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Investment Needs
Investment Needs
Someone has greatly said that practical knowledge is far better than
classroom teaching. During this project I fully realized this and come to
know about the present real world of Insurance sector. It includes all the
activities involved in providing insurance products to the final customers. I
am pleased to know about the consumers’ wants and competitors activities
in the real world of Insurance.
The report contains first of all brief introduction about the company. Then it
contains the current status of private insurance companies and foreign
insurance companies in India.
INTRODUCTION
Life is full of risks. Being a social animal and risk reverse, man always tries
to reduce risk. An age-old method of sharing of risk through economic
cooperation led to the development of the concept of “insurance”.
Insurance may be described as a social device to reduce or eliminate risk of
loss to life and property. Insurance is collective bearing of risk. The risks,
which can be insured against, include fire, perils of sea, death, accidents and
burglary.
Insurance can be defined as a legal contract between two parties where one
party called insurer undertakes to pay a fixed amount of money on
happening of a particular event which may be certain or uncertain. The other
party called insurer pays in exchange a fixed sum known as `premium. The
insurer and the insured are also known as “Assuror and Assured”.
Insurance is a social device where uncertain risks of individuals may be
combined in a group and thus made more certain - small periodic
contributions by the individuals provide a found out of which those who
suffer losses may be reimbursed. In addition to being a means to protect
oneself, the insurance Industry is an efficient conduit for the saving of
people to be channeled towards economic growth. In India, the Insurance
Industry7 is more than 150 years old. Today, it is monopolized by two
PSU's in their respective fields of life and General Insurance.
However, with the successful passage IRDA Bill through both houses of
parliament in December 1999 the sector has been opened up to private
players.
This will provided much. Needed impetus to the Industry and will improve
the quality of service and products and will also increase employment
opportunities.
There are still some issues their need to be sorted out, particularly with
regard to the status of intermediaries as envisaged by the Insurance
Regulatory Authority.
They are mainly working for a India’s first life insurance and focus on their life
insurance product name “India first mahajan plan”
Product highlights:
MAHAJEEVAN PLAN Product of India first life insurance.
o Higher rate of return
o 16 times life cover
o Loan with no interest charges Tax benefit
o Assignment feature
o Highly secured
2. HR DOMAIN
Apart from these domains, during the learning sessions we will do many
other activities like,
Money maker activity.
Cake cutting on birthdays.
Participated in many contests launching like:
Get 125% theme.
I phones distribution
Certificates
International or domestic trips.
Mission
To build a world class business through high quality and honest financial
solutions backed by incisive research and expert team.
Vision
To increase our market share year on year and maintain the same level of
experience for every client and assure that we become the most valuable
asset for each client.
Strengths:
Highly return
Highly secured
Weakness:
Opportunities:
Threats:
Investing your money can allow you to grow it. Most investment vehicles,
such as stocks, certificates of deposit, or bonds, offer returns on your money
over the long term. This return allows your money to build, creating wealth
over time.
As you are working, you should be saving money for retirement. Put your
retirement savings into a portfolio of investments, such as stocks, bonds, mutual
funds, real estate, businesses, or precious metals. Then, at retirement age, you can
live off funds earned from these investments.
Based on your personal tolerance of risk, you may want to consider being riskier at
a younger age with your investments. Greater risk increases your chances of
earning greater wealth. Becoming more conservative with your investments as you
grow older can be wise, especially as you near retirement age.
In order to grow your money, you need to put it in a place where it can earn a high
rate of return. The higher the rate of return, the more money you will earn.
Investment vehicles tend to offer the opportunity to earn higher rates of return than
savings accounts. Therefore, if you want the chance to earn a higher return on your
money, you will need to explore investing your money.
Investing can help you reach big financial goals. If your money is earning a higher
rate of return than a savings account, you will be earning more money both over
the long term and within a faster period. This return on your investments can be
used toward major financial goals, such as buying a home, buying a car, starting
your own business, or putting your children through college.
