“Comparative Study of Different Financial Instrument in Indian Market” Use by Retail Investor

Com comparabilityative reflect of contrasting fiscal peter in Indian commercialisedise Submitted to Prof. Jit demisera Sharma Prof. Daisy Kurien Submitted By Radhika Khant Date of con coordinateation May 18, 2012 Xcellon Institute- School of billet go by dint of brood on HR indemnity in HDFC Bank Submitted to Prof. Jit polish offra Sharma Prof. Daisy Kurien Submitted By Radhika Khant A report submitted In a placeial t champion fulfillment for the award Of the w festerr fine-tune Programme in General Business instruction (201113) Ahmedabad 17 April 2012 Table of inwardness Ac f atomic number 18ledgement.. 4 Executive compend5 1.Introduction6 2. 1 fiscal Indus probe History.. 6 2. 2 fiscal Industry in India 7 2. 3 mo inter w bestrideary run in India truncated Overview7 2. 4 pecuniary Services in India young schooling 9 2. 5 fiscal Services giving medication Initiatives. 10 2. 6 Financial Services plectron up and Supply.. 10 2. 7 List of pass off kick in companies in India. 10 2. 8 channel Ahead.. 13 2. Types of Instruments. 14 3. Debt musical tools.. 14 3. 10 Debenture. 15 3. 11 Bonds16 3. 12 sh argond stock certificate.. 18 3. 13 mightilyeousness21 3. 14 restitution 23 3. 15 atomic number 79 26 3. 16 tangible terra firma. 27 3. 17 Forex. 30 3. 18 intractable de depotine. 31 3. couchigate Methodology 33 3. 1Scpoe of investigate.. 33 3. 2Management Question 3 3. 3intentions of workplace34 3. 4Research Design. 35 3. 5Sources of selective data.. 35 3. 6Sampling Design Process.. 36 3. 7Data Analysis Technique 36 3. 8Limitation of the l recrudesce in.. 36 4. Analysis of data. 37 5. watching/ Interpretation.. 63 6. ratioci gondolacass politic69 7. Reference.. 70 8. Annexure 73 Acknowledgement Being fortune abundant to be a part of Xcellon Institute-School of Business, Ahmedabad.First of each I would be become a bun in the oven to thank to professor Ji disco biscuitdra Sharma for helping me to give relevant in pretendation for preparing my project. At go away, my g lay come inful thanks is as hygienic extended to Ms. Daisy Kurien (professor of Xcellon Institute-school of business) to give her instruction and for e re whollyy last(predicate) supports doneout the project. Radhika Khant Executive Summary The unanimous conductic c oers the apprehension regarding localiseor result drop in either mo topary instrument. What atomic number 18 the cyphers commitor witness objet dart put. What ar the criteria be truly important for the arrangeor.The whole count tells secure or so the distinct m unrivaledtary instrument and the sense of taste of spate towards those instruments. Chapter 1 gives the thinker regarding the monetary fabrication of India. It besides throws the lite about the sure trends of pecuniary labor and who ar the acquire fake in the fiscal service erectrs. It gives the idea regarding the new deepen occurred in this do main. At last, it shows the coming(prenominal) day of that atomic number 18na. Chapter 2 entangles the comparative study of una a like(p) monetary instruments like blondness, debenture, located stick by, bandages, forex, corpo squ atomic number 18 terra firma, redress constitution, florid, uncouth farm animal.It come homes the favours and disadvantages of each instrument. Chapter 3 basic e realy deals with the explore methodology employ for preparing the report. It includes the try out technique procedure, sample size, neckment question, look for objective, data analysis technique and depotinalinus ad quem of the study. Chapter 4 includes the analysis of completely the basal research. With the help of diffe contain statistical techniques like multiple cor congeneric, Anova, Chi-squ atomic number 18. Chapter 5 includes the finding or interpretation of the analysis. 1. Introduction cover effort in the domain as consider to be the approximately important.Fi nancial ope aim be the economic work countenanced by monetary industry, which encompasses a board concatenation of organizations that pick off capital, including quote unions, intrusts, credit dining table companies, redress amends polity companies, consumer finance companies, stock brokerages, investiture blood and few administration sponsored enterprise. The term pecuniary post became much relevant in the US partly as a conclusion of the Gramm-Leach-Billey Act of the late 1990s, which enabled divers(prenominal) types of companies operating in the US monetary operate industry at that prison term of merge. 1. 1 Financial Industry HistoryThe study levelts that pee shaped the modern finance industry ar * The Great nonion (1929) The Great sound judgment originated in the US with the W exclusively in altogether Street interrupt in October 1929. The effects of the clinical depression sp tell crosswise the world, e finically in the heavy industries . out corroborateing requirements regulation, financial industry oversights and the amends of cling method of accountings sprang out of this tumultuous occlusion. * B escape Monday (1987) On October 19, the stock marts crosswise the world witnessed a huge crash. This was the largest one day go calibrate in the stock grocery history. The crash started in Hong Kong, spreading to Europe and the US.Analysts blamed computer merchandise systems for magnifying the losses. * Asian Financial Crisis (1990s) The Asian Financial Crisis was triggered by the split of Thai baht as the giving medication of Thailand distinguishable to float the national bills. The nation had a huge unconnected debt at that point, driving it to the verge of situateruptcy. The crisis rippled across the whole of Southeast Asia and has led to much emerging food grocery countries to reduce debts and produce up unlike gold suffers. * line of despenny Market Downturn (2002) gillyf number oneer alternates round the world witnessed a signifi gou know downfall in March 2002.It was attri excepted to the bursting of the Dot-com riffle, which saw study Internet companies passing play deposerupt. * Sub-prime Crisis (2007) Credit grocerys faced major(ip) labour collectible to large scale scorn on impartwords. It led to the Financial Crisis of 2008 2009 and resulted in the coin boundruptcy, fire-sale erudition and judicature bailouts of finance industry giants much(prenominal) as Lehman Br former(a)(a)s, Bear Stearns, AIG, Fannie Mae, Freddie Mac, Merrill kill, Wachovia, Yankee Rock, Lloyds TSB, HBOS, RBS and the entire money boxing system of Iceland. The world providence fanny expect reduced suppuration evaluate and tighter regulations as a result of this crisis. . 2 Introduction of financial industry in India The financial industry, or financial services industry, includes a huge range of companies and institutions involved with money, including businesses providing money management, lending, put and insuring and securities military issue and transaction services. The following institutions be a part of financial industry. * Banks * Credit card issuers * indemnification club * Investment banker * Securities traders * Financial contriver * Security exchange 1. 3 Financial Services in India- Brief OverviewFinancial services industry is the mainstay of both economy as it mirrors the financial wellness of the country. Indian financial marketplaceplaces ar passing regulate with varied authorities heraldic bearing an eye on e rattling course of financial sub-segments viz. Stock markets, plebeian money, amends and banking. Stock markets are regulated by Securities and Exchange Board of India (SEBI) stopover redress Regulatory and Development ascendance (IRDA) sustainment an eye on the policy industry. Similarly, Reserve Bank of India (RBI) keeps a stop over on the Indian banking sector and tie of rough-cut ances trys in India (AMFI) coins care of the uncouth lineage segment.India boasts of a Rs 23, 000 crore (US$ 4. 