Importance of Systematic investment planning in portfolio management

7/24/2019 Importance of Systematic investment planning in portfolio management

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TABLE OF CONTENTS

Page No.

CHAPTER 1 EXECUTIVE SUMMARY... 07

CHAPTER 2 INTRODUCTION

2.1 Introduction to the Topic............................................08

2.2 Introduction to the Industry........................................23

2.3 Introduction to the Company......................................27

2.4 Introduction to the Project...........................................30

CHAPTER STUDY!PRO"ECT DETAILS

3.1 Objecties o! the Project"#tudy..................................4$

3.2 %iterature &eie'........................................................(0

3.3 #tudy )ethodo*o+y.....................................................,1

3.4 #tudy %imitations........................................................,4

CHAPTER # ANALYSIS $ FINDIN%S...................................................,(

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CHAPTER & CONCLUSIONS $ RECOMMENDATIONS

(.1 Conc*usions................................................................74

(.2 &ecommendations......................................................7,

ANNEXURES

-1 -** Tab*es

-2 ////.

-3 ////.

-4 ////.

-( ////.

-, ////.

-7 ////.

1 uestionnaires"ata &ecordin+ 5ormats ////.

C1 ib*io+raphy ////..

Summer Internship Project

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IMPORTANCE OF SYSTEMATIC INVESTMENT

PLANNING IN PORTFOLIA MNAGEMENT

(A Project with FINANCIAL HOSPITAL)

Submitted in partial fulllment of the requirementsfor

Post Graduate Diploa i! Ma!a"ee!t

#PGDM)

A$adei$ Year% &'(

Submitted B

#CHAITI* SHAH)

Roll No+ #M,--)

PGDM,II. /at$0% &'(-,(1

C0eta!a2s I!stitute o3 Ma!a"ee!t a!d Resear$0./a!dra #E). Mu4ai -'' '(

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DECLARATION

I hereb declare that this report submitted in partial fulllment of the requirement of

the award for the Post "raduate #iploma in $ana%ement to &hetana's Institute of

$ana%ement and esearch) is m ori%inal wor* and not submitted for award of an

de%ree or diploma fellowship or for similar titles or pri+es,

I further certif that I ha-e no objection and %rant the ri%hts to &hetana's Institute

of $ana%ement and esearch to publish an chapter. project if the deem t in/ournals.$a%a+ines and newspapers etc, without m permission,

Pla$e % Mu4ai

Da'e ( )INPUT THE CORRECT DATE*

Na+e ( )CHAITI, SHAH*

Class % P+G+D+M+5 Se+ 6 II

Ro-- No. ( )M##*

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CERTIFICATE

This is to certi!y that the project submitted in partia* !u*!i**ment !or the a'ard o! Post 6raduate

ip*oma in )ana+ement o! Chetanas Institute o! )ana+ement and &esearch is a resu*t o! the

bona!ide research 'or carried out by )r. " )s. C9-ITI: #9-9 under my superision and

+uidance; no part o! this report has been submitted !or a'ard o! any other de+ree; dip*oma;

!e**o'ship or other simi*ar tit*es or pri


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AC*NO:LEDGEMENT

here is no template for this) as it is li*el to chan%e from person to person)

particularl since this is a chance for ou to ac*nowled%e all those who plaed a

role in the conduct of the project,

his is one of the few pa%es of the entire report that is written in rst person) so)

use of I) $e) 4e) 5s) etc, is allowed here,

he aim here is to ac*nowled%e and than* e-erone who ma ha-e plaed a part in

the completion of the project, hese should denitel include the followin%

Institute #irector)

#r, 6rishna Pande) our Internal "uide) our 78ternal "uide with his #esi%nation 9

:ame of &ompan (at the &ompan;) the $umbai 5ni-ersit< 9 ma also include

an other facult or student who ma ha-e helped ou in an wa) the Institute I

=ab) the Institute =ibrar and anone else (fellow student) famil or friends; who

ma ha-e plaed a useful role in the successful conduct of the project,

Si%nature

of the Student

Nae o3 t0e Stude!t


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CHAPTER 1( EXECUTIVE SUMMERY

)utua* !unds hae emer+ed as a stron+ !inancia* intermediary and are the !astest +ro'in+

se+ment o! the !inancia* serices sector in India. )utua* !unds p*ay a ery si+ni!icant ro*e in

channe*ihether as the !oundation o! ones inestment pro+ram or

as a supp*ement; mutua* !und schemes can he*p the inestors to meet their !inancia* +oa*s. - host

o! !actors has contributed to this e?p*osie +ro'th o! the industry. The industry has made

si+ni!icant strides in terms o! its ariety; sophistication and re+u*ation. ue to the economic

boom; entry o! !orei+n asset mana+ement companies; !aorab*e stoc marets and a++ressie

maretin+ by mutua* !unds; the asset mana+ement industry in India is 'itnessin+ dramatic

+ro'th in terms o! ne' !und openin+s; the number o! mutua* !und !ami*ies; and in the tota*

assets under mana+ement in recent years. espite arious attractions o!!ered; the tota* net assets

o! mutua* !unds are ery *ess as compared to other dee*oped countries. In the product o!!erin+

too; the Indian !und industry is not c*ose to the dee*oped countries. India 32 member !und

industry has to sca*e ne' hei+hts to narro' the +ap 'ith the other dee*oped countries. To

achiee this; the Indian mutua* !und industry needs to 'iden its ran+e o! products 'ith a!!ordab*e

and competitie schemes that combine arious e*ements o! *i@uidity; return and security in

main+ mutua* !und products the best possib*e a*ternatie !or the sma** inestors in the Indian

maret. esides; mutua* !unds can surie on*y i! they per!orm 'e** and satis!y the e?pectations

o! the inestors. In this conte?t a sincere attempt has been made by the researcher to e?amine the

steady +ro'th o! the industry; the innoations and the dee*opment that has taen p*ace in India.

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CHAPTER 2( INTRODUCTION

2.1 I/'o3'4o/ 'o '5e 'o643

5a' 48 S98'e+a'43 I/:e8'+e/' P-a/;

S98'e+a'43 I/:e8'+e/' P-a/ #IP is an inestment ehic*e o!!ered by mutua* !unds to

inestors; a**o'in+ them to inest usin+ sma** periodica**y amounts instead o! *ump sums. The

!re@uency o! inestment is usua**y 'ee*y; month*y or @uarter*y. In #IP; a !i?ed amount o!

money is debited by the inestors in ban accounts periodica**y and inested in a speci!ied

mutua* !und. The inestor is a**ocated a number o! units accordin+ to the current Aet asset a*ue.

Bery time a sum is inested; more units are added to the inestors account.

#ystematic Inestment P*an #IP is a simp*e; timehonored strate+y desi+ned to he*p inestors

accumu*ate 'ea*th in a discip*ined manner oer the *on+ period o! time and p*an a better !uture

!or them. This discip*ined approach o! inestin+ proides 'ith the !o**o'in+ bene!its

1. Po

)ost o! us de*ay inestments unti* the *ast moment. Aeed*ess to say; the *on+er one de*ay; the

+reater 'i** be the !inancia* burden on him to meet his !inancia* +oa*s. On the other hand; one

'ou*d be surprised 'hat one cou*d achiee by sain+ a sma** sum o! money re+u*ar*y at an ear*y

a+e. )oreoer; the ear*ier one inests; the *on+er his money 'ors !or him and +reater 'i** be

the po'er o! compoundin+.

Thepo'er o! compoundin+under*ines the importance o! main+ his money 'or !or him at an

ear*y a+e.

Tae this e?amp*e.

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#hyam starts sain+ &s. (000 eery year !rom the a+e o! 20 and continues to do so ti** he reaches

3(; a!ter 'hich he stops main+ any !urther inestment. #anjay starts sain+ &s 12;000 eery

year !rom the a+e o! 3( and continues to do so ti** he reaches ,( years o! a+e. I! both earn; say;

12E per annum on their inestments; 'hich o! them 'ou*d be 'ea*thier 'hen they retire at ,(F

#hyam

#urprisin+; isnt itF

-t ,(; #hyam 'ou*d hae accumu*ated &s ((.84 *ahs 'hereas #anjays 'ea*th 'ou*d hae been

*o'er at &s 28.$2 *ahs. The po'er o! compoundin+ can hae a si+ni!icant impact on 'ea*th

accumu*ation; especia**y i! one remains inested oer a *on+ period o! time.

2. R6ee Co8' A:eag4/g > T5e 6ohat

one needs is an automatic marettimin+ mechanism *ie &upee Cost -era+in+&C- that

e*iminates the need to time your inestments.

In other 'ords; 'ith &C-; you dont hae to 'orry about 'here share prices or interest rates are

headed. Gou simp*y inest a !i?ed amount at re+u*ar intera*s; re+ard*ess o! the A-H. The idea is

that you buy !e'er units 'hen the A-H is hi+h and more 'hen it is *o' D automatica**y. This is

in *ine 'ith our natura* desire to buy *o' and se** hi+h.

5or instance; you cou*d opt !or a #ystematic Inestment P*an#IP by inestin+ &s 1000 eery

month into an openended e@uity scheme 'ith an A-H o! &s 10. The aera+e cost per unit under

the #IP 'i** a*'ays be *ess than the aera+e purchase price per unit; re+ard*ess o! 'hether the

maret is risin+ or !a**in+ or !*uctuatin+.

&C-; ho'eer; does not +uarantee a pro!it. ut 'ith a sensib*e and *on+terminestment

approach; it can smoothen out the maret ups and do'ns and reduce the ris o! inestin+ in

@
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o*ati*e marets. In a nutshe**; &C- is an e!!icient and conenient ehic*e to accumu*ate 'ea*th

in a timebound and discip*ined manner.

. Co/:e/4e/3e

#ae yourse*! !rom the troub*e o! doin+ the same thin+. Gou do not hae to tae time out

!rom your busy schedu*e to mae your inestments. Bnro** !or the #IP by startin+ an account

and proidin+ postdated che@ues o! periodic inestments month*y; @uarter*y based on your

conenience. Gou can re*a? once you hae sent in your che@ues 'ith the comp*eted

Bnro*ment 5orm.

5a' 48 Po'=o-4o Ma/age+e/';

>e a** dream o! beatin+ the maret and bein+ super inestors and spend an inordinate amount o!

time and resources in this endeaor. Conse@uent*y; 'e are easy prey !or the ma+ic bu**ets and the

secret !ormu*ae o!!ered by ea+er sa*espeop*e pushin+ their 'ares. In spite o! our best e!!orts;

most o! us !ai* in our attempts to be more than aera+e inestors. Aonethe*ess; 'e eep tryin+;

hopin+ that 'e can be more *ie the inestin+ *e+ends D another >arren u!!ett or Peter %ynch.

