A PROJECT REPORT ON Study of Various Investment Avenue

SUBMITTED BY Nisha A. Bangar M.COM. (part-I) SEM.-I, 2012 SEAT NO:Roll No:-47

UNDER THE GUIDANCE OF PROF. Tushar Shah

SUBMITTED TO University of Mumbai

NIRMALA MEMORIAL FOUNDATION COLLEGE OF COMMERCE AND SCIENCE Thakur Complex, 90feet road Kandivali (E), Mumbai-400 101 Academic Year- 2012-13

Certificate

This is to certify that Ms. Nisha A. Bangar studying in M.COM-I at Nirmala Memorial Foundation College of Commerce And Science, kandivali (E), has completed a project on the Various Investment Avenue in the Academic year 2012-13. This information which is submitted is true and original to the best of my knowledge.

-------------------Signature of principal (Dr. T. P. Madhu Nair)

--------------------Signature of Coordinator (Dr. Neha Goel)

---------------------Signature of project guide (Prof. Tushar Shah)

---------------------Signature of External Examiner

DECLARATION

I NISHA A. BANGAR of Nirmala College of Commerce and Science, studying in M.COM. (Part I) hereby declare that I have completed the project on A study of Various Investment Avenue in the academic year 2012-13.

The information submitted is true and original to the best of knowledge.

--------------------Date of submission

--------------------students signature Nisha A. Bangar M.COM. - Part I

Acknowledgement

The satisfaction that accompanies the successful completion of a task would be incomplete without the mention of people who made it possible, whose constant guidance and encouragement crown all the efforts with success.

I take this opportunity to express my profound gratitude to Principal Dr. T.P. Madhu Nair and the management Of Nirmala Degree College of Science And Commerce for giving the opportunity to accomplish that project work.

My journey till date would be incomplete without extending my gratitude towards Mr. Tushar Shah my course coordinate Dr. Neha Goel my project guide for giving her valuable inputs and suggestion, who not only served as my supervisory but also encouraged and challenged me throughout my academic program. She patiently guided me through the dissertation process, never accepting less than my best efforts.

Above all, I would like to thank my family members who were very supportive and were constant source of inspiration. It is for them and the great almighty god that I have succeeded in my efforts. I thank them all.

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Preface

As a student, I was very keen to understand the link and the importance of Economic Integration and role in todays context world. In this volatile capital market it has become very difficult for the investors that where they should invest so as to have maximum profit. This project takes you through with the great investment avenues available for the investors their comparative analysis so as to understand various investment opportunities and satisfy investors. This project helps understanding the difference between investment options and also guides you to choose one of them as Investment Avenue. The study is based on secondary data available from various books and websites my inference is based on the data that I have obtained and understood. The project helps us to understand the importance of various investments. It is beneficial to the customers because customer get the good types of investment.

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Objective

The purpose of the study was to determine the saving behavior and investment preferences of customers. Customer perception will provide a way to accurately measure how the customers think about the products and services provided by the company. Todays trying economic conditions have forced difficult decisions for companies. Most are making conservative decisions that reflect a survival mode in the business operations. During these difficult times, understanding what customers on an ongoing basis is critical for survival. Executives need a 3rd party understanding on where customer loyalties stand more than ever management needs ongoing feedback from the customers, partners and employees in order to continue to innovate and grow. The main objective of the project is to find out the needs of current and future customers. For this report, customer perception and awareness level will be measured in many important areas like; To understand all about different investment avenues available in India.

To find out how the investors get information about various financial statement.

How long they prefer to keep their money invested.

In which type of financial instrument they like to invest.

What are the various factors that they consider before investing?

To give a recommendation to the investors that where they should invest.

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INDEX
Chap no. contents Page no.

1 1.2 1.3 1.4 1.5 1.6 2.1 2.2 2.3 2.4 2.5 2.6 3 4

Introduction Financial Navigating in the Current Economy Investment objective Investment Criteria By Individuals Types Of Investor Choosing the right type of investment Types of Investment Public Deposit Investment in Gold and Silver LIC scheme What is Money Market Investment? Analysing of data Conclusion Bibliography

5 9 14 15 17 19 21 23 24 26 28 33 35 36

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Introduction

1.1 What is Investment Avenue

The dictionary meaning of investment is to commit money in order to earn a financial return or to make use of the money for future benefits or advantages. People commit money to investments with an expectation to increase their future wealth by investing money to spend in future years. For example, if you invest Rs. 1000 today and earn 10% over the next year, you will have Rs. 1100 one year from today. An investment can be describe as perfect if it satisfies all the needs of all investors. So, the starting point in searching for the perfect investment would be to examine investor needs. If all those needs are met by the investment, then that investment can be termed the perfect investment. Most investors and advisors spend a great deal of time understanding the merits of the thousands of investment available in India. Little time, however, is spent understanding the needs of the investor and ensuring that the most appropriate investments are selected for him. The Investment Needs of an Investor By and large, most investors have eight common needs from their investments: 1. Security of original capital; 2. Wealth Accumulation 3. Comfort Factor; 4. Tax Efficiency; 5. Life Cover; 6. Income; 7. Simplicity; 8. Ease of Withdraw Types of investment. -5-

Different investment avenues are available to investors. Mutual funds also offer good investment opportunities to the investors.

