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A SURVEY ON THE PREFERENCE OF SALARIED CLASS

ON VARIOUS INVESTMENT OPTIONS AVAILABLE

A project submitted to
University of Mumbai for partial completion of the degree of
Master in Commerce
Under the Faculty of Commerce

Submitted By
RAHUL BALINDRA GUPTA

Under the Guidance of

PROF.SAILEE SHRINGARPURE

PRAHLADRAI DALMIA LIONS COLLEGE

OF COMMERCE & ECONOMICS
SUNDAR NAGAR, S.V. ROAD, MALAD (WEST)
MUMBAI 400 064

DECEMBER 2019
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Prahladrai Dalmia Lions College of Commerce & Economics

Sunder Nagar, Malad (West), Mumbai, 400 064
ISO 9001:2015 Certified

CERTIFICATE

This is to certify that Ms/Mr. RAHUL BALINDRA GUPTA has worked

and duly completed her/his Project Work for the degree of Master in
Commerce under the Faculty of Commerce in the subject of Accountancy/
Management and her/his project is entitled, “A SURVEY ON THE
PREFERENCE OF SALARIED CLASS ON VARIOUS
INVESTMENT OPTIONS AVAILABLE” under my supervision. I
further certify that the entire work has been done by the learner under the
guidance and that no part of it has been submitted previously for any Degree
or Diploma of any University.
It is her / his own work and facts reported by her/ his personal finding and
investigations.

Signature
PROF.SAILEE SHRINGARPURE

Date of Submission: 12th December, 2019

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DECLARATION

I the undersigned RAHUL BALINDRA GUPTA here by, declare that

the work embodied in this project work titled “A SURVEY ON THE
PREFERENCE OF SALARIED CLASS ON VARIOUS
INVESTMENT OPTIONS AVAILABLE”, forms my own
contribution to the research work carried out under the guidance of
PROF.SAILEE SHRINGARPURE is a result of my own research work
and his/her not been previously submitted to my other University for any
other Degree/Diploma to this or any other University.

Wherever reference has been made to previous works of other, it has been
clearly indicated as such and included in the bibliography.

I, here by further declare that all information of this document has been
obtained and presented in accordance with academic rules and ethical
conduct.

Signature
(RAHUL BALINDRA GUPTA)

Certified by
PROF.SAILEE SHRINGARPURE
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ACKNOWLEDGEMENT
To list to who all helped me is difficult because they are so numerous and
the depth is so enormous.

I would like to acknowledge the following as being idealistic channel and

fresh dimension and completion of project.

I take this opportunity to thank the University of Mumbai for giving me

chance to do this project.

I would like to thank my Principal, Dr. N.N. Pandey and our Vice-
Principal Prof. Subhashini Naikar for providing the necessary facilities
required for completion of this project.

I take this opportunity to thank our Co-Ordinator Prof. Pankaj Jain for his
moral support and guidance.

I would also like to express my sincere gratitude towards my project guide

Prof. Sailee shringarpure whose guidance and care made the project
successful.

I would like to thank my college library for having provided various

reference books and magazines related to my project.

Lastly I would like to thank each and every person directly or indirectly
helped me in the completion of the project, especially my Parents and my
peers who supported me through out of my project.

RAHUL BALINDRA GUPTA

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INDEX

Chapter Title Page

No. no.
1 Introduction to investment & its alternatives 6
1.1 INTRODUCTION TO INVESTMENT 7
1.2 INVESTMENT OPTIONS AVAILABLE 8
2 OBJECTIVES & NEED OF THE STUDY 27
2.1 NEED OF THE STUDY 28
2.2 OBJECTIVES AND SCOPE OF THE STUDY 28
2.3 SCOPE OF THE STUDY 28
3 RESEARCH METHODOLOGY 29
3.1 RESEARCH METHODOLOGY 30
INTRODUCTION
3.2 RESEARCH DESIGN 30
3.3 SAMPLING DESIGN 30
3.4 DATA COLLECTION AND ANALYSIS 31
4 LITERATURE REVIEW 33
4.1 LITERATURE REVIEW HISTORY 34
5 DATA ANALYSIS & INTERPRETATION 36
6 CONCLUSIONS AND SUGGESTIONS 55
6.1 FINDINGS OF THE STUDY 56
6.2 RECOMMENDATIONS 56
6.3 LIMITATIONS OF THE STUDY 57
REFERENCES 58
ANNEXURE QUESTIONNAIRE 59
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CHAPTER 1

INTRODUCTION TO INVESTMENT & ITS

ALTERNATIVES
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1.1 INTRODUCTION TO INVESTMENT

In the Present-day financial markets. Investing money has become a very complex task.
Most of the investors are unaware of the fact that investing is both an art and a science.
Majority of people irrespective of their education, status, occupation etc, are fascinated by
investments. Investment is an economic activity in which every person is engaged in one
form or another. Even though the basic objective of making investment is earning profits,
not everybody who makes investment benefits from it. Those who incur losses have not
managed their funds scientifically and have just followed others blindly. All investments
are risky to some degree or other as risk and return go together. The art of investment is to
see that the return is maximized with the minimum degree of risk.

Investment is the process of, ‘sacrificing something now for the prospect of gaining
something later’. Our definition implies that there are three dimensions to an investment-
time which involves creation of assets or exchange of assets with profit motive. it is the
employment of funds with the purpose of earning additional income or growth in value.
The person making investment has to part with his funds. the funds may be converted into
monetary assets or a claim on future money for a return. This return is an award for
abstaining from present consumption for parting with the money or liquidity and for taking
a risk. The risk may be about the return on investment, time of waiting, cost of getting back
funds, safety of funds, and variability of the return.

