A PROJECT REPORT ON

A Study on Portfolio Management of Individual Investors in

Mumbai

SUBMITTED

TO THE UNIVERSITY OF MUMBAI

AS A PARTIAL REQUIREMENT FOR COMPLETING THE DEGREE OF

B.COM (Accounting and Finance) SEMESTER VI

SUBMITTED BY:

AAYUSHI HEMAL MEHTA

ROLL NO.: 48

UNDER THE GUIDANCE OF PROF

MS. PAYAL BHATIA

SIES COLLEGE OF COMMERCE AND ECONOMICS

MARCH 2024
 SIES COLLEGE OF COMMERCE AND ECONOMICS,

PLOT NO. 71/72, SION MATUNGA ESTATE

T.V. CHIDAMBARAM MARG,

SION (EAST), MUMBAI – 400022.

CERTIFICATE

This is to certify that AAYUSHI HEMAL MEHTA of B. Com (Accounting and Finance)
Semester VI (Academic year 2022-2023) has successfully completed a research project
on “ A Study on Portfolio Management of Individual Investors in Mumbai ” under the
Guidance of Ms. Payal Bhatia

Ms. Payal Bhatia CA Chandrashekar Sawant

(Project Guide) (Course Co-Ordinator)

(External Examiner) (Dr Mrs. Nina Roy Choudary)

(Principal)

Place: Mumbai

Date:
 DECLARATION

I, AAYUSHI HEMAL MEHTA Student of B. Com (Accounting and Finance)

Semester VI (Academic year 2022-2023) hereby declare that, I have completed the
research project on A study on Portfolio Management of Individual Investors in
Mumbai.

The information presented in this project is true and original to the best of my
knowledge. This project is previously not submitted to any University for any Degree
or Diploma Course of this or any other University.

(Aayushi Hemal Mehta)

Roll No: 48

Place: Mumbai
Date:
 ACKNOWLEDGEMENT
I would like to thank the University of Mumbai, for introducing B. Com
(Accounting and Finance) course, thereby giving its students a platform to
be abreast with changing business scenario, with the help of theory as a
base and practical as a solution.
I am indebted to our Principal Dr Nina Roy Choudhury for providing
necessary facilities required for completion of the Project.
I take this opportunity to thank our coordinator CA Chandrashekar Sawant
for his support and guidance. I would sincerely like to thank her for all his
efforts.
I would like to express my sincere gratitude towards my project guide
Ms. Payal Bhatia whose guidance and care made the project successful.
I would like to thank my College library for having provided various
reference books and magazines related to my project.
Last but not the least; I would like to thank my parents for giving the best
education and for their support and contribution without which this project
would not have been possible.

(Aayushi Hemal Mehta)

Roll No: 48
 EXECUTIVE SUMMARY

This study investigates the portfolio management practices of individual investors in

Mumbai, examining their investment strategies, preferences, and the challenges they
face. Through a comprehensive analysis of survey data collected from a diverse sample
of investors, several key findings have emerged. The main objective is to understand
the investors investing pattern at different age levels, their risk appetite and risk
tolerance and their overall ideal portfolio mix.

Investment Preferences:
The study uncovers a diverse range of investment preferences among individual
investors in Mumbai. While some favor traditional avenues such as stocks and mutual
funds, others exhibit a growing interest in alternative investments like real estate and
cryptocurrency. This diversity underscores the importance of understanding individual
investor needs and preferences within the dynamic investment landscape.

Risk Appetite and Diversification:

Risk appetite varies significantly among investors, with some displaying a conservative
approach, while others are more inclined towards high-risk, high-reward strategies.
Diversification emerges as a common strategy among investors to mitigate risk, with
many opting for a mix of asset classes in their portfolios. This highlights the
significance of a balanced and diversified approach tailored to individual risk profiles
and investment objectives.

Information Sources and Decision-making:

Individual investors in Mumbai rely on various sources for investment information,
including financial advisors, online resources, and peer recommendations. However,
decision-making processes are often influenced by behavioral biases and market
sentiments, emphasizing the need for investor education and awareness. Providing
access to reliable information and tools for rational decision-making is crucial for
enhancing investment outcomes.