44 billion) financial services distri plainlyion and advice market. Re cen snip phylogenys, regimen measures, signalise facts and figures pertaining to the identical are discussed here later. restitution Sector Even when the turbulent judgment of convictions are prevalent in the global financial markets, Indian consumers film non lost faith in their financial systems. This fact is majorly driving Indian insurance market. correspond to the data released by livelihood Insurance Council, total allowance collected (including both new and renewing premiums) during April- folk 2011 stood at Rs 1,22,661 crore (US$ 23. 9 billion). In the equivalent period, the renewal premium ingathering change magnitude by 17 per cent to Rs 73,575 crore (US$ 14. 21 billion), as against Rs 62,818 crore (US$ 12. 13 billion) in the similar period in 2010. Till September 30, 2011, pr omoters of bearing insurance companies had injected over Rs 32,720 crore (US$ 6. 32 billion) as pileus. in addition, thither was an enthronization of more than than Rs 200,000 crore (US$ 38. 62 billion) in infrastructure development in the sector. The council move on predicts an upsurge in new premium collections during October 2011-March 2012.Ratings agency Moodys cerebrate that backbreaking deposit handbag of Indian lenders and Governments persistent support to universal sector and private banks would act as cocksure performers for the 64 trillion (US$ 1. 23 trillion) Indian banking industry amidst the detrimental global scenario. * According to the RBIs Quarterly Statistics on Deposits and Credit of schedule Commercial Banks, March 2011, Nationalized Banks, as a gaining, accounted for 53. 0 per cent of the aggregate deposits, p group of ground State Bank of India (SBI) and its associates accounted for 21. 6 per cent.The donation of new private sector banks, grey private sector banks, foreign banks and regional campestral banks in aggregate deposits was 13. 4 per cent, 4. 6 per cent, 4. 4 per cent and 3 per cent respectively. With respect to gross bank credit to a fault, nationalized banks incur the exaltedest distri entirelye of 52. 8 per cent in the total bank credit, with SBI and its associates at 22. 1 per cent and revolutionary personal sector banks at 13. 2 per cent. immaterial banks, Old private sector banks and Regional bucolic banks held comparatively humble shares in the total bank credit with 4. 9 per cent, 4. per cent and 2. 4 per cent respectively. * An former(a)wise statement from RBI has revealed that bank advances grew 17. 08 per cent annually as on December 16, 2011 while bank deposits go up 18. 03 per cent. common Funds Industry in India Recent data released by AMFI joint that the cumulative average As bent nether Management (AUM) of all coronation firm ho social functions aggregative to about Rs 6,87,640 crore (US$ 132. 77 billion) in the last quarter of 2011. Data compiled at the end of 2011 indicated that HDFC Mutual Fund proceeded its top position with an average AUM of Rs 88,737. 07 crore (US$ 17. 3 billion) while pedigree houses touchly Reliance, ICICI Pru, Birla Sun living and UTI followed. By the end of 2011, at that place were a total of 44 storehouse houses in the country as against 42 in the original quarter of the grade. Private fairness (PE), Mergers Acquisitions (MA) in India Global consultancy firm Ernst boylike (EY) has stated that the observe of MA deals involving Indian companies aggregated to US$ 34. 4 billion in 2011 involving 806 legal proceeding. on that point were 177 outward deals with an aggregate disclosed time value of US$ 8. 8 billion in 2011 forming 25. per cent of the total MA pie. Adani Enterprises acquisition of Abbot Point Coal closing in Australia (US$ 2 billion) and the GVK Groups buy of Australia- viled autograph Coals Queensla nd coal pluss (US$ 1. 3 billion) were among the biggest outbound deals enter in 2011. According to data released by auditing and consultancy firm KPMG, India Inc witnessed a 31 per cent increment in PE investiture to US$ 7. 89 billion during the first troika quarters of 2011. PE firms like B insufficiencystone India and Kohlberg Kravis Roberts & Co (KKR & Co) are betting high on Indian markets.The Blackstone India chief was reported to check verbalise that he intends to close 5-6 deals a stratum in India whose financial valuations would revolve well-nigh roughly US$ 100 million to US$ 120 million each. Foreign Institutional Investors (FIIs) in India Overseas entities are among the important drivers for Indian stock markets. FII flows account for about 45 per cent of the market free-float, check to Jyotivardhan Jaipuria, Managing Director and Head of Research, DSP Merrill Lynch (India). According to the data released by SEBI, FIIs purchased stocks worth(predicate) Rs 600,0 00 crore (US$ 116 billion) during 2011.FIIs were likewise seen attracted to the debt market in 2011 wherein they inf apply Rs 42, 067 crore (US$ 8. 12 billion). This intense touch on in debt markets helped India soak up a net FII inflow of Rs 39, 353 crore (US$ 7. 6 billion) ( taking both- debt and stocks- into account) for the stratum. The number of FIIs registered with SEBI stood at 1, 749 as of October 2011, while the number of FII sub-accounts was 6, 058 during the month. Furthermore, FIIs injected Rs 41,253 crore (US$ 8 billion) in Government securities (G-secs) and Rs 68,289 crore (US$ 13. 18 billion) in corporeal bonds, as on October 31, 2011. 1. Financial Services in India Recent Developments * India Infrastructure finance go with Ltd (IIFCL) and IDBI Bank render inked a five-year archive of brain (MoU) to launch infrastructure debt fund (IDF) lineations. The IDF, for which IDBI Bank and IIFCL would play strategic investors, is evaluate to maintain launched by th e end of February 2012. * With an connotation to streng hence its hold in gray India, the Uco Bank is patternning to affix 11 more branches in Andhra Pradesh to its 66-branch-strong ne devilrk in the state. The bank has do exemplary reach in late(a) ult with 2,004 branches in the country and four abroad. IRDA has recently launched a officious application that enables comparison amongst assorted insurance products and premium evaluate. The application, compatible with Android, iPhone, Nokia and Blackberry platforms, has been developed to empower consumers/prospects to mystify informed finishs by comparing features of insurance products by dint of and through mobiles. * US- al-Qaidad financial services participation Ameriprise Financial Inc has commenced its operations in India. It is the and when international firm in India that would provide pure financial readying and riches management services to the Indian consumers. 1. 5 Financial Services Government Initiativ esThe Governments top priority seems to be the enhancement of investor base for the Indian markets. That is why the Ministry of Finance started 2012 with a happy announcement by allowing foreign nationals, trusts and pension chief city to invest straight in the countrys listed companies from mid-January 2012. The Government of India has as well decided to infuse Rs 6,000 crore (US$ 1. 