Ulip Plan Document
Ulip Plan Document
Ulip Plan Document
UNIVERSITY OF MUMBAI
SUBMITTED BY
ROLL NO. 26
SEMESTER - 3
2018-19.
CERTIFICATE
I, Prof. Ashish Diwadkar, hereby certify that Mr. Jatin D Pujari from MCOM of
Guru Nanak Khalsa College of Arts, Science And Commerce completed this
Research
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SECURITIES‖ in semester 3 of the academic year 2022-2023.
Signature of Signature of
Signature of Signature of
Date of Submission:
ACKNOWLEDGEMENT
There are many people who have helped me directly and indirectly to complete this
project successfully.
First I would like to thank my project guide Prof. ASHISH DWADKAR for guiding
me throughout the project. Without her help it would have been impossible for me to
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I am also thankful to all my friends who helped me to understand the technical aspects
of the project and I would also like to thank the principal SEEMA SAPHALE,
VicePrincipal and Coordinator of BMS Dept. and all the faculty members of BMS
dept. and rest of the college for giving me the opportunity to work in the form of
EXECUTIVE SUMMARY
There are many different ways you can go about investing, including putting money
into stocks, bonds, mutual funds, ETFs, real estate (and other alternative investment
vehicles), or even starting your own business.
Every investment vehicle has its positives and negatives, which we'll discuss in a later
section of this tutorial. Understanding how different types of investment vehicles
work is critical to your success. For example, what does a mutual fund invest in? Who
is managing the fund? What are the fees and expenses? Are there any costs or
penalties for accessing your money? These are all questions that should be answered
before making an investment. While it is true there are no guarantees of making
money, some work on your part can increase your odds of being a successful investor.
Analysis, research and even just reading up on investing can all help.
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Now that you have a general idea of what investing is and why you should do it, it's
time to learn about how investing lets you take advantage of one of the miracles of
mathematics: compound interest
INDEX
CHAPTER SUB- TITLE AND CONTENTS PAGE
NO. CHAPTER NO.
NO.
1. Introduction to study(Secondary
Data)
1.1 Introduction 2
1.2 Objective of study 3
1.3 Important terms of investing 4
1.4 Benefits of financial planning 7
1.5 Investment planning process 9
2. Introduction to the topic
2.1 Formulation of goals & need 13
assessment
3. Research methodology
3.1 Introduction 29
3.2 Insurance planning 31
3.3 Investment planning 33
3.4 Retirement planning 36
3.5 Income tax planning 38
3.6 Estate planning 39
3.7 Mutual funds 42
3.8 Fixed income securities 43
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4. Review of literature 45
5. Analysis & findings(Primary Data) 53
6. Conclusion 70
7. Annexure 72
Questionnaire and bibliography 72&75
There are many investment avenues in which a person can invest to make a
future income i.e.
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1. Debentures
2. Gold and Silver
3. Mutual funds
4. Life insurance
5. Real estate
6. Preference shares etc.
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1.3 IMPORTANT TERMS OF INVESTING
Investing
Stocks, bonds, cash equivalents and mutual funds are the most common form
of investment.
Stocks, bonds, mutual funds and certificate of deposits are commonly termed
as securities.
Speculation
Speculation implies the act whereby people make an investment in a risky
asset, hoping to obtain profits from future changes in the prices of the asset.
This hope could be based on reports that people may have heard but they may
not have checked the credentials of the assts.
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financial strength, future prospects, expected returns and the corresponding
risk. The detailed analysis helps in taking a considered view.
Speculation involves taking a short term view based on the volatilities of the
market in order to benefit from the price movements. A speculator works on
the assumption of favorable price movements which may or may not be
happen. A speculator may use technical charts and analysis to predict price
movement but the same will lack scientific rigor.
Gambling
It may mean taking a pot-shot that may or not yield result. There is no real
basis for taking such actions except for some sort of hunch or tip and without
any kind of in-depth analysis of the company or its shares. A dart board
investment style will fall under this category.
Shorting
There is time lag between the deal for sale and the delivery (say of shares), this
allows a person to sell something that he or she does not possess. During the
time lag, the investor buys the requisite quantity and if able to do so at a
cheaper price that that of the sale price, he or she is able to book a profit. This
transaction is called short selling or shorting.
Hedging
Every investment has an inherent risk and an investor takes steps to reduce
this risk. This technique is called hedging which may involve cover operations
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such as buying a call or selling a put or taking forward cover against foreign
exchange exposure etc.
Diversification
Diversified portfolio the return is the weighted average return but the risk of
the portfolio is lower as compared to the risk in the individual securities.
Arbitrage
Arbitrage involves taking advantage of price differential in different markets.