Like all investment, they also carry certain risks. The investors should compare the risks and expected yields after adjustment of tax on various instruments while taking investment decisions. The investors may seek advice from experts and consultants including agents and distributors of mutual funds schemes while making investment decisions. An investment is an exposure of cash that has the objective of producing cash inflows in future. The worthiness of an investment is measured by how much cash the investment is expected to generate. The analysis of return on investment is a financial forecasting tool that assists the business manager in evaluating whether a proposed investment opportunity is worthwhile within the context of the companys business objectives and financial constraints. The investment s to be analyzed has some of the following characteristics:

A major amount of money is involved. The financial commitment is for more than one year. Cash flow benefits are expected to be achieved over many years. The strategic direction of the company may be affected. The companys prosperity may be significantly affected if the investment is made or not made.

Investment decision should be analyzed carefully because such analysis is of assistance in the decision making process and because the decision s are irreversible, have long term strategic implications are uncertain, and involve considerable financial exposure.

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Assistance
Forecasting the future performance of a proposed investment requires the analyst to identify all the issues and effects, both positive and negative, associated with the investment. While this does not eliminate risk, it does lead to a more intelligent, better performed decisionmaking process; facts and expectations based upon research and strategic thinking are incorporated into the forecast. The results of the financial analysis do not make the decision. People make decisions based upon the best available information. A capital expenditure requires significant funds and corporate commitment. It is vital that these decisions be well informed.

Irreversible
Operating decisions, such as scheduling overtime or purchasing larger amounts of raw materials, can be changed when the environment or circumstances change or when it becomes obvious that a mistake was made. With these decisions, the need for correction can be readily determined and the actual change can be implemented quickly, with minimum financial penalty. A capital expenditure decision, such as purchasing machinery, can also be changed. In this case, however, the financial penalty can be substantial. Having installed equipment sit idle because customer orders dried up or never materialized can be severely damaging. Changes in customer preferences that are not recognized before assets are purchased and installed can be even more damaging if the company cannot or is unwilling to admit the mistakes and take corrective actions. The discipline of analysis and forecasting should minimize the occurrence of this type of event.

Long-Term strategic Implications

Locating an operation in a certain part of the world, building a factory in a certain configuration, and deciding what kinds of machines are needed and how many are all decisions that will affect the way the company conducts its business for many years to come. These decisions may very well contribute to the companys future prosperity, or the lack of it. Companies can face such risks as: -7-

Critical raw materials becoming depleted Rail transportation service being terminated Manpower and skills shortages occurring

Uncertainty
The ability to predict the future is becoming more difficult and complex for businesses. Markets, Customers, Competitors and technology have made the need for strategic discipline more critical than ever before.

Financial Exposure
In addition to the uncertainties and risks involved, the sheer amount of funds that must be committed to a major investment requires that all available facts and issues be identified and evaluated. If additional debt is directly or indirectly involved, the analytical process is even more critical. Involving banks or other sources of external financing is often very helpful. Banks are risk averse businesses. They will not lend money unless they are convinced of the merits of the proposed investment. Lenders often protect their clients by identifying risks that the clients had not identified or had under emphasized. In this situation, the forecast becomes a selling document as well as a decision-making tool.

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1.2 Financial Navigating in the Current Economy: Ten Things to

Consider before You Make Investing Decisions

Invest Wisely: An Introduction to Mutual Funds. This publication explains the basis of mutual fund investing, how mutual funds work, what factors to consider before investing and how to avoid common pitfalls. Given recent markets events, you may be wondering whether you should make changes to your investment portfolio. The SECs Office of Investor Education and Advocacy is concerned that some investors including bargain hunters and mattress stuffers are making rapid investment decisions without considering their long term financial goals. While we cant tell you how to manage your investment portfolio during a volatile market, we are issuing this investor alert to give you the tools to make an informed decision. Before you make any decision, consider these areas of importance:

1. Draw a personal financial roadmap

Before you make any investing decision, sit down and take an honest look at your entire financial situation especially if you have never made a financial plan before. The first step to successful investing is figuring out your goals and risks tolerance-either on your ow or with the help of a financial professional. There is no guarantee that you will make money from your investments. But if you get the facts about saving and investing and follow through with an intelligent plan, you should be able to gain financial security over the years and enjoy the benefits of managing your money.

