Study of different investment strategies and portfolio management

ACKNOWLEDGEMENT

I wish to express my gratitude to Standard Chartered Bank’s management

for giving us an opportunity to be a part of their esteem organization and
enhance our knowledge by granting permission to do our Summer
Internship Program under their kind guidance.

I am grateful to Mr. NITISH DIPANKAR (Area Sales Manager), our guide, for
his invaluable guidance and cooperation during the course of the program.
He provided us with his assistance and support whenever needed that has
been instrumental in completion of this program.

I am also sincerely thankful to my faculty guide, Mrs. Anupama Raina

(faculty, IBS-Gurgaon) who had an immense patient to take up my all
queries and suggest me her invaluable suggestions. Her guidance and
encouragement has showed the path of fulfillment to my project.

I am grateful to Prof. A.K.Bhattacharya (Faculty, IBS-Gurgaon) for his

helpful guidance to stick to the right path in the project. His guidance during
the questionnaire preparation was very useful and helps me to analyse the
report.

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Table of content
Sl. No. Particulars Page no.

1. Acknowledgement 1

2. Table of content 2

3. Abstract of the Report 3

4. Banking Industry Current scenario 4

5. Company Profile

a. Back ground of Standard Chartered Bank 6

b. Principle and values 7

c. Business offered by Standard Chartered Bank 9

d. Products Offered By Standard Chartered Bank 11

6. Introduction 14

7. Investment & Investment planning 16

8. Study of Financial Products

a. Savings Bank A/c 21

b. Mutual funds 23

c. Life Insurance & ULIPs 35

d. Stock market 45

e. Term Deposits & Bonds 46

9. Field survey 49

10. Analysis 51

11. Recommendation 88

12. Portfolio Management 91

13. Annexure 106

14. Bibliography 119

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Abstract of the Report

This report contains the different investment strategies taken by the
investors (mainly small investors) and the trends of investment in different
investment instruments. Project focused on findings of risk tolerance of
investors and the time horizon they want to remain invested n the market.
The project extended to find out the instrument in which different investor is
now investing evaluating the projecting risk in the instrument.

To understand the trend of the investor I have gone through a field

survey, based on investment strategy questionnaire. The result of the
survey depicts a clear picture of current investment trend in Indian market.
The analysis shows that the age groups of 18-30 years are more adaptable
to the high risk where as the age group of 41-50 are the safe players.
Annual income and the disposable income also played a major role in the
investment strategies in the investor’s mind. Results reveal that most
investor’s first priority to invest is the “Tax Savings”.

The project continues with the portfolio management of the selected

respondent of the field survey. To do the portfolio management study have
been done on different investment instrument in details, like Savings bank
A/c, ULIP (Unit Linked Insurance Policy), Mutual Funds, Stocks, Term
Deposits of Standard Chartered Bank and other different private Banks and
AMC’s. After the study portfolio is prepared for the selected respondent after
revisiting them for the portfolio management discussion. The portfolio is
made on the response of the respondent in the last visit.

Introduction to Banking Industry

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The Indian banking can be broadly categorized into Nationalized,

Private Banks and Specialized banking institutions. The Reserve Bank of
India acts a centralized body monitoring any discrepancies and shortcoming
in the system. The need to become highly customer focused has forced the
slow-moving public sector banks to adopt a fast track approach. The
unleashing of products and services through the internet has galvanized
players at all levels of the banking and financial institutions market grid to
look a new at their existing portfolio offerings. Indian banks are now quoting
all higher valuation when compared to banks in other Asian countries (viz.
Hong Kong, Singapore, Philippines etc.). The reasons are numerous: the
economy is growing at a rate of 8%, Bank credit is growing at 30% per
annum and there is an ever-expanding middle class of between 250 and 300
million people (larger than the population of the US) in need of financial
services.

Indian markets provide growth opportunities, which are unlikely to be

matched by the mature banking markets around the world. Some of the
high growth potential areas to be looked at are: the market for consumer
finance stands at about 2%-3% of GDP, compared with 25% in some
European markets, the real estate market in India is growing at 30%

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annually and is projected to touch $ 50 billion by 2008, the retail credit is

expected to cross Rs 5,70,000 crore by 2010 from the current level of Rs
1,89,000 crore in 2004-05 and huge SME sector which contributes
significantly to India’s GDP.

Banks that employ IT solutions are perceived to be ‘futuristic’ and

proactive players capable of meeting the multifarious requirements of the
large customer base.

The Indian banking has come from a long way from being a sleepy
business institution to a highly proactive and dynamic entity. This
transformation has been largely brought about by the large dose of
liberalization and economic reforms that allowed banks to explore new
business opportunities rather than generating revenues from conventional
streams. The banking in India is highly fragmented with 30 banking units
contributing to almost 50% of deposits and 60% of advances.

Industry estimates indicate that out of 274 commercial banks

operating in India, 223 banks are in the public sector and 51 are in the
private sector. The private sector bank grid also includes 24 foreign banks
that have started their operations here. Under the ambit of the nationalized
banks come the specialized banking institutions. These co-operatives, rural
banks focus on areas of agriculture, rural development etc.

Currently (2007), banking in India is generally fairly mature in terms

of supply, product range and reach-even though reach in rural India still
remains a challenge for the private sector and foreign banks.

Currently, India has 88 scheduled commercial banks (SCBs) - 28

public sector banks (that is with the Government of India holding a stake),
29 private banks (these do not have government stake; they may be
publicly listed and traded on stock exchanges) and 31 foreign banks. They
have a combined network of over 53,000 branches and 17,000 ATMs.
According to a report by ICRA Limited, a rating agency, the public sector
banks hold over 75 percent of total assets of the banking industry, with the
private and foreign banks holding 18.2% and 6.5% respectively

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The Background of Standard Chartered Bank

T
he Standard Bank of British South Africa founded in 1863 and the
Chartered Bank of India, Australia and China, founded in 1853. The
Standard Chartered Group was formed in 1969 through a merger of
these two banks.

Both companies were keen to capitalize on the huge expansion of trade and
to earn the handsome profits to be made from financing the movement of
goods from Europe to the East and to Africa.

The Chartered Bank

• Founded by James Wilson following the grant of a Royal Charter by

Queen Victoria in 1853.
• Chartered opened its first branches in Mumbai (Bombay), Calcutta and
Shanghai in 1858, followed by Hong Kong and Singapore in 1859.
• Traditional business was in cotton from Mumbai (Bombay), indigo and
tea from Calcutta, rice in Burma, sugar from Java, tobacco from
Sumatra, hemp in Manila and silk from Yokohama.
• Played a major role in the development of trade with the East which
followed the opening of the Suez Canal in 1869 and the extension of
the telegraph to China in 1871.
• In 1957 Chartered Bank bought the Eastern Bank together with the
Ionian Bank's Cyprus Branches. This established a presence in the
Gulf.

The Standard Bank

• Founded in the Cape Province of South Africa in 1862 by John

Paterson. Commenced business in Port Elizabeth, South Africa, in
January 1863.
• Was prominent in financing the development of the diamond fields of
Kimberley from 1867 and later extended its network further north to
the new town of Johannesburg when gold was discovered there in
1885.
• Expanded in Southern, Central and Eastern Africa and by 1953 had
600 offices.

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• In 1965, it merged with the Bank of West Africa expanding its

operations into Cameroon, Gambia, Ghana, Nigeria and Sierra Leone.

In 1969, the decision was made by Chartered and by Standard to undergo a

friendly merger. All was going well until 1986, when a hostile takeover bid
was made for the Group by Lloyds Bank of the United Kingdom. When the
bid was defeated, Standard Chartered entered a period of change. Provisions
had to be made against third world debt exposure and loans to corporations
and entrepreneurs who could not meet their commitments. Standard
Chartered began a series of divestments notably in the United States and
South Africa, and also entered into a number of asset sales.

From the early 1990s, Standard Chartered has focused on developing its
strong franchises in Asia, the Middle East and Africa using its operations in
the United Kingdom and North America to provide customers with a bridge
between these markets. Secondly, it would focus on consumer, corporate
and institutional banking and on the provision of treasury services - areas in
which the Group had particular strength and expertise.

In the new millennium they acquired Grindlays Bank from the ANZ Group
and the Chase Consumer Banking operations in Hong Kong in 2000.

Since 2005, they have achieved several milestones with a number of

strategic alliances and acquisitions that will extend our customer or
geographic reach and broaden our product range.

Principles & Values

At Standard Chartered success is built on teamwork, partnership and the

diversity of the people.

At the heart of our values lie diversity and inclusion. They are a fundamental
part of our culture, and constitute a long-term priority in our aim to become
the world's best international bank.

Today we employ 73,000 people, representing 115 nationalities, and you'll

find 61 nationalities among our 500 most senior leaders. We believe this
diversity helps to fuel creativity and innovation, supporting the development
of exciting new products and services for our customers worldwide.

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What Standard Chartered Bank Stand for

Strategic intent

• The world's best international bank

• Leading the way in Asia, Africa and the Middle East

Brand promise

• Leading by Example to be The Right Partner

Values

• Responsive
• Trustworthy
• International
• Creative
• Courageous

Approach

• Participation:- Focusing on attractive, growing markets where we can

leverage our relationships and expertise
• Competitive positioning:- Combining global capability, deep local
knowledge and creativity to outperform our competitors
• Management Discipline:- Continuously improving the way we work,
balancing the pursuit of growth with firm control of costs and risks
Commitment to stakeholders

• Customers:- Passionate about our customers' success, delighting them

with the quality of our service
• Our People:- Helping our people to grow, enabling individuals to make
a difference and teams to win
• Communities:- Trusted and caring, dedicated to making a difference
• Investors:- A distinctive investment delivering outstanding
performance and superior returns
• Regulators: - Exemplary governance and ethics wherever we are.

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Standard Chartered’s Business

Listed on both the London Stock Exchange and the Hong Kong Stock
Exchange, Standard Chartered PLC is consistently ranked in the top 25 FTSE
100 companies by market capitalization.

By combining our global capabilities with deep local knowledge, we develop

innovative products and services to meet the diverse and ever-changing
needs of individual, corporate and institutional customers in some of the
world's most exciting and dynamic markets.

Personal banking

Through our global network of over 1,700 branches and outlets, we offer
personal financial solutions to meet the needs of more than 14 million
customers across Asia, Africa and the Middle East.

Credit Cards

Accepted worldwide, our credit cards are designed to give you greater
financial freedom and flexibility.

Insurance

Enjoy peace of mind with comprehensive protection for you and your family.

Investment Advisory Services

Take advantage of expert advice on how to preserve and enhance your

wealth.

International Banking

Our international banking centres provide a confidential banking platform

and global investment opportunities.

Savings & Banking Services

We offer a wide choice of savings accounts and banking services to suit you
and your lifestyle

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Loans & Mortgages

Our personal loans and award-winning mortgages are helping people realise
their aspirations in countries across the world.

SME Banking

SME Banking provides integrated financial solutions to small and medium

businesses, through a relationship management approach. Its
customer focused product offerings include working capital finance,
trade services, foreign exchange, and cash management.

Wholesale Banking

Headquartered in Singapore and London, with on-the-ground expertise that

spans our global network, our Wholesale Banking division provides corporate
and institutional clients with innovative solutions in trade finance, cash
management, securities services, foreign exchange and risk management,
capital rising, and corporate finance.

Islamic Banking

Standard Chartered Saadiq's dedicated Islamic Banking team provides

comprehensive international banking services and a wide range of Shariah
compliant financial products that are based on Islamic values.

Private Banking

Our Private Bank advisors and investment specialists provide customised

solutions to meet the unique needs and aspirations of high net worth clients.

Commercial banking

Standard Chartered has maintained a long local presence, since 1858, with
particular emphasis on relationship banking. Significant networks have been
established with vendors and financial-related organizations to enable it to
offer the customers a comprehensive range of flexible financial services,
with special focus on transactional banking products. Supported by state-of-
the-art operations, Standard Chartered is pro-active in improving every part
of services. Electronic Delivery system has been put in place to ensure that
transactions are handled speedily.

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PRODUCT OFFERED BY STANDARD CHARTERED BANK

Different Types of Savings Bank Account

aXcessPlus Unlimited aXcess.

Unlimited
Freedom
Get instant cash at over 20,000 ATMs across India and over 1,000,000 ATMs
across the world through the Visa network. And get a globally valid Debit
Card that lets you shop at over 326,000 outlets in India and at over 14
million outlets across the world.

Unique Feature

 FREE Unlimited Visa ATM transactions (Cash withdrawal and balance

enquiry)
 FREE Standard Chartered Bank branch access across the country.
 FREE Doorstep Banking
 FREE Demand Drafts/Pay Orders (drawn at SCB locations)
 FREE Payable at Par Cheque-book
Other features available are;
 International Debit Card
 Phone Banking
 Net Banking and
 Extended Banking Hours.

Super Value Account

Unique feature

 Free globally valid Debit-cum-ATM card

 Free Access to 6500 ATMs in India

 Free Doorstep Banking

 Free Bill pay

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 Free Inter Bank Funds Transfer

 Free Foreign Inward Remittance Certificates

Other benefits of the Super Value account:

 Globally valid debit card

 Multicity Banking

 24-hour branches, 365 day branches available at select locations

 Phone banking - available to you 365 days a year on a 24-hour basis

in the metros and everyday of the week at other centers.

 Inter Net banking - access and transact on your accounts through the
Internet from any part of the world.

 Free Investment Advisory Services to assist you in investing in a range

of mutual funds.

 Full suite of complimentary banking services including credit cards,

loan products and capital market services

No Frills Account

You can now open an account with Standard Chartered Bank, with an
average quarterly balance of as low as Rs. 250. What’s more – you can avail
of Anywhere Banking, by which you can access your account from any
branch of Standard Chartered Bank in India.

Unique Feature

 Quarterly Average Balance, as low as Rs. 250.

 ATM card & Debit Card available.

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 4 free transactions per month at any Standard Chartered Bank

channel (Internet banking, Phone Banking, ATM & Branch).

 Anywhere banking– Access your account from any branch of Standard

Chartered Bank.

 Access to Phone Banking and Internet Banking.

 Free Cheque deposit at any SCB Branch or ATM.

aaSaan

Unique Feature

 No Minimum Balance requirement

 Free unlimited access to any SCB branch across the country for
Customer-in-person
 Unlimited Free access to Standard Chartered Bank ATM's
 Up to 4 free cash withdrawal transactions per month at other domestic
VISA ATMs
 Nominal quarterly fee of Rs. 100 (reversed if the Average Balance in
the quarter is Rs 10,000 or more).

Other Facilities
 International Debit Card
 Phone banking
 Net Banking
 Extended banking hours
 Locker facility
 Door-step banking.

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Introduction
Indian economy and Investment Sectorial growth

India economy is developing at a fast rate and every sector of India

economy is showing a positive growth. The growth development product in
India in the year 2006-07 is 9.2%. The rate of robust growth of in industrial
development is 10.6%. ‘The Economists’ have also observed high growth in
manufacturing sector and telecommunication sectors. The Infrastructure
sector is also showing impressive growth in the year 2006-07. The
secondary sectors as also shown upward growth, the BSE and NSE sensex
has closed at high marks of 21000 and 7000 respectively. In this way all
these sectors have contributed to overall growth of Indian economy.

Behind China, India is the second fastest growing economy. According

to a survey by Goldman Sachs, India will become the 3rd largest economy
by 2035. This is measured in $US. If we use PPP (purchasing power parity)
which takes into account local purchasing power, India already has the 3rd
largest economy.

The economy has been growing at an average growth rate of 8.8 per
cent in the last four fiscal years (2003-04 to 2006-07), with the 2006-07
growth rate of 9.6 per cent being the highest in the last 18 years.
Significantly, the industrial and service sectors have been contributing a
major part of this growth, suggesting the structural transformation
underway in the Indian economy.

Within the investment sector the real estate is raising sky high due to

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Strong Economic Growth: The world’s fourth largest economy, growing at

over 8% the last two years and forecast to grow at over 7% over the next
five; Growth measures supported across the political spectrum; a boom in
the services sector with a strong revival of industry; powerful internal
consumption and demand.

