marital status and gender.
Mostly government securities and fixed income securities is ranked no.1

Real assets such as land and gold is ranked no.2
Life insurance is ranked no.3
Mostly stocks or equity mutual funds is ranked no. 4
A mix of investments in money market, bonds, stocks and mutual funds is ranked no. 5
Conclusion
The respondents invest in long term investments, they save below 1 lakh. The
respondents seek the advice of a professional investor before making their investments as
they are aware of the pros & cons of investing in a bad investment option. Most of them
keep themselves updated with the new forms of investment. They are all educated and
like to invest separately.
The respondents do not like to lock their funds for more than 10 yrs. The
respondents like to invest mainly in bank deposits but at the same time also invest in
mutual funds & marketable securities. The term of investment preferred is 6 months – 1
year.

The respondents are more worried about the safety of their investments rather
than growth or capital appreciation. The respondents would like to avoid loss even
though they may only keep pace with inflation. As discussed earlier the respondents want
to play safe and avoid losses even though they have an opportunity to earn more.
We can conclude that this set of investors is not risk takers. They are happy with
the returns that they receive on their investment; they are also bothered about liquidity &
the period of its maturity.
Suggestions:
1. One of the important findings of the study is that the investors don’t want to
invest for more than 10 years. But long term investments will certainly help the
investors at the time of retirement or for discharging other kind of family
responsibilities. Therefore investors should invest in instruments which have a
longer time horizon like fifteen to twenty years. The investment options that can
be considered are PPF, pension plans, life insurance plans, and various plans
available for children’s education, real estate etc.
2. Secondly, life insurance is ranked No 3 amongst the various investment options.

But while designing the portfolio, life insurance should be given at most
importance as it secures the life of the investor as well as his/her dependants.
3. Before starting the investment activity, it is always advisable to have a thorough

knowledge of the various investment options and the terms and conditions
associated with a particular investment option. It is also advisable to seek a good
professional advice.
4. The amount of savings and investment should be proportional to the annual

income. Every year the amount of investment should be increased to take care of
the inflation.
Questionnaire

1. Do you maintain funds for long term or short term investments?
- Long Term - Short Term
2. What is the amount of savings of the family per annum?
o Below 1 lakh
o 1 to 2 laks
o more than 2 to 3 lakhs
o Above 3 lakhs
3. Do you seek professional investment advice before making a decision on your

portfolio?
a. Yes
b. No
4. Which statement best describes your level of understanding about different types
of investment options and their behavior over long term?
a. No knowledge. I know nothing about investing and have little interest in

learning about different investment options. Don’t find the subject that
interesting.
b. Minimal knowledge. I understand the basic terms, but don’t understand
the differences among different types of investment. Don’t know much
about the financial world.
c. Somewhat knowledgeable. I am comfortable with general investing
concepts, but look to experts for more in-depth knowledge. Have a fair
comprehension of investing, but I would like to know more.
5. What is the duration of investment preferred by you?
o Less than 2 years

o 2-5 years

o More than 10 years
6.Rank the following factors you consider before making an investment in the order
of your preference.[1-6; 1- Good, 6-Poor]
o Safety of income is my primary concern. The amount of capital

appreciation and income my investment earn are secondary objectives.
_______
o My investment should be relatively safe and emphasize current income.
_________
o My investments can be exposed to a moderate level of risk with the
primary goal of generating current income. Capital appreciation over
time is a secondary objective.________
o My investment can be exposed to a risk and should emphasize growth
over time, but should also generate some current income.______
o My investments should be covered by tax benefit. _________
o My investments should be en-cashed within a short notice, (Liquidity).
7. Which of the following statements best reflect your views towards investment
risk and the effect of inflation (Price rise)?
Option 1. My main goal is to avoid loss, even though I may only keep pace with
the inflation.
Option 2. My main goal is to earn slightly more than inflation, while still
keeping risk to minimum.
Option 3.My main goal is to increase my portfolio value. To that end, I am
willing to accept short-term losses, but I am comfortable with extreme
performance volatility in my portfolio value.
Option 4.My main goal is to maximize my portfolio value and I am willing to
assume higher risk to do so.