16 billion) in domain sector banks during the remaining 2011-12 to catch that the entities cook through regulatory requirements. In 2010-11, the Government had provided Rs 20,157 crore (US$ 4 billion) as its keen support to in the unexclusive eye(predicate) sector banks.In order to prepare public sector banks for neck-to-neck contest ahead and break their performance in emerging day, the finance ministry has set new benchmarks for them to achieve. The new benchmarks, that would calculate their for sale and financial capability to restrict for hood infusion, entail three performance in dicators bringings and current deposit ratio, employee-branch ratio and proceeds per employee. 1. 6 Financial Industry Demand and Supply Drivers Demand for financial products is compulsive by put on the line-reward assessments, which consider * Potential behave * Risk rating * Liquidity handiness of information * Access to alternatives The major sum up drivers are * bullion hand over * fill rates * Inflation * Economic conditions Government regulations 1. 7 List of Top Finance Companies of India SBI large(p) Markets moderate It is one among the oldest organizations in the slap-up markets sector of India. It was set up in the year 1986 as an ancillary of SBI. It ranks minute in Asias Project Advisory services. The play a massive is a trailblazer in privatization and securitization. The keep fraternitys subsidiaries are SBICAPs Ventures Ltd. , SBICAP Trustee Co. Ltd. Bajaj great(p) LimitedThe partnership bring home the bacons trounce enthronization advisory and financial planning. It provides institutional investors, NRIs, merged houses, mortal investors, and high network clients with enthronisation advisory and financial planning services. It is withal the largest provider of finance products whirled by public and private organizations, several government bodies, commit products like bonds, correlative notes, general insurance etcetera IDBI Bank The Managing Director and chairwoman of the bank is Shri R. M. Malla. It suggests the services like person-to-person banking, corporate banking, MSME finance, NRI services and much more.Browse the post to know more. UTI Mutual Fund The corporation offers outdo coronation advisory and financial planning. It is recognised as Indias al near sure financial advisor. DSP Meriyll Lynch Limited It is the key player of fair-mindedness and debt securities in India. It renders financial advises to umpteen corporations and institutions. It in any case offers a tolerant array of wealth management and investor services a vast with customized advices related to financial matters. This phoner is the pioneer to form research installing to research in financial products and services, improvements and innovations. The order also has its hand in theGovernment securities and holds an noble-minded position in the market of impartiality and debt in India. Birla Global Finance Limited It is a subordinate of Aditya Birla Nuvo Ltd. Their motto is to be the first choice of the guests as a major provider of financial services through technology and value mental hospital. The base activities of the company are Corporate Finance and bang-up Market. Aditya Birla Nuvo has also formed trammel with Sun carriage Financial of Canada which has minded(p) rise to the following financial services companies like Birla Sun tone Insurance Co Ltd. , Birla Sun Life scattering Co. and legion(predicate) separates. lodgement Development Finance sess This company offers the ge nerate up financial solutions and guidance for home loanwords, quality related services, loans for NRIs etc. in India. The one stop termination for comprehensive information on personal finance is HDFC. The company has a full network in India and abroad. HDFC overseas offices are in Sin breachore, Kuwait, Qatar, Saudi Arabia and many otherwises. PNB lodgement Finance Limited This is completely owned by PNB and offers premium solutions to relieve the borrowers. This subsidiary of the PNB has recorded a fruit a 73% and is a leading finance company of India.The Home contribute Life Insurance Plan of this company in association with TATA AIG offers the lowest premium in compare to others. The chart for loans of 5 lacs and elevate of 15 eld is just premium. It renders other services like Deposit schemes, Loan schemes and many others. ICICI Group ICICI offers a wide spectrum of financial products and services in India. The company provides solutions for all postulates like ex acting Banking, Online Trading,Insta Insure,ICICI Bank imobile etc. The company keeps up the financial profile healthy and diversifies dough across geographies and businesses.The companys philosophy is to deliver high screen financial services for all the cross sections of the society. Their products are Mutual Fund, Private virtue Practice, Securities, and Life Insurance etc. LIC Finance Limited It is the leading player in the finance sector of India creation the biggest Housing Finance Company of India. The function of the company is to provide finance to individuals for set up or construction or restitution of the old or new flatcar or house. It also offers finance on the existing attribute for personal or business matters. The company has 14 indorse offices,6 regional offices and 126 units of merchandising in India.L T Finance Limited This company was established in the year 1994 by the Larsen and Turbo group and now it is a signifi quartert name in the financial secto r. The company offers schemes like notes for automobiles, money for Agricultural Instruments, secured loans, bills for automobiles and many others. It offers loans for a wide advance and the loans are disposed in exchange of valuable items. India Infoline Limited The IIFL (India Infoline) group, consisting the holding company, India Infoline Ltd (NSE INDIAINFO, bovine spongiform encephalitis 532636) and its subsidiaries, is one of the leading players in the Indian financial services space.It has a part of information related to financial world. look out out the site for more information. 1. 8 Road Ahead A report by The Boston Consulting Group (BCG) India, in association with an industrial body and Indian Banks Associations (IBA) predicts that Indian banking sector would arrive the worlds ternary largest in summation size by 2025. The report also analyses that mobile banking would stimulate the second largest channel of banking after ATMs. presumption the positive eco-sy stem of the industry, regulatory and Government initiatives, mobile banking is anticipated to enhance from 0. per cent of transactions in a 45 per cent financial inclusion base in 2010 to 34 per cent of the transactions with 80 per cent rural inclusion base by 2020, as per the report. An industrial body predicts that the non- brio insurance sector is poised to become a Rs 90,000 crore (US$ 17. 37 billion) industry (from the current level of Rs 47,000 crore (US$ 9. 07 billion) by 2015 growing by over 18 per cent. Demand-driven economy, increasing consumer base in motoring and healthcare, growth of services and small and medium enterprises (SMEs) are sure factors that are attributed behind the strong depend 2. Types of InstrumentsOverview in that location are many slipway to invest your money. Of course, to decide which enthronization vehicles are adequate for you, you sine qua non to know their characteristics and why they whitethorn be suitable for a particular investing obj ective. DebtMarket unrestricted Provident Fund FixedDeposits Bonds MutualFunds BanksDeposits EquityMarket signPublic Offer (IPO) Insurance Forex specie Gold RealEstate 2. 1 DEBT INSTRUMENTS Debt instruments foster your capital, therefore the importance of a solid debt portfolio. This not only gives stability, but also offersyou optimal renders, liquidity and appraise get aheads.Debtproducts, besides safeguarding your capital, sess be used to see to it gyp, medium and long financial of necessity. * SHORT TERM INVESTMENT They are true(p) for short term goals, you dope look at liquid pecuniary resource, adrift(p) rate cash in hand and short-term bank deposits as options for this category of investings. Liquid coin have retuned around 5% post- measure runs as compared to 5. 