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2. Evaluate your comfort zone in taking on risk

All investments involve some degree of risk. If you intend to purchase securities- such as stocks, bonds, or mutual funds- its important that you understand before you invest that you could lose some or all of your money. Unlike deposits are at FDIC- insured banks and NCUA-insured credit unions, the money you invest in securities typically is not federally insured. You could lose your principle, which is the amount you have invested. Thats true even if you purchase your investments through a bank. The reward for taking on risk is the potential for a greater investment return. If you have a financial goal with a long time horizon, you are likely to make more money by carefully investing in asset categories with greater risk, like stocks or bonds, rather than restricting your investments to assets with less risk, like cash equivalents. On the other hand, investing solely in cash investments may be appropriate for short term financial goals. The principle concern for individuals investing in cash equivalents is inflation risk, which is the risk that inflation will outpace and erode returns over time.

3. Consider an appropriate mix of investments

By including asset categories with investment returns that move up and down under different market conditions within a portfolio, an investor can help protect against significant losses. Historically, the returns of the three major asset categories- stocks, bonds and cash- have not moved up and down at the same time. Market conditions that cause one asset category to do well often cause another asset category to have average or poor returns. By investing in more than one asset category, youll reduce the risk that youll lose money and your portfolios overall investment returns will have a smoother ride. -10-

If one asset categorys investment returns falls, youll be in a position to counteract your losses in that asset category with better investment returns in another asset category. In addition, asset allocation is important because it has major impact on whether you will meet your financial goal. If you dont include enough risk in your portfolio, your investments may not earn a large enough return to meet your goal. For example, if you are saving for a longterm goal, such as retirement or college, most financial experts agree that you will likely need to include at least some stock or stock mutual funds in your portfolio.

4. Be careful if investing heavily in shares of employers stock or any individual stock

One of the most important ways to lessen the risks of investing is to diversify your investments. Its common sense: dont put all your eggs in one basket. By picking the right group of investments within an asset category, you may be able to limit your losses and reduce the fluctuations of investment returns without sacrificing too much potential gain. Youll be exposed to significant investment risk if you invest heavily in shares of yours employers stock or any individual stock. If that stock does poorly or the company goes bankrupt, youll probably lose a lot of money.

5. Create and maintain an emergency fund

Most smart investors put enough money in a savings product to cover an emergency, like sudden in employment. Some make sure they have up to six months of their income in savings so that they know will absolutely be there for them when they need it.

6. Pay off interest credit card debt

There is no investment strategy anywhere that pays off as well as, or with less risk than, merely paying off all high interest debt you may have. If you owe money on high interest credit cards, the wisest thing you can do under any market conditions is to pay off the balance in full as quickly as possible. -11-

7. Consider dollar cost averaging Through the investment strategy known as dollar cost averaging you can protect yourself from the risk of investing all of your money at the wrong time by following a consistent pattern of adding new money to your investment over a long period time. By making regular investments with the same amount of money each time, you will buy more of an investment when its price is low and less of the investment when its price is high. Individuals that typically make a lump-sum contribution to an individual retirement account either at the end of the calendar year or in early April may want to consider dollar cost averaging as an investment strategy, especially in a volatile market

. 8. Take advantage of free money from employer In many employer-sponsored retirement plans, the employer will match some or all of your contributions. If your employer offers a retirement plan and you do not contribute enough to get your employers maximum match, you are passing up free money for your retirement savings.

9. Consider rebalancing portfolio occasionally

Rebalancing is bringing your portfolio back to your original asset allocation mix. By rebalancing, youll ensure that your portfolio does not overemphasize one or more asset categories, and youll return your portfolio to a comfortable level of risk. -12-

You can rebalance your portfolio based either on the calendar or on your investments. Many financial experts recommend that investors rebalance their portfolio on a regular time interval, such as every six or twelve months. The advantage of this method is that the calendar is a reminder of when you should consider rebalancing. Others recommend rebalancing only when the relative weight of an asset class increases and decreases more than a certain percentage that youve identified in advance. The advantage this method is that your investments tell you when to rebalance. In either case, rebalancing tends to work when done on a relatively infrequent basis.

10.Avoid circumstances that can lead to fraud

Scam artists read the headlines, too. Often, theyll use a highly publicized news item to lure potential investors and make their opportunity sound more legitimate. The SEC recommends that you ask questions and check out the answers with an unbiased source before you invest. Always take your time and talk to trusted friends and family members before investing.