8. The chart below shows the highest one year gain and the highest one year loss on
four different hypothetical investments of Rs.100000. Given the potential gain or
loss in any one year, where would you invest your money?
o Portfolio one: You could gain up to Rs.4000 (4%)
o Portfolio two: You could lose RS.2000 (-2%) but gain up to Rs.7000 (7%)
o Portfolio three: You could lose Rs.50000 (-5%) but gain up to Rs.10000
(10%)
o Portfolio four: You could lose Rs.120000 (-12%) but gain up to Rs.14000
(14%)

Bibliography
http://en.wikipedia.org/wiki/Behavioral_economics
http://www.journalofbehavioralfinance.org/journals/journals_main.html
http://www.finpipe.com/behave.htm
http://www3.interscience.wiley.com/journal/121355847/home?
CRETRY=1&SRETRY=0
http://www.hinduonnet.com/businessline/blbby/stories/2004042700200600.htm

SR No. Topic Page No.: Personal Wealth Management

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Personal wealth management

Sr no. Topic Page no.

INDIAN BUSINESS ACADEMY 1

Personal wealth management- From Super rich to everyone…..

INDIAN BUSINESS ACADEMY 2

Savings And Investment:

INDIAN BUSINESS ACADEMY 3

Objectives of the study:

INDIAN BUSINESS ACADEMY 4

1. A study on the investors’ behavior towards Securities Market in Bangalore.

1. To study the awareness of investors in the Bangalore city.

INDIAN BUSINESS ACADEMY 5

4. To offer valuable suggestions on the basis of findings.

INDIAN BUSINESS ACADEMY 6

Traps into which investors fall:

Conclusion: An investor can’t be assumed to be a machine, always making logical

INDIAN BUSINESS ACADEMY 7

3. Personal Tax planning for an Individual:

This is the review of an article written by R K Gupta (professor of finance Punjab

Tax planning at different stages of life through various investments.

4. Fundamentals of safe Investments: This article is written by Mr. Vikas Shrotriya

INDIAN BUSINESS ACADEMY 8

Can we reduce risk?

Data analysis and interpretation:

Age No. of respondents

INDIAN BUSINESS ACADEMY 9

Graph 1: Shows the age of respondents:

Ag e o f th e R esp ond ents

No. of res pondents

This table & graph shows the income of the respondents

Table 2: Represents the income of the respondents:

Income (Rs. In Lakhs) No. of respondents

INDIAN BUSINESS ACADEMY 10

Table 3: Represents the Marital Status of the respondents:

Marital Status No. of Respondents

Marital Status of the Respondents

INDIAN BUSINESS ACADEMY 11

This table & graph shows the gender of the respondents

Table 4: Represents the Gender of the respondents:

Gender No. of Respondents

Graph 4: Shows the Gender of the respondents:

Gender of the Respondents

- Long Term - Short Term

The respondents replied in the following manner:

INDIAN BUSINESS ACADEMY 12

b) Based On Income (Rs. In Lakhs)

c) Based On Marital Status

2. What is the amount of savings of the family per annum?

INDIAN BUSINESS ACADEMY 13

b) Based on Income (Rs. In Lakhs)

c) Based on Marital Status:

INDIAN BUSINESS ACADEMY 14

3. Do you seek professional investment advice before making a decision on your

The respondents replied in the following manner:

b) Based on Income (Rs. In Lakhs)

c) Based on Marital Status:

INDIAN BUSINESS ACADEMY 15

a. No knowledge. I know nothing about investing and have little interest in

The respondents replied in the following manner:

b) Based on Income (Rs. In Lakhs)

INDIAN BUSINESS ACADEMY 16

c) Based on Marital Status