“sacrifice of certain present value for some uncertain future value.” Sharpe/Alexander

The developing countries like India face the enormous task of finding sufficient capital in
their development efforts. Most of these countries find it difficult to get out of the vicious
circle of poverty of low income, low saving, low investment, low employment etc. With
high capital output ratio, India needs very high rates of investments to make a leap forward
in her efforts of attaining high levels of growth. Since the beginning of planning, the
emphasis was on investment as the primary instruments of economic growth and increase
in national income. In order to have production as per target, investment was considered
the crucial determinant and capital formation had to be supported by appropriate volume
of saving
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1.2 INVESTMENT OPTIONS AVAILABLE

There are a large number of investment instruments available today. To make our lives
easier we would classify or group them. In India, numbers of investment avenues are
available for the investors. Some of them are marketable and liquid while others are non-
marketable and some of them also highly risky while others are almost risk less. The people
has to choose Proper Avenue among them, depending upon his specific need, risk
preference, and return expected Investment avenues can broadly categories under the
following heads.

1. Shares

2. FI Bonds

3. Corporate Debenture

4. Company Fixed

5. Bank Fixed

6. PPF

7. Life Insurance

8. Post Office-NSC

9. Gold/Sliver

10. Real Estate

11. Mutual Fund

12. Others
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1.Shares:

A share is the interest of a shareholder in a definite portion of the capital. It expresses a

proprietary relationship between the company and the shareholder. A shareholder is the
proportionate owner of the company. A share is the interest of a shareholder in a definite
portion of the capital. It expresses a proprietary relationship between the company and
the shareholder. A shareholder is the proportionate owner of the company but he does not
own the company’s assets which belong to the company as a separate legal entity.
Section 2(46) defines a share as, “A share in the share capital of a company and includes
stock. except where a distinction between stock and shares is expressed or implied”. An
exhaustive definition of share has been given by Farwell J. in Borland’s trustee v. steel
bros. in the following words:

“A share is the interest of a shareholder in the company, measured by a sum of money, for
the purpose of liability in the first place, and of interest the second, but also consisting of
a series of mutual covenants entered into by all the shareholder inter se in accordance with
the companies act”. Thus, a share

i) Measures the right of a shareholder to receive a certain proportion of the profits of the
company while it is a going concern and to contribute to the assets of the company when
it is being wound up; and
ii) Forms the basis of the mutual covenants contained in the articles binding the
shareholders inter se.
A share is a personal estate capable of being transferred in the manner laid down in the
articles of association. It is a movable property which can either be mortgaged or pledged.
Share is included in the definition of ‘good’ under the provisions of the sale of goods act,
1930. Every share issued by a company under its common seal specified the shares held by
any member. The share certificate is the prima facie evidence of the title of the member to
such shares. The share certificate is not a negotiable instrument.
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Types of shares:

According to section 86 of the companies act, a company can issue only two types of
shares:

(a) Preference shares; and

(b) Equity shares.

 Equity shares:

All shares which are not preference shares are equity shares. Equity shareholders have the
residual rights of the company. They may get higher dividend than preference shareholders
if the company is prosperous or get nothing if the business of the company flops. In the
winding up, the equity shares are entitled to the entire surplus assets remaining after the
payment of the liabilities and the capital of the company; unless the articles confer right on
the preference shares a right to participate in the distribution of surplus assets.

 Preference shares:

A preference share must satisfy the following two conditions:

1. It shall carry a preferential right as to the payment of dividend at a fixed rate;

and

2. In the event of winding up, there must be a preferential right to the repayment
of the paid up capital.
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These are two dominant characteristics of preference shares. So preference share may or
may not carry such other right as:

(a) A preferential right to any arrears of dividend;

(b) A right to share in surplus profits by way of additional dividend;

(c) A right to be paid a fixed premium specified in the memorandum; and

(d) A right to share in surplus assets in the event of a winding up, after all kinds of capital
have been repaid.

1. Cumulative and non-cumulative preference shares:

With regard to the payment of dividend, preference shares may be cumulative or non-
cumulative. In the case of cumulative preference shares, if the profits of the company in
any years are not sufficient to pay the fixed dividend, on the preference shares the
deficiency must be made up out of the profits of subsequent years. The accumulated
arrears of dividend must be paid before anything is paid out of the profits to the holders
of any other class of shares. In the case of non-cumulative preference shares, the dividend
is only payable out of the net profits of each year. If there are no profits in any year, the
arrears of dividend cannot be claimed in the subsequent years. Preference shares are
presumed to be cumulative unless expressly described as non-cumulative. Any
ambiguous language in the articles will not be enough to make them non-cumulative.

2. Participating and Non-participating Preference Share:

Participating preference shares are those shares which are entitled, in addition to preference
dividend at a fixed rate, to participate in the balance of profits with the equity shareholders
after they get a fixed rate of dividend on their shares. The participating preference shares
may also have the right to share in the surplus assets of the company on its winding up.
Such a right must be expressly provided in the memorandum or the articles of association
of the company.
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Non-participating preference shares are entitled only to a fixed rate of dividend and do
not share in the surplus profits. The preference shares are presumed to be non-
participating, unless expressly provided in the memorandum or the articles or the terms of
issue. A mere fact that the articles of a company confer on the preference shareholders a
right to participate with the equity shareholders in the surplus profits does not necessarily
mean that the preference shareholders are entitled to participate in the surplus assets also.

