Table of Content

Academy Certificate
Declaration
Acknowledgement
Preface

CHAPTER- 1 Conceptual Background

CHAPTER- 2 Company Profile

CHAPTER- 3 Research Methodology

Background of the topic

Objective

Research Design

Area of Sample

Sample Selection

Questionnaire

CHAPTER- 4 Analysis & Interpretation

CHAPTER- 5 Finding/Conclusion/ & Recommendation

Bibliography

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 ACKNOWLEDGEMENT

I am using this opportunity to express my gratitude to everyone

who supported me throughout the course of this MBA project
report. I am thankful for their aspiring guidance, invaluably
constructive criticism and friendly advice during the project work. I
am sincerely grateful to them for sharing their truthful and
illuminating views on a number of issues related to the project.
I express my warm thanks to Mr. Shiv raj Singh sir for their
support and guidance at Fintellect intelligent financial solutions
LLP.
I would also like to thank my project external guide Mr. Meeraj
Ahmed sir faculty of GhanshyamBinani Academy of
Management Sciences and all the people who provided me with
the facilities being required and conductive conditions for my MBA
project report.

Thank you
Pal Preeti Rajesh

2
 DECLARATION

I hereby declare that this Summer Training Report

entitled “INVESTMENT PLANNING WITH REFERENCE TO

WORKING EMPLOYEES OF FIFS” in Fintellect intelligent

financial solution LLP submitted in the partial fulfillment

of the requirement of Master of Business Administration

(MBA) of GHYANSHYAM BINANI ACADEMY OF

MANAGEMENT SCIENCES , MIRZAPUR is based on

primary &secondary data found by me in various

departments, books, magazines and web FIFS &

Collected by me in under guidance of DR. Meeraj Ahmed

DATE:
Pal Preeti Rajesh
MBA (Second Years)
Roll No.1707670016

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 Preface
Importance of theStudy

Savings are the excess of Income over expenditure for any economic

unit. Thus: S=Y- E, where S is the savings, Y is the income and E is

the expenditure.

Excess funds or surplus in profits or capital gains are also available for investment.
Savings is abstaining from present consumption for a future use. Savings are
something autonomous coming from households as a matter of habit. But bulk of
the savings come for specific objectives like interest income, future needs,
contingencies, precautionary purposes or growth in future wealth leading to rise in
the standard of livingetc.

Let us learn more about how people earn, how they spend, how they keep money
for future needs, and how they use their earnings to get some return.

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 CHAPTER- 1

Conceptual Background

5
Savings andInvestments

Savings are the excess of Income over expenditure for any economic

unit. Thus: S=Y- E, where S is the savings, Y is the income and E is

the expenditure.

Excess funds or surplus in profits or capital gains are also available for investment.
Savings is abstaining from present consumption for a future use. Savings are
something autonomous coming from households as a matter of habit. But bulk of
the savings come for specific objectives like interest income, future needs,
contingencies, precautionary purposes or growth in future wealth leading to rise in
the standard of livingetc.

When people start saving they search for various investment options to invest their
savings. During this process they consider various factors like risk, return,
duration, liquidity, tax planning, hedge against inflation, safetyetc.

In earlier days the investment options available to investors were very limited like
insurance, jewelry, fixed deposits, debentures, shares etc.

But in the liberalized economy there are many investment options, which promise
very high returns. After private players started operating in Insurance, there are
many policies available which not only cover the risk, but they also promise high
return with good capital appreciation.

Individuals engage themselves in such activities to earn money. The money they
earn is normally spent on meeting daily needs like buying vegetables, groceries,
clothes, giving school fees, telephone bills etc. People also generally try to keep
aside a part of their earnings to meet future needs like marriage of their sons and

6
Daughters, buying a house, health care, etc. People also use part of their earning to
deposit in banks or in buying shares, property or gold. By doing so, these people
are also able to generate some extra earnings forthemselves.

2.1.1 Income

As we know, individuals engage in one or the other occupations to earn their

livelihood. For example, a person may be employed in Bank and draw salary, a
person may engagein

7
selling books and earn a profit, a doctor or a lawyer may do the private practice
and get fees for their services. The earning from all these sources is called income.
Sometimes we find people earn from more than one source. For example, a teacher
can write books for schools and he gets some money from the publishers. If he is a
singer, he can sing for All India Radio (AIR) for which AIR gives him some
money. Thus, one individual can engage in different occupations to earn money.
The earnings from different sources are collectively called as his total income. This
total income in a month is called as his monthly income and in a year is
annualincome.

Sources of Income:

Some may earn from a single source and others may have multiple sources. Let us
learn about the various sources from which people earn their income.

 Business: Individuals engaged in business earn income by way ofprofit.

 Employment: People who are in employment earn their income by way of

salary or wages.
 Profession: You have seen doctors, lawyers and chartered accountants. They

provide personal services of special nature and charge fees for their services.
This fee is the source of income forprofessionals.
 Vocation: As we know vocation is the application of one’s special skill or

knowledge to earn money. For example, a good cook can cook food at
marriage parties and earn some income. A carpenter can make or repair
furniture and earnincome.
 Agriculture: When we cultivate land we produce crops, paddy, vegetables

etc. All or a part of it can be sold which gives us a return. This earning is
called agricultural income.

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 Property: Normally owning land or a home is considered as owning

property. This property can be given on rent or lease to someone for use and
we get a return on it. Thus, it becomes a source of income forus.
 Other Income: People keep a part of their earning either in banks, post office

or they can buy shares and debentures, government bonds etc. All these give
them some return in the form of interest/dividend. These are also called
theirincome.

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Expenditure

When we buy goods or products we pay money for them. Similarly when we avail
of some services like consulting a doctor during illness or getting water and
electricity for use, we also pay for them. Normally we pay for all these goods and
services since we use them. Sometimes we present some gift items to our friends
and relatives for their use. Besides this, we also spend money on charity and
donation to the poor persons and also to the cyclone or earthquake victims. In these
cases, we do not earn any money out of such spending. These are our expenditure.
Sometimes we spend money and use it for other purposes to get some additional
income. That spending is a type of expenditure through which we generate further
income. This is called investment. To clarify the concepts further let us observe
the activities of a housewife and a restaurant owner. Both of them buy vegetables.
A housewife buys them for consumption of her family and the restaurant owner
buys them to prepare different dishes and sells them at aprofit.

In the first case the housewife does not get any monetary return. Thus, it is
expenditure for her. In the second case i.e., in case of restaurant owner, spending
on vegetable can be termed as investment, because the spending on vegetables
finally generates additional income for him. Thus, the term ‘Expenditure’ refers to
spending of money on any item, which does not give any additional monetary
income in return to the person who spends that amount.

Avenues of Expenditure:

Generally, most of us spend a major portion of our income on buying goods and
services for daily consumption. Besides spending on goods and services there are
also many other areas in which we spend money like expenditure on celebrations,
on entertainment, charity and donation, etc. The different areas in which we spent
our earnings are called avenues of expenditure.

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 Expenditure on Goods and Commodities: We may spend money on various
types of goods and commodities needed for use in our daily living. These
may be perishable goods like vegetables, milk, fish, etc. or may be consumer
durables like television, radio, furniture etc.

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 Expenditure on Services: We also spend money for availing of different
types of services. It may be for availing banking services, postal services,
transport services, communication servicesetc.
 Expenditure on Celebrations: In our daily life we find several occasions for
celebration. It may be a birthday, an anniversary, a festival, a marriage
ceremony etc. On such occasions we spend a lot ofmoney.
 Expenditure on Entertainment: In our busy life we often feel like taking a
break for some sort of enjoyment through entertainment programs. This may
include going to watch a movie or drama or dance or cricket match or even
going for a picnic ortour.
 Expenditure on Charity and Donation: Sometimes people spend money by
donating to individuals or institutions engaged in social services or
charitable work. These are called expenditure on charity anddonation.
 Expenditure on Health and Education: In a family people usually spend
some money on health and education of their children. When individuals go
for higher education it requires more money. Thus, money spent on health
and education may be termed asexpenditure.
 Other Expenditure: The modern age has paved newer avenues of
expenditure for people. For example, now-a-days people go to a gymnasium
to keep themselves physically fit, go to beauticians to take care of their body
and beauty, surf the Internet to gather information and also send e-mails,etc.

2.1.2 :Savings

Savings refer to the amount of money which is kept aside from the current income
for future use. We may be able to keep aside this money either by reducing our
expenditure or by increasing our income or by doing both.