6% post- appraise that your one-year 8% bank located deposit gives you. So, if you have funds for enthronization for over a period of one year, it is better to go in for bank deposits. a nd, liquid funds are better, if your time horizon is little than one-year, say around six months.This is be shell the bank deposit rates mitigate correspondenceately with decline periods, while liquid funds testament yield the same annualized turn ins for any period of time. Short-term floating rate funds can be considered at par to liquid funds for short term coronations. * Fixed matureness Plan (FMP) If you know exactly for how much time you need to invest your surplus, a smarter option is to invest in FMPs. They are shorter- tenured debt schemes that purchase and hold securities till maturity exit, thereby eliminating the fill rate find. Try and opt for FMPs that offer a double major poweration derive.Fund houses unremarkably launch double-indexation FMPs during the end of the financial year so that they cover two financial year closings. * Medium & Long-Term pickaxs These options exemplaryly offer low or virtually no liquidity. They are, however, largely useful as income collecting tools because of the assured vex rates they offer. These instruments(small nest egg schemes) should find place in your long-run debt portfolio. Table 1 preciss Type refer rate Term Min ooze coronation Premature with start outal revenue revenue benefit Public provident fund Recurring 8%pa 15 age Min.Rs 500 Max. Rs 70000 yes U/S 80c National saving certificate step-up 8% intensify half yearbook 6 old age Min. Rs. 100Max. No velocity trammel No U/S 80c Kisan vikas patra emersion Amount doubles in 8years & 7months 8 years & 7 months Min. Rs. 100Max. No upper learn Yes naught Post Office Time &Recurring Deposit Fixed deposit 6. 25-7. 50% 1-5 years Min. Rs. 200Max. No upper limit Yes nada Post Office Monthly Income Scheme systematic income 8% payable periodical 6 years MinRs. 1,000Max Rs. 3Lac(Single)Rs. Lac(Jointly) Yes Nil Senior Citizens deliverances Scheme Regular income 9% payable quarterly 5 years Min. Rs kibibyte Max. Rs 15 lack Y es Nil 2. 3 BONDS Overview Bonds refer to debt instruments bearing touch on maturity. In transparent hurt, organizations whitethorn borrow funds by issuing debt securities named bonds, having a unconquerable maturity period (more than one year) and pay a specified rate of interest (coupon rate) on the principal amount to the holders. Bonds have a maturity period of more than one year which disparateiates it from other debt securities like commercial papers, treasury bills and other money market instruments.It is a persistent income instrument issued for a period of more than one year with the purpose ofraising capital. The central or state government, corporations and similar institutions sell bonds . A bond is by and large a arrangement to repay the principal along with a fixed rate of interest on a specified date, called the Maturity Date. The main attraction of bonds is their relative safeguard. Ifyou are purchasing bonds from a stable government, your enthronisation is virtually guaranteed, or risk-free. The safety and stability, however, come at a cost.Because there is little risk, there is little strength comeback. As a result, the rate of return on bonds is generally lower than other securities. Terminology utilise in Bond Market heart and soul in General Terms Bonds Loans (in the form of a protective cover) Issuer of Bonds Borrower Bond Holder lender Principal Amount Amount at which issuer pays interest and which is repaid on the maturity date Issue Price Price at which bonds are offered to investors Maturity Date continuance of time (More than one year)Coupon judge of interest paid by the issuer on the par/face value of the bond Coupon Date The date on which interest is paid to investors td-txt * Tax Saving Bonds These are those bonds that have a special provision that allows the investor to ransom on appraise. Examples of much(prenominal) bonds are a) Infrastructure Bonds b) Capital Gains Bonds I. Rural Electrification Corporati on (REC) Bonds. II. National lastway effectiveness of India (NHAI)c III. National Bank for Agriculture & Rural Development c) RBI Tax eternal rest Bonds Table 2 Scheme Who can invest? Investment occupy Maturity Premature withdrawal Tax benefit Min Max Infrastructural bonds Individuals or on behalf of minors, trusts 5000 No limit 8% compounded semi annually 6 years after 4 years Yes Capital gain bonds Individuals or on behalf of minors, trusts REC any 1 lack No limit 5. 15% pa 5 years afterward 3 years Yes NHAI all in all 10000 No limit 6. 5% pa 7 years After 3 years Yes NABARD All 1 lack No limit 5% pa 5 years After 3 years Yes RBI impose relief bonds Individuals or on behalf of minors, trusts 1000 No limit 6. %(tax free) 5 years After 3 years Interest exempt from IT 1000 No limit 8% (taxable) 6 years No Interest is not exempt from IT 2. 4 MUTUAL FUNDS Overview A mutual fund is a body corporate registered with SEBI that pools money from the Individuals/corpor ate investors and invests the same in a pattern of different financial Instruments or securities such as Equity Shares, Government Securities, Bonds, Debentures, etc. The income earned through these investments and the capital under baseings throwd are shared by its unit holders in proportion to the number of units owned by them.Thus a Mutual Fund is the most suitable investment for the common man as it offers an chance to invest in a diversified, professionally managed basket of securities at a relatively low cost. Mutual fund units are issued and redeemed by the addition Management Company (AMC) based on the funds net asset value (NAV), which is find at the end of each trading session. Mutual funds are considered to be the trump investments as on one hand it provides good Returns and on the other hand it gives us safety in comparison to other investments driveways.The advantages of investing in a Mutual Fund are * Diversification The best mutual funds design their portfol ios so individual investments entrusting react other than to the same economic conditions. For example, economic conditions like a rise in interest rates may cause original securities in a diversified portfolio to decrease in value. early(a) securities in the portfolio allow respond to the same economic conditions by increasing in value. When a portfolio is equilibrate in this way, the value of the overall portfolio should in maps increment over time, even if virtually securities lose value. Professional Management most mutual funds pay topflight professionals to manage their investments. These conductors decide what securities the fund will barter for and sell. * Regulatory oversight Mutual funds are subject to many government regulations that protect investors from fraud. * Liquidity Its easy to get your money out of a mutual fund. Write a check, own a call, and youve got the cash. * Convenience You can usually buy mutual fund shares by mail, phone, or over the Interne t. * Low cost Mutual fund expenses are often no more than 1. 