The Rise of the Middle-Class: 300 million and growing with higher
disposable incomes and even higher aspirations; educated, professional
workforce driving urbanization beyond the traditional metro cities.

Before I start I have to explain what investment is and why people

want to invest? It is very important for me to understand how people plan
before investing. These things are discussed below:

INVESTMENTS

I
nvestment = Cost Of Capital, like buying securities or other monetary or paper
(financial) assets in the money markets or capital markets, liquid real assets,
such as gold, real estate, or collectibles. Types of financial investments include
shares, other equity investment, and bonds. These financial assets are then
expected to provide income or positive future cash flows, and may increase or
decrease in value giving the investor capital gains or losses.

People usually invest when they have good amount of ideal money to
spend. The main objective is to save money for future uncertainties, capital
appreciation, more income and most of all tax savings.

Investing is not guesswork or prediction. It takes more than just a

‘tip’; it needs training to plan, instinct to pick and sheer intellect to make it
work for the investor. Human nature is fickle, his wants keep changing.

An investment can be described as perfect if it satisfies all the needs

of all investors. So, the starting point in searching for the perfect investment
would be to examine investor needs. If all those needs are met by the
investment, then that investment can be termed the perfect investment.

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Most investors and advisors spend a great deal of time understanding the
merits of the thousands of investments available in India. Little time,
however, is spent understanding the needs of the investor and ensuring that
the most appropriate investments are selected for him.

Why people invest?

Investors do invest in different instrument to simplify their lifestyle and to
make certain goals in future life. Most investors invest for the long term to
fulfill the inflation and for the capital appreciation. By and large the investors
have typical requirement to fill, and those are:-

• Capital preservation: - The chance of losing some capital has been a

primary need. This is perhaps the strongest need among investors in
India, who have suffered regularly due to failures of the financial
system.

• Wealth generation: - This is largely a factor of investment

performance, including both short-term performance of an investment
and long-term performance of a portfolio. Wealth accumulation is the
ultimate measure of the success of an investment decision.

• Life Cover:- Many investors look for investments that offer good
return with adequate life cover to manage the situations in case of any
eventualities. Recent days investors do invest in the endowment
policies and ULIPs.

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

important part of the Indian psyche. Every rupee saved in taxes goes
towards wealth accumulation.

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• Income: This refers to money distributed at intervals by an

investment, which are usually used by the investor for meeting regular
expenses. Mostly daily traders invest for income.

• Future Uncertainty: - No one has seen the future so every person

personally save money for any contingencies. People invest in short
term for this. There must be an easy cash withdraw for the
contingencies.

• Ease of withdrawal: This refers to the ability to invest long term but
withdraw funds when desired. This is strongly linked to a sense of
ownership. It is normally triggered by a need to spend capital, change
investments or cater to changes in other needs.

• Beat inflation: - inflation is a major player in the economy. It

reduced the valuation of rupee. Investors do in vest to maintain the
buying capacity of them.

• Retirement planning: - most of the service person do invest to get

return after the vesting period, for that the investment such a manner
that the returns comes at the time of retirement.

Investment Planning
Investors need to identify the financial goals throughout life or for the
next 10 to 15 years depending upon the time horizon selected by the
investor, and prioritizing them. Investment Planning is important because it
helps in deriving the maximum benefit from the investments.

Success as an investor depends upon his investment in right

instrument in right time and for the right period. This, in turn, depends on
the requirements, needs and goals. For most investors, however, the three
prime criteria of evaluating any investment option are liquidity, safety and
level of return.

Investment Planning also helps to decide upon the right investment

strategy. Besides individual requirement, investment strategy would
also depend upon age, personal circumstances and risk appetite.

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Investment Planning also helps in striking a balance between risk and

returns. By prudent planning, it is possible to arrive at an optimal mix
of risk and returns, which suits particular needs and requirements.

Investment means putting the ideal money to work to earn more

money. Done wisely, it can help you meet financial goals. Investing
even a small amount can produce considerable rewards over the long-
term, especially if you do it regularly. But one needs to decide about
how much he / she wants to invest and where.

Options before investment

Investors choose wisely before investing which solely depends on the

present market conditions, future prospect of the instrument, the
return offered by the company and the season to invest in that
particular instrument. For example, a good investment for a long-term
life insurance plan may not be a good investment for higher education
expenses. In most cases, the right investment is a balance of three
things: Liquidity, Risk tolerance and Return.

Liquidity – How easily an investment can be converted to cash, since

part of invested money must be available to cover financial
emergencies.

Risk tolerance - The biggest risk is the risk of losing the money that
has been invested, but the main thing is to how much investor can
cover up and sustain with that. Another equally important risk is that
investments may not provide enough growth or income to offset the
impact of inflation, which could lead to a gradual increase in the cost
of living. There are additional risks as well (like decline in economic
growth). But the biggest risk of all is not investing at all.

Return - Investments are made for the purpose of generating returns.

Safe investments often promise a specific, though limited return.
Those that involve more risk offer the opportunity to make - or lose -
a lot of money.

The Investment Process

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Investors like to invest through the instinct and want to gain

profit from the market by investing. However, while financial
institutions are undoubtedly a part of the process of investing. As
investors, it is not surprising that we focus so much of our energy and
efforts on investment philosophies and strategies, and so little on the
investment process. It is far more interesting to read about how Peter
Lynch picks stocks and what makes Warren Buffett a valuable
investor, than it is to talk about the steps involved in creating a
portfolio or in executing trades. Though it does not get sufficient
attention, understanding the investment process is critical for every
investor for several reasons:

1. Investment planning centrally depends upon the portfolio of the

investor; as a result the primary step of the investment process is to
make a portfolio. By emphasizing the sequence, it provides for an
orderly way in which an investor can create his or her own portfolio or
a portfolio for someone else.

2. The investment process provides a structure that allows investors to

see the source of different investment strategies and philosophies. By
so doing, it allows investors to take the hundreds of strategies that
they see described in the common press and in investment
newsletters and to trace them to their common roots.

3. The investment process emphasizes the different components that are

needed for an investment strategy but strategies that look good on
paper never work for those who use them.

STEPS INVOLVED IN INVESTMENT PLANNING

Investment is not only prediction it has its own reasons behind every up and
down in the market. So it is has its own theory to move in particular
directions. To get in to the market investors must go through the following
process.

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 Analysis and profiling of the instrument: - The first step is

performing a Need Analysis check. The requirements and expectations
of the investor should be met by the instrument. During the profiling
investor should consider their age, their profession, the number of
dependents, and their income. By doing this check, the risk profile of
the investor should be designed.

 Evaluating the alternatives: - The next step would be revaluating

the needs. Other investment instruments and options should be
analyzed. The risk-return profile of investment products is evaluated in
this step. Every investment product varies according to its return
potential and riskiness. Investment products giving a high rate of
return are generally risky and volatile. The products giving a lower
rate of return usually are less risky.

 Analyse the Profile: - The next step would be analyse the risk-return
profile of the investor on to the investment portfolio. The investment
instruments are matched with the risk-return profile of the investor.
All the investment alternatives that offer expected rate of return are
evaluate for consideration.

 Preparing an Optimum Portfolio: - Then according to the risk

appetite and return pattern an optimum portfolio is designed for the
investor. The basket of investment instrument selected in the previous
step are given due weightage and appropriate amount of money is
invested in each of the investment avenue so as to get maximum
return with minimum possible risk.

 Consistent Monitoring: - Finally a continuous watch on the portfolio

is extremely important. Fundamental analysis of the investment
products done in the previous stages would only help in selecting the
right product but the right time of entry or exit from a particular

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stream is evaluated by doing a technical analysis. For this professional

portfolio management is a must.

Analysis and profiling of Evaluating the

the instrument alternatives

Consistent Monitoring
Investmen Analyse the
t planning Profile

Preparing an
Optimum Portfolio

STUDY OF FINANCIAL PRODUCTS

Investment options in India

Savings Bank Account (SB A/c)

Saving Bank account (SB account) is meant to promote the habit of saving
among the people. It also facilitates safekeeping of money. In this scheme
fund is allowed to be withdrawn whenever required, without any condition.
Hence a savings account is a safe, convenient and affordable way to save
money. Banks generally put some restrictions on the total number of
withdrawals permitted during specific time periods. Banks also stipulate
certain minimum balance to be maintained in savings accounts. Normally a
higher minimum balance is stipulated in cheque operated accounts as
compared to non-cheque operated accounts.

Features:
The minimum amount to open an account in a nationalized bank is Rs 500.
If cheque books are also issued, the minimum balance of Rs 1000 has to be
maintained. However in some private or foreign bank the minimum balance

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is Rs 5,000 or more and can be up Rs. 10,000. One cheque book is issued to
a customer at a time.

A Savings account can be opened either individually or jointly with another

individual. In a joint account only the sign of one account holder is needed
to write a cheque. But at the time of closing an account, the sign of the both
the account holders are needed.

Certain non-profit welfare organizations are also permitted to open Savings

bank accounts with banks.

Return
Interest @ 3.5 % p.a. with effect from 1/3/2003.

The amount of interest will be calculated for each calendar month on the
lowest balance in credit of any account between the close of the tenth day
and the last day of each month. In Savings Bank account, bank follows the
simple interest method. The rate of interest may change from time to time
according to the rules of Reserve Bank of India.

One can withdraw his/her money by submitting a cheque in the bank and
details of the account, i.e. the Money deposited, withdrawn along with the
dates and the balance, is recorded in a passbook.

• Advantages
It's much safer to keep your money at a bank than to keep a large
amount of cash in your home.
• Bank deposits are fairly safe because banks are subject to control of
the Reserve Bank of India with regard to several policy and
operational parameters, many of the banks also give internet banking
facility through with one do the transactions like withdrawals,
deposits, statement of account etc.
• Banks provide Auto-Mated Teller machine(ATM) for 24 hours cash
withdrawn, some banks also have 24 hours open branches in very few
selected cities.

How to open a SB account

• Savings Bank Account can be opened in the name of an individual or

in joint names of the depositors by filling up the appropriate forms.

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• A minor who have completed ten years of age can also open and
operate the account.
• At the time of opening an account one must submit the documents like
photocopy of passport or Electoral card, Postal identification card as
address proof and two passport size photos.
• Most banks also require an introduction for opening an SB account.
The introduction may be obtained either from an existing account
holder or from a respectable citizen, well known to the bank, which
should normally call on the bank and sign in the column specially
provided for the purpose of introduction in the account opening form.

Mutual fund in India

A mutual fund is nothing more than a collection of stocks and/or bonds. You
can think of a mutual fund as a company that brings together a group of
people and invests their money in stocks, bonds, and other securities. Each
investor owns shares, which represent a portion of the holdings of the fund.

You can make money from a mutual fund in three ways:

1) Income is earned from dividends on stocks and internet on bonds. A fund

pays out nearly all of the income it receives over the year to fund owners in
the form of a distribution.
2) If the fund sells securities that have increased in price, the fund has a
capital gain. Most funds also pass on these gains to investors in a
distribution.
3) If fund holdings increase in price but are not sold by the fund manager,
the fund's shares increase in price. You can then sell your mutual fund
shares for a profit.

Funds will also usually give you a choice either to receive a check for
distributions or to reinvest the earnings and get more shares.

Advantages of Mutual Funds:

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Professional Management - The primary advantage of funds (at least

theoretically) is the professional management of your money. Investors
purchase funds because they do not have the time or the expertise to
manage their own portfolios. A mutual fund is a relatively inexpensive way
for a small investor to get a full-time manager to make and monitor
investments.

Diversification - By owning shares in a mutual fund instead of owning

individual stocks or bonds, your risk is spread out. The idea behind
diversification is to invest in a large number of assets so that a loss in any
particular investment is minimized by gains in others. In other words, the
more stocks and bonds you own, the less any one of them can hurt you
(think about Enron). Large mutual funds typically own hundreds of different
stocks in many different industries. It wouldn't be possible for an investor to
build this kind of a portfolio with a small amount of money.

Economies of Scale- Because a mutual fund buys and sells large amounts of
securities at a time, its transaction costs are lower than what an individual
would pay for securities transactions.

Liquidity- Just like an individual stock, a mutual fund allows you to request
that your shares be converted into cash at any time.

Simplicity - Buying a mutual fund is easy! Pretty well any bank has its own
line of mutual funds, and the minimum investment is small. Most companies
also have automatic purchase plans whereby as little as $100 can be
invested on a monthly basis.

Disadvantages of Mutual Funds:

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• Professional Management - Did you notice how we qualified the advantage

of professional management with the word "theoretically"? Many investors
debate whether or not the so-called professionals are any better than you or
I at picking stocks. Management is by no means infallible, and, even if the
fund loses money, the manager still takes his/her cut. We'll talk about this in
detail in a later section.

• Costs - Mutual funds don't exist solely to make your life easier - all funds
are in it for a profit. The mutual fund industry is masterful at burying costs
under layers of jargon. These costs are so complicated that in this tutorial
we have devoted an entire section to the subject.

• Dilution - It's possible to have too much diversification. Because funds

have small holdings in so many different companies, high returns from a few
investments often don't make much difference on the overall return. Dilution
is also the result of a successful fund getting too big. When money pours
into funds that have had strong success, the manager often has trouble
finding a good investment for all the new money.

• Taxes - When making decisions about your money, fund managers don't
consider your personal tax situation. For example, when a fund manager
sells a security, a capital-gains tax is triggered, which affects how profitable
the individual is from the sale. It might have been more advantageous for
the individual to defer the capital gains liability.

No matter what type of investor you are, there is bound to be a mutual fund
that fits your style. According to the last count there are more than 10,000
mutual funds in North America! That means there are more mutual funds
than stocks.

It's important to understand that each mutual fund has different risks and
rewards. In general, the higher the potential return, the higher the risk of
loss. Although some funds are less risky than others, all funds have some
level of risk - it's never possible to diversify away all risk. This is a fact for all
investments.
Each fund has a predetermined investment objective that tailors the fund's
assets, regions of investments and investment strategies. At the
fundamental level, there are three varieties of mutual funds:
1) Equity funds (stocks)
2) Fixed income funds (bonds)
3) Money market funds.

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All mutual funds are variations of these three asset classes. For example,
while equity funds that invest in fast-growing companies are known as
growth funds, equity funds that invest only in companies of the same sector
or region are known as specialty funds.

Let's go over the many different flavors of funds. We'll start with the safest
and then work through to the more risky.

Money Market Funds:

The money market consists of short-term debt instruments, mostly Treasury
bills. This is a safe place to park your money. You won't get great returns,
but you won't have to worry about losing your principal. A typical return is
twice the amount you would earn in a regular checking/savings account and
a little less than the average certificate of deposit (CD).

Bond/Income Funds:
Income funds are named appropriately: their purpose is to provide current
income on a steady basis. When referring to mutual funds, the terms "fixed-
income," "bond," and "income" are synonymous. These terms denote funds
that invest primarily in government and corporate debt. While fund holdings
may appreciate in value, the primary objective of these funds is to provide a
steady cash flow to investors. As such, the audience for these funds consists
of conservative investors and retirees.

Bond funds are likely to pay higher returns than certificates of deposit and
money market investments, but bond funds aren't without risk. Because
there are many different types of bonds, bond funds can vary dramatically
depending on where they invest. For example, a fund specializing in high-
yield junk bonds is much more risky than a fund that invests in government
securities. Furthermore, nearly all bond funds are subject to interest rate
risk, which means that if rates go up the value of the fund goes down.

Balanced Funds:
The objective of these funds is to provide a balanced mixture of safety,
income and capital appreciation. The strategy of balanced funds is to invest
in a combination of fixed income and equities. A typical balanced fund might
have a weighting of 60% equity and 40% fixed income. The weighting might
also be restricted to a specified maximum or minimum for each asset class.

A similar type of fund is known as an asset allocation fund. Objectives are

similar to those of a balanced fund, but these kinds of funds typically do not
have to hold a specified percentage of any asset class. The portfolio

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manager is therefore given freedom to switch the ratio of asset classes as

the economy moves through the business cycle.