3. Redeemable preference shares:

According to section 80, a company limited by shares, if so, authorized by its articles, may
issue redeemable preference shares. Such shares may be redeemed either after a fixed
period or earlier at the option of the company. In the case of irredeemable shares, the capital
is to be returned on the winding up of the company. The redeemable preference shares can
be redeemed, only subject to the following conditions:

i) Such shares must be fully paid

ii) Such shares shall be redeemed out of distributable profits or out of the proceeds of a
fresh issue made for the purposes of redemption.
iii) Any premium to be paid on redemption of such shares must be paid out of profits or
out of the share premium account.
iv) Where shares are so redeemed out of profits, a sum equal to the nominal value of the
shares
redeemed must be transferred to the ‘capital redemption reserve account’.

This amount shall be treated as capital of the company and the provisions as regards
reduction of capital shall apply. The amount credited to the account cannot be paid out to
the shareholders as dividend. But it can be used to pay up unissued shares to be issued as
fully paid bonus shares. Redemption of preference shares is not to be taken as reduction of
the company’s authorized share capital. Shares already issued cannot be converted into
redeemable preference shares.

Where a company fails to comply with these provisions, the company and every officer
of the company who is in default shall be punishable with fine which may extend to Rs.
1,000. Redemption of redeemable preference shares shall be notified to the registrar
within one month of redemption. Where redeemable preference shares have been issued,
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the balance sheet must contain a statement specifying what part of the capital consists of
such shares and the earliest date on which the company has power to redeem the shares.

2.Debt:

Debt is a route that most people will know and wide range of debt instruments that are
present have the necessary experience of there is a from bank fixed deposits to company
fixed deposits. Debt is simple as the investor ill earn at a fixed percentage of the
investment, which will then be returned to the investor at the time of maturity or
redemption of the investment.

3.Mutual Funds:

This is an emerging area for investment and there is a large variety of schemes in the market
to suit the requirements of a large number of people. In finance, in general, you can think
of equity as ownership in any asset after all debts associated with that assetare paid off. For
example, a car or house with no outstanding debt is considered the owner's equity because
he or she can readily sell the item for cash. Stocks are equity because they represent
ownership in a company.

Advantages to invest in mutual funds:

 No large investment compulsory: Mutual funds allow you to make an

investment, even if you have a very small amount to invest. This advantage makes
it more attractive among investors.

 Investing in a variety of instruments: Imagine ordering a thali at your favorite

restaurant where you can eat a variety of different foods in one affordable package!
Mutual funds also work in a similar way. Mutual Funds invest in a wide range of
securities. This diversification reduces the risk by limiting the effect of a possible
decline in the value of any one security. You achieve this diversification through a
Mutual Fund with far less money than you can do on your own.
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

 Convenience: You can invest directly with the fund house or through your
financial advisor. You get regular information on the value of your investments
and portfolios of the schemes.

 Professional Management: Mutual fund investments are managed by experienced

and skilled professionals, who with the help of an investment research team,
analyzes the performance & prospects of companies and selects suitable
investments to achieve the objective of the scheme.


 Easy access to your money: In open-ended mutual funds, you can redeem all or
part of your units any time you wish. Some schemes do have a lock-in period where
an investor cannot return the units until the completion of such a lock-in period.
With close-ended schemes, you can sell your units on a stock exchange at the
prevailing market price or avail of the facility of repurchase through Mutual Funds
at NAV related prices which some close-ended and interval schemes offer you on
maturity of scheme or periodically, as the case maybe.

4.Corporate Debenture:

Corporate debentures are normally backed by the reputation and general credit
worthiness of the issuing company. It is a type of debt instrument that is not covered by
the security of physical assets or collateral. Debentures are a method of raising credit for
the company and although the money thus raised is considered a part of the company's
capital structure, it is not part of the share capital.
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Security:

 Secured/Mortgage Debentures: Debentures secured against assets of the

company. i.e. if the company is winding up, assets will be sold and debenture
holders will be paid back. The charge/mortgage may be fixed or a floating charge.
If it is fixed, charge is on a specific asset say plant, machinery etc. If it is floating
charge, it means it is on general assets of the company.
 Which assets are charged: The ones available with the company presently and
also assets in future?
 Mortgage deed: Includes nature/value of the security, date of interest payment,
and rate of interest, repayment terms, and rights of the debenture holders if the
company defaults. In the event of default of company to pay interest or principal
installment, they can recover their money via the assets mortgaged.

 Unsecured/Naked Debentures: Debentures not secured against assets of the

company i.e. if the company is winding up, assets will be not be sold in order to
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pay the debenture holders. In other words, no charge is created on the assets of the
company which means that there is no security of interest and principal payment.
The creditworthiness and soundness of the company serves as a security

Tenure:
 Redeemable Debentures: Debentures which have to be repaid within a certain
specified
period. E.g. 5% 2 years Rs. 1000 debenture means redeemable period is 2
years (5% interest/coupon payment). After redemption, they can be reissued.

 Irredeemable/Perpetual Debentures: These can be paid back at any time during

the life of the company. i.e. there is no specified period for redemption. Hence.
They are also called Perpetual Debentures. Nonetheless if the company has to wind
up, then they have to repay the debenture holders.

Registration:

 Registered Debentures: As the name suggested, these are debentures that are
registered with the company. It records all details of debenture holdings such as
name, address, particulars of holding etc. Interest shall be paid only to the registered
holder (treated as a non-negotiable instrument). They can be transferred by a
transfer deed.

 Bearer Debentures: These can be transferred by mere delivery. Company does not
hold records for the debenture holder. Interest will be paid to the one who displays
the interest coupon attached to the debenture.