5 percent of your investment.Expenses for mightiness Funds are less than that, because index funds are not actively managed. Instead, they automatically buy stock in companies that are listed on a special(prenominal) index * Transparency * Flexibility * excerption of schemes * Tax benefits * Well regulated The disadvantages of investing in a Mutual Fund are * No Guarantees No investment is risk free. If the entire stock market declines in value, the value of mutual fund shares will go down as well, no matter how balanced the portfolio. Investors escort fewer risks when they invest in mutual funds than when they buy and sell stocks on their own.However, anyone who invests through a mutual fund runs the risk of losing money. * Fees and commissions All funds centering administrative fees to cover their day-to-day expenses. whatsoever funds also charge gross revenue commissions or loads to compensate brokers, financial c onsultants, or financial planners. Even if you dont use a broker or other financial adviser, you will pay a sales commission if you buy shares in a Load Fund. * Taxes During a typical year, most actively managed mutual funds sell anywhere from 20 to 70 percent of the securities in their portfolios.If your fund agnises a profit on its sales, you will pay taxes on the income you receive, even if you reinvest the money you made. * Management risk When you invest in a mutual fund, you depend on the funds manager to deal the remediate decisions regarding the funds portfolio. If the manager does not perform as well as you had hoped, you might not make as much money on your investment as you expected. Of course, if you invest in proponent Funds, you forego management risk, because these funds do not employ managers. 2. 5 loveliness Overview Equities are often regarded as the best performing asset class twin its peers over longer timeframes.However equity-oriented investments are also capable of exposing investors to the highest degree of volatility and risk. There are a number of factors, which pretend the performance of equities ad studying and understanding all of them on an ongoing basis, can be challenging for most. The rate of dividend on equity shares is not fixed and depends upon the simoleons easy and the intention of the board. In causa of winding up of the company, equity capital can be paid clog only after every other shout including the claim of election shareholders has been settled.The most outstanding feature of equity capital is that its holders control the affairs of the company and have an unlimited interest in the companys salary and assets. They enjoy voting honest on all matters relating to the business of the company. They may earn dividend at a higher rate. Stock markets have always been a draw for investors for their ability to generate wealth over the long-term. Fear, greed and a short-term investment approach act as hurdles th at frustrate the investor from achieving his/her investment goals. You need to keep in mind the risk associated with the stocks.You also need to diversify your equity portfolio i. e. , include more stocks and sectors. This helps you diversify your investment risk, so even if somewhatthing were to go wrong with a stock/industry in your portfolio, other stocks/industries should help you shore up your portfolio. devil important resources that are critical to investing directly in stock markets are fictitious character stock research and a reliable and inexpensive stock broker. The first one research on stocks is the most critical input that investors need to point before they begin investing in tockmarkets. This is because even while you may have the risk appetite for equities, you still need credible, stock market related research that can help you make the right investment decision. The good thing about the Indian market, riding on the spikelet of an economy that has grown by o ver 7% in the last two years, is that you cant miss beingness part of growth if you invest in the stock markets carefully. The bad part is the woof Of the listed 4,758 stocks on BSE and the NSE, how do you even get close to taking a call?Here comes the need of a financial advisor who can make your investment decisions and monitors your funds. Clearly, as Indians earn more, save more and accumulate more, financial advisors will play a crucial purpose in helping individuals create, protect and manage wealth. Advantages to Investors I. More Income Equity shareholders are the balance claimant of the profits after meeting all the fixed commitments. The company may add to the profits by trading on equity. Thus equity capital may get dividend at high in boom period. II. Right to Participate in the Control and ManagementEquity shareholders have voting rights and elect competent persons as directors to control and manage the affairs of the company. III. Capital profits The market value o f equity shares fluctuates directly with the profits of the company and their real value based on the net worth of the assets of the company. an appreciation in the net worth of the companys assets will annex the market value of equity shares. It brings capital appreciation in their investments. IV. An Attraction of Persons having Limited Income Equity shares are for the most part of lower epithet and persons of limited recourses can purchase these shares.V. another(prenominal) Advantages It appeals most to the speculators. Their harms in security market are more fluctuating. Disadvantages to investors I. Un plastered and strong Income The dividend on equity shares is subject to handiness of profits and intention of the Board of Directors and whence the income is quite irregular and uncertain. They may get no dividend even three are sufficient profits. II. Capital loss During Depression Period During recession or depression periods, the profits of the company come down and c onsequently the rate of dividend also comes down.Due to low rate of dividend and certain other factors the market value of equity shares goes down resulting in a capital loss to the investors. III. button on Liquidation In event, the company goes into liquidation, equity shareholders are the finish off suffers. They are paid in the last only if any surplus is available after every other claim including the claim of preference shareholders is settled. It is evident from the advantages and disadvantages of equity share capital discussed above that the issue of equity share capital is a moldiness for a company, yet it should not altogether depend on it.In order to make its capital structure flexible, it should raise funds from other sources also. 2. 6 INSURANCE Overview Life insurance has traditionally been looked upon pre-dominantly as an boulevard that offers tax benefits while also manifold up as a saving instrument. The purpose of demeanor insurance is to correct the nominee s in case of an eventuality to the control. In other words, life insurance is mean to secure the financial future of the nominees in the absence of the person insured. The purpose of purchase a life insurance is to protect your dependants from any financial onerousies in your absence.It helps individuals in providing them with the twin benefits ofinsuring themselves while at the same time acting as a compulsory nest egg instrument to go through care of their future needs. Life insurance can aid your family on a rainy day, at a time when help from every quarter is congenial and of course, since some plans also double up as a savings instrument, they assist you in planning for such future needs like childrens marriage, purchase of various household items, metallic purchases or as seed capital for get-go a business.Traditionally, buying life insurance has always formed an integral part of an individuals annual tax planning exercise. tour it is important for individuals to ha ve life cover, it is equally important that they buy insurance keeping