Some employers offer to match the money you invest in your 401(k) plan up to a
certain amount. Of course, the only way you can qualify and earn these matching
funds is if you are actively investing in your 401(k) plan. Thus, many people invest
in their 401(k)s to gain the matching employer funds.
8. Support others
Many investors like investing in people, whether they are business owners, artists,
or manufacturers. These investors feel good helping others achieve their goals.
As an investor, you may be able to reduce your taxable income by investing pre-
tax dollars into a retirement fund, like a 401(k). If you generate a loss from an
investment, you may be able to apply that loss against any gains from other
investments, which lowers the amount of your taxable income.
New ventures need the backing of money, and they look to investors for that
backing. Some investors may like the excitement of investing in a new, cutting-
edge product or service, or being part of something like a business or film that
introduces them to a glamorous world.
2.2 Investment pattern:
The investment pattern is a long-term perspective and investing one’s hard earned
money is a serious subject that can have a major impact on investor's future
wellbeing. In fact, everyone makes savings and investments. For any investor who
invests money in various financial instruments, there will be varying degree of
risks involved. Every investor has to appraise his risk-appetite, understand his
financial goals and make investments. It is also important to analyse the risk-return
trade off and then make investment decision.
The investment is the employment of funds with the aim of achieving additional
income or growth in value. The essential quality of an investment is that it involves
"waiting" for a reward. It involves the commitment of resources, which have been
saved or put away from current consumption in the hope that some benefits accrue
in future. Broadly speaking, an 89 investment decision is a trade - off between risk
and return. All investment choices are made at points of time in accordance with
the personal investment ends and in contemplation of uncertain future.
Choice of Investments:
a. Liquidity needs: The liquidity is the conversion of the investments into cash for
meeting urgent expenses or commitments. An investor may invest his surplus
money into various kinds of investment instruments with an objective of encashing
an instrument at the earliest when needed. The investment in a savings bank
account is highly liquid and in a bond illiquid.
b. Appropriate time horizon: The money saved by the investors is used for
fulfilling future needs and the investor earns the returns on different financial
instruments as per their features. The investor chooses the savings and investment
instruments in view of his plans for future needs. Thus, investments in money
market instruments for short term and in fixed deposits/bonds for long term are
made.
c. Regular income and capital appreciation requirements: The need for getting
a regular income is one of the important criteria for some investors. An old -aged
investor may be more inclined to invest in a monthly income scheme to have
regular income for fulfilling his regular daily needs. Another investor may put the
money in a fixed deposit for 3-5 years since his need is to get cumulative returns.
Some investors are not satisfied with moderate returns and thus invest in equity
shares. This enables them to earn capital appreciation along with good returns
which are not available in banks.
d. Need for diversification: A wise investor always likes to invest the savings in a
diversified portfolio. This helps in balancing out the inherent risks of investments.
The diversification helps in minimizing the risks, if not eliminating it totally. An
investor may invest in a basket of securities and also in many company shares if
equity investments is the only option chosen. 90
e. Minimize tax liability: Some financial instruments provide tax benefits and
many plan their investment options to minimize their tax liability. The investors
normally in higher tax brackets choose to invest in LIC schemes or PPF accounts
to avail tax benefits and rebates, thus their tax liability gets reduced. The Income
Tax Act 1961 provides such benefits under various sections.
The savings and investments have been an integral part of human existence.
As the future always remain uncertain, the money saved today comes handy
tomorrow or whenever required. The investors may have their own
individual objectives for investment.
The options for savings & investments are continuously increasing. It is
possible for an investor to have more than one of these objectives , the
success of one must come at the expense of others. The basic objectives of
making savings and investment are 93.
1. Safety
As a matter of fact, there is no such thing as a completely safe and secure
investment. On the one hand, one may see his savings eroding in a financial
instrument and on the other, one can have ultimate safety of the investment
funds by the purchase of government securities or through the purchase of
the highest quality corporate bonds issued by the blue chip companies. Such
securities are the best means of preserving principal while receiving a
specified rate of return. Even the bank deposits provide greatest safety.
