A DISSERTATION REPORT ON Investment Pattern of Investor’s in Mutual Fund & Life In surance “CASE STUDY OF CHANDIGARH” SUBMITTED TO S.L.KAUSHAL Training and Placement Coordinater INSTITUTE OF MANAGEM ENT STUDIES H.P.UNIVERSITY SHIMLA UNDER THE SUPERVISION OF: Haribaksh Singh (Bra nch Manager) Abhishek Chadha (Relationship Manager) SUBMITTED BY: Kulbir Singh R oll no 2026

Rohit Goyal (Relationship Manager) TABLE OF CONTENTS Serial No. 1. 2. Contents Certificate Acknowledgement Company Profile • Vision • Incorporation of com pany • Corporate structure • Capital structure • Strategy • Corporate governance • Board o f directors Page No. 3. 4. 5. Objective of the study Introduction to the study a. Investor and Investment b. M utual funds c. Insurance 6. Literature Review 7. Research Methodology 2

a. Sampling & Sample Design b. Analytical Tools c. Data Collection d. Limitation s of the study 8. 9. 10. 11. 12. Result & Discussions/Findings Recommendation Executive summary Bibliography Anne xure 3

Acknowledgement Preservation, inspiration and motivation have always played a key role in the su ccess of any venture. In the present world of cutthroat competition project is l ikely a bridge between theoretical and practical working, willingly I have prepa red this particular project. First of all, I would like to thank the supreme pow er, the almighty God who is obviously the one who has always directed me to work on the right path of my life. With this grace this project could become a reali ty. I feel highly delighted with the way my dissertation report on topic “Investme nt Pattern of Investor’s in Mutual Funds & Life Insurance- A case study of Chandig arh ” has been completed. Any accomplishment requires the efforts of many people a nd this work is not different. Firstly, I would like to extend my sincere thanks to Haribaksh Singh (Branch Manager) INDIAINFOLINE for his co-operation and prov iding me good environment to work on. I would like to thank Abhishek Chadha and Rohit Goyal (Relationship Manager) INDIAINFOLINE to provide me the fruitful guid ance to complete the project. Finally, I would like to thanks all the branch emp loyees’, respondents and other people whom directly or indirectly help me completi ng the project. 4

(Kulbir Singh) COMPANY PROFILE (INDIA INFOLINE LTD) VISION “THE VISION OF INDIA INFOLINE IS TO EMERGE AS THE MOST RESPECTED FINANCIAL SERVICE PROVIDER IN INDIA.” INCORPORATION OF COMPANY Nirmal Jain, MBA (IIM, Ahmedabad) and a Chartered and Cost Accountant, founded I ndia’s leading financial services company India Infoline Ltd. in 1995, providing g lobally acclaimed financial services in equities and commodities broking, life i nsurance and mutual funds distribution, among others. Mr. Jain began his career in 1989 with Hindustan Lever’s commodity export business, contributing tremendousl y to its growth. He was also associated with Inquire-Indian Equity Research, whi ch he co-founded in 1994 to set new standards in equity research in India. India Infoline Limited is listed on both the leading stock exchanges in India, viz. t he Stock Exchange, Mumbai (BSE) and the National Stock Exchange (NSE) and is als o a member of both the exchanges. It is engaged in the businesses of Equities br oking, Wealth Advisory Services and Portfolio Management Services. It offers bro king services in the Cash and Derivatives segments of the NSE as well as the Cas h segment of the BSE. It is registered 5

with NSDL as well as CDSL as a depository participant, providing a onestop solut ion for clients trading in the equities market. It has recently launched its Inv estment banking and Institutional Broking business CORPORATE STRUCTURE India Infoline Media and Research Services Limited. 6

The content services represent a strong support that drives the broking, commodi ties, mutual fund and portfolio management services businesses. Revenue generati on is through the sale of content to financial and media houses, Indian as well as global. It undertakes equities research which is acknowledged by none other t han Forbes as Best of the Web and …a must read for investors in Asia . India In foline s research is available not just over the internet but also on internatio nal wire services like Bloomberg (Code: IILL), Thomson First Call and Internet S ecurities where India Infoline is amongst the most read Indian brokers India Infoline Commodities Limited India Infoline Commodities Pvt Limited is engaged in the business of commodities broking. Our experience in securities broking empowered us with the requisite s kills and technologies to allow us offer commodities broking as a contra-cyclica l alternative to equities broking. We enjoy memberships with the MCX and NCDEX, two leading Indian commodities exchanges, and recently acquired membership of DG CX. We have a multichannel delivery model, making it among the select few to off er online as well as offline trading facilities. India Infoline Marketing & Services 7

India Infoline Marketing and Services Limited is the holding company of India In foline Insurance Services Limited and India Infoline Insurance Brokers Limited. (a) India Infoline Insurance Services Limited is a registered Corporate Agent wi th the Insurance Regulatory and Development Authority (IRDA). It is the largest Corporate Agent for ICICI Prudential Life Insurance Co Limited, which is India s largest private Life Insurance Company. India Infoline was the first corporate agent to get licensed by IRDA in early 2001. (b) India Infoline Insurance Broker s Limited India Infoline Insurance Brokers Limited is a newly formed subsidiary which will carry out the business of Insurance broking. We have applied to IRDA for the insurance broking license and the clearance for the same is awaited. Pos t the grant of license, we propose to also commence the general insurance distri bution business. India Infoline Investment Services Limited Consolidated shareholdings of all the subsidiary companies engaged in loans and financing activities under one subsidiary. Recently, Orient Global, a Singaporebased investment institution invested USD 76.7 million for a 22.5% stake in Indi a Infoline Investment Services. This will help focused expansion and capital rai sing in the said subsidiaries for various lending businesses like loans against securities, SME financing, distribution of retail loan products, consumer financ e business and housing finance business. India Infoline Investment Services Priv ate Limited consists of the following step-down subsidiaries. 8

(a) India Infoline Distribution Company Limited (distribution of retail loan pro ducts) (b) Moneyline Credit Limited (consumer finance) (c) India Infoline Housin g Finance Limited (housing finance) IIFL (Asia) Private Limited IIFL (Asia) Private Limited is wholly owned subsidiary which has been incorporat ed in Singapore to pursue financial sector activities in other Asian markets. Fu rther to obtaining the necessary regulatory approvals, the company has been init ially capitalized at 1 million Singapore dollars. 9

Products and Services We are a one-stop financial services shop, most respected for quality of its adv ice, personalised service and cutting-edge technology. Equities Indiainfoline provided the prospect of researched investing to its clients, whic h was hitherto restricted only to the institutions. Research for the retail inve stor did not exist prior to Indiainfoline. Indiainfoline leveraged technology to bring the convenience of trading to the investor’s location of preference (reside nce or office) through computerised access. Indiainfoline made it possible for c lients to view transaction costs and ledger updates in real time. click for more PMS Our Portfolio Management Service is a product wherein an equity investment portf olio is created to suit the investment objectives of a client. We at Indiainfoli ne invest your resources into stocks from different sectors, depending on your r isk-return profile. This service is particularly advisable for investors who can not afford to give time or don t have that expertise for day-to-day management o f their equity portfolio. click for more Research 10