Equity Funds:
Funds that invest in stocks represent the largest category of mutual funds.
Generally, the investment objective of this class of funds is long-term capital
growth with some income. There are, however, many different types of
equity funds because there are many different types of equities. A great way
to understand the universe of equity funds is to use a style box, an example
of which is below.

The idea is to classify funds based on both the size of the companies
invested in and the investment style of the manager. The term value refers
to a style of investing that looks for high quality companies that are out of
favor with the market. These companies are characterized by low P/E and
price-to-book ratios and high dividend yields. The opposite of value is
growth, which refers to companies that have had (and are expected to
continue to have) strong growth in earnings, sales and cash flow. A
compromise between value and growth is blend, which simply refers to
companies that are neither value nor growth stocks and are classified as
being somewhere in the middle.

For example, a mutual fund that invests in large-cap companies that are in
strong financial shape but have recently seen their share prices fall would be
placed in the upper left quadrant of the style box (large and value). The
opposite of this would be a fund that invests in startup technology
companies with excellent growth prospects. Such a mutual fund would
reside in the bottom right quadrant (small and growth).

Global/International Funds:
An international fund (or foreign fund) invests only outside your home
country. Global funds invest anywhere around the world, including your
home country.

It's tough to classify these funds as either riskier or safer than domestic

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investments. They do tend to be more volatile and have unique country

and/or political risks. But, on the flip side, they can, as part of a well-
balanced portfolio, actually reduce risk by increasing diversification.
Although the world's economies are becoming more inter-related, it is likely
that another economy somewhere is outperforming the economy of your
home country.

Specialty Funds:
This classification of mutual funds is more of an all-encompassing category
that consists of funds that have proved to be popular but don't necessarily
belong to the categories we've described so far. This type of mutual fund
forgoes broad diversification to concentrate on a certain segment of the
economy.

Sector funds are targeted at specific sectors of the economy such as

financial, technology, health, etc. Sector funds are extremely volatile. There
is a greater possibility of big gains, but you have to accept that your sector
may tank.

Regional funds make it easier to focus on a specific area of the world. This
may mean focusing on a region (say Latin America) or an individual country
(for example, only Brazil). An advantage of these funds is that they make it
easier to buy stock in foreign countries, which is otherwise difficult and
expensive. Just like for sector funds, you have to accept the high risk of
loss, which occurs if the region goes into a bad recession.

Socially-responsible funds (or ethical funds) invest only in companies that

meet the criteria of certain guidelines or beliefs. Most socially responsible
funds don't invest in industries such as tobacco, alcoholic beverages,
weapons or nuclear power. The idea is to get a competitive performance
while still maintaining a healthy conscience.

Index Funds:
The last but certainly not the least important are index funds. This type of
mutual fund replicates the performance of a broad market index such as the
S&P 500 or Dow Jones Industrial Average (DJIA). An investor in an index
fund figures that most managers can't beat the market. An index fund
merely replicates the market return and benefits investors in the form of low
fees.

Costs are the biggest problem with mutual funds. These costs eat into your
return, and they are the main reason why the majority of funds end up with
sub-par performance.

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What's even more disturbing is the way the fund industry hides costs
through a layer of financial complexity and jargon. Some critics of the
industry say that mutual fund companies get away with the fees they charge
only because the average investor does not understand what he/she is
paying for.

Fees can be broken down into two

categories:
1. On-going yearly fees to keep you invested in the fund.
2. Transaction fees paid when you buy or sell shares in a fund (loads).

The Expense Ratio

The ongoing expense of a mutual fund is represented by the expense ratio.

This is sometimes also referred to as the management expense ratio (MER).
The expense ratio is composed of the following:

• The cost of hiring the fund manager(s) - Also known as the management
fee, this cost is between 0.5% and 1% of assets on average. While it sounds
small, this fee ensures that mutual fund managers remain in the country's
top echelon of earners. Think about it for a second: 1% of 250 million (a
small mutual fund) is $2.5 million - fund managers are definitely not going
hungry! It's true that paying managers is a necessary fee, but don't think
that a high fee assures superior performance.

• Administrative costs - These include necessities such as postage, record

keeping, customer service, cappuccino machines, etc. Some funds are
excellent at minimizing these costs while others (the ones with the
cappuccino machines in the office) are not.

• This expense goes toward paying brokerage commissions and toward

advertising and promoting the fund.

On the whole, expense ratios range from as low as 0.2% (usually for index
funds) to as high as 2%. The average equity mutual fund charges around
1.3%-1.5%. You'll generally pay more for specialty or international funds,
which require more expertise from managers.

• Front-end loads - These are the most simple type of load: you pay the fee
when you purchase the fund. If you invest Rs.1,000 in a mutual fund with a
5% front-end load, Rs.50 will pay for the sales charge, and Rs. 950 will be
invested in the fund.

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• Back-end loads (also known as deferred sales charges) - These are a bit
more complicated. In such a fund you pay the back-end load if you sell a
fund within a certain time frame. A typical example is a 6% back-end load
that decreases to 0% in the seventh year. The load is 6% if you sell in the
first year, 5% in the second year, etc. If you don't sell the mutual fund until
the seventh year, you don't have to pay the back-end load at all.

A no-load fund sells its shares without a commission or sales charge. Some
in the mutual fund industry will tell you that the load is the fee that pays for
the service of a broker choosing the correct fund for you. According to this
argument, your returns will be higher because the professional advice put
you into a better fund. There is little to no evidence that shows a correlation
between load funds and superior performance. In fact, when you take the
fees into account, the average load fund performs worse than a no-load
fund.

In the Indian economy Mutual funds have grown faster than any other
investment instrument.

The table show net capitalization in Mutual fund sector during 2002 to 2007.

Year UTI Bank- FI- Private Total

sponsored sponsored sector
mutual funds mutual mutual funds
funds

2002-03 -9434.1 1033.4 861.5 12122.2 4583.0

2003-04 1049.9 4526.2 786.8 41509.8 47872.7

2004-05 -2467.2 706.5 -3383.5 7933.1 2788.9

2005-06 3423.8 5364.9 2111.9 41581 52481.6

2006-07 7326.1 3032.0 4226.1 76687 91271.2

NET RESOURCES MOBILISED BY MUTUAL FUNDS 2002 to 20071

1
Handbook of Statistics on Indian Economy, Reserve Bank Of India 2006-07

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FEW TERMS IN MUTUAL FUNDS

NAV: -mutual fund's price per share or exchange-traded fund's (ETF) per-
share value. In both cases, the per-share rupee amount of the fund is
derived by dividing the total value of all the securities in its portfolio, less
any liabilities, by the number of fund shares outstanding.

(Total asset value –liabilities) /no. of units= Net asset value

In terms of corporate valuations, the value of assets less liabilities equals

net asset value (NAV), or "book value".

In the context of mutual funds, NAV per share is computed once a day
based on the closing market prices of the securities in the fund's portfolio.
All mutual fund’s buy and sell orders are processed at the NAV of the trade
date. However, investors must wait until the following day to get the trade
price.

Mutual funds pay out virtually all of their income and capital gains. As a
result, changes in NAV are not the best gauge of mutual fund performance,
which is best measured by annual total return.

Because ETFs and closed-end funds trade like stocks, their shares trade at
market value, which can be a dollar value above (trading at a premium) or
below (trading at a discount) NAV.

SALE PRICE: - when an investor wants to disinvest from the investment

he/she sell the unit(s) of the stock of the shares of mutual fund. The sell
results the loss or gain of the capital. The tax law provides special rules for
determining how much gain or loss you have, and in what categories, when
you sell mutual fund shares. Tax is one of the main concerns during the sell.
The tax gain or loss from mutual fund sales is calculated by comparing your
tax basis in the shares sold to the sales proceeds net of any transaction
costs. In general, the tax-planning objective is to maximize the basis in the
shares being sold to minimize the gain, or maximize the loss.

The Tax Code allows four methods:

 First-in, first-out (FIFO) method;

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 Specific identification (specific ID) method;

 Single-category or "regular" average basis method; and

 Double-category average basis method.

FIFO Method

This method assumes that shares you sell come out of the earliest-acquired
blocks you own. In a rising market, FIFO tends to generate the biggest tax
bill, because the oldest, cheapest shares are considered sold first. However,
FIFO also increases the odds that your gains will be long term and therefore
qualify for the 20% maximum rate.

FIFO is the "default" method. In other words, you must use FIFO to calculate
mutual fund gains and losses,

Specific ID Method

Under this method, one specifies exactly which block (or blocks) of mutual
fund shares you intend to sell, so you can minimize gains or maximize losses
by selling your highest-cost shares first.

Selling the most expensive shares could mean his/her gains will be short
term and therefore taxed at regular income tax rate rather than the long-
term capital gains rate of 15%. However, if you are selling losers, it's
generally better to sell short-term shares. Your short-term losses will then
offset short-term gains that would otherwise be taxed at your income tax
rate.

Single-Category Average Basis Method

This method is available when one leaves his/her mutual fund shares on
deposit in an account with an agent or custodian, but not when he/she
actually has possession of share certificates.

Each time investor makes a sale, he simply figures his average presale basis
for shares of that fund. For holding period purposes, investor is considered
to sell the oldest shares first.

Double-Category Average Basis Method

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Here you separate shares into two pools — one consisting of all long-term
shares (held over 12 months), and the other consisting of all short-term
shares. Then each time you sell, you calculate the average per-share basis
for each pool. You can then sell strictly out of one pool or the other, or mix
and match as you see fit. The advantage is you have more flexibility to
control the basis of the shares being sold and whether the resulting gains
will be taxed at 15% or your regular rate.

Wide variety of Mutual Fund Schemes exists to cater to the needs such as
financial position, risk tolerance and return expectations etc. The table below
gives an overview into the existing types of schemes in the Industry.

TYPES OF MUTUAL FUND SCHEMES2

• By Structure

o Open - Ended Schemes

o Close - Ended Schemes

o Interval Schemes

• By Investment Objective

o Growth Schemes

o Income Schemes

o Balanced Schemes

o Money Market Schemes

• Other Schemes

o Tax Saving Schemes

o Special Schemes

 Index Schemes

2
From finance.indiamart.com

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 Sector Specific Schemes

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Fig: changes in the Mutual fund industry in India till 2006

What is Life Insurance..???

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Life insurance is a financial resource for one’s family and loved ones in case
of his death. It is a contract between insurer and an insurance company in
which the company provides the beneficiaries with a certain amount of
money upon insurer death. In return, insurer pays periodic payments
(premiums) in an amount that depends on medical history, age, gender, and
occupation.

Background3

Though the history of insurance dates back to 1818 with the establishment
of the Oriental Life Insurance company in Calcutta, and then when LIC was
established in the year 1956. For private life insurance sector in particular
things started taking shape after the recommendation of Malhotra
committee which put forward a proposal for the establishment of the
regulatory body and also encouraged to set up unit linked insurance pension
plan. It was after his recommendation that IRDA (Insurance regulatory and
development authority) was established in April 2000. After that in the year
2001 the sector was finally opened for the private players and foreign
private. They are allowed to have 26% share in Indian company. The real
innovation happened in this time only, when Life insurance companies
introduced ULIPs with greater flexibilities. After making a magnificent entry
and becoming the most popular life insured product.

The other decision taken simultaneously to provide the supporting systems

to the insurance sector and in particular the life insurance companies was
the launch of the IRDA’s online service for issue and renewal of licenses to
agents.

Due to IRDA the transparency and rules and regulations are still here in the
insurance market.

3
(insurance chronicle, Icfai publications & current scenario by jawahar)

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Fig: growth of insurance sector in last 10 years

ULIP AND ENDOWMENT PLANS4

Endowment plans are life insurance plans, which not only cover the
individual’s life in case of eventuality but also offer a maturity benefit at the
end of the term.

In the event of the individual’s demise, his/her nominees receive the sum
assured with accumulated profits/bonus on investments (till the time of his
demise). In case the individual survives the tenure, he/she receives the sum
assured and accumulated profits/bonus.

ULIPs attempts to fulfill investment needs of an investor with

protection/ insurance needs of an insurance seeker. ULIPs work on the
premise that there is a class of investors who regularly invest their savings

4
Business India, may ‘05
Business India, Feb ‘06
Business India, March ‘06

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in products like fixed deposits, bonds, debt funds, diversified equity funds
and stocks. There is another class of individuals who take insurance to
provide for their family in case of an eventuality. So typically both these
categories of individuals have a portfolio of investment as well as life
insurance.

ULIP as a product combines both these products (investment and life

insurance) into single product. This saves the investor/insurance seeker the
hassles of managing and tracking a portfolio of product.

Taking into account the changing socio-economic demographics, rate of GDP

growth, changing consumer behavior and occurrences of natural calamities
at regular intervals, the Indian life insurance market is expected to reach
the value of around Rs 1683 Billion in the year 2009. The market is
expected to grow at a CAGR of more than 200% YOY from the year 2006.
In 2006-07, pension premium contributed about 22.11% to total premium
income of insurers. Interestingly, the figure in the first nine months to
December 2005 was 25.22%.

Insurance sector in India is one of the booming sectors of the economy and
is growing at the rate of 15-20 per cent annum. Together with banking
services, it contributes to about 7 per cent to the country's GDP.

Key Players

This section provides an overview of some of the key players in this industry
like Bajaj Allianz, ING Vysya, SBI Life, Tata AIG Life, HDFC Standard, ICICI
Prudential Life Insurance, Birla Sunlife, Aviva Life Insurance, Kotak Mahindra
Old Mutual, Max New York Life, Met Life, Sahara Life, LIC, Tata-AIG General,
Reliance General, IFFCO-Tokio, ICICI-Lombard, HDFC Chubb, New India
Assurance Company Limited, National Insurance Company Limited, United
India Insurance Company Limited and Oriental Insurance Limited.

ULIP - KEY FEATURES (IN GENERAL):

1. Premiums paid can be single, regular or variable. The payment period too
can be regular or variable. The risk cover can be increased or decreased.

2. As in all insurance policies, the risk charge (mortality rate) varies with
age.

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3. The maturity benefit is not typically a fixed amount and the maturity
period can be advanced or extended.

4. Investments can be made in gilt funds, balanced funds, money market

funds, growth funds or bonds.

5. The policyholder can switch between schemes, for instance, balanced to

debt or gilt to equity, etc.

6. The maturity benefit is the net asset value of the units.

7. The costs in ULIP are higher because there is a life insurance component
in it as well, in addition to the investment component.

8. Insurance companies have the discretion to decide on their investment

portfolios.

9. They are simple, clear, and easy to understand.

10. Being transparent the policyholder gets the entire episode on the
performance of his fund.

11. Lead to an efficient utilization of capital.

12. ULIP products are exempted from tax and they provide life insurance.

13. Provides capital appreciation.

14. Investor gets an option to choose among debt, balanced and equity
funds.

ULIPs vs. Mutual Funds

Unit Linked Insurance Policies (ULIPs) as an investment avenue are closest

to mutual funds in terms of their structure and functioning. As is the case
with mutual funds, investors in ULIPs is allotted units by the insurance
company and a net asset value (NAV) is declared for the same on a daily
basis.

Similarly ULIP investors have the option of investing across various schemes
similar to the ones found in the mutual funds domain, i.e. diversified equity
funds, balanced funds and debt funds to name a few.

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Mutual fund investors have the option of either making lump sum
investments or investing using the systematic investment plan (SIP) route
which entails commitments over longer time horizons. The minimum
investment amounts are laid out by the fund house.

ULIP investors also have the choice of investing in a lump sum (single
premium) or using the conventional route, i.e. making premium payments
on an annual, half-yearly, quarterly or monthly basis. In ULIPs, determining
the premium paid is often the starting point for the investment activity.

ULIPs Mutual Funds

Determined by theMinimum investment

Investment investor and can beamounts are determined
amounts modified as well by the fund house

No upper limits,Upper limits for

expenses expenses chargeable to
determined by theinvestors have been set
Expenses insurance company by the regulator

Portfolio Quarterly disclosures are

disclosure Not mandatory* mandatory

Modifying Generally permitted

asset for free or at aEntry/exit loads have to
allocation nominal cost be borne by the investor

Section 80CSection 80C benefits are

benefits areavailable only on
available on all ULIPinvestments in tax-
Tax benefits investments saving funds

MAJOR DIFFERENCES IN ULIPs AND MUTUAL FUNDs

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If a mutual fund investor in a diversified equity fund wishes to shift his

corpus into a debt from the same fund house, he could have to bear an exit
load and/or entry load.