>e read the 'ords 'ritten by and about success!u* inestors; hopin+ to !ind in them the ey to

their stocpicin+ abi*ities; so that 'e can rep*icate them and become 'ea*thy @uic*y.

In our search; thou+h; 'e are 'hipsa'ed by contradictions and anoma*ies. In one corner o! the

inestment to'n s@uare; stands one adisor; ye**in+ to us to buy businesses 'ith so*id cash !*o's

and *i@uid assets because thats 'hat 'ored !or u!!ett. In another corner; another inestment

e?pert cautions us that this approach 'ored on*y in the o*d 'or*d; and that in the ne' 'or*d o!

techno*o+y; 'e hae to bet on companies 'ith so*id +ro'th prospects. In yet another corner;

stands a si*er ton+ued sa*esperson 'ith iid charts and presents you 'ith eidence o! his

capacity to +et you in and out o! marets at e?act*y the ri+ht times. It is not surprisin+ that !acin+

this cacophony o! c*aims and counterc*aims that 'e end up more con!used than eer.

In this introduction; 'e present the ar+ument that to be success!u* 'ith any inestment strate+y;

you hae to be+in 'ith an inestment phi*osophy that is consistent at its core and 'hich matches

not on*y the marets you choose to inest in but your indiidua* characteristics. In other 'ords;

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the ey to success in inestin+ may *ie not in no'in+ 'hat maes Peter %ynch success!u* but in

!indin+ out more about you.

5a' 48 a/ 4/:e8'+e/' 654-o8o659;

-n inestment phi*osophy is a coherent 'ay o! thinin+ about marets; ho' they 'or

and sometimes do not and the types o! mistaes that you be*iee consistent*y under*ie inestor

behaior. >hy do 'e need to mae assumptions about inestor mistaesF -s 'e 'i** ar+ue; most

inestment strate+ies are desi+ned to tae adanta+e o! errors made by some or a** inestors in

pricin+ stocs. Those mistaes themse*es are drien by !ar more basic assumptions about

human behaior. To proide an i**ustration; the rationa* or irrationa* tendency o! human bein+s to

join cro'ds can resu*t in price momentum D stocs that hae +one up the most in the recent past

are more *ie*y to +o up in the near !uture. %et us consider; there!ore; the in+redients o! an

inestment phi*osophy.

Human Frailty

nder*yin+ a** inestment phi*osophies is a ie' about human behaior. In !act; one

'eaness o! conentiona* !inance and a*uation has been the short shri!t +ien to human

behaior. It is not that 'e in conentiona* !inance assume that a** inestors are rationa*; but that

'e assume that irrationa*ities are random and cance* out. Thus; !or eery inestor 'ho tends to

!o**o' the cro'd too much a momentum inestor; 'e assume an inestor 'ho +oes in the

opposite direction a contrarian; and that their push and pu** in prices 'i** u*timate*y resu*t in a

rationa* price. >hi*e this may; in !act; be a reasonab*e assumption !or the ery *on+ term; it may

not be a rea*istic one !or the short term.

-cademics and practitioners in !inance 'ho hae *on+ ie'ed the rationa* inestor assumption

'ith septicism hae dee*oped a ne' branch o! !inance ca**ed behaiora* !inance 'hich dra's

on psycho*o+y; socio*o+y and !inance to try to e?p*ain both 'hy inestors behae the 'ay theydo and the conse@uences !or inestment strate+ies. -s 'e +o throu+h this section; e?aminin+

di!!erent inestment phi*osophies; 'e 'i** try at the outset o! each phi*osophy to e?p*ore the

assumptions about human behaior that represent its base.

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Market Efficiency

- c*ose*y re*ated second in+redient o! an inestment phi*osophy is the ie' o! maret

e!!iciency or its absence that you need !or the phi*osophy to be a success!u* one. >hi*e a** actie

inestment phi*osophies mae the assumption that marets are ine!!icient; they di!!er in their

ie's on 'hat parts o! the maret the ine!!iciencies are most *ie*y to sho' up and ho' *on+

they 'i** *ast. #ome inestment phi*osophies assume that marets are correct most o! the time

but that they oerreact 'hen ne' and *ar+e pieces o! in!ormation are re*eased about indiidua*

!irms D they +o up too much on +ood ne's and do'n too much on bad ne's. Other inestment

strate+ies are !ounded on the be*ie! that marets can mae mistaes in the a++re+ate D the entire

maret can be under or oera*ued D and that some inestors mutua* !und mana+ers; !or

e?amp*e are more *ie*y to mae these mistaes than others. #ti** other inestment strate+ies

may be based on the assumption that 'hi*e marets do a +ood job o! pricin+ stocs 'here there

is a substantia* amount o! in!ormation D !inancia* statements; ana*yst reports and !inancia* press

coera+e Dthey systematica**y misprice stocs on 'hich such in!ormation is not aai*ab*e.

Tactics and Strategies

Once you hae an inestment phi*osophy in p*ace; you dee*op inestment strate+ies that

bui*d on the core phi*osophy. Consider; !or instance; the ie's on maret e!!iciency e?pounded

in the *ast section. The !irst inestor; 'ho be*iees that marets oer react to ne's; may dee*op

a strate+y o! buyin+ stocs a!ter *ar+e ne+atie earnin+s surprises 'here the announced earnin+s

come in 'e** be*o' e?pectations and se**in+ stocs a!ter positie earnin+s surprises. The second

inestor 'ho be*iees that marets mae mistaes in the a++re+ate may *oo at technica*

indicators such as mutua* !und cash positions and short sa*es ratios to !ind out 'hether themaret is oerbou+ht or oerso*d and tae a contrary position. The third inestor 'ho be*iees

that maret mistaes are more *ie*y 'hen in!ormation is absent may *oo !or stocs that are not

!o**o'ed by ana*ysts or o'ned by institutiona* inestors.

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It is 'orth notin+ that the same inestment phi*osophy can spa'n mu*tip*e inestment

strate+ies. Thus; a be*ie! that inestors consistent*y oerestimate the a*ue o! +ro'th and under

estimate the a*ue o! e?istin+ assets can mani!est itse*! in a number o! di!!erent strate+ies ran+in+

!rom a passie one o! buyin+ *o' PB ratio stocs to a more actie one o! buyin+ such companies

and attemptin+ to *i@uidate them !or their assets. In other 'ords; the number o! inestment

strate+ies 'i** ast*y outnumber the number o! inestment phi*osophies.

59 o 9o /ee a/ 4/:e8'+e/' 654-o8o659;

)ost inestors hae no inestment phi*osophy; and the same can be said about many

money mana+ers and pro!essiona* inestment adisors. They adopt inestment strate+ies that

seem to 'or !or other inestors and abandon them 'hen they do not. >hy; i! this is possib*e;

you mi+ht as; do you need an inestment phi*osophyF The ans'er is simp*e. In the absence o!

an inestment phi*osophy; you 'i** tend to shi!t !rom strate+y to strate+y simp*y based upon a

stron+ sa*es pitch !rom a proponent or perceied recent success. There are three ne+atie

conse@uences !or your port!o*io

%acin+ a rudder or a core set o! be*ie!s; you 'i** be easy prey !or char*atans and pretenders;

'ith each one c*aimin+ to hae !ound the ma+ic strate+y that beats the maret.

-s you s'itch !rom strate+y to strate+y; you 'i** hae to chan+e your port!o*io; resu*tin+ in hi+h

transactions costs and you 'i** pay more in ta?es.

>hi*e there may be strate+ies that do 'or !or some inestors; they may not be appropriate !or

you; +ien your objecties; ris aersion and persona* characteristics. In addition to hain+ a

port!o*io that under per!orms the maret; you are *ie*y to !ind yourse*! 'ith an u*cer or 'orse.

>ith a stron+ sense o! core be*ie!s; you 'i** hae !ar more contro* oer your destiny. Aot on*y

'i** you be ab*e to reject strate+ies that do not !it your core be*ie!s about marets but a*so to

tai*or inestment strate+ies to your needs. In addition; you 'i** be ab*e to +et much more o! a

bi+ picture ie' o! 'hat it is that is tru*y di!!erent across strate+ies and 'hat they hae in

common.

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T5e B4g P43'e o= I/:e8'4/g

To see 'here the di!!erent inestment phi*osophies !it into inestin+; *et us be+in by *ooin+ at

the process o! creatin+ an inestment port!o*io. Aote that this is a process that 'e a** !o**o' D

amateur as 'e** as pro!essiona* inestors thou+h it may be simp*er !or an indiidua*

constructin+ his or her o'n port!o*io than it is !or a pension !und mana+er 'ith a aried and

demandin+ c*iente*e.

Step 1: Understanding the Client

The process a*'ays starts 'ith the inestor and understandin+ his or her needs and pre!erences.

5or a port!o*io mana+er; the inestor is a c*ient and the !irst and o!ten most si+ni!icant part o! the

inestment process understands the c*ients needs the c*ients ta? status and most important*y; his

or her ris pre!erences. 5or an indiidua* inestor constructin+ his or her o'n port!o*io; this may

seem simp*er; but understandin+ ones o'n needs and pre!erences is just as important a !irst step

as it is !or the port!o*io mana+er.

Step 2: Prtfli Cnstructin

The ne?t part o! the process is the actua* construction o! the port!o*io; 'hich 'e diide

into three subparts.

1. The !irst o! these is the decision on ho' to a**ocate the port!o*io across di!!erent asset

c*asses de!ined broad*y as e@uities; !i?ed income securities and rea* assets such as rea* estate;

commodities and other assets. This asset a**ocation decision can a*so be !ramed in terms o!

inestments in domestic assets ersus !orei+n assets; and the !actors driin+ this decision.

2. The second component is the asset se*ection decision; 'here indiidua* assets are piced

'ithin each asset c*ass to mae up the port!o*io. In practica* terms; this is the step 'here the

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stocs that mae up the e@uity component; the bonds that mae up the !i?ed income component

and the rea* assets that mae up the rea* asset component are se*ected.

3. The !ina* component is e?ecution; 'here the port!o*io is actua**y put to+ether. 9ere

inestors must 'ei+h the costs o! tradin+ a+ainst their perceied needs to trade @uic*y. >hi*e

the importance o! e?ecution 'i** ary across inestment strate+ies; there are many inestors 'ho

!ai* at this sta+e in the process.

Step !: E"aluate prtfli perfrmance

The !ina* part o! the process; and o!ten the most pain!u* one !or pro!essiona* money mana+ers; is

per!ormance ea*uation. Inestin+ is a!ter a** !ocused on one objectie and one objectie a*one;

'hich is to mae the most money you can; +ien your particu*ar ris pre!erences. Inestors are

not !or+iin+ o! !ai*ure and un'i**in+ to accept een the best o! e?cuses; and *oya*ty to money

mana+ers is not a common*y !ound trait. y the same toen; per!ormance ea*uation is just as

important to the indiidua* inestor 'ho constructs his or her o'n port!o*io; since the !eedbac

!rom it shou*d *ar+e*y determine ho' that inestor approaches inestin+ in the !uture.