An arbitrageur continuously monitors different markets with the help of
sophisticated tools and seeing an opportunity buys and sells in different
markets to make large profits.
Such price differentials tend to exist for every short period due to
inefficiencies but equally correct fast. However, such techniques are not as
risk free as they may appear due to timing and settlement differences.
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1.4 BENEFITS OF FINANCIAL PLANNING
Financial Planning helps you give direction and meaning to your financial decisions.
It allows him to understand how each financial decision affects other areas of finance.
For example, buying a particular investment product may help your client to pay off
his mortgage faster or may buying a particular investment product may help your
client to pay off his mortgage faster or may delay his retirement significantly. By
viewing each financial decision as a part of a whole, you may help your client
consider the long term and the short term effects on his life goals.
Set specific targets of what you want to achieve and when you want to achieve
results. E.g. Instead of saying you want to be "comfortable" when you retire or
that you want your children to attend "good" schools, you need to quantify what
"comfortable" and "good" mean so that you'll know when you've reached your
goals.
Each financial decision you make can affect several other areas of your life. E.g.
an investment decision may have tax consequences that are harmful to your
estate plans. Or a decision about your child's education may affect when and how
you meet your retirement goals. Remember that all of your financial decisions
are interrelated.
Financial planning is a dynamic process. Your financial goals may change over
the years due to things like an inheritance, marriage, birth, house purchase or
change of job status. Revisit and revise your financial plan to stay on track with
your financial goals.
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Start planning as soon as you can:-
People who save or invest small amounts of money early and often tend to do
better than those who wait until later in life. By developing good financial
planning habits such as saving, budgeting, investing and regularly reviewing
your finances early in life, you will be better prepared to meet life changes and
handle emergencies.
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1.5 INVESTMENT PLANNING PROCESS
Most of us would like to look at life as a continuum from the cradle to the grave
where all phase of life are joyful and well taken care of financially. While most
people spend to satisfy their immediate needs, they would also like to save and invest
so as to take care of their future needs and emergencies. People also desire to have a
reasonable return and create a corpus.
1. Goal setting:
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• Before plans are prepared, the assumptions and conditions underlying them
must be clearly defined these assumptions are called planning premises and
they can be identified through accurate forecasting of likely future events.
• They are vital to the success of planning as they supply per tenant facts about
future. They need revision with changes in the situation. Contingent plans may
be prepared for alternate situations.
3. Reviewing Limitations:
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• Once the broad goals, planning premises and limitations are laid down, the
next step is to decide the period of planning. The planning period should be
long enough to permit the fulfillment of the commitments involved in a
decision.
• After the goals are defined and planning premises are identified, management
can formulate policies and strategies for the accomplishment of desired
results. The responsibility for laying down policies and strategies lies usually
with management. But, the subordinates should be consulted as they are to
implement the policies and strategies
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7. Integration of plans:
• Different plans must be properly balanced so that they support one another.
Review and revision may be necessary before the plan is put into operation.
Moreover, the various plans must be communicated and explained to those
responsible for putting them into practice.
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2.1 FORMULATION OF GOALS & NEED ASESSMENT
Formulation of Goals
Financial goals are the milestones that the client hopes to reach with the help of his
financial resources.
• Realistic.
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2. Analyze investor objectives, needs and current financial situation
Preparation of the investor's Personal:-
Financial Statements Preparation of the Cash flow Statement and the Budget
Prioritizing Goals, The next step is to prioritize the financial goals of the client and
work out the amounts that are required to be invested towards achieving these goals
Evaluate Qualitative Factors.
Qualitative factors have a significant bearing on the financial plan for a client. The
client's Tolerance towards risk, investment preferences, current health status etc. need
to be kept in mind while evaluating alternative Strategies.
A financial planner needs to develop appropriate strategies for the client in the
following areas:-
Inflation is one of the major concerns of a central bank while formulating monetary
policies of the country. Among its many adverse influences, inflation can take away
gains from any investment. An investor would like to gain more than the inflation rate
to have a real return from the investment.
Another concern is longevity and after retirement life spans, coupled with small
nucleus family norms. Therefore, any financial plan has to take care of this concern,
which is a crucial need. Of course, a wise financial planner would always first take
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care of the general and life insurance needs of an individual before commencing
financial planning for other needs and investment.
The answer to the preceding goals would lead to information related to:-
How much money they require?
How much time do they have to get there?
What are the investment vehicles that they may be appropriate for them?
What are the kinds of returns they can expect?
The more specific are the investors, the more likely they can plan and achieve
reasonable goals.
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2.2 INVESTOR PROFILE AND BEHAVIOUR
Motive of investor both rational and irrational are considered under the behavioral
fiancé as defining the long run price formation in the financial markets. The
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traditional finance on the other hand seeks to understand the financial markets by
using models based on rational behavior of the investors.
