project on selling methods of life insurance policies

ACKNOWLEDGEMENTThis project has been finished towards partial fulfillment of MBA of ICFAI Business

School.

I feel it expedient to express my profound indebtedness and sincere thanks to

Cluster head of the organization Mr. Mohit, Company guide Mr. Lokesh Arora and

Guide Prof. Dilraj Kaur Bhatia, as they gave me a chance to write a report and I

chose this topic.

I acknowledge with deep sense of gratitude for their support & invaluable

suggestions. It was only because of them that this project had been a learning

experience for me.

I thank all the persons who co-operated with me in giving their valuable points

from time to time and all those persons who participated in this project by way of

questionnaires or personal interviews. This project would also help me in the

future as I learn about the most speedily booming sector of Economy which has

the capacity to India from a developing country to a revolutionized developed

country.

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Table of Contents1. Acknowledgement 1

2. Abstract 4

3. Introduction 5

4. (Part-1): Selling Of Life Insurance 6

4.1 Direct selling Method 6

4.2 Telecalling Method 9

4.3 Internet Method 13

4.4 Survey Method 16

4.5 Canopy Method 18

4.6 Event 21

5. (Part-2): Analysis of Wealth Management Instruments 24

5.1 Definition of Wealth Management 24

5.2 Analysis of Wealth Management Instruments 25

5.2.1 Mutual Fund 25

5.2.2 Real Estate (Property) 28

5.2.3 Unit Linked Insurance Plans 31

5.2.4 Stock (Equity) 35

5.2.5 Portfolio Management Services (PMS) 37

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5.2.6 Structured Savings Products 40

5.2.7 Commodities 45

5.3. Scope of Wealth Management in India 46

6. (Part-3) Scope of Wealth Management in Middle Class 48

6.1 Conclusion 64

7. (Part-4) Mutual Fund and Inclusiveness 66

7.1 Conclusion 70

8. Appendices 71

9. References 76

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ABSTRACTThis report is basically divided into Four Parts.

Part One: Selling of life insurance

Salesmanship offer adventure, excitement and the competition we all need to lead a full and enjoyable life. During course of this period I have used six methods of selling which are- Direct selling, Tele-calling, Internet, Canopy, Survey, and Event. These are explained in this report with their benefits, limitations, learning’s and suggestions if any.

The second part of the report is about wealth management that is an advanced type of financial planning that provides High net worth individuals and families with private banking, estate planning, asset management, legal resources, and investment management, with the goal of sustaining and growing long-term wealth. The various instruments under it are equity, mutual fund, real estate, equity linked instruments, Portfolio Management Services. I have analyzed all of these instruments in this report and share my ideas regarding what are the best instruments in various conditions.

The third part of the report is about scope of wealth management in middle class. For this part I did survey to find out how many people are aware about wealth management, how many of them taking wealth management companies services and how many are willing to take services of wealth management company for the minimal fee of Rs. 365 annually.

The fourth part of the report speaks about Mutual Fund and Inclusiveness. Inclusiveness means not excluding any section of society. In this part I tried to find out can mutual fund include lower income section of society to provide the benefits of growth?

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http://en.wikipedia.org/wiki/Investment_management

http://en.wikipedia.org/wiki/Asset_management

http://en.wikipedia.org/wiki/Estate_planning

http://en.wikipedia.org/wiki/Private_banking

http://en.wikipedia.org/wiki/High_net_worth_individual

http://en.wikipedia.org/wiki/Financial_planning

IntroductionThis first quarter of the report is aimed at to find out which method of insurance selling is best in which situations and which the most effective method of selling is and is there any scope of improvement in implementation of method to improve its efficiency. So to achieve the desired aim of report each of the methods have been used by me for the considerable period of time to judge each of the method. The suggestions made are on my personal experience while implementing each of the methods and the only limitation I found is lack of time and trying methods under different conditions.

The second quarter of the report is aimed at to understand what wealth management is, different instruments under it and suitability of each of the method with different people. Each of the instruments has been analyzed to frame who should invest after consideration benefits and limitation of each of the instruments.

The third quarter of the report is aimed to understand how big the scope of wealth management in middle class, What the middle class understand by wealth management and would they like to take a services of wealth management companies. For this a survey is done to frame out the scope of wealth management.

The Last quarter of the report is aimed to know can mutual fund improve the standards of lower income class of people to make them inclusive to the growth of country. It is also aimed to know whether they have capacity to invest in mutual fund and what can be done to make mutual fund accessible to them so they could also bear the fruits of higher growth.

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PART-1

SELLING OF LIFE INSURANCE

Sales methods:

1) Direct Selling:

Under this method, sales leads are generated by telesales girls and I was required to visit the client and sale the insurance. This was a scientifically correct method as according to one research people like much to talk to opposite sex on phone than to people of same sex. As in India mainly financial decision making power vests with male so it is the scientifically correct that girls make calls and boys are required to go to field as they are more mobile and it is risky to send girl alone to field.

Peculiarities of this Sales Method:

The success of this system depends upon team work as lead cannot be succeed if there is any mistake in service to customer either on behalf of telecalling girl or field boy

A good coordination is required between telecallers and field boys Telecallers share a grand responsibility as she is the first person from organization with

whom client contacts. She is to establish a good image of her and organization. But sales are not closed at telecalling level only. Second responsibility of carrying that

good image is lie with the field boy he is required to persist with the impression that is developed by telecallers.

My role:

I work under this method for 10 days and I visit 20 people during this period. According to system I was required to visit clients whose leads are generated by telecallers.

Learning’s:

Little things matters most:I learned that how little things such as your dressing sense, shoes are polished or not, whether your hairs are well combed or not matters a lot as these things create first

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impression about the person selling in the mind of client. As before we sell the product we are required to sell our self.

Product knowledge is not enough: I learned that it is not enough that you know well about the product and you explains benefits of the product clearly as you are required to emphasis more on the benefits to the client rather than what product is all about as it is the benefits in which client has interest and not in what my product is all about. So I realize the line form the book ‘sell your way to success’ by Alfred tack that “don’t sell the steak, sell the sizzle”

Importance of sales story:I also learned that there must be a sequence in which you are to present while selling the product. As I was selling in my own way earlier but I didn’t get any success but later on after reading the book ‘SELL YOUR WAY TO SUCCESS’ as suggested by my company mentor I understand the importance of sequence in which sales story is to be presented and according to quotes of the book the following is the sales sequence that should be followed:

Step 1- The approach:

The approach should be such which hold the attention of the client as it is the first few words you spoke that counts most.

Step 2- Creation of interest:

It is not enough that you have raise attention by a good approach but you are required to sustain that story by creating interest of customer and his interest can be created only through the benefits he will avail by product. The following are the main reasons because of which anybody purchases any good:

I. Gain of moneyII. Caution: fear of prospect of losing something

III. Utility value: utility of productIV. PrideV. Sentiment

VI. PleasureVII. Benefits to health

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Step 3- Creation of confidence:

Now you have gain the attention of customer and you have created the interest but still it is not enough to sell the product now you got to create confidence about you and your organization in the mind of customer because it is well proved customer wont purchase or listen to you unless he has confidence in whatever you are saying so it is very important to create confidence

Step 4- The product:

Here at this step you got to sell the product by emphasizing upon the advantages the product will bring to the customer.

Step 5- Creation of desire to buy:

In this step you are required to tell A Verbal Proof Story (A.V.P.S.) a story of which actually happened to somebody else for using or not using the product.

Step 6: the Close- after you have gone through all the steps from the approach to creation of desire to buy, you should not stop yourself you should go for closing the sale directly moving form creation of desire to straight for the order as once decision is delayed all work done can result in lost state.

So, on the basis of these steps I developed a sales story which results in sales for me.

But I also found some limitation regarding the above system applied in JRG Insurance Broking P Ltd. Which are as follows……

The target of TELECALLERS is to generate at least 4 leads daily but the quality of leads is not matter as I found that TELECALLERS just concentrate on that they are to generate four leads whom with field executives can meet. They didn’t take into consideration whether the customer is genuinely I interested to purchase the product or not whether he has required documents or not but they are supposed to verify these things also.

Sometimes telecallers even go for false promises regarding utility of product just to make a lead which result in contradictory information given by telecallling girls and field boy

So all this limitation results in fake calls, not interested calls which undermine the performance of field boys

I also find that some of the telecalling and field boys also lacks product knowledge

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Some times while calling customers they forget some of the highlights of the product that are needed to be told which also affect their performance

Suggestions:

Target of telecallers should be quality calls and they should be explained what are the things to verify to judge quality of their lead.

I observed that telecallers indulge in non quality leads as they fear of non completion of their targets so they should be motivated to achieve targets but if they don’t achieve once a while they shouldn’t be cursed and if they fail to achieve this targets on regular basis then on first basis it should be understand why they are unable to achieve their targets

They should be provided a standard sales script which is based on the basis of rule AIDA that is attention interest, desire, action. A standard script based on this will improve their performance and will also take out the possibility of missing something while talking to customer

Any news related to their industry which they can be used by them should be explained by senior on regular basis to improve their skills

In office, telecallers should be provided daily NAV of product, Share market position to update them and improve quality of their calls

They should also be explained uses of annuity table and be provided the same so that they could solve the investment queries of customers skillfully.

2) Telecalling:

Under this method I was to call 100 people daily for a week. I called 30% of them using life insurance pitch. 30% of them on investment pitch and 40% of them on financial planning pitch.

I developed sales script for each of the pitches that are insurance pitch, investment pitch and financial planning pitch on the basis of formula AIDA (Attention, Interest, Desire, and Action). I also call without sales script in 25% of cases to understand the usefulness of sales script.

Sales pitches:

Investment Sales Pitch:

Good morning sir, am I talking to Mr. XYZ? This is Ravi from Bharti Axa. I have called you regarding the newly launched investment plan which can give you return of more than double which you earn through banks.

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Is this the right time to talk to you?

The product is Aspire Life in which you are required to deposit money for a minimum period of 7 years. Suppose you invest Rs. 30000 for a period of 7 years at the end of 20 years you will get around Rs. 3000000. Plus you will get free life insurance cover of 15 times of your annual premium. Plus you will get a guaranteed amount of 160% of your first year premium. Moreover it will provide you flexibility as if you need money in between you can withdraw money in between but your plan will continue.