These parts o! the process are summarihi*e 'e 'i** *eae much o! the detai* !or *ater; 'e 'i**

attempt to present at *east the core o! each phi*osophy here.

Market Timing "ersus #sset Selectin

The broadest cate+ori


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phi*osophies can be cate+oriithin each; thou+h; are numerous strands that tae ery di!!erent ie's about marets.

Consider maret timin+ !irst. >hi*e most o! us consider maret timin+ on*y in the conte?t o! the

stoc maret; there are inestors 'ho consider maret timin+ to inc*ude a much broader ran+e o!

marets D currency marets; bond marets and rea* estate come to mind. The ran+e o! choices

amon+ security se*ection phi*osophies is een 'ider and can span chartin+ and technica*

indicators; !undamenta*s earnin+s; cash!*o's or +ro'th and in!ormation earnin+s reports;

ac@uisition announcements.

>hi*e maret timin+ has a**ure to a** o! us because it pays o!! so 'e** 'hen you are

ri+ht; it is di!!icu*t to succeed at !or e?act*y that reason. There are a** too o!ten too many

inestors attemptin+ to time marets; and succeedin+ consistent*y is ery di!!icu*t to do. I! you

decide to pic stocs; ho' do you choose 'hether you pic them based upon charts;

!undamenta*s or +ro'th potentia*F The ans'er; as 'e 'i** see; in the ne?t section 'i** depend not

on*y on your ie's o! the maret and empirica* eidence but a*so on your persona*

characteristics.

#cti"ist "ersus Passi"e $n"esting

-t the broadest *ee*; inestment phi*osophies can a*so be cate+ori


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the 'ay companies are run. >e shou*d hasten to dra' a contrast bet'een actiist inestin+ and

actie inestin+. -ny inestor 'ho tries to beat the maret by picin+ stocs is ie'ed as an

actie inestor. Thus; actie inestors can adopt passie strate+ies or actiist strate+ies.

Time Hri%n

i!!erent inestment phi*osophies re@uire di!!erent time hori


18/86

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contradictory phi*osophies coe?istin+ in the maret because o! their di!!erent time hori


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1@

the in+redients o! tradin+ costs; and the tradeo!! bet'een the speed o! tradin+ and the cost

o! tradin+

>e 'ou*d hasten to add that you do not need to be a mathematica* 'ihi*e persona* e?perience o!ten determines ho' 'e ie' our !e**o' human

bein+s; 'e shou*d e?pand this to consider broader eidence !rom marets on ho' inestors act

be!ore 'e mae our !ina* jud+ments.

Oer the *ast !e' decades; it has become easy to test di!!erent inestment strate+ies as

data becomes more accessib*e. There no' e?ists a substantia* body o! research on the inestment

strate+ies that hae beaten the maret oer time. 5or instance; researchers hae !ound conincin+

eidence that stocs 'ith *o' price to boo a*ue ratios hae earned si+ni!icant*y hi+her returns

than stocs o! e@uia*ent ris but hi+her price to boo a*ue ratios. It 'ou*d be !oo*hardy not to

reie' this eidence in the process o! dee*opin+ your inestment phi*osophy. -t the same time;

thou+h; you shou*d eep in mind three caeats about this research

#ince they are based upon the past; they represent a *oo in the rearie' mirror. #trate+ies that

earned substantia* returns in the 1$$0s may no *on+er be iab*e strate+ies no'. In !act; as

success!u* strate+ies +et pub*ici


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2

measured by the mode*s 'e use. To the e?tent that 'e mismeasure ris or i+nore a ey

component o! ris; it is entire*y possib*e that the hi+her returns are just a re'ard !or the +reater

ris associated 'ith *o' price to boo a*ue stocs.

#ince understandin+ 'hether a strate+y beats the maret is such a critica* component o!

inestin+; 'e 'i** consider the approaches that are used to test a strate+y; some basic ru*es that

need to be !o**o'ed in doin+ these tests and common errors that are made unintentiona**y or

intentiona**y 'hen runnin+ such tests. -s 'e *oo at each inestment phi*osophy; 'e 'i**

reie' the eidence that is aai*ab*e on strate+ies that emer+e !rom that phi*osophy.

Step !: Find the philsphy that pr"ides the )est fit fr yu

Once you understand the basics o! inestin+ !orm your ie's on human !oib*es and

behaior and reie' the eidence accumu*ated on each o! the di!!erent inestment phi*osophies;

you are ready to mae your choice. In our ie'; there is potentia* !or success 'ith a*most eery

inestment phi*osophy yes; een chartin+ but the prere@uisites !or success can ary. In

particu*ar; success may rest on

*ur risk a"ersin #ome strate+ies are inherent*y risier than others. 5or instance; enture

capita* or priate e@uity inestin+; 'here you inest your !unds in sma**; priate businesses that

sho' promise is inherent*y more risy than buyin+ a*ue stocs D e@uity in *ar+e; stab*e; pub*ic*y

traded companies. The returns are a*so *ie*y to be hi+her. 9o'eer; more ris aerse inestors

shou*d aoid the !irst strate+y and !ocus on the second. Picin+ an inestment phi*osophy and

strate+y that re@uires you to tae on more ris than you !ee* com!ortab*e tain+ can be

ha


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21

*ur time hri%n #ome inestment phi*osophies are predicated on a *on+ time hori


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22

usua**y recommended to retai* inestors 'ho do not hae the resources to pursue actie

inestment.

India has a diersi!ied !inancia* sector; 'hich is under+oin+ rapid e?pansion. The sector

comprises commercia* bans; insurance companies; nonbanin+ !inancia* companies; co

operaties; pension !unds; mutua* !unds and other sma**er !inancia* entities. IndiaKs serices

sector has a*'ays sered the countrys economy 'e**; accountin+ !or about (7 per cent o! the

+ross domestic product 6P. In this re+ard; the !inancia* serices sector has been an important

contributor. The si


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23

2.2 INTRODUCTION TO THE INDUSTRY

#erice industry sector 'ith an around (7 per cent contribution to the +ross domestic product

6P; has made rapid strides in the *ast !e' years and emer+ed as the *ar+est and !astest

+ro'in+ sector o! the economy. esides bein+ the dominant sector in Indias 6P; it has a*so

contributed substantia**y to !orei+n inestment !*o's; e?ports; and emp*oyment. Indias serices

sector coers a 'ide ariety o! actiities that hae di!!erent !eatures and dimensions. They

inc*ude trade; hote* and restaurants; transport; stora+e and communication; !inancin+; insurance;

rea* estate; L business serices; community; socia* and persona* serices and serices associated

'ith construction. #erices in India are emer+in+ as a prominent sector in terms o! contribution

to nationa* and states incomes; trade !*o's; !orei+n direct inestment 5I in!*o's; and

emp*oyment.

The compound annua* +ro'th rate C-6& o! serices sector 6P 'as 8.( per cent !or the

period 200001 to 201314.

-s per the surey; in India; the +ro'th o! sericessector +ross domestic product 6P has been

hi+her than that o! oera** 6P bet'een the 5G01 5G14. #erices constitute a major portion o!

Indias 6P 'ith a (7 per cent share in 6P at !actor cost at current prices in 201314; an

increase o! , per cent points oer 200001.

The shi!t !rom primary and secondary actiities to tertiary actiities by the citi


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2!

-ccordin+ to the data proided by Internationa* ata Corporation IC; the tota* mobi*e

serices maret reenue in India is e?pected to touch #J 37 bi**ion in 2017 +ro'in+ at a

compound annua* +ro'th rate C-6& o! (.2 percent.

The +ro'th in the ITe# sector has resu*ted in increasin+ competition bet'een the di!!erent brands

in the ecommerce sector. -s a resu*t; it is e?pected that the ecommerce sector 'i** +enerate

c*ose to 1(0;000 jobs 'ithin the ne?t 23 years.

The *o+istics sector in India 'hich 'as a*ued at #J 101 bi**ion in 2013 is e?pected to +ro' by

10 per cent per annum to reach #J 13, bi**ion by 201,; accordin+ to )r & inesh; Chairman;

CII Institute o! %o+istics -disory Counci* and =oint )ana+in+ irector; TH# #ons %td.

I/:e8'+e/'8

The Indian serices sector has attracted the hi+hest amount o! 5I e@uity in!*o's in the period

-pri* 2000ecember 2014; amountin+ to about #J 41;7((.4, mi**ion 'hich is about 18 per

cent o! the tota* !orei+n in!*o's; accordin+ to the epartment o! Industria* Po*icy and Promotion

IPP.

The 6oernment o! India has a'arded a contract 'orth &s 1;370 crore #J 221.,3 mi**ion to

&icoh India %td and Te*ecommunications Consu*tants India %td TCI% to modernise 12$;000

Ta?i serice a++re+ator O*a p*ans to sca*e up operations to 100 cities !rom 1$ current*y. The

company; 'hich is *ooin+ at sma** to'ns !or +ro'th; a*so p*ans to inest in drier ecosystem;

such as trainin+ centres and techno*o+y up+rade.

%o:e/+e/' I/4'4a'4:e8

#tron+ and consistent emphasis on se*!re*iance in its economic dee*opment pro+rammes oer

the years by the 6oernment o! India has a*so enab*ed India to bui*d up a bi+ and ersati*e cadre

o! pro!essiona*s. They no' hae e?pertise and si**s across a ast and 'ideran+in+ spectrum o!

discip*ines; such hea*th care; tourism; education; en+ineerin+; communications; transportation;

in!ormation techno*o+y; banin+; !inance; mana+ement; amon+ others.

2!


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20

The 6oernment o! India has adopted a !e' initiaties in the recent past. #ome o! these are as

!o**o's

The 6oernment o! India p*ans to tae mobi*e net'or by ecember 201, to near*y 10 per cent

o! Indian i**a+es that are sti** unconnected.

The &esere an o! India &I has a**o'ed thirdparty 'hite *abe* automated te**er machines

-T) to accept internationa* cards; inc*udin+ internationa* prepaid cards; and has a*so a**o'ed

'hite *abe* -T)s to tie up 'ith any commercia* ban !or cash supp*y.

The 6oernment o! India has *aunched tourist isa on arria* THo- enab*ed by e*ectronic

trae* authoriorin+ 6roup con!erence !or Comprehensie Cooperation

5rame'or !or In!ormation and Communication Techno*o+ies ICT. India a*so o!!ered =apan to

manu!acture ICT e@uipment in India.