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1.3 Investment objectives

Investing is a wide spread practice and many have made the fortunes in the process. The starting point in this process is to determine the characteristic of the various investments and the matching them with the individual need and preferences. All personal investing is designed in order to achieve certain objectives. These objectives may be tangible such a buying a car, house etc. and intangible objective such as social status, security etc. similarly, these objectives may be classified as financial or personal objectives. Financial objective are safety, profitability and liquidity. Personal or individual objective may be related personal characteristic of individual such as family commitments, status, dependents, educational requirement, income, consumption and provision for retirement etc. the objectives can be classified on the basis of the investor approach as follows:

a) Short term high priority objectives: investors have a high priority towards achieving certain objectives in a short time. For example, a young couple will give high priority to buy a house. Thus, investors will go for high priority objectives and invest their money accordingly.

b) Long term high priority objectives: some investors look forward and invest on the basis of objectives of long term needs. They want to achieve financial independence in long period.

c) Low priority objectives: these objectives have low priority in investing. These objectives are not painful after investing in high priority assets, investors can invest in these low priority assets.

d) Money making objectives: investor put their surplus money in this kind of investment. Their objectives are to maximize wealth. Usually, the investors invest in share of companies which provides capital appreciation apart from regular income from dividend. -14-

1.4 INVESTMENT CRITERIA BY INDIVIDUALS:

Every investor has certain specific objectives to achieve through his long term/ short term investment. Such objectives may be monetary financial or personal character. The objectives include safety and security of the funds invested profitability and liquidity. These objectives are universal in character as every investor will like to have undue risk about his principal amount when the interest rate is offered is extremely attractive. These objectives or factors are known as investment attributes. There are personal objective which are given due consideration by every investor while selecting suitable avenue foe investment. Personal objective may be like provision for old age and sickness, provision for house construction, provision for education and marriage and children and finally provision for dependents including wife, parents or physically handicapped member of the family. Investment Avenue selected should be suitable for achieving both the objectives decided. Merits and demerits of various investment avenues need to be considered in the context of such investment objectives.

1. Period of investment:
Period of investment is one major consideration while selecting avenue for investment. Such period may be short, medium or long. Return of interest is normally more in the case of longer term investment while it is less in the shorter period investment. The period of investment relates to liquidity. An investor has to decide when he needs money back and adjust period accordingly. LIC policy is an investment for a very long period. Balance in the saving bank account is a short term investment with highest liquidity but lowest rate of return.

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2. Risk in investment:
Risk is another factor which needs careful consideration while selecting the avenue for investment. Risk is a normal feature of every investment as a investor has to part with his money immediately and has to collect it back with some benefit in due course. The risk may be more in some investment avenue and less in other. The risk in the investment may be related to no-payment of principal amount or interest thereon. In addition liquidity risk inflation risk, market risk, business risk, politic risk, etc. are some more risk connected with the investment made. The risk investment depends upon various factors. For example, the risk is more, if the period of maturity is longer. Similarly, the risk is less in case of debt instrument. In addition, the security is creditworthy. It is always desirable to select an investment avenue where the risk involved is minimum. Thus, the objective of an investment should be to minimize the risk and to maximize the return out of the investment made.

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1.5 Types of investor

In continuation of the lessons Ive learned from Rich Dad Poor Dad author, R obert Kiyosaki, I will discuss today what he called Types of investor. According to him, there are two main types of investors: Average Investors and Professional Investors. Average Investors buy package securities such as mutual funds, treasury bills, or real-estate-investment trusts. Professional investors are more aggressive- they create investment opportunities or get in on the ground floor of new offerings, build businesses and marketing networks, assembal groups of financiers to fund deals too large for them to undertake alone, and pick the companies with the most promise for initial public offerings of stock. There are five different types of professional investors:

The Accredited Investor

As defined by Robert kiyosaki, accredited investors are individual investor that earns at least $200,000 in annual income ($300,000 for a couple) and/or has a net worth of $ 1 million. Accredited investor has access to many lucrative investments that, because of their risk may be legally off-limits to people of lesser income. Although usually financially educated, accredited investors are not necessarily fully literate. They may be content with security and comfort rather than wealth, and may rely on adviser to develop and implement their financial plans.

The Qualified Investors

This investors is well versed in either fundamental or technical investing and so there are two types of qualified investors- the fundamental investor and technical investor. Fundamental investing requires the ability to assess a companys potential by reviewing financial statements, tracking the industries the company represent, and calculating how changes in interest rate and the economy as a whole could affect the profitability. -17-

The fundamental investors uses financial ratios, which you we learn all about later, to assess the strength of a company he or she is considering as and investment. Technical investmenting is different- it is based on knowledge of the sales history of companys stock, the mood of the market in general, and techniques such as short selling and option. The fundamental investors is typically an S in the CASHFLOW Quadrant because he or she will usually operate alone in evaluating stocks, either through examining fundamental and using technical analysis in evaluating potential investment. Unlike a fundamental investor, a technical investor (often stock trader) does not necessarily look for well-run, profitable corporations. If people are rushing to invest in a certain type of industry, say dot-com companies, the technical investor may jump on the bandwagon, regardless of whether these companies are showing earnings, let alone profits. Technical investing is thus more speculative than fundamental, but it can yield greater rewards. Regardless of investment style, qualified investors know how to make, or at least preserve, money in an up or down market.