The biggest benefits of all is that whatever the premium you pay is tax deductible under Section 80C of Income Tax Act,1961 and the amount you get at maturity or amount you withdraw in between is totally tax free.

So if you like the plan I will like to meet you to explain the plan in detail and collect documents.

Insurance Sales Pitch:

Good morning sir, am I talking to Mr. XYZ, This is Ravi from Bharti Axa Life Insurance Company ltd. I have called you regarding the newly launched insurance cum investment plan which can give you return of more than double of what you earn through banks plus it provides you insurance cover for financial security.

If you have time I would like to explain about the plan.

The product is Aspire Life in which you are required to deposit money for a minimum period of 7 years. Suppose you invest Rs. 30000 for a period of 7 years at the end of 20 years you will get around Rs. 3000000. Plus you will get free life insurance cover of 15 times of your annual premium with no allocation charges and you will also get free guaranteed gift of 160% of your first year premium. Moreover it will provide you flexibility as if you need money in between you can withdraw money in between but your plan will continue.

The biggest benefits of all is that whatever the premium you pay is tax deductible under Section 80C of Income Tax Act,1961 and the amount you get at maturity or amount you withdraw in between is totally tax free.

We have some other products also so I will like to meet you so that I can offer you best product according to your needs.

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Financial Planning Pitch:

Good morning sir, this is Ravi from JRG wealth Management Company. We provide financial planning services to help people to secure their future and live their dreams without any financial difficulties.

Suppose you need Rs. 1000000 at the end of 10 years, we advised on the basis of your income how you should invest your money to achieve this target.

Can we assist you in living your dreams?

It is not possible me to do your financial planning on phone so I will like to meet you. Please tell me your age, occupation, income, family status so that I could think over your case in advance before meeting you and offer you best of financial planning.

Findings of this method:

I try to find out under which pitch customer listen most. I called on 500 numbers but could contact to only 300 people as data was old.

Method Calls Listen %

Life Insurance pitch 88 7 7.95

Investment pitch 100 14 14

Financial planning pitch 112 51 45.53

So I find out that under financial planning pitch people listen most. The success rate was 45.53% under this method so it was the most successful method.

Challenges to this method:

This method will provide result only if sales field executive are trained to articulate their sales story in financial planning way.

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Sales field are needed to be trained for more products and some techniques to understand customer needs although they can still focus on Aspire Life- the most revenue generating product for us.

As our OCR lacks experience and deep knowledge so our most experienced and quality work force that is Branch and Territory Managers should teach OCR how to tackle customer with this pitch and how to make customer belief that Aspire Life cater to different needs.

OCR should also be provided some regular knowledge about markets and different financial instruments available in market.

A little effort of mentioning Daily NAVs And Sensex on notice board in branch should also be done as it improves quality of OCRs

Observations:

I find out that people from middle class or people with less income and low designation listen more on all methods compared to people with high income and high designations.

there were some people who were interested under Financial Planning pitch but do lacks money as this moment so they have promised to call whenever they wished to invest

I observed that mood also affects the success of call. No. of people who disconnected phone or do not listen my full sales script was highest

in case of life insurance pitch and lowest in case of financial planning pitch. I also observed that no. of people who give me time to meet was highest in case of

financial planning pitch. My conversion rate was less when I was calling without script when compared to with

script. I also observed that sales story for financial planning should be different from insurance

pitch as in that case emphasis should be on understanding the needs of customer and then suggesting product according to their needs but in case of insurance pitch our emphasis should be on benefits of having policy.

Limitation of method:

Data: there were some people on data which don’t have much capacity to invest. Quality of sales pitch can also affect calls I feel girls making calls could increase the success rate of people listening calls.

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Suggestions:

Sales script must be used as it improves success rate Financial planning pitch is most successful as that gives the person impression that his

needs are judged and product suggested is tailor made to his needs Sales script must be according to AIDA rule

Learning’s:

Importance of sales script. Need of patience Smile must for calling as a dull voice don’t attract the listener Phone call manners must to be followed while making call

3) Internet: Under this method I develop an advertisement on the financial planning pitch and send it to 100 persons on their e -mail id for a week. Advertisement was again developed on the basis of AIDA formula.

Findings:

The response I get was nothing as I got only 4 responses and only one out of these 4 was positive and that too didn’t follow up.

The message I sent was….

Dear sir/madam,

A friend to assist you in achieving your dreams.

Plz find the attached document.

And attached document was below shown advertisement.

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Dear sir/madam,

A friend to assist you in achieving your dreams.

Plz find the attached document.

The advertisement

“Sapne sabke apne apne but to achieve them, we all need money”

Hello,

Your dream could be anything owning a lavish house, education in foreign, big Mercedes car etc.

You work very hard to live these dreams.

But does your money works that hard?

If, no?

And money is stopping you to live these dreams,

Don’t worry just contact us we can help you to live these dreams through good financial planning.

Ravi Gumber

E-mail: [email protected]

Mobile: 9873801272

Responses got:

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mailto:[email protected]

1. Thank you very much

2. Who are you and how did you get my no.

3. What it is?

4. This is nice, I will catch you later.

But again this person didn’t contact me again and I couldn’t as I didn’t has his number only e-mail id.

Results:

Responded 4/500= .8%

Positive response 1/500=.1%

Achievement 0/500=0%

Learning’s and achievements:

This method not of much use

I learn how to make advertisement and I followed AIDA(attention, interest, desire, action) formula while making this advertisement

I learn how to get email ids data.

Limitation:

Quality of advertisement could be a limitation

Recommendation:

A more attractive advertisement should be used again to verify the result of this method.

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4) Survey:

Objective:

I prepared a questionnaire on wealth management and surveyed around 200 people to judge the effectiveness of survey as method of sales.

The Questionnaire

Survey for Wealth Management

1. Do you invest?Yes No

2. Where do you invest and rank these options according to amount of investment in each option? (For maximum-1 and minimum-6) RANKBank FDs Post Office (Kisan Vikas Patra) Mutual Fund Insurance Shares Property All

3. How do you invest?Self Financial AdvisorFamily/Friends adviceWealth Management Company

(If Wealth Management Company is not selected in Q.N.3, then move to Q.N.7)

4. Which wealth management company’s services are you taking?

5. How do you select this wealth management company?BrandAdvertisementFriends/Family advice

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6. How do you rate services of your wealth management company?Highly satisfiedSatisfiedDissatisfiedHighly dissatisfiedCan’t say

7. Have you heard about wealth management companies?Yes No

8. If yes, why don’t you take services of wealth management companies?Lack of confidenceFeesLack of awareness

9. Would you like to take services of wealth Management Company with minimal fees?Yes No

10. Your annual incomeRs.150000-300000 Rs.300000-500000Rs.500000-600000>Rs.600000

11. What % of income, do you really save?

12. Personal details:Name: Address:Gender:Age:Mobile:Education Qualification:Occupation: Service/Profession/BusinessOrganization Name:

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Finding:

No lead generation No sales

Observations:

it is a good method for collecting data, introduce company and share ideas but not a good method for sales

female refuse to give mobile no. and other details in most cases people avoid to give their details for the fear of misuse

Limitations:

survey is done in busy places so there is less time to sales people don’t give that much time that required for sales people won’t even pay heed when you approach for sales

Learning’s:

how to conduct survey how to prepare questionnaire importance of first impression while conducting survey need to be patient as some people won’t behave with you properly

5) Canopy:

Under this method, I was to establish canopy at different places and sit there daily for promoting company and to assess usability of this method for sales

For the conduct of this method the first decision is: location of canopy

Requirements of ideal location:

a place where large no. of people visit place must attract the people which are target of product people must have time there to give to canopy persons

Other things to be considered:

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cost-benefit analysis:We must ascertain expected lead generation from a location and then compare it with the cost of operating canopy from that place before choosing any location

Conduct of canopy:

We establish canopy at three different places 2 days each. The places were….

1. Japanese Park, Rohini

2. Netaji Subhash Place, Pitampura

3. Kamla Nagar

1. Japnaese Park, Rohini:

Here we establish our canopy near entry gate of park. Our targeted customers were young and middle aged working people as we sale insurance products.

Suitability of location:

Location choice was prove to be good as it was a very famous and big park, around 1000 people visit daily there.

People again has time there as they came for relaxation there 50% of people coming here were from our target group

Achievements:

In two days, 100 people visit our canopy and we introduced our company, our product to them.

We generated 5 leads out of these 100 people. 1 policy was sold later on to the one of person contacted there and another one is in

follow up We get reliable data of 100 people through which we can understand their needs and

their risk appetite We also promoted our company as 1000 people visit there

2. Netaji Subhash Place, Pitampura:


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Location choice was as it was a commercial complex where a thousands of people visit there

Most of people visiting there was from our target group

Achievements:


We generated just two leads from here No sales till now But it was a very good place for promoting company as thousands of people visit there.

3. Kamla Nagar Market:


Location was good as thousands of people visit there but people didn’t have much time there as they were busy in shopping

25% of people visiting there was from our targeted sales group as most of the people there was either young not working people, housewives etc.

Achievements:


We generated just one leads from here No sales till now

Observation:

It is a good method for promoting company, generating leads, reliable data. But sales can’t be closed through canopy method as far as canopy method for insurance

product is concerned as people neither come with required finance nor with required documents in these places

Insurance is a financial product so people take time to decide while taking any product so it can’t be sold on spot in canopy

Location suitability is must for success of this method

Limitation:

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Under Canopy method, people are expected to visit on our on their own. If brand of the company is not well known then people visit less to canopy Doing cost benefit analysis before selecting any location is difficult.

Learning’s:

Formalities for organizing canopy How to conduct canopy method

Suggestions:

Canopy must be attracted enough to attract people Canopy must offer some incentive to people visiting canopy to attract more people like

discount to close deals and generate more leads.

6) Event:

Under this method, we organize a drawing competition in Mann Public School on May 12, 2008. This competition was for the students of class 4 to class 8. We asked these students to paint their life dream on paper. We also asked students to give following details in one form…..

NAME

CLASS

FATHER NAME

ADDRESS

MOBILE NO.

LIFE DREAM

Objective:

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Objective of this method was to collect data, promote our company, and build up relationship with families of children to generate sales later on.