Citii5i speed at

eery +oernment o'ned serice point such as rai*'ays stations; airports; bus stops; hospita*s

and a** +oernment departments that dea* 'ith the pub*ic on a dai*y basis.

Roa A5ea

#erices sector +ro'th is +oerned by both domestic and +*oba* !actors. The sector is e?pected to

per!orm 'e** in 5G1,. #ome improement in +*oba* +ro'th and recoery in industria* +ro'th

'i** drie the serices sector to +ro' 7.4 per cent in 5G1, 5G1( 7.3 per cent. The

per!ormance o! trade; hote*s and restaurants; and transport; stora+e and communication sectors

are e?pected to improe in 5G1,. %oss o! +ro'th momentum in commodityproducin+ sectors

had aderse*y impacted transport and stora+e sectors oer the past t'o years. The !inancin+;

insurance; rea* estate and business serices sectors are a*so e?pected to continue their +ood run in

5G1,. The +ro'th per!ormance o! the community; socia* and persona* serices sector is direct*y

*ined 'ith +oernment e?penditure and 'e be*iee that the +oernment 'i** remain committed

to !isca* conso*idation in 5G1,.

20


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2

B?chan+e &ate sed IA& 1 M #J 0.01, as on 5ebruary 2,; 201(

Re=ee/3e8()edia &eports; Press &e*eases; IPP pub*ication; Press In!ormation ureau; Indian

bud+et pub*ication.

The Institute o! Chartered -ccountants o! India IC-I is the nationa* pro!essiona* accountin+

body o! India. It 'as estab*ished on 1 =u*y 1$4$ as a body corporate under the Chartered

-ccountants -ct; 1$4$ enacted by the Par*iament actin+ as the proisiona* Par*iament o! India

to re+u*ate the pro!ession o! Chartered -ccountancy in India. IC-I is the second *ar+est

pro!essiona* accountin+ body in the 'or*d in terms o! membership; a!ter -merican Institute o!

Certi!ied Pub*ic -ccountants. IC-I is the on*y *icensin+ cum re+u*atin+ body o! the !inancia*

audit and accountancy pro!ession in India. It recommends the accountin+ standards to be

!o**o'ed by companies in India to The Aationa* 5inancia* &eportin+ -uthority A5&- and sets

the accountin+ standards to be !o**o'ed by other types o! or+ani


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2. INTRODUCTION OF THE COMPANY

5inancia* 9ospita* aims To in!*uence our c*ientKs 'ith the spirit o! pro+ress by continuous*y

proidin+ the meanKs; #trate+ies and products that 'i** he*p to enhance their net 'orth; protect

their !ami*ies security; and he*p them to create prosperity in a** o! their business and priate

!inancia* endeaors.

Their mission and !uture prospect is to optimie achiee this by proidin+ tai*ored adice 'ith respect to the !ormu*ation;

imp*ementation and maintenance o! *on+term !inancia* strate+ies >e combine this 'ith an

emphasis upon e!!iciency in the mana+ement o! each c*ientKs !inancia* a!!airs. >hether it

dee*opin+ a !inancia* p*annin+; creatin+ a customi


28/86

2?

5. ESTATE PLANNIN%( Bstate is comprised o! eerythin+ you o'nyour car; home; other

rea* estate; 5&s and sain+ accounts; inestments; *i!e insurance; !urniture; persona*

possessions.

5inancia* 9ospita* is no'n best because it +ies

ONE STOP DESTINATION(

ont choose di!!erent a+ents; choose a comp*ete 5inancia* Consu*tant. In todays comp*e?

scenario; peop*e dont hae time to isit or maintain di!!erent a+ents !or arious inestment

products. >e o!!er you a ery 'ide ran+e o! baset o! products 'hich suits to your eery need.

5inancia* 9ospita*; a sin+*e point shoppin+ ma** !or a** your !inancia* inestments and needs. e

it )utua* 5unds; %i!e Insurance; 6enera* Insurance; B@uity Tradin+; 5i?ed eposit or 6o*d

inestment or somethin+ e*se; our e?pert team 'i** identi!y the best products across the industry

!or you.

PORTFOLIO AT FIN%ER TIPS

#eam*ess and stream*ined !or inestor conenience. oin+ inestment is no' as easy as booin+

rai*'ays ticet or buy moie ticet on*ine. -** you need is an internet connection and 5inancia*

9ospita* -ccount. 5inancia* 9ospita* proides you a comp*ete p*at!orm to buy; se**; s'itch;

redeem; #tart #IP; #top #IP 'ithout any paper 'or. Gou can ery 'e** diersi!ied and create

your o'n port!o*io 'ith the he*p o! our 5inancia* P*anner. -part !rom it; there are *ots o! a*ue

added serices *ie tri++ers; maturity a*erts; price a*erts; #IP a*erts and mana+in+ entire !ami*y

port!o*io throu+h sin+*e c*ic etc.

PERSONALIED SERVICE

I! your ne?t door person is hain+ medicines !or diabetes or cancer; do you start tain+ the sameF

Then 'hy this principa* !or inestment/F In *i!e eery person has a di!!erent +oa*s and dream.

2?


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Bery person has a di!!erent re*ationship 'ith &is and &eturn. >e as a 5inancia* P*anner

appoint a dedicated re*ationship mana+er !or you; 'ho 'i** understand your re*ationship 'ith

ris and return and su++est you the per!ect mi? o! asset c*ass i


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2.# I/'o3'4o/ 'o '5e 6oe3'

P6o8e o= SIP8

R6ee 3o8' a:eag4/g &upee cost aera+in+; a*so common*y no'n as &C- is one o! the ery

si+ni!icant reasons 'hy inestin+ in a systematic inestment p*an must be considered by a*most

eery inestor. Inestors inestin+ a !i?ed amount o! money eery month to'ards any

inestment ehic*e a**o' them to purchase more units or stocs 'hen the price o! the inestment

is *o'er. This reduces the aera+e cost o! purchasin+ o! the !inancia* asset oer time.Considerin+ a *on+ term inestment approach; rupee cost aera+in+ can een out any maret ups

and do'ns in the *on+ term; a**o'in+ the inestor to +ain ma?imum bene!its ion his or her

inestments oer time.

In simp*istic terms; *et us consider an inestor is inestin+ a month*y !i?ed amount in a mutua*

!und inestment p*an. Considerin+ the !act that the inestor inests the same amount each month

irrespectie o! the maret cyc*e; be it a bu** phase or a bear phase; the aera+e cost o! inestment

is eentua**y maintained at a *o'er *ee* a**o'in+ ma?imum +ains in the *on+ term.

B6.

)ost inestors 'ant to buy stocs 'hen the prices are *o' and se** them 'hen prices are hi+h.

ut timin+ the maret is time consumin+ and risy. - more success!u* inestment strate+y is to

adopt the method ca**ed &upee Cost -era+in+. To i**ustrate this 'e** compare inestin+ the

identica* amounts throu+h a #IP and in one *ump sum.

Ima+ine #uresh inests &s. 1000 eery month in an e@uity mutua* !und scheme startin+ in

=anuary. 9is !riend; &ajesh; inests &s. 12000 in one *ump sum in the same scheme. The

!o**o'in+ tab*e i**ustrate ho' their respectie inestments 'ou*d hae per!ormed !rom =an to

ec

3


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Se858 I/:e8'+e/' Rae858 I/:e8'+e/'

)onth A-H -mount nits -mount nits

=an04 $.34( 1000 107.00$1 12000 1284.10$1

5eb04 $.3$$ 1000 10,.3$43

)ar04 8.123 1000 123.1072

-pr04 8.7(0 1000 114.28(7

)ay04 8.012 1000 124.8128

=un04 8.$2( 1000 112.0448

=u*04 $.102 1000 10$.8,,0

-u+04 8.310 1000 120.33,$

#ep04 7.(,8 1000 132.13(3

Oct04 ,.4,2 1000 1(4.7(0$

Ao04 ,.$31 1000 144.27$3

ec04 7.,00 1000 131.(78$

Tab*e Ao 1

31


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-t the end o! the 12 months; #uresh has more units than &ajesh; een thou+h they inested the

same amount. Thats because the aera+e cost o! #ureshs units is much *o'er than that o!

&ajesh. &ajesh made on*y one inestment and that too 'hen the perunit price 'as hi+h.

#ureshs aera+e unit price M 12000"1480.,012 M &s. 8.10(

&ajeshs aera+e unit price M &s. $.34(

Po


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O'5e e/e=4'8 - systematic inestment p*an o!!ers a number o! misce**aneous bene!its that

mae inestment @uite com!ortab*e and an enjoyab*e e?perience. One can start inestin+ in a

systematic inestment p*an 'ith a ery *o' amount o! &s. (00 or &s. 1000 per month. This

a**o's users o! a** !inancia* bac+rounds to inest in capita* marets 'ithout !ee*in+ the pinch o!

a *ump sum inestment. - *ar+e number o! !und houses 'aie o!! entry or e?it *oad on mutua*

!unds in case the inestment is done throu+h a systematic inestment p*an. #IPs a*so o!!er a

ta?ation bene!it as #IPs are ta?ed !or capita* +ains on !irst in !irst out basis.

S98'e+a'43 I/:e8'+e/' P-a/#IP is an inestment ehic*e o!!ered by mutua* !undsto

inestors; a**o'in+ them to inest usin+ sma** periodica**y amounts instead o! *ump sums. The

!re@uency o! inestment is usua**y 'ee*y; month*y or @uarter*y.

In #IP; a !i?ed amount o! money is debited by the inestors in ban accounts periodica**y and

inested in a speci!ied mutua* !und. The inestor is a**ocated a number o! units accordin+ to the

currentAet asset a*ue. Bery time a sum is inested; more units are added to the inestors

account.

The strate+y c*aims to !ree the inestors !rom specu*atin+ in o*ati*e marets by o**ar cost

aera+in+.-s the inestor is +ettin+ more units 'hen the price is *o' and *ess units 'hen theprice is hi+h; in the *on+ run the aera+e cost per unit is supposed to be *o'er.

#IP c*aims to encoura+e discip*ined inestment. #IPs are !*e?ib*e; the inestors may stop

inestin+ a p*an anytime; or may choose to increase or decrease the inestment amount. #IP is

usua**y recommended to retai* inestors 'ho do not hae the resources to pursue actie

inestment.