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Investors are savers but all savers cannot be good investors as an investment is a
science and an art. Savings are sometimes autonomous and sometimes induced by
the incentives like fiscal concessions or income or capital appreciation. Savers come
from all classes except in the case of the population who are below the poverty line.
The growth of urbanization and literacy has activated the cult of investment. More
recently, since the eighties the investment activity has become more popular with the
change in the govt.

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policies towards liberalization and financial deregulation. The process of
liberalization and privatization was accelerated by the govt. policy changes
towards a market oriented economy, through economic and financial reforms
started in July 1991.

Need for Savings:

Savings are essential not only for individuals, family or businessmen but it is also
very much required for a nation. Growth is practically impossible without savings.
Individuals save because of several reasons. Let us discuss why we all
requiresavings.

Savings help us to meet future requirements: We need money in future for various
purposes like spending money on higher education, on marriages and other
celebrations, owning some immovable assets like house, land, farms etc. With
savings at hand we, can meet all theseexpenses.

Savings help us to meet expenses during emergencies: There are events which are
uncertain and may occur in future. All these events may require some amount of
money to be spend, which we can have from our savings. For example, we may
require money during emergencies like sudden illness, accidents, etc.

Savings help us to raise our standard of living: Savings accumulated over a period
of time become a substantial amount, which enables us to buy something, which is
better, comfortable or even luxurious. For example, you can buy a vehicle of your
own, home, good furniture; you can use generators/inverters at home to avoid
power cut, etc. All these improve your standard of living.

Savings help us to generate further income: We can use our savings or part of it in
buying shares, debentures or bonds, in buying property and renting it out or even in

14
keeping money in a bank for a fixed period. All of these can give us an assured return
in terms of dividend, rent or interest. This is an additional income for us.

Savings help the nation in its economic development: When we keep our savings in a
bank or in a post office, we get interest in return. But have you ever thought what
they do with our money? How do they generate more money from our savings?
Actually they utilize our money for various productive purposes. For instance, banks
may give our money to the business houses as loan and charge more interest from
them. Similarly, government may.

coming back from Shimla you may not be requiring all those winter clothes. This
sort of expenditure may be cutshort.

Try to generate additional income and don’t spend it. This is a very good way of
savings. Whatever we earn from a regular source we can spend it on our livelihood.
But the extra earnings that we make from other sources can be kept aside for future
use. For example, suppose one of your articles is published in the newspaper or
magazine and you are paid some money for that. You can keep aside this money
for future use.

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Investment

We have already learnt that sometimes people spend some money on buying
shares, bonds, properties, etc… which gives them some monetary return.
Sometimes people also keep their savings or a part of it as a recurring or fixed
deposit in the banks or post offices and earn interest on it. Similarly some people
deposit their money in Mutual Funds, Public Provident Fund Account etc. some
buy National Savings Certificates from the post office and some take Life
Insurance Policies etc. All these give them some additional income. These types of
expenditures are called investment. Thus, the term ‘investment’ refers to depositing
or spending money on some items that generate additional income either
immediately or in the future. For example, if you deposit money in Public
Provident Fund Account it will give you some amount of return in the form of
interest. So, this is your investment.

Objectives of Investor:

 Income
 Appreciation ofcapital
 Safety
 Liquidity
 Hedge againstinflation
 A method of taxplanning

The mix of these objectives may also depend on the time frame of the investment.

 Short-term/day to day tradinggains

 Short term capital gain up to oneyear
 Long term appreciation of more than 1 to 3years

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Investment preferences of public may be set out in terms of their savings for:

 Transaction purpose (for daily needs or regularpayment)

 Precautionary purpose (for contingencies or specialneeds)
 Speculation or asset purposes (for capital gain or building

ofassets) Let us learn about avenues available forinvestment.

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Deposits in Banks and Post Offices: These are the most common, popular, risk-
free, and trustworthy investments. In banks and post offices, individuals deposit
their money in savings account, where they can withdraw the money whenever
required. They can also deposit money for a fixed period on one-time basis or a
recurring basis. All these investments are safe and give an assured return. There is
something known as recurring deposits. That means in Banks we can open
recurring deposit accounts, and every month/quarter, we can deposit the fixed
amount and the bank will give a fixed interest on that money which is usually
higher than the regular interest rates in the banks.

Other Schemes/Certificates of Bank, Post Office: Apart from deposits, the banks
and post offices also offer various other schemes like Monthly Income Scheme,
National Savings Scheme, Public Provident Fund, National Savings Certificates,
KissanVikasPatra etc., which provide assured return and are risk-free.

National Savings Certificates (NSC) Ninth (IX) Issue

 No maximum limit forinvestment

 INR 100 grows to INR 234.35 after 10years
 Minimum INR 100; No maximum limit available in denominations of INR

100, 500, 1000, 5000, &10,000

 A single holder type certificate can be purchased by an adult for himself or
on behalf of a minor or to aminor
 Rate of interest:8.90%
 Maturity value of a certificate of INR 100 purchased on or after 1.4.2012

shall be INR. 238.87 after 10years

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KissanVikasPatra

 Minimum Investment of INR 500; No maximumlimit

 Rate of interest 8.40% compoundedannually
 Money doubles in 8 years and

7months ProvidentFund

Employee Provident fund scheme came into effect in 1952, and this was done on a
mandatory basis so that employees save on a monthly basis through a government
scheme.

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The Government gives interest on the money which is deducted in PF. All the
employees (including casual, part time, Daily wage contract etc.) other than an
excluded employee are required to be enrolled as members of the fund the day, the
Act comes into force in such establishment. Ideally when someone attains the age
of 55, or over and retires from his duties, then s/he is eligible to withdraw the PF.

Public Provident Fund

Public Provident Fund (PPF) is a savings-cum-tax-saving instrument. It also serves

as a retirement-planning tool for many of those who do not have any structured
pension plan covering them.

The account can be opened in designated post offices, State Bank of India
branches, and branches of some nationalised bank. ICICI Bank is the first private
sector bank which has been authorized to open PPF account.

 Minimum yearly deposit of INR 500 isrequired

 Limit of subscription: INR 70,000 in ayear
 Rate of Return on PPF is 8.6 % p.a. (Compoundedannually)
 The minimum tenure of the PPF account is 15years
 The subscription, which shall be in multiples of INR 5, for any year, be paid

into the account in one lump sum, or instalments not exceeding twelve in
ayear

Government Bonds: Sometimes government and semi-government organizations

accept deposits from individuals for a fixed period and promise to pay a fixed
amount after the stipulated period. These are in the form of bonds, which are also
risk-free and provide assured return.

Life Insurance policies: Post offices, Life Insurance Corporation of India, and other
private sector life insurance companies insure the life of individuals for a specific

20
amount for a specified period upon payment of a premium amount. The individual
who is insured gets a good return on maturity of the policies. This is a very
important form of investment. People should look if they are adequately covered. A
person’s net worth plays a huge role in determining the amount of policy s/he
should have. If a person’s earnings are high, then the lifestyle changes accordingly.
Hence individuals should ensure that they buy enough

21
coverage so that if case of their unfortunate death, their family can survive well on
that insurance money.

UTI and other mutual funds schemes: There are some financial institutions (may be
government, semi-government or private) which raise money from individuals and
invest the collected amount in securities and deposits and thereby earn a good
return. This return is then distributed among the investors as dividend. These types
of investments are risky. It may give you very good return or it may also lead to
losses.

Here, to avoid some of the disadvantages associated with Mutual Funds,

Systematic Investment Plan (SIP) has been introduced.

A systematic investment plan or SIP (as it is more commonly known) is a way to

invest in mutual funds regularly.

The idea is to set apart a sum every month or quarter, and use that to buy units of a
particular mutual fund, regardless of its price. People like such a system because it
helps them save regularly and build up an investment.

Benefits of SIP:

 Regular saving habit: Perhaps the best benefit of setting up a SIP is that it

forces us to set apart some money every month and enforces

savingdiscipline.
 Protects from timing the market: If we commit an amount of money to a SIP,

we would most likely continue to invest, regardless of a big fall or huge

gains in the market. This in turn will enable us to invest regularly rather than
try to time the market, which not many small investors can dosuccessfully.

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Corporate securities and deposits: There are companies which accept deposits from
public for a fixed period. People can invest their savings in these companies. This
is bit risky as your money goes into private hands. But if the company is good and
a reputed one, you can get assured return. Similarly people sometime invest in
buying shares of the company. If the company is performing well the shareholders
get good return otherwise the shareholders may not get anything. These
investments are againrisky.

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Real estate: Sometimes people spend money on buying a plot of land, an apartment
or a house etc., the value of which appreciates over a period of time. By giving it
on rent, they can earn money. These types of investments are less risky.