It is expected from rational investor that they update their beliefs correctly on
receiving new information and make choices in tune with expected utility. A crucial
component of any model of financial markets is a specification of how investors form
expectations. Some of these are:
Representativeness:-
People try to determine the probability if an item belongs to a set or a model
generates a data set.
Conservatism:-
People may be reluctant to search for evidence that contradicts their beliefs, they
tend to treat such evidence with excessive scepticism, and they may misinterpret
evidence that goes against their hypothesis.
Belief perseverance:-
People often cling to their beliefs tightly and for too long.
Anchoring:-
People often start with an initial, possibly some arbitrary value or belief and then
adjust away from it.
Availability bias:-
When judging the probability of an event, people often search their own
memories for relevant information.
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2.3 CONDUCTING RISK ASESSMENT
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The planner needs to understand the risk appetite of the investor. Generally,
investors are asked to fill in a form to ascertain their risk appetite. This helps to
categories the investor into aggressive, moderate and conservative investors
based on their risk profile.
There is always a correlation between the risk appetites of the investors and the
returns they expect. Higher the risk, higher is the return expected. This is known
as risk return trade off. Concepts such as portfolio, diversification, risk and
return and techniques for reducing and hedging risk are some of the tools for
financial planning.
For example:- equity shares by their nature are riskier as compared to a fixed
deposit or government securities. Higher returns are expected from the equity
shares.
Types of Investors
As the investment option for each of the investor types is different, it becomes
essential to determine the style of investor before they invest.
The various investor types are:
Aggressive investor: is an investor who likes to take risks to earn an extra
but of return.
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not capable of taking shocks, in terms of losses in investment. In other
words, they are passive investors.
Typically, they are at retirement stage or already retired with low current
income, they tend to be risk averse and relatively passive investors. They
could also be inheritors of wealth whose main objective is wealth
conservation.
Risk tolerance:-
Investors with distinct investment styles invest in different types of products
having varying risk return relationships. There are various degrees of risk
across the investment spectrum, from government savings bonds, which are
the least risky to equities, commodities and options which are the risk.
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The former, carrying only sovereign risk are considered risk free because of
the government guarantees. Although the government of India saving bonds
and bank fixed deposits (FDs) are the safest, the returns offered are not very
attractive.
Although stocks have historically increased in the price over the long term
investment in equities however could be volatile and very risky over a
shorterterm period.
Investor should remember that they do not lose until they sell what they have
invested in. for example, if an investor in united states did not panic and sell
his stocks in October 1987, he would have done quite well because the market
rebounded in the subsequent years.
The same was true in the Indian market. If investors had not have panicked
and sold post the 800 points fall in a single day on may 17, 2004 at the
Bombay stock exchange (BSE) Sensex level of 4227.5, they would have done
quite well because the market rebounded sharply from its bottom to trade at
6000 level by mid November 2004.
Therefore, when investors invest in the stock market, they should think
longterm. Investors should not invest in stocks any money that they would
need in the short term.
Time:-
The time the investors want to spend on investing determines how active they
can be as investors for managing their money. If they want to spend 15
minutes a month on investing, then they should consider using passive
strategies.
However, if they plan to set out eight hours a week to devote to investing, then
they can consider researching companies and pouring over financial
statements to pick lucrative individual stocks.
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2.4 NEED FOR FIANANCIAL PLANNER
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to higher competition and service standards. Competition in the financial
planning and wealth management is expected to become more intense in
future.
The opening up of Indian market and the entry of the private players the
product range has widened and a lot of choice is available with the Indian
consumer. For example organizations such as insurance companies offer a
wider choice of products today unlike in past where only LIC was opening.
Use of technology for this would enable the financial planner to be more
productive on the job. Most importantly the modern day financial planner
needs to understand his/her customer with respect to their financial position,
their risk appetite and their future financial needs to be able to recommend
suitable investments.
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2.5 INVESTMENT AVENUES
Equity
Please note that investments in equity should only be done for the long term
(anything more than 5 years) to earn decent returns. Risk of investing in equities is
high and so the returns are also high. You could dabble in the stock market broadly in
three ways.
1. Directly by buying and selling shares on the stock exchanges BSE/NSE
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2. Take the plunge via the Mutual Fund route – wherein the options available
are : equity diversified, balanced, tax saving ELSS funds, thematic, exchange
traded or index funds
3. Investing in ULIPs (insurance plans) via their equity funds.
Debt
Debt investment can be done for the short term and long term as well. Risk here is
very low and so return is low as well. Investing in debt can be done by the following
ways.
1. Fixed Deposits, POMIS, NSC, PPF, NPS, Bonds, Kisan Vikas Patra, Senior
Citizen Saving Schemes
2. Debt mutual funds (balanced, floating rate, gilt, liquid and liquid plus) also
offer another way to do so.