Sound investment decisions depend upon reliable fundamental data and stock selec tion techniques. Indiainfoline Equity Research is proud of its reputation for, a nd we want you to find the facts that you need. Equity investment professionals routinely use our research and models as integral tools in their work. They choo se Ford Equity Research when they can clear your doubts. click for more Commodities Indiainfoline’s extension into commodities trading reconciles its strategic intent to emerge as a one-stop solutions financial intermediary. Its experience in sec urities broking has empowered it with requisite skills and technologies. The Com pany’s commodities business provides a contracyclical alternative to equities brok ing. The Company was among the first to offer the facility of commodities tradin g in India’s young commodities market (the MCX commenced operations only in 2003). Average monthly turnover on the commodity exchanges increased from Rs 0.34 bn t o Rs 20.02 bn. The commodities market has several products with different and no n-correlated cycles. On the whole, the business is fairly insulated against cycl ical gyrations in the business. click for more Mortgages During the year under review, Indiainfoline acquired a 75% stake in Moneytree Co nsultancy Services to mark its foray into the business of mortgages and other lo an products distribution. The business is still in the investing phase and at th e time of the acquisition was present only in the cities of Mumbai and Pune. The Company brings on board expertise in the loans business coupled with existing r elationships across a number of principals in the mortgage and personal loans bu sinesses. Indiainfoline now has plans to roll the business out across its pan-In dian network to provide it with a truly national scale in operations. click for more 11

Home Loans Get expert advice that suits your needs Loan against residential and commercial property Expert recommendations Easy documentation Quick processing and disbursa l No guarantor requirement click for more Personal Loans Freedom to choose from 4 flexible options to repay Expert recommendations Easy documentation Quick proc essing and disbursal No guarantor requirement click for more Invest Online Indiainfoline has made investing in Mutual funds and primary market so effortles s. All you have to do is register with us and that’s all. No paperwork no queues a nd No registration charges. INVEST IN MF Indiainfoline offers you a host of mutu al fund choices under one roof, backed by in-depth research and advice from rese arch house and tools configured as investor friendly. APPLY IN IPOs You could al so invest in Initial Public Offers (IPO’s) online without going through the hassle s of filling ANY application form/ paperwork. click for more SMS Stay connected to the market The trader of today, you are constantly on the move . But how do you stay connected to the market while on the move? Simple, subscri be to India Infoline s Stock Messaging Service and get Market on your Mobile! 12

There are three products under SMS Service: • Market on the move. • Best of the lot. • VAS (Value Added Service ) click for more Insurance An entry into this segment helped complete the client’s product basket; concurrent ly, it graduated the Company into a one-stop retail financial solutions provider . To ensure maximum reach to customers across India, we have employed a multi pr onged approach and reach out to customers via our Network, Direct and Affiliate channels. Following the opening of the sector in 1999-2000, a number of private sector insurance service providers commenced operations aggressively and helped grow the market. The Company’s entry into the insurance sector derisked the Compan y from a predominant dependence on broking and equity-linked revenues. The annui ty based income generated from insurance intermediation result in solid core rev enues across the tenure of the policy. click for more Wealth Mangement Service Imagine a financial firm with the heart and soul of a two-person organization. A world-leading wealth management company that sits down with you to understand y our needs and goals. We offer you a dedicated group for giving you the most pers onal attention at every level. 13

CAPITAL STRUCTURE as at 31.3.2007 as at 31.3.2006 A SHARE CAPITAL Authorised 80,000,000 (Previous year - 80,000,000) Equity Shares of Rs.10 each 800,000,000 Issued, Subscribed an d Paid Up 50,167,198 (Previous year - 45,100,851) Equity Shares of Rs.10 each 50 1,671,980 TOTAL 501,671,980 B RESERVESAND SURPLUS Securities premium account Ope ning balance Addition during the year Deduction during the year 800,000,000 451,008,510 451,008,510 1,124,870,894 658,823,520 1,783,694,414 206,255,007 972,256,488 -53,640,601 1,124,870,894 General reserve Opening balance Addition during the year Special Reserve Employe e stock options outstanding Less : Deferred Employee Compensation Expenses Profi t and Loss Account Minority Interest Pre-aquisition profit of Moneyline Credit P vt. Ltd. Foreign Exchange Fluctuation Reserve Total 30,000,000 53,000,000 83,000,000 18,500,000 48,375,000 -37,407,790 809,545,795 96,469 -587,955 2,705,022,995 30,000,000 30,000,000 293,556,902 -1,050,372 1,447,377,424 14

C E U YS A EW R A T Q IT H R A R N S E quityshare wa nts rra D S C R DL A S EUE ON Overdra fromB nks (S ft a ecured ag inst pledg of fixed deposits) a ing Overd ra fromB nks (S ft a ecured ag inst m rg &collaterals) a a ins L n fromOthers (S ured ag oa ec ainst pledg of sha e res) T ta o l E U S C R DL A S NEU E O N 1%O ptiona C lly onvertible B onds Non C onvertible D ebentures T ta o l 4 ,2 0 0 4 0 ,0 0 4 ,2 0 0 4 0 ,0 0 1 0 7 ,0 0 5 ,9 4 8 3 9 4 ,6 8 8 ,3 2 0 9 3 6 ,1 8 1 ,7 1 9 1 5 ,0 7 8 ,4 4 7 ,8 6 1 ,0 3 6 5 1 ,6 7 6 9 9 ,2 4 8 ,0 6 9 2 8 6 ,5 2 9 ,4 2 5 1 0 ,5 2 1 ,0 2 7 ,5 3 1 0 1 ,6 1 0 ,1 2 3 2 2 8 ,8 4 6 ,5 3 4 3 2 9 ,4 5 6 ,6 6 7 8 0 0 ,9 1 0 ,9 0 7 8 0 0 ,9 1 0 ,9 0 7 PROGRESSIVE STRATEGY At India Infoline, we expect to capitalize on this industry buoyancy through fiv e distinctive priorities: 1. Proximity to customers: Even as our broking is pred ominantly online, we recognize that customer proximity enhances his or her trust in us on the one hand and enables us to deliver superior services on the other. We expanded our branch network from 175 to 560 during the year under review for precisely this reason: to ensure that whenever our customers seek an informed, competent and honest financial services intermediary, an India Info line facilit y will never be far away. 2. Predicting precision: At India Info line, our core business lies in the accurate prediction of the stock markets. While we must con cede that nobody can predict the performance of even a stock, sector or the over all market with any precise consistency, we modestly claim to have demonstrated an ability in improving the odds and, in turn, helping our customers better thei rs. 15

3. Precise execution: Today, stocks and money worth millions move in the form of invisible bits through wires over various networks. At India Info line, we are proud to possess cutting-edge technology that ensures that the customers’ money an d securities are always secure, transactions executed with precision and custome rs receive all information support – stock quotes, charts, trade confirmation, etc . – on a real-time basis whenever they need them. 4. Proactive service: The goal o f a service provider is to respond to a customer’s query with speed, accuracy and efficiency. This is true at India Infoline with a difference; this responsivenes s is not a goal in itself; it represents the originating point in our customer r elationship cycle. We recognize that it is not only important to provide all tha t the customer requires, it is also critical to provide what he or she has been unable to articulate as well. We are delighted to state that this is now an esse ntial feature of our corporate culture, with our trade confirmation on SMS and o ur alerts on the customer s portfolio being two of a number of relevant examples . 5. Process mastery: Six years ago, India Infoline pioneered a paradigm shift i n India’s broking industry through a voluntary reduction in brokerage rates from 1 00-150 basis points to a mere 5 basis points. This inspired an industry wide mel tdown that made trading affordable for millions in the history of India’s capital market for the very first time. As an extension, our processes have now been per fected to not only deliver value-for-money but 16

also provide precise information as well as demonstrate superior risk control an d management – every time. Corporate Governance Company’s philosophy on Corporate Governance: The India Infoline Group is committe d to placing the Investor First, by continuously striving to increase the effici ency of the operations as well as the systems and processes for use of corporate resources in such a way so as to maximize the value to the stakeholders. The Gr oup aims at achieving not only the highest possible standards of legal and regul atory compliances, but also of effective management. BOARD OF DIRECTORS Directors Mr. Nirmal Jain R Venkataraman Mr. Nilesh Vikamsey Mr. Sat Pal Khattar Mr Kranti Sinha Designation Chairman and Managing Director Executive Director Independent Director Non Execu tive Director Independent Director OBJECTIVE OF THE STUDY 17