The Sophisticated Investor

The goal of this investor is to build wealth by developing a foundation of asset that can generate high cash returns with minimum payment of taxes. Armed with the three EsEducation, Experience and Excess cash- the sophisticated investor takes advantage of tax, corporate and securities laws to protect capital and maximize earnings. When operating from the B quadrant, the investor can choose the best structure or entity through which to crate assets. This entity provides some degree of control over the investment and also serves as a firewall between personal and business finances in the event of the law suit Sophisticated investors exercise control over the timing of taxes and character of their income. They know, for example, to defer paying taxes on capital gains from real estate by rolling over profits to more expensive property. They look at economic downturn as an opportunity to pay bargain basement prices for quality securities, and they create deals instead of simply waiting for the right one to come along. -18-

Sophisticated investors take risks but abhor gambling, hate losing but are not afraid to, are financially intelligent yet rely on experts to each more them, own little in their names yet command great wealth. Although they become partners in real-estate ventures and large shareholders in corporations, they lack one essential strength: management control over their assets.

The Inside Investor

Building or owning a profitable business is the primary goal of this investor. Whether as an officer of a corporation or owner of a majority of its share of stock, the inside investor exercises some degree of management control. By running business systems from inside, he or she learns how to analyze them from the outside and thereby becomes a sophisticated investor as well. Although inside investors have financial intelligence, they do not necessarily have financial resources and thus may not meet the definition of an accredited investor.

1.6 Choosing the right type of investment

After understanding the concept of investment the investor would like to know how to go about task of investing how much to invest at any moment and when to buy or sell the securities. This depends on investment process an investing policy, investing any vocational securities, portfolio construction and portfolio evaluation and revision. Every investor tries to derive maximum economic advantage from his investing activity for evaluating. An investment avenue are based upon the rate of return, risk and in certainty, capital appreciation, marketable, tax advantages and convince of investors. The investor investing decision in various financial market instrument the choice of investment option will depend in personal circumstances as well as general market condition for. E.g. A good investors for long term retirement plan may not be a good investment for a higher education expenses in more cases the right investment is the balance of four things.
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1. Return:All investments are characterized by the expectation of a return. In fact, investments are made with the primary objective of driving a return. The return may be received in the form of yield plus capital appreciation. The difference between the sale price and the purchase price is capital appreciation. The dividend or interest received from the investment is the yield. Different types of investments promise different rates of return. The return from an investment depends upon the nature of investment, the maturity period and a host of other factors. 2. Risk:Risk is inherent in any investment. The risk may relate to loss of capital, delay in repayment of capital, nonpayment of interest or variability of returns. While some investments like government securities and bank deposits are almost risk less, others are more risky. The risk of an investment depends on the following factors. The longer the maturity period, the longer is the risk. The lower the credit worthiness of the borrower, the higher the risk. The risk varies with the nature of investment. Investments in ownership like equity share carry higher risk compared to investments in debt instrument like debenture and bonds. 3. Safety:The safety of an investment implies the certainty of return of capital without loss of money or time. Safety is another features which an investors desire for his investment. Every investor expects to get back his capital on maturity without loss & without delay. 4. Liquidity:An investment, which is easily saleable or marketable without loss of money & without loss of time is said to possess liquidity. Some investments like company deposits, bank deposits, P.O. deposits, NSC, NSS etc. are not marketable. Some investment instrument like preference shares & debentures are marketable, but there are no buyers in many cases & hence their liquidity is negligible. Equity shares of companies listed on stock exchanges are easily marketable through the stock exchanges. -20-

2. Types of investment

PF & PPF GOI Saving Bonds

Shares and Debent ure Money Market Securiti es

National Saving Schemes

UTI & Mutual funds gold and silver

investme nt Avenues

HDFC Scheme

Bank Deposit LIC Scheme Public Deposit

2.1 Type
Bank deposit
Investment of surplus money in bank deposit in quit popular among investor. Banks collect working capitals for their business to their deposit called bank deposit. The deposits are given by customer for specific period and bank pays interest on them. In India all the bank accept deposit by offering interest. The deposit can be accepted from individual, institution and even business enterprises. The business and profitability of banks depend on deposit collection. For depositing money in the bank, an investor has to open an account in a bank. Different types of deposit account are Current account Saving account

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Fixed deposit account

Fixed deposits- they cover the fixed deposits of varied tenors offered by the commercial banks and other non-banking financial institutions. These are generally a low risk prepositions as the commercial banks are believed to return the amount due without default. By and large these FDs are the preferred choice of risk-averse Indian investors who rate safety of capital & ease of investment above all parameters. Largely, these investments earn a marginal rate of return of 6-8 per annum.