Challenges and Opportunities:

Investors in Mumbai face several challenges, including market volatility, regulatory
changes, and inadequate financial literacy. Nevertheless, the study also identifies
opportunities presented by technological advancements, such as robo-advisors and
online trading platforms, which empower investors to make informed decisions.
Addressing these challenges and leveraging technological innovations can better
support investors in navigating the complexities of financial markets.

Recommendations for Portfolio Management:

Based on the findings, the study offers recommendations to enhance the portfolio
management practices of individual investors in Mumbai. These include fostering
financial literacy initiatives, promoting diversified investment strategies, and
leveraging technology for personalized investment solutions. Implementation of these
recommendations can empower investors to build resilient portfolios aligned with their
financial goals and risk profiles.

In conclusion, this study provides valuable insights into the portfolio management
landscape of individual investors in Mumbai, highlighting complexities, opportunities,
and areas for improvement in their investment journey. Addressing these findings and
recommendations can contribute to the development of an informed, empowered, and
resilient investor community in Mumbai and beyond.
 Index

Sr. Particular Page

No no
1 Introduction 8 - 44

2 Research Methodology 45 - 48

3 Review of Literature 49 - 57

4 Data Analysis and Interpretation 58 - 73

5 Conclusions, Recommendations and 74 - 78

Suggestions
6 Bibliography 79 - 80

7 Appendix 81 - 83
 1. INTRODUCTION

Investment is an art that can be mastered or dealt with by planning well enough and
knowing what exactly one wants from the investment. Investing ensures present and
future long term financial security. Investments are important because in today’s world,
earning income from the job one does it just not sufficient to fulfil the needs and
demands of an individual, therefore investing helps individuals to incur that extra
income that can help them achieve their desired goals and aims in life. Therefore,
making good investment decisions is very necessary. It is very important to understand
and study the market and its fluctuations in order to earn fruitful returns. One can earn
good returns from its investments by creating a portfolio of investments that is
diversified so as to reduce risk and increase potential returns. Portfolio management is
all about making investment decisions and determining the strengths, weaknesses,
opportunities and threats in the choice of funds, that is, where one must invest their
money in an attempt to minimize risks while aiming at maximizing returns. It provides
the best investment plans that suit the investors budget, income, age and ability to
undertake risks. A portfolio consists of bonds, shares, mutual funds and other assets
that aim at making profits/ returns. Portfolio can consist of mix of debt investments and
equity investments. While debt and equity investments, both can deliver good returns,
they have differences that should be known. Debt investments are those that deliver
fixed payments in the form of interest such as bonds, etc. It ensures the investor fixed
income and also ensures lesser risk from the investment. On the other hand, equity
investments are those investments that do not guarantee fixed returns to the investors.
There are few who like to take risk while others avoid taking risk. The younger lot of
investors has more ability to take risk and therefore invest usually in risky securities.
Their goals and aims vary than that of the older generation. Also, younger generation
has an advantage and that is the time period. Younger investors have the time and are
flexible to study the market through their success and failures. Since investing has a
fair lengthy learning curve, young adults have the advantage because they have years
to study the markets and refine their investing strategies. Another plus point about the
younger generation of investors is that they are the tech savvy ones, and therefore they
are able to study, research and apply online investing tools and techniques. Whereas,
the older lot of investors would prefer having a stable income and would not opt for
investing in risky securities. The main aim of investing of both the younger generation
and the older generation is saving for retirement. However, their investing strategies
vary due to volatility, time period and other factors. They have the disadvantage of time
period; therefore, they are more prone to not taking risk while investing. They are closer
to their retirement age, and hence avoid taking risky investment decisions. Due to the
market being volatile, an investor can make huge profit or loss depending upon the
market conditions and the investor’s knowledge regarding the market. Investing
definitely isn’t a nerve racking experience, provided decisions are made on the basis of
analysis and reasoning, and are not guided by whims, fancies and rumors. Some may
find it safer to invest in debt due to fixed returns while some may want to take up risks
and hence invest in equity. There might be few who invest in both, that is, debt as well
as equity. The main objective of investors is either income generation or wealth
creation. Therefore, for income generation the best option would be investment in debt,
whereas for wealth creation equity investments prove to be a better choice as the returns
are more, but at the same time it involves risk that is higher than that of a debt
investment.