3. Traditional insurance policies (money back, whole life, endowment) and the
debt portions of ULIPs can be a mechanism as well.
Real Estate
This is again for the long term with a high risk and very low liquidity factor. Liquidity
is defined as the ease with which you could sell your investment for cash quickly.
Investing in property can be done by :
1. Buying apartments and plots in either residential or commercial areas
2. Or buying Real Estate Mutual Funds.
Commodities
For small investors, exposure to gold is the right step to invest into commodities. The
risk is moderate/high in this class of investment and it is highly volatile as well. 1.
One could buy gold and silver bars/coins or jewelry and
2. Invest in Gold exchange traded mutual funds.
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Art
Investment into Arts is not every small investor’s first dream but having invested into
the first four, one could think of putting their money into art as well. This should be
on less priority as compared to the above four.
These broadly define the options available with investors for investing their hard
earned money.
Returns
Investments are made with the primary objective of deriving returns out of it.
Thus, a good rate of return from an investment is the first and foremost
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conditions for effective investment. The returns may be received in the form
of annual incomes as well as capital gains or loss.
Risk
Risk of an investment is related with the probability of actual returns
becoming less than the expected returns. It can be termed as the variability in
the expected return. Risk may relate to loss of capital, loss of
interest/dividend, delay in repayment of capital, variability of returns, etc. Risk
and returns of an investment are related to each other.
Safety
Safety in an investment implies the certainty of return of capital without loss
of money or time. Safety in another feature which an investor desires from his
investment. Every investor expects to get back his capital on maturity without
loss without delay.
Liquidity
Liquidity means marketability of an investment. Liquidity in an investment
refers to the ability an investment to be converted in cash by sale or transfer.
In simple terms, liquidity means to get your money whenever you need it.
Tax Benefits
The investor may also desire to get the benefits of tax exemption from the
investments. Some investments offer tax benefits while others do not. Tax
benefits available to an investment can be in one of the following form:
Investments can offer tax benefits at the time of initial deposits.
Investments can offer tax benefits on returns generated.
Investments can offer tax benefits when it is redeemed on maturity.
Duration
The duration of an investment – particularly how long it may take to generate
a healthy rate of return is a vital consideration for the investor. The investment
horizon should match the period that your funds must be invested for or how
long it would take to generate a desired return.
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Past Market Trends
At times, past market trends may also influence selection of investment
alternatives. Sometimes history repeats itself, sometimes markets learn from
their mistakes.
All above are the factors that affects investment decisions of the people in the
society.
The most important aspect of cash flow management is avoiding extended cash
shortages, caused by having too great a gap between cash inflows and
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outflows. You won't be able to stay in business if you can't pay your bills for
any extended length of time.
A Personal cash flow statement measures yours cash inflows and outflows in order to
show you your net cash flow for a specific period of time. Cash inflows generally
include the following:
• Salaries
• Interest from investments
• Dividends from investments
• Capital gains from the sale of financial securities like stocks and bonds
Cash inflow can also include money received from the sale of assets like houses or
cars. Essentials, your cash inflows consist of anything that brings in money.
Cash outflow represents all expenses, regardless of size. Cash outflows include the
following types of costs
A cash flow plan will function best if it reflects your goals, whether long-term or
short-term. There four factor that will help you establish control over money.
1. Income/Expenses
Identity and isolate income and expenses. You will need to consider whether
income is gross, or net (the amount you actually have available); if it is gross,
you need to set aside an expenses category for taxes.
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2. Category
Define the kinds of income you receive and the kinds of expenses you incur.
Categorize them according to the fixed or flexible nature of the item.
3. Time
Your system should be based on a monthly structure, and you should quantify
your income and expense within a 12-month format.
4. Amount
Income and expenses should be expresses in Rupees
Setting up a cash flow management system to help you live within your budget
can help put you back on track toward meeting your goals. With a proper
system in place, you will be well on the way to controlling your cash flow,
rather than letting in control you.
Insurance is essentially the means to financially compensate for losses that life
throws at people, corporate, and otherwise. Insurance can be used as a tool to
shield an individual against potential risks like travel accidents, death,
unemployment, theft, property destruction by natural calamities, fire mishaps,
etc.
Functions of Insurance
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The functions of insurance can be categorized as:
• Primary Function:
The following are the primary functions of insurance:
Secondary Function:-
The following are the secondary functions of insurance:
• Small capital to cover larger risk: Insurance relieves the businessmen from
security investments by paying small amount of premium against larger risk and
uncertainty.
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• Contributes towards the development of larger industries: Insurance provides
development opportunity to those larger industries having more risks in their
setting up.