In India; a recurrin+ payment can be set !or #IP usin+ B*ectronic C*earin+ #ericesBC#. #omemutua* !unds a**o' ta? bene!its under B@uity*ined sain+s schemes. This ho'eer has a *oc

in period o! three years. Thus; the !ina* payment o! #IP a*so must c*ear the *ocin be!ore this

scheme can be aai*ed

33
http://en.wikipedia.org/wiki/Mutual_fundhttp://en.wikipedia.org/wiki/Net_asset_valuehttp://en.wikipedia.org/wiki/Dollar_cost_averaginghttp://en.wikipedia.org/wiki/Dollar_cost_averaginghttp://en.wikipedia.org/wiki/Dollar_cost_averaginghttp://en.wikipedia.org/wiki/Indian_settlement_systems#Electronic_Clearing_Services_.28ECS_Debit.29http://en.wikipedia.org/wiki/Indian_settlement_systems#Electronic_Clearing_Services_.28ECS_Debit.29http://en.wikipedia.org/wiki/Equity-linked_savings_schemehttp://en.wikipedia.org/wiki/Mutual_fundhttp://en.wikipedia.org/wiki/Net_asset_valuehttp://en.wikipedia.org/wiki/Dollar_cost_averaginghttp://en.wikipedia.org/wiki/Dollar_cost_averaginghttp://en.wikipedia.org/wiki/Indian_settlement_systems#Electronic_Clearing_Services_.28ECS_Debit.29http://en.wikipedia.org/wiki/Equity-linked_savings_scheme


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Ho< SIP


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SIP I/:e8'+e/' > M9'5 1

SIP 4/ 4e3' e4'4e8!8'o3@8 48 a 4gge8' +9'5

>hen you do a direct inestment in B@uities the !irst decision that you tae is 'hy you are

buyin+ a particu*ar stocF -re you aimin+ a Ha*ue buyin+ or a momentum +ainF -nd in both the

cases a prudent inestor is c*ear o! an entry *ee* and tar+et appreciation 'hen he 'ou*d enter or

e?it a stoc. #o 'hy 'ou*d he try to do a &upee Cost -era+in+ i! he has done the !undamenta*

ana*ysisF One 'ou*d do a #IP in direct e@uities i! he is unsure o! +ro'th o! a particu*ar company

and sanity says one shou*d inest e@uities 'hen you hae done your home'or. ut i! your

reason is that you dont hae a *ump sum amount to inest; I hae another important point to

share.

#econd reason is #IP 'ors !or port!o*ios"inde?es"mutua* !unds and not stand a*one inestments.

Ima+ine 'hat 'i** happen to your inestments i! that stoc price neer recoered but no' you

'i** say that you 'i** do #IP on*y in b*ue chip stocs or inde? stocs. -nd I am not surprised by

your ar+ument but *et me te** you that een coup*e o! years +ood per!ormance o! a stoc or

sector can mae it a b*ue chip L een part o! inde?. %et me share

o you no' about Qenith %td D I am not ta*in+ about Qenith Computers. Qenith %td 'as a top

stee* company L part o! #ense?!rom 1$82 to 1$$2.

5e' more stocs de!inite*y b*ue chips o! that time that 'ere part o! Inde? Coup*e o! years bac

D Premier -uto; -rind )i**s; a*rampur Industries; Century Te?ti*es; 9industan )otors; Indian

Or+anics; Indian &ayon; )uund; Qee Te*!i*ms; #CI India; 6B #hippin+; )TA%; AIIT.I! you eep

interest in direct e@uity inestments then you can chec 'hat happened 'ith these stocs

>hat happened 'ith =aipraash -ssociates D it 'as part o! Inde? ti** =an 2012.

Ao' you can say I 'ou*d hae aoided a** these stoc L many more that hae not per!ormed

+ood. =ust 'ou*d *ie to share >arren u!!ett here In the business 'or*d; the rear ie' mirror is

a*'ays c*earer than the 'indshie*d.

30


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SIP I/:e8'+e/' > M9'5 2

SIP 48 =o 8+a-- 4/:e8'o8 o 8a-a4e g98

Once I 'as ta*in+ to an 9AI; and 'as e?p*ainin+ him about #IP; he 'as +rinnin+ a** the time

and at *ast he ased o )utua* 5unds a**o' #IP o! &s ( %ah per monthF Ges 'hy notF It is

made to be*iee that #IP is !or &s 1000 and thats a**. In !act the messa+es hae +one 'ron+ that

i! you are sa*aried and hae a sma** disposab*e incomeN #IP is the on*y too* !or 'ea*th creation.

#IP as 'e a** no' is a concept and not *imited to the amount o! inestment. Irrespectie o! the

amount one inests; he is inestin+ in an asset 'here instead o! timin+ the purchase he is

aera+in+ his per unit cost o! his inestment. The returns that he +ets are in percenta+es and he

tends to bene!it in proportion to his inestment.

SIP I/:e8'+e/' > M9'5

SIP 48 a =/ o a 835e+e

-s I mentioned in startin+ that #IP are not mutua* !unds. >hen I 'as 'orin+ !or 95C )utua*

5und; inestors ca**ed and ased >hats the A-H o! 95C Top 200 #IP 5undF %ot o! peop*e

thins that #IP is a security or a !und. asica**y #IP is a concept and not a !und or a stoc or an

inestment aenue. It is a ehic*e to inest. #o a*most a** open ended mutua* !unds yes;

inc*udin+ debt and money maret !unds o!!er a #IP. esides mutua* !unds one can do a #IP in

a*most eery asset c*ass. o you thin a person inestin+ &s (000" eery 1 sto! the month 'hen

he +ets his sa*ary in AP# is a #IPF Ges it is a #IP inestment your %IP inestment L simi*ar*y.

SIP I/:e8'+e/'> M9'5 #

3


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SIP 85o- e 8'a'e


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3?

SIP 48 a +ag43a- 6e8346'4o/ =o 833e88

)any readers a!ter readin+ the )a+ic o! #ystematic Inestment P*ans +et the 'ron+ impression

that an #IP is a ma+ica* !ormu*ation that 'ors irrespectie o! any other criteria. It is true that

#IPs mae more money een i! the #ense? +oes no'here oer a period o! time. It is a*so true that

you can e?pect to mae some money een i! you are inestin+ ia #IP in an aera+e mutua* !und.

ut it must be rea*i


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hae the !inancia* capabi*ity to mae *ar+e *ump sum inestments. -s soon as you decide to

inest *ump sum amounts; you are instant*y a host to maret timin+.

I! you hae stron+ stomach and dont panic on seein+ your money eaporatin+ in the short term;

you can de!inite*y try your *uc at *ump sum inestin+. ut i! you are a norma* inestor 'ith a

comparatie*y *o' ris appetite; it 'i** be better !or you to sta++er your inestments ia the #IP

route.

SIP I/:e8'+e/' > M9'5

T5ee 48 a 4g5' '4+e =o SIP 4/:e8'4/g

)any inestors are a*'ays tryin+ to time the maret. They do not understand that it is time in the

maret not timin+ the maret that is important. The most common @uestion o! the inestors Is it

the ri+ht time to start #IPF Obious*y the correct ans'er -** times are +ood times !or startin+

#IP.

SIP I/:e8'+e/' > M9'5

I 3a//o' +488 +9 SIP a'e8

Gou must a*'ays ensure that su!!icient !unds are aai*ab*e on the #IP date in your ban account.

#IP is entire*y at your !ree 'i**. I! !or some reason you are not ab*e to maintain ba*ance in your

account !or the #IP it simp*y means that you 'i** miss one #IP but you 'i** not be pena*ised !or

that !rom asset )ana+ement Company. you can chec 'hat your ban char+es Gour #IP

account remains actie een i! you miss one #IP date but a!ter 3 miss it +et cance**ed.

SIP I/:e8'+e/' > M9'5 10

I 3a//o' +a@e -+6 8+ 4/:e8'+e/' 4/ a =/


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#ome inestors thin that they hae to maintain separate accounts !or #IP inestments and *ump

sum inestments in the same !und. #IP is just a mode o! inestin+ in a mutua* !und. Gou can

a*'ays mae some *ump sum inestments in a !und in 'hich your #IP is runnin+. There is no

need to maintain separate accounts.

SIP I/:e8'+e/' > M9'5 11

SIP a'e8 ae 4+6o'a/'

)any noice Inestors !ee* that #IP date p*ays an important part in their #IP returns. #IP date has

no si+ni!icance in *on+ term. It is just a date !or your conenience.

T96e8! Me'5o8 o= SIP8

There are many inestment methods in #IP no' you can inest in your desired shares throu+h #IP.

Gou can inest on the dai*y; 'ee*y; !ortni+ht*y or @uarter*y basis 'ith the he*p o! #IP.

Mo/'5-9 S98'e+a'43 I/:e8'+e/' P-a/ )SIP*

This is the traditiona* 'ay o! #IP inestment in B@uity )utua* 5und. This is the best option !or

sa*aried peop*e. Inestor can choose any date o! each month !a**in+ !rom 1 to 10.

Da4-9 S98'e+a'43 I/:e8'+e/' P-a/ )SIP*

In this method; your inestment is inested in the !und on dai*y basis. #ome mutua* !unds o!!er

Rdai*y #IP option. This product is best !or sma** traders ino*ed in micro se+ment. ut some

peop*e dont *ie ai*y #IP and sometimes it +ie you *osses. -ctua**y; it aera+e yourinestment on a re+u*ar basis but it proes to be a burden sometimes.

F-eJ4 S98'e+a'43 I/:e8'+e/' P-a/ )SIP*

!


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Traditiona* #IP a**o's you to inest a speci!ic amount on month*y or dai*y basis. 9o'eer; the

inestor o! 5*e?i #IP can inest di!!erent amounts in #IP inestment at di!!erent time periods. 9e

can mae modi!ications month a!ter months in amount to be inested. This cannot be done

throu+h mutua* !unds.

>ith the he*p o! this !aci*ity; inestor can inest &s. 1;000 &s. 10;000 per month and this

depends on cash in hand. 9o'eer; the inestors 'ho are not much a'are o! maret conditions

shou*d be care!u* 'hi*e inestin+ throu+h 5*e?i #ystematic Inestment P*an #IP.

TYPES OF MUTUAL FUNDS

!1


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5i+ure Ao.

I.O6e/E/e This scheme a**o's inestors to buy or se** units at any point in time. This does

not hae a !i?ed maturity date.

1.De'! I/3o+e In a debt"income scheme; a major part o! the inestab*e !und are channe*i


43/86

!3

inestment aenue 'hich is idea* !or inestors seein+ a steady income.

2. Mo/e9 Ma@e'! L44 This is idea* !or inestors *ooin+ to uti*i


44/86

!!

1. Ca64'a- Po'e3'4o/ The primary objectie o! this scheme is to sa!e+uard the principa*

amount 'hi*e tryin+ to de*ier reasonab*e returns. These inest in hi+h@ua*ity !i?ed income

securities 'ith mar+ina* e?posure to e@uities and mature a*on+ 'ith the maturity period o! the

scheme.