On the other hand most insurance companies permit their ULIP inventors to
shift investments across various plans/asset classes either at a nominal or
no cost (usually, a couple of switches are allowed free of charge every year
and a cost has to be borne for additional switches).

With these comparable there are certain factors where in these two differ.
Mutual funds are essentially short to medium term products. The liquidity
that these products offer is valuable for investors. ULIPs, in contrast, are
positioned as long-term products and going ahead, there will be separate
playing fields for ULIPS and MFs, with the product differentiation between
them becoming more pronounced. ULIPs do not seek to replace mutual
funds, they offer protection against the risk of dying too early, and also help
people save for retirement. Insurance has to be an integral part of one's
wealth management portfolio. Further, exposure of Indian households to
capital markets is limited.

ULIPs and mutual funds are, therefore, not likely to cannibalize each other in
the long run. The primary objective of an insurance product is protection.
The whole reason why it has evolved as a savings plan in the minds of
certain people is because there is a significant savings component attached
to it; however, it is still not the primary purpose of the plan. Second, there
are various kinds of insurance products; the element of protection in each
varies. In certain plans the level of protection is low and the savings
component high, but that is a choice to the customer.

While ULIPs as an investment avenue is closest to mutual funds in terms of

their functioning and structure, the first and foremost purpose of insurance
is and will always be 'protection'. The value that it provides cannot be
downplayed or underestimated. As an instrument of protection, insurance
provides benefits that no investment can offer. It is important for an
investor to understand his financial goals and horizon of investment in order
to make an informed investment decision. The decision to invest in either a
mutual fund or a ULIP should depend on the time period of investment,
individual financial goals as well as risk taking appetite, and it’s about time
the industry and customer realise it.

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ULIP vs. ENDOWMENT PLANS

It wasn't too long back, when the good old endowment plan was the
preferred way to insure oneself against an eventuality and to set aside some
savings to meet one's financial objectives. Then insurance was thrown open
to the private sector. The result was the launch of a wide variety of
insurance plans, including the ULIPs.

Two factors were responsible for the advent of ULIPs on the domestic
insurance horizon. First was the arrival of private insurance companies on
the domestic scene. ULIPs were one of the most significant innovations
introduced by private insurers. The other factor that saw investors take to
ULIPs was the decline of assured return endowment plans. Of course, the
regulator -- IRDA (Insurance and Regulatory Development Authority) was
instrumental in signaling the end of assured return plans.

Today, there is just one insurance plan from LIC (Life Insurance
Corporation) -- Komal Jeevan -- that assures return to the policyholder.

These were the two factors most instrumental in marking the arrival of
ULIPs, but another factor that has helped their cause is a booming stock
market. While this now appears as one of the primary reasons for their
popularity, we believe ULIPs have some fundamental positives like enhanced
flexibility and merging of investment and insurance in a single entity that
have really endeared them to individuals.

A. EXPENSES

ULIPs are considered to be very expensive when compared to traditional

endowment plans. This notion is rooted more in perception than reality.

Sale of a traditional endowment plan fetches a commission of about 30% (of

premium) in the first year and 60% (of premium) over the first five years.
Then there is ongoing commission in the region of 5%.

Sale of a ULIP fetches a relatively lower commission ranging from as low as

5% to 30% of premium (depending on the insurance company) in the first
1-3 years. After the initial years, it stabilizes at 1-3%. Unlike endowment
plans, there are no IRDA regulations on ULIP commissions.

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Broadly speaking, ULIP expenses are classified into three major categories:

1) Mortality charges

Mortality expenses are charged by life insurance companies for providing a

life cover to the individual. The expenses vary with the age, sum assured
and sum-at-risk for the individual. There is a direct relation between the
mortality expenses and the abovementioned factors. In a ULIP, the sum-at-
risk is an important reference point for the insurance company. Put simply,
the sum-at-risk is the difference between the sum assured and the
investment value the individual's corpus as on a specified date.

2) Sales and administration expenses

Insurance companies incur these expenses for operational purposes on a

regular basis. The expenses are recovered from the premiums that
individuals pay towards their insurance policies. Agent commissions, sales
and marketing expenses and the overhead costs incurred to run the
insurance business on a day-to-day basis are examples of such expenses.

3) Fund management charges (FMC)

These charges are levied by the insurance company to meet the expenses
incurred on managing the ULIP investments. A portion of ULIP premiums are
invested in equities, bonds, and money market instruments. Managing these
investments incurs a fund management charge, similar to what mutual
funds incur on their investments. FMCs differ across investment options like
aggressive, balanced and debt ULIPs; usually a higher equity option
translates into higher FMC.

Apart from the three expense categories mentioned above, individuals may
also have to incur certain expenses, which are primarily 'optional' in nature-
the expenses will be incurred if certain choices that are made available to
individuals are exercised.

a) Switching charges

Individuals are allowed to switch their ULIP options. For example, an

individual can switch his fund money from 100% equities to a balanced
portfolio, which has say, 60% equities and 40% debt. However, the
company may charge him a fee for 'switching'. While most life insurance

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companies allow a certain number of free switches annually, a switch made

over and above this number is charged.

b) Top-up charges

ULIPs allow individuals to invest a top-up amount. Top-up amount is paid in

addition to the premium amount for a particular year. Insurance companies
deduct a certain percentage from the top-up amount as charges. These
charges are usually lower than the regular charges that are deducted from
the annual premium.

c) Cancellation charges

Life insurance companies levy cancellation charges if individuals decide to

surrender their policies (usually) before three years. These charges are
levied as a percentage of the fund value on a particular date.

B. FLEXIBILITY

As we mentioned, one aspect that gives ULIPs an edge over traditional

endowment is flexibility. ULIPs offer a host of options to the individual based
on his risk profile.

There are insurance companies that offer as many as five options within a
ULIP with the equity component varying from zero to a maximum of 100%.
You can select an option that best fits your objectives and risk-taking
capacity.

Having selected an option, you still have the flexibility to switch to another
option. Most insurance companies allow a number of free 'switches' in a
year.

Another innovative feature with ULIPs is the 'top-up' facility. A top-up is a

one-time additional investment in the ULIP over and above the annual
premium. This feature works well when you have a surplus that you are
looking to invest in a market-linked avenue, rather than stash away in a
savings account or a fixed deposit.

ULIPs also have a facility that allows you to skip premiums after regular
payment in the initial years. For instance, if you have paid your premiums
religiously over the first three years, you can skip the fourth year's

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premium. The insurance company will make the necessary adjustments from
your investment surplus to ensure the policy does not lapse.

With traditional endowment, there are no investment options. You select the
only option you have and must remain with it till maturity. There is also no
concept of a top-up facility.

Your premium amount cannot be enhanced on a one-time basis and skipped

premiums will result in your policy lapsing.

C. LIQUIDITY

Another flexibility that ULIPs offer the individual is liquidity. Since ULIP
investments are NAV-based it is possible to withdraw a portion of your
investments before maturity. Of course, there is an initial lock-in period (3
years) after which the withdrawal is possible.

Traditional endowment has no provision for pre-mature withdrawal. You can

surrender your policy, but you won't get everything you have earned on
your policy in terms of premiums paid and bonuses earned. If you are clear
that you will need money at regular intervals then it is recommended that
you opt for money-back endowment.

D. TAX BENEFITS

Taxation is one area where there is common ground between ULIPs and
traditional endowment. Premiums in ULIPs as well as traditional endowment
plans are eligible for tax benefits under Section 80C subject to a maximum
limit of Rs 100,000. On the same lines, monies received on maturity on
ULIPs and traditional endowments are tax-free under Section 10.

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Indian Stock Market overview

The Bombay Stock Exchange (BSE) and the National stock Exchange India
Ltd. (NSE) are the two primary exchanges in India. In addition, there are 22
regional stock exchanges. However, the BSE and NSE have established
themselves as the two leading exchanges and account for about 80% of
equity volume traded in India. The average daily turnover

NSE has around 1500 shares listed with a total market capitalization of
around Rs. 9,21,500 crore. The BSE has over 6000 stocks listed and has a
market capitalization of around Rs. 9,68,000 crore.

Most key stocks are traded on both the exchanges and hence the investor
could buy them on either exchange. Both exchanges have a different
settlement cycle, which allows investors to sift their positions on the
bourses. The primary index of BSE is BSE Sensex comprising of 30 stocks.
NSE has the S&P NSE 50 Index (Nifty) which consists of fifty stocks.

The BSE Sensex is the older and more widely followed index. Both these
indices are calculated on the basis of market capitalization and contain the
heavily traded shares from key sectors.

Both exchanges have switched over from the open outcry trading system to
a fully automated computerized mode of trading known as BOLT (BSE online
trading) and NEAT (National Exchange Automated Trading) system. It
facilitates more efficient processing, automatic order matching, faster
execution of trades and transparency.

The scripts traded on the BSE have been classified into ‘A’,’B1’,’B2’,’C’, ‘F’,’Z’
groups. The ‘A’ group shares represent those, which are in the carry forward
system (Badla).

The ‘F’ group represents the debt market (fixed income securities) segment.

The ’Z’ groups scripts are the blacklisted companies.

The ‘C’ group covers the odd lot securities in ‘A’, ‘B1’, & ‘B2’ groups and
rights renunciations.

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5
Term deposits

A deposit held at a financial institution that has a fixed term. These

are generally short-term with maturities ranging anywhere from a fifteen
days to a few years. When a term deposit is purchased, the lender (the
customer) understands that the money can only be withdrawn after the
term has ended or by giving a predetermined number of days notice.

Term deposits are an extremely safe investment and are therefore

very appealing to conservative, low-risk investors. By having the money tied
up investors will generally get a higher rate with a term deposit compared
with a demand deposit.

Investor some time pledge these term deposits to take house loan,
personal load, education load, etc. these works as the security deposits or
asset of the debtor.

Here is a list of Term deposit rates of different Banks I have studied:-

Tenure Standard IC IC I HDFC ABN -AmroK otak

C hartered Mahindra
15 days - 59 days 5.25% 4% 5.50% 4%-5.5% 4%
60 days – 89 days 5.75% 4% 5.50% 5.50% 5.50%
90 days – 360 days 6.25% 6.25% 6.75% 6%-8% 8.50%
361 days 8.50% 6.25% 8% 6% 8.50%
362 days< 1year 6.25% 6.25% 6.75% 6% 8.50%
1 year < 2years 6.50% 8% 8% 6%-8% 9.25%
2 years - 4 years 6.75% 8% 8.25% 6.75% 9.25%

5
Investopedia.com

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Bonds in India.

A bond is just an organization's IOU; i.e., a promise to repay a sum of

money at a certain interest rate and over a certain period of time. In other
words, a bond is a debt instrument. Other common terms for these debt
instruments are notes and debentures. Most bonds pay a fixed rate of
interest for a fixed period of time.

Why do organizations issue bonds?

A company needs funds to expand into new market, while Government

needs money for everything from infrastructure to social programs.
Whatever the need, a large sum of money will be needed to get the job
done.

One way is to arrange for banks or others to lend the money. But a
generally less expensive way is to issue (sell) bonds. The organization will
agree to pay some interest rate on the bonds and further agree to redeem
the bonds (i.e., buy them back) at some time in the future (the redemption
date).

The price of a bond is a function of prevailing interest rates. As rates go

up, the price of the bond goes down, because that particular bond becomes
less attractive (i.e., pays less interest) when compared to current offerings.
As rates go down, the price of the bond goes up, because that particular
bond becomes more attractive (i.e., pays more interest) when compared to
current offerings.

A bearer bond is a bond with no owner information upon it; presumably the
bearer is the owner. Bearer bonds included coupons which were used by the
bondholder to receive the interest due on the bond.

Another type of bond is a convertible bond. This security can be converted

into shares of the company that issues the bond if the bondholder chooses.
Of course, the conversion price is usually chosen so as to make the
conversion interesting only if the stock has a pretty good rise.

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Different types of bonds6

In general there are few types of bonds available in the market to buy, like;

Government bonds: - these bonds are issued by the government to raise

money from the public.

Bills - Debts securities maturing in less than one year.

Notes - Debt securities maturing in one to ten years.

Bonds - Debt securities maturing in more than ten years.

Marketable securities from the Indian government– known collectively as

Treasuries and are as Treasury bonds, Treasury notes and Treasury bills.

Municipal Bonds – Municipal bonds, known as “munis”, are the next

progression in term of risk. The major advantage in munis is that the
returns are free from State/central tax. Local government some time makes
their debt non-taxable for residents, thus making some municipal bonds
completely tax free. Because of the tax-savings yield in munis is lower than
the taxable bonds.

Corporate bonds – A company can issue bonds just as it can issue stock.
Generally, a short term corporate bond is less than five years; intermediate
is five to twelve years, and long term is over 12 years.

Corporate bonds are characterized by higher yields because there is a higher

risk of a company defaulting than a government. The company’s credit
quality is most important: the higher the credit quality, lower the interest
rate the investor receives.

Bondholders are not owners of the corporation. But if the company gets in
financial trouble and needs to dissolve, bondholders must be paid off in full
before stockholders get anything.

Zero coupon Bonds: - This is a type of bond that make no coupon

payments but instead is issued at a considerable discount to par value. For
example, let us say, a zero coupon bond with a Rs. 1,000 par value and 10
years to maturity is trading at Rs. 600; then investor would be paying
Rs.600 today that will worth Rs. 1,000 after 10 years.

6
Security analysis and portfolio management by Ritu Ahuja

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FIELD SURVEY
The field survey was based on the investment strategies taken by the small
investors and the instrument they prefer to invest. To fulfill the particular I
have done field survey in about 160 people in the NCR. The entire summer
internship is surrounded by this investment strategy and making portfolio.

The entire project is designed like this: -

 Formation of questionnaire depending upon the investor mind

set and the need.

 I put strong emphasis on the questionnaire that respondent

must fill the questionnaire. For that I restrict my questions to
six. Thus it becomes short and time saving.

 I visited the malls area in gurgaon and my group members

visited few areas in Delhi. As a result we get a mixed response
from NCR.

 After gathering the entire data sheet I have put it in the excel
sheet and started analyzing.

Objective of the Project: The objectives of the project are mainly-

 Analysis of current investment strategies adopted by the

different age group and different income group.

 Basic acceptance of investment instrument towards the

investors.

 Find out the potential customer and their needs.

 Basic trends of investment in the market.

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Limitation of the Study: The limitation or the problem I faced during

the project are-

 Non co-operation of people during the field survey.

 Small area for field survey.

 Limited time.

 Wrong information gives by the respondents.

 Limited number of respondents.

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ANALYSIS
GRAPHICAL PRESENTATION

Fig: Distribution of age groups in the sample

Explanation :-

The above pie chart shows that the sample of 153 is predominantly
consists of respondents of the age groups of 18-30 years and 31-40 years.
This reveals that most of the investors are them who are started their carrer
recently or working for 10-15 years. This also shows that the age group of
greater than 50 years are very less interested in invetment.

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Fig : Distribution of occupation through out the sample

Explanation :-

This graph shows that the respondents are mostly from the service
class (61%) and business person consists of only 37% of respondents.Self
employed are very less in numbers.

Form the Standard Chartered point of view it is quite useful as the

service people are regular investors. Where as the business class invest
large amount in a single time.

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Fig : Distribution of sample annual income wise

Explanation :-

In the sample the income group of 2,50,000 to 5,00,000 Rs is

dominating. It reveals that this income group were the major respondent in
the survey. The second major income group is the 7,50,000 to 10,00,000.

Most investors are from the income group of 2,50,000 tp 5,00,000

Rsand 7,50,000 to 10,00,000 which is enthusiastic for the companies as the
potential customers are from the medium investor and the bid investors.
Combining the two income group company can have a mixed bag of good
investor in the near future.