Business activities: You must have observed that some people invest money to
carry on various business activities. They may start the business individually i.e., in
the form of sole proprietorship, or by inviting others to invest money with them
i.e., they can start partnership form of business. By investing their money and
putting their best effort then can get return in the form of profit.

Investment in the share market: A person can invest his money in the share market
by purchasing shares. A share market is a public institution and it serves the growth
of the capital market. In a stock market, purchase and sale of shares are made in
conditions of free competition. It is organized as voluntarily, non-profit making
association of brokers to regulate and protect their interests. Whenever a company
raises capital through public issue of securities, its securities are required to be
listed on the stock exchange within ten weeks of the closing of the subscription list
mainly to provide liquidity to theinvestors.

Gold, Silver, Precious Metals, and Precious Stones: All these items vary as per the
market rates. And in the past few years, the rates of them have only increased.

Now if we see the gold price per 10 gram on Jan 2009, it was INR 13,664. And it
was INR 27,322 on Jan 1, 2012. So in 3 years it went up by INR 13,658, which is
almost 100%. So if someone had invested in gold at the right time, then it brings in
good results.

24
The same goes for silver too. Silver price on Jan 1, 2009 was INR 13,753 per
kilogram and it went up to INR 51,043 per kilogram on Jan 1, 2011. So the
increase was INR 37,290 per kilogram that means the increase was 271%. Hence,
people who had invested in silver had reaped a better return than investing in gold.
In fact on May 1, 2011 it went up to INR 71,576 per kilogram.

Venture Capital: Venture capital (VC) is financial capital provided to early-stage,

high- potential, high risk, growth start-up companies. The venture capital fund
makes money by owning equity in the companies it invests in, which and usually
have a novel technology or business model in high technology industries, such as
biotechnology, IT, software, etc. The

25
typical venture capital investment occurs after the seed funding round as growth
funding round (also referred to as Series A round) in the interest of generating a
return through an eventual realization event, such as an IPO or trade sale of the
company. Venture capital is a subset of private equity. Therefore, all venture capital
is private equity, but not all private equity is venture capital.

In addition to angel investing and other seed funding options, venture capital is
attractive for new companies with limited operating history that are too small to
raise capital in the public markets and have not reached the point where they are
able to secure a bank loan or complete a debt offering. In exchange for the high
risk that venture capitalists assume by investing in smaller and less mature
companies, venture capitalists usually get significant control over company
decisions, in addition to a significant portion of the company's ownership (and
consequently value).

This option is usually applicable for High Net-worth Individuals (HNIs) to

consider who have a huge risk-appetite.

New developments in Investment avenues:

Exchange traded funds: (ETFs) are a new variety of mutual funds that first became
available in 1993. ETFs have grown rapidly and now hold nearly $80 billion in
assets. ETFs are sometimes described as more 'tax efficient' than traditional equity
mutual funds, since in recent years, some large ETFs have made smaller
distributions of realized and taxable capital gains than most mutualfunds.

26
REIT (Real estate investment trust): REITs are companies which own properties
such as office buildings, shopping complexes, and hotels etc, which are giving
continuous income. As these companies pass most part of their income to the
shareholders, they get tax benefits from their income. Like other stocks that are
traded in the stock exchanges, REIT can also be traded in the stock exchange.
REITs give a new opportunity to the retail and institutional investors to diversify
theirportfolio.

Classification of Investments:

There are different methods of classifying the investment avenues.

27
A major classification is:

Physical investment: Example of physical investments is land, property, flats,

house, gold, precious metals and stones, paintings, etc…

Financial investment: Examples are Fixed Deposits, Bonds, Shares, and Mutual
Funds etc. Most of the financial assets, barring cash are used for production or
consumption, or further creation of assets, useful for production of goods
andservices.

Among different types of investments, some are marketable and transferable and
others are not. Examples of marketable assets are shares and debentures of public
limited companies, particularly the listed companies on stock exchanges, bonds of
P.S.Us, Government securities, etc. Non-marketable securities or investments are
bank deposits, provident fund and pension funds, insurance certificates, post office
deposits, NSC bonds, company deposits, private limited companies sharesetc.

Difference between Savings and Investments:

Savings are money or other assets kept over a long period of time, usually in a
bank without any risk of loss or making profit. Investments are money or other
assets purchased with the hope that it will generate income, reduce costs, or
appreciate in the future. In an economic sense, an investment is the purchase of
goods that are not consumed today but are used in the future to create wealth. In
finance, an investment is a monetary asset purchased with the idea that the asset
will provide income in the future or appreciate and be sold at a higher price. And
usually it has also a risk of someloss.

As far as we are talking about investment then it is certain amount of money which
is saved or used in some projects where we can take profit more than the money we
have saved or invested. In general terms investment means the use of money to

28
make more money.

Features of investment avenues:

The investor has various alternative avenues of investment for his / her savings to
flow in accordance with his / her preferences. All investments involve some risk or
uncertainty. The objective of the investor is to minimize the risk involved in
investment and maximize the return.

29
1. Risk: The risk depends on the followingfactors:

 The longer the maturity period, the larger is therisk.

 The more the creditworthiness of the borrower or agency issuing securities,

the less is therisk.

 The nature of instrument, namely, the debt instrument or fixed deposit or

ownership instrument like equity or preference share, also determinesrisk.

 The risk of variability of returns is more in the case of ownership capital as

the return varies with the net profits after all commitments aremet.
 The nature of tax liability on theinstrument

2. Return: A major factor influencing the pattern of investment is its return, which

is its return and capital appreciation, if any. The difference between the purchase
price and the sale price is capital appreciation and the yield is the interest or
dividend divided by its purchaseprice.

3. Safety: The safety of the capital is the certainty of return on capital without loss

of money or time involved. In all cases of money lent, some transaction costs and
time are involved in getting the fundsback.

4. Liquidity: If a capital asset is easily realizable, saleable or marketable, then it is

said to be liquid. An investor generally prefers liquidity for his /her investments,
safety of his /her funds, a good return with a minimum risk or minimization of risk
and maximization of return (dividend and capitalappreciation).

5. Marketability: This refers to transferability or sale ability of an asset. Those

listed in stock market are more easily marketable than those that are notlisted.

6. Tax benefits: Some instruments enjoy good tax benefits; hence their net return
ishigher.

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Risk-return Relationships:

Risk and return are directly correlated with each other, when the risk is high; return
is also high, and vice versa.

The relationship between risk and return is a fundamental financial relationship

that affects expected rates of return on every existing asset investment. TheRisk-
Return

31
relationship is characterized as being a ‘positive’ or ‘direct’ relationship meaning
that if there are expectations of higher levels of risk associated with a particular
investment, then greater returns are required as compensation for that higher
expected risk. Alternatively, if an investment has relatively lower levels of
expected risk then investors are satisfied with relatively lowerreturns.

This risk-return relationship holds for individual investors and business managers.
Greater degrees of risk must be compensated for with greater returns on
investment. Since investment returns reflects the degree of risk involved with the
investment, investors need to be able to determine how much of a return is
appropriate for a given level of risk. This process is referred to as ‘pricing the risk’.
In order to price the risk, we must first be able to measure the risk (or quantify the
risk) and then we must be able to decide an appropriate price for the risk we are
being asked tobear.

Think Before Making an Investment:

When we are investing money, we must look into some factors to reduce the risk
involved in investment. Following factors determine where to invest the money:

 Ability to save: Some of the investments require regular contributions of

certain amount of money like payment of LIC premium or instalments in a

recurring deposit. We need to assess our ability to save before taking
suchdecision.
 Safety: We must look into the various risks or drawbacks of the instruments

where we are going to invest to ensure safety of ourinvestments.

 Easy Liquidity: Any investment we make must be capable of being

converted into cash, whenever necessary.

32
  Rate of Interest: Rate of interest is more important than the amount of return

we get. Savings and Investment normally, for larger deposits, higher rates of
interest arefixed.
 Tax relief: One must take into consideration the various tax benefits we can

avail of through ourinvestments.

Personal Tax planning for an Individual

33
Some people have a wrong notion that tax planning is useful only once we are well
settled in life. Rather, the best time to start tax planning is right from the day we
start earning any income in our name.

For any individual, tax planning occupies a prominent position in the investment
planning process.

Tax Planning: Everyone is entitled to arrange his / her affairs to reduce his / her tax
liability, but the arrangement must be real and genuine, and not a sham. Thus tax
planning ensures not only the accrual of tax benefits within the four corners of law
but also that the tax obligations are properly discharged to avoid penal provisions.
It should not be mixed with tax evasion and tax avoidance.

Tax planning at different stages of life through various Investments:

When a person starts earning by default the company s/he works for deducts the PF
which is exempted from tax. Also, Insurance policy (life Insurance, medical
insurance u/s 80D and retirement plans) can be planned as deduction can be
availed u/s 80C.