Conduct:

200 students sit for this competition and each of the participating students was given pencil, sharpener, eraser, colors to attract maximum students

Achievements:

Promoted our company Get reliable data Form a relationship with students which can help us to generate sales in future

Observations:

This is a good method for collecting data, promoting company but at the same time it is a costly method

It can’t give result in short term but it will prove to be very successful in long run as it helps to bond a relationship between company and potential customers

Suggestions: Prize should be related to discounts in insurance premium as it can entice parents to

have policy and will show result in short term It should be organized on yearly basis in last half of financial year as it is the time when

most people invest for tax planning so it will grow chances of making sales if prize are linked to discounts

Annual organization of event will build a permanent bond with emotions of parents.

Learning’s:

How to conduct competition How the company work with innovation to make sales, collect data, promote company

Limitation:

Ability of this method to give result in short period Success is not guaranteed Costly method

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CONCLUSION:

Conducting sales through above six methods was a learning and exciting experience I learn how all of these method work, what are the things that affect effectiveness of each of these method. But if I were to rate success of these methods I will say….

1. Direct sales: This is the most effective method as telecallers (mostly girls) explain product and field boys are to go and close sales

2. Telecalling sales: It is also a good method for sales but it against the rule of perfection as

same person is making calls and going to field

3. Internet method: I feel this is not at all effective method for sale

4. Survey: This is a good method for collecting data and promoting company but not for sales

5. Canopy: This is good method for generating leads, collecting data and promoting company but very difficult to make sales as product is financial one. For success of this method selection of suitable location is most crucial.

6. Event: This is good method for collecting reliable data, promoting company, building relationship with perspective customers but it can’t result in instant sales

Hence direct sales and Telecalling sales are good method for sales. Survey, Canopy and Event method are good for generating reliable data and promoting company. Internet method was not attractive on any counts.

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Part 2Analysis of Wealth Management Instruments

Wealth Management:

Wealth Management is classified as an advanced type of financial planning that provides High net worth individuals and families with private banking, estate planning, asset management, legal resources, and investment management, with the goal of sustaining and growing long-term wealth.

Where

Financial Planning:

Financial planning is the task of determining how a business or individual will afford to achieve its strategic goals and objectives. The Financial Plan describes each of the activities, resources, equipment and materials that are needed to achieve these objectives, as well as the timeframes involved.

High Net Worth Individuals (HNWIs):

(HNWI) is a person with a high net worth. Typically these individuals are defined as having investable assets (financial assets not including primary residence) in excess of US$1 million

Private Banking:

Private banking is a term for banking, investment and other financial services provided by banks to private individuals disposing of sizable assets. The term "private" refers to the customer service being rendered on a more personal basis than in mass-market retail banking, usually via dedicated bank advisers.

Estate Planning:

Estate planning is the process of accumulating and disposing of an estate to maximize the goals of the estate owner. The various goals of estate planning include making sure the greatest amount of the estate passes to the estate owner's intended beneficiaries, often including paying the least amount of taxes and avoiding or minimizing probate court involvement.

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http://en.wikipedia.org/wiki/Probate_court

http://en.wikipedia.org/wiki/Tax

http://en.wikipedia.org/wiki/Beneficiary

http://en.wikipedia.org/wiki/Estate_(law)

http://en.wikipedia.org/wiki/Retail_banking

http://en.wikipedia.org/wiki/Financial_services

http://en.wikipedia.org/wiki/Investment

http://en.wikipedia.org/wiki/Bank

http://en.wikipedia.org/wiki/Net_worth

http://en.wikipedia.org/wiki/Financial_plan

http://en.wikipedia.org/wiki/Investment_management

http://en.wikipedia.org/wiki/Asset_management

http://en.wikipedia.org/wiki/Estate_planning

http://en.wikipedia.org/wiki/Private_banking



http://en.wikipedia.org/wiki/Financial_planning

Additional goals typically include providing for and designating guardians for minor children and planning for incapacity.

Investment Management:

Investment management is the professional management of various securities (shares, bonds etc) assets (e.g. real estate), to meet specified investment goals for the benefit of the investors. Investors may be institutions (insurance companies, pension funds, corporations etc.) or private investors (both directly via investment contracts and more commonly via collective investment schemes e.g. mutual funds).

Services offered by Wealth Management Industry:

Portfolio Management and Portfolio Rebalancing Investment Management and Strategies Private Banking and Financing Tax Advice

Products/Instruments offered:

Stocks and Stock Trading Equity Linked Investments ( Unit Linked Insurance) Structure Savings Products Mutual Funds Property (Real Estate) Alternative Investments including:

o Art o Precious Metals

Now analysis of each product one by one:

1) Mutual funds:

A mutual fund is simply a financial intermediary that allows a group of investors to pool their money together with a predetermined investment objective. The mutual fund will have a fund manager who is responsible for investing the pooled money into specific securities (usually stocks or bonds). When you invest in a mutual fund, you are buying shares (or portions) of the mutual fund and become a shareholder of the fund.

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http://en.wikipedia.org/wiki/Mutual_fund

http://en.wikipedia.org/wiki/Real_estate

http://en.wikipedia.org/wiki/Asset

http://en.wikipedia.org/wiki/Securities

http://en.wikipedia.org/wiki/Incapacity

Benefits of Mutual Fund:

Professional Management: The major advantage of investing in a mutual fund is that you get a professional money manager to manage your investments for a small fee. You can leave the investment decisions to him and only have to monitor the performance of the fund at regular intervals.

Diversification: Considered the essential tool in risk management, mutual funds make it possible for even small investors to diversify their portfolio. A mutual fund can effectively diversify its portfolio because of the large corpus. However, a small investor cannot have a well-diversified portfolio because it calls for large investment. For example, a modest portfolio of 10 blue-chip stocks calls for a few a few thousands.

Convenience: Mutual funds offer tailor-made solutions like systematic investment plans and systematic withdrawal plans to investors, which is very convenient to investors. Investors also do not have to worry about investment decisions; they do not have to deal with brokerage or depository, etc. for buying or selling of securities. Mutual funds also offer specialized schemes like retirement plans, children's plans, industry specific schemes, etc. to suit personal preference of investors. These schemes also help small investors with asset allocation of their corpus. It also saves a lot of paper work.

Cost Effectiveness: A small investor will find that the mutual fund route is a cost-effective method (the AMC fee is normally 2.5%) and it also saves a lot of transaction cost as mutual funds get concession from brokerages. Also, the investor gets the service of a financial professional for a very small fee. If he were to seek a financial advisor's help directly, he will end up paying significantly more for investment advice. Also, he will need to have a sizeable corpus to offer for investment management to be eligible for an investment adviser's services.

Liquidity: You can liquidate your investments within 3 to 5 working days (mutual funds dispatch redemption cheques speedily and also offer direct credit facility into your bank account i.e. Electronic Clearing Services).

Tax breaks: You do not have to pay any taxes on dividends issued by mutual funds. You also have the advantage of capital gains taxation as proceeds from sale of mutual fund after one is

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long term capital gain which is tax free. Tax-saving schemes and pension schemes give you the added advantage of benefits under section 88.

Transparency: Mutual funds offer daily NAVs of schemes, which help you to monitor your investments on a regular basis. They also send quarterly newsletters, which give details of the portfolio, performance of schemes against various benchmarks, etc. They are also well regulated and SEBI monitors their actions closely

Disadvantages of mutual funds:

No Guarantees: No investment is risk free. If the entire stock market declines in value, the value of mutual fund shares will go down as well, no matter how balanced the portfolio. Investors encounter fewer risks when they invest in mutual funds than when they buy and sell stocks on their own. However, anyone who invests through a mutual fund runs the risk of losing money.

Fees and commissions: All funds charge administrative fees to cover their day-to-day expenses. Some funds also charge sales commissions or "loads" to compensate brokers, financial consultants, or financial planners. Even if you don't use a broker or other financial adviser, you will pay a sales commission if you buy shares in a Load Fund.

Taxes: During a typical year, most actively managed mutual funds sell anywhere from 20 to 70 percent of the securities in their portfolios. If your fund makes a profit on its sales, you will pay taxes on the income you receive, even if you reinvest the money you made

Management Risk: When you invest in a mutual fund, you depend on the fund's manager to make the right decisions regarding the fund's portfolio. If the manager does not perform as well as you had hoped, you might not make as much money on your investment as you expected. Of course, if you invest in Index Funds, you forego management risk, because these funds do not employ managers.

Return and Tax Implications:For long period I calculated the average return on diversified mutual funds on a period of 5 years on 58 diversified schemes…… Average Return= 47.53% compounded annually

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Suppose you invested Rs. 10000 on March 15, 2007 in XYZ Mutual Fund and purchase 1000 units at Rs. 10 each

You redeemed these units on March 18, 2008 at Rs. 15 per unit so you earn a profit of Rs. 5000 on it you are not required to pay any tax on it as long term capital tax is free. So you earn return of 5000/10000*100= 50% on your returnSo your post tax return is 50% But now suppose you redeemed units on March 10, at the same NAV of Rs. 15 and your other taxable income is Rs. 500000. Now your income of Rs. 5000 will be added in Rs. 500000 and you will be tax of 30.9% on this Rs. 5000

TOTAL INCOME MF INCOME TAX RATE TAX NET INCOME AFTER TAX RETURN Rs.500000 5000 30.9% 1545 3455 34.55%Rs.250000 5000 20.6% 1030 3970 39.70%Rs.150000 5000 10.3% 515 4485 44.85%

So it is better to invest in Mutual Fund for more than 1 Year.Otherwise Pretax Return = 50%And After Tax Return will vary from 34.55% to 44.85% based on your other taxable income

2) Real Estate (Property):

Benefits of Investment in Real Estate:

Higher return and sustainable returns:

If you select a right property at a right price then you can earn very handsome unbelievable returns and moreover these returns are sustainable as they are not volatile like stock market.

Cash flow from property:

This means the difference between your income and your expenses on that specific piece of property. Of course, this can be either negative or positive. You feel a lot better when it’s positive, but negative cash flow isn’t necessarily bad if it’s a planned part of your investment program. But be careful of the temptation to use up your whole cash flow on rapid debt reduction.