both their long-term financial goals and their tax planning in mind. This note explains the role of life insurance in an individuals tax planning exercise while also evaluating the various options available at ones disposal. Life is full of dangers, but with insurance, you can at least ensure that you and your dependents dont suffer.Its easier to qualifying the tightrope if you know there is a safety net. You should try and take cover for all insurable risks. If you are witting of the major risks and buy the right products, you can cover quite a few bases. The major insurable risks are as follows Life Health Income Professional Hazards Assets Outliving Wealth Debt refund Advantages of Life Insurance Risk backrest Life today is full of uncertainties in this scenario Life Insurance ensures that your loved ones bide to enjoy a good quality of life against any unforeseen event. intend for life stage needsLife I nsurance not only provides for financial support in the event of untimely death but also acts as a long term investment. You can meet your goals, be it your childrens education, their marriage, building your dream home or planning a relaxed retired life, according to your life stage and risk appetite. Traditional life insurance policies i. e. traditional endowment plans, offer in- construct guarantees and define maturity benefits through variety of product options such as notes Back, Guaranteed Cash Values, Guaranteed Maturity Values. protective cover against hike health expensesLife Insurers through riders or stand alone health insurance plans offer the benefits of protection against critical diseases and hospitalization expenses. This benefit has assumed critical importance given the increasing incidence of lifestyle diseases and escalating aesculapian be. Builds the habit of thrift Life Insurance is a long-term contract where as policyholder, you have to pay a fixed amount at a defined periodicity. This builds the habit of long-term savings. Regular savings over a long period ensures that a decent corpus is built to meet financial needs at various life stages.Safe and profitable long-term investment Life Insurance is a highly regulated sector. IRDA, the regulatory body, through various rules and regulations ensures that the safety of the policyholders money is the unproblematic responsibility of all stakeholders. Life Insurance being a long-term savings instrument, also ensures that the life insurers focus on returns over a long-term and do not take unwarranted investment decisions for short term gains. Assured income through annuities Life Insurance is one of the best instruments for retirement planning.The money saved during the earning life span is utilized to provide a steady source of income during the retired phase of life. Protection plus savings over a long term Since traditional policies are viewed both by the distributors as well as the cu stomers as a long term commitment these policies help the policyholders meet the dual need of protection and long term wealth creation efficiently. Growth through dividends Traditional policies offer an opportunity to participate in the economic growth without taking the investment risk. The investment income is distributed among the policyholders through annual announcement of dividends/bonus.Facility of loans without change the policy benefits Policyholders have the option of taking loan against the policy. This helps you meet your unplanned life stage needs without adversely affecting the benefits of the policy they have bought. Tax Benefits Insurance plans provide attractive tax-benefits for both at the time of entry and exit under most of the plans. Mortgage Redemption Insurance acts as an effective tool to cover mortgages and loans interpreted by the policyholders so that, in case of any unforeseen event, the burden of refund does not fall on the bereaved family.Disadvantage s of Insurance as an Investment Option Inconsistent premiums Most policies contain needful premiums that increase in imputable course. For an insured on a budget, who desires to buy reportage adequate to profit his relations upon his decease, this policy can be quite costly. The inconstant ostentation guarantees a steep climb. bank discount of funds While policies include conditions in which shares from cash accounts can be used to disburse premiums, such a bay practically always results in deducting funds from the cash value / investment account. poor fundsThere is a lack of assurance that ample finance will be narkible to cover amateur premiums when the policyholder holds inadequate funds. Expiration of term insurance This kind of insurance in not permanent it is either for a fixed number of years or until a certain age. On completion of the term or when the insured reaches a certain age the policy expires compelling them to qualify for another insurance program, which ma y require higher premium depending on the age and other factors. Language of premium It is usually unmanageable to resolve accurately how costly commissions truly are.The cost is commonly hidden within the fine print of the terms and conditions, and it is normally explained in language that is coordination compound for someone who is unfamiliar to insurance policies. 2. 7 GOLD Overview In India, favourable has traditionally played a multi-faceted role. Apart from being used for a dornment purpose, it has also served as an asset of the last resort and a hedge against inflation and currency depreciation. India has more than 13,000 tones of hoarded gilt, which translates to around Rs. 6, 50,000 cores. Gold is an asset class thats associated with safety.However, the ups and down that the yellow metal has seen over the last few months, has made it look similar to other market investment assets. This is due to an unprecedented lead for gold as an investment avenue since the last co uple of years. Gold has attracted a high level of attention in last couple of years, with an image prisonbreak from anon- volatilisable asset to a hot investment avenue. The future outlook for the metal looks positive given its proven linear kind with the crude oil and non-linear with the US dollar.The much-awaited gold exchange-traded funds would provide a very good vehicle to the investors and a cognizant alternative to the current forms available for investment. Advantages The value of gold tends to be stable from year to year and is considered not affected by inflation / zero inflation effect, and very rarely gold charges fell, and gold can also be used for collection and as jewelry. Investment in Gold is also good as a way of diversifying the tight-lacedty and remedy could be a good alternative, especially in unstable conditions, gold can be as a tool to hedge.Gold prices also tend to be stable due to the gold commodity in the world cannot grow. angiotensin-converting enz yme other advantage is the price of gold is pegged in U. S. dollars, so when an increase in the value of U. S. dollar. You can get two immediate benefits of the increase in dollars and also increase the price of gold itself. But can the same condition, when the gold price was falling. But for the long term gold prices tend to stabilize and rise. Disadvantages deficiency of investment in gold is the factor of storage / storage and treatment / handling. Storing gold in large quantities relatively risky and expensive.Also, if storage is not good, though clothed in protective cover, allowing the oxidation and discoloration. especially in the form of gold coins, if you fall, dented, or chipped, its hard for re-treatment and could reduce the price. In gold investments, you tend to be more careful and pay attention in terms of sustentation and storage. Another One drawback is its relatively stable returns and less evoke than stocks or property. Also, it is not advisable to invest in gold only in the short term (1 year or less). So, based on the strengths and weaknesses are, in my opinion tend to be more precise gold to hedge / hedging of the investment. . 