The main objective of the study is to find out the investment pattern of the inv estors in Mutual fund and Life insurance. To determine what factors influence th em while they choose a particular investment ,a particular company and in which particular scheme they prefer to invest and to find out whether they are satisfi ed with their investment decision or not INTRODUCTION TO THE STUDY Investor An investor is any party that makes an Investment. However, the term has taken o n a specific meaning in finance to describe the particular types of people and c ompanies that regularly purchase equity or debt securities for financial gain in exchange for funding an expanding company. Less frequently the term is applied to parties who purchase real estate, currency, commodity derivatives, personal p roperty, or other assets. 18

The term implies that a party purchases and holds assets in hopes of achieving c apital gain, not as a profession or for short-term income. Types of investors • Individual investors (including trusts on behalf of individuals, and umbrella co mpanies formed for two or more to pool investment funds) • • • Collectors of art, antiques, and other things of value Angel investors, either i ndividually or in groups Venture capital funds, which serve as investment collec tives on behalf of individuals, companies, pension plans, insurance reserves, or other funds. • • • • Investment banks. Businesses that make investments, either directly or via a cap tive fund Investment trusts, including real estate investment trusts Mutual fund s, hedge funds, and other funds, ownership of which may or may not be publicly t raded Investment Investment or investing is a term with several closely-related meanings in busin ess management, finance and economics, related to saving or deferring consumptio n. An asset is usually purchased, or equivalently a deposit is made in a bank, i n hopes of getting a future return or interest from it. Types of investment 19

The term "investment" is used differently in economics and in finance. Economist s refer to a real investment (such as a machine or a house), while financial eco nomists refer to a financial asset, such as money that is put into a bank or the market, which may then be used to buy a real asset. Business Management The investment decision (also known as capital budgeting) is one of the fundamen tal decisions of business management: managers determine the assets that the bus iness enterprise obtains. These assets may be physical (such as buildings or mac hinery), intangible (such as patents, software, goodwill), or financial (see bel ow). The manager must assess whether the net present value of the investment to the enterprise is positive; the net present value is calculated using the enterp rise s marginal cost of capital. Economics In economics, investment is the production per unit time of goods, which are not consumed but are to be used for future production. Examples include tangibles ( such as building a railroad or factory) and intangibles (such as a year of schoo ling or on-the-job training). In measures of national income and output, gross i nvestment I is also a component of Gross domestic product (GDP), given in the fo rmula GDP = C + I + G + NX. I is divided into non-residential investment (such a s factories) and residential investment (new houses). "Net" investment deducts d epreciation from gross investment. It is the value of the net increase in the ca pital stock per year. 20

Finance In finance, investment is buying securities or other monetary or paper (financia l) assets in the money markets or capital markets, or in fairly liquid real asse ts, such as gold, real estate, or collectibles. Valuation is the method for asse ssing whether a potential investment is worth its price. Personal Finance Within personal finance, money used to purchase shares, put in a collective inve stment scheme or used to buy any asset where there is an element of capital risk is deemed an investment. Saving within personal finance refers to money put asi de, normally on a regular basis. This distinction is important, as investment ri sk can cause a capital loss when an investment is realized; unlike saving(s) whe re the more limited risk is cash devaluing due to inflation. In many instances t he terms saving and investment are used interchangeably, which confuses this dis tinction. For example many deposit accounts are labeled as investment accounts b y banks for marketing purposes. Whether an asset is a saving(s) or an investment depends on where the money is invested: if it is cash then it is savings, if it s value can fluctuate then it is investment. RealEestate In real estate, investment is money used to purchase property for the sole purpo se of holding or leasing for income and where there is an element of capital ris k. Unlike other economic or financial investment, real estate is purchased. 21

Broad of speaking, a person can make use of his income in three alto natives. Th ey are saving, investment and expenditure. If he saves more then he will have to reduce on his expenses and vice versa. To meet the current and future financial requirement of the person, a right combination of these is essential. These few lines explain the importance of a right combination of the three activities. Th is is what we mean by investor investment pattern & thus comes the need of aware ness initiatives for this concept. An Investor has many objects for doing the in vestment some are doing investment for security purpose some are doing for high return purpose and some for tax benefits. Same income and age group people follo w different pattern of investment and to understand this pattern is very complex . Researchers try to find out the investment pattern of Investor’s in Mutual Fund & Life Insurance. Investment objective The options for investing our savings are continually increasing, yet every sing le investment vehicle can be easily categorized according to three fundamental c haracteristics - safety, income and growth - which also correspond to types of i nvestor objectives. While it is possible for an investor to have more than one o f these objectives, the success of one must come at the expense of others. Here we examine these three types of objectives, the investments that are used to ach ieve them and the ways in which investors can incorporate them in devising a str ategy. Safety Perhaps there is truth to the axiom that there is no such thing as a 22

completely safe and secure investment. Yet we can get close to ultimate safety f or our investment funds through the purchase of government-issued securities in stable economic systems, or through the purchase of the highest quality corporat e bonds issued by the economy s top companies. Such securities are arguably the best means of preserving principal while receiving a specified rate of return. T he safest investments are usually found in the money market and include such sec urities as Treasury bills (T-bills), certificates of deposit, commercial paper o r bankers acceptance slips; or in the fixed income (bond) market in the form of municipal and other government bonds, and in corporate bonds. The securities li sted above are ordered according to the typical spectrum of increasing risk and, in turn, increasing potential yield. To compensate for their higher risk, corpo rate bonds return a greater yield than T-bills. Income However, the safest investments are also the ones that are likely to have the lo west rate of income return, or yield. Investors must inevitably sacrifice a degr ee of safety if they want to increase their yields. This is the inverse relation ship between safety and yield: as yield increases, safety generally goes down, a nd vice versa. Most investors, even the most conservative-minded ones, want some level of income generation in their portfolios, even if it s just to keep up wi th the economy s rate of inflation. But maximizing income return can be an overa rching principle for a portfolio, especially for individuals who require a fixed sum from their portfolio every month. A retired person who requires a 23

certain amount of money every month is well served by holding reasonably safe as sets that provide funds over and above other income-generating assets, such as p ension plans. Growth Of Capital This discussion has thus far been concerned only with safety and yield as invest ing objectives, and has not considered the potential of other assets to provide a rate of return from an increase in value, often referred to as a capital gain. Capital gains are entirely different from yield in that they are only realized when the security is sold for a price that is higher than the price at which it was originally purchased. (Selling at a lower price is referred to as a capital loss.) Therefore, investors seeking capital gains are likely not those who need a fixed, ongoing source of investment returns from their portfolio, but rather t hose who seek the possibility of longer-term growth. Growth of capital is most c losely associated with the purchase of common stock, particularly growth securit ies, which offer low yields but considerable opportunity for increase in value. For this reason, common stock generally ranks among the most speculative of inve stments as their return depends on what will happen in an unpredictable future. Blue-chip stocks, by contrast, can potentially offer the best of all worlds by p ossessing reasonable safety, modest income and potential for growth in capital g enerated by long-term increases in corporate revenues and earnings as the compan y matures. Yet rarely is any common stock able to provide the near-absolute safe ty and Income-generation of government bonds. 24