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Appreciation in the value of a Property:

There are two kinds of appreciation, which we can call “external” and “internal”. “External” appreciation has nothing to do with the actual property itself but comes from economic conditions, land scarcity etc. Some people have made good deals by predicting where the next property “hotspot” will be and buying in hopes of quick appreciation – but of course, if you get it wrong, you are in trouble. “Internal” appreciation comes from improvement in the actual property itself and is easier for you to control. You can buy a piece of property in need of repair at its “as is” value, improve it and sell it on at a profit.

Leverage:

Being able to buy a piece of property by borrowing a percentage of its value. No other type of investment offers such a high degree of leverage. It is not unusual for investors to purchase a single family house by obtaining 100 percent finance – i.e. “no money down” real estate investing. This of course is very attractive if you can “flip” the property at a profit, quickly repay the loan and pocket the difference. But of course this can also be extremely risky. If the property doesn’t prove to be a good investment, you are in trouble. Never forget the loan is a loan and has to be repaid – somehow.

Amortizing:

You have bought the property with other people’s money, but as you repay, your principal is being reduced. That means your equity – your level of ownership of the property - is being increased.

Tax advantages:

There are several ways in which property ownership can be used for legitimate tax avoidance – though this should not be your first and foremost reason for buying the property, more a side benefit.

These are the main “tangible” benefits of property investing. There are many more – associated with the satisfaction and enjoyment, and the “residual” nature of the income as opposed to “linear” income – i.e. the money comes in even when you’re not actually working. Above all there’s the “buzz” which many claim beats the excitement of any other type of investment!

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Disadvantages of Investment in Real Estate:

Huge money :

To invest in real estate huge money is required so this is not possible for everybody and anybody

High risk:

If you choose a wrong property or property at wrong price it is very difficult to recover from that loss.

Technical Knowledge:

Before selecting a piece of property a lot of things are to be look after like documents, location, ownership so it requires a technical knowledge to invest in real estate.

Time Consuming:

Looking for a perfect piece of land is a tough job as it takes a lot of time to purchase a property.

Unscrupulous persons:

It is also important to verify the credibility of the person whom with you is dealing as there are lots of scrupulous persons who are involved in the real estate market.

Return and Tax Implication:

Return:

I try to measure return from property market by comparing prices of property in various area of Delhi with its one year old and five year old prices. Following were the Results…..

Places Price in 2003 Price in 2007 Price in 2008

Narela 600000 1500000 2500000

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Rithala 2200000 5000000 8200000

Pitam Pura 1700000 3500000 5000000

Bankner 300000 500000 800000

So prices of Property are increasing at a very high speed in Delhi but return are uneven there were some are where in just one year prices has doubled but there are again some areas where prices has just increased by 10-20% in the same period.

Tax Implication:

If property is kept for more than three years then profits from property are long term capital gain so taxed at 20.6% otherwise profit is added in normal income and taxed according to applicable tax rate.

3) Equity linked investment plans(Unit Linked Insurance Policies):

Benefits:

ULIP investments qualify for deductions under Section 80C of the Income Tax Act. This holds well, irrespective of the nature of the plan chosen by the investor. But in case of mutual funds, only investments in tax-saving funds (also referred to as equity-linked savings schemes) are eligible for Section 80C benefits.

Maturity proceeds from ULIPs are tax free under Section 10(10) D on the Income Tax Act.

Insurance cover: It also provides insurances cover to human being so it also cover the loss of income to family of deceased person in case death. So help in maximizing wealth.

Flexibility: It also offers the flexibility of withdrawing some money in between if required.

Higher Post Tax Returns: Post tax returns of ULIP Plans are higher because of tax benefits under section 80C and 10(10) D

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Disadvantages:

Higher charges: ULIP plans carry a very high allocation charges and other charges which wipe out a good amount of return

Lock in period: Every ULIP plan has an lock in period of 3 years which is also an disadvantages as there is no liquidity for first three years

Less Returns: Returns are less in case of ULIP as a large part of premium is wipe out in allocation charges so higher the allocation, lower is the amount invested and lower the return.

Tax Benefits:

Total income after Investment Tax Rate Tax benefits under 80CInvestment Rs. 500000 Rs. 100000 30.9% 30900Rs.250000 Rs. 100000 20.6% 20600Rs.150000 Rs. 100000 10.3% 10300

ULIPs vs. Mutual Funds:

ULIPs Mutual Funds

Investment amounts

Determined by the investor and can be modified as well

Minimum investment amounts are determined by the fund house

Expenses

No upper limits, expenses determined by the insurance company

Upper limits for expenses chargeable to investors have been set by the regulator

Portfolio disclosure Not mandatory* Quarterly disclosures are mandatory

Modifying asset allocation

Generally permitted for free or at a nominal cost Entry/exit loads have to be borne by the investor

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Tax benefits

Section 80C benefits are available on all ULIP investments

Section 80C benefits are available only on investments in tax-saving funds

Difference between ULIP and Mutual Fund:

Mode of investment/ investment amounts:Mutual fund investors have the option of either making lump sum investments or investing using the systematic investment plan (SIP) route which entails commitments over longer time horizons. The minimum investment amounts are laid out by the fund house.ULIP investors also have the choice of investing in a lump sum (single premium) or using the conventional route, i.e. making premium payments on an annual, half-yearly, quarterly or monthly basis. In ULIPs, determining the premium paid is often the starting point for the investment activity.This is in stark contrast to conventional insurance plans where the sum assured is the starting point and premiums to be paid are determined thereafter. ULIP investors also have the flexibility to alter the premium amounts during the policy's tenure. For example an individual with access to surplus funds can enhance the contribution thereby ensuring that his surplus funds are gainfully invested; conversely an individual faced with a liquidity crunch has the option of paying a lower amount (the difference being adjusted in the accumulated value of his ULIP). The freedom to modify premium payments at one's convenience clearly gives ULIP investors an edge over their mutual fund counterparts.

Expenses:In mutual fund investments, expenses charged for various activities like fund management, sales and marketing, administration among others are subject to pre-determined upper limits as prescribed by the Securities and Exchange Board of India.For example equity-oriented funds can charge their investors a maximum of 2.5% per annum on a recurring basis for all their expenses; any expense above the prescribed limit is borne by the fund house and not the investors.Similarly funds also charge their investors entry and exit loads (in most cases, either is applicable). Entry loads are charged at the timing of making an investment while the exit load is charged at the time of sale.Insurance companies have a free hand in levying expenses on their ULIP products with no upper limits being prescribed by the regulator, i.e. the Insurance Regulatory and Development Authority. This explains the complex and at times 'unwieldy' expense structures on ULIP offerings. The only restraint placed is that insurers are required to notify the regulator of all the expenses that will be charged on their ULIP offerings.Expenses can have far-reaching consequences on investors since higher expenses translate into lower amounts being invested and a smaller corpus being accumulated.

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ULIP-related expenses have been dealt with in detail in the article "Understanding ULIP expenses".

Portfolio disclosure:Mutual fund houses are required to statutorily declare their portfolios on a quarterly basis, albeit most fund houses do so on a monthly basis. Investors get the opportunity to see where their monies are being invested and how they have been managed by studying the portfolio.There is lack of consensus on whether ULIPs are required to disclose their portfolios. During our interactions with leading insurers we came across divergent views on this issue.While one school of thought believes that disclosing portfolios on a quarterly basis is mandatory, the other believes that there is no legal obligation to do so and that insurers are required to disclose their portfolios only on demand.Some insurance companies do declare their portfolios on a monthly/quarterly basis. However the lack of transparency in ULIP investments could be a cause for concern considering that the amount invested in insurance policies is essentially meant to provide for contingencies and for long-term needs like retirement; regular portfolio disclosures on the other hand can enable investors to make timely investment decisions.

Flexibility in altering the asset allocation:Offerings in both the mutual funds segment and ULIPs segment are largely comparable. For example plans that invest their entire corpus in equities (diversified equity funds), a 60:40 allotment in equity and debt instruments (balanced funds) and those investing only in debt instruments (debt funds) can be found in both ULIPs and mutual funds. If a mutual fund investor in a diversified equity fund wishes to shift his corpus into a debt from the same fund house, he could have to bear an exit load and/or entry load.On the other hand most insurance companies permit their ULIP inventors to shift investments across various plans/asset classes either at a nominal or no cost (usually, a couple of switches are allowed free of charge every year and a cost has to be borne for additional switches).Effectively the ULIP investor is given the option to invest across asset classes as per his convenience in a cost-effective manner.This can prove to be very useful for investors, for example in a bull market when the ULIP investor's equity component has appreciated, he can book profits by simply transferring the requisite amount to a debt-oriented plan.

Tax benefits:ULIP investments qualify for deductions under Section 80C of the Income Tax Act. This holds well, irrespective of the nature of the plan chosen by the investor. On the other hand in the mutual funds domain, only investments in tax-saving funds (also referred to as equity-linked savings schemes) are eligible for Section 80C benefits.Maturity proceeds from ULIPs are tax free. In case of equity-oriented funds (for example diversified equity funds, balanced funds), if the investments are held for a

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period over 12 months, the gains are tax free; conversely investments sold within a 12-month period attract short-term capital gains tax @ 15%.Similarly, debt-oriented funds attract a long-term capital gains tax @ 10%, while a short-term capital gain is taxed at the investor's marginal tax rate.Despite the seemingly similar structures evidently both mutual funds and ULIPs have their unique set of advantages to offer. As always, it is vital for investors to be aware of the nuances in both offerings and make informed decisions.

4) Stock(Equity): Investment in stock or equity means investing in equity or stock of different companies.

Benefits of stock (equity):

Higher Returns: By investing directly in stock the investor can earn very high returns.

Bet against inflation: In times of increasing inflation equity is the best bet to combat inflation as it gives very high returns.

Regular Income: The investor can earn regular income in forms of dividends, bonus, etc.

Capital Appreciation: Investor earns not only in terms of regular income but also in terms of income from capital appreciation

Liquidity: Stock offers a great liquidity as they can be sold anytime in the secondary market.

Benefits of growth of economy: As Sensex is called barometer of economy so share markets performance show performance of economy so by investing in equity investor grow with the economy

Tax benefits: On capital appreciation short term capital tax is just 15% and long term capital gain tax is nil

Voting right: Conceptually speaking shares provides ownership rights to its holder so they enjoy decision making power

Disadvantages of Investing in Stock (Equity):

High Risk: It is very risky to invest money in stock as stocks are very volatile.