Next stage is to own a house. The biggest advantage of putting your money in
residential house property is tax haven in one hand while on the other hand; you
get a secure place of your own to live in. The repayment of principal is deductible
up to one lakh in a year u/s 80C.

Usually, a person has to spend a lot on the education of children. Tax planning can
be used as effective tool in this respect as it may ensure that the capital base is not
eroded or adversely affected. Sec 10(14) and rule 2BB provides for certain
allowances that are exempt according to the limit specified in respect of each
suchallowances.

34
Senior citizens can invest special Senior Citizens schemes launched by govt. of India.

Tax planning brings fiscal discipline in the functioning of a taxpayer and reduces
the transfer of money, from the person who has earned it by hard labor, to the govt.
for waste and ostentation. Thus the amount invested enhances the capacity of the
taxpayers for expansion and growth, which in turn increases the tax revenue of the
govt.

Wealthy Investors

35
According to a study undertaken jointly by Merrill Lynch, Cap Gemini, Ernst and
Young, High Net worth Individuals [HNIs] or wealthy investors are proactive in
portfolio management, risk management, consolidation of financial assets and use
of diversification strategies as actively as large institutions. HNIs are proactive in
identifying new investment options and take inputs from professional advisors in
volatile marketconditions.

HNIs are dynamic in modifying their asset allocation and were among the first
investors to move from equities to fixed income during 2001-2002 period of
downturn in equity markets. They shifted back to equities when they identified
favourable market trends.

Needs of wealthy investors

Wealthy investors being aware of the emerging investment opportunities use

sophisticated investment strategies such as:-

 Leveraging on the professional advisors' capability to analyse market trends

and make appropriateinvestments

 Searching for innovative products to enhancevalue
 Diversifying across various types ofassets
 Investing across emerginggeographies
 Consolidating financial information and

assets Investment products andavenues

 Managed products: Managed product service is the most popular investment

strategy adopted by wealthy investorsglobally.

 Real Estate: Wealthy investors have found this asset class very attractive and

have invested directly in real estate and indirectly through real estate
investmenttrusts.

36
 Art and passion: Wealthy investors also have their investment in art, wine,

antiques, andcollectibles.
 Precious Metals: Gold and other precious metals are attractive investment
options to balance the assetallocation.
 Commodities: Wealthy investors have turned to commodities to offset the

lower returns from fixed incomesecurities.

37
  Alternative investments: Hedge funds and Private equity investments such

as venture funds are becoming increasingly popular with wealthy investors

to reduce the investment risks related to stock marketfluctuations.

This is because these alternative instruments have low correlation with equity
asset class performance. Investment in non correlated assets, such as
commodities helps to improve diversification of the portfolio amidst volatile
market conditions.

Characteristics of wealthy

investor The wealthy investor

of today is:-

 Young, educated andknowledgeable

 Well informed about globaltrends
 Willing to takerisks
 Demanding and qualityconscious
 Performance oriented in taking decisions and lessloyal
 Techno savvy and seeks information from varioussources
 Smart in looking for the bestdeal
 Not attracted by traditional status symbols that do not addvalue
 Hands on in checking investments, making deals and getting personally

involved Special needs of wealthyinvestors

The strategies and characteristics of wealthy investors have led to financial

institutions innovating and expanding their product range to meet the growing
demands of such investors.

A financial advisor should keep in mind the following special needs and
expectations of the wealthy clients:

38
Demand broader range of services and skills: Wealthy clients not only are on the
lookout for multiple investment avenues, unlike other clients, but are also ready to
face the risks associated with newerproducts.

Net worth and goals need to be matched and assets need to be planned tax
effectively:
Sincewealthyinvestorshavesurplusfundsthatcanbepassedontothenextgenerations

39
and also come into the high tax-paying category, investors need to advise them on
the best methods to transfer their assets after death as well as on the best tax saving
investments.

Estate planning and tax planning: In-depth knowledge about tools of estate
planning such as wills, trusts, and power of attorney is necessary. It is also
important to know the succession rules and tax rules to do effective tax planning
resulting in minimal/no tax on transfer ofassets.

Educate the client: Educating the client on various and different types of
investment avenues that will suit him the best will prove very beneficial for the
financial advisor. Wealthy clients, especially those who are self made, may assume
that if they can make wealth in one Financial consultant they can manage their own
portfolio as well. In such cases it is best to educate the client about the best
investment options rather than trying to push a product; because if one is trying to
push a product, the client is unlikely to get interested since he/she will be having
enough people chasing him/her for investments.

40
 CHAPTER- 2

Company Profile

41
 Company Details

LLP AAA-5467
Identification
Number

Company Name FINTELLECT

INTELLIGENT
FINANCIAL
SOLUTIONS LLP

Company Status Active

RoC RoC-Kanpur

Main division of Activities

business activity auxiliary to
to be carried out financial
in India intermediation

Description of Activities
main division auxiliary to
financial
intermediation

Number Of 0
Partners

Number of 3
Designated
Partners

Date of 06 July 2011

42
LLP AAA-5467
Identification
Number

Incorporation

Age of 7 years, 2 month,

Company 20 days

Share Capital & Number of Employees

Total Obligation of ₹100,00

Contribution 0

43
 Director Details

DIN Director Designatio Appointmen

Name n t Date

05014592 RATIKA Designated 06 July 2011

AGARWA Partner
L

05014593 SARITA Designated 06 July 2011

SINGH Partner

05014595 SINGH Designated 06 July 2011

SHIV RAJ Partner

06378470 SINGH Designated 26 September

MANTOO Partner 2017
KUMAR

07910524 JAISWAL Designated 26 September

SHRUTI Partner 2017

44
'Fintellect Intelligent Financial Solutions LLP' is the organization
that aspires to be the one among most admired financial advisory and
training company in India.

I would like to introduce you about my company and the kind of work we
do. We Offer our services in area of Financial Advisory, Financial Services
and Financial Education and Training. For each segment we follow high
level of transparency, integrity and business ethics .In financial advisory
segment we advise our selected investors /clients through financial market
certified professional and charge reasonable fee as per norms and guidelines
of Government of India. Our advice are fee and commission based only,
where in another hand we offer almost every kind of financial product e.g.
Mutual funds, Bonds / Debentures, New Pension Schemes and Equity etc. to
investors .Financial education and training is the segment where we offer
need based training to private companies, mutual fund houses and NBFCs.
Currently we have two companies in our corporate tie-up. In financial
education and training we are leading organization and almost every
essential certification approved by Government of India is covered in
our training programme . Our company conduct training programmes only
through our 'Designated Business Partners'.

BRIEF PROFILE OF COMPANY

The business of the “Fintellect intelligent Financial Solutions LLP” is

45
 To establish, provide, maintain and conduct or otherwise,
subsidiaries in India or in any other part of the world, educational
and training institutions, research organizations and training
activities, seminars and workshops for scientific, To transact and
carry on all kinds of shares, securities and financial advisory
business and to be appointed to act as agents of any company or
concern and to do and platform all or any of the several duties,
services and authorities appertaining to such office or imposed by
the terms of any agreement entered into for the purpose
aforesaid.

 To organize seminars, do and conduct research work in the field

of financial market and in all areas of corporate activities and to
publish the result,opinion, journals and books in connection there
with and to carry on all the works incidental to the research
activities.

.
 To sell, distribute and promote financial market products and
services of its own or of others , either directly through network
marketing by creation of network base or through indirect
distribution channels consisting of distributers, agent,
franchisees, etc. either in India or otherwise.

46
  To carry on business as financiers (financers), commercial agents,
merchant bankers, mortgage brokers, insurance and mutual fund
brokers, stock market brokers , portfolio management services
and advices on tax planning, cash flow, financial and investment
planning and analysis, retirement planning and such other
services as may be required to carry the above said activities.

 fundamental or technical analysis, researches and experiments;

and tests of all kinds to promote such studies and researches; or
certificate, diploma or other courses in the fiend of financial
markets; or education and training for courses offered by other
bodies, relating to financial market; or any other business in any
other manner as may be decided by the majority of partners.

Our Vision
We offer our services in the area of Financial Advisory, Financial Services
and Financial Education and Training. For each segment, we follow the high
level of Transparency, Integrity and Business Ethics. Our goal is to be one
among most admired Financial Advisory, Financial Training, and Financial
Service Provider Company in India.

Our Mission

 Wealth Management and Peace of Mind.

 Make a Difference in Life of Others by Leading, Guiding and
Teaching.