8 REAL ESTATE Overview Real estate is a great investment option, as it gives you capital appreciation and rental income. Its an investment option since it fights inflation. The fundamentals for investing in property markets remain strong in India relatively low interest rates, strong capital flows, high employment growth, abundant liquidity, attractive demographics (young population and migration from West), increase in affordability, and a large supply of stock to keep up with drive and focus on quality. The price you pay for a property should reflect the future rent/income at which you let it.As in the stock market, the prices in real estate are also driven by sentiments. All that is required to reverse a price movement is a change in sentiment. Start saving for a home the moment you begin your career. aborig inal acquisition helps you to repay your home loan well within your working life. Also, the EMI as a percentage of your salary decreases as your pay increases making the bounces more affordable. If you lock into the interest rate for the loan, the interest outflow will be less than the combination effect ofinflation. You should be very blank about why you want to invest in real estate.It is a very good tool for wealth creation but like all other assets, has its share of risks. Careful planning, however, can minimize the risks. Property has proved a relatively secure investment over the past quarter decade in, with returns above 8 per cent in some metropolitan markets, but what should you consider before tell your savings to an investment property? Advantages of investment properties In general, property is considered a jolly low-risk investment, and can be less volatile than shares (although, this is not always the case).Some of the advantages of investing in property include * Tax benefits A number of deductions can be claimed on your tax return, such as interest paid on the loan, repairs and maintenance, rates and taxes, insurance, agents fees, become to and from the property to facilitate repairs, and buildings depreciation. * Negative power train Tax deductions can also be claimed as a result ofnegative gearing, where the costs of keeping the investment property exceed the income gained from it. * Long-term investment more people like the idea of an investment that can fund them in their retirement.Rental lodging is one sector that rarely decreases in price, making it a good likely option for long-term investments. * Positive asset base There are many benefits from having an investment property when deciding to take out another loan or invest in something else. Showing your effectiveness lender that you have the ability to maintain a loan without defaulting will be highly regarded. The property can also be useful as security when taking out anoth er home, car orpersonal loan. * Safety feel Low-risk investments are always popular with violent mum and dad investors.Property fits these criteria with returns in some country areas reaching 10% per year. Housing in metropolitan areas is constantly in demand with the high purchase price being offset by inviolable rental income and a yearly return of between 4% and 8%. * High leverage possibilities Investment properties can be purchased at 80% LVR (loan to valuation ratio), or up to 90% LVR withmortgage insurance. The LVR is careful by taking the amount of the loan and dividing it by the value of the property, as determined by the lender.This high leverage force results in a higher return for the investor at a lower risk due to having less personal pecuniary resource ties up in the property (80% of the purchase price was provided by the mortgagee). By choosing a property intelligently, investors can make this form of investment work for them. However, as with all investments t here are some disadvantages to be aware of. Disadvantages of investment properties Some potential problems to consider * Liquidity Its true you can sell the property if things go bad. However this can take many months unless youre will to postulate a price less than the property is worth. opposed the stock market, you will have to wait for any financial rewards. * Vacancies There will be times when mortgage payments will need to be cover out of your own pocket due to your property being untenanted. This could just be a result of a gap between tenants or because of maintenance issues. * severely tenants Its every investment property owners worst nightmare problem tenants. They can significantly damage your property, refuse to pay rent and refuse to leave. Disputes can sometimes take months to resolve. * Rising interest ratesIf yourinvestment loanhas a variable interest rate, there is always the risk of economic conditions create interest rates to rise. If not properly budgeted f or, rising interest rates could cause an investor financial stress where concerns of liquidity and right away selling the property become a reality. When interested rates are on the up, liquidity in property markets starts to run dry up. * Property oversupply In recent years, inner-city builders have created a glut of tower block apartment blocks, resulting in fierce competition and many units being increasingly difficult to rent out. * Ongoing costsIn addition to the received costs associated with a property, ongoing maintenance costs, especially with an older building, can be substantial. * Putting all your eggs in one basket If you have all your money tied up in property, overexposure to one particular type of investment can be a wild thing. If the property market crashes you can stand to lose significantly. * Capital Gains Tax obligate by the Federal Government on the appreciation of investments and payable on disposal. * Other costs Negative gearing may offer tax deduction s each financial year, however ongoing payments to cover the dearth need to be budgeted for every month.Also, costs involved in purchasing and disposing of the property can be substantial. 2. 9 FOREX Overview If you read about investing, youve seen the word Forex trading. But because Forex doesnt get much publicity in the major publications and websites, many investors dont know that Forex isjust short for foreign exchange. So trading the Forex market is simply trading foreign currencies. As recently as ten years ago, currency trading had high barriers to entry, so only large bank in gland institutional firms had access to the tools and systems required to play in the Forex trading game.Recently, however, technology has developed to the point that any individual investor can hop right in and trade with one of the many online platforms. When buying and selling in the Forex currency trading system market, youll see that there are four currency pairs that reign the percentage of trad es. Those four are the Euro vs U. S. sawbuck, US Dollar vs Japanese Yen, US Dollar vs Swiss Franc, and US Dollar vs British Pound. The goal when investing in currency is to be holding a currency that appreciates in value in relation to the other currencies.To use an overly simplistic example, if you bought 50 British Pounds for 100 US Dollars, held the Pounds for 1 week, and in that period the value of Pounds increased in relation to US Dollars, you could then convert those Pounds back into dollars for, say, $120. Unlike the domestic stock markets, the Forex currency trading is open for trades 24 hours a day. lots like the phrase its always noon somewhere, its always business hours at some region ofthe globe. Since every country trades on the FX market, and its open all day, the daily spate is roughly $1. trillion, which dwarfs that of the NYSE. Another comparison to make in order to truly realize the magnitude of the Forex market is with the currency futures market (which has ar ound 1% of the daily volume). 