Secondary Objectives Tax Minimization An investor may pursue certain investments in order to adopt tax minimization as part of his or her investment strategy. A highly paid executive, for example, m ay want to seek investments with favorable tax treatment in order to lessen his or her overall income tax burden. Making contributions to an IRA or other tax-sh eltered retirement plan, such as a 401k, can be an effective tax minimization st rategy. Marketability Liquidity Many of the investments we have discussed are reasonably illiquid, which means t hey cannot be immediately sold and easily converted into cash. Achieving a degre e of liquidity, however, requires the sacrifice of a certain level of income or potential for capital gains. Common stock is often considered the most liquid of investments, since it can usually be sold within a day or two of the decision t o sell. Bonds can also be fairly marketable, but some bonds are highly illiquid, or non-tradable, possessing a fixed term. Similarly, money market instruments m ay only be redeemable at the precise date at which the fixed term ends. If an in vestor seeks liquidity, money market assets and non-tradable bonds aren t likely to be held in his or her portfolio. In brief, choosing a single strategic objec tive and assigning weightings to all other possible objectives is a process that depends on such factors as the investor s temperament, his or her stage of life , marital status, family situation, and so forth. Out of the multitude of possib ilities out there, each 25

investor is sure to find an appropriate mix of investment opportunities. You nee d only be concerned with spending the appropriate amount of time and effort in f inding, studying and deciding on the opportunities that match your objectives. WHAT IS A MUTUAL FUND? A Mutual Fund is a trust that pools the savings of a number of investors who sha re a common financial goal. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciations realized are shar ed by its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securi ties at a relatively low cost. 26

TYPES OF MUTUAL FUNDS BY STRUCTURE • Open-Ended Schemes • Close-Ended Schemes • Interv al Schemes BY INVESTMENT OBJECTIVE • Growth Schemes • Income Schemes • Balanced Scheme s • Money Market Schemes OTHER SCHEMES • Tax Saving Schemes • Special Schemes Index Sc hemes Sector Specific Schemes Features that investors like in Mutual Fund 27

If mutual funds are emerging as the favorite investment vehicle, it is because o f the many advantages they have over other forms and avenues of investing, parti cularly for the investor who has limited resources available in terms of capital and ability to carry out detailed research and market monitoring. The following are the major advantages offered by mutual funds to all investors. Portfolio di versification : Mutual Funds normally invest in a well-diversified portfolio or securities. Each investor in a fund is a part owner of all of the fund’s assets. T his enables him to hold a diversified investment portfolio even with a small amo unt of investment that would otherwise require big capital. Professional managem ent ; Even if an investor has a big amount of capital available to him, he lacks the professional attitude that is generally present in the experienced fund man ager who, ensures a much better return than what an investor can manage on his o wn. Few investors have the skills and resources of their own to succeed in today’s fast moving, global and sophisticated markets. Reduction/ diversification of ri sk : An investor in a mutual fund acquires a diversified portfolio, no matter ho w small his investment. Diversification reduces the risk of loss, as compared to investing directly in one or two shares or debentures or other instruments. Whe n an investor invests directly, all the risk of potential loss is his own. A 28

fund investor also reduces his risk in another way. While investing in the pool of funds with other investors any loss on one or two securities is also shared w ith other investors. This risk reduction is one of the most important benefits o f a collective investment vehicle like the mutual fund. Reduction of transaction costs : What is true of risk is also true of the transaction costs. A direct in vestor bears all the costs of investing such as brokerage or custody of securiti es. When going through a fund, he has the benefit of economies of scale; the fun ds pay lesser costs because of larger volumes, a benefit passed on to its invest ors. Liquidity: Often, investors hold shares or bonds they cannot directly, easily and quickly sell. Investment in a mutual fund, on the ot her hand, is more liquid. An investor can liquidate the investment by selling th e units to the fund if open-end, or selling them in the market if the fund is cl osed-end, and collect funds at the end of a period specified by the mutual fund or the stock market. Convenience and flexibility : Mutual fund management companies offer many invest or services that a direct market investor cannot get. Investors can easily trans fer their holdings from one scheme to the other, get updated market information But roses have thorns as well … 29

While the benefits of investing through mutual funds far outweigh the disadvanta ges, an investor and his advisor will do well to be aware of a few shortcomings of using the mutual funds as investment vehicles. No Control over Costs : an investor in a mutual fund has any control over the overall cost of investing. He pays investment managemen t fees as long as he remains with the fund, albeit in return for the professiona l management and research. Fees are usually payable as a percentage of the value of his investments. Whether the fund value is rising or declining. A mutual fun d investor also pays fund distribution costs, which he would not incur in direct investing. However, this shortcoming only means that there is a cost to obtain the benefits of mutual fund services. However, this cost is often less than the cost of direct investing by the investors. No Tailor-made Portfolios : Investors who invest on their own can build their ow n portfolios of shares, bonds and other securities. Investing through funds mean s he delegates this decision to the fund managers. The very high-net-worth indiv iduals or large corporate investors may find this to be a constraint in achievin g their objectives. However. Most mutual funds help investors overcome this cons traint by offering families of schemes-a large number of different schemes – withi n the same fund. An investor 30

can choose from different investment plans and construct a portfolio of his choi ce.

Poor Reach : Lack of deeper distribution networks and channels is hurting the growth of the industry. This is an area of concern for t he MF industry, which has not been able to penetrate deeper into the country and has been limited to few metros. Banks still dominate : The biggest hindrance to the growth of the mutual fund in dustry lies in its inability to attract the savings of the public, which constit utes the major source of investment in the other developed countries. A large po ol of money in the savings in India is still with the state –run and private banks . The structure and organization of Mutual Funds as per SEBI guidelines is as foll ows: 31

(a) Sponsor Sponsor is the company which sets up the Mutual Fund e.g. Kothari Pioneer Mutual Fund have sponsor Pioneer Investment Management, Inc., USA and the Investment T rust Of India Ltd. (ITI). The Investment Trust Of India (Pvt.) Ltd. was establis hed in 1946 and is one of the India well known Financial Services Companies. To promote the Mutual Fund, the sponsor has to meet the criteria laid down by SEBI. The criteria broadly deal with sufficient experience, net worth, and past recor d in terms of fair dealing & integrity. Those who qualify these criteria are per mitted by SEBI to setup Mutual Funds. (b) Asset Management Company (AMC) 32

