Investment Portfolio

Investment is a commitment of funds made in the expectation of some positive rate of return. The Investment needs of an Investor:1) Capital Preservation. 2) Wealth Generation. 3) Tax Savings. 4) Income. 5) Future Uncertainty. 6) Retirement Planning.

Investment Planning

It helps in deciding upon the right Investment strategy. It is a balance of three components:1) Liquidity. 2) Risk Tolerance. 3) Return.

Portfolio Management

A Portfolio is a collection of securities that are grouped together to diversify the total Risk. An Optimal Portfolio provides the highest possible utility, given the constraints imposed by the opportunity set and efficiency frontier. Beta measures the risk associated with Individual Portfolio in relation to the Market Portfolio.

Meaning of Portfolio Management

The Art & Science of making decisions about Investment mix & policy, matching Investments to Objectives, asset allocation for Individuals & balancing risk vs. Performance. Portfolio Objectives:1) Stability of Principal. 2) Income. 3) Growth of Income. 4) Capital Appreciation. Investment Pyramid

Objectives

1) To study the demographical factors affected the choice of Portfolio of Investors. 2) To identify the purpose of investment & extent of financial literacy of Investors. 3) To know the most preferred Investment avenues of Investors. 4) To find out the Risk Tolerance limit of Investors.

Research Methodology Research Problem: A Comparative Analysis on Investment Portfolio of Business & Service Class Investors of Ranchi (Lalpur to Kutchahry). Research Design: Descriptive Research Design. Data Collection: Primary Research:- Questionnaires and interview. Secondary Research: - Journals & Magazines. Sample:The Business & Service class Investors of Ranchi (Lalpur to Kutchahry). Sampling Unit:Those Business & Service class Investors using PM Services of Ranchi (Lalpur to Kutchahry). Sample Size:- 100. 50- Business Class Investors 50- Service Class Investors. Sampling Frame:- It includes the Clients Database using PMS of HSBC InvestDirect, Ludhiana & the Walking Investors in Ludhiana Branch. Sampling Technique:- Simple Random Sampling & Convenience Sampling Techniques.

Data Analysis & Interpretation

Demoghraphic Profile of Investors

Percentage Of Investors 100% 88%

80%
60% 40% 20% 0% Business Service

78%

12% Male 88% 78%

22%

Female 12% 22%

2:- The Age Group of Investors.

Age Group of Investors

Percentage Of Investors 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Business Service 78% 56% 30% 20%

10% 2% 51-60 10% 2%

4% 0% Above 60 4% 0%

Below 35 30% 78%

35-50 56% 20%

3:- The Marital Status of Investors.

Marital Status of Investors

Percentage of Investors 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Business Service 80%

52%
20%

48%

Unmarried 20% 52%

Married 80% 48%

5:- Monthly Flow of Income of Investors.

50% 40% Percentage of Investors 30% 20% 10% 0% 12%

Monthly Inflow of Income 46% 44%

30% 22% 20% 4% Under Rs.10,000 22%

Business Service

12% 4%

Rs.10,001 to Rs.20,000 20% 22%

Rs.20,001 to Rs.30,000 22% 44%

Above Rs.30,000 46% 30%

6:- Awareness among Business class Investors regarding various Investment Plans.

Percentage Of Business Class Investors

120% 100% 80% 60% 40% 20% 0%

100%

92%

92% 52% 48%

86%

0%

8%

8%

14%

Bank & Insuran Comm P.O. ce Equitie odities/ Real Fixed Schem Derivat Estate s Deposit es ives s Yes 100% 92% 92% 48% 86% No 0% 8% 8% 52% 14%

7:- Awareness among Service Class Investors regarding various Investment Plans.

Awareness regarding various Investment Plans

Percentage of Service Class Investors 120% 100% 80% 60% 40% 20% 0% 100% 0% 98% 2% 88% 80% 66% 34% 20% 12%

Bank & Insuran Comm P.O. ce Equitie odities/ Real Fixed Schem Derivat Estate s Depo es ives Yes 100% 98% 88% 66% 80% No 0% 2% 12% 34% 20%

8:- The Purpose of Investors behind their Investments.

Purpose of Investors behind their Investments

Percentage of Investors
70% 60% 50% 40% 30% 30% 20% 10% 0% Capital Appreciation 30% 46% Balance of Capital App. & Current Income 62% 38% 8% 16% 46% 38% 62%

Supplement to Current Income 8% 16%

Business Service

9:- The Basis which initiates the Investors to invest in any Financial Security.

Basis of Investments
0.45 0.4 0.374 0.342 0.277 0.237 0.349 0.421

Mean/Average

0.35 0.3 0.25 0.2 0.15 0.1 0.05 0 Business Service

Fundamental Analysis 0.277 0.342

Financial Advisor 0.349 0.237

Portfolio Services 0.374 0.421

10:- Important Features required in Investors Portfolio Plan.

Features required in Investors' Portfolio Plan Mean/Average

4 3.5 3 2.5 2 1.5 1 0.5 0 Business Service Growth 2.48 2.62 2.48 2.62 3.34

3.26

3 3

2.34 1.84

2.22

1.9

4 2
Safety 3.34 3.26

2
Tax Efficiency 2.34 2.22

1
Income 1.84 1.9

11:- Most Preferred Investment Avenues by the Investors.