Other Function:-
• Source of earning foreign exchange: The country can earn foreign exchange by
way of issue of marine insurance policies and various other ways.
• Risk free trade: Insurance promotes exports insurance, which makes the foreign
trade risk free with help of different types of policies under marine insurance
cover.
Characteristics of Insurance:-
• Pooling of losses: Spreading of losses incurred by a few over the entire group, so
that in the process, average loss is substituted for actual loss.
• Risk transfer: Pure risk is transferred from insured to insurer, who typically is in
a stronger financial position to pay the loss than the insured.
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3.3 INVESTMENT PLANNING
Definition:-
The placing of funds into the proper investment vehicles based on the investor's future
goals, time horizon, and priorities. This also takes into account the safety of the
investments as well as liquidity and level of return. Ideally, proper investment
planning will allow the investor's funds to produce financial rewards over time.
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• Investment Plans: - Investment plans help beat inflation and build a large corpus.
We at Policybazaar.com help you compare investment plans offered by all life
insurance companies in India and select the best suited investment plan for you.
An investment plan should be selected keeping in mind 3 main goals:
• Risk Profile:-if you are a young customer and are willing to take financial risks, a
ULIP is better suited for you while if you’re a conservative investor, then a
traditional endowment or money-back plan will suite your needs.
• Final Goal:-you want to build the corpus for retirement or child’s education.
• Unit Linked Insurance Plans:-the easiest way for a consumer to enter the stock
market with an added advantage of life cover. As these products provide tax
benefits and market linked returns, they are very good for long-term investment.
ULIPs offer many investment funds to choose from which allow you flexibility to
shift between equity and debt, based on the market conditions and risk profile.
• Money back Plans:-type of endowment plans which give periodic cash payouts to
investors. As they help build regular large capsules of fund; they are very useful
for salaried class who wish to save for buying large assets every 3-5years
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Child Plans are saving instruments which help parents build a protected asset
for their child’s future. They also provide many insurance features which
protect the intent or reason for corpus building; primarily for child’s future
education and expenses.
• Investments should be both liquid and fixed-This enables you to use them in
emergencies as well as avoiding overspending.
• Start small and gradually increase invested amount- Choose premium payment
options ranging from monthly to annual to single premium.
• Research a lot before investing- use help of financial planner if need be.
• Ask questions - Resolve all your doubts before investing. Use investment
calculator to calculate exact premium before buying.
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• Investments in Gold:- The value of gold has been appreciating steadily.
Looking at the last few years, there has been more than 22% annualized
returns; this makes gold a very good investment option. For people interested in
investing in gold, there are various methods which include physical gold, egold
and gold ETF.
• Bank Fixed Deposits and Postal Schemes:- These 3 options are most suitable
for making safe investments. The interest rate on PPF account is presently at
8.8% per annum and keeps changing every year; different banks offer different
interest rates. There are also many postal investment schemes which can be
bought.
The main goal of a successful retirement planning is ensuring that one will have
sufficient financial resources to maintain or improve one’s lifestyle during his/her
retirement years. According to some financial experts, to do so, one will need to save
enough.
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• The years one spends in retirement may be more or less than one projected. The
same may go for the increase in cost of living.
• However a comprehensive outlook and some thought will help to provide
realistic projections.
• The longest of journeys start with single step. We are not sure who said that,
but being in the financial planning space, we think it most aptly describes what
retirement planning is all about.
• Planning for retirement is one long journey but a resolute and systematic step by
step approach makes it a lot less laborious.
Start early:-
• A well prepared approach towards any goal is usually the result of an early start.
Retirement planning is no different. We hear financial planners say that it’s
never too early to start saving for retirement and they are right.
• Make no mistake that an early start helps and one will surprised at just how
much it helps. A friend or colleagues, who started saving for retirement even
five year earlier than another with the same quantum of investment
• Even if one doesn’t have the requisite amount of money required to start, the
key lies in starting with whatever is available and making up for the deficit at a
later stage.
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• The most important reference point for the investment plan is the objective to
invest in avenues that lower risk and maximize returns and do so in line with
one’s risk profile.
• This is where the investment advisor’s expert advice will play a crucial role.
Typically a retirement portfolio should be well diversified across pension plans,
mutual funds, equities, EPF/PPF and fixed deposit.
One of the important considerations in making any investment choice across asset
classes is tax implication of investment decision. Tax planning plays an important
role in portfolio management especially in the current scenario of complex tax
structure.
• Every person, whose total income of the previous year exceeds the maximum
amount that is not chargeable to income tax, is an assessed.
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• An income can be taxed under the head ―Salaries‖ where there exists an
Employers-Employee relationship between the payer and the payee.