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Fig : Distribution of disposible income

Explanation :-

Disposible income is the strong piller of investment, more the

disposible income for the investors more they invest in the investment
instrument. The pie shows that the major repondents have a dispposible
income of 5,000 to 10,000 Rs per month which is good enough money for an
investor who is investing regularly for the longer term. It also depicts that
investors who has a disposible income of more then 20,000 Rs is 1/5th of the
sample. This reveals company got a fair enough data base of high amount
investors.

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Fig : First priority of investment in the sample

Explanation :-

Tax saving is the major concern now in india. The above pie alsoshow
that 40% of people want to invest for the taxsavings, but that is for only 1.5
lakh. It is expeacted that before the investment investors focus would be the
main criteria where he wants to invest in. depending up on the reponse I
have found out that 18% people invest to secure for Future Uncertainties
and 19% fight against inflation and do invest for only Capital Preservation.

Only 9% people focus on their retirement time and invest for vesting
period.

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Fig : Withdraw from investment

Explantion :-

It shows that how investors want to stay remain invested in.42% of

investors want to stay in the market for the 3-5 years, it has been said that
3 years is a market cycle so, investor usually want stay in for the two cycle.
This is the very normal period for remain invested due to primary BULL and
BEAR turn period go through 5-6 years.

23% investors are the short term investor as they want to get out of
market with in 3 years. But it is healthy for the investment market thst
18% investors want to stay invested for 6-9 years and 17% more than
10 years. These long term investors are keeping the market more stable
than the short term investors.

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Fig : Risk tolerence ability

Explanation :-

The research showed that the most investors are risk averse and goo
for the moderate risk. 42% investors are in this category. This is good news
for the market that only 22% of insvestors are with low risk apetite. The low
risk apetite investor mostly invested in the fixed return instruments.

7% investors have very high and 29% investors have high risk profile,
they useally invest in the stocks and mutual fund, where the ris is high and
the returns are also high in proportion.

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Fig :Risk bear acceptablilty

Explanation :-

Investor’s negative return acceptablity shows how he/she can aceept

the market up-downs positively. If they really take it to the account then the
can sustain in the market for the longer time.

In the above pie chart ‘Never accept return’ shows the group with low
risk appetite where as ‘once in 3 years’ & ‘once in 5 years’ represents the
group with moderate risk appetite. ‘once in 7 years’ & ‘can fluctuate in
long run’ represents the group with high or very high risk appetite.
Though this is not applied to all, as risk assumption is different for every
other person.

Here, 36% investors need always positive returns or assured return,

where as 30% of investors can have a moderate risk bearing appetite. And
rest 34% investors can bear the high risk.

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Fig : Disposible income according to age groups

Explanation :-

It clearly shows that the age group of 18-30 years has the most
disposible income per month because most of them are single. More the age
grows the disposible income reduced may be because the family expance
and the living expance increased.

So from the company’s point of view 18-30 years age group is the
most potential investors and usually this age group is investing for more
profit.

It has to make a point that investors with 5,000 to 10,000 Rs per

month are most in the 18-30 years age group.

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Fig : Investment instrument used by age groups

Explanation :-

Most of the investors are invested in the insurance sector. The age
group of 18-30 years are highly invested in the mutual funds and share
market. This group also invested equally in the FDs and RBI bonds.

The 31-40 years age group is also invested in all the instrument but
they are quite heavily invested in the real estate sectors. But the number of
respondent in this group is less than the 18-30 years sge group.

The more than 50 years age group are most invested in the FD & RBI
bonds. They are less invested in the shares and the mutual funds.

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Fig : Risk tolerence according to Age

Explanation :-

Risk tolerence is the major concern in the investment market. If the

risk is high then return expected is high for the investors. Age is also
considered for the risk tolerence. It is expected that the lower the age group
risk tolerence is high.

In the above bar graph it is clear that 18-30 years age group have
more risk taking ability than the other age groups, number of respondent in
very high, high are most in this age group. The reason behind this is that
this age group wants to earn more and they are only in the beginning of
their carrer.

The next group which is next this is the 31-40 age group in which
most are family person and for that reason the are with mostly moderate
risk profile.

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Fig : Age wise time Horizon

Explanation:-

Time Horizon is very much important for an investor because it

determines the time period the investor need to invest and the market
conditions during that time. More the time horizon the risk diluted more.

Those who invest for very few years (<3 years) the are the short term
investors and the risk takers. They usually invest for the high gain in short
term. The above bar graph shows that age group 18-30 years dominating in
this sector.

Most of the respondents are in the 3-5 years group. They remain
invested for the a full cycle of bear turn and bull turn.

The age group of 31-40 years are likely to remain invested in 6-9
years because if they could invest in the beginning of the bull turn then they
can make highest profit after 3 market cycle.

Only the Real Estate investors wants to invested more than 10 years.

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Fig : Age wise negative return acceptability.

Expalnation :-

Negative return acceptability shows the risk tolerence, as shown

before risk tolerence is more in 18-30 years age group, this graph also
shows that least risk tolerence group is 31-40 years age group.

The age group of >50 years are also risk averse they can not tolerate
any fluctuuation in return part in longer time but they can tolerate minute
losses in 7 and 3 years return.

18-30 year age group response are evenly distributed in all ranges of
negative return acceptibility.

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Fig : Disposible income-wise Risk tolerence

Explanation:-

Disposible income gives the power of investment to the investor. But

the risk tolerence is the mind set of individual investors. I have tried to
corelate these two.

This graph shows that different disposible income group has different
risk tolerence. The < 5,000 Rs income group is with moderate risk takers.

The disposible income group of 5,000-10,000 Rs are more risk takers

than the previous one. Though the response of this group is more concern
about the moderate risk.

The next group 10,000-15,000 Rs has diversified their risk, this group
tend to invest in diversified intrument where risk is diluted due to diversity
of risk profile.

The 15,000-20,000 Rs disposible income group is the most risk takers

in all the groups.

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Relation Between Disposible income & Time Horizon

Fig:Disposible income wise time horizon

Explanation:-

Time horizon decides the tenure the investor remain invested in the
market. This depics the investment potential along with risk tolerence.

The above graph shows that the Disposible income group of > 20,000 Rs are
intended to quick return,so they intended to invest for below 3 years. 36%
of respondent from more than 20,000 Rs group.

The disposible income group of 5,000-10,000 Rs.is tend to invest for

3-5 years and > 10 years span.

Where as 10,000-15,000 Rs disposible income group is predominently

invested in the 6-9 years span.

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Fig: Disposible income wise investment focus

Explanation:-

Investment focus is the primary mind set of the investor, before

investment he/she always try to find out the proirity of the investment and
the suitable savings to invest.

Here in every disposible income group ‘Tax savings’ is one of the main
primary focus. But it has seen that 10,000-15,000 Rs group is more end
towards the ‘Capital Preservation’ & ‘Tax savings’.

The above 20,000 Rs disposible income group are not focused towards the
‘Retirement’, they are focus to tax savings.

The 15,000-20,000 disposible income group has a primary focus of all the
priorities. This is the group which has a mind set of all the rpimary focuses.

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Fig: Disposible income wise Negative return acceptabilty

Explanation:-

The safe players are always want less negative return and fixed
return in the fixed tenure. Here in ths bar graph the below 5,000 Rs
disposible income group are the safe players, only 9% of this group has a
high negative return acceptability.

Where as in the 15,000-20,000 Rs disposible income group has a high

Negative return acceptability about 32% respondent are in ‘Can Fluctuate in
long run’ and 23% in ‘Once in 7 years’ group.

But in the above 20,000 Rs disposible income group, 50% respondents do

not want negative return. The 10,000-15,000 group has a greater negative
acceptance tan any other group.

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Fig: Occupation wise Investment

Explanation:-

This graph will show how investors of different category tend to invest.

Here in this bar graph service category are like to invest in the Fixed
Deposits (23%) and Mutual Funds (24%). Fixed deposits gives a fiex return
where as in mutual funds the risk is diversified.

Business class is more attracted towards the Shares (18%) and real estate
(17%) because they have the lum sum amount to invest in the single time.
More over they also invest in the mutual funds where high risk may be taken
for the higher return.

For the Self employed category, they are mostly invested in the Fixed
Deposits (37%) and Insurance sector(36%).

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Fig: Occupation wise Primary focus

Explanation:-

In the above bar graph shows how occupation dominate the

investment focus of the investors.

In the Service category the investment focus is the tax savings, 46%
investor prioritised Tax savings as their first priority of investment. Where as
income, retirement, capital preservation are the minor priority for them.

For the Business class Capital preservation and Future Uncertainity playes a
big role in their investment planning. Nearly 46% investors are in this
category.

Self employed are very few in number in my survey so I have not consider
them in this explanation.

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Fig: Occupation wise Negative Return

Explanation:-

Negative return acceptance is a another way to find out the risk tolerence.

In this graph Self employed category 75% responded they can not accept
negative return. Only 25% responded they can accept negative return in 7
years.

In Service category most investors are risk averse, 39% never accept
negative return, but few of them are now started to invest in the riskier
profile so negative acceptability is present.

For the business class, they are mostly invested in shares & mutual funds,
as results they responded ‘Once in 3 years’ and ‘Can fluctuate in long term’.
The investor who want to stay for 3 years are the short term players,where
as the long term players can accept ups & downs in their investment for the
higher return.

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Fig: Occupation wise Time Horizon

Explanation:-

The above graph shows that in all the occupation nearly 22% -25%
investors are want to quit before 3 years. This may be because of the short
term investment.

The noticeable thing is that in service category 40% and in Business

category 48% investors are tend to remain invested for 3-5 years. This is
very good indicstion for the investment institution.

In the service category 21% invetors are want to stay invested for more
than 10 years this is because the are invested in the real estate and long
term invesment instrument like bonds.

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SPSS ANALYSIS
TABULAR PRESENTATION

Hypothesis:
Null hypothesis: There is no relationship between investor’s annual income and
time horizon.
Alternative hypothesis: Relationship present between annual income and time
horizon.

Crosstabs
Case Processing Summary

Cases
Valid Missing Total
N Percent N Percent N Percent
annual income *
Withdraw money from 161 100.0% 0 .0% 161 100.0%
investment
annual income *
161 100.0% 0 .0% 161 100.0%
Investment in Shares
annual income *
Investment in Mutual 161 100.0% 0 .0% 161 100.0%
Funds
annual income *
161 100.0% 0 .0% 161 100.0%
Investment in FDs/Bonds
annual income *
161 100.0% 0 .0% 161 100.0%
Investment in Real Estate
annual income *
161 100.0% 0 .0% 161 100.0%
Investment in Insurance

Annual income * Time Horizon of investment

Crosstab

Count
Time horizon of investment
< 3 years 3-5 years 6-9 years > 10 years Total
annual < 2,50,000 1 5 2 3 11
income 2,50,000-5,00,000 30 32 8 11 81
5,00,000-7,50,000 2 12 3 2 19
7,50,000-10,00,000 4 11 12 10 37
>10,00,000 0 8 3 2 13
Total 37 68 28 28 161

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Chi-Square Tests

Asymp. Sig.
Value df (2-sided)
Pearson Chi-Square 30.729 a 12 .002
Likelihood Ratio 32.810 12 .001
Linear-by-Linear
7.560 1 .006
Association
N of Valid Cases 161
a. 10 cells (50.0%) have expected count less than 5. The
minimum expected count is 1.91.

Directional Measures

Asymp.
a b
Value Std. Error Approx. T Approx. Sig.
Nominal by Lambda Symmetric .029 .047 .612 .541
Nominal annual income
.050 .054 .897 .370
Dependent
Withdraw money from
.011 .051 .209 .835
investment Dependent
Goodman and annual income c
.080 .027 .000
Kruskal tau Dependent
Withdraw money from c
.064 .022 .002
investment Dependent
Uncertainty Coefficient Symmetric .077 .024 3.257 .001 d

annual income d
.077 .024 3.257 .001
Dependent
Withdraw money from d
.078 .024 3.257 .001
investment Dependent
a. Not assuming the null hypothesis.
b. Using the asymptotic standard error assuming the null hypothesis.
c. Based on chi-square approximation
d. Likelihood ratio chi-square probability.

Symmetric Measures

Value Approx. Sig.

Nominal by Nominal Contingency Coefficient .400 .002
N of Valid Cases 161
a. Not assuming the null hypothesis.
b. Using the asymptotic standard error assuming the null hypothesis.

Explanation:
In the above chi-square test the asymmetric significance is 0.002, which is
lower than the table value. Then null hypothesis is rejected & alternative
hypothesis is accepted. The Uncertainty coefficient value 0.077 and the
approx significance are 0.001, which shows there is fair strong
relationship between time horizon & Annual income. The symmetric
Lambda shows that there is 2.9% possibility of improvement in that
relationship. The contingency coefficient shows that there is 40%
association in this relationship.

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Hypothesis:
Null hypothesis: There is no relationship between investor’s annual income and
Investment in Share.
Alternative hypothesis: Relationship present between annual income and
investment in shares.

Annual income * Investment in Shares

Crosstab

Count
Investment in Shares
No Yes Total
annual < 2,50,000 8 3 11
income 2,50,000-5,00,000 47 34 81
5,00,000-7,50,000 14 5 19
7,50,000-10,00,000 16 21 37
>10,00,000 4 9 13
Total 89 72 161

Chi-Square Tests

Asymp. Sig.
Value df (2-sided)
Pearson Chi-Square 9.532a 4 .049
Likelihood Ratio 9.746 4 .045
Linear-by-Linear
5.619 1 .018
Association
N of Valid Cases 161
a. 1 cells (10.0%) have expected count less than 5. The
minimum expected count is 4.92.

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Directional Measures

Asymp.
a b
Value Std. Error Approx. T Approx. Sig.
Nominal by Lambda Symmetric .066 .044 1.423 .155
Nominal annual income c c
.000 .000 . .
Dependent
Investment in
.139 .091 1.423 .155
Shares Dependent
Goodman and annual income d
.012 .009 .108
Kruskal tau Dependent
Investment in d
.059 .036 .050
Shares Dependent
Uncertainty Coefficient Symmetric .030 .019 1.602 .045 e
annual income e
.023 .014 1.602 .045
Dependent
Investment in e
.044 .027 1.602 .045
Shares Dependent
a. Not assuming the null hypothesis.
b. Using the asymptotic standard error assuming the null hypothesis.
c. Cannot be computed because the asymptotic standard error equals zero.
d. Based on chi-square approximation
e. Likelihood ratio chi-square probability.

Symmetric Measures

Value Approx. Sig.

Nominal by Nominal Contingency Coefficient .236 .049
N of Valid Cases 161
a. Not assuming the null hypothesis.
b. Using the asymptotic standard error assuming the null hypothesis.

Explanation:
In the above chi-square the asymmetric significance or the p-value is 0.049, which
is less than 0.05, so the null hypothesis is rejected & the alternative
hypothesis is accepted.
The uncertainty coefficient is 0.03 & the approx significance 0.045shows that there
is fairly week relationship between the variables.
The symmetric Lambda value is 0.066, which means there is 6.6% of possibility
of improvement.
The contingency coefficient shows there is 23.6% relationship present between
the variables.

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Hypothesis:
Null hypothesis: There is no relationship between investor’s annual income and
Investment in Mutual Funds.
Alternative hypothesis: Relationship present between annual income and
investment in Mutual Funds.

Annual income * Investment in Mutual Funds

Crosstab

Count
Investment in Mutual
Funds

No Yes Total
annual income < 2,50,000 10 1 11
2,50,000-
31 50 81
5,00,000
5,00,000-
8 11 19
7,50,000
7,50,000-
8 29 37
10,00,000
>10,00,000 4 9 13
Total 61 100 161

Chi-Square Tests

Asymp. Sig.
Value df (2-sided)
Pearson Chi-Square 17.729 a 4 .001
Likelihood Ratio 18.612 4 .001
Linear-by-Linear
8.150 1 .004
Association
N of Valid Cases 161
a. 2 cells (20.0%) have expected count less than 5. The
minimum expected count is 4.17.