History

Before understanding about portfolio management and all aspects related to portfolio
management it is necessary to understand how this all began. In the 1930s, before the
advent of portfolio theory, people still had “portfolios”. However, their perception of
the portfolio was very different. The goal of most investors was to find a good stock
and buy it at the best price. Whatever were the investor’s intentions, investing consisted
of laying bets on stocks that one thought were at their best price. The loose ways of the
market, although tightened through accounting regulations after The Great Depression,
increased the perception of investing as a form of gambling for people too wealthy or
haughty to show their faces at the track. In the wilderness, professional managers like
Benjamin Graham made huge progress by first getting accurate information and then
by analyzing it correctly to make investment decisions. Successful money managers
were first to look at a company’s fundamentals when making decisions, but their
motivation was from the basic drive to find good companies on the cheap. No one
focused on the risk factor until a little known, 25 year old graduate student changed the
financial world. The story goes that, Harry Markowitz, then a graduate student in
operations research, as searching for a topic for his doctoral thesis. A chance encounter
with a stock broker in a waiting room started him in the direction of writing about the
market when Markowitz read John Burr Williams‟ book, he was struck by the fact that
no consideration was given to the risk factor that is involved in a particular investment.
The concept of portfolio management was developed and discovered by Harry Max
Markowitz. He was an American Economist, born on 24th August 1927. He was also a
professor of finance at the Rady School of Management at the University of California,
San Diego. The Portfolio theory was introduced in his paper „Portfolio Selection‟
which was published in the Journal of Finance in 1952. The above reasons inspired him
to write and publish his first book on portfolio analysis. In 1990, he won the Nobel Prize
in Economic Sciences for the Theory, shared with Merton Miller and William Sharpe.
Markowitz is not only known for his pioneering work in Portfolio Theory. He is also
much known for the study of the effects of asset risk, return, correlation and
diversification related to investment portfolio returns. The interpretations of this theory
led people to the conclusion that risk, not the best price, should be the crux of any
portfolio. The implications of Markowitz theory broke over the Wall Street in a series
of waves. In olden days, the traditional portfolio managers diversified funds over
securities of large number of companies based on intuition. They had no real knowledge
of implementing risk reduction. Since 1950, a body of knowledge has been built up
which quantifies the expected risk and also the riskiness of the portfolio. Managers who
loved their “gut trades” and “two-gun investing styles” were hostile towards investors
wanting to dilute their rewards by minimizing risk. The public, starting with
institutional investors like pension funds, won out in the end. It is to be noted that, these
days the concept of the portfolio is so commonplace that it is hard to imagine things
were any different. Though investing has a history dating back centuries, the modern
concept of the portfolio and the management techniques applied today for investing
today are really quite current. Understanding how they came to be can help provide
insights into the real nature of investing, the way most ordinary investors think, and
how to approach making the best decisions for any given set of objectives. 1.2 Elements
and Characteristics A portfolio that consists of the right mix of investments, that best
suit the investors choices that he/ she makes while investing forms a good portfolio. An
investor should be very clear with his ideas on how much, and for how long he/ she
want to invest and what are his/ her aims for investing. The portfolio should not expose
the investor to any more risk than is necessary to meet the investors‟ needs. For every
investment portfolio, there is a minimum level of risk and return that are necessary to
safely achieve its objectives. It is necessary to identify the amount and ability of risk
level of the investors before evaluating the quality of the portfolio. Portfolio
management is planned in such a way to increase the effective yield an investor gets
from his surplus invested funds. By minimizing the burden, yield can be effectively
improved. A good portfolio is the one that gives a favourable tax shield to its investors.
Investment safety or minimization of risks is one of the most important objectives of
portfolio management. Portfolio management not only involves keeping the investment
intact but also contributes towards the growth of its purchasing power over the period.
The motive of financial portfolio management is to ensure that the investment is
absolutely safe. Other factors such as income, growth, etc. are considered only after the
safety of investment is ensured. It is very important in any aspect of life to minimize
the cost of any task to be performed or anything to be achieved in the process of trying
to reach the ultimate goal. Similarly, a good portfolio is the one that tries to achieve its
objectives in the lowest possible cost. Risk is something that every investor tries to
avoid at some course of their investment. Therefore, in order for investors to know the
quality of their portfolio, it is necessary to understand how much return to expect from
the investments. Risk efficiency can be achieved by the investors by diversifying their
portfolio. By implementing effective diversification as a strategy, investors can stabilize
their portfolio.
Portfolio Management Process