• The gain on sale of a capital asset is called capital gain. The following are
various types of capital gains:
Estate planning refers to the process by which an individual or his/her family arranges
the transfer of assets to the legal heirs in the event of death or disability of the
individual.
It includes the distribution of the real and personal property of an individual to his/her
heirs. An estate plan aims to preserve the maximum amount of wealth possible for
beneficiaries and flexibility for the individual prior to his death.
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• Tax-effective transfer: To ensure least tax deduction on such transfer of wealth.
- Ensuring all the benefits due to the deceased, such as life insurance,
pension, and other benefits are received.
During the
Lifetime
Power of
Trust Gift Partition
Attorney
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• Trust: A trust is an entity created to hold assets for the benefits of certain person
or entities.
• Will: it is a legal document through which, one can allocate one’s assets and
property to the loved ones after death.
• Intestate Succession: The Indian Succession Act states that any attempt to set
out the exact share of each such person and its fluctuation depends on various
factors.
The share taken by each sharer will fluctuate in different circumstances.
• Life Insurance: It is a good estate planning tool. The main reason for a life
insurance is that when the insured name his beneficiaries, the money passes to
them directly, without probate.
Post -death
Life
Will Succession
Insurance
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3.7 MUTUAL FUNDS
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3.8 FIXED INCOME SECURIETIES
• Tradable securities: It means they have a secondary market where they can be
sold or tradable securities. An example of tradable securities is debentures. The
various types of tradable securities are:
- Government securities
- Corporate bonds
- N.S.C.
- P.P.F.
- Company deposits
• Safety: Fixed income investments generally have two features associated with them.
Return of capital at the end of a specified period and/or a specified rate of return for
a specified period.
• Income Expectation: With the exception of Floating Rate Securities, the coupon is
set at issuance and remains the same until maturity.
• Choice: The different fixed-income instruments in the market allow you to choose
from a range of credit ratings and maturity periods.
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CHAPTER 4
REVIEW OF LITERATURE
Abstract: In the present scenario, everybody needs investment, even if one does not
participate directly in selection of any particular investment regime, participation still
occurs through pension plans, saving schemes of banks and post offices and life
insurance policies. With the advent of globalization and diversification of financial
markets, investment opportunities for the retail investors have increased. Investor's
decision making capacity is highly influenced by many factors such as the return he
would be getting for holding any particular financial security. Therefore in order to
understand the individual investor behavior many factors have to be considered such
as stock preferences, risk tolerance, objective and pattern of investment etc. Insight
about the desire, socio-demographic profile, financial know-how and nurturing
environment play a very crucial role in understanding the movements of financial
markets. In the present study, the enormous literature related to investor behavior have
been analyzed and explored. The study tries to propose a conceptual framework by
exploring the various empirical studies done on investor behavior. Despite the
enormous wealth of existing research, there is still a scope for future research.
Amutha
Abstract: The economic boom in India has boon to many in terms of increased job and
business prospects. The past decade has witnessed changes in consumer lifestyle and
has influenced many activities, including investment activity. People used to invest
savings in various avenues. There are considerable variations in the availability of
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investment avenues in pre-liberalization and post-liberalization period. Even changes
in demographic profile of India substantiate these changes in investment avenues,
their growth and a spurt in the new avenues. This article tries to study the relationship
between demographic profiles and investment choice of the investors. Show less
www.sciencedirect.com
Abstract:
www.sciencedirect.com
Abstract:
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Generation Networks) is receiving extraordinary attention from policy makers all over
the world, due to the significant impact of high-speed Internet access on the whole
economy and society. However, even before the recent financial crises, a dramatic
downward trend in telecommunications investment has occurred, mainly due – at least
according to incumbent operators – to excessively intrusive regulatory intervention.
The typical conflict between regulation, competition and investment emerges. It is
therefore important, for both future research and regulatory and practitioners’
references, to review the specialized but growing branch of the literature on this
interesting and policy-relevant issue. The purpose of this paper is therefore to survey
the relevant theoretical and empirical literature on the relationship between regulation,
at both retail and wholesale level, and investment in telecoms infrastructures. The
picture that emerges is not conclusive, and further research is still needed, both
theoretically and empirically, to better understand the real impact of regulatory
incentives on investments.
Reference: www.sciencedirect.com
Abstract:
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industry are also related to the use and importance of sophisticated capital budgeting
practices.