Most Preferred Investment Avenues

6

Mean/Average

5 4.18 4 3 2 1 0 3.6 3.14

4.82 4.42 3.92 3.3 2.72 2.88 2.96 2.58 3.38

6 6

4 3
Bank & P.O. Fixed Deposits 3.6 3.14

4 2
Insurance Schemes 4.18 3.3

3
5

1
2.72 2.88

2
Commodities /Derivatives 4.42 4.82 3.38 3.92

Mutual Fund Schemes

Equities 2.58 2.96

Real Estate

Business Service

12:- Type of Investments which are covered under their Current Portfolio.

60% 50% 40% 30% 20% 10% 0%

Current Portfolio of Investors

52% 36% 28% 18% 14% 30%

Percentage Of Investments

16% 6%

Mainly Cash/Bank Deposits with small portion in Low risk Bonds 18% 36%

Mainly Debt Instruments & some Portion in Blue Chip Stocks 14% 28%

A mix of Debt Instrument, Blue Chip & Aggressive Stocks 52% 30%

Mostly Speculative or High Risk Investments 16% 6%

Business Service

13:- Important sources of Information which influence the Investors decision regarding their Investments.

1 0.8 0.6 0.4 0.8 0.26

Sources Of Information
0.4 0.34 0.7 0.38

Mean

0.2 0 -0.2 -0.4 -0.6 -0.8 -1

-0.58 -0.88 -0.76

-0.64

Newspaper/ Magazines Business Service 0.26 0.8

Electronic Media (T.V.) 0.4 0.34

Peer Group/ Friends -0.58 -0.88

Broker/ Financial Advisor 0.7 0.38

Internet -0.76 -0.64

14:- The Time Period for which Investors prefer to keep their Investments.

Percentage of Investors

Time Period of keeping Investment

60% 50% 50% 40% 30% 20% 20% 10% 0% Less than 1 month 2% 16% 38% 40% 34%

0% 1 month - 6 months 20% 16% 6 months - 12 months 38% 34% More than 12 months 40% 50%

Business Service

2% 0%

15:- The Decision of the Investors at the time of Fluctuation in the Market.

Investors' Decision
Percentage of Investors
60% 52% 50% 40% 30% 20% 10% 10% 0% Business Service 36% 38% 30%

34%

Withdraw your Money 10% 34%

Wait & Watch 52% 36%

Invest more in it 38% 30%

16:- The Investors belong to Risk Category.

The Investors' Risk Categories

Percentage of Investors
60% 54% 50% 50% 40% 30% 20% 20% 14% 10% 0%

36% 26%

Aggressive Capital Preservation 14% 20%

Balanced Portfolio 36% 54%

Aggressive Capital Appreciation Portfolio 50% 26%

Business Service

Findings & Conclusion

Conclusion of 1st Objective: Majority of Business class Investors are adults and they have the family size of more than 3 because 80% of them are married and they have monthly Income of above Rs. 30,000. It means high incomes Business Investors are doing more Investments. Whereas majority of Service class Investors is Young and they have less number of dependents (0-1) because majority (80%) is unmarried and they start doing Investments with the Salary Package of Rs.20,001 to Rs.30,000 because as they have less number of dependents so they are using more of their money into Investments.

Conclusion of 2nd Objective The Business Investors have the awareness of all Investment avenues especially Equities & Real estate, few of them dont know about Commodities/Derivatives & thats why they do Investments with the purpose of appreciation in their Capital as well as a source of their current Income & whenever they do Investment in any security, they do so because their Portfolio Management Services & Financial Advisor initiate them to do so. Whereas Service class Investors have the awareness of all Investment avenues especially Insurance schemes and Equities and very few of them dont know about Derivatives. They do Investments with the purpose of Capital Appreciation & they do Investments by having Portfolio Services Initiation as well as Fundamental analysis of that particular Scrip/Company.

Conclusion of 3rd Objective Business class Investors have given the highest preference means Rank 1 to Equities. Whereas Service class Investors have given the highest preference to Mutual Funds.

Conclusion of 4th Objective

The most preferred Investment Avenue for Business Investors is Equity & Real Estate and they keep it with themselves for more than 12 months because Equity is a long term Investment. They wait & watch or they invest more whenever they noticed any fluctuation in the market . Thats why they come under Aggressive Capital Appreciation Category which refers to higher risk & higher returns. Whereas the Service class Investors have most preferred Investment Avenue is Mutual Fund so they keep it for long period and most of them withdraw their Investment or they wait & watch when any fluctuation is noticed in the market. Thats why; they have a Balanced Portfolio which refers to moderate risk & moderate return.

Conclusion

Business Class Investors are more Risk taking. They prefer to invest in High risk Investments such as Equity & hold their securities for a longer period of time. They come under the Aggressive Capital Appreciation Portfolio. Whereas; the Service Class Investors are less Risk taking. Whenever they noticed any fluctuation in the market they try to withdraw their money. They do Safer Investments such as Mutual Fund and prefer to take moderate risk & moderate return. So, they come under a Balanced Portfolio.