The safest investments are found in the money market and include such
securities as Treasury bills, certificates of deposit, commercial paper or in
the fixed income (bond) market in the form of municipal and other
government bonds and in corporate bonds.
2. Income
The safest investments are also the ones that are likely to have the lowest
rate of income, return or yield. The investors must inevitably sacrifice a
degree of safety if they want to increase their income. There is an inverse
relationship between safety and yield: as yield increases, safety generally
goes down, and vice-versa.
In order to increase their rate of investment return and take on risk above
that of money market instruments or government bonds, investors may
choose to purchase the corporate bonds. Most investors, even the most
conservative ones, want some level of income generation in their portfolios.
3. Growth of Capital
The investor also wishes to have a rate of return from an increase in value of
investment, often referred to as a capital gain. The capital gains are entirely
different from yield as they are only realized when the security is sold for a
price that is higher than the price at which it was originally purchased. In the
growth objective, the investor seeks the possibility of long term growth.
The growth of capital is mostly concerned with the purchase of shares,
which may offer low yields but considerable opportunity for increase in
value. The blue-chip shares offer the best of all worlds by possessing
reasonable safety, modest income and potential for growth in capital
generated by long-term increases in corporate revenues and earnings as the
company matures.
Secondary Objectives:
1. Tax-Benefits
An investor may have some investments to have tax benefits as part of his or her
investment strategy. A highly-paid executive may want to seek investments with
favorable tax benefits in order to lessen the overall income tax burden, e.g.
investment in PPF or LIC policy.
2. Marketability / Liquidity
Many of the investments are reasonably illiquid, meaning that they cannot
be immediately sold and easily converted into cash. Achieving a degree of
liquidity, however, may require the sacrifice of a certain level of income or
potential for capital gains.
The shares are often considered the most liquid of investments, since they
can usually be sold within a day or two. The bonds can also be fairly
marketable, but some bonds are highly illiquid, or non-tradable, having a
fixed term. Similarly, money market instruments may only be redeemable on
the precise date at which the fixed term ends. If an investor seeks liquidity,
non-tradable bonds should not be held in portfolio. It is seen from each of
the five objectives discussed above that the advantages of one often comes at
the expense of the benefits of another. If an investor desires growth, for
instance, he or she must often sacrifice some income and safety.
The choosing of a single strategic objective and assigning weights to all
other possible objectives depends on such factors as the investor's
temperament, stage of life, marital status, family situation, and so on. Each
investor is sure to find an appropriate mix of investment opportunities. One
needs to be concerned with spending the appropriate amount of time and
effort in finding, studying and deciding on the opportunities that match one’s
objectives.
Each mutual fund describes its investment objective in its prospectus along
with the strategy the fund manager follows to meet that objective. The
mutual fund investors often look for funds whose stated objectives are
compatible with their own goals.
Chapter 3
Research methodology
Primary data:
The primary data for this study is collected with the objective in mind “a study on
FINAMIGO CONSULTANTS”.
Secondary data:
The secondary data for the study is collected with the information that is
Tools
The data required for the study is collected with the help of questionnaire. These
Questionaries are handed over to the customers and asked to get it filled up. The
data is interpreted from the information that is incurred from the questionnaire
Sampling area:
Sample size
Due to the limitation of time and scope of the study the number of respondents
logical sequence from the data collected. After tabulation of the data, researcher
1. Percentage Analysis
The data that is obtained is from the questionnaire is analyzed through percentage
2. Graphs
Graphical representations are used to show the results in simple form .The graphs
are prepared on the basis of data that is received from the percentage analysis.
Sampling method:
Research design:
Limitation of study:
The study suffers from a few limitations, which will have to be kept in mind for the
LIMITATIONS