Technical Knowledge:

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To invest in share market one must a very sound technical knowledge of stock market and share prices, their movement only then one can make money in share market

High cost: It is very costly to invest in shares as one is required to pay brokerage and different other charges

No Guaranteed Return: There is no guaranteed return from share market as one can even wipe out its principal if money is not invested in right stocks and at right time.

Return and Tax Implication: Performance of indices as on 31st MARCH, 08

Compounded Annualized Returns (%)Index Name 1 Year 2 Year 3 Year 5 YearBSE Sensex 46.83 46.84 45.37 43.10BSE MID Cap 68.15 48.62 48.1BSE SMALL CAP 92.97 49.78 57.26BSE 200 60.03 49.56 44.16 46.44

Tax Implication:Suppose you invested Rs. 100000 on March 15, 2007 in XYZ Company and purchase 10000 shares at Rs. 10 eachYou sale these shares on March 18, 2008 at Rs. 15 per unit so you earn a profit of Rs. 50000 on it you are not required to pay any tax on it as long term capital tax is free.So you earn return of 50000/100000*100= 50% on your returnSo your post tax return is 50%But now suppose you redeemed units on March 10, at the same Price of Rs. 15 and now you will be required to pay short term capital gain tax @15%

But there is debate whether one should invest in individual stocks or equity funds so lets find out what is Stock Vs Fund:

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5) Portfolio management services(PMS):

Portfolio management service is provided by wealth Management Company to its HNIs clients. Under it client handover a min. of around Rs. 20 Lakh to wealth Management Company in return build a personalized portfolio according to needs, financial goals and risk appetite of the client. This is suitable for those who money in bagfuls, but don't have the time or inclination to manage it.

Mutual Fund Vs PMS:

But why should you opt for PMS instead of a mutual fund? Here are a few aspects on which portfolio managers say they score over the standardized products offered by mutual funds:

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Asset Allocation:

You may know what stocks, equity funds or bonds you would like to own, but do you know how much of your savings you should allocate to each of these? The decision on asset allocation will be crucial in determining investment returns over the long term. With PMS, an asset allocation plan is tailor-made for you, after a detailed check on your investment goals, savings pattern and appetite for risk.

Timing:

Have you ever kicked yourself for switching your entire portfolio into equities just before they tanked? If you have, you probably need help with regard to timing of investments. Once you hire a portfolio manager, you can expect assistance on when you should be investing more money into equities and when you should be bailing out. A portfolio manager may also switch a portion of your portfolio into cash, if he perceives a big risk to stock prices. The focus is on preserving value.

Flexibility:

You are bullish on FMCG stocks, but find that equity funds have marginal exposures to the sector. In a PMS, you can expect the portfolio manager to accommodate your sector preferences when he invests. But don't expect to completely dictate what stocks or sectors your portfolio manager will buy for you, as he will be the best judge of that.

Also, portfolio managers do not have to stick to any rigid rules on what proportion of your money will be invested in each sector or stock. They can also use liberal doses of cash or derivative instruments to pep up your returns. Mutual fund managers have their hands tied on these aspects by SEBI regulations.

Benefits:

Personalized Approach:More handholding from your portfolio manager than you have been accustomed to from your mutual fund. You can expect to have a personal relationship manager through whom you can interact with the fund manager at any time of your choice. You can also expect frequent (maybe monthly) interaction with the portfolio manager to discuss any concerns that you might have. Expect to be consulted on any major changes in asset allocation or in the investment strategy relating to your portfolio. All administrative matters, including operating a bank account and dealing with settlement and depository transactions, will be handled by the PMS.

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Transparency:If you are the type who likes to watch over your money like a baby, the disclosures offered by a PMS may be just right for you. On handing over your money, you will receive a user-ID and password from the PMS, which will grant you online access to your portfolio details. You can use these to check back on your portfolio as often as you like.

Hassle Free Investment:Keeping track of capital gains (and losses) for the taxman can be a depressing chore, when you have furiously churned your investments through the year. Opting for PMS will free you of this chore, as a detailed statement of the transactions on your portfolio for tax purposes comes as a part of the package.

Fees:

Most portfolio managers allow you to choose between a fixed and a performance-linked management fee. If you opt for the fixed fee, you may pay between 2-2.5 per cent of portfolio value; this is usually calculated on a weighted average basis. The structure for the performance-linked fee differs across players; usually, this includes a flat fee of 0.5-1.5 per cent. The portfolio manager also gets to share a percentage of your profit — usually 15-20 per cent — earned over and above a threshold level, which may range between 8 per cent and 15 per cent. Apart from management fees, separate charges will be levied towards brokerage, custodial services and towards meeting tax payments.

There are wide variations in fee structure between players and across products. For instance, Birla Sun Life charges only a performance-linked fee for its portfolio services. Way2Wealth has a differential fee structure for its debt and equity dominated portfolios.

When you opt for a performance-based fee, the profits are reckoned on the basis of "high watermarking". That is, you pay the fee only on the positive returns on your portfolio. For instance, if you invest Rs 100 in a PMS and its value appreciates to Rs 150 at the end of the year, you pay a fee on the profit of Rs 50. Subsequently, a fee will be levied only on gains over and above the Rs 150 mark. If the value of your portfolio slumps to Rs 70, and climbs back to Rs 110, the Rs 40 you earn will not be reckoned as profit. You will again be charged a fee only if the value of your portfolio recovers to over Rs 150, the previous "high watermark."

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Suitability of PMS:

Anybody with a nest egg, which meets the minimum investment requirement, can consider using a PMS. However, a PMS may only add significant value in the following cases:

Equity Bias: Portfolio management services may be ideal for a person who seeks a substantial investment in the stock markets. An equity portfolio also offers greater scope for a manager to add value than does a debt portfolio. Several of the established players in the PMS business focus on equity investments, though some also offer hybrid products.

Large surplus to invest: The minimum portfolio size that portfolio managers accept for a customized portfolio ranges from Rs 25 lakh to Rs 5 crore. So consider a PMS only if you have a substantial surplus to invest in stocks. If you don't, evaluate if you can use the services of a financial planner or an advisor, instead of a PMS. If you are willing to handle the paperwork associated with investing, you can get a financial planner or advisor to construct an asset allocation plan and guide you on the choice of investments for a one-time fee of Rs 5,000-15,000. YOU earn money in bagfuls, but don't have the time or inclination to manage it. If this description fits you, do consider entrusting your money to a professional portfolio management service (PMS). In return for a fee, portfolio managers offer to craft a basket of stocks, bonds or even mutual funds that would fit your personal investment goals and risk preferences. Though a few portfolio managers offer standardized packages for a sum as small as Rs 5-10 lakh, it may take a minimum investment size of Rs 25-50 lakh to fetch you a customized portfolio. Apart from cash, you can also hand over an existing portfolio of stocks, bonds or mutual funds to a PMS that could be revamped to suit your profile.

6) Structured Saving Products: Public Provident Fund(PPF) National Saving Certificates(NSC) Tax Saving Fixed Deposits Fixed Deposits Fixed Maturity Plans(FMPs) Kisan Vikas Patra

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I. Public Provident Fund(PPF):Investments in PPF are of a recurring nature and run over a 15-Yr period. Investors are required to make annual contributions to keep their PPF accounts active. The minimum and maximum investment amounts are Rs 500 and Rs 70,000 per annum respectively. Only contributions of up to Rs 70,000 per annum are eligible for a tax benefit. Any amount invested over the aforementioned sum is returned without interest. At present, investments in PPF earn a return of 8.0% per annum, compounded yearly. It should be noted that investments in PPF offer an assured return, but the rate of return is subject to change.

Liquidity: PPF scores poorly on the liquidity front. Withdrawals are permitted only from the seventh financial year. The amount of withdrawal is limited to 50% of the balance at credit at the end of 4th year immediately preceding the year in which the amount is withdrawn or at the end of the preceding year whichever is lower.

Tax Benefits: Apart from Section 80C tax benefits at the time of investing, interest income from investments in PPF is exempt from tax under Section 10(11) of the Income Tax Act.

Illustration: suppose you invest Rs. 50000 in your PPF account.

Tax Benefits

Total Income PPF N. Income Interest Tax Rate (80C) 10(10) D Total savings ATR*

Rs.550000 50000 500000 4000 30.9% 15450 1236 16686 41.37%

Rs.300000 50000 250000 4000 20.6% 10300 824 11124 30.25%

Rs.200000 50000 150000 4000 10.3% 5150 412 5562 19.12%

*ATR means After Tax Return= Total Savings+Interest Income

PPF Investment

II. National Saving Certificate(NSC):

NSC offers the opportunity to make lump sum investments for a 6-Yr period. The minimum investment amount is Rs 100, while there is no upper limit. Presently, investments in NSC earn a return of 8.0% per annum, compounded on a half-yearly basis. Hence Rs 100 invested in NSC will grow to Rs 160.1 on maturity. The rate of return

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is locked in at the time of investment. Hence investments are insulated from any subsequent change in rates.

Liquidity: NSC scores poorly on the liquidity front. The interest income is received on maturity. Furthermore, premature withdrawals are only permitted under specific circumstances like death of the holder(s), forfeiture by the pledgee or under court’s order.

Tax Implication: Interest income from NSC investments is chargeable to tax. However, the interest accruing annually is also deemed to be reinvested, hence it qualifies for deduction under Section 80C.Illustration: suppose you invest Rs. 50000 in your NSC.

Total Income NSC N. Income Interest Tax Rate (80C) Total Savings* ATR**

Rs.550000 50000 500000 4080 30.9% 15450 19530 39.06%

Rs.300000 50000 250000 4080 20.6% 10300 14380 28.76%

Rs.200000 50000 150000 4080 10.3% 5150 9230 18.46%

*Total Savings= Interest Income+ Tax Savings u/s 80C**ATR means After Tax Return

III. Tax Saving Fixed Deposits:Tax-saving fixed deposits are conventional fixed deposits offered by banks; however investments therein (up to Rs 100,000 per annum) are eligible for tax benefits under Section 80C. These fixed deposits have investment tenure of 5 years and the minimum investment amount is generally Rs 100. At present, most banks offer a rate of return in the range of 8.0%-8.5% per annum. A higher rate of return (additional 0.5%) is offered on investments made by senior citizens.