Coupon:
 Zero -Coupon -Debentures: Does not have a specified interest rate, thereby to
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 compensate, they are issued at a substantial discount. Interest: Difference in face

value and issue price.

 Specific Coupon rate Debentures: Debentures are normally issued with an

interest rate which is nothing but the coupon rate. It can be fixed or floating.
Floating is associated with the bank rates.

Convertibility:
 Convertible Debentures (Fully/ Partly convertible): Debentures which can be
converted to either equity shares or preference shares by the company or debenture
holders at a specified rate after a certain period. A company can also issue Partly
Convertible Debentures whereby only a part of the amount can be converted to
equity/preference shares.
 Non-Convertible Debentures (NCDs): These can’t be converted into
equity/preference shares.

Advantages/Merits of Debenture Issue:

 It enables a company to raise funds for a specific period.

 No dilution of control as debenture holders don’t possess voting rights

 Debenture (debt) enables the company to Trade on equity. It can pay

dividend to equity shareholders at a rate higher than overall ROI.
 Debenture holders entitled to a fixed rate of interest. E.g.: 10% debenture

 They enjoy priority over other unsecured creditors with respect to debt repayment.
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 Suitable for conservative investors who seek steady ROI with little or no risk.

 Interest on debentures is treated as expense and is tax deductible.

 Company can adjust its gearing in accordance to its financial plan.

 Debenture holders are regarded as creditors of the company and they receive
preference over equity shareholders and preference share Holders.


Disadvantages/Demerits of Debenture issue:

 They have a fixed maturity; hence provision has to be made for repayment.

 There is a limit to which funds can be raised through debentures.

 It is risky if the company fails to pay interest or principal installment on

time, as debenture holders can file petition for winding up the company.

 It is not suitable for a company with fluctuating earnings as it may also lead
to fluctuations in payment of dividend payable to equity shareholders.

 With more risk, you get more return. Debentures being secure investments,
returns are less.

 Like ordinary shares, debenture holders will not be regarded as owners of the
company and have no voting rights.
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5.Company Fixed Deposit:

Company fixed deposit is the deposit placed by investors with companies for a fixed term
carrying a prescribed rate of interest. Company FDs are primarily meant for conservative
investors who don't wish to take the risk of vagaries of the stock market. But experts say
the due diligence that an investor should undertake is similar to that before Buying shares.
Getting lured by the high interest rate alone is not advisable.

6.Fixed Deposits:

Fixed Deposits with Banks are also referred to as term deposits. Minimum Investment
period for bank FDs is 30 days. Deposits in banks are very safe because of the regulations
of RBI and the guarantee provided by the deposit insurance corporation. The interest rate
on fixed deposits varies with term of the deposits Bank deposits enjoy exceptionally high
liquidity. Loans can Raised against bank deposits.

7.Post Office Savings:

Post Office Monthly Income Scheme is a low risk saving instrument, which can be
availed through any Post Office The interest rate on deposits is slightly higher than
banks. The interest is

calculated half yearly and paid yearly. There are various types of schemes provided by
post

offices. These are:

Savings Account

 Any individual can open an account.

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 Cheque facility available.

 Group Account, Institutional Account, other Accounts like Security Deposit

account & Official Capacity account are not permissible

 Rate of interest 4% per annum

Time Deposit Account

 Any individual (a single adult or two adults jointly) can open an account.
 Group Accounts, Institutional Accounts and Misc. account not permissible.
 Trust, Regimental Fund or Welfare Fund not permissible to invest.
 1 Year, 2 Year, 3 Year and 5 Year Time Deposit can be opened.
 In case of premature closure of 1 year, 2 Year, 3 Year or 5 Year account on or after
01.12.2011, if the deposit is withdrawn after 6 months but before the expiry of one
year from the date of deposit, simple interest at the rate applicable to from time to
time to post office savings account shall be payable.
 In case of premature closure of 2 year, 3 year or 5 year account on or after
01.12.2011, if the deposit is withdrawn after the expiry of one year from the date
of deposit, interest on such deposits shall be calculated at the rate, which shall be
one per cent less than the rate specified for a period of deposit of 1 year, 2 year or
3 years as mentioned in the concerned table given under Rule 7 of Post office Time
Deposit Rules.
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 Rate of interest - 8.20%, 8.20%, 8.30%, 8.40% compounded quarterly for 1,2,3 &
5 years TD account respectively.

 The investment in the case of 5 years TD qualify for the benefit of Section 80C of
the Income Tax Act, 1961 from 1.4.2007.

Type of Account Minimum Deposit Maximum Deposit

INR.200/- and in multiples of
1,2,3 & 5 Year TD INR. No limit.
200/- thereafter

Recurring Deposit Account:

 Any individual (a single adult or two adults jointly) can open an account.
 Advance Deposits earn rebate.
 Four defaults are allowed.
 Rate of interest 8.30%
 Maturity value of a 5 Years RD account opened on or after 1.4.2013 with
monthly deposit of INR.10/- shall be INR.744.53.
 Defaults can be paid within two months.
 Part withdrawal facility available.
 Premature closure allowed after three years.
 Pay Roll Savings Scheme is also available for employees of various
Establishments.

Type of Account Minimum Deposit Maximum Deposit

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INR. 10/- and in multiples of

Individual Account INR. No limit
5/- thereafter

Senior Citizen Savings Scheme (SCSS) Account:

 A new avenue of investment and return for Senior Citizen.
 The account may be opened by an individual,
 Who has attained age of 60 years or above on the date of opening of the Account?

 Who has attained the age 55 years or more but less than 60 years and has retired
under a Voluntary Retirement Scheme or a Special Voluntary Retirement Scheme
on the date of opening of the account within three months from the date of
Retirement?