2. F4Je Ma'4'9 P-a/8 )FMP8* 5)Ps; as the name su++ests; are mutua* !und schemes 'ith a

de!ined maturity period. These schemes norma**y comprise o! debt instruments 'hich mature in

*ine 'ith the maturity o! the scheme; thereby earnin+ throu+h the interest component a*so ca**ed

coupons o! the securities in the port!o*io. 5)Ps are norma**y passie*y mana+ed; i.e. there is no

actie tradin+ o! debt instruments in the port!o*io. The e?penses 'hich are char+ed to the

scheme; are hence; +enera**y *o'er than actie*y mana+ed schemes.

III. I/'e:a- Operatin+ as a combination o! open and c*osed ended schemes; it a**o's inestors

to trade units at prede!ined intera*s.

)T-% 5A PB&5O&)-ACB #9BBT

ICICI Pe/'4a- Fo38e B-e3546 E4'9 F/

ICICI Pe/'4a- Fo38e B-e3546 E4'9 F/ 48 a/ O6e/e/e e4'9 835e+e '5a'

a4+8 =o go


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The *ar+e cap companies hae proen trac record; @ua*ity mana+ement and +ood

+ro'th potentia*.

This product is suitable for investors who are seeking*

%on+ term 'ea*th creation so*ution

- !ocused *ar+e cap e@uity !und that aims !or +ro'th by inestin+ in companies in the

*ar+e cap cate+ory.

Inestors shou*d consu*t their !inancia* adisers i! in doubt about 'hether the product is suitab*e

!or them.

Key !eatures

T96e ( Open ended e@uity scheme

P-a/8 ( &e+u*ar L irect

O6'4o/8 ( 6ro'th L iidend

De=a-' O6'4o/ ( 6ro'th; iidend reinestment is de!au*t suboption

A66-43a'4o/ A+o/' ( &s.(000 p*us in mu*tip*es o! &s.1

M4/. A4'4o/a- I/:e8'+e/' ( &s.1000 p*us in mu*tip*es o! &e.1

!0


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E/'9 Loa (Ai*. p!ront commission sha** be paid direct*y by the inestor to

the -)5I re+istered istributors based on the inestorsK

assessment o! arious !actors inc*udin+ the serice rendered by the

distributor.

EJ4' Loa ( pto one year D 1E o! app*icab*e A-H; more than one year Ai*

Ree+6'4o/ C5ee8 I88e(

M4/4++ Ree+6'4o/ A+'.( &s.(00 p*us in mu*tip*es o! &e.1

S98'e+a'43 I/:e8'+e/' P-a/( )onth*y #IP &s. 1;000" p*us in mu*tip*e o! &e. 1"; )inimum

insta**ments ,. uarter*y #IP &s. (;000" p*us in mu*tip*eo! &e. 1"; )inimum insta**ments D 4.

S98'e+a'43 4'5a


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comprisin+ a tota* o! 100 stocs. These t'o indices are

co**ectie*y re!erred to as the CAU 100 Inde?. The e@uity

port!o*io 'i** be 'e**diersi!ied and actie*y mana+ed to rea*i


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!rom the date o! a**otment o! each insta**ment o! 'ithdra'a*.

P-a/ $ O6'4o/8 &e+u*ar

6ro'thiidend

irect

6ro'th

iidend

The iidend Option under both P*ans o!!ers the !o**o'in+ modes

o! diidend Payout &einestment #'eep

M4/4++

I/:e8'+e/'&s. (000 and in mu*tip*es o! &e. 1" therea!ter.

A4'4o/a-P35a8

e&s. 1000 and in mu*tip*es o! &e. 1" therea!ter.

S98'e+a'43

I/:e8'+e/'

P-a/

)SIP*

Mo/'5-9 O6'4o/ &s. (00 and in mu*tip*es o! &e. 1" therea!ter;

per month; !or at*east 12 months or &s. 1000 and in mu*tip*es o!

&e. 1" therea!ter; per month; !or a minimum period o! si?

months.

a'e-9 O6'4o/( &s. 1(00 and in mu*tip*es o! &e. 1" therea!ter;

per @uarter; !or a minimum period o! !our @uarters.

EJ6e/8e Ra'4o&e+u*ar P*an 3.003800E

B!!ectie 5rom 01

0,201(

irect P*an 2.(03800EB!!ectie 5rom 01

0,201(

!?


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R48@o+e'eT548 6o3' 48 84'a-e =o 4/:e8'o8


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#imi*ar*y )r. 'ants to hae corpus o! &s. ( crores at the a+e o! ,( and his current a+e is 2(; he

just needs to inest &s. (;10, eery month !or 480 months at C-6& o! 12E

This is ca**ed the po'er o! compoundin+. )r. just started inestment 1( years be!ore and just

need to inest rs. (;10,; 'hich is !ar *ess than inestin+ &s. 2$;37$.

Thus it is ri+ht*y said that start inestin+ ear*y to +et better returns.

CHAPTER ( STUDY! PRO"ECT DETAILS

.1 Oe3'4:e o= '5e S'9!6oe3'

Re8ea35 Oe3'4:e(To study the importance o! #ystematic Inestment P*an in Port!o*io

)ana+ement.

Ma/age+e/' Oe3'4:e(Importance o! #ystematic Inestment P*an in Port!o*io )ana+ement.

0


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In this case i! 'e hae research objectie; hence 'e 'i** hae &esearch esi+n.

Aature o! &esearch Phase I D B?p*oratory; Phase II D escriptie

ata Co**ection #ource Primary

&esearch )ethodo*o+y" ata Co**ection )ethodo*o+y Phase I D ua*itatie;

Phase II D escriptie

ata Co**ection Too* Phase I Interie' #heet

Phase II uestionnaire

.2L4'ea'e Re:4e

Ho< 9o 3a/ ga4/ =o+ e4'9 4/:e8'+e/'8;

01


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-"ource Pankaa. Maalde / Ecnmic Times/ ec 8; 2014; 08.00-) I#T

To inest in mutua* !unds; rather than +oin+ !or a *ump sum inestment; a #ystematic Inestment

P*an #IP is a much better option. Inestin+ a !i?ed sum eery month in a mutua* !und

o!!ers rupeecost aera+in+; 'hich *o'ers the inestorKs aera+e cost and reduces ris. Inestors

donKt hae to 'orry about the dai*y o*ati*ity in the maret. Gou can start 'ith as *itt*e as &s (00

a month. - *on+term #IP'i** he*p you enjoy the bene!its o! compoundin+.

B@uity inestors shou*d aoid Ae' 5und O!!ers A5Os and Initia* Pub*ic O!!erin+s IPOs.

They shou*d inest in e@uity schemes that hae comp*eted at *east three years; and hae a proen

trac record. There has been a !*ood o! A5Os; pushed by distributors 'ho are bein+ paid hi+h up

!ront commissions; in the past si? months. -*so; in an acce*eratin+ maret; companies o!ten

choose to +o pub*ic. -+ain; these companies do not hae a trac record to jud+e them by and can

proe to be risy inestments.

Then; inestors must reie' the per!ormance o! the schemes they inest in. Gour !und may not

a*'ays be amon+ the top three; but it has to be in the !irst @uarti*e. -n actie !und must beat its

benchmar. I! your !und does not meet these criterion; you must shi!t to another !und.

5ina**y; port!o*io returns depend more on asset a**ocationthan a !undKs per!ormance. -sset

a**ocation shou*d be !o**o'ed serious*y and the port!o*io shou*d be restored to its ori+ina* asset

a**ocation; at *east once a year. I! you canKt do it yourse*!; or do not hae access to pro!essiona*

he*p; auto reba*ancin+ products *ie ba*anced !unds can be idea* !or you.

02
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HY SYSTEMATIC INVESTMENT PLAN )SIP* MA,E SENSE EVEN

HEN DEBT SEEMS TO SCORE

So3e()-9 T L P&-#9-AT )-9B#9; BT ureau 5eb 13; 2012; 0,.18-) I#T

-s per the data !rom :ary Computershare; a re+istrar o! mutua* !unds; the number

o! #IPinestors dropped sharp*y to 80;823 in 201112; !rom 3.1, *ah in 201011. -ccordin+ to

C-)#; another re+istrar; ne' #IP re+istrations dropped !rom 23.,( *ah to 18.$ *ah durin+ the

same period. SIt is due to three di!!erent reasons. One; e@uities are not doin+ 'e**. #econd; een

mutua* !unds are pushin+ debt products at the moment. Third; there is sti** a distribution acuum

created by the ban o! entry *oad on mutua* !unds;S says )uund #eshadri; !ounder; )#Hentures

5inancia* P*anners.

5or e?amp*e; a #IP in 95C Top 200; the scheme 'ith the *ar+est asset under mana+ement

-) at more than &s 10;000 crore; has +ien a return o! ,.(E in the past year i! you had put

in money usin+ the #IP route eery month; this 'as the return you 'ou*d hae +ot 95C

B@uity 5und;the scheme 'ith the second*ar+est -); has +ien a ne+atie return o! 1.71E

'hi*e &e*iance 6ro'th has +ien a return o! a mere 3.4,E in the same period.

Compared to such uninspirin+ per!ormance; ban and company !i?ed deposits are o!!erin+

returns in the ran+e o! $E11E per annum. This di!!erence in returns; accordin+ to )5

distributors; has resu*ted in inestors c*osin+ their #IPs and shi!tin+ money to !i?ed income

instruments.

ut is it a smart strate+yF #ure; it may mae sense i! you *oo at the numbers in the short term.

9o'eer; it cou*d proe a hu+e mistae i! you *oo bac a!ter a *on+er period o!; say; 10 years.

In !act; een the 'orst per!ormin+ #IP; Taurus iscoery 5und; de*iered 8.23E 'hi*e =)

B@uity de*iered a return o! 11.11E in the period. #ure; some se*!proc*aimed pundit may te**

you that you cou*d hae done better i! you timed the maret; but a*'ays remember that timin+

the maret is easier said than done.

03
http://economictimes.indiatimes.com/topic/SIPhttp://economictimes.indiatimes.com/topic/HDFC%20Equity%20Fundhttp://economictimes.indiatimes.com/topic/HDFC%20Equity%20Fundhttp://economictimes.indiatimes.com/topic/HDFC%20Equity%20Fundhttp://economictimes.indiatimes.com/topic/Taurus%20Discovery%20Fundhttp://economictimes.indiatimes.com/topic/SIPhttp://economictimes.indiatimes.com/topic/HDFC%20Equity%20Fundhttp://economictimes.indiatimes.com/topic/HDFC%20Equity%20Fundhttp://economictimes.indiatimes.com/topic/Taurus%20Discovery%20Fund


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SIP INVESTMENTS MAY FETCH %OOD RETURNS IN A SIDEAYS

MAR,ET

So3e( )adhu T; BT ureau -u+ (; 2014; 02.($P) I#T; Bconomic Times

I rea**y donKt no' ho' *on+ 'i** #IP systematic inestment p*an inestors hae to 'ait to +et

decent returns !rom this maret; een as those 'ho hae pumped in *ump sum amount in the

maret hae a*ready made hu+e returns some !inancia* adisors hae been oicin+ their concern

in priate conersations !or a 'hi*e no'. In !act; septics hae comp*ained that it is a*mostsoundin+ *ie a c*eer pitch to +et indiidua*s to commit *ump sum amount to the maret.