Liquidity: Premature withdrawals are not permitted. However, investors can choose the regular interest payout options (subject to the same being offered by the bank) for liquidity.

Tax Implication: Interest income from tax-saving fixed deposits is chargeable to tax. Also unlike PPF and NSC, the same is subject to TDS (tax deduction at source).

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Illustration: suppose you invest Rs. 50000 in your Tax Savings Fixed Deposits.

Total Income FDs N. Income Interest Tax Rate (80C) Total Savings* ATR**

Rs.550000 50000 500000 4000 30.9% 15450 19450 38.90%

Rs.300000 50000 250000 4000 20.6% 10300 14300 28.60%

Rs.200000 50000 150000 4000 10.3% 5150 9150 18.30%

*Total Savings = Interest Income+ Tax Savings u/s 80C**ATR= After Tax Return

IV. Fixed Deposits:If we take simple Fixed Deposits with Banks, theirDuration: Duration varies from 7 days to 5 or more yearsTax Implication: these are not exempt u/s 80C and interest Income is chargeable to tax.

Illustration:Suppose you invest Rs. 10000@8% for one Year Fixed Deposit.Total Income Interest Tax rate Tax payable N. Interest ATR*500000 800 30.9% 247 553 5.53%250000 800 20.6% 165 635 6.35%150000 800 10.3% 82 718 7.18%

*ATR= After Tax ReturnThis is not a tax efficient instrument of investment but it gives pre tax higher return as it offer 8%-9% even for one year FD.

V. Fixed Maturity Plans(FMPs):FMPs are actually close-ended debt funds (investments can be made only during the new fund offer period) with a fixed maturity offering an indicative yield (both the maturity and yield is known upfront). Here the keyword is indicative. That means, on maturity, there is a possibility of the actual returns deviating from what has been indicated to investors at the time of investing.

FMPs Vs FDs:Fixed Maturity Plans (FMPs) can be termed as the mutual fund industry’s answer to Fixed Deposits (FDs). Over the years, FMPs have established themselves as an option for debt fund investors (i.e. risk-averse investors). In many cases, they occupy the slot that used to belong to FDs. This is not surprising given that both the avenues cater to the

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same investor category. Having said that, it is worth noting that FMPs and FDs also vary across a few critical parameters.

Differentiating Parameters:

Assured returns vs. Indicative returns: The defining feature of both FMPs and FDs is that investors know in advance how much return they will earn on maturity. The difference is, while the returns on FDs are assured, returns on FMPs are indicative.

Varying tax treatment: The tax treatment on interest income is different for FMPs and FDs. In FDs, the interest income is added to the investor’s income and is taxable at the applicable tax slab (or the marginal rate of tax). As far as FMPs are concerned, the tax implication depends upon the investment option – dividend or growth. In the dividend option, investors have to bear the Dividend Distribution Tax. Whereas in the growth option, returns earned are treated as capital gains (short-term or long-term depending on the investment tenure). In the case of short-term capital gains (i.e. if investments are held for less than 365 days), the interest income is added to the investor’s income and is taxed at the marginal rate of tax. As for long-term capital gains (if investments are held for more than 365 days), the tax liability is computed using two methods i.e. with indexation (charged at 20% plus surcharge) and without indexation (charged at 10% plus surcharge); the tax liability will be the lower of the two. Thanks to the indexation benefit, FMPs end up delivering more tax efficient returns than FDs.

Conclusion:While FMPs offer superior post-tax returns vis-à-vis FDs, returns offered by them are only indicative and not assured. Given the fact that returns are not assured, FMPs are riskier than FDs

VI. Kisan Vikas Patra:Kisan vikas patra are the certificates which doubles the initial investment at maturity which is for 8 years and 7 months.Interest Rate: 8.25% compounded annuallyTax Implication: Interest is exempt from taxAmount of Investment: Certificates are available in dominations of Rs. 100/-, Rs. 500/-, Rs. 1000/-, Rs. 10000/- , Rs. 50000/-

Flexibility: Kisan vikas Patra premature after 2 years and 6 months

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7) Commodities:The long-term fundamentals of most commodities are trustworthy. The world’s population and infrastructure is growing at a rapid pace and will continue to require massive quantities of natural resources to meet growing demand. Population growth means that by 2020 the world will need 40% more food. And in Asia, which is considered as “movers and shakers” in the commodities, growth has only just begun. So for investors looking to tap into the commodities markets, it is simply a matter of knowing how and where to invest. In the table below, we can judge the return of various asset classes:

20- Feb-08 Last 1 Month YTD 1 Year 5 Year

Gold 924.75 4.72% 10.97% 40.17% 162.56%

Silver 17.45 8.09% 18.17% 26.20% 275.35%

Oil 99.05 9.37% -0.12% 69.25% 173.61%

Conclusion: After analyzing most of the financial products available in the market I feel there is no one best product in the market. Goodness of an investment instrument depends upon the needs of investor, risk appetite, market conditions. For example, if you are looking for an investment for a long period like 15 years…. Risk Profile Instrument suggestedConservative PPFMedium Risk Taker Diversified Equity Mutual Fund/ Balance Fund/PropertyHigh Risk Taker Equity/Property

If you are looking for investment Horizon of 5 years or more…Risk Profile Instrument suggestedConservative NSC/ Tax Saving FDs

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Medium Risk Taker Diversified Equity Mutual Fund/ Balance Fund/PropertyHigh Risk Taker Equity/Property

If you are looking for investment for short term…..

Risk Profile Instrument suggestedConservative FDs/ Money Market Instrument/Debt Mutual FundMedium Risk Taker Diversified Equity Mutual Fund/ Balance Fund/PropertyHigh Risk Taker Equity/Property/Commodities

But some alternative investment avenues are also coming which also needed to give a look like…..Gold ETF, Art, Precious Metals etc. before investing as they can also prove to be a very good tool.

Scope of Wealth Management in India:India is one of the fastest growing Countries in World. It is the fastest growing country after china in BRIC countries. HNWIs Growth rate is highest in the World. With the economic boom catapulting stock and real estate prices to an all-time high and salaries hitting the roof, the wealth and disposable incomes of several million Indian have grown substantially during the past two decades.

Driving Forces:

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Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q22005-06 2006-07 2007-08

0

2

4

6

8

10

12

14

GDP and Sector Growth rates

GDPAgricultureIndustryServices%

1

Scope of wealth management services is very bright in India because of following factors:

12th largest economy of the world 2nd fastest growing economy with a GDP of $1tn Last 8 quarters GDP’s avg. growth rate @ of 9.3% GDP Growth rate for FY-07 was 9.4% as compared to 9% for FY-06 India - one of 10 fastest-growing population of HNWIs globally There are at least 23 Indian citizens amongst the richest people on the planet No. of HNWIs in India – 100,000 (19.3% growth in 2005) Salary increases in India – 13.9% is the highest in the world According to study, 2005 World Wealth Report, by Capgemini and Merrill Lynch,

indicating that the number of High Net worth Individuals (HNWI) in India grew at 14.6 per cent twice that of the world's growth of 7.3 per cent in 2004 augurs well for some of these banks.

Penetration level of wealth management services in India - 10% in comparison to European markets (60-90%)

Progressive integration of financial markets - banking, insurance, mutual funds, securities, commodities

Indian customer demanding TOTAL FINANCIAL SOLUTIONS

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PART-3

Scope of wealth Management in Middle Class“Indian Middle Class” is said to number today between 320-350 million people. This amounts to nearly 30% of India’s total population. The management consultancy firm, Mckinsey, predicts that India’s middle class will reach 583 million by the year 2025. India will reach Aristotle’s ideal by then, when the middle class will constitute 50 per cent of total population.

According to survey conducted by Max New York Life and the National Council for Applied Economic Research (NCAER), “81 per cent of Indian households save for the future”

This promotes me to think if 81 per cent of Indian households save for the future. Do they not need wealth management services to boost their earning from investments?

Wealth Management Services (WMS) are meant for High Net Worth Individuals (HNIs). But there is a very big untapped Middle Class with increasing incomes to tap. So I conducted survey to determine scope of wealth management in middle class.

Income status of respondents from middle class was as follows….

56%

26%

7%

11%

1.5-3L3-5L5-6L>6L

56% of people were in Rs.1.5L-3L

26% of people were in Rs.3L-5L

7% of people were in Rs.5L-6L

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11% of people were in above Rs.6L

If I apply this composition to our strong 330 million middle class populations then….

185 million comes in Rs.1.5L-3L = Rs.27750 billion

85.8 million Comes in Rs.3L-5L = Rs.25740 billion

23.1 million Comes in Rs.5L-6L = Rs.11550 billion

36.3 million Comes in above Rs.6L = Rs.21780 billion

Total income power with middle class Rs.86820 billion

Saving pattern of respondents in survey was:

49%

30%

9%

9%3%

0%-20%20%-30%30%-40%40%-50%ABOVE 50%

And mode that is most frequent value is 20% and applying this representative value of saving to above income power of middle class suggest that….

Investible capacity of middle class is 20% of Rs. 86820 Billion which comes out to be Rs. 17364 billion.

This is size of untapped market which is waiting to be tapped. This Rs. 17364 could be money which can be managed by Wealth Management Companies if tapped properly with proper strategy

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Objective of survey:

Objective of survey was to know how many people are aware about wealth management companies. How many people are taking their services if not taking why? and will they like to take services of wealth management companies with a minimum fee of Rs. 365 annually.

Target population:

Target population was young working people from middle class with annual income of Rs. 150000 or more.

Sample Size:

I choose the sample size of 200

Selection of sample:

The sample was chosen randomly at selected office complexes and shops.

Profile of sample (Respondents):

Gender wise:

7%

93%

no. of femaleno. of male

The sample size was biased towards male because in India still financial decisions are taken by male and female were also reluctant to discuss their details in survey.

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Qualification wise:

41%

14%

32%

1% 7%

2%4%

GRAPGMBA10TH12THBELOW 10THProfessional

Age wise:

57%32%

7%4%

UNDER 3030-4041-50ABOVE 50

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Occupation wise:

87%

13%

servicebusiness

Findings:

How many people invest their money?