AMC manages the funds of various Schemes: AMC employs a large number of professi onal for investment and research. It plays a key role in the running of a Mutual Fund and it operates under the supervision and guidance of the trustee. For exa mple, Kothari Pioneer AMC Ltd. has been appointed as the investment manages Koth ari Pioneer Mutual Fund and operates its various schemes under the provisions of the investment Management Agreement entered into with Kothari Pioneer Mutual Fu nd on July 29,1993. The AMC can be a private or public limited company either li sted or not. The AMC may be a new or existing, should have a minimum 40 percent stake paid up in the paid-up equity of the AMC to be set up the sponsor. The min imum net worth of the AMC is stipulated at Rs. 5 crore. The Memorandum and Artic les Of Association of the AMC Company should have the approval of SEBI. AMC is a uthorized to do business, if the following condition of SEBI are fulfilled. (1) AMC, which are already existing, should have a sound track record, general reput ation and fairness in all other business transactions. (2) The directors of AMC should be persons of high repute and standing having at least 10 years of profes sional experience in the relevant fields such as portfolio management, investmen t analysis, and in financial administrator. (3) At least 50 percent of the Board of AMC should be independent director not connected with sponsoring organizatio n. 33

(4) The AMC should at all times have a minimum net worth of Rs. 5 crore. Except in the case of Bank sponsored AMC where the Prior concurrence of RBI is r equired. SEBI may withdraw the authorization granted to any AMC, if it is not se rving in the interest of investors. The board of trustees, of a Mutual Fund, wil l appoint another AMC or liquidate the Mutual Fund as may be necessary with in t here months of withdrawal. (c) Trustee The trustees are an important link in the working of a Mutual Fund. Trustees are people with long experience and who have earned a name for themselves for integ rity and excellence in their fields. It is the responsibility of the trustees to see that AMC always act in the best interest in the investors. Thus they carry the crucial responsibility of safe guarding the interest of the investors. They do this by constant monitoring of the operations of the scheme. AMC supplies all information demanded by trustees on a regular basis i.e. quarterly. Establishin g a separate trust company should carry out trusteeship functions. At least 50 p ercent of the Board of Trustee shall be independent and should not have any affi liation with the sponsoring institution or any of its subsidiaries. The trustees have to submit a six monthly report to the SEBI and an annual report to the inv estors in the fund. 34

(d) Custodian The SEBI while granting the authorization for setting up of a Mutual Fund, would also approve the custodian as part of the package. The custodian should be diff erent from the AMC. The sponsor and trustee companies cannot act as custodian. I f the sponsor has a custodian division, it can act for other Mutual Fund not set up by the sponsor. The approval of any agency as custodian would depend upon it s track record, experience, and qualify of service, computerization and other in frastructure facilities. The approval of Mutual Fund involves the approval of sp onsor, AMC, trustee and custodian all together, who are responsible for the mana gement of fund. Each scheme floated by Mutual Fund should have prior registratio n with SEBI. The AMC should prepare a proportion/letter of offer for each to dec ide the proposal within 30 days of its receipt, filing within SEBI before inviti ng public. SEBI has to decide the proposal within 30 days of its receipt, failin g which SEBI clearance is presumed. Mutual Funds are allowed to start and operat e both open-ended and close-ended schemes. History of the Indian Mutual Fund Industry The mutual fund industry in India started in 1963 with the formation of Unit Tru st of India, at the initiative of the Government of India and Reserve Bank the. The history of mutual funds in India can be broadly divided into four distinct p hases First Phase – 1964-87 Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It wa s set up by the Reserve Bank of India and functioned under the Regulatory and ad ministrative control of the Reserve Bank of India. In 1978 UTI was de-linked fro m the RBI and the Industrial Development Bank of 35

India (IDBI) took over the regulatory and administrative control in place of RBI . The first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6, 700 crores of assets under management Second Phase – 1987-1993 (Entry of Public Sector Funds) 1987 marked the entry of non- UTI, public sector mutual funds set up by public s ector banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fund e stablished in June 1987 followed by Canbank Mutual Fund (Dec 87), Punjab Nationa l Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Ju n 90), Bank of Baroda Mutual Fund (Oct 92). LIC established its mutual fund in J une 1989 while GIC had set up its mutual fund in December 1990. At the end of 19 93, the mutual fund industry had assets under management of Rs.47, 004 crores Third Phase – 1993-2003 (Entry of Private Sector Funds) With the entry of private sector funds in 1993, a new era started in the Indian mutual fund industry, giving the Indian investors a wider choice of fund familie s. Also, 1993 was the year in which the first Mutual Fund Regulations came into being, under which all mutual funds, except UTI were to be registered and govern ed. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the f irst private sector mutual fund registered in July 1993. The 1993 SEBI (Mutual F und) Regulations were substituted by a more comprehensive and revised Mutual Fun d Regulations in 1996. The industry now functions under the SEBI (Mutual Fund) R egulations 1996. 36

The number of mutual fund houses went on increasing, with many foreign mutual fu nds setting up funds in India and also the industry has witnessed several merger s and acquisitions. As at the end of January 2003, there were 33 mutual funds wi th total assets of Rs. 1,21,805 crores. The Unit Trust of India with Rs.44,541 c rores of assets under management was way ahead of other mutual funds. Fourth Phase – since February 2003 In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI w as bifurcated into two separate entities. One is the Specified Undertaking of th e Unit Trust of India with assets under management of Rs.29,835 crores as at the end of January 2003, representing broadly, the assets of US 64 scheme, assured return and certain other schemes. The Specified Undertaking of Unit Trust of Ind ia, functioning under an administrator and under the rules framed by Government of India and does not come under the purview of the Mutual Fund Regulations. The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is re gistered with SEBI and functions under the Mutual Fund Regulations. With the bif urcation of the erstwhile UTI which had in March 2000 more than Rs.76,000 crores of assets under management and with the setting up of a UTI Mutual Fund, confor ming to the SEBI Mutual Fund Regulations, and with recent mergers taking place a mong different private sector funds, the mutual fund industry has entered its cu rrent phase of consolidation and growth. As at the end of September, 2004, there were 29 funds, which manage assets of Rs.153108 crores under 421 schemes. 37

The graph shows the growth of assets under management over the years What is Insurance? Insurance, in law and economics, is a form of risk management primarily used to hedge against the risk of a contingent loss. Insurance is defined as the equitab le transfer of the risk of a potential loss, from one entity to another, in exch ange for a premium. Insurer, in economics, is the company 38

that sells the insurance. Insurance rate is a factor used to determine the amoun t, called the premium, to be charged for a certain amount of insurance coverage. Risk management, the practice of appraising and controlling risk, has evolved a s a discrete field of study and practice. Principles of insurance Commercially insurable risks typically share seven common characteristics. 1. A large number of homogeneous exposure units. The vast majority of insurance policies are provided for individual members of very large classes. Automobile insurance, for example, covered about 175 million automobil es in the United States in 2004. The existence of a large number of homogeneous exposure units allows insurers to benefit from the so-called “law of large numbers ,” which in effect states that as the number of exposure units increases, the actu al results are increasingly likely to become close to expected results. There ar e exceptions to this criterion. Lloyds of London is famous for insuring the life or health of actors, actresses and sports figures. Satellite Launch insurance c overs events that are infrequent. Large commercial property policies may insure exceptional properties for which there are no ‘homogeneous’ exposure units. Despite failing on this criterion, many exposures like these are generally considered to be insurable. 2. Definite Loss. The event that gives rise to the loss that is subject to insurance should, at least in principle, take place at a known time, in a known place, and from a known cause. The classic example is death of an insured on a l ife insurance policy. Fire, automobile accidents, and worker injuries may all ea sily meet this criterion. Other types of 39