47
  Committed to Create Strong Relations with Clients.
 Independent Top-notch Advice; Excellent Services and Idea.
 Point Sharp Focus of Financial Advisory, Financial training and
financial services

Why People Choose Us

 Professionally Responsible and Ethical Organization

 Dedicated Qualified Team

 Timely Support

48
OURPRODUCT / SERVICES

 Financial Planning

Financial Planning is the process of meeting one’s life’s goals through

proper management of one’s personal finances. Life goals could include
buying a house, saving for children’s education or planning for retirement.

 New Pension Scheme(NPS)

Pension Fund Regulatory and Development Authority (PFRDA) has been

established by the Government of India, Ministry of Finance on 10th
October, 2003 to promote old age income security. National Pension System
(NPS) is an initiative of PFRDA to regulate and develop the pension sector
in India. It aims at building up a corpus sufficient enough to buy an annuity
for their old age.
 Mutual Funds

A mutual fund is a pool of money, which is collected from many investors

and is invested by an asset management company to achieve some common
objectives of the investors.
 Bonds & Debentures

A debt instrument represents a contract whereby one party lends money to

another on pre-determined terms about rate and periodicity of interest,
repayment of principal amount by the borrower to the lender. In the Indian
securities market, the term 'bond' is used for debt instruments issued by the
Central and State governments and public sector organizations and the term

49
'debenture' is used for instruments issued by private corporate sector. Bonds
and debentures represent long-term debt instruments.
 Portfolio Management

Portfolio management is the art of managing different asset classes with the
purpose of meeting the investor’s financial objective as per his risk appetite.
Appropriate risk- reward relationship, time horizon for reaching the desired
financial goals and the amount of capital to be managed are the three basic
ingredients of portfolio management.

 Taxation

Taxes in India are of two types – Direct and Indirect. Taxes that cannot be
collected from third parties and whose burden directly falls on the tax payer
are called Direct Taxes. Personal Income Tax, Corporate Tax and Wealth tax
are examples of Direct Taxes. Indirect Taxes are those whose burden can
generally be passed on to third parties and can be rightfully collected from
them. The principal Indirect Taxes levied in India are Customs Duty, Excise
Duty, Service Tax and Sales Tax.

 Exchange Traded Funds (ETF)

Exchange Traded Funds are essentially Index Funds that are listed and
traded on exchanges like stocks. An ETF is a basket of stocks that reflects
the composition of an Index, like S&P CNX Nifty or BSE Sensex. The
ETFs trading value is based on the net asset value of the underlying stocks

50
that it represents; meaning thereby, that it is a mutual fund that can be
bought and sold in real-time at a price that changes throughout the day.
 Equity Funds

A scheme, which invests predominant portion of its fund in equity and

equity related instruments, is known as an equity scheme. This kind of a
scheme exhibits all the attributes of an equity instrument viz., it has
comparatively high risk, high return potential and extremely volatile. An
investor entering an equity fund should

understand that he is taking risk and should be prepared to remain invested

in such a scheme for a long tenure. The aim of growth funds is to provide
capital appreciation over the medium to long- term.
 Health Insurance

The cost of medical treatment is rising as days are passing by. As the age of
human being or family size increase, medical expenses tend to rise
significantly. Without a suitablehealthcover in place, medical expenditure
can drain liquid assets and create a lasting impact on one’s financial plan.
That is why, it is advised to purchase a suitable and appropriate health
insurance policy, under which the cover is available for medical expenses
incurred due to various health hazards.

 Life Insurance

General Life Insurance Planning is planning for a situation when the

individual on whom the family is dependent for fulfillment of their goals is
not alive. In case of one’s death, the family may face two types of losses:
Financial Loss and Emotional Loss. While the latter happens in all the cases,

51
the former happens if an earning member of the family dies. Life insurance
helps the family to overcome this financial loss, by analyzing and estimating
the financial loss the family is likely to incur and by considering one’s
family expenses and future goals.
 Insurance

Apart from human capital, many other things need to be protected which
include health, home contents, motor vehicles, etc. the three broad
classification specified in Indian Insurance Act, 1938 and adopted by Indian
insurance industry are: Fire Insurance, Marine Insurance and Miscellaneous
Insurance.

 Retirement Plans

Retirement planning generally looks at answering three fundamental

questions:
· Goal setting – How much does one need on retirement?
· Contribution and time horizon – How much amount one can save on
regular basis or lump sum for the retirement goal?
· Risk tolerance – How much risk one can take to reach the retirement
goal?

 NCFM / NISM Modules Training

NCFM Certificate (NSE ACADEMY’S Certification in Financial Markets)–

With a view to create a pool of human resources with right kind of expertise
in financial market,NSE started NSE Academy Limited in 2016. Today NSE

52
Academy professionally educate and give certificates to people who succeed
in tests in different finance related educational programs like financial
services, banking and financial literacy.

NATIONAL INSTITUTE OF SECURITIES MARKETS (NISM)- The

National Institute of Securities Markets (NISM) is a public trust established
in 2006 by the Securities and Exchange Board of India (SEBI), the regulator
of the securities markets in India. The institute carries out a wide range of
capacity building activities at various levels aimed at enhancing the quality
standards of and increase the participation in the securities markets.
 III Licentiate / Associate ship Training

(III) LICENTIATE
In India, the Licentiate is a vocational qualification offered by the special
vocational boards or professional bodies. These are offered after completion
of school education and are somewhat less extensive than a full-fledged
university degree. Issuers of the Licentiate degree include but are not
limited to the Insurance Institute of India, the Institute of Company
Secretaries of India, the Association of Mutual Funds of India, and the
Diploma Examination Board of the government of Andhra Pradesh.
ASSOCIATESHIP
A designation earned by insurance professionals and conferred by The
Institutes. The Associate in Insurance Services, or AIS, designation indicates
that the holder has demonstrated knowledge of the insurance industry,
insurance principles and practices, as well as insurance contracts and how
they should be managed.
 CFP & CFPA Training

53
CERTIFIED FINANCIAL PLANNER
CERTIFIED FINANCIAL PLANNER Certification (CFP) is a mark of
excellence granted to individuals who meet the stringent standards of
education, examination, experience and ethics. It is the most prestigious and
internationally accepted Financial Planning qualification recognized and
respected by the global financial community.
CENTER FOR PROFESSIONAL ADVANCEMENT (CFPA)
The Center for Professional Advancement - CFPA offers technical training
and continuing professional education courses to those in the
Pharmaceutical, Biotechnology, Medical Device, Chemical Engineering and
Cosmetics industries. Our accredited training is ideal for professionals and
companies seeking a combination of innovation and education. CFPA
courses are offered in a variety of formats including in person training,
customized onsite technical training (Client Site), and online technical
training.

Achievements

 Among the top 5 stock brokers in India (4% of NSEvolumes)

 India's No. 1 Registrar & Securities TransferAgents

 Among the top 3 DepositoryParticipants

 Largest Network of Branches & BusinessAssociates

 ISO 9002 Certified

 operations byDNV

54
  Among top 10 Investmentbankers

 Largest Distributor of FinancialProducts

 Adjudged as one of the top 50 IT users in India by MISAsia

 Full Fledged IT driven operations.

VALUES:
 Trust
 Integrity
 Dedication
 Commitment
 Transparency
 Enterprise

 Hard work and teamplay

 Learning &innovation
 Empathy andhumility

55
 CHAPTER- 3

Research Methodology

Background of the topic

56
 Few years ago, people would have hardly heard about FIFS, or at least,
they would have so many notions on the FIFS as such. FIFS is a sunrise
in Financial consultant which started to spread its wings just close to a
decade ago. Initially, this system provided voice support to the
customers in English-speaking nations like United States & United
Kingdom. One of the major requirements for hiring folks was good
communication skills in English & graduation was not considered as one
of the criteria.

To attract talent, pay package in this Financial consultant was way above
the normal expectations. Also, this was considered as an easy route to
get into highly-paid jobs for people who couldn’t complete even
graduation. Higher pay packages led to a different lifestyle
fortheseemployees.

As the Financial consultant started to mature, pay packages stabilized

over a period of time in comparison with other industries. Due to a
mismatch between higher expenses due to a different lifestyle versus the
income, few people started to get into the debt trap as well.
Hence, it was felt appropriate to conduct a study & understand the
financial aspects of an employee working in the FIFS. This study tries to
unearth the answers to the questions on whether the employees of this
Financial consultant invest. If so, what are the options exercised to invest
their money
Objectives of theStudy

57
 This study has been made with the following objectives:

 This study focuses on understanding the investment behavior of employees of

FIFS– which predominantly employsyoungsters
 To understand how FIFSemployees manage their ‘Finance’

 To understand investment avenues available based on different

typeofinvestors To get an understanding on the preference of investments
by FIFSemployees
 Take experts’ opinion and suggest the various investment opportunitiesavailable

Sample size

The sample size was of only 100 Respondents

Sampling Area:

The area of the research was Mirzapur city.