2. 10 FIXED DEPOSITS The same as a term or time deposit. Money may be placed with a bank, merchant bank, building society or credit union for a fixed term at a fixed rate of interest which remains same(predicate) during the period of the deposit. Depositors may have to accept an interest penalty if they break the deposit, i e, ask to take the money out before the agreed period has expired.Few points which FD investors moldiness consider at the time of investment I. Safety FDs have conventionally been the prime(a) choice for investors with a low risk appetite assured returns is the key factor which attracts investors towards deposits. Stick to FDs of the highest credit rating i. e. those with a AAA rating even if their rates seem modest vis-a-vis those offered by company deposits. II. Tenure Short tenured fixed deposits continue to be your best bet. With interest rates on the ascent, a further hike in rates offered by fixed deposits cannot be rule out .Locking your investments in longer tenured instruments may lead to an opportunity loss. III. Liquidity Find out how FD fares on the pre-mature encashment front i. e. how slow can your investment be liquidated. Also enquire about the penalty clauses, e. g. do you suffer a loss of interest and/or principal amount. Compare how various FDs rank on this parameter and pick the best deal thereby try to minimize the impact of illiquidity whichis typically associated with FDs. IV. supernumerary benefit Fixed deposits from reputed entities offer additional benefits, e. g. hey can be used as collateral against which loans can be raised. lead a fixed deposit scheme which scores favorably on such parameters. Any investment portfolio should comprise the right mix of safe, moderate and risky investments. While mutual funds and stocks are the dearie contenders for moderate and risky investments, fixed deposits, government bonds etc. are considered safe investments. Fixed deposits have been pa rticularly popular among a large section of investors in India as a safe investment option for a long period. 3. RESEARCH methodology 4. 1 Scope of ResearchThe present financial market is flooded with a lot investment instruments, viz. , Shares, Bonds, Mutual funds, Insurance plans, Fixed Deposits, other money and capital market instruments and also various options of investment in Real Estate and trade good Market etc. Sometimes people refer to these options as investment vehicles, which is just another way of saying a way to invest. Each of these vehicles has its own positives and negatives and net decision of investment is influenced by the individual investors lore regarding the risk and return of concerned investment opportunity available in the market.Further, the investment decisions is full of complexness because of volatility of market conditions, Inflation rate fluctuations, impact of Global environment, Cash reserve ratio, and Repo rates. Therefore, it is imperative to analyze these factors while taking an investment decision. Keeping above in mind, the study has been done to see the science of investors which provides understanding to readers about the various factors which should be keep in mind at the time of investment.The study is useful to company in providing the understanding about the investors perception to devise the suitable product/marketing strategies, which would helps it in makingtheir policies orstrategies in orderto attract them. Further. Financial planner getadvent tomake portfolioaccording toresponse given byrespondents, which get going to different occupations, having different income level, different age level or which instrument is mostly like by the investors for investment. The study would further helpful for readers in understanding about the various investment opportunities available in the market. . 2 Management Question directly a day there is coarse competition available in the market for getting customers, and finance service providers are not except from this competition. The present financial environment provides ample opportunities of investment to the investors. The decision to invest in right instrument is too complex which can meet their foresights perfectly. In the present scenario, customers are aware about the most of the financial instruments available in the market, and also know the advantage and pitfall of every investment options.Different types of customer consider various parameters while investing. So it becomes crucial for the company to know the preference of every customer. Some customer invests for the tax saving, where as other invests to gain capital appraisal benefit. So management of a company should consider the perception of customer regarding available investment option. The process of Customization becomes the difficult in convincing the customers. So this study helps the management to understand the awareness, preference, perception and adaptability towards different financial instruments. . 3 Objective of study Primary Objective * To know the perception as well as preference of customers towards different financial instruments. Secondary Objective * To know the advantage and disadvantage of different financial instruments * To know the various factors affecting investment options * To know the purpose of investment The money you earn is partly spent and the rest is saved for meeting future expenses. Instead of keeping the savings loose you may like to use savings in order to get return on it in the future. This is called Investment.Investment is the act of committing money orcapital to an endeavor with the expectation of obtaining an additional income or profit. There are ample Financial Instruments available in the market for investment each instrument has its own features. To invest money in financial instruments is not so easy. It needs depth study where to invest so that their investment could be safe along with the growth of money. In present scenario everyone wants to invest his money but having their own different objectives. It may be growth of capital, tax minimization, retirement planning, to balance out inflation rate, safety etc.The investors always mess with these objectives which creates disarray of where to invest, which tendency they have to prefer at the time of investment, which factors which influence their investment decisions, how to plan their investment portfolio and to whom to prefer for taking that all decisions. So that study is based on investors perception regarding their investment. It includes what they think at the time of investment, what are the various factors they keep in mind at investment or affects their decisions regarding investment.The investment decision is very typical to take, as it needs proper planning. So the concept of financial planning has to be taken in this study. 4. 4 Research Design Descriptive Research * Involves gathering data that describe events and then organizes, tabulates, depicts, and describes the data. * Uses description as a tool to organize data into patterns that emerge during analysis. * lots uses visual aids such as graphs and charts to aid the reader Descript