losses may only be definite in theory. Occupational disease, for instance, may i nvolve prolonged exposure to injurious conditions where no specific time, place or cause is identifiable. Ideally, the time, place and cause of a loss should be clear enough that a reasonable person, with sufficient information, could objec tively verify all three elements. 3. Accidental Loss. The event that constitutes the trigger of a claim should be fortuitous, or at least outside the control of the beneficiary of the insurance. The loss should be ‘pure,’ in the sense that it results from an event for which there is only the opportunity for cost. Events that contain speculative e lements, such as ordinary business risks, are generally not considered insurable . 4. Large Loss. The size of the loss must be meaningful from the perspective of the insured. Insurance premiums need to cover both the expected c ost of losses, plus the cost of issuing and administering the policy, adjusting losses, and supplying the capital needed to reasonably assure that the insurer w ill be able to pay claims. For small losses these latter costs may be several ti mes the size of the expected cost of losses. There is little point in paying suc h costs unless the protection offered has real value to a buyer. 5. Affordable Premium. If the likelihood of an insured event is so high, or the cost of the event so large, that the resulting premium is large rel ative to the amount of protection offered, it is not likely that anyone will buy insurance, even if on offer. Further, as the accounting profession formally rec ognizes in financial accounting standards (See 40

FAS 113 for example), the premium cannot be so large that there is not a reasona ble chance of a significant loss to the insurer. If there is no such chance of l oss, the transaction may have the form of insurance, but not the substance. 6. Calculable Loss. There are two elements that must be at least estimate able, if not formally calculable: the probability of loss, and the atte ndant cost. Probability of loss is generally an empirical exercise, while cost h as more to do with the ability of a reasonable person in possession of a copy of the insurance policy and a proof of loss associated with a claim presented unde r that policy to make a reasonably definite and objective evaluation of the amou nt of the loss recoverable as a result of the claim. 7. Limited risk of catastrophically large losses. The essential risk is often aggregation. If the same event can cause losses to numerous policy holders of the same insurer, the ability of that insurer to issue policies becom es constrained, not by factors surrounding the individual characteristics of a g iven policyholder, but by the factors surrounding the sum of all policyholders s o exposed. Typically, insurers prefer to limit their exposure to a loss from a s ingle event to some small portion of their capital base, on the order of 5%. Whe re the loss can be aggregated, or an individual policy could produce exceptional ly large claims, the capital constraint will restrict an insurers appetite for a dditional policyholders. The classic example is earthquake insurance, where the ability of an underwriter to issue a new policy depends on the number and size o f the policies that it has already underwritten. Wind insurance in hurricane zon es, particularly 41

along coastlines, is another example of this phenomenon. In extreme cases, the a ggregation can affect the entire industry, since the combined capital of insurer s and reinsures can be small compared to the needs of potential policyholders in areas exposed to aggregation risk. In commercial fire insurance it is possible to find single properties whose total exposed value is well in excess of any ind ividual insurer’s capital constraint. Such properties are generally shared among s everal insurers, or are insured by a single insurer who syndicates the risk into the reinsurance market. Why Life Insurance? You think twice before taking the plunge into buying insurance. Is buying insura nce a necessity now? Spending an extra amount as premium at regular intervals where you do not see immediate benefits does not seem a necessity at the moment. Well you could be wrong. Buying Insurance cannot be compared with any other for m of investment. Insurance gives you a life long benefit and the returns will de finitely come but only when you need it the most i.e. at the right time. Besides buying insurance early in life is one of the wise decisions you could take. Bec ause the premium you would be paying would be comparatively lower. Insurance is not about how much more it can offer you when the stock market is at its peak. I t may not be an attractive investment option. But weigh the pros and cons and co nsider how much more it offers at a small price. 42

Most important of all it provides you with that unique sense of security that no other form of investment provides. It gives you a sense of financial support es pecially during that time of crisis irrespective of the fluctuations in the stoc k market. Insurance provides for your career goals right from your childhood yea rs. If the earning member of the family is no more your child s educational need s will not suffer. In fact his higher education too will be provided for. You ne ed not spend sleepless nights thinking about how to save for your child s marria ge. Life Insurance will take care of that typical once-in-a-life-time spending o n marriages. An accident or a disability may be devastating but an insurance pol icy can be of utmost support for the family during such times too. Besides it pr ovides for additional benefits such as bonuses. You need not worry about your re tirement years. The rising prices, taxes, and your lifestyle will be taken care of easily. And you can relax and spend your old age in comfort and peace. Life i nsurance today plays a major role in ones life at various stages. Considering th e benefits it offers one cannot but give a thought to buying an insurance policy at the earliest. Need for Life Insurance The need for life insurance comes from the need to safeguard our family. If you care for your family’s needs you will definitely consider insurance. 43

Today insurance has become even more important due to the disintegration of the prevalent joint family system, a system in which a number of generations co-exis ted in harmony, a system in which a sense of financial security was always there as there were more earning members. Times have changed and the nuclear family h as emerged. Apart from other pitfalls of a nuclear family, a high sense of insec urity is observed in it today besides, the family has shrunk. Needs are increasi ng with time and fulfillment of these needs is a big question mark. Insurance pr ovides a sense of security to the income earner as also to the family. Buying in surance frees the individual from unnecessary financial burden that can otherwis e make him spend sleepless nights. The individual has a sense of consolation tha t he has something to fall back on. From the very beginning of your life, to you r retirement age insurance can take care of all your needs. Your child needs goo d education to mould him into a good citizen. After his schooling he needs to go for higher studies, to gain a professional edge over the others - a necessity i n this age where cutthroat competition is the rule. His career needs have to be fulfilled. Six tips for investing in life insurance 1. Understand Why You Need It: - While most people may need life insurance at so me point in their life, don t buy a policy just because you heard it was a good idea. Life insurance is designed to provide families with financial security in the event of the death of a spouse or parent. Life insurance protection can help pay for mortgages, a college education, help to fund retirement, provide charit able bequests and of course is a key element 44

in estate planning. In short, if others depend on your income for support, you s hould strongly consider life insurance. Even if you don t have any of these need s immediately, you still may want to consider purchasing a small "starter" polic y, if you anticipate you will have them in the future. The reason: the younger y ou are, the less expensive life insurance will be. 2. Determine the Amount of Co verage You Need: - The amount of money your family or heirs will receive after y our death is called a death benefit. To determine the proper amount of life insu rance an online calculator, like the one available at this site, can be helpful. You can also get a ballpark figure using any number of formulas. The easiest wa y is to simply take your annual salary and multiply by 8. A more detailed method is to add up the monthly expense your family will incur after your death. Remem ber to include the one-time expenses at death and the ongoing expenses such as a mortgage or school bills. Take the ongoing expenses and divide by . 07.That ind icates you ll want a lump sum of money earning approximately 7% each year to pay those ongoing expenses. Add to that amount any money you ll need to cover one-t ime expenses and you ll have a rough estimate of the amount of life insurance yo u need. As useful as calculators and rough estimates are, there are some things they don t do. They cannot provide you with any final answers. Calculators only allow you to perform "hypothetically," recalculating and generating new results as you make and input new assumptions. Using these tools and educating yourself on the workings of life insurance and other financial products, however, can hel p you feel more comfortable when discussing your needs with such professionals a s a New York Life agent. 45