 No age limit for the retired personnel of Defense services provided they fulfill
other specified

o conditions.

 The account may be opened in individual capacity or jointly with spouse.

 Non-resident Indians (NRIs) and Hindu Undivided Family (HUF) are not eligible
to open an account.

 The individual may open one or more account in the multiple of INR.1000/-,
subject to a maximum limit of INR.15 lakh.
 Page 23

 No withdrawal shall be permitted before the expiry of a period of five years from
the date of opening of the account. The depositor may extend the account for a
further period of 3 years.

 Premature closure of account is permitted

 After one year but before 2 years on deduction of 1 ½ % of the deposit.

 After 2 years but before date of maturity on deduction of 1%

of the deposit. Premature closure allowed after three years.

 In case of death of the depositor before maturity, the account shall be closed and
deposit refunded without any deduction along with interest.

 Interest @ 9.20% per annum from the date of deposit on quarterly basis. Interest
can be automatically credited to savings account provided both the accounts stand
in the same post office.
 Interest rounded off to the nearest multiple of rupee one.
 Post Maturity Interest at the rate applicable to the deposits under Post Office
Savings Accounts from time to time is admissible for the period beyond maturity.
 Nomination facility is available in the Scheme.
 The investment under this scheme qualify for the benefit of Section 80C of the
Income Tax Act, 1961 from 1.4.2007.

Monthly Income Scheme (MIS) and Senior Citizen Saving Scheme (SCSS) are the best
for Senior Citizens who desire monthly/quarterly interest. Invest in MIS / SCSS and
transfer interest into RD account through SB account through written request and earn a
combined interest of 10.5 % (approx.)
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This is the safest investment option for the Senior Citizens.

8.Life Insurance Policies:

Insurance companies offer many investment schemes to investors. These schemes

promote saving

and Additionally, provide insurance cover. L1C is the largest life insurance company in
India.

Some of its schemes include -

 -Life policies,
 -Convertible whole life assurance policy,
 -Endowment assurance policy,
 -Jeevan Saathi,
 -Money back policy
 -Unit linked plan
 -Term assurance
 -Immediate annuity

 -Deferred annuity

 -Riders etc.

Insurance policies, while catering to the risk compensation to be faced in the future by
investor, also have the advantage of earning a reasonable interest on their investment
insurance premiums.

9.Public Provident Fund (PPF):

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A long-term savings instrument with a maturity of 15 years. A PPF account can be opened
through a nationalized bank at any time during the year and is open all through the year for
depositing money. Tax benefits can be availed for the amount invested and interest accrued
is tax-free. A withdrawal is permissible every year from the seventh financial year of the
date of opening of the account.

Public Provident Fund Account:

 Ideal investment option for both salaried as well as self-employed classes.

 Non-Resident Indians (NRIs) are not eligible.
 Investment up to INR. 1,00,000 per annum qualifies for IT Rebate under section
80 C of IT Act.

 The rate of interest on the subscriptions made to the fund on or after 01.12.2011
and balances at credit of the subscriber in the existing PPF account shall bear
interest at the rate of eight point seven per cent (8.70%) per annum.
 Loan facility available from 3rd financial year up to 5th financial year. The rate of
interest charged on loan taken by the subscriber of a PPF account on or after
01.12.2011 shall be2% p.a. However, the rate of interest of 1% p.a. shall continue
to be charged on the loans already taken or taken up to 30.11.2011.

 Withdrawal permitted from 6th financial year.

 Free from court attachment.
 An individual cannot invest on behalf of HUF (Hindu Undivided Family) or
Association of persons.
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Type of Account Minimum limit Maximum limit

Public Provident Fund INR. 1,00,000/- in a financial
(Individual INR. 500/- in a financial year year
account on his behalf or on
behalf
of Minor whom he is the
guardian)

10.Real Estate:

Investment in real estate also made when the expected returns are very attractive. Buying
property is an equally strenuous investment Decisions. Real estate investment is often
linked with the future development plans of the location. At present investment in real
assets is booming there are various investment source are available for investment which
are directly or indirectly investing real estate. In addition to this, the more affluent
investors are likely to be interested in other type of real estate, like commercial property,
agricultural land, semi urban land, and resorts.

11.Gold/ Silver /Others:

The bullion offers investment opportunity in the form of gold, silver, art objects (paintings,
antiques), precious stones and other metals (precious objects), specific categories of metals
are traded in the metal exchange.
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CHAPTER 2

OBJECTIVES & NEED OF THE STUDY

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2.1 NEED OF THE STUDY:

The need of the study was to fill the gap that was identified in the previous researches. the
researchers conducted earlier lay emphasis on the customer perception bout securities
considering the ample importance of this aspect the present study was conducted to know
the pattern of investment of salaried people and study the behavior of investors and
determine their awareness level regarding investment avenues available in the stock
market.

2.2 OBJECTIVES AND SCOPE OF THE STUDY:

 To study the investment preference among salaried people working in different
sectors in, Kandivali, Mumbai, India.
 To know the factor that influencing investment behavior of the peoples.
 To analyze the investment pattern among the salaried investors.
 To find the problems facing by the investors.
 To know the mode of investments of the salaried respondents in various investment
avenues.

2.3 SCOPE OF THE STUDY:

This study is focusing on the preference of Investments by salaried class people and it will
be helpful to identify the better investment options in the market. the scope of the study is
limited to Mumbai city.
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CHAPTER 3

RESEARCH METHODOLOGY
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3.1 RESEARCH METHODOLOGY INTRODUCTION:

Research methodology is a way to systematically solve the research problem. the research
methodology includes the various methods and techniques for conducting a research.
Research is an art of scientific investigation. In other word research is a scientific and
systematic search for pertinent information one specific topic. The logic behind taking
research methodology into consideration is that one can have knowledge about the method
and procedure adopted for achievement of objective of the project.