Recurring deposit account

The recurring deposit account is an account in the bank (or a Post office in some countries) where an investor deposits a fixed amount of money every month for fixed tenure (mostly ranging from one year to five years). This scheme is a meant for investors who want to deposit a fixed amount every month, in order to get a lump sum after some years. The small monthly savings in the recurring deposit scheme enable the depositor to accumulate a handsome amount on maturity. Interest at term deposit rates is computable on quarterly compounded basis.

Advantages & Disadvantages of bank deposit Advantages

1 2 Investment is reasonable safe and secure with adequate liquidity. Banks offer reasonable return on the investment made and that too in regular manner. 3 4 5 Banks offer loan facility against the investment made. Procedure and formality involved in bank investment are limited, simplr and quick. Bank offer various services and facilities to the customer.

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Disadvantages
1. The rate of return in case of bank investment is low compare to other avenue of investment. 2. The return on investment is not adequate even to give protection against the present inflation rate in the country. 3. Capital appreciation is not possible in bank investment.

2.2 Public Deposits The company acts provided that companies can accept deposits directly from the public. This mode of raising funds has become popular in the1990, because the bank credit had became costlier. As per provision of the companies Act, a company can not accept deposit for a period of less than 6 month and more than 36 month. However, deposits up to 10% of the paid up capital and free reserve can be accepted for a minimum period of three month for meeting short term requirement. Again, a company cannot accept and renew deposits in access of 35% of its paid up capital and free reserves. In order to meet temporary financial need, companies accept deposit from the investors. Such deposited are called public deposit and are popular particularly among the middle class investors. All most all companies collect corer of rupees through the deposits. Companies were offering attractive interest rate previously. However the interest rates are now reduced considerably. At present, the interest rate offered is 9 to 12percent. On maturity, the depositor has to be returning the deposit receipt the company and the company pays back the deposit amount. The depositor can be renewing his deposit for further the period of one to three years at his opinion. Many companies are now supplementing their fixed deposit scheme by cumulative time deposit scheme under which the deposited amount along with interest is paid back in lump sum on maturity. Companies now appoint manager to their fixed deposit schemes. The managers are usually reputed share brokers. The help companies in collecting the deposit and also look after the administrative work in connection with such deposits. -23-

At present along with private sector companies, even public sector companies and public utilities also accept such deposits in order to meet their working capital needs. This source is popular and used extensively by the companies. The popularity of public deposits is due to the following advantages, (1) Public deposits are available easily are quickly provided by company and enjoy public confidence. (2) This method of financing is simpler and cheaper than obtaining loans from commercial banks. (3) Public deposit enables the company to trade on equity and pay higher dividend on equity shares.

2.3 Investments is gold and silver

Investment is gold and silver is called as previous objects. Everybody like gold and hence require gold or silver. These two precious metals are used for making ornament and also for investment or surplus funds over a long period of time. In India, gold is an obsession deep-rooted in mythology, relies rites and it is very psychological. In every family at least little quantity of gold and silver is available. Some people by this metal as an investment. The prices also depend upon demand and supply of gold. The supply has been increasing as low speed. However, the demand has been increasing very fast, therefore, the price also go increasing. People used gold and silver at time and marriage and festivals with the gold and silver, precious stones such as diamonds rubies and pearls are also appealing for long term investment particularly among rich people. Gold and silver are useful as a store of wealth. They act as secret assets. The investment is highly liquid, which can be sold at any time. The market prices are continuously increasing. There is a high degree of prestige value for gold and silver in the society. The benefit of the capital appreciation is also available.

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The investment is gold and silver is risky due to theft. It may also cause an injury to the life of the investors. It is a long term investment. Rtegular income for investment is not available capital formation and economic growth of the country. The traditional attraction for gold and silver is gradually reducing. The important of gold is now free. There is no tax saving on the investment.

Advantage of Gold Investment

Many people turn to gold investments during times of economic uncertainty. A gold investment can be through a gold stock, mutual fund that invests in gold or a gold electronically traded fund. However, many investors prefer to hold their gold investment in the physical form. There are several advantages to this.

Intrinsic Value
Gold maintains its intrinsic value despite a governments ability to back its money. If your countrys currency collapses and becomes worthless, you will still be able to spend your physical gold.

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Universally Accepted
Physical gold can be spent and bartered anywhere at any time. It does not need to be converted like currency, since it is universally deemed as valuable in economies around the world.

Security
In times of economic crisis, bank accounts can be frozen preventing you from gaining access to your money. If you have a physical gold investment, it can always be accessed.