3. Find the Right Type of Policy:-Once you ve got an estimate of how much insura nce you ll need, it s time to think about the type of policy that best fits your needs. Today life insurance comes in many varieties, but there are four basic t ype’s term, whole life, universal life, and variable life. As a first-time buyer, one will more than likely fit your needs. .4. Look at the Quality of the Company: - An insurance policy is only as good as the company that backs it. You want to know for certain that the company that issues your policy will be around to service it and eventually pay the dea th claim. To help you discern the strongest companies, there are several ratings agencies that rate insurance companies on the quality of their fiscal fitness, quality of investments, and overall financial soundness. A credit rating represe nts an independent assessment of the insurer s ability to pay its claims on time and meet all its other financial obligations, the bottom line for any life insu rance company. 5. Consult an Agent: - Agents provide an invaluable service. First, an agent can help you factor in the other "human elements into your insurance equations to help you determine the right amount of insurance. The relationship you develop w ith an agent can last a lifetime. Second, an agent can help you update your cove rage as your needs change. They can help you guide you through a lifetime of fin ancial decisions, giving you one less thing to worry about. 6. Increase Your Voc abulary: - Any discussion of insurance will probably include words such as cash value, premium, dividends, death benefit and more. To discuss life insurance kno wledgeably, it will help to understand the terms. Below is a brief summary of so me common terms. This site offers a complete glossary of insurance terms. 46

Literature Review. The literature review includes the academic books, journals, internet access, ma gazines etc. Business Statistics by “S.P Gupta &M.P. Gupta”- The information regarding the statis tical tools and their limitations in different fields the research is given in t his section. This section explains why to use correlation and what are the 47

situations in which correlation can be used, and what does correlation means. Research Methodology by “C.R. Kothari” The information regarding the basics of resea rch and research methodology , what are the different types of research designs, what is problem statement, what are the sources of data collection and what are the methods of data collection is given in this section Financial Management by “I.M. Pandey”- The information regarding nature of financial management, portfolio management, risk-return relationship,options,derivatives and valuation of shares have been understood from this book. WORK BOOK by “Association Of Mutual Funda In India”-The information about the basic knowledge and working of mutual funds in I ndia is taken from this book.

RESEARCH METHODOLOGY Research is a systematic and continues method of defining a problem, collecting the facts and analyzing them, reaching conclusion forming generalizations. Resea rch methodology is a way to systematically solve the problem. It may be understo od has a science of studying how research is done scientifically. In it we study the various steps that all generally adopted by a researcher in studying his re search problem along with the logic behind them. 48

The scope of research methodology is wider than that of research method. Thus wh en we talk of research methodology we not only talk of research methods but also consider the logic behind the method we use in the context of our research stud y and explain why we are using a particular method. So we should consider the fo llowing steps in research methodology: Problem statement Objective of study Rese arch design Data collection Sample design Statistical tool Limitation of study PROBLEM STATEMENT The research problems, in general refers to sum difficulty with a researcher exp erience in the contest of either a particular a theoretical situation and want t o obtain a salutation for same, there are so many investment options available f or the investors, how they invest or choose a particular investment option and w hat factor they consider more for investing or choosing a particular investment option and also to find out are they satisfied with their investment decision. 49

RESEARCH OBJECTIVE • To understand the investor pattern of investment • To find out the difficulties of investors while investing. • To find out that which is more popular among investo r between Life Insurance & Mutual Fund. • To find out that are investor satisfied with their investment decision or not. RESEARCH DESIGN A research design is the arrangement of the conditions for the collections and a nalysis of the data in a manner that aims to combine relevance to the research p urpose with economy in procedure. In fact, the research design is the conceptual structure within which research is conducted; it constitutes the blue print of the collection, measurement and analysis of the data. As search design includes an outline of what the researcher will do from writing the hypothesis and its op erational implication to the final analysis of data. I used descriptive research design in this project. The research design focus on the following . o What is the study about? o Why is the study being made? o Where will the study be carrie d out? o What type of data is required? 50

o Where can be required data be found? o What period of time will the study incl ude? o What will be sample design? o What techniques of data collection will be used? o How will the data be analyzed? o In what style will the report be prepar ed? DATA COLLECTION The task of data collection is begins after a research problem has been defined and research designed/ plan chalked out. Data collection is to gather the data f rom the population. The data can be collected of two types: Primary data Seconda ry data Primary data The Primary data are those, which are collected afresh and for the first time, a nd thus happened to be original in character. Methods of collection of Primary data are as follows: o Interview o Questionnair e Secondary data The Secondary data are those which have already been collected by some one else and which have already been passed through the statistical tool. Methods of coll ection of Secondary data are Journals, Websites and books. SAMPLE DESIGN 51

A sample design is a definite plan for obtaining a sample from a given populatio n. It refers to the technique or the procedure and the researcher would adopt in selecting items of sample. Sample design may as well lay down the number of ite ms to be included in the sample i.e. the size of the sample. Sample design is de termined before data are collected. Sapling area Sample Size Sampling Technique –C handigarh –100 - Non-Probability 52

STATISTICAL TOOL Introduction In our day-to-day life, we find many examples when a mutual relationship exists between two variables i.e. with fall or rise in the value of one variable, the f all or rise ay take place in the value of other variable. For example, price of a commodity rises as the demand for the commodity goes up. Upto a certain time-p eriod, weight of a person increases with the increase in the age. Similarly, the temperature rises with the rise in the sunlight. These facts indicate that thre e is certainly some mutual relationship that exists between the demand for a com modity and its price, the age of a person and his weight, and the sunlight and t emperature. The correlation refers to the statistical technique used in measurin g the closeness of the relationship between the variables. Definition of Correlation Some important definitions of correlation are given below: Correlation analysis deals with the association between two or ore variables. “Simpson and Kafka” If two or ore quantities vary in sympathy, so that movement in one tend to be accompani ed by corresponding movements in the other, then they are said to be correlated. “Conner” Correlation analysis attempts to determine the degree of relationship betw een variables. “Ya-Lun-Chou” 53

Spearman’s Rank Correlation Method This method of determining correlation was propounded by Prof. Spearman in 1984. By this method correlation between qualitative data namely beauty, honesty, int elligence etc, can be computed. Such types of variables can be assigned ranks bu t their quantitative measurement is not possible. Thus, rank correlation method is used in such cases. The following is the formula for the computation of rank correlation coefficient: R = 1 - 6∑D2 or 2 N (N -1) 1- 6∑D2 (N3-N) Where R = Rank coefficient of correlation, D= Difference between two ranks (R1-R 2) N= Number of pair of observation. The value of rank correlation always lies b etween –1 and +1. This method can be studied in the following three different situ ations: 1. When ranks are given 2. When ranks are not given. 3. When equal or ti ed ranks. 54

What are the reasons for choosing a particular company for investing in life ins urance and mutual funds? Agent Brand name Track record Life Insurance 7 37 19 Rank R1 3 1 2 Mutual Fund 12 33 30 Rank R2 3 1 2 (D=R1-R2) 2 0 0 0 ∑D2=0 R = 1 - 6∑D2 or 2 N (N -1) 1- 6.0 =1 (33-3) 1- 6∑D2 (N3-N) Hence there is a complete agreement in the order of ranks and the ranks are in s ame direction. 55