Reference: www.emeraldinsight.com
Abstract:
Takes as its departure point the criticism of Guthrie and Parker by Arnold and the
Tinker et al.critique of Gray et al. Following an extensive review of the corporate
social reporting literature, its major theoretical preoccupations and empirical
conclusions, attempts to re‐examine the theoretical tensions that exist between
―classical‖ political economy interpretations of social disclosure and those from more
―bourgeois‖ perspectives. Argues that political economy, legitimacy theory and
stakeholder theory need not be competitor theories but may, if analyzed appropriately,
be seen as alternative and mutually enriching theories from alternative levels of
resolution. Offers evidence from 13 years of social disclosure by UK companies and
attempts to interpret this from different levels of resolution. There is little doubt that
social disclosure practice has changed dramatically in the period. The theoretical
perspectives prove to offer different, but mutually enhancing, interpretations of these
phenomena.
www.emeraldinsight.com
Abstract:
This paper presents an overview and guidance for manufacturing companies which are
preparing to invest in advanced manufacturing technology (AMT). The purpose of
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this paper is to explain the reasons why the company may encounter problems while
adopting AMT, and to look at the many suggestions offered by the relevant literature
for improving the performance of evaluation in AMT investment. According to the
four major steps in adopting AMT (i.e. strategic planning, justification, training and
installation, and reutilization and implementation), the research work here aims to
assist managers or investors to recognize problems at each step, thus offering
appropriate ways to avoid and/or solve those problems. It is believed that improved
justification methods will encourage more firms to invest in AMT and to realize the
benefits these investments can offer.
Reference: www.sciencedirect.com
Abstract:
This paper reports the results of a study on the usefulness of typical social disclosures
from corporate annual reports for investment decision-making. Rather than seek to
solely survey respondents about their stated behavior, the present study also seeks to
examine if narrative social disclosures in the annual report actually impact on the
behavior of how investors allocate their investment funds. The experiment provides a
basis for assessing the magnitude of any decision impacts. The results indicate that
from a sample of sophisticated users (accountants and investment analysts) social
disclosures from annual reports do not elicit any more than a 15% switch in
investment funds. Furthermore, the switch in funds is not always in favor of the
company providing the information. Consistent with these behavioral reactions the
survey evidence also reveals moderate attitudes to the decision usefulness of narrative
social disclosures for investment decision making.
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Andrew L. Zacharakis, G. Dale Meyer
Reference: www.sciencedirect.com
Abstract:
The three staged investment process often begins with venture screening. First, VCs
screen the hundreds of proposals they receive to assess which deserve further
consideration. Those ventures that survive the initial stage are then subjected to
extensive due diligence. Finally, the VC and entrepreneur negotiate terms of the
investment. Considering the amount of time that due diligence and negotiation of
terms may take, it is imperative that VCs minimize their efforts during screening so
that only those ventures with the most potential proceed to the next stage. Yet, at the
same time, the screening process should also be careful not to eliminate gazelles
prematurely. VCs are in a quandary. How can they efficiently screen venture
proposals without unduly rejecting high potential investments? The answer may be to
use actuarial decision aides to assist in the screening process.
Actuarial decision aides are models that decompose a decision into component parts
(or cues) and recombine those cues to predict the potential outcome. For example, an
actuarial model about the VC decision might decompose a venture proposal into
decisions about the entrepreneurial team, the product, the market, etc. The
subcomponent decisions are than recombined to reach an overall assessment of the
venture's potential. Such models have been developed in a number of decision
domains (e.g., bank lending, psychological evaluations, etc.) and been found to be
very robust. Specifically, these models often outperform the very experts that they are
meant to mimic.
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The current study had 53 practicing VCs participate in a policy capturing experiment.
The participants examined 50 ventures and judged each venture's success potential;
would the venture ultimately succeed or fail. Likewise, identical information about
each venture was input into two different types of actuarial models. One actuarial
model—a bootstrap model—used information factors that VCs had identified as being
most important to making a good investment decision. The second actuarial model
was derived by Roure and Keeley (1990). The Roure and Keeley model best
distinguished between success and failure in a study of 36 high-technology ventures.
The bootstrap model outperformed all but one participating VC (he achieved the same
accuracy rate as the bootstrap model). The Roure and Keely model, although less
successful than the bootstrap model, outperformed over half of the participating VCs.
The implications of this study are that properly developed actuarial models may be
successful screening decision aides. The success of the actuarial models may be
attributed to their consistency across different proposals and time. The models always
weight the information cues the same. VCs, as are all human decision makers, may
often be biased by differing salient information cues that cause them to misinterpret or
ignore other important cues. For example, a VC may overlook product weaknesses if
(s)he is familiar with the entrepreneur putting forth a particular proposal. Although the
current study developed a generalized actuarial model, each VC firm could create
screening models that fit it's particular decision criteria. The models could then be
used by junior associates or lower level employees to perform an initial screen of
received venture proposals thereby freeing senior associates' time.
Reference: www.tandfonline.com
Abstract:
As early as the 1950's, capital budgeting processes based on discounted cash flow
served as the principal tools for evaluating capital investment proposals for American
firms. Buffeted during the late 1970's and 1980's by overseas competition, American
54
firms, supported by innovative researchers, reconsidered capital investment evaluation
practices. This paper briefly discusses both past and present manufacturing investment
evaluation methods.