99%

1%

InvestNot Invest

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Where do they invest their money?

FD POST OFFICE MF INSURANCE SHARES PROPERTY0%

10%

20%

30%

40%

50%

60%

70%

46%

27%

46%

64%

41%

32% Series1

They were also asked to rank their various investment avenues from their highest investment to lowest investment to judge their risk appetite…

Formula to judge their Risk Taking Ability:

INVESTMENTRISK PROFILE

WEIGHTAGE FOR RISK TAKING ABILITY

CLASS OF ASSETRANKS

1 2 3 4 5 6

EQUITY 1 5 4 3 2 1 1MUTUAL FUND 2 4 3 2 1 1 1

INSURANCE 3 3 3 2 2 1 1

PROPERTY 4 2 2 2 1 1 1

BANK FDs 5 0 0 0 1 1 1

POST OFFICE 5 0 0 0 1 1 1

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According to this formula we will judge Risk Taking Ability in the following way:

Suppose one person respondent in following way:

Asset RANK SCORE FOR RISK TAKING ABILITY

EQUITY 1 5

MUTUAL FUND 2 4

INSURANCE (ULIP) 3 2

PROPERTY 4 1

BANK FD 5 0

POST OFFICE 6 0

TOTAL RISK TAKING ABILITY SCORE 12

Now this Total Risk Taking Score of 12 suggest that Person is High Risk taker as per following formula…….

Risk taking ability score Risk profile

0-5 Risk Averse

6-10 Medium Risk Takers

11-15 High Risk Takers

These categories has been made on the basis of score of ideal portfolio for each of the Risk Averse, Medium Risk Taker and High Risk Taker

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Now Risk Taking Profile of Respondents:

54%36%

10%

RISK AVERSEMEDIUM RISK TAKERHIGH RISK TAKER

Now how the respondents make investment decisions:

77%

7%

11%

5%

SELFFINANCIAL ADVISORFRIENDS/FAMILY ADVICEWEALTH MANAGEMENT COMPANY

Only 5% of people are taking services of Wealth Management Companies

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Awareness regarding Wealth Management Companies among Wealth Management Companies:

51%49%

AWARE NOT AWARE

Thanks to emerging wealth management industry 51% respondents were aware about wealth management companies

Profile of respondents who are aware about wealth management companies:

Gender Wise:

male female50%

52%

54%

56%

52%

54%

Series1

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Age wise:

below 30 30-40 40-50 above 500%

10%

20%

30%

40%

50%

60%55%

47%43% 43%

Series1

Qualification wise:

MBA PG

PROFESS

IONAL Q

UALIFICATIO

N

GRADUATES

12TH10TH

BELOW

100%

10%

20%

30%

40%

50%

60%

70%

80%

90%

70% 71%80%

34%38%

0% 0%

Series1Series2

Occupation wise:

SERVICES BUSINESS0%

10%

20%

30%

40%

50%

60%

53%

38%

Series1

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But now the question is if respondents were aware about wealth management companies then why they are not taking their services as only 5% of respondents are taking their services

The answer lies here:

34%

3%

33%

16%

14%

LACK OF TRUSTFEESLACK OF AWARENESSNO NEEDSELF COMPETENT

They above were reason for not taking wealth management company service but who are the persons which are taking wealth management companies:

Gender Wise:

80%

20%

MALEFEMALE

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Respondents taking services of WMC are….

80% Male and 20% Female

Age Wise:

80%

10%

10%

BELOW 3030-4041-50

The respondents who are taking services are mostly young as

80% are under age 30, rest 10% each from 30-40 and 41-50 age group

Qualification Wise:

80%

20%

MBAGRADUATION

The respondents who are taking services of WMC are mostly highly educated as

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80% of them are MBA and rests 20% are graduates

Occupation Wise:

100%

SERVICES

1

100% Respondents who are taking WMS were not from business class but from service class.

Which companies Services are these respondents taking:

70%

10%

10%

10%

RELIGARESHAREKHANHDFCICICI

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On What basis do they select these companies?

60%

30%

10%

BRANDFRIENDS/FAMILY ADVICEBOTH

What’s their feedback to services they are availing?

50%50%HIGHLY SATISFIEDSATISFIED

These suggest that Wealth Management companies are doing good work so other should also avail their services.

Now the real question how many people are willing to take services of wealth management companies:

The service I offered was for minimal fee of Rs. 365 annually and the services offered for this were……

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Alerts for good investment opportunities Any time call facility for investment Alerts for emergencies sale needs Financial planning services Honest analysis of products

The responses verdict was:

78%

22%

YESNO

A whopping 78% of respondents show interest to avail servicesBut those who says ‘NO’ why they said so….

25%

25%20%

30%

SELF COMPETENTNO NEEDLACKS TRUSTNO REASON

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Now profile of people who are willing to avail services:

Gender Wise:

MALE FEMALE72%

74%

76%

78%

80%

82%

84%

86%

77%

85%

Series1

Age wise:

BELOW 30 30-40 41-50 ABOVE 5060%

65%

70%

75%

80%

85%83%

70%71% 71% Series1

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Qualification Wise:

MBA PG

PROFESS

IONAL Q

UALIFIC

ATION

GRADUATES

12TH10TH

BELOW

10

0%

20%

40%

60%

80%

100%

120%

70%

86%

40%

80% 85%

100% 100%

Series1

Occupation Wise:

SERVICES BUSINESS76%

77%

78%78%

77%Series1

CONCLUSION:

With 320 million current population in middle class and according to Mckinsey Report, it will touch 583 million by 2025. So it is a very very big market to be tapped but challenge remains there. The biggest challenge is to develop confidence among people as a whopping 34% of people don’t trust the services of Wealth Management Companies. Even one respondent touted that “there is no wealth management companies in India, all which are in the industry are brokers/agents but not advisor or financial advisors”

The second big challenge is to provide quality services to people at the lower cost possible as a whopping 56% of population is income group of Rs.1.5 to Rs.3 Lacs so they won’t be able to pay high fees.

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Challenges are big but the opportunity is much bigger than challenges. Understanding this some companies has started tapping this sector but still they are concentrating on higher segment of this sector. Equity Intelligence is one such company as it offers Portfolio Management Services from Rs. 500000 onwards. The less than three-year-old Equity Intelligence has already built up a client base of 540 and an asset portfolio of Rs 100 crore and its client base’s growth rate is 300%.

But much more growth rate is in lower segment of middle class which is mammoth in numbers and also willing.

PART 4

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MUTUAL FUND AND INCLUSIVENESSInclusiveness:

Inclusiveness means not excluding any one. Diversity between rich and poor are getting bigger and bigger. Poor is becoming poorer not because he not only earn less but also he does not know where to put his money. He put his money in post office and banks RDs. He invest systematically every month, even daily with discipline in post office schemes banks but not in Mutual Funds which can give him higher profits with almost same security. So higher profits will increase his standard of living so will bring inclusiveness.

But question is: isn’t Mutual Fund risky to invest?

Should a person with limited financial capabilities invest in Mutual Funds?

The answer is: he must invest in Mutual Funds as they are risk free in long period but only in long run.

Long Run: Period of 5 years or more

Objective: To judge whether mutual fund are risk free in long run or not.

Null Hypothesis: Mutual funds are risk free in long run.

Methodology:

I take out all the mutual fund schemes which are operational for more than 5 years and find out average of return of those schemes. Moreover I found out the probability of return of below 9% that is current interest rate on Bank FDs for 5 years or more.

Conduct:

I took all the 58 schemes of diversified equity mutual fund and calculate average return for 5 years.

Average Return:

5 years:

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Average return was 47.53% compounded annually

More than 5 years:

If we took the return of these schemes from inception date that is more than 5 years it turns out to be 25.16% compounded annually.

PROBABILITY OF LESS THAN 9% RETURN:

5 YEARS:

PROBABILITY= 0 which means all the 58 schemes give more than 9% return in 5 years

For more than 5 years:

Probability=0 which means all the 58 schemes give more than 9% compounded return in more than 5 years

(Calculation shown in Annexure)

Balanced Schemes:

Balanced schemes are the schemes which invest both in equity and debt market.

Average Return:

I took all 19 schemes which have track record of 5 years or more.

5 years:

Average return=31.76% compounded annually

More than 5 years

Average return= 16.7% compounded annually

Probability of Less than 9% Return:

5 years:

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Probability= 0 which means every balanced in last 5 years has given more than 9% return compounded annually

More than 5 Years:

Probability= 0 which means every balanced scheme in last more than 5 years has given more than 9% return compounded annually

So no equity diversified and balanced scheme has given less than 9% compounded return in last 5 years or more so it is risk free although not assured return.

So Null Hypothesis is accepted

Moreover average return for last 5 years are 47.53% and 31.76% for equity diversified and balanced schemes without any default that is return of less than 9%. So it is suggested to invest in these funds as these schemes provide higher return with no default rate. In other words promote inclusiveness.

This is fine that People with low incomes must invest in Mutual Funds but do they have the capacity to invest in mutual funds?

This is answered here the lowest Monthly Systemic Investment Plan (SIP) starts with Rs. 100 with Reliance Mutual Fund. It is the amount which is in reach of almost all people

Even to test this I interviewed 100 People. These people were rickshaw pullers, sweepers, rehdi walas, daily workers etc. and ask them…..

Do they save any money for future?

91%

9%

SAVENOT SAVE

91% of respondents said that they save although their saving vary from as low as Rs. 100 to Rs.1000

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When I told them if there is some avenue where they can earn return of around 20% in long run. Can they invest as low as Rs. 100 monthly for longer periods like 5 years or more?

96%

4%

INVESTCAN NOT INVEST

So they have the capability to invest as low as Rs. 100 per month, they also have the opportunity to invest in form of Reliance Mutual Fund SIP.

So they must invest it will improve their standard of living and so the inclusiveness.

This is also a very big opportunity for mutual fund companies to tap this market.

But is it enough to introduce one scheme which is in affordable limit to tap Bottom of Pyramid segment.

Followings things are must to tap this market according to Bottom of Pyramid Book written by Prof C.K. Prahlad…..