LIMITATIONS In every research there are chances of errors and constraints. I have found foll owing limitations in my study. Sample size, which I have taken, is very small, o n the basis of which efficient decision can’t be taken. Respondents were biased in their responses because they were more in favor of th e brand they were using. Co-operation from respondents, this was the major problem. Most of the people we re at their work. So they did not have enough time to give all replies. The popu lation surveyed was not open to questions related to their personal income i.e. either they fell hesitant in disclosing the facts about their incomes or they we re simply not interested. The respondents were not in the favor to disclose their address and contact numb er because they believed that they would be contacted through telemarketing. 56

Results and Discussions/Findings Q:Do you invest? 100 90 80 No. of responses 70 60 50 40 30 20 10 0 Yes Response No Q: If not, what is the reason for that? 8 7 No. of responses 6 5 4 3 2 1 0 Lack of knowledge Lack of interest Inadequate funds Reasons 57

Q:What do you perceive first while investing? 45 40 No. of responses 35 30 25 20 15 10 5 0 1 Perception Security High returns& Tax benefits Saving&Tax benefits Saving High returns Tax benefits Q: Do you invest in LIFE INSURANCE or MUTUAL FUNDS? 50 45 40 No of responses 35 30 25 20 15 10 5 0 Life Insurance Mutual Funds Both 58

Q: What are the reasons for investing in LIFE INSURANCE? 30 Security No. of responses 25 20 15 10 5 0 1 Reasons Saving Tax benefits Secur ity&Tax benefits Saving&Tax benefits Q:Give the name of company you prefer for investing in LIFE INSURANCE? 35 No.of responses 30 25 20 15 10 5 0 1 Company ICICI Prudential LIC Birla Sunli fe Reliance Insurance Others 59

Q:What are the reasons for choosing a particular company for life insurance? 40 35 No.of responses 30 25 20 15 10 5 0 Agent Brand name Reason Track record Q:In which plan do you invest your money in LI? 35 30 No. of responses 25 20 15 10 5 0 Money back Endowment plan Scheme ULIPS 60

Q:Are you satisfied with your decision of investing in LI? 60 50 No. of responses 40 30 20 10 0 Highly satisfied Satisfied Moderate Q:What are the reasons for investment in Mutual Fund? 30 No. of responses 25 20 15 10 Saving 5 0 1 Reasons High returns&Diversified po rtfolio Tax benefits&Saving Diversified portfolio Tax benefits High returns 61

Q:Which company do you prefer for investing in MF ? 40 No. of responses 35 30 25 20 15 10 5 0 1 Name of company UT MF I Birla Sunlif e MF Prudential ICICI Reliance MF Others Q: What are the reasons for choosing a particular company? 35 30 No. of responses 25 20 15 10 5 0 Agent Brand name Reasons Track record 62

Q: In which scheme do you invest? 45 40 No. of responses 35 30 25 20 15 10 5 0 1 Scheme Equity Balanced Income Sec tor specific Tax saving Q:Are you satisfied with your decision of investing in MF? 60 50 No. of responses 40 30 20 10 0 Highly satisfied Satisfied Satisfaction lev el Moderate 63

RECOMMENDATIONS • Investors should make the investment with proper planning keeping in mind their investment objectives. • Investors should read the offer document carefully before investing in any scheme of the mutual funds and life insurance. • Investors should also consults the brokers or agents to seek information and adv ice but their decision should not merely be based on agents advice rather the de cision should be based on their careful investigation. • The investors should select a particular investment option on basis of their nee d and risk tolerance. • The investors should diversify their investment portfolio in order to reduce the risk. • The investors should continuously monitor their inv estments. • The companies should provide all relevant information to the investors. 64

EXECUTIVE SUMMARY Management ideas without any action based on them mean nothing. That is why prac tical experience is vital for any management studies. Theoretical studies in the class room are not sufficient to understand the functioning climate and the rea l problems coming in the way of management. So, practical exposures are indispen sable to such courses. Thus, practical experience acts as a supplement to the cl assroom studies. This report deals with “Investment Pattern of Investor’s in Mutual Fund & Life Insurance- A case study of Chandigarh” has been completed. I have lear nt a lot of new things which could never been learnt from theory classes. Main o bjectives of this project is to find out the investment pattern of investor’s in M utual Fund & Life Insurance, to find out what factors influence them more to cho ose a particular investment option, particular company & to find out whether the y are satisfied with their investment decision or not. In this study I used nonprobability sampling technique and collected data from primary and secondary sou rce. In this study descriptive research design is used. Area of study is Chandig arh. It is find out that out of 100 people 89 invest their money while 11 do not invest at all because of 65

inadequate funds, lack of interest and lack of knowledge. Majority of people inv est their money in both Mutual Funds & Life insurance .Majority of people take t he investment decision on the basis of brand name and track record and are satis fied from their decision. 66

BIBLIOGRAPHY Books:Financial Management 9th edition by “I.M. Pandey.” Vicas publication house pvt ltd. Research Methodology 2nd edition by “C.R. Kothari” .New age international publ ication, Business Statistics 14th edition by “S.P. Gupta &M.P.Gupta.”Sultan Chand & Sons publication. Workbook 3rd edition May 2006 by “Association of Mutual Funds in India.” Websites:http://www.insurance.com/LifeArticles.aspx http://www.amfiindia.com http://www.i nvestopedia.com/articles/basics/04/032604.asp http://finance.indiamart.com/taxat ion/income_tax/tax_plan ning.html http://www.indiainfoline ANNEXURE 67

Investment Pattern of Investor’s in Mutual Fund & Life Insurance – a Case Study of C handigarh Name of Investor:Place:Occupation:Annual Income (in Rs.) Service……………….. Business……………… Oth tails: Q:- Do you invest? Yes Q:- If not, why? What is the reason for that? Lack of Knowledge Full of Risks Q:- What do you perceive first while investing? Savi ng Tax Benefits Others Q:-Arrange the following investment option in descending order according to your preferences while making an investment? Life Insurance B ank Deposits Equity Mutual Fund Govt. Bonds High Returns Security Lack of Intere st Inadequate Funds No Service/Business/Other Sex:- Male/Female Age(In Yrs.). 68

Q:-Do, You invest in Life Insurance or in Mutual funds? LI MF Both Q: What are the reasons for investment in Life Insurance? Security Tax benefits Others Q:- Give the name of the company you prefer for investing in life insuran ce? ICICI Prudential Birla Sun Life Life Insurance Company Others Savings High R eturn Q:- What are the reasons for choosing a particular company for life insurance? B roker/Agent Track Record Q: In which plan do you invest your money? Money back U LIPS Q;- Are you satisfied with the overall decision of our investment in life i nsurance? Highly Satisfied Moderate Highly Unsatisfied Q:- What are the reasons for investment in Mutual Fund? Tax Benefits Diversified Portfolio High Return Sa ving Satisfied Unsatisfied No Reply Endowment plan Brand Name Others 69

Q:-Which company do you prefer for investing in Mutual Fund? UTI Mutual Fund Pru dential ICICI Birla Sun Life Mutual Fund Others Q:- What are the reasons for investing/ choosing a particular company for invest ing in Mutual Fund? Broker/Agent Track Record Q: In which scheme do you invest? Equity specific scheme Income scheme Sector specific scheme Balanced scheme Inde x scheme Tax saving scheme Brand Name Q: - Are you satisfied with your decision of investing in Mutual Fund? Highly Sa tisfied Moderate Highly Unsatisfied Satisfied Unsatisfied Place: Date: Respondent Signature 70

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