9o'eer; as the theory started doin+ the rounds; many indiidua* inestors hae started

@uestionin+ the 'isdom behind continuin+ #IPs in e@uity mutua* !unds in a bu** maret. Their

theory is simp*e since you end up buyin+ units at hi+her prices eery month; your returns may

be truncated. The +ap in returns 'ou*d be hu+e 'hen compared 'ith someone 'ho had

committed a *ump sum amount 'hen the maret 'as at a *o'er *ee*.

SIt is true that a *ump sum inestment 'ou*d 'or better in a maret that is secu*ar*y risin+. This

is because you are buyin+ units at hi+her A-Hs net asset a*ue eery month in an #IP.

Obious*y; a *ump sum inestment made at the bottom 'i** 'or better;S says Airanjan &isbood;

director; !und research; at )ornin+star India. S9o'eer; 'e rea**y donKt no' 'hether the

current ra**y is secu*ar or the be+innin+ o! a bu** maret eeryone is hopin+ !or. - *ot de pends on

the +oernment po*icies and a host o! internationa* !actors.

It may #ti** >or 6aura )ashru'a*a; a )umbai based seasoned certi!ied !inancia* p*anner;

@uestions the *o+ic behind the 'ho*e theory. SIt is just not possib*e !or any maret to moe in

one direction !or a *on+ period. =ust *oo at the stoc maret moement in the *ast 1( days; and

you can see !or yourse*! that the maret hasnKt moed in one direction; he says.

0!


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9e points out that the #ense? !e** by oer 400 points on 5riday; and it 'as up by oer 100 points

on )onday mornin+. I! that is the trend in 1( days; 'hat 'i** be the trend oer a *on+ period; he

says. )ashru'a*a; 'ho recommends e@uity on*y to inestors 'ith an inestment hori


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)5Ks )ana+in+ irector and Chie! B?ecutie O!!icer #aurabh Aanaati said. The !und o!!er

opens !or subscription today and 'i** c*ose on -u+ust 28; 2014.

SIndiidua* security se*ection becomes the ey in mana+in+ a corporate bond !und; 'hich o!!ers

a hi+h yie*d and has the potentia* o! a credit up+rade due to improin+ !undamenta*s;S he said.

The !und sees to +enerate returns and capita* appreciation by predominant*y inestin+ in

corporate debt securities o! aryin+ maturities across the credit spectrum. The !und is a credit

!ocused bond product seein+ a hi+h *ee* o! accrua* income; a company re*ease said. -t *east 80

per cent o! net assets o! the !und 'ou*d be inested in priate and pub*ic sector corporate bonds

'ith an aim to tae adanta+e o! hi+hyie*din+ corporate bonds. Inestments 'ou*d

predominant*y be made in corporate bonds across aryin+ maturities 'ith ratin+s comprisin+

bet'een K---K and K-K by a creditratin+ a+ency; the re*ease said. The ne' !und o!!ers +ro'th;

diidend payout and diidend reinestment options units 'ou*d be issued at &s 1;000 each. 5or

*ump sum purchase; the minimum app*ication amount is &s (;000 and in mu*tip*es o! &e 1

therea!ter; the re*ease said. 5or #ystematic Inestment P*an #IP inestments; the minimum

app*ication amount is &s 1;000 under the month*y #IP option and &s 2;000 under the @uarter*y

#IP option and in mu*tip*es o! &e 1 therea!ter.-n e?it *oad o! 2 per cent 'ou*d be payab*e on

inestments redeemed on or be!ore 18 months !rom the date o! a**otment; it added.

MUTUAL FUNDS EUITY FOLIO COUNT EXPANDS BY OVER 7 LA,HIN APRILOCTOBER

So3e(PTI Ao $; 2014; 10.($-) I#T; Bconomic Times

B@uity mutua* !undsadded more than seen *ah inestor accounts or !o*ios in the !irst seen

months o! the current !isca* 20141( in ie' o! sharp ra**y in the stoc maret.

5o*ios are numbers desi+nated to indiidua* inestor accounts; thou+h one inestor can hae

mu*tip*e !o*ios.

-ccordin+ to #ecurities and B?chan+e oard o! Indiadata on inestor accounts 'ith 4( !und

houses; number o! e@uity !o*ios rose to 2;$$17;$74 at *ast monthend !rom 2;$1;80;$22 at the end

0
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o! the *ast !isca* )arch 31; 2014; re+isterin+ a +ain o! 7;37;0(2 !o*ios durin+ -pri*October

period this year.

The additions came at a time 'hen the maret 'as sca*in+ ne' hi+hs.

The month o! -pri* sa' the !irst rise in more than !our years. Prior to that; the e@uity mutua*

!und )5 sector had seen a continuous c*osure o! !o*ios since )arch 200$ a!ter the maret

crashed due to the +*oba* !inancia* crisis in *ate 2008. #ince )arch 200$; it has seen a c*osure o!

1.( crore !o*ios.

The inestor base reached its pea o! 4.11 crore in )arch 200$; 'hi*e it 'as 3.77 crore in )arch

2008.

Industry e?perts said that stron+ ra**y in the e@uity maretand the conse@uent rise in inestorsK

interest *ed to a sharp increase in retai* !o*ios.

SThere has been rise in #ystematic Inestment P*an #IP re+istration and a *ot o! c*oseended

schemes hae been *aunched by mutua* !und houses in the past !e' months and the rise in such

actiities are supported by a sharp sur+e in e@uity maret;S uantum )utua* 5und Chie!

B?ecutie O!!icer =immy Pate* said.

The addition in e@uity !o*ios is in *ine 'ith #BKs benchmar#ense?sur+in+ by 2( per cent in

the !irst seen months o! the current !inancia* year.

)oreoer; mutua* !unds industry reported net in!*o's o! near*y &s 34;000 crore in e@uity !unds

in the -pri*#eptember period o! the current !isca* 20141(; 'hich he*ped the industry +ro' its

!o*io count.

Oera**; the industry retai* !o*ios sur+ed to 3.$7 crore at Octoberend !rom 3.$( crore at the endo! )arch.

SYSTEMATIC AY IS THE BEST PLAN FOR MA,IN% MONEY

0>
http://economictimes.indiatimes.com/topic/equity%20markethttp://economictimes.indiatimes.com/topic/SIPhttp://economictimes.indiatimes.com/topic/Sensexhttp://economictimes.indiatimes.com/topic/Sensexhttp://economictimes.indiatimes.com/topic/equity%20markethttp://economictimes.indiatimes.com/topic/SIPhttp://economictimes.indiatimes.com/topic/Sensex


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#ource soua+yaummardas; )ay 22; 201( 0811 P); Times o! India

In simp*e 'ord inestin+ on a re+u*ar basis is no'n as systematic inestment.

Gou need to inest month*y on a particu*ar date; there are many option aai*ab*e *ie an

recurrin+ deposit; you can deposit eery month a particu*ar amount in your ban; in mutua* !und

you can inest a !i?ed amount on particu*ar date !or 'hich the !und house 'i** a**ocate you some

units at the particu*ar A-H on that day; or in broin+ house to purchase a particu*ar shares on

eery month o! a !i?ed inestment amount. or in posta*.

y inestin+ in this 'ay you can start 'ith some !i?ed a*so ery *o' amount as per your abi*ity;

and in *on+ run o! ban &; mutua* !und; at di!!erent A-H or shares you +et compound bene!it

as 'e** as a aera+in+ price.

5or an e?amp*e i! you inest &s 1; 400 per month !or 30 years 'ith a e?pectation o! 10E

annua*i


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-s 'ith any inestment; you shou*d *in the #IP 'ith a speci!ic !inancia* +oa*. I! you donKt eep

an eye on your +oa*s; you 'i** inest in a hapha


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sudden*y boost many dormant sectors. 9ere are some recommendations that one can do to p*an

the e@uity inestments !or 2014.

earn )ore on Inestin+ Bducatin+ yourse*! on the *atest dee*opments and intrinsic detai*s o!

inestin+ is a +ood step to usher in the Ae' Gear. Irrespectie o! 'hether you are a ne' inestor

or someone 'ho has been inestin+ !or a *on+ time; there is a*'ays room to *earn and educate

about arious aspects o! inestin+. -part !rom *earnin+ about inestin+; it is essentia* to

understand the basics o! economy. In this day and a+e o! +*oba* economic s*u++ishness the

maret !undamenta*s can sometimes behae indi!!erent*y. I! you hae a !air idea about inestin+

and the +*oba* economic out*oo; chances are that you are more *ie*y to tae better inestin+

decisions !or a** your e@uity maret re*ated inestments.

I/:e8' 4/ M'a- F/8 U84/g S98'e+a'43 I/:e8'+e/' P-a/ )SIP*( - *ot o! peop*e enter the

e@uity band'a+on thinin+ they 'ou*d mae substantia* +ains in a short period o! time. >hi*e

the e@uity maret has +ien doub*e di+it returns in the past that hae been ade@uate to coer !or

the risin+ in!*ation; un*ess one no's the maret timin+ the +ains can be hard to come by. The

compound annua* +ro'th rate or the yearoeryear +ro'th rate o! an inestment has been a

ro**er coaster ride !or the past si? to seen years. Considerin+ that the sense? corrected near*y

21E bet'een =anuary 2008 and ecember 2011 and then ra**ied 11E ti** )arch 2012 and

corrected 10E a+ain maes a point !or timin+ the maret.#ome peop*e 'ho entered the maret in a ra**y 'ou*d hae made better +ains than the ones

enterin+ in a bearish phase. #ystematic inestment p*ans ru*e out a** such timin+ ambi+uity and

o!!ers easy inestment options as per your choice either 'ee*y; month*y or eery @uarter. #ince

2014 is an e*ection year; the dai*y ne's and eents are *ie*y to tri++er the maret sentiment one

'ay or the other. Inestin+ usin+ systematic inestment p*ans throu+h the mutua* !und route

sa!e+uards a+ainst a** outside parameters that can drie the e@uity maret sentiment.