Affordability:Affordability is there with Rs. 100 SIP

Access:Access is lacking as mutual fund can be subscribed only with the PAN Card Holders and very few people especially lower income people have PAN Cards so a solution should be find to make Mutual Fund accessible for them

Availability;Availability is there

Education: as poor people do not have access to media or are illiterate so they need to be educated about benefits of investing in mutual funds

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Hybrid Solutions: although probability shows there is no instance where mutual fund has given negative or very low returns in long run but there is no surety so mutual fund should be innovated to address this concern as these poor people can never afford to lose their money.

CONCLUSION:

Mutual Fund gives very good return with very low probability of default but still there is no assured return. But seeing past performance of mutual funds, it could prove to be a tool for bringing inclusiveness in society as poor will also take part in equity market which is barometer of Economy. In other words the poor will also grow with country so it will bring inclusiveness. At the same time it is a very big opportunity for mutual fund companies but they are required to address accessibility, education of product, and security of money concerns to tap the actual potential of market.

Appendices

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APPENDICE- 1

Calculation of return from mutual fund and probability of less than 9% compounded return annually.

Equity Diversified Schemes:

S.N. SCHEME NAME 5 YearsSince Inception Probability

1 SBI MAGNUM SECTOR UMBRELL-CONTRA FUND- GROWTH 65.41 21.77 0

2 RELIANCE GROWTH-GROWTH 64.62 33.36 0

3 SBI MAGNUM GLOBAL FUND 94-GROWTH 62.88 13.36 0

4 SUNDRAM BNP PARIBAS SELECT MIDCAP- GROWTH 59.87 51.68 0

5 SBI MAGUM MULTIPLIER PLUS 93- GROWTH 59.43 14.07 0

6 TAURUS STARSHARE 58.33 18.87 0

7 TATA EQUITY OPPORTUNITIES FUND-GROWTH 57.96 24.98 0

8 HSBC EQUITY FUND- GROWTH 56.24 52.39 0

9 BIRLA SUN LIFE EQUITY FUND- GROWTH 55.75 38.4 0

10 TAT PURE EQUITY FUND- GROWTH 53.83 25.08 0

11 HDFC TOP 200- GROWTH 52.36 26.03 0

12 TATA SELECT EQUITY FUND- APPRECIATION 52.31 20.5 0

13 BIRLA MID CAP FUND - GROWTH 52.29 47.29 0

14 DSP MERRIL LYNCH OPPORTUNITIES FUND- GROWTH 52.11 27.49 0

15 RELIANCE VISION- GROWTH 51.83 28.11 0

16 KOTAK 3O- GROWTH 51.55 27.64 0

17 HDFC GROWTH FUND- GROWTH 51.1 28.22 0

18 DWS ALPHA EQUITY FUND- GROWTH 50.64 45.58 0

19 DSP MERRIL LYNCH TOP 100 EQUITY FUND- GROWTH 50.6 49.16 0

20 ICICI PRDENTIAL DYNAMIC PLAN- GROWTH 49.76 45.97 0

21 HDFC EQUITY FUND - GROWTH 49.73 24.08 0

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22 FRANKLIN INDIA OPPORTUNITIES- GROWHT 49.62 15.31 0

23 SUNDRAM BNP PARIBAS SELECT FOCUS- GROWTH 49.55 44.76 0

24 HDFC CAPITAL BUILDER FUND- GROWTH 49.49 15.59 0

25 FRANKLIN INDIA PRIMA PLUS- GROWTH 49.19 23.45 0

26 SBI MAGNUM EQUITY FUND- GROWTH 49.17 12.65 0

27 TEMPETON INDIA GROWTH FUND- GROWTH 48.48 21.28 0

28 SUNDRAM BNP PARIBAS GROWTH FUND- GROWTH 48.07 22.53 0

29 FRANKLIN INDIA PRIMA FUND- GROWTH 47.92 23.95 0

30 ICICI PRDENTIAL POWER- GROWTH 47.73 18.06 0

31 SAHARA GROWTH FUND- GROWTH 47.49 40.16 0

32 PRINCIPAL RESURGENT INDIA EQUITY FUND- GROWTH 47.44 32.57 0

33 FRANKLIN INIDA BLUECHIP -GROWTH 47.44 27.52 0

34 TAURUS DISCOVERY STOCK 46.57 10.27 0

35 BIRLA SUN LIFE FRONTLINE EQUITY FUND- GROWTH 45.73 21.81 0

36 TATA GROWTH FUND-GROWTH 45.59 30.32 0

37 ESCOERTS GROWTH PLAN- GROWTH 45.25 32.98 0

38 DBS CHOLA GROWT FUND- GROWTH 44.68 35.98 0

39 JM EQUITY- GROWTH 43.57 12.09 0

40 UTI MASTER GROWTH UNIT SCHEME 1993- GROWTH 43.23 13.25 0

41 ICICI PRUDENTIAL GROWHT PLAN- CUMULATIVE 43.15 27.92 0

42 ING CORE EQUITY FUND- GROWTH 43.09 15.02 0

43 BIRLA ADAVANTAGE FUND- GROWTH 43.06 23.05 0

44 PRINCIPAL GROWTH FUND- GROWTH 42.78 26.09 0

45 UTI MASTERPLUS UNIT SCHEME 91- GROWTH 42.65 14.05 0

46 UTI EQUITY FUND- GROWTH 42.57 10.23 0

47 TAURUS BOBABZA EXCLUSIVE GROWTH SCHEME 95 42.48 15.43 0

48 UTI INDEX SELECT FUND 41.74 16.64 0

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49 UTI MASTER EQUITY PLAN UNIT SCHEME 41.18 37.87 0

50 DBS CHOLA OPPORTUNITIES FUND- CUMULATIVE 40.94 14.86 0

51 UTI MASTER VALUE FUND- GROWTH 39.08 19.88 0

52 JM BASIC FUND- GROWTH 38.92 18.15 0

53 UTI UNIT SCHEME 1986(MASTERSHARE)- GROWTH 38.89 13.71 0

54 BIRLA DIVIDEND YIELD PLUS- GROWTH 37.64 36.53 0

55 LIC MF GROWTH FUND- GROWTH 37.62 12.29 0

56 LIC EQUITY FUND- GROWTH 35.61 14.02 0

57 BIRLA INDIA OPPORTUNITIES FUND- GROWTH 32.97 9.43 0

58 UTI VARIABLE INVESTMENT SCHEME - GROWTH 17.98 13.63 0

Average Return 47.53724 25.1269Probability of less than 9% return compounded annually

0

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BALANCE FUNDS

S.N. SCHEME NAME 5 Yearssince inception Probability

1 SBI MAGNUM BALANCED FUND- GROWTH 42.08 17.99 0

2 HDFC PRUDENCE FUND- GROWTH 38 19.8 0

3 TATA BALANCED FUND- GROWTH 36.92 16.21 0

4 DSP MERRIL LYNCH BALANCED FUND- GROWTH 35.97 19.48 0

5 KOTAK BALANCE -GROWTH 35.41 17.49 0

6 BIRLA SUNLIFE 95- GROWTH 35.27 26.09 0

7 ESCORTS BALANCED FUND - GROWTH 34.99 27.91 0

8 CANARA RBECO BALANCE- GROWTH 33.56 10.54 0

9 FRANKLIN TEMPLETON BALANCEFUND- GROWTH 33.17 17.67 0

10 PRINCIPAL BALANCED FUND- GROWTH 32.75 12.51 0

11 ICICI PRUDENTIAL BALANCED - GROWTH 31.59 17.12 0

12 SUNDRAM BNP PARIBAS BALANCED FUND- GROWTH 29.77 18.48 0

13 ING BALANCED FUND- GROWTH 29.28 10.31 0

14 BIRLA BALCNCE FUND - GROWTH 28.33 14.34 0

15 HDFC BALANCED FUND- GROWTH 27.95 18.08 0

16 JM BALANCED - GROWTH 27.2 11.41 0

17 UTI BALANCED FUND- GROWTH 26.74 15.62 0

18 LICF BALANCED- PLAN C GROWTH 25.75 10.43 0

19 ESCORTS OPPORTUNITIES FUND- GROWTH 18.85 15.88 0

Average Return 31.76737 16.70316Probability of less than 9% return compounded annually 0

Appendice-2

Questionnaire for wealth management survey:

Survey for Wealth Management

13. Do you invest?Yes No

14.Where do you invest and rank these options according to amount of investment in each option? (For maximum-1 and minimum-6) RANKBank FDs Post Office (Kisan Vikas Patra) Mutual Fund Insurance Shares Property All

15. How do you invest?Self Financial AdvisorFamily/Friends adviceWealth Management Company

(If Wealth Management Company is not selected in Q.N.3, then move to Q.N.7)

16. Which wealth management company’s services are you taking?

17. How do you select this wealth management company?BrandAdvertisementFriends/Family advice

18. How do you rate services of your wealth management company?Highly satisfiedSatisfiedDissatisfiedHighly dissatisfied

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Can’t say 19.Have you heard about wealth management companies?

Yes No

20. If yes, why don’t you take services of wealth management companies?Lack of confidenceFeesLack of awareness

21. Would you like to take services of wealth Management Company with minimal fees?Yes No

22. Your annual incomeRs.150000-300000 Rs.300000-500000Rs.500000-600000>Rs.600000

23. What % of income, do you really save?

24. Personal details:Name: Address:Gender:Age:Mobile:Education Qualification:Occupation: Service/Profession/BusinessOrganization Name:

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References:

1. Life Insurance Pre- Recruitment Examination Book from Insurance Institute of India.2. Sell Your Way To Success written by Alfred Tack3. The Fortunes at the Bottom of Pyramid written by C.K.Prahlad4. Bulls Bears and Blue Chips written by Ram K. Piparaiya5. Students Guide To Income Tax by Vinod K. Singhania6. www.moneycontrol.com 7. www.amfi.com 8. www.economicstimes.com 9. www.mutualfundindia.com 10. Ritu Nanda Insurance Services Journal11. Portfolio Organizer, august 2007

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http://www.mutualfundindia.com/

http://www.economicstimes.com/

http://www.amfi.com/

http://www.moneycontrol.com/

project on selling methods of life insurance policies

Documents

scope of wealth management

asset management

investment management

longterm wealth

mutual fund

survey method

direct selling method

various instruments