Time period:

The total time period that was spent by me during this summer Training was

fourty five days.

Scope of theStudy

58
 This study covers investment pattern of the employees of some of the major
FIFSorganizations operating from Mirzapur. Collection of primary data includes
the inputs from the employees of following organizations:

 InfosysBPO(IBPO
AccNauture BPO
 IBM
 Hewlett
 PackardFidelity
 BPO
 GENPACT

 ANZBPO
 DellBPO
& Other
Profiles of these organizations have been covered at a later stage of this document.

Research Design

59
 Duration of the Project The duration of the project is 45 days Ø Objective
of the study The purpose of choosing the project is to know: Investor’s
option for entry into investment is through which Procedure. Research
Type Conclusive and explorative approach has been adopted in the study.
As here the topic of research problem has been explored so that hidden
facts can come into the light. People belonging to different state of
society.

Servicemen working in government organization & private organization.

Professionals who includes doctors, lawyers, teacher’setc.Ø Research
Design This research is Explorative and conclusive in nature because it
aims to collect the data about the behavior of investors in which way they
invest in Mutual Funds. Their search approach used is survey based and
the analysis is largely based on the primary data.

This study was conducted based on both primary data and secondary data.

1.9 (A) Primary Data

Primary data was collected based on preparing a ‘questionnaire’ – a

popular data collection tool to get the answers to our questions. This
questionnaire was floated to FIFSemployees based at MIRZAPUR on a
‘random sample’ basis.

This study covers a sample size of 200 employees working in

FINTELLECT INTELLIGENT FINANCIAL SOLUTIONS.

60
 (B) Secondary Data

We have made extensive use of resources available in the Internet &

other print media to gather the information, do the analysis, and arrive at
the conclusion. Information from various sources has been used to
understand more about various investment alternatives& to provide
suggestions for choosing better investmentportfolio.

1.9 (C) AnalyticalTools

As mentioned earlier, ‘Questionnaire’ (a technique or a method used for

obtaining specific information about a defined topic) was used to collect the
primary data. This questionnaire contains both close-ended (questions
wherein respondent has to select based on the options provided) as well as
open-ended questions (respondent has to provide his / her personal opinion).
Questionnaire that was floated has been attached.

61
 QUESTIONNAIRE

1) Age group of respondent?

[ ] a. Below 25
[ ] b. 25 - 30
[ ] c. 30 – 40
[ ] d. 40 – 50
[ ] e. 50 above

2) Annual income?
[ ] a. Below 100000
[ ] b. 100000 – 200000
[ ] c. 200000 – 400000
[ ] d. 400000 – 500000
[ ] e. More then 500000

3) Insurance cover?
[ ] a. Yes
[ ] b. No

62
 4) Type of insurance cover they have?
[ ] a. Company life
[ ] b. Company health
[ ] c. Personal life
[ ] d. Personal health
[ ] e. Car insurance
[ ] f. Property insurance

5) Percentage of salary being invested?

[ ] a. Below 5%
[ ] b. 5% to 15%
[ ] c. 15% to 25%
[ ] d. 25% to 40%
[ ] e. Above 40%

6) Investment horizon?

[ ] a. Short term
[ ] b. Middle term

63
 [ ] c. Long term
[ ] d. Not yet invested

7) Investment option?
[ ] a. PPF
[ ] b. Government bonds
[ ] c. Fixed deposit
[ ] d. Property & Real Estate
[ ] e. Gold / Silver / Precious metal
[ ] f. Mutual funds
[ ] g. Equities
[ ] h. Insurance
[ ] . Other

8) Reason (events) for investment?

[ ] a. Property
[ ] b. Retirement
[ ] c. Career planning
[ ] d. Education
[ ] e. Tax planning
[ ] f. Increase wealth

64
 [ ] g. Others

9) Loan taken?
[ ] a. No
[ ] b. Yes

10)Type of loan?
[ ] a. Home loan
[ ] b. Vehicle loan
[ ] c. Personal loan
[ ] d. Other

11)Total investment ?
[ ] a. With INR 100000
[ ] b. 100000 to 500000
[ ] c. 500000 to 1000000 (a million)
[ ] d. 1 million to 2 million
[ ] e. 2 million to 5 million
[ ] f. Do not wish to disclose

65
 12)How often are investment being made?
[ ] a. Once a month
[ ] b. Once in 6 month
[ ] c. Once in a year
[ ] d. No investment

13)Risk profile?
[ ] a. High risk
[ ] b. Medium risk
[ ] c. Low risk
[ ] d. No risk

14)Since how long are the investment being made?

[ ] a. Within 2 year
[ ] b. 2 year – 5 year
[ ] c. 5year – 10year
[ ] d.10year – 20 year
[ ] e. More then 20 year
[ ] f. Not yet invested

66
 CHAPTER- 4

Analysis & Interpretation

67
Following parameters are being used for the analysis:

 Sample Size:200
 AgeGroup
 Incomelevel
 Percentage of Salary beinginvested
 InvestmentHorizon
 Preferred InvestmentAvenues
 Reasons forInvestment
 TotalInvestment
 RiskProfile
 & otherfactors

Analysis & interpretation for this study is being carried on based on the answers
provided by our respondents to the questionnaire.

68
Age Group of the Respondents

First question in our survey was pertaining to their age. This was probably one of
the easiest questions and there was no Finance-knowledge string attached to this
question.

We all are aware that FIFSis a young Financial consultant and employs lot of
youngsters including students directly out of college. 41% of our respondents are
in the age group of 25 to 30 years, followed closely by age group of 30 to 40 years
at 36%. Overall, it is interesting to note that almost all of our respondents
(whooping 98%) are within 40 years of their age.

Table 3.1: Age Group of the respondents

Age Group Count Percentage

Below 25 42 21%
25 to 30 Years 82 41%
30 to 40 Years 73 36%
40 to 50 Years 04 02%
Above 50 Years 01 00%
Out of 200 respondents, 5 respondents were above 40 years but only one respondent
was more than 50 years old.

Chart 3.1: Age Group of the respondents

69
21% of our respondents were aged below 25 who started their career.

70
Annual Income

Initially, when we had thought of taking this topic as our study, we had perplexing
questions that were posed as FIFS employees usually complain that their salaries
are lesser, and hence, they would not have any investment. This might be true for
the career- starters but find that 44% of our respondents are earning more than INR
500,000 per annum.

Table 3.2: Annual Income of the respondents

Annual Income Coun Percentage

t
Below 100,000 0 0%
100,000 - 200,000 41 20%
200,000 - 400,000 52 26%
400,000 - 500,000 20 10%
More than 500,000 89 44%

Chart 3.2 displays the annual income of the respondents in a graphical representation.

71
Insurance Cover

Over 90% of our respondents have insurance cover. However, majority of the
respondents have the insurance cover provided by the organization they work.

Table 3.3A – Whether respondents have insurance cover?

Insurance Cover Count

Yes 181
No 21

Chart 3.3A provides the information in a graphical format.

72
Table 3.3B provides the information on the type of insurance cover they have. At
least around half of our respondents have personal life insurance.

Type ofInsuranceCover Count

Company Life 121
Company Health 129
Personal Life 97
Personal Health 31
Car Insurance 9
Property 10
Insurance

73
Chart 3.3B displays the type of insurance cover respondents have.

74
Percentage of salary being invested

Fourth question in our survey pertained to percentage of the salary being invested &
table
3.4 depicts thesame

Percentage of salary being invested

Below 5% 46 23%
5% to 15% 75 37%
15% to 25% 49 24%
25% to 40% 16 8%
Above 40% 16 8%

More than one-thirds (37%) of our respondents invest between 5% and 15% of
their salary. Close to one-fourths (24%) of our respondents invest between 15%
and 25% of theirsalary.

Chart 3.4: Percentage of Salary Being Invested

75
Investment Horizon

Fifth question in our survey pertains to the horizon of their investments. More than
half of our respondents are long-term oriented. As majority of our respondents are
youngsters, it looks like they invest having long-term horizon in mind to create
wealth.

Table 3.5 displays the investment horizon of the respondents

Investment Horizon Count Percentage

Short-Term 23 11%
Mid-Term 61 30%
Long-Term 114 56%
Not Yet Invested 4 2%

30% of our respondents invest keeping medium-term goals in

mind. Chart 3.5: Investment Horizon

76
 Investment Options

Sixth question in our survey tried to find out the type of investments that our
respondents make the investments. This is one of the important questions which
provide an eye-opener on the topic: ‘Investment pattern’.