Investment Management or Portfolio Management is a complex activity which may be

broken down into the following steps:

Specification of Investment Objectives and Constraints. The typical objectives sought

by investors are current income, capital appreciation, and safety of principal. The
relative importance of these objectives should be specified. Further, the constraints
arising from liquidity, time horizon, tax and special circumstances must be identified.
Choice of the Asset Mix. The most important decision in portfolio management is the
asset mix decision. Very broadly, this is concerned with the proportions of stocks"

(equity shares and units/ shares of equity oriented mutual funds) and ‘bonds’ (fixed
income investment vehicles in general) in the portfolio. The appropriate “stock-bond”
mix depends mainly on the risk tolerance and investment horizon of the investor.

Formulation of Portfolio Strategy: Once a certain asset mix is chosen, an appropriate

portfolio strategy has to be hammered out. Two broad choices are available; an active
portfolio strategy or a passive portfolio strategy. An active portfolio strategy strives to
earn superior risk-adjusted returns by resorting to market timing, or sector rotation, or
security selection, or some combination of these. A passive portfolio strategy, on the
other hand, involves holding a broadly diversified portfolio and maintaining a
predetermined level of risk exposure.

Selection of Securities: Generally investors pursue an active stance with respect to

security selection. For stock selection, investors commonly go by fundamental analysis
and/ or technical analysis. The factors that are considered in selecting bonds (fixed
income instruments) are yield to maturity, credit rating, term to maturity, tax shield and
liquidity.

Portfolio Execution: This is the phase of portfolio management which is concerned with
implementing the portfolio plan by buying and/ or selling specified securities in given
amounts. Though often glossed over in portfolio management discussions, this is an
important practical step that has a bearing on investment results.

Portfolio Revision: The value of a portfolio as well as its composition – the relative
proportions of stock and bond components – may change as prices of dominant factor
underlying this change. In response to such changes, periodic rebalancing of the
portfolio is required. This primarily involves a shift from stocks to bonds or vice versa.
In addition, it may call for sector rotation as well as security switches.

Performance Evaluation: The performance of a portfolio should be evaluated

periodically. The key dimensions of portfolio performance evaluation are risk and
return and the key issue is whether the portfolio return is commensurate with its risk
exposure. Such a review may provide useful feedback to improve the quality of the
portfolio management process on a continuing basis. Investors should always evaluate
their portfolio from time to time in order to check and know where they can make
necessary changes as and when it is required.
Types of Investment Portfolios

The set of securities held by investors is called an investment portfolio. The investment
portfolio many contain just one security. However, since in general no investor puts all
eggs in one single basket, the investor tries to create a portfolio that contains several
securities. Such an investment portfolio is known as a diversified portfolio. An
investment portfolio can be classified in the light of following factors such as
objectives, risk levels and the level of diversification.

Investment portfolio based on Objectives

On the basis of objectives sought, a portfolio can be income portfolio, growth portfolio,
mixed portfolio, tax saving portfolio or liquidity portfolio. In income portfolio, the
objective of the investor is to maximize the current income. Small investors and
investors whose current income needs are high like pensioners and unemployed persons
and persons with low tax brackets prefer income portfolios. Here the portfolio generally
consists of fixed income securities like debentures, bonds, income mutual funds, equity
with continuous dividend record, etc. On the other hand, growth portfolio stress on
capital gain. Big investors, high earning professionals and persons with income falling
in high tax brackets prefer a growth portfolio. This portfolio includes securities such as
growth mutual funds, growth shares, etc.