Primary Data
CHAPTER 5
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59
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63
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DATA ANALYSIS
From the above survey of 100 people, 70% of people have knowledge about
investment avenues and rest of 30% does not even know about investment avenues.
So, there is a need of awareness about investment avenues in the society.
As per analysis, 50% people had invested before in any of the investment avenues and
50% people do not invested yet.
While investing every person check below mentioned factors:
• Returns
• Risk
• Other
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Out of 100, 65% people going for Returns; 27% people checks the Risk; and rest of
people going for other things which includes (Tax benefits, Past market trends,
Liquidity etc.).
While investing every person prefer to invest there money in following sectors:
• Private Sector
• Government Sector
• Public Sector
• Foreign Sector
From the above sector maximum amount of people selecting government sector
than any other sector.
• Children’s Education
• Retirement
• Home Purchase
• Children’s Marriage
• Healthcare
• Others
So, people going for the objective of home purchase other than any other objective
of investment and after that people going to prefer Healthcare so, people have
saving objectives.
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• Wealth Creation
• Tax saving
• Earn Returns
• Future Expenses
• Other
So, people have wealth creation objective behind investment then any other
objective of investment.
• Steadily
• At an Average rate Fast
So, 47% of people want there investment to grow at an average rate, 30% of
people want there invest at an fast rate, and rest of people want there investment to
grow at steadily rate.
• 0-15%
• 15-30%
• 30-50%
So, Maximum amount of people going for 15-30% of there income for investment
after that maximum amount of people going for 0-10% of there income for
investment.
Out of 100, 46% of people are preferring Long-term investment than any other type of
investment.
The source of investment advice is most through internet i.e. 28%, 22% people are
looking for financial planners to invest in various securities. Rest of the people are
going for other sources for investment advice.
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CHAPTER 6
CONCLUSION
Through the various sections of this tutorial, we’ve introduced and discussed a
number of investing concepts and investing vehicles. Among them are:
· Stocks
· Bonds
· Mutual Funds
· Active management
· ETFs
Moreover, we stressed the idea that investing is not one size fits all. Different
strategies work for different investors and different situations. Additionally, an
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investor might employ more than one strategy, or choose a variety of investment
vehicles depending upon their goals.
Just like going on trip in your car, it is important that investors have a plan and a
destination in mind before investing their money. Your goals-whether planning for
retirement or buying a home-dictate your time horizon, which dictates your tolerance
for risk. Additionally, you want to make sure that you diversify your investments so
that some do well when the rest of your portfolio might not. This approach allows an
investor to construct a portfolio that is in line with their risk tolerance and that
balances potential return with some downside risk protection.
Hopefully our tutorial has provided some insights and good ideas as you invest for
your future.
Your journey is just beginning, however. Your challenge is to keep learning and stay
informed.
So, from this project we can conclude that investment of people is decided on there
financial planning, Tax saving planning & future goals etc.
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CHAPTER 7
ANNEXURE
QUESTIONNAIRE (BLANK)
Your age group
• 10-20
• 21-30
• 31-40
• 41-50
Gender
• Male
• Female
What is your profession?
• Businessmen
• Employee
• Student Other
Do you know about investment avenues?
• Yes
• No
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Whether you invested before in any investment avenues?
• Yes
• No
What factors do you see while investing in securities?
• Returns
• Risk
• Other
In which sector do you prefer to invest your money?
• Private Sector
• Government Sector
• Public sector
• Foreign Sector
What are your saving objectives?
• Children’s Education
• Retirement
• Home purchase
• Children’s marriage
• Healthcare
• Others
What is your investment objective?
• Income and Capital Preservation
• Long-term Growth
• Short-term Growth
• Growth and income
• Other
What is the purpose behind investment?
• Wealth creation
• Tax saving
• Earn returns
• Future expenses
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• Other
At which rate you want your investment to grow?
• Steadily
• At an average rate
• Fast
What percentage of your income do you invest?
• 0-15%
• 15-30%
• 30-50%
What is the time period you prefer to invest?
• Short-term(0-1yrs)
• Medium-term(1-5yrs)
• Long-term(>5yrs)
What is your source of investment advice?
• News papers
• News channels
• Family or Friends
• Books
• Internet
• Magazines
• Advisor
• Financial Planner
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BIBLIOGRAPHY
Reference sites
www.researchgate.com
www.sciencedirect.com
www.wikipidia.com
www.investopedia.com
www.googlescholer.co.in
www.tandfonline.com
www.emeraldinsight.com
www.googledocs.com
www.googleforms.com
Newspapers
• Times Of India
• Economics Times
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