3.2 RESEARCH DESIGN:

Research design is the conceptual structure within which research is conducted. It

constitutes the blueprint for collection, measurement and analysis of data was a descriptive
research. Descriptive research involves collecting numerical through self-report collected,
through questionnaires or interviews (person or phone), or through observation. For present
study, the research was descriptive and conclusion oriented.

3.3 SAMPLING DESIGN:

 Universe: The universe is most commonly defined as everything that physically

exists.
 The entirely of space and time, all forms of matter energy and momentum, and the
physical laws and constants that govern them. all those persons who make
investment.
 Theoretical universe: It included investors make investment in all over the world
 Accessible universe: It included investors make investment in Indian stock
market.
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 Sampling unit: The target population must be defined that has to be sampled.

The sampling unit of research included salaried people residing in Ropar.

 Sample size: This refers to number of respondents to selected from the universe
to constitute a sample. The sample size of 100 investors was taken.
 Sampling technique: Convenience sampling was used to select the sample.
Convenient sampling is a non-probability sampling technique that attempts to
obtain a sample of Convenient elements. in case of convenience sampling, the
selection of sample depends upon the discretion of the interviewer. In this project,
questionnaire method was used for the collecting the data. With the help of this
method of collecting data, a sample survey was conducted.

3.4 DATA COLLECTION AND ANALYSIS:

Data collection:
Information has been collected from both primary and secondary data.

 Secondary data: Secondary data are those which have already been collected by
someone else and which already had been passed through the statistical process. the
secondary data was collected through web sites, books and magazines.

 Primary data: Primary data are those which are fresh and are collected for the first
time, and thus happen to be original in character. the primary data was collected
through direct personal interviews (open ended and close ended questionnaire).
Tools of presentation &analysis:
To analyses the data with the help of questionnaire, following tools were used.

 Likert scale: These consist of a number of statements which express either a

favorable or unfavorable attitude towards the given to which the respondents
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are asked to react. The respondents respond to in terms of several degrees of

satisfaction or dissatisfaction.

Percentage and pie charts: Those tools were used for analysis of data.
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CHAPTER 4

LITERATURE REVIEW
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4.1 LITERATURE REVIEW HISTORY:

Behavioral finance is a new emerging science that studies the irrational behavior of the
people. Avinash Kumar Singh (2006) The study entitled "Investment Pattern of People"
has been undertaken with the objective, to analyze the investment pattern of people in
Bangalore city and Bhubaneswar analysis of the study was undertaken with the help of
survey conducted .After analysis and interpretation of data it is concluded that in Bangalore
investors are more aware about various investment avenues & the risk associated with that.
All the age groups give more important to invest in equity & except people those who are
above 50 give important to insurance, fixed deposits and tax saving benefits. Generally,
those investors who are invested in equity, are personally follow the stock market
frequently i.e. in daily basis. But those who are invested in mutual funds are watch stock
market weekly or fortnightly. In Bangalore, investors are more aware about various
investment avenues and the risk associated with that. But in Bhubaneswar, investors are
more conservative in nature and they prefer to invest in those avenues where risk is less
like bank deposits, small savings, post office savings etc.

Sudalaimuthu and Senthil Kumar (2008) Mutual fund is the one of investment avenues
the researcher research in this area about investors perception towards mutual fund
investments has been analyzed effectively taking into account the investors reference
towards the mutual fund sector, scheme type, purchase of mutual fund units, level of risks
undertaken by investors, source of information about the market value of the units,
investors opinion on factors influenced to invest in mutual funds, the investors
satisfaction level towards various motivating factors, source of awareness of mutual fund
schemes, types of plan held by the investors, awareness of risk category by investors,
problems faced by mutual fund investors. Running a successful mutual fund requires
complete understanding of the peculiarities of the Indian Stock Market and also the
awareness of the small investor. The study has made an attempt to understand the
financial behavior of mutual fund investors in connection with the scheme preference and
selection. An important element in the success of a marketing strategy is the ability to
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fulfill investor expectation. The result of these studies through satisfactory on the
investor’s perception about the mutual funds and the factors determining their investment
decisions and preferences. The study will be useful to the mutual fund industry to
understand the investor’s perception towards mutual fund investments and the study
would also be informative to the investors.
Sunil Gupta (2008) the investment pattern among different groups in Shimla had revealed
a clear as well as a complex picture. The complex picture means that the people are not
aware about the different investment avenues and they did not respond positively, probably
it was difficult for them to understand the different avenues. The study showed that the
more investors in the city prefer to deposit their surplus in banks, post offices, fixed
deposits, saving accounts and different UTI schemes, etc. The attitude of the investors
towards the securities in general was bleak, though service and professional class is going
in for investment in shares, debentures and in different mutual fund schemes. As far as the
investments are concerned, people put their surplus in banks, past offices and other
government agencies. Most of the horticulturists in Shimla city who belong to Apple belt
though being rich have a tendency of investing then surpluses in fixed deposits of banks,
provident funds, Post Office savings, real estates, etc. for want of safety and suitability of
returns.