On the basis of objectives, investment portfolio also includes a mixed portfolio that
gives moderate preference to both returns and growth. Salaried persons and middle-
income investors prefer to invest through such as portfolio. Here the portfolio consists
of securities like debentures and bonds, convertible debentures, growth as well as
income mutual funds, growth shares and so on. Liquidity portfolio is another type of
investment portfolio based on objectives of the investors. Liquidity portfolio
emphasizes on easy offloading. Frequently traded securities (with many quotations on
a single day in stock exchanged), gilt-edged securities, buy-back securities, etc, are
included in this portfolio.

Investment Portfolio based on Risk Level

On the basis of risk level and risk appetite of the investors, a portfolio maybe aggressive
(high risk), moderate (medium risk) or conservative/ defensive (low risk). Investors
interested in assuming high risk go for aggressive portfolio. These investors invest in
extremely risky securities. They may select securities which have positive correlation
between them. They may get rewards in proportion to the risk they take. Moderate
portfolios have risks that are more or less equal to the market risk. Conservative
portfolios have far lesser risk than the market. A conservative portfolio consists of a
high load of risk free investments like bank deposits, government bonds, etc. The risk
level involved in a conservative portfolio is least among the other two portfolios that
are based on the risk factor. Therefore, investors that are not very open to taking risks
choose the conservative investment portfolio as it involves lesser risk in comparison to
the other two portfolio types.
Investment Portfolio based on Diversification Level

On the basis of level of diversification, portfolio can be classified highly diversified,

moderately diversified and lowly diversified portfolios. High diversification may be
taken to mean that the portfolio has over 20 different securities in the kit, while a
moderate diversification includes 10 - 20 securities in the kit and low diversification
means less than 10 securities in the portfolio. High diversification if properly done
reduces the unsystematic risk to zero. In moderate diversification means substantial
unsystematic risk is present in the portfolio. As the number of securities increase in a
portfolio, the unsystematic risk reduces and hence total risk reduces.

Traditional Portfolio Theory and Modern Portfolio Theory

Traditional portfolio management is a non-quantitative approach to balance a portfolio
with different assets, such as stocks and bonds, from different companies and different
sectors as a way of reducing the overall risk of the portfolio. Traditional portfolio
analysis has been of very subjective nature but it has provided success to some persons
who have made their investments by making analysis of individual securities through
evaluation of return and risk conditions in each security. In fact, the investors are able
to get maximum returns at the minimum risk or achieve his return position at the
indifferent curve which states his risk condition.

The normal method of calculating the return on an individual security in the traditional
portfolio theory was by finding out the dividends that have been given by the company,
the price earnings ratios, the common holding period and by an estimation of the market
value of the shares. It can be measured on each security through the process of finding
out the standard deviation. The traditional portfolio theory is based on the fact that risk
could be measured on each individual security through the process of finding out the
standard deviation and that security should be chosen where the deviation is the lowest.
Greater variability and higher deviations show more risk than those securities which
have lower variation. The modern portfolio management theory differs from the
traditional approach by the use of quantitative methods to reduce risk. The modern
portfolio theory quantifies the relationship between the risk and return and assumes that
an investor must be compensated for the assuming risk. The modern portfolio theory
believes in the maximization of return through the combination of securities. The
modern portfolio theory discusses the relationship between different securities and then
draws inter-relationships of risks between them. It is not necessary to achieve success,
only by trying to get all securities of minimum risk. The modern portfolio theory (MPT)
is a theory of finance that attempts to maximize portfolio expected return for a given
amount of portfolio risk, or equivalently minimize risk for a given level of expected
return, by carefully choosing the proportion of various assets. The main objective of
modern portfolio theory is to have efficient portfolio, which is a portfolio that yields
the highest return for a specific risk, or stated in another way, the lowest risk for a given
return.

Modern portfolio theory is a mathematical formulation of the concept of diversification

in investing, with the aim of selecting a collection of investment assets that has lower
overall risk than any other combination of assets with the same expected returns. This
is possible; intuitively speaking, because different types of assets sometimes change in
value in opposite directions. For example, to the extent prices in the stock market move
differently from prices in the bond market, a combination of both types of assets can in
theory generate lower overall risk than either individually. The theory states that by
combining a security of high risk, success can be achieved by an investor in making a
choice of investment outlets. The modern theory is of the view that diversification risk
can be reduced. Diversification can be made by the investor either by having a large
number of shares of companies in different regions, in different industries, or those
producing different types of product lines. Diversification is important but the modern
theory states that there cannot be only diversification to achieve the maximum return.
The securities have to be evaluated and thus diversified to some limited extent within
which the maximum achievement can be sought by the investor.