T54/@ Lo/g Te+( The best 'ay to mae substantia* +ains in the e@uity maret is to a*'aysthin *on+ term. Inestin+ is a journey and not a detour. Peop*e 'ho understand the importance

o! inestin+ in the *on+ term are much more success!u* in the e@uity maret compared to short

term specu*ators. n*ess you are a trader 'ith ade@uate no'*ed+e o! maret sentiment and


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ana*ysis; one shou*d a*'ays !ocus on company !undamenta*s and inest 'ith a *on+ term

strate+y.

Considerin+ 2014 'i** see a ne' centra* +oernment; chances are that any ne' decisions that the

+oernment mi+ht tae 'ou*d !ructi!y in the ne?t t'o to three years. In such a scenario; peop*e

inestin+ in e@uity maret in 2014 are better o!! hain+ a *on+ term inestment strate+y in p*ace.

Ta@e De3484o/8 a8e o/ F/a+e/'a-8( )ae sure that a** your inestment re*ated decisions

this year are in!*uenced by company !undamenta*s. This year try and *earn the basic o! readin+

company @uarter*y report projections and ba*ance sheets. The more one *earns about the

!undamenta* ana*ysis o! the company in @uestion; the better the chances o! tain+ a +ood

inestment decision. 5undamenta* ana*ysis a!ter a** acts as the 'a*in+ stic in the rou+h times to

counter any ne+atie maret sentiment.

,ee6 a/ E9e o/ Ma@e' I/=-e/34/g Ne) 210) Cinancial Hospital;

The 5inance )inistry had ear*ier dropped the mandatory disc*osure o! dormant ban accounts as

'e** as !orei+n trips. This time around; the )inistry has come up 'ith a simp*er approach to IT&

5orms; 'hich 'i** ease the process o! standard and e!i*in+ o! income ta? returns on the 'ho*e.

Incidenta**y; the ear*ier ersions o! the IT& 5orms 'ere a bit on the comp*e? side and 'ere

stron+*y opposed by the assessees; )Ps as 'e** as by the industry. These IT& 5orms 'ere

brou+ht to pub*ic notice by the CT *ast month and is app*icab*e !or the runnin+ -ssessment

1


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2

Gear. These !orms hae been proided 'ith speci!ied co*umns !or the purpose o! di!!erent ban

accounts; their I5#C codes; !orei+n isits 'hether persona* or proided by the companies as 'e**

as the names o! joint account ho*ders.

The !irst and !oremost adanta+e o! e!i*in+ income ta? is the reduction in the number o! pa+es

o! the IT& 5orm. This comes as a bi+ re*ie! to assessees as the number o! pa+es in the 5orm has

been reduced !rom 14 to a mere three pa+es. IT& 5orm 2 and IT& 5orm 2- 'i** consist o! three

pa+es each. Other detai*s; 'hich are deemed necessary !or the e!i*in+ o! ta? returns; hae to be

added in schedu*es.

-*so; the 5inance )inistry has re*a?ed its ru*e re+ardin+ the number o! ban accounts he*d in a

persons name. The )inistry has decided to do a'ay 'ith the disc*osure o! dormant ban

account detai*s. - dormant account can be de!ined as one; 'hich is not in operation !or the *ast

three years. -ccordin+ to the recent re!orm; on*y the account number and I5# code o! those

sain+s ban or current accounts need to !i**ed up that are actie in the preious year. The

ba*ance sheet o! those accounts 'i** hae to be !urnished. -ssessees mi+ht not bother about such

accounts; 'hich hae not been !unctiona* oer the preious year.

-part !rom these !actors; the )inistry has a*so re*a?ed the conditions !or ta?payers 'ho need to

tae !orei+n trips !re@uent*y. 5rom this year on'ards; it has been proposed that the passportnumber; i! app*icab*e; 'i** be re@uired to be submitted in the IT& 5orm 2- and IT& 5orm 2.

9o'eer; un*ie the preious conditions; there 'i** be no re@uirement to proide detai*s o! the

!orei+n trip and the e?penditure incurred durin+ the process. This brin+s a hu+e re*ie! to those

'ho pay a isit to !orei+n *ocations eery no' and then.

-part !rom this !actor; an indiidua* 'ho is not an Indian citi


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3

. S'9 Me'5oo-og9

Re8ea35 De84g/

- research desi+n is the speci!ication o! method and procedure !or ac@uirin+ the in!ormation

needed to the structure or to so*e the prob*em. It is the oera** operation pattern or !rame'or o!

the project that stipu*ates 'hat in!ormation is to be co**ected; !rom 'hich sources and 'hatprocedure.

&esearch desi+n is needed because it !aci*itates the smooth sai*in+ o! the arious research

operations; thereby main+ research as e!!icient as possib*e yie*din+ ma?ima* in!ormation 'ith

minima* e?penditure o! e!!ort; time and money. &esearch desi+n has a si+ni!icant impact on the

re*iabi*ity o! the resu*ts obtained. It thus acts as a !irm !oundation !or the entire research.

&esearch desi+n stands !or adance p*annin+ o! the methods to be adopted !or co**ectin+ the

re*eant data and the techni@ues to be used in their ana*ysis.

There 'i** be t'o phase !or the research as the tit*e su++ests importance o! #ystematic

Inestment P*annin+.

3


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!

Na'e o= Re8ea35

T5e 65a8e I the nature o! research 'i** be B?p*oratory as 'e are e?p*orin+ the unno'n

ariab*es *ie Importance o! #ystematic Inestment P*annin+. >e +o !or e?p*oratory research

'hen 'e 'ant to e?p*ore somethin+. B?p*oratory comes 'hen objectie has unno'n ariab*es"

!actors behind it. B?p*oratory research is research conducted !or a prob*em that has not been

c*ear*y de!ined. The research methodo*o+y 'i** be @ua*itatie as depthness o! the research is

more important that reach and een importance 'ont chan+e 'ith the chan+e in samp*e si


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suitab*e au?i*iary ariab*es !or strati!ication and samp*e se*ection; the estimation methods that

'i** be used and the aai*ab*e bud+et in terms o! time and resources.

Popu*ation under study are inestors 'ho do #IPs re+u*ar*y. Thus a+e +roup may ran+e !rom 24

years to ,0 years.

5or Phase I; popu*ation under study 'i** be inestors 'ho are inestin+ in systematic Inestment

P*annin+ !or more than ( years as they are the @ua*i!ied indiidua*s 'ho can +ie us in depth

no'*ed+e about importance o! usin+ #IPs instead o! %ump sum.

5or Phase II; popu*ation under study 'i** be inestors 'ho are ne' or 'ho hae just started their

inestments in #IPs as they are ne' inestors and 'ant to no' their psyche about 'hy they

choose #IPs and 'hich particu*ar )utua* 5und.

The #amp*in+ methodo*o+y used 'i** be Co/:e/4e/3e No/ Poa4-4'9 Sa+6-4/g. Aon

probabi*ity samp*in+ is a samp*in+ techni@ue 'here the samp*es are +athered in a process that

does not +ie a** the indiidua*s in the popu*ation e@ua* chances o! bein+ se*ected . Conenience

samp*in+ is probab*y the most common o! a** samp*in+ techni@ues. >ith conenience samp*in+;

the samp*es are se*ected because they are accessib*e to the researcher. #ubjects are chosen simp*y

because they are easy to recruit. This techni@ue is considered easiest; cheapest and *east time

consumin+. #o I 'i** approach inestors o! #IP in my icinity.

Thus the data is taen in se*ectie areas o! Po'ai; 6hatopar; )a*ad; %o'er pare*; Thane; 5ort;

Hi*e Par*e and Hihro*i

SAMPLE SIE

Sample si%eis an important concept in statistics; and re!ers to the number o! indiidua* pieces o!

data co**ected in a surey. - surey or statisticKs samp*e si


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e2. Thus hi+h to*erab*e error *eads to *ess samp*e si


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>

CHAPTER #( ANALYSIS AND FINDIN%S

1. 9o' much do you inest in #IPs )onth*yF

SIP Pe Mo/'5 No o= 6e8o/8 4/:e8' K

W &s 1000 27

&s 1000 (000 4(

&s (001 10000 18

X&s 10000 10

Tab*e Ao. 3

2>J

!0J

1?J

1J

No o3 perso!s

K s 1

s 1 L 0

s 01 L 1

Ms 1

>


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5i+ure Ao. 1

5rom the aboe !i+ure; it is seen that majority o! the peop*e inest &s 1000 D (000 rs per month

is #IPs as this is the aera+e inestment 'hat they can a!!ord.

2. >hich type o! )utua* 5und #cheme do you pre!erF

S$0ee o3 Mutual Fu!dNo+ o3 Perso! I!;ested>


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itKs the ri+ht or 'ron+ time to inest. The inestor just has to !o**o' the p*an 'ith a secure

no'*ed+e that inestments 'i** he*p achiee the tar+et amount oer a desired period and rate o!

return.

#IP 'ors on the princip*e o! re+u*ar inestments and brin+s the po'er o! compoundin+ to your

!orth. It remoes tensions and uncertainty !rom your inestment p*an by main+ it a mechanica*

borin+ process. It incu*cates the habit o! re+u*ar sain+s and does not encoura+e timin+ and

specu*ation in the marets. -** these are correct and accepted !acts. ut; donKt !or+et that #IP is

just another method o! inestin+; it is a ehic*e not the !ina* destination it may pass throu+h

strai+ht road or bumpy roads it may *ead you to your destination is a *esser or sometimes hi+her

time !rame and sometimes it may een not *ead you to your destination by derai*in+ your p*an.

#IP is just a method o! +ettin+ on to the inestment ehic*e to reach your destination i! the

ehic*e you choose is incorrect 'hicheer method you may +et in there is *ess *ie*ihood o!

you reachin+ your destination. There!ore; the ne?t time 'hen a mutua* !und or distributor or

!inancia* p*anner adises you that #IPs are the sa!est route to inest in e@uities then remember

that they are not te**in+ *ies it is sa!est route but not !or you the inestor but !or their o'n

se*es.

)utua* !unds hae emer+ed as a stron+ !inancia* intermediary and are the !astest +ro'in+

se+ment o! the !inancia* serices sector in India. )utua* !unds p*ay a ery si+ni!icant ro*e in

channe*ihether as the !oundation o! ones inestment pro+ram or

as a supp*ement; mutua* !und schemes can he*p the inestors to meet their !inancia* +oa*s. - host

o! !actors has contributed to this e?p*osie +ro'th o! the industry. The industry has made

si+ni!icant strides in terms o! its ariety; sophistication and re+u*ation. ue to the economic

boom; entry o! !orei+n asset mana+ement companies; !aorab*e stoc marets and a++ressie

maretin+ by mutua* !unds; the asset mana+ement industry in India is 'itnessin+ dramatic

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+ro'th

Importance of Systematic investment planning in portfolio management

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