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Directional Measures

Asymp.
a b
Value Std. Error Approx. T Approx. Sig.
Nominal by Lambda Symmetric .064 .022 2.778 .005
Nominal annual income c c
.000 .000 . .
Dependent
Investment in Mutual
.148 .050 2.778 .005
Funds Dependent
Goodman and annual income d
.018 .009 .024
Kruskal tau Dependent
Investment in Mutual d
.110 .036 .001
Funds Dependent
Uncertainty Coefficient Symmetric .058 .024 2.377 .001e
annual income e
.044 .018 2.377 .001
Dependent
Investment in Mutual e
.087 .037 2.377 .001
Funds Dependent
a. Not assuming the null hypothesis.
b. Using the asymptotic standard error assum ing the null hypothesis.
c. Cannot be computed because the asymptotic standard error equals zero.
d. Based on chi-square approximation
e. Likelihood ratio chi-square probability.

Symmetric Measures

Value Approx. Sig.

Nominal by Nominal Contingency Coefficient .315 .001
N of Valid Cases 161
a. Not assuming the null hypothesis.
b. Using the asymptotic standard error assuming the null hypothesis.

Explanation:
In the above chi-square the asymmetric significance or the p-value is 0.001, which
is less than 0.05, so the null hypothesis is rejected & the alternative
hypothesis is accepted.
The uncertainty coefficient is 0.058 & the approx significance 0.001shows that
there is fairly strong relationship between the variables.
The symmetric Lambda value is 0.066, which means there is 6.4% of possibility
of improvement.
The contingency coefficient shows there is 31.5% relationship present between
the variables.

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Hypothesis:
Null hypothesis: There is no relationship between investor’s annual income and
Investment in Fixed Deposits & bonds.
Alternative hypothesis: Relationship present between annual income and
investment in Fixed Deposits & bonds.

Annual income * Investment in FDs/Bonds

Crosstab

Count
Investment in
FDs/Bonds
No Yes Total
annual < 2,50,000 0 11 11
income 2,50,000-5,00,000 28 53 81
5,00,000-7,50,000 4 15 19
7,50,000-10,00,000 19 18 37
>10,00,000 9 4 13
Total 60 101 161

Chi-Square Tests

Asymp. Sig.
Value df (2-sided)
Pearson Chi-Square 17.744a 4 .001
Likelihood Ratio 21.319 4 .000
Linear-by-Linear
11.906 1 .001
Association
N of Valid Cases 161
a. 2 cells (20.0%) have expected count less than 5. The
minimum expected count is 4.10.

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Directional Measures

Asymp.
a b
Value Std. Error Approx. T Approx. Sig.
Nominal by Lambda Symmetric .043 .049 .850 .395
Nominal annual income c c
.000 .000 . .
Dependent
Investment in
.100 .112 .850 .395
FDs/Bonds Dependent
Goodman and annual income d
.019 .010 .018
Kruskal tau Dependent
Investment in d
.110 .039 .001
FDs/Bonds Dependent
Uncertainty Coefficient Symmetric .067 .022 2.999 .000 e
annual income e
.050 .016 2.999 .000
Dependent
Investment in e
.100 .033 2.999 .000
FDs/Bonds Dependent
a. Not assuming the null hypothesis.
b. Using the asymptotic standard error assuming the null hypothesis.
c. Cannot be computed because the asymptotic standard error equals zero.
d. Based on chi-square approximation
e. Likelihood ratio chi-square probability.

Symmetric Measures

Value Approx. Sig.

Nominal by Nominal Contingency Coefficient .315 .001
N of Valid Cases 161
a. Not assuming the null hypothesis.
b. Using the asymptotic standard error assuming the null hypothesis.

Explanation:

In the above chi-square the asymmetric significance or the p-value is 0.001, which
is less than 0.05, so the null hypothesis is rejected & the alternative
hypothesis is accepted.
The uncertainty coefficient is 0.067 & the approx significance 0.000shows that
there is very strong relationship between the annual income & Investment in
FDs/Bonds.
The symmetric Lambda value is 0.043, which means there is 4.3% of possibility
of improvement.
The contingency coefficient shows there is 31.5% relationship present between
the variables.

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Hypothesis:
Null hypothesis: There is no relationship between investor’s annual income and
Investment in Real estate.
Alternative hypothesis: Relationship present between annual income and
investment in Real estate.

Annual income * Investment in Real Estate

Crosstab

Count
Investment in Real
Estate
No Yes Total
annual < 2,50,000 10 1 11
income 2,50,000-5,00,000 54 27 81
5,00,000-7,50,000 11 8 19
7,50,000-10,00,000 18 19 37
>10,00,000 5 8 13
Total 98 63 161

Chi-Square Tests

Asymp. Sig.
Value df (2-sided)
Pearson Chi-Square 10.441 a 4 .034
Likelihood Ratio 11.253 4 .024
Linear-by-Linear
9.586 1 .002
Association
N of Valid Cases 161
a. 1 cells (10.0%) have expected count less than 5. The
minimum expected count is 4.30.

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Directional Measures

Asymp.
a b
Value Std. Error Approx. T Approx. Sig.
Nominal by Lambda Symmetric .028 .049 .566 .571
Nominal annual income c c
.000 .000 . .
Dependent
Investment in Real
.063 .109 .566 .571
Estate Dependent
Goodman and annual income d
.015 .012 .047
Kruskal tau Dependent
Investment in Real d
.065 .034 .035
Estate Dependent
Uncertainty Coefficient Symmetric .035 .019 1.801 .024e
annual income e
.026 .015 1.801 .024
Dependent
Investment in Real e
.052 .029 1.801 .024
Estate Dependent
a. Not assuming the null hypothesis.
b. Using the asymptotic standard error assuming the null hypothesis.
c. Cannot be computed because the asymptotic standard error equals zero.
d. Based on chi-square approximation
e. Likelihood ratio chi-square probability.

Symmetric Measures

Value Approx. Sig.

Nominal by Nominal Contingency Coefficient .247 .034
N of Valid Cases 161
a. Not assuming the null hypothesis.
b. Using the asymptotic standard error assuming the null hypothesis.

Explanation:

In the above chi-square the asymmetric significance or the p-value is 0.034, which
is less than 0.05, so the null hypothesis is rejected & the alternative
hypothesis is accepted.
The uncertainty coefficient is 0.035 & the approx significance 0.024shows that
there is week relationship between the annual income & Investment in Real estate.
The symmetric Lambda value is 0.028, which means there is 2.8% of possibility
of improvement.
The contingency coefficient shows there is 24.7% relationship present between
annual income and investment in Real estate.

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Hypothesis:
Null hypothesis: There is no relationship between investor’s annual income and
Investment in Insurance.
Alternative hypothesis: Relationship present between annual income and
investment in Insurance.

Annual income * Investment in Insurance

Crosstab

Count
Investment in
Insurance
No Yes Total
annual < 2,50,000 4 7 11
income 2,50,000-5,00,000 22 59 81
5,00,000-7,50,000 3 16 19
7,50,000-10,00,000 3 34 37
>10,00,000 2 11 13
Total 34 127 161

Chi-Square Tests

Asymp. Sig.
Value df (2-sided)
Pearson Chi-Square 7.650 a 4 .105
Likelihood Ratio 8.270 4 .082
Linear-by-Linear
6.191 1 .013
Association
N of Valid Cases 161
a. 3 cells (30.0%) have expected count less than 5. The
minimum expected count is 2.32.

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Directional Measures

Asymp.
a b
Value Std. Error Approx. T Approx. Sig.
Nominal by Lambda Symmetric .000 .000 .c .c
Nominal annual income c c
.000 .000 . .
Dependent
Investment in c c
.000 .000 . .
Insurance Dependent
Goodman and annual income d
.018 .012 .022
Kruskal tau Dependent
Investment in d
.048 .030 .107
Insurance Dependent
Uncertainty Coefficient Symmetric .028 .018 1.532 .082 e
annual income e
.019 .013 1.532 .082
Dependent
Investment in e
.050 .032 1.532 .082
Insurance Dependent
a. Not assuming the null hypothesis.
b. Using the asymptotic standard error assuming the null hypothesis.
c. Cannot be computed because the asymptotic standard error equals zero.
d. Based on chi-square approximation
e. Likelihood ratio chi-square probability.

Symmetric Measures

Value Approx. Sig.

Nominal by Nominal Contingency Coefficient .213 .105
N of Valid Cases 161
a. Not assuming the null hypothesis.
b. Using the asymptotic standard error assuming the null hypothesis.

Explanation:

In the above chi-square the asymmetric significance or the p-value is 0.104, which
is less than 0.05, so the null hypothesis is accepted. There is no relation
between annual income and investment in insurance.

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AGE GROUP VS FIRST PRIORITY OF INVESTMENT

Hypothesis:
Null hypothesis: There is no relationship between investor’s age group and
Investment focus or the priority of investment.
Alternative hypothesis: Relationship present between age group and Investment
focus.

Case Processing Summary

Cases
Valid Missing Total
N Percent N Percent N Percent
First Priority of
161 100.0% 0 .0% 161 100.0%
investmnet * Age groups

First Priority of investmnet * Age groups Crosstabulation

Count
Age groups
18-30 years 31-40 years 41-50 years >50 years Total
First Priority tax savings 26 21 12 7 66
of investmnet Future Uncertainty 27 17 0 2 46
Income 5 8 8 2 23
Retirement 7 4 5 2 18
Capital Preservation 0 2 3 3 8
Total 65 52 28 16 161

Ch i-Squ are T ests

Asym p. Sig.
Value df (2-sided)
Pearson Chi-Square 32.766a 12 .001
Likelihood Ratio 40.273 12 .000
Linear-by-Linear
6.549 1 .010
Association
N of Valid Cases 161
a. 9 cells (45.0%) have expected count less than 5. T he
m inim um expected count is .80.

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Directional Measures

Asymp.
a b
Value Std. Error Approx. T Approx. Sig.
Nominal by Lambda Symmetric .037 .043 .845 .398
Nominal First Priority of
.011 .076 .137 .891
investmnet Dependent
Age groups Dependent .063 .040 1.511 .131
Goodman and First Priority of c
.048 .013 .002
Kruskal tau investmnet Dependent
Age groups Dependent .066 .017 .002 c
Uncertainty Coefficient Symmetric .094 .019 4.782 .000 d
First Priority of d
.090 .018 4.782 .000
investmnet Dependent
Age groups Dependent .099 .020 4.782 .000 d
a. Not assuming the null hypothesis.
b. Using the asymptotic standard error assuming the null hypothesis.
c. Based on chi-square approximation
d. Likelihood ratio chi-square probability.

Symmetric Measures

Value Approx. Sig.

Nominal by Nominal Contingency Coefficient .411 .001
N of Valid Cases 161
a. Not assuming the null hypothesis.
b. Using the asymptotic standard error assuming the null hypothesis.

Explanation:

In the above chi-square the asymmetric significance or the p-value is 0.001, which
is less than 0.05, so the null hypothesis is rejected & the alternative
hypothesis is accepted.
The uncertainty coefficient is 0.000 & the approx significance 0.094shows that
there is very strong relationship between the age group and first priority of
investment.
The symmetric Lambda value is 0.037, which means there is 3.7% of possibility
of improvement.
The contingency coefficient shows there is 41.1% relationship present between
age group and first priority of investment.

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RISK APPETITE & FIRST PRIORITY OF INVESTMENT

Hypothesis:
Null hypothesis: There is no relationship between investor’s risk appetite and
Investment focus or the priority of investment.
Alternative hypothesis: Relationship present between risk appetite and Investment
focus.

Case Processing Summary

Cases
Valid Missing Total
N Percent N Percent N Percent
First Priority of investmnet
161 100.0% 0 .0% 161 100.0%
* Risk appetite

First Priority of investmnet * Risk appetite Crosstabulation

Count
Risk appetite
Low Moderate High Very high Total
First Priority tax savings 24 25 12 5 66
of investmnet Future Uncertainty 6 19 17 4 46
Income 3 7 12 1 23
Retirement 6 8 4 0 18
Capital Preservation 3 1 2 2 8
Total 42 60 47 12 161

Chi-Square Tests

Asymp. Sig.
Value df (2-sided)
Pearson Chi-Square 23.235 a 12 .026
Likelihood Ratio 24.052 12 .020
Linear-by-Linear
1.172 1 .279
Association
N of Valid Cases 161
a. 9 cells (45.0%) have expected count less than 5. The
minimum expected count is .60.

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Directional Measures

Asymp.
a b
Value Std. Error Approx. T Approx. Sig.
Nominal by Lambda Symmetric .061 .035 1.679 .093
Nominal First Priority of
.053 .055 .931 .352
investmnet Dependent
Risk appetite Dependent .069 .046 1.469 .142
Goodman and First Priority of c
.042 .018 .008
Kruskal tau investmnet Dependent
Risk appetite Dependent .050 .020 .022c
Uncertainty Coefficient Symmetric .056 .021 2.682 .020d
First Priority of d
.054 .020 2.682 .020
investmnet Dependent
Risk appetite Dependent .059 .022 2.682 .020d
a. Not assuming the null hypothesis.
b. Using the asymptotic standard error assuming the null hypothesis.
c. Based on chi-square approximation
d. Likelihood ratio chi-square probability.

Symmetric Measures

Value Approx. Sig.

Nominal by Nominal Contingency Coefficient .355 .026
N of Valid Cases 161
a. Not assuming the null hypothesis.
b. Using the asymptotic standard error assuming the null hypothesis.

Explanation:

In the above chi-square the asymmetric significance or the p-value is 0.026, which
is less than 0.05, so the null hypothesis is rejected & the alternative
hypothesis is accepted.
The uncertainty coefficient is 0.056 & the approx significance 0.02 shows that there
is fairly strong relationship between the risk appetite and first priority of
investment.
The symmetric Lambda value is 0.061, which means there is 6.1% of possibility
of improvement.
The contingency coefficient shows there is 35.5% relationship present between
risk appetite and first priority of investment.

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CONCLUTION AND RECOMMENDATIONS

The over all project is depending up on the findings that has been explained
previously. All my survey findings are corelated and being explain in the
above graphs.

After completing the survey and watching the analysis I come to this
conclusiion that the before investment investors do have focus on Tax
savings, Income, Capiatal preservation etc. They also have a
predetermination of the time period of investment.

According to my view the age group of 18-30 can be a great potential

investors for the company as the has high risk profile, more disposible
income, and the time horizon is perfect 3-5 years.

 Recommendation for this category is company must follow up these

high potential customers, they can be offered ULIPs as there is
blocking period of 5 years in NEW SECURE FIRST plan. This ULIP has a
20%-22% return which good enough for investment. The main focus
should be to reach to the customer, these customers are aware of
ULIPs and aware of other product. Company should try to reach them
and tap the investor.

 Mutual Funds can also be offered as they have high risk profile.
Company should take initiative to get demat account of these
customers.

 The age group of 31-40 years, investors are with ‘Moderate’ risk
profile, most of the investors are from the 10,000-15,000 Rs per
month disposible income. Company will get a good investor with
diluted risk profile. Company can offer them ULIPs,and Fixed Deposits
as investment instrument. Mutual funds can be an option but that
must be a debt fund to invest.

 The age group of 41-50 years, investors are from the 15,000-
20,000 Rs disposible income group. Investor in this group are
invested in Insurance sector, the primary focus of these investors
are retirement and time horizon is likely to be 6-9 years. This is also

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good potential group for the retirement plan in ULIPs. Mutual funds
can be a good option for them.

 For the age group of above 50 years, the rish profile would be low
moderate,as the term is not more than 3 years. Investors have
invested in insurance sector but in this age insurance would not be a
good option for investor. Company should try to minimise the risk
tolerence by offering Fixed deposits.

OCCUPATION

If we see the survey data it will seen that respondents are majorly Service
peopole and Business Class. Depending upon the data I conclude that the
srevice class has a time horizon of 3-5 years and risk tolerence ‘Low-
Moderate’. They invested in FDs, Mutual Fund and ULIPs.

 Recommendation company shoul tap these class by innovative

marketing strategies as they already invested, and offer FDs, ULIPs.
Mutual fund can be a lucrative offer if the Fund is any moderate fund
or debt fund.

 For the business class, the risk profile is high-very high. Most investor
are with negative return acceptability and time horizon is < 3 years.
Company should offer Mutual funds with risk profile High to very
high thus investor can get a high return. Apart from this company
should offer to open demat account with them.