Aesthetics
Gold is beautiful as well as valuable. Many people enjoy holding and looking at their physical gold investments. Holding a gold coin or bar in your hand is far more fulfilling than holding a bank statement.

Collecting
Physical gold in investments can include gold coins. Investors can enjoy the hobby of collecting gold coins at the same time they are investing. Their collections are their physical gold investments. 2.4 LIC SCHEME Life insurance business was nationalized in India since long and is run by the life insurance corporation of India. In addition, we have also postal life insurance scheme run by the postal department. LIC is responsible for the expansion of life insurance business in India. 1) In addition, it places an important role in collecting the saving of the people 2) It gives protection and act as a method of compulsory saving. LIC is one revenue for investment of money out of regular income. It also gives protection to family member. LIC business is more the monopoly of life insurance. Private sector is now allowed to participate in the insurance. -26-

Advantages of investment in Life Insurance Scheme

1) Protection to family member through financial support in the case of death of policy holder. 2) Investment in life insurance scheme serves as a provision for old age. 3) It acts as a method of compulsory saving over a long period out of regular income. 4) Investment in life insurance provides loan facility from banks. 5) LIC now gives bonus to policy holder on yearly basis. This adds the maturity level of the policy. 6) Investment in life insurance scheme gives tax benefit. This tax benefit is available even when the policy is taken on the name of the investor wife, son or daughter. 7) Investment in life insurance scheme gives mental peace to investor in the age when our life is exposing to various risk uncertainty and danger. 8) Investment in life insurance provides comfortable and financial independent life after retirement. This is a special benefit during old age to life insurance policy holder.

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2.5 What is a Money Market Investment?

A money market investment is an account held by a bank or other financial institution that keeps its cash in short term debt obligations. This is done to insure maximum safety for the money market investment principal while providing a modest return. The short term debt obligations held in money market investments are usually from highly rated companies and government agencies.

Potential Money market investment has the potential to make, on average, two to five percent per year. This modest rate of return is the result of their conservative investment strategy in short term debt obligations. Money market investments put their money in treasury bills, certificates of deposit and commercial paper. Money markets investments are considered open ended investments, meaning investors add and withdraw funds from money market fund accounts at any time without penalty.

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Benefits One of the benefits of money market investments is the low risk to principle. It is possible to effectively lose money in a money market investment, though it is very unlikely. If the interest rate were to decline below the rate of inflation, the money market investment loses buying power. Money market investments are usually not FDIC insured. You might not get your money back if the company holding your money market investment goes bankrupt.

Significance Money market investments are among the most significant in finance. Since they act as holding places for cash waiting to be invested, they are some of the most widely owned securities. Proceeds from sales of stocks, bonds and mutual funds are often directed to money market investments. Interests and dividends from other investments are often transferred automatically into money market investments.

Function Money market investments require higher initial deposits than bank savings accounts. This is usually between $1000 to $5000 and is the minimum balance that must be maintained. Most money market investments keep a stable one dollar per share price. When interest is paid, it is done with additional shares at the one dollar per share price. Most money market investments provide check writing services with the account.

Considerations Investors must take into consideration that money market investments are not all the same. Different funds invest in different securities and pay different interest rates. It is important to compare the performance of money market investments. While past performance is not a guarantee of future return, it will give investors an indication of the potential of a money market investment. Keep in mind that interest rates often change without notice. -29-

Types of Money market Instruments in India

The money market is a monetary system of lending and borrowing of short-term funds. After the globalization initiative in 1992, India has witnessed a growth in its money markets. Financial institutions have been employing money market instruments to finance the shortterm monetary requirements of industries such as agriculture, finance and manufacturing. The money markets have performed well in the past 20 years. The Reserve Bank of India (RBI) has been playing the key role of regular and controller of such money markets. The RBI intervenes regularly to curb crisis situations, such as liquidity crunching in the markets, by reducing the Cash Reserve Ratio (CRR) or by pumping in more money. Money market instruments provide for borrowers short-term needs and gives needed liquidity to lenders. The types of money market instruments are treasury bills, repurchase agreements, commercial papers, certificate of deposit, and bankers acceptance.

Treasury Bills (T-Bills)

Treasury bills began issued by the Indian government in 1917. They are short-term investments issued by the Reserve Bank of India. They are one of the safest money market instruments because they are risk free, but returns from this instrument are not very large. The primaries as well as the secondary markets circulate this instrument. They have 3 month, 6 month and 1 year maturity periods. T-bills are issued with a separate price from their face value. The face value is achieved upon maturity, as is the interest earned on the buy value. The buy value is set by a bidding process in auctions. -30-

 Repurchase Agreements
Repurchase agreements are also known as repos. They are short-term loans that buyers and sellers agree to sell and purchase. As of 1992, repo transactions are allowed only between RBI-approved securities such as state and central government securities, T-bills, PSU bonds, FI bonds and corporate bonds. Repurchase agreements are sold by sellers with a promise of purchasing them back at a given price and on a given date in the future. The buyer will also purchase the securities and other instruments in the repurchase agreement with a promise of selling them back to the seller.