No investment instrument emerged as the clear winner. In fact, none of the

instrument crossed even a one-quarter (25%) mark milestone.

Table 3.6 displays the preference among the investment options available

Investment Options Count Percentage

PPF 30 8%
Government Bonds 12 3%
Fixed Deposits 88 22%
Property & Real Estate 50 13%
Gold / Silver / Precious Metals 46 12%
Mutual Funds 38 10%
Equities 18 5%
Insurance 95 24%
Others 18 5%

Insurance is the top choice. However, Fixed Deposits comes very close to the top
spot. If Insurance is considered as a necessity to guard against any contingencies,
Fixed Deposit would occupy the top slot as the preferred investment instrument
amongst FIFS employees.

77
Chart 3.6: Preference of Investment by Respondents

Many of the experts on the Investing advise youngsters to have equity exposure,
especially through Mutual Funds. However, we could find that only 5% invest in
the Equity market, and only 10% have investments in Mutual Funds.

78
 Reasons (Events) for Investment

Table 3.7 displays the reasons for which respondents invest.

Property Events(Multiplechoice) Count Percentage

82 19%

Retirement 73

17%
CareerPlanning 86 20%
Education 40 9%
TaxPlanning 71
16%
IncreasingWealth 72 17%
Others 10 2%

There is no single answer given by all the respondents. Here, we could understand
that respondents invest for the following reasons: Career Planning, Property, to plan
for retirement, to increase wealth, tax planning, & others.

Chart 3.7 displays the reasons for the Investment

Most of the respondents invest for multiple reasons. Some of them invest not only
to increase their wealth but simultaneously plan for reduction of tax as well.

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Loan Taken

Our eighth question was designed to understand whether loan has been taken, if yes,
the reasons for taking the loan.

Table 3.8A depicts the answer to close-ended question: whether loan has been taken?

LoanTaken Count
No 99

Yes 103

Chart 3.8A: Whether Loan has been taken?

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Table 3.8B depicts the reason for taking a loan

Type of Loan Count

Home Loan 37
Vehicle Loan 33
Personal Loan 28
Others 15

Chart 3.8B: Type of Loan Taken

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 Total Investment

Table 3.9 provides the details of the total investment

Total Investment Count Percentage

Within INR 100,000 71 35%
100,000 to 500,000 53 26%

500,000 to 1,000,000 (a Million) 10 5%

1 Million to 2 Millions 12 6%

2 Millions to 5 Million 5 2%
5 Million to 10 Million 2 1%

More than 10 Millions 3 1%

Do not wish to disclose 46 23%

35 % of respondents have investments within I N R 100,000. 61% of respondents

has investments lesser than half-a-millionmark.

As the size of the investment increases, count of respondents decreases. At least

11% of our respondents had investments crossing a million. This has been
considered by adding investment range starting from amillion.

Around 23% of respondents did not wish to disclose their total investments.

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Chart 3.9: Total Investment

83
How often are Investments being made?

Table 3.10

Perio Count Percentage

d
Once a month 73 26%
Once in 6 months 94 33%
Once in a year 106 38%
No Investment 8 3%

Around 38% of the respondents make an investment once a year. Another 33% of
the respondents invest once in six months. However, only 26% of the respondents
invest once in amonth.

This question answers whether investment has been made as a habit

or not. Chart3.10:

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85
Risk Profile

Table 3.11: Risk Profile of the Respondents

Risk Profile Count Percentage

High Risk 24 12%
Medium Risk 107 53%
Low Risk 28 14%
No Risk 43 21%

53% of respondents have medium risk appetite. 12% of respondents have high-risk
appetite. Though most of our respondents are youngsters, however, 14% have a
low-risk appetite. 21% of respondents prefer traditional methods of investments
and looks like they do not want to venture into Equity markets or invest through
MutualFunds.

Chart 3.11: Risk Profile

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Investment Losses

Table 3.12: Investment Losses encountered by respondents

Whether Investment Losses were suffered? Count Percentage

Yes 71 35.1%
No 131 64.9%

Investment Losses have been suffered by 35% of our respondents. Sometimes,

when investors encounter losses during their first tryst with investment, probably,
they are taken back and try to be risk-averse and reduce their risk-appetite.

Chapter 3.12

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Since how long are the investments being made?

Table 3.13 has been provided below which provides the details from the responses
received by the respondents to our survey on how long are theyinvesting.

Investments Since Count Percentage

Within 2 Years 27 13%
2 Years - 5 Years 30 15%
5 Years - 10 Years 96 48%
10 Years - 20 Years 33 16%
More than 20 Years 1 0%
Not Yet Invested 15 7%

Close to half of our respondents stated that they have been investing since five to
ten years period. This is a positive trend as people have been investing from quite
some time. 16% of our respondents have been investing for more than ten
yearsnow.

Chart 3.13: How long are the investments being made?

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 Advantages

Fourteenth question in our survey tried to unearth the answer to what are the
advantages that our respondents thought of on investing. Table 3.14 displays the
results.

40% of our respondents felt that investing helps in securing their future. It is
heartening to note that FIFSemployees (though the majority of the employees are
of young age) have thought about the future. 22% of our respondents see it as a
way to grow wealth.

Advantages Count Percentage

Secured Future 138 40%
To increase wealth 74 22%
To meet educational expenses 32 9%
Alternate sources of Income 16 5%
Contingencies 39 11%
Good habit 14 4%
Increases the knowledge of the market 4 1%
Tax Saving 19 6%
Others 8 2%
Government lures citizens to make investment by offering tax saving advantages;
however, only 6% of our respondents think tax saving as an advantage for
investing.

Chart 3.14: Advantages of Investing – as perceived by respondents

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90
Disadvantages

Fifteenth question tries to find out the perception of our respondents on whether
they find any disadvantages of investing. Table 3.15 provides the disadvantages of
investing, as perceived by respondents of our questionnaire.

Disadvantages Count Percentage

None 80 33%
Reduction in Liquidity 52 22%
Less expenditure 25 10%
Risk Attached 64 27%
Lesser than expected returns 19 8%

As above table provides the details, 33% of our respondents do not feel any
disadvantages of investing. However, 27% feel that there are risky investments
which act as a deterrent to investing, & another 22% find that their liquidity

reduces when theyinvest.

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Difficulties

Table 3.16 lists the difficulties faced by our respondents while investing.

Difficulties Count Percentage

None 82 29%
Lack of proper guidance 89 31%
21 7%
Suitable instrument not 18 6%
available Limited 38 13%
earnings & Inflation 9 3%
Lump sum Investment not 12 4%
3 1%
possible Not sure about 12 4%
optimum investment Not
enough clarity
Legal implications
Unable to save

This table clearly illustrates that lack of proper guidance is one of the important
reasons which shies away the potential investors from investing. Appropriate
financial awareness sessions are required to plug the gap between one’s
understanding and the reality.

Chart 3.16: Difficulties faced while investing

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93
Monthly Maintenance Expenses

Table 3.17 lists the percentage of salary being spent on monthly

maintenanceexpenses.

Monthly Maintenance Expenses

Percentage Count

Percentage
Below 25% 33 16%
25% - 35% 41 20%
35% - 50% 56 28%
50% - 75% 39 19%
More than 75% 33 16%

28% of respondents spent between 35% and 50% on monthly maintenance

expenses.35% of respondents spend more than 50% of their salary on monthly
maintenanceexpenses.

Chart 3.17: Monthly Maintenance Expenses as a percentage of Salary

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 CHAPTER- 5
Finding/Conclusion/ &
Recommendation

95
 FINDINGS
 62% of our respondents are aged within 30years
 44% of our respondents earn more than half-a-million Indian Rupees
perannum
 90% of the respondents have an insurancecover
 Most of the respondents are being provided with an insurance cover by the

organization theywork
 37% of our respondents invest between 5% and 15% of theirsalary
 56% of our respondents have long-term investmenthorizon
 Insurance is the preferred investment with 24% followed by Fixed Deposit
at22%
 Equity preference revolves at 5% for ourrespondents
 10% of our respondents prefer MutualFunds
 Around 50% of our respondents have taken aloan
 18% of our respondents have taken homeloan
 61% of respondents have a total investment of within INR500,000
 11% of respondents have a total investment of more than a millionINR
 38% of respondents invest once in ayear
 53% of respondents have medium-riskappetite
 35% of respondents have incurred investmentlosses
 64% of respondents have been investing at least since 5years
 40% of respondents feel that biggest advantage of investing is that it

provides securedfuture
 33% believe that there are no disadvantages forinvesting
 27% of the respondents feel that the risk of investing is the
biggestdisadvantage
 31% of respondents feel that they do not have proper guidance which acts as

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 a biggest difficulty toinvest
 36% of respondents spend more than 50% of their income in the

maintenance expenses while 28% of respondents spend between 35% and

50% of their salary on monthly maintenanceexpenses.