Disposible Income

 The disposible income bracket less than Rs.5000 per month are
basically safe investors and have not and do not prefer investing in
mutual funds and ULIP. Thus positioning of these products should
be such that people are attracted towards this scheme. Emphasis
on marketing of the products should be given.

 Respondents under disposible income bracket Rs.5,000-Rs.10,000

have mainly invested in insurance and real estate. But when survey
was done and their preferences was asked these respondents
strongly preferred investing in these strategies.

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 Disposible Income Bracket of Rs.15,000-Rs.20,000 are the strong

contenders for investing their money and these people have
invested in real estate, insurance and fixed deposits. Moreover
there is mixed preferences for their investments thus proper
segmentation of the sample should be done accordingly marketing
strategies should be adopted.

 Though there is a small percentage of respondents in disposible

income bracket above Rs.20,000 who least prefer investing in
mutual fund. But this is the segment which can be well targeted
and their portfolio should be such that gives them more returns.
The case of ULIP is different as people strongly prefer investing in
this investment strategy. Thus emphasis for selling ULIP in this
income bracket.

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TAX CALCULATION & PORT FOLIO MANAGEMENT

TAX CALCULATION
In the port folio management I have learned how to calculate the Income
tax of service person and businessmen. According to the indian Income tax
acts Income tax is defined as below:

An income tax is a tax levied on the financial income of persons,

corporations, or other legal entities.

Various income tax systems exist, with varying degrees of tax incidence.
Income taxation can be progressive, proportional, or regressive.
Individual income taxes often tax the total income of the individual (with
some deductions permitted).

The government of India imposes a Progressive Income Tax on taxable

income of individuals, Hindu Undivided Families (HUFs), companies (firms),
co-operative societies and trusts.

Income from Salary

All income received as a salary is taxed under this head. Employers must
withhold tax compulsorily, if income exceeds minimum exemption limit, as
Tax Deducted at Source (TDS), and provide their employees with a Form 16
which shows the tax deductions and net paid income. In addition, the Form
16 will contain any other deductions provided from salary such as:

1. Medical reimbursement: Up to Rs. 15,000 per year is tax free if

supported by bills. (Company pays Fringe Benefit Tax on this amount)

2. Conveyance allowance: Up to Rs. 800 per month (Rs. 9,600 per year) is
tax free if provided as conveyance allowance. No bills are required for this
amount.

3. Professional taxes: Most states tax employment on a per-professional

basis, usually a slabbed amount based on gross income. Such taxes paid are
deductible from income tax.

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Income from Business or Profession

The income referred to in section 28, i.e., the incomes chargeable as

"Income from Business or Profession" shall be computed in accordance with
the provisions contained in sections 30 to 43D. However, there are few
more sections under this Chapter, viz., Sections 44 to 44DA (except sections
44AA, 44AB & 44C), which contain the computation completely within itself.
Section 44C is a disallowance provision in the case non-residents. Section
44AA deals with maintenance of books and section 44AB deals with audit of
accounts.

Section 80C Deductions

Section 80C of the Income Tax Act [1] allows certain investments and
expenditure to be tax-exempt. The total limit under this section is Rs.
150,000 (Rupees One lakh fifty thousand) which can be any combination of
the below:

* Contribution to Provident Fund or Public Provident Fund

* Payment of life insurance premium

* Investment in pension Plans

* Investment in Equity Linked Savings schemes (ELSS) of mutual funds

* Investment in specified government infrastructure bonds

* Investment in National Savings Certificates (interest of past NSCs is

reinvested every year and can be added to the Section 80 limit)

* Payments towards principal repayment of housing loans. Also any

registration fee or stamp duty paid.

* Payments towards tuition fees for children to any school or college or

university or similar institution. (Only for 2 children)

Section 80D: Medical Insurance Premiums

Medical insurance, popularly known as Medi-claim Policies, provide

deduction up to Rs 15000. This deduction is additional to Rs.1,50,000
savings. For senior citizens, the deduction up to Rs. 20,000 is allowable. This
deduction is available for premium paid on medical insurance for oneself,
spouse, parents and children.

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PERSONAL TAX RATES

For individuals, HUF, Association of Persons (AOP) and Body of

individuals (BOI):
For the Assessment Year 2008-09
Rate
Taxable income slab (Rs.)
(%)
Up to 1,50,000
Up to 1,80,000 (for women)
NIL
Up to 2,25,000 (for resident individual of
65 years or above)
1,50,001 – 3,00,000 10
3,00,001 – 5,00,000 20
5,000,001 upwards 30*
*A surcharge of 10 per cent of the total tax liability is applicable where the
total income exceeds Rs 1,000,000.

Tax calculation:-

For Men

Illustration: let a person with yearly income of 6,00,000 Rs. The tax he will
paid will be as given below.

For first 1,50,000 Rs tax Nil

For next 1,00,000 Rs.of investment tax Nil

Now tax for 2,50,001-3,00,000 @ 10% 5,000 Rs

For 3,00,001-5,00,000 Rs. @ 20% 40,000 Rs.

For 5,00,001-6,00,000 Rs. @ 30% 30,000 Rs.

Total tax paid 75,000 Rs.

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What is a Portfolio management?

A portfolio management is a collection of investments held by an institution

or a private individual. Kolding a portfolio is part of an investment and risk-
limiting strategy called Diversification. By owning several assets, certain
types of risk (in particular specific risk) can be reduced.

The aim of portfolio management is to achieve the maximum return

from a portfolio which has been delegated to be managed by an individual
manager or financial institution. The manager has to balance the parameters
which define a good investment i.e. security, liquidity, and return. The goal
is to obtain the highest return for the client of the managed portfolio.

While doing the portfolio management of customers it is ensured that the

portfolio has objectives and achieves a sound balance between the
competing objectives, which are:-

 Safety of investment

 Stable current return

 Appreciation in capital value

 Liquidity

 Tax planning

 Minimizing the risk

 Diversification

Portfolio Expected Return

The expected rate of return is the weighted average of the expected rates of
return on assets comprising the portfolio. The weights, which add up to 1,
reflect the fraction of total portfolio invested in each asset. Thus, there are
two determinants of portfolio returns:

I. Expected rate of return on each assets and

II. Relative share of each asset in the portfolio.

Symbolically:

E (rp) =∑w E (ri)

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Where, E (rp) =expected return from the portfolio.

w = proportion invested in the portfolio.

E (ri) =expected return from the assets i.

Portfolio Risk

Total risk is measured in terms of variance or standard deviation of return.

Unlike portfolio expected return, portfolio variance is not the weighted
average of variance of returns on individual assets in the portfolio.

Symbolically:

σ²p= (w1)²(σ1)²+ (w2)²(σ2)²+2(w1) (w2) (σ12)

Where,

σ²= Variance of returns of the portfolio

(w1)= Fraction of the portfolio invested in asset 1

(w2)= Fraction of the portfolio invested in asset 2

(σ²1)= Variance of asset 1

(σ²2)= Variance of asset 2

(σ12)= Covariance between returns of two assets.

Return is not fixed for any investment instrument it depends upon the
market liquidity, interest rate, and some other economic situation of that
country. For the calculation of the risk & return I have chosen the historic
data.

I have also showed the risk profile which have been ranging from Low to
very high.

List of return expected on the basis of Historical data

Types of investments Historical returns Risk profile

Company Bonds 6%-8% Medium-high

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Bond Mutual Funds 8%-10% Medium

Equity Mutual Funds 15%-20% High

Equities 15%-20% Very high

Fixed Deposits 7%-8% Low

PPF 8% Low

Post Office 8% Low

Government Securities 5%-6% Low

ELSS 15%-20% Medium-high

Note: higher returns for lower risk (because of Govt. guarantees there) that
PPF and similar A/c appear to have, is misleading. These do not have much
liquidity, and since that is an important measure of risk.

CREATING PORTFOLIO

Making a portfolio is depends on the risk measurement of the investment

and the time horizon he/she prefer to invest. But from the point of view of
the portfolio manager, choosing a investment intrument or a fund is more
difficult than to measure the risk tolerence and time horizon.

For the portfolio managers calculating the risk and return is the main area
where they focused. As an investors before investing alwways watch for the
risk and return for his/her investment. So before creating the portfolio, risk
and return calculation is manditory.

To understand the risk of a specified fund, there are some statistical

instruments that helps to measure the volatality in respect to the market,
industry, and peers. Measuring volatility and risk depics the fluctuation of
return investors receive.

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For this creation of portfolio I have choose Mutual Funds as investment

instrument because, it has a diversified investment options from equity
market, money market, to debt instrument. To diversified investment
investor can investment as he/she wanted to. Any one can invest in mutual
funds as variation in investment instrument is greater than any other
investment instrument.

METHODOLOGY USED

Investing in mutual funds involving an active role of a fund manager is set

to be one of the safest investment avenues as regards the high risk/return
equity investment. Being assumed safe and the responsibility entrusted to
fund managers, it is perceived that investors give a cursory glance at the
performance sheet of the fund, gain some money, and carry on with their
investments with the fund.

However, though they make money from the fund, a detailed examination of
the fund's performance in relation to other risk-free investment avenues and
the Benchmark index gives telling insights into the fund's performance. A
comparison with risk-free investments like government securities, treasury
bills, and also the Benchmark index would determine how safer and more
profitable your fund is.

Here is an analysis of the ratios that can help investors gauge the
performance of your fund as regards investing in less riskier investment
avenues.

Standard Deviation

Standard deviation throws light on a fund's volatility in terms of rise and fall
in its returns. Maximum volatility in a security is the riskiest, considering the
unevenness it brings about in its performance. Standard deviation of a fund
measures this risk by measuring the degree to which the fund fluctuates in
relation to its mean return. That is the average return of a fund over a
period of time.

A fund that has a consistent four-year return of 3%, for example, would
have a mean or average of 3%. The standard deviation for this fund would

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then be zero because the fund's return in any given year does not differ
from its four-year mean of 3%. On the other hand, a fund that in each of
the last four years returned -5%, 17%, 2% and 30% will have a mean
return of 11%. The fund will also exhibit a high standard deviation because
each year the return of the fund differs from the mean return. This fund is
therefore riskier because it fluctuates widely between negative and positive
returns within a short period.

To determine how well a fund is maximising its returns received for its
volatility, a comparison can be done for similar investment and similar risky
mutual funds. The fund with the lower standard deviation would be more
optimal because it is maximising the return received for the amount of risk
acquired.

Sharpe ratio

This ratio describes how much return you are receiving for the extra
volatility that you endure for holding a riskier asset. Remember, you always
need to be properly compensated for the additional risk you take for not
holding a risk-free asset.

It is defined as S(x) = (rx-Rf)/Std dev(x)

Where 'x' is the investment,

'rx' is average rate of return of x

Rf is the best available rate of return of a risk-free security like government

securities

Std dev(x) is the standard deviation of rx.

Sharpe ratio is a risk-adjusted measure of return that is often used to

evaluate the performance of a portfolio. The ratio helps to make the
performance of one portfolio comparable to that of another portfolio by
making an adjustment for risk. For example, if manager A generates a
return of 15% while manager B generates a return of 12%, it would appear
that manager A is a better performer. However, if manager A, who produced

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the 15% return, took much larger risks than manager B, it may actually be
the case that manager B has a better risk-adjusted return.

Say that the risk free-rate is 5%, and manager A's portfolio has a standard
deviation of 8% (considering high risk/return), while manager B's portfolio
has a standard deviation of 5%.

The Sharpe ratio for manager A would be 1.25 while manager B's ratio
would be 1.4, which is better than manager A. Based on these calculations,
manager B was able to generate a higher return on a risk-adjusted basis. A
ratio of more than or equal to 1 is good, more than or equal 2 is very good,
and more than or equal 3 is excellent.

Sharpe ratio is broken down into three components: asset return, risk-free
return, and standard deviation of return. After calculating the excess return,
it's divided by the standard deviation of the risky asset to get its Sharpe
ratio. The idea of the ratio is to see how much additional return you are
receiving for the additional volatility of holding the risky asset over a risk-
free asset - the higher the better.

Beta

Beta determines the volatility, or risk, of a fund in comparison to that of its

index or benchmark. A fund with a beta very close to 1 means the fund's
performance closely matches the index or benchmark. A beta greater than 1
indicates greater volatility than the overall market, and a beta less than 1
indicates less volatility than the benchmark.

If, for example, a fund has a beta of 1.05 in relation to the Sensex, the fund
has been moving 5% more than the index. Therefore, if the Sensex has
increased 15%, the fund would be expected to increase 15.75%.

On the other hand, a fund with a beta of 2.4 would be expected to move 2.4
times more than its corresponding index. So if the Sensex moved 10%, the
fund would be expected to rise 24%, and, if the Sensex declined 10%, the
fund would be expected to lose 24%.

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Investors can choose funds exhibiting high betas, which increase chances of
beating the market. Also if the market is bearish the funds that have betas
less than 1 are a good choice because they would be expected to decline
less in value than the index. For example, if a fund had a beta of 0.5 and the
Sensex declined 6%, the fund would be expected to decline only 3%.
However, you must note that beta by itself is limited and there may be
factors other than the market risk affecting your fund's volatility.

FUNDS SELECTION

I have selected minimun five funds from different Funds from different types
of funds. Here is the list of the mutual funds I have selected.

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Fund name Fund name

Aggressive Funds Balanced Funds

Tata Infrastructure Kotak Balance
DSPML T.I.G.E.R. Tata Balanced
Regular
Sundaram BNP
Debt oriented
Paribas Select
Midcap Regular DBS Chola MIP
UTI infrastructure ICICI Prudential
Child Care-Study
Reliance Growth
Birla Mid Cap Principal MIP Plus
Principal MIP
Magnum Emerging
Businesses HSBC MIP Savings

Diversified equity Debt Funds

Kotak Opportunities Birla Sun Life
Taurus Star share Income

Birla Sun Life Birla Income Plus

Frontline Equity Kotak Bond
Regular
Birla Sun Life Equity
Birla Gilt Plus
HDFC Top 200
Regular
ICICI Prudential
Dynamic ICICI Prudential
Gilt Investment
Magnum Contra
Magnum Global
Magnum Multiplier
Plus

Balanced Funds
HDFC Prudence
Principal Child
Benefit
Magnum
Balanced

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 These 33 funds are the top funds in respective fund sector, the 1st
year return and 3 years are calculated.
 Then with 60% weightage given to 3 years return and 40% weightage
given to 1st year return. Thus I have got the total average return score
of the respective funds.
 Beta & Sharpe ratio being calculated. Then I calculate adjusted risk by
dividing Sharpe ratio by beta.
 Then adjusted risk is multiplied by the total return score of individual
funds. Then I got the adjusted risk & return.
 The highest scorer is the best fund to invest respect to the fund type.
So I have ranked the funds in the respective category.
 These funds are recommended to the investors depending the risk
tolerence.

Portfolio of Investor

WITH 70% AGGRESSIVE & 30% DEFENSIVE RISK PROFILE

Investable amount = 500,000 Rs.

Aggressive investment= 500,000x.7= 350,000 Rs

Defensive investment= 500,000x.3= 150,000 Rs

Aggressive investment

ELSS= 100,000 Rs.

Aggressive mutual funds= 200,000 Rs.

NFO= 50,000

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Explanation :

 ELSS is a type of mutual funds where investor can get the Tax shield
of 80(C), which means upto investment of Rs 100,000 is tax free.
There is no need invest in ULIPs or any endowment insurance,
because ELSS gives on an average return of 25%-30%7. For the
secure life investor must do an insurance that will give only insurance
plan. This will be a expence of the investor but in the long run ELSS
will give more return than a ULIP plan.

 NFO is the emerging mutual funds that is going to flurish in the future.
It is difficult to predict which NFO will be good, because it is time
constrain. But investor must evaluate the background of the NFO and
the fund manager.
 Aggressive mutual funds, are the most volatily mutual funds respect to
the market. I have recommended top five mutual funds each with
amount 40,000 Rs. The funds are:

Tata Infrastructure, DSPML T.I.G.E.R. Regular, Reliance Growth, Birla Mid

Cap, Sundaram BNP Paribas Select Midcap Regular.