Commercial Papers
Commercial papers are promissory notes that are unsecured and issued by companies and financial institutions. They are issued at a discounted rate of their face value. They have fixed maturity of 1 to 270 days. They are issued for financing of inventories, accounts receivable, and settling short-term liabilities or loans. Commercial papers yield higher returns than Tbills. They are usually issued by companies with strong credit ratings, as these instruments are not backed by collateral. They are usually issued by corporations to raise working capital and are actively traded in the secondary market. Commercial papers were first issued in the Indian money market in 1990.

Certificate of Deposit
A certificate or deposit is a short-term borrowing note, like a promissory note, in the form of a certificate. It enables the bearer to receive interest. It has a maturity date, a fixed rate of interest and a fixed value. It usually has a term between 3 months and 5 years. The funds can not be withdrawn on demand, but it can be liquidated on payment of penalty. The returns are higher than T-bills as the risk is higher. Returns are based on an annual percentage yield (APY) or annual percentage rate (APR). in APY, interest is gained by compounded interest calculation, whereas in APR simple interest calculation is done to calculate the return. The certificate of deposit was first introduced to the money market of India in 1989.

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 Bankers Acceptance
A bankers acceptance is a short-term investment plan created by a company or firm with a guarantee from a bank. It is a guarantee from the bank. It is a guarantee from the bank that a buyer will pay the seller at a future date. A good credit rating is required by the company or firm drawing the bill. The terms for these instruments are usually 90 days, but this period can vary between 30 and 180 days. Companies use the acceptance as a time draft for financing imports, exports and other trade.

Advantages
The main advantage of investing in a money market account is the higher yield that most money market accounts see over traditional savings accounts. Prepare for transactions to be monitored in a money market account with information from a financial planner in this free video on savings accounts.

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2.6 Analyzing of Data Analysis

Do you know about the following financial instruments? The sample size consists of 100 respondents and out of which almost all the people are fully aware about investment avenues like gold and fixed deposits and almost 95 are aware about equity shares and mutual funds.

How do you get information about the following investment avenues? Out of the 100 respondents about 50% of them get the information from advertisement on the television and internet and the rest from the magazines. Company sales executives and friends and relatives.

Rate the following according to your preference? Out of the 100 respondents asked the most preferred financial instrument is fixed deposits and the then the rest like equity shares with 70% and insurance.

What is your age? Out of respondents that were surveyed the maximum were of the age group of 31-40. What are the factors that you consider while investing in any financial instrument? Out of respondents 50% were of the opinion that return and safety are the main reasons behind their investment decisions.

On what basis you invest in any particular financial instrument? -33-

The respondents were mostly of the opinion that portfolio is the most important factor before investing and then fundamental analysis done by them or by the financial adviser & then the other factors.

What is your annual income? Out of the total respondents around 60% were in the income group of 1-3 lakhs and 22% in the 3-5 lakhs bracket.

How much of your money you invest in financial instrument? Most of the respondents surveyed were mostly those people who invest 10 to 30% of their money in their instrument.

How long do you prefer to keep you money invested? Out of the 100 respondents mostly were of the view that they invested there for money at least for a period of 1 year to 3 years.

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3.Conclusion
The overall project is depending upon the findings that have been explained previously. After completing the survey and watching the analysis I come to their conclusion that the before investment investors do have focus on tax savings, income, capital preservation etc. they also have a predetermination of the time period of investment. According to my view the age group of 21-30 can be a great potential investors for the company as the high risk profile, more disposable income and the time horizon is perfect 3-5 years. Recommendation for this category is company must follw up these high potential customers, they can be offered equity shares because these groups of people have a high risk profile and they can afford to takes risks which is usually associated with equity shares. 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 groups of 31-40 years investors are with moderate risk profile. Most of the investors are from 10000-15000 Rs. Per month disposable income. Company will get a good investor with risk profile. Company can offer them VLIPs and fixed deposits as investment instrument. The age group of 41-50 years, investors are from the 15000-20000 Rs. Disposable income group. Investor in this group are invested in insurance sector, the primary focus of these investors are retirement. Fixed deposits can be a good option for them. For the age group of above 50 years the risk 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. In the survey there was lot of people who were in the age group of above 60. For this group the company can target fixed deposits which gives continues return like monthly interest.

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4.Bibliography

Websites:
www.mutual funds india.com www.hse india.com www.scribd.com

Books:
Foundation of Investment Analysis P.K. BANDGAR

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