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 CONCLUSION

All the FIFS employees should have a check on the amount of money that is being
spent. At least part of the income should be saved on a regular basis. Once Savings
is made as a habit, most part of the savings should beinvested.

There are many investment options available based on individual’s income & risk
profile. Hence, all the employees should make investing a habit.

We would like to quote Warren Buffett which is quite apt for this particular study.

 Earnings: Never depend on a single income. Make investment to create a

second income.
 Spending: If you buy things you do not need, soon you will have to sell

things you need.

 Savings: Don’t save what is left after spending but spend what is left
aftersavings.
 Taking Risk: Never test the depth of the river with bothfeet.
 Investment: Don’t put all your eggs in a singlebasket.

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 SUGGESTION &RECOMMENDATION
We feel that since the higher education policy is very good in the BPO Financial
consultant, all the employees should avail it. Instead of complaining that the salaries are
lower in the FIFSFinancial consultant compared to the IT Financial consultant, they
should avail the courses of their choice. All the companies give 50-100% concession in
the course fees and the management gives full support (like the employee is not engaged
in work during the class hours, some companies provide transport if the classes happen in
the University Campus, leaves for preparation for the exams etc.). They should look at
the cost of these courses in the market and the concession they are getting because of
being an employee of such MNCs. Also most of the companies give promotion and
progression/ role change to the employees who go for higher education through the
company’s HEP/Executive MBA programs. Thus, we can pursue the studies without
hampering our earning capability. In short, we could refer it as ‘Learn while you Earn’.

Employees should look at buying a separate life insurance the moment they start earning.
They can look at term insurance where the premiums are low, but the returns are very
high in case of the unfortunate death of the employee. This gives a huge security to the
family, especially if s/he is the only bread earner.

Employees should look at health insurance for sure. Many employees shared their
unfortunate experience of losing their savings or selling their assets during any major
illness of self/ family. Many employees had not added their parents in the health
insurance policy and had to pay huge sums during hospitalization. Employees should not
depend only on the health insurance through office, but should take separate health
insurance for the entire family. And since the premiums are low at young age, employees
should look at that option. It saves tax under 80C/CC/CCC.

All the employees should save from their first pay check. They may look at the option of
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RD or PPF and make small investments there. By the power of compounding, it will
grow over the years.

We observed that the employees who did not save in their 20s had to face problems, and
hence, had to save and invest aggressively in their 30s. They had to curb their desires a
lot in their 30s as they had to make up for the losses in their 20s. Hence we suggest the
employees to save from their first pay check.

When there is huge amount of spending without a check and keep borrowing, we fall into
a vicious circle of debt trap. Not only individuals, but many nations have fallen into the
debt trap and the after-effects of such debt trap can be understood in the wake of recent
Greece economic crisis.

Employees should never withdraw the PF amount when they change companies. PF is a
forced investment which the Govt. makes an employee to do and every employee should
safeguard it. And they should not even look at the option of taking a loan against PF
unless there is any emergency.

Every employee should submit the medical bills (up to Rs. 15000 is tax exempted) and
LTA bills as they are exempted from tax. We observed that most of the young employees
are not aware of it and are not depositing it and paying tax unnecessarily.

Employees should submit the rent receipt and /or rent agreement to claim the tax
submission on a year on year basis. We found that most of the employees whom we
interviewed were not doing it.

Employees should look at investing in property at a young age. It is ok if they do not buy
a very good flat/ house. It is ok to buy a plot/ house in an upcoming area at a cheaper rate
and avail the tax benefit as the property costs go up with time. Also if we do the
calculations, we will see that rent + some more money= EMI. Even if we do not stay in
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that house, we can put it on rent and have a secondincome.

Employees, who buy a home, should buy an insurance to protect the home loan. It should
cover any natural calamity and damage to the property, job loss, disability etc. so that
your loved ones should inherit your property, not your loan in case of death or disability.

Employees should do thorough research before buying a property, MFs or exposing

themselves to the Equity market. The risks are high and the returns too are high.
However incorrect moves can incur a lot of losses. Also when an employee is young
(below 35) s/he.

can do aggressive investment as s/he can make up for the losses. Most of the employees
in their 30s mentioned that as of now they are at ‘Medium Risk Medium Return stage’,
however after a few years they will take lesser risks as they will be nearing retirement.

In the 20s, all the employees should concentrate on their careers fully as they can reap
the benefits when they grow older. Also, they should not get into the debt trap as many of
the FIFSemployees we interviewed had got into. The credit cards are easily given to this
young group as the salaries are high and in big cities the avenues of spending money are
higher. And the culture in the FIFSFinancial consultant is quite westernized, and the
young employees easily fall for the partying, movies, shopping mode using credit cards
and personal loans. They should avoid taking car/bike loans as all the FIFS provide
transport and vehicle is a depreciating asset. Also the habit of balance transfer in credit
cards should be avoided and if one needs to use the CC, then should pay off the entire
balance every month. There should be no evolving credit. Using the credit card
judiciously and using the 45-day credit period is good, but not otherwise.

Employees can consider buying gold and silver. Gold has given more than 150% return
in the last 4 years. Silver too has given more than 160% returns. In fact diamonds and
platinum does not have much of resale value. Hence employees can think buying it for
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personal use, and not think that it is an investment. Also ornaments are not exactly an
investment as while selling, due to wastage, making charge etc. a lot of money is wasted.
Employees should look at bullions or ETFs.

Employees should remember than every rupee saved is every rupee earned. Hence should
minimize wastage. Every employee should make a budget and document the expenses on
a regular basis. They should look at reducing wastages and stick to a budget. We
observed that the employees who had spent prudently had managed to save, invest, and
enjoy all at the same time as they stuck to their budgets.

It is important to note the significance of savings for an economy. Recession in

developed economies, like United States and other European nations provides an insight
on the importance of savings of the individuals to the economic growth of the nation.

This study gains further importance as this financial consultant predominantly employs
youngsters. As such, it would be interesting to study the pattern of their investments.
Also, ‘Power of Compounding’ suggests that the wealth generation can be maximized
when a person starts investing at a youngage.

We suggest that young employees start investing so that they can benefit from the ‘Power
of Compounding’. Also, it does not mean that they have to shell out huge amounts of
money every month as investment, but can start with as little as they can. As their
disposable income reduces, this also ensures that they concentrate more on their
spendingpattern.

Every employee should look at a second income source. There are many part-time jobs
which they can do over the weekends (Freelance training, web designing, modelling,
music or any other vocational training, tuitions etc.). There are a lot of works from home
options which employees can do if they have a PC and internet connection at home /
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cyber café. Every employee should look at such options.

We suggest the employees not to spend more than 50% of their salaries for maintenance
expenses. In the initial years of the career, it is a little difficult specially if one has to pay
rent etc…, however, if one manages by staying in shared accommodation etc. at a young
age, then the later years become easy for them. Youngsters, who live lavishly in their 20s
on credit, face challenges later. Hence, we suggest every employee to think before
spending, and not spend, and thenthink.

Every employee should have at least 6 months maintenance expense in their bank
accounts. This is for any contingency like sudden illness, job loss etc... Employees who
have regular EMIs should always keep aside 6 months EMI to mitigate anycontingency.

Every employee should look at tax saving options and invest enough to save tax. Every
year minimum 1 lakh should be saved for those employees who fall under the tax
bracket. And the young employees who have just joined and their salaries are not taxable
should also save prudently.

One of the golden rules of investment is “As and when our salary increases, we should
increase our investments”. All the FIFSemployees should follow that.

Another golden rule is, “Never keep all your eggs in one basket”. Employees should
follow that principle and invest in debt and equity. Also, they should invest in high risk
instruments like property, bullion, equity and MFs and should have safe options

like PPF, FD, NSC, Govt Bonds, etc... More the portfolio is diversified; the better it is for
any employee.

Many FIFS employees do the mistake of not including the names of their parents/spouses

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as nominees for their life insurance. In the situation of an unfortunate death, the company
has to go through the hassles of allocating the money to the next of kin. Every employee
should do that mandatorily when they join the company and should contact the HR team,
if there are any changes in the details.

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BIBLIOGRAPHY

105
Bibliography & References

www.wikipedia.comww

w.birlasunlife.comww

w.irdaindia.org

www.google.comwww.Fintellect

Intelligent Financial

Solutions.com

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