Manish Mittal and Vyas (2008) Investors have certain cognitive and emotional
weaknesses which come in the way of their investment decisions. Over the past few years,
behavioral finance researchers have scientifically shown that investors do not always act
rationally. They have behavioral biases that lead to systematic errors in the way they
process information for investment decision. Many researchers have tried to classify the
investors on the basis of their relative risk taking-capacity and the type of investment they
make. Empirical evidence also suggests that factors such as age, income, education and
marital status affect an individual's investment decision. This paper classifies Indian
investors into different personality types and explores the relationship between various
demographic factors and the investment personality exhibited by the investors.
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CHAPTER 5

DATA ANALYSIS & INTERPRETATION

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DEMOGRAPHIC PROFILE OF INVESTORS:

Gender No. of respondents Percentage of respondents

Male 64 64
female 36 36
Total 100 100
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Age No. of respondents Percentage of respondents

Less than 20 17 17

20-40 76 76

More than 40 7 7

Total 100 100

Occupation No. of respondents Percentage of respondents

Government employee 29 29

Private employee 71 71

Total 100 100

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Income (per month) No. of respondents Percentage of respondents

Less than 20000 36 36

20000-40000 52 52
Greater than 40000 12 12
Total 100 100
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Interpretation:

It was found that the major population of investors was 20-40 years and 17% was of
less than 20 yrs. And 29% investors are government employees and 71% investors are
private employees. And majority of respondents i.e. 52% earn income between Rs.
20000-40000 per month. It means majority of investors was 20- 40 years having income
in between Rs. 20000-40000.
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Statement 1: To know whether respondents invest

No. of respondents Percentage of respondents

Yes 93 93

No 7 7

Total 100 100

Interpretation:

From the survey it was found that 93% respondents invest in the securities and 7% are
non-investor.
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Statement 2: Awareness regarding types of investment instruments

Types of investment No. of respondents Percentage of respondents

instruments

shares 14 14

Bank deposits 45 45

insurance 11 11

Gold 8 8

Mutual funds 22 22

Total 100 100

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Interpretation:

Above pie chart shows that 14% investors were aware of shares, 45% were aware of
bank deposits, 11% insurance, 8% gold and 22% were aware mutual funds. It means
majority of the people are aware of bank deposits followed by insurance.

Statement 3: To know the type of investment option the person has been investing

No. of respondents Percentage of respondents

shares 12 12

Mutual funds 22 22

Bank deposits 47 47

insurance 11 11

Gold 8 8

Total 100 100

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Interpretation:
From the survey it was found that 12% respondents invest in shares, 22% in mutual
funds, 47% in bank Deposits. 11% in insurance and 8% respondents invest in gold That
means majority of the salaried people invests in bank deposits.
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Statement 4: to know the rates at which the investment Grow

No. of respondents Percentage of respondents

Steadily 52 52

At an average rate 30 30

At fast rate 18 18

Total 100 100

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Interpretation:

From the survey it was found that 18% respondents want their investment grow at fast
rate whereas only 30% respondents were in the favor of investment growth at average
rate and only 52% respondents were in favor of investment growth at steadily.

Statement 5: To know the frequency of investment by the respondents

No. of respondents Percentage of respondents

Daily 0 0

Weekly 3 3

Monthly 56 56

Yearly 41 41

Total 100 100

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Interpretation:

From the above table & chart it was found that 56% respondents invest monthly.41%
invest yearly, and there were 3% respondents who invest weekly. Thus, it can be stated
that majority of the investors invest monthly in different types of alternatives.
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Statement 6: To know the percentage of income that respondent invest annually

No. of respondents Percentage of respondents

Up to 10% 48 48

10-20% 27 27

More than 20% 25 25

Total 100 100

Interpretation:

From the above table & chart it was found that 27% respondents invest 10-20% of their
Annul income, 25% respondents invest more than 20% of their annual income, and 48%
respondents invest up to 10% of their income in different investment avenues. Thus, it
can be Conclude that majority of investors invest Upto10% of their annual income.
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Statement 7: To know the purpose of investment

No. of respondents Percentage of respondents

Wealth creation 26 26

Future needs 39 39

Children’s education 8 8

House building 14 14

Marriage purpose 13 13

Total 100 100

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Interpretation:

From the above table it can be found that 26% people invest money to create its capital,
39% people invest to meet its future needs ,8% of salaried people invest for their
children’s education, 14% people to build their house and 13% people to meet marriage
expenses. Thus, according to above majority of the people invest majority to meet its
future needs.

Statement 8: To know the respondent’s influence on investment decision.

No. of respondents Percentage of respondents

Self 28 28

Friends& relatives 50 50

Newspapers & advertisements 3 3

Agents 19 19

Total 100 100

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Interpretation:

From the above table & chart, it was found that multiple aspects for investing influenced
respondents. 28% respondents take decision on the basis of their personal evaluation
where as 50% respondents invest because of influence of friends & relatives, the
newspaper Influences 3% respondents and 19% respondent invest because of influence
of Agent. it can be stated that majority of the persons are influenced by their friends &
relatives for investment tool.

Statement 9: to know the factors that were considered while investing

Investment factors No. of respondents Percentage of respondents

Return on investment 65 65

Tax benefits 13 13

Capital appreciation 19 19

Risk 3 3

Total 100 100

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Interpretation:

From the above survey it was found that the maximum respondents considered return on
investment was most important factor, 13% respondents considered tax benefits as an
important factor and 19% respondents considered capital appreciation as an important
factor. It can be stated that majority of investors were consider return as an important
factor while investing.

Statement 10: To know investor’s action in case of stock market drop

No. of Percentage of
respondents respondents

Transfer funds into secure investment 41 41

Wait to see if investment improves 24 24

Invest more funds 2 2

Withdraw funds & stop investing 33 33

Total 100 100

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Interpretation:

From the survey it was found that maximum respondent would transfer funds into secure
investment, 24% respondents would wait to see if investment improves, 2% respondents
would invest more funds and 33% respondents would stop investing. It can be stated that
majority of investors would like to transfer funds into secure investment.