In these funds DSP ML T.I.G.E.R. Regular high liquid as there is no tenure.

Reliance Growth and Birla Mid Cap minimum tenure is 1 year. So there is no
liquidity problem for the investor.

Defensive investment

Balanced funds,Debt funds= 50,000

Government securities= 50,000

Fixed deposits=50,000

Explanation:

This investor has 30% in defensive investment. I have distributed all

investment equally to balanced funds, Government securities, Fixed
deposits.
7
See Annexure no. 4

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Fixed deposits are for 1 years, Kotak Mahindra offers 9.25% for 1 years
fixed deposits.

Government securities for 5 years, it will yield 8%.

Return after one years of the above investment

INVESTMENT CALCULATION EXPECTED RETURN

ELSS 100,000X35% 35,000
AGGRESSIVE FUNDS 200,000X40% 80,000
NFO 50,000X15% 7,500
BALANCED FUNDS 50,000X 25% 12,500
FIXED DEPOSITS 50,000X9.25% 4625
GOVT.SECURITIES 50,000X8% 4,000
TOTAL 143625

On an average the return =143,625/500,000= 28.25% which good for the

investorof very high risk.

Portfolio of Investor

WITH 60% AGGRESSIVE & 40% DEFENSIVE RISK PROFILE

Investable amount = 500,000 Rs.

Aggressive investment= 500,000x.6= 300,000 Rs

Defensive investment= 500,000x.4= 200,000 Rs

Aggressive investment

ELSS= 100,000 Rs.

Balance Funds= 50,000 Rs.

NFO= 50,000

Diversified equity funds= 100,000

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Explanation:

 Here investor has a risk tolerence of 60% aggressive. So I have

recommended 33% of the aggressive investment in the
Diversified Equity funs where the risk ranges from medium to
high.
 The diversified funds are yeilding good returns from the market
nearly 30% on an averege.
 Balanced Funds are from medium risk and medium return, it
ranges risk from low to medium. Return is quite moderate near
about 25%-30%.

Defensive investment

Debt funds= 75,000

Debt oriented Funds=75,000

Fixed deposits=50,000

Explanation:

In the defensive invetment part investor must try to gain more interest rate
as the return is secure and liquidity is low.

 Fixed deposits rate is maximum 9.25%, Kotak Mahindra Bank is

offering for One year teneure.
 Debt Funds are the secure mutual funds with risk profile of low and
the return is ranging 9%-11%. The top five funds I have
recommended: Birla Sun Life Income, Birla Income Plus, Kotak Bond
Regular, Birla Gilt Plus Regular, ICICI Prudential Gilt Investment.
 For the liquidity Kotak Bond Regular has no minimum time of
investment, ICICI Prudential has 3 years of minimum investment, but
rest has one year minimum investment period. So liquiidity is there in
between the funs.
 For the debt oriented funds, these are the funds that are low risky but
return is more than the debt funds NEARLY 13%. I have

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recommended: DBS Chola MIP1, ICICI Prudential Child-care Study0,

Principal MIP, Principal MIP Plus1, HSBC MIP savings2.

 ICICI Prudential Child-care Study is highly liquid as there is no

minimum tenure of investment, DBS Chola, Principal MIP & Principal
MIP plus has a minimum tenure of 1 year, and HSBC has 2 years. So
investor has liquidity option in his investment.

Return after one years of the above investment

INVESTMENT CALCULATION EXPECTED RETURN

ELSS 100,000X35% 35,000
BALANCED FUND 50,000X25% 12,500
DIVERSIFIED EQUITY 100,000X30% 30,000
NFO 50,000X15% 7,500
DEBT FUND 75,000X9% 6750
DEBT ORIENTED FUND 75,00013% 9750
FIXED DEPOSIT 50,000X9.25% 4625
TOTAL 106,125

Then on an average the return =106,125/500,000=21.25% which is good

for an investor of high risk profile.

ANNEXURE

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Comparative table of Savings Account of 5 banks

Service Standard Kotak
Charges chartered ABN AMRO ICICI HDFC Mahindra

Average
Balance 10000 10000 5000 5000** 10000

Non
maintenance
of AQB or AB
750/quarter 750/quarte
<5000 1500 500/month * r 750
>=5000 to <
7500 1250 400/month
>=7500 to
10000 750 300/month

* Rs. 250/quarter for sr. citizens & young star customers (minors)

** if customer is semi urban than AQB will be 2500/quarter

Debit card
fees
Free for
normal debit 1st year
200/yr 180/yr 99/yr 100/yr Rs.100 for
card
subsequen
t years
smart fill card 399/yr NA 99/yr* NA NA
gold card 799/yr 400/yr NA 500/yr na

Additional
cards
supplementar
y cards NA 180/yr NA NA 100/card
add on cards NA 180/yr** NA 500/yr*** 250/card
replacement
card fee 200/card 200/card 100/card 100/card
damaged card
fee 200/card 200/card free free
woman’s card NA NA NA 150/card NA
* smart fill card is HPCL DEBIT CARD in ICICI
** minimum limit for add on card in ABN AMRO is RS.15000 & service charge will
be as

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<7500 500/month
>=7500 to
<10000 400/month
>=10000 to
< 15000 300/month
***for easy shop woman’s card fee will be RS 150/yr in HDFC

Service Standard Kotak

Charges chartered ABN AMRO ICICI HDFC Mahindra
ATM's
transaction
HDFC &
free All ATMs* ICICI SBI** KOTAK M

cash with
drawl (from
Rs 25 from
partners Rs Others( Vis
any other
Charged 20 & from a domestic
UTI ATMS bank
non ATMs
and ABN except SBI
partners Rs
AMRO
60)
ATM’S

*for these facility minimum AQB should be Rs.15,000

Cheque
Book
At par cheque book
0 to 500 free free
Rs 1/ 1000
50*** (min Rs free
>501 50**** 50)
cheque
return
Inward 300 350 200 400 300

OUTWARD 100 100 100***** 100 300

*subsequent to the month where transaction criteria not fulfilled & bal<10,000
** only in gold card , 2 transactions per month
*** only if AQB is not maintained otherwise free
**** free 1st cheque book of 25 leaves
***** 50/Cheque for local cheque deposited by customer

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Statements
monthly
statement 200/yr 200/yr free* free
Ad-hoc
statement 50/yr NA 100/stat 100/yr

Facilities
D-mat a/c NA free
D-mat
maintain
charges NA 360 per yr
Internet
Banking Free free free free free
Phone
Banking Free free free free free
DD/POS
DD
COMMISON
2/1000(min shown
On same bank 50 50) below 2.5/1000*

4/1000 (100
on other bank 2.5/1000** min)
* min 50 max 5000
** min 50 max 8000

Service Standard Kotak

Charges chartered ABN AMRO ICICI HDFC Mahindra
commission
schedule

on branch
location
Up to 10000 50,40*
10000-50000 75,60*
50000-
100000 2.5/1000**
above 100000 2/1000***
* for sr. citizens /rural areas

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** min 150/-
***min 250/- & max 5000
On non branches location-----Rs 50/- plus charges as below
Rs 500 10
Rs500 to
1000 15
Rs1000 to
5000 25
Rs 5000 to
10000 30
Rs10000 to
100000 3/1000
>Rs 100000 6/1000*
* max Rs 5000

PO
commission DD DD
schedule 50 1/1000* charges charges
* 75 for PO Up to 50000 max 5000

Account 500 less within 12 250 within < 14 & >6 Rs.600 if
closing than 6 months 1 yr, nil months no closed
charge months 500/- after 1 yr charge, within 6
15 days to months.
6 months Else no
100/- charges

courier Rs.
Door step
25 & DD Rs.
banking
50 par Rs. 10 par
transaction transaction NA

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COMPARATIVE ANALYSIS OF 5 ULIPs

Policy Bajaj ICICI- Life AVIVA- Life HDFC- Unit Birla Sun Life –
name Allianz- Time Gold Bond Linked Dream Plan
New Endowment
Secure
First

Age

Minimum 0 years O years 18 years 18 years 18 years

age of (risk
entry commence
s at age 7)

Maximum 65 years 65 years 50 years 65 years 60 years

age of
entry

Risk 7 to 70 0 to 75 years 18 to 75 years 18-75 years

covered for years
age
between

Maximum 70 years 75 years 30 years 25years

tenure

Minimum 5 years 10 years 10 years 10 years 5 years

tenure

Premium
amount
(min.)

Annually 10,000 20,000 25,000 10,000 <=50,000

Half yearly 6,000 12,000 6,000

Quarterly 3,000 6,000 3,000

monthly 1,000 2,000 1,000

Maximum Y times of Annual Annual Annual Annual

sum the premium*0.5* premium*0.5* premium*40 premium*0.5*
assured

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amount premium * term term term

Age
Y

0-35
40

36-40
30

41-55
20

55-60
10

61-65
5

Minimum 5*annual Annual Annual Annual 50,000

sum premium or premium premium*0.5* premium*0.5*t
assured 0.5*term*a x0.5x term term erm
amount nnual
premium
which- ever
is higher

Regular
premium
allocation

Silver 20,000- 25,000- Up to

( >=10,000 49,999 50,000 1,99,9999
to
<75,000)

1st >2nd 1st 2nd >3r 1st yr >2nd 1st & >3rd yr NIL
d
yr yr yr yr 85% yr 2nd yr 99%
30% 94% 96% 70%
80 92. Yr
% 5%
96

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Gold 50,000- 50,000- 2,00,000-

(>=75,000 4,99,999 1,00,000 4,99,999
to
2,50,000)

1st >2ndy 1st 2nd >3r 1st yr >2nd 1st & >3rd yr NIL
yr yr d
yr yr Yr yr 2nd yr
82 92. 85% 99%
95% %
96 80%
50% 5% % 97%

Platinum(> 5,00,000- 1,00,000- 5,00,000-

2,50,000) 9,99,999 5,00,000 9,99,999

1st 2nd yr 1st 2nd >3r 1st yr >2nd 1st & >3rd yr NIL
d
yr yr yr 85% yr 2nd yr 99%
97% 98% 85%
76% 15 7.5 Yr
% % 4%

>10,00,000 5,00,000- 10,00,000-

50,00,000 19,99,999

1st 2nd >3r 1st yr >2nd 1st & >3rd yr

d
yr yr yr 2nd yr
89% 99%
10 7.5 Yr 98% 90%
% %
4%

>50,00,000 >20,00,000

1st yr >2nd 1st & >3rd yr

93% yr 2nd yr 99%
98% 95%

Benefits
offered

Death Sum Higher of sum Higher of sum Higher of the

benefit assured + assured or assured or sum assured of
the value fund value fund value fund value
of units

Before age Value of

of 7 yrs units

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Maturity Value of Fund value or Total fund Total of the

benefit units ECS for 5 yrs value fund value

Funds 5 types of 6 types of 5 types of 5 types of fund 3 types of fund

funds fund fund

Equity fund Multiplier Index fund Liquid fund Protector fund

II fund
Risk- High Risk-Low Risk-Low
Risk -High Risk –High

Equity Flexi growth Enhancer Secure Builder fund

growth fund fund managed fund
fund Risk- Low
Risk- High Risk- High Risk-
Risk -Very Low/Moderate
High

Bond Fund Flexi Growth fund Defensive Enhancer fund

Balanced fund managed fund
Risk Risk- High Risk- Moderate
-Moderate Risk-Moderate Risk-Moderate

Liquid fund Balancer fund Balancer fund Balanced

managed fund
Risk Profile- Risk- Risk-
Low Moderate Moderate Risk- High

Accelerator Protector fund Secure fund Equity

midcap managed fund
Fund Risk-Low Risk- Low
Risk-Very High
Risk Profile-
Very High

Preserver Growth fund

fund
Risk- Very High
Risk- Capital
preservation

Tax benefit

80C Up to Up to Up to Up to 1,00,000 Up to 1,00,000

1,00,000 1,00,000 tax 1,00,000 tax tax free tax free

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tax free free free

10(10D) Returns are

tax free

80D Save up to
10,000

Other
charges

Policy 30 per 60 per month 59 per month, 20 per month 8.44/1000

admin month per yr 5%
charges increment

Fund
manageme
nt charge

Equity Multiplier Index fund Liquid fund Protector fund

index fund
II 1.25% p. 2.25% p. a 0.75 % p. a 0.8% p. a 1% p. a
a

Equity Flexi growth Enhancer Secure Builder fund

growth fund fund managed fund
fund 1% p. a
1.75% p. a 2.25 % p. a 1.75% p. a 0.8% p. a

Bond Fund Flexi Growth fund Defensive Enhancer fund

Balanced fund managed fund
0.95% p. a 1.5% p. a 1% p. a
2.25% p. a 0.8% p. a

Liquid fund Balancer fund Balancer fund Balanced

managed fund
0.95% p. a 2.25% p. a 1.25% p. a
0.8% p. a

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Accelerator Protector fund Secure fund Equity

midcap managed fund
Fund 1.5 % p. a 1.5% p. a
1.75% p. a 0.8% p. a

Preserver Growth fund

fund
0.8% p. a
0.75 % p. a

Miscellaneo 100 per 100 per trans. 250 per trans. 100 per trans.
us charges trans.

Mortality Age Age Age Age

charges charge charge charge charge

20 20 20 30
1.57/1000 1.33/1000 1.54/1000 1.69/1000

30 30 30 40
1.74/1000 1.46/1000 1.93/1000 2.94/1000

40 40 40 50
2.82/1000 2.46/1000 4.42/1000 6.95/1000

50 50 50 60
6.53/1000 5.91/1000 12.17/1000 16.76/1000

Switch 3 free(if > 4 free (if >4, 4 free(if >4, 24 switch free, 2 free(>2 ,per
option 3, 5% of 100 per 5% of switch >24 per switch switch 100)
switch amt switch, min amt or Rs.500 100
or Rs.100 switch 2000) whichever is
whichever lower
is lower)

Flexibility Additional Additional Single premium Accidental rider

riders riders benefit top-up,
benefit premium
change,

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Additional
riders benefit

Surrender 1-2 yrs-75% <0.5yr-100% 30% between 2 1-3 yr-

chargers yrs 57.49/1000
2-3 yrs-60% 0.5-1yr-60%

3yrs-2% 1-2 yr-20%

4yrs-1% 2-3yr-10%

Top up Minimum Minimum Minimum 5000

premium 5000 1000

Partial After 3 yrs After 3 yrs Minimum Minimum Minimum 5000

withdraw (min minimum 5000 10,000
option withdraw 2000
1000 )

QUESTIONNAIRE FOR INVESTMENT STRATEGIES

Name Age: 18-30 31-40 41-50 >50

Occupation: Service Business Self Employed Other

Contact no.

Q 1.What is your annual income (approx)?

< 2,50,000 2,50,000-5,00,000 5,00,000-7,50,000

7,50,000-10,00,000 > 10,00,000

Q 2. What is your monthly disposible income?

< 5,000 5,000-10,000 10,000-15,000

15,000-20,000 > 20,000

Q 3. What is your primary investment focus (please give ranking 1-5, where
1- best)

Tax Savings Future Uncertainity Income

Retirement Capital Preservation

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Q 4. When You want to withdraw money from youe investment?

Less than 3 years 3-5 years

6-9 years >10 years

Q 5. Where you have invested from the followings?(you can tick more than
one)

Share Mutual Funds FD/RBI bonds

Real Estate Insurance

Q 6. What is applicable to you?

Never Accept Negative return

Can accept negative return once in 3 years

Can accept negative return once in 5 years

Can accept negative return once in 7 years

Returns can fluctuate in longer term.

BIBLIOGRAPHY

Sites
www.google.com
www.investopedia.com
www.standardchartered.in
www.iciciprulife.com
www.nseindia.com
www.ampi.com
www.finance.indiamart.com
www.business.india.com
www.valueresearch.com
www.myiris.com

Books

Financial management (Ninth edition) by I M Pandey.

Security analysis and Portfolio management by Ritu Ahuja.
Insurance in India by S Swaminathan.
Insurance chronicle, Icfai publications & current scenario by jawahar

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