Statement 11: to know the decision regarding other investment policy

Investment decision No. of respondents Percentage of respondents

Yes 47 47

No 53 53

Total 100 100

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Interpretation:

From the survey it was found that 47% respondents have the other investment policy
where as 53% respondents do not have the other investment policy.
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Chapter No. 6

Conclusions and Suggestions

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6.1 FINDINGS OF THE STUDY

Following findings are generated from the study:

 Maximum investors are aware of all the investment options.

 Investors do not invest in a single avenue. They prefer different avenues and
investors prefer to invest in bank deposits, insurance.
 Maximum investors’ wants their investment grow at steadily.
 The main purpose of majority of the people to invest money is to meet its
future needs.
 The investment decision of investors is influenced through friends & relatives.
 Different factors considered by investors while investing are return, risk, tax
benefits, capital appreciation and most prominent factor is the return on any
investment avenue.
 Majority of investors invest up to 10% of their annual income.
 Maximum investors invest on monthly basis.
 Investors have other investment policies.
 Investors are more satisfied from bank deposits followed by mutual funds.

6.2 RECOMMENDATIONS
Following are the recommendations of the study:
 The various investment tools which are mostly preferred by the investors are bank
deposits, post office savings, etc. So, there should be various other means to create
awareness regarding the potential of other instruments and the tools which can be
more beneficial to the investors.
 The investors consider various factors while making investment like risk, return,
liquidity etc. there should be rational thinking o that the investor is able to know
that at what point of time they need capital appreciation instead the risk and when
the need return instead of liquidity.
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 The preferred time span of investment by the investors depends upon the need of
the investor that whether they want to have early and high returns or wants to have
stable returns, most probably the long-time span is suitable because the returns are
high and safety is also there.
 The satisfaction level of various investors is different due to different investment
alternatives they opt for. If they will be aware of each type of alternative and the
worth of the alternatives then investing as per that There was satisfaction level will
also be high.
 Investors should have the complete knowledge of all the alternatives.

6.3 LIMITATIONS OF THE STUDY

It I said, “what is worth doing best”.in other words a person should aim at perfection. How-
ever in real life this is not always possible. human have to work within the limitation set
by the nature and society that is to say even though every Effort has been made to make
this project report authentic and comprehensive however many constraints were also at
play the major limitations of the study are:

 Due to paucity of time and resources a countrywide survey was not possible
hence only Mumbai city has been taken for the study.
 Since a smaller sample was chosen so it may not be a true representative of the
population under study.
 The possible of the respondent’s responses being based cannot be ruled out.
 Most of the study was restricted to internet and published data because of the non-
availability of primary data.
 The information given by the respondents might be biased because some of them
might not be interested to given correct information.
 Some of the respondents could not answer the questions due to lack of
knowledge.
 Some of the respondents of the survey were unwilling to share information.
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REFERENCES

Charles (1999). Economic policy astonishing growth in Americans stock portfolios.

The icfai journal of stock market, 6 (3): 43-60. Availability

http://paper.ssrn.com/so13/results.cfm

Dijk (2007) economic policy, the size effect in equity return. empirical research finding.
Journal of financial management and analyi21 (1). Available at
http://paper.ssrn.com/so13/results.cfm

Johnson (2008). The value of quality: stock market returns to published quality reviews.
The icfai journal of applied economics,7(3):7-22. Available at
http://papers.ssrn.com/so13/results.cfm

Introduction on online investors & traders available at http://www.traderji.com/

Introduction on types of investment available at

http://finance.mapsofworld.com/investment/types/
 Page 59

ANNEXURE

QUESTIONNAIRE
Dear respondent,
I am a student of Mcom in cordial institute of Accountancy is conducting a research on
“investment pattern of salaried people”. I would be extremely thankful if you spare
time to answer the following questions. All the facts disclosed by you will be used for
academic purpose only.
PERSONAL PROFILE

NAME: ………………………………….…

AGE :
o Less than 20 years
o 20-40 years
o More than 40 years

Gender:
o male
o female

occupation:
o government employee
o private employee

Income (per month):

o less than 20000

o 20000-40000
o More than 40000
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Q1. Do you invest your money?

o Yes
o No

Q2. Out of the following, which type of instrument are you aware of ?
o Shares
o Bank deposit
o Insurance
o Gold
o Mutual funds

Q3. Where have you been investing?

o Shares
o Bank deposit
o Insurance
o Gold
o Mutual funds

Q4. Which rates do you want your investment to grow?

o Steadily
o At average rate
o At fast rate

Q5. How frequently do you invest?

o Daily
o Weekly
o Monthly
o Yearly

Q6. what percentage of your annual income do you invest in securities?

o Up to 10%
o 10-20%
o More than 20%
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Q7. What is the main purpose of your investment?

o Wealth creation
o Future need
o Children education
o House building
o Marriage purpose

Q8. which sources of information you come to know about particular option for
investment?
o Self
o Friends & relative
o Newspaper
o Agent

Q9. Which factor do you consider before investing in different securities?

o Return investment
o Tax benefits
o Capital appreciation
o Risk

Q10.in your opinion, what would be the optimum strategy if stock market drops
immediately after you invest in it?

o Transfer fund into secure investment

o Wait to see if investment improves
o Invest more funds
o Withdraw funds & stop investing

Q11. Do you have any other investment policy?

o Yes
o No
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