Thus, traditional theory and modern theory are both framed under the constraints of risk
and return, the former analyzing individual securities and the latter believing in the
perspective of combination of securities. Traditional theory believes that the market is
inefficient and the fundamental analysts can take advantage of the situation. By
analyzing internal financial reports and statements of the company, investors can make
superior profits though higher returns. The technical analyst believed in the market
behaviour and past trends to forecast the future of the securities. These analyses were
mainly under the risk and return criteria of single security analysis. However, modern
portfolio theory, as brought about by Markowitz and Sharpe, is the combination of the
securities to get the most efficient portfolio.
The combination of investments can be made in multiple ways. Markowitz developed
the theory of diversification though scientific reasoning and methods.
Diversification of Portfolio
In order for an investor to reduce risk, the best way is by diversifying its portfolio. It is
said; never put all your eggs in a single basket. Similarly, one should not invest in just
one company or industry but try to diversify its risks and invest in different
industries/companies. The concept of diversification is basically to create a portfolio
that includes multiple investments in order to reduce risk. This is one of the most
common ways to reduce the risk of the overall investment portfolio. A diversified
portfolio reduces an investor’s risk by not being concentrated in one specific are of
investment. If one investment performs poorly over a certain period, the other
investments may perform better over that same period, reducing the overall potential
losses of one’s investment portfolio from concentrating all the capital under on type of
investment. The loss of one company is offset by the profit of the other. In this way, the
investor can eliminate risk and earn returns. By diversifying its portfolio, one is more
likely to reduce volatility, that is, risk and enhance potential returns. However, a
diversified portfolio can consist of both, diversifiable risk as well as no diversifiable
risk.

Diversifiable risk also known as non-systematic risk is a risk that is company specific
or industry specific. This risk can be mitigated though diversifying investment and
maintaining portfolio diversification. Some examples of diversifiable risks are strikes,
product malfunctions, etc. and all these are company/industry specific.
Therefore, a person investing in one industry has high diversifiable risk or unsystematic
risk. This risk is also called avoidable risk. To avoid this, the investor should invest in
other company/industry stocks as well to diversify the risk in the portfolio, so as to have
a lesser impact of an adverse event in one industry. On the other hand, non-diversifiable
risk is an unavoidable risk. It affects all the industries in the particular economy and is
not industry specific. The effect of diversifiable risk also known as systematic risk,
causes the stocks and shares of all companies to move in the same direction. This risk
occurs due to market risk, interest rate risks or purchasing power risk, that is, risk due
to inflation.
Therefore, the bottom line is that, diversification of portfolio can help an investor to
manage his risk. However, no matter how diversified one’s portfolio is, risk can never
be eliminated completely. Diversification will only help in minimizing the risk to a
certain extent. Risk associated with individual stocks and shares can be reduced to a
certain extent, but the general market risk cannot be eliminated and it affects nearly
every stock, therefore it is important to diversify among almost every asset class in
order to reduce risk and increase returns.

An investor can invest in equity shares as well as in bonds. An investor can also invest
in mutual funds to minimize their risk. Investing in different assets classes like shares,
bonds, real estate, gold and mutual funds, etc. will help the investor to reduce his/her
risk to certain extent but cannot eliminate risk completely. Portfolio diversification will
lower the volatility of a portfolio because not all asset categories, industries, or stock
move together.

However, it should be understood that just like under diversification could affect
investments in the portfolio, over diversification is almost as large a problem today as
under diversification. It is common for investors to believe that if a given amount of
diversification is good then more is better. However, this concept is false. If adding an
individual investment to a portfolio does not reduce the risk of the total portfolio more
than it costs in potential returns then further diversification would be over
diversification. Most experts believe that 12-25 individual investments are sufficient to
reduce unsystematic risk.

Therefore, it should be learnt that diversification of portfolio should be done in the right
manner. An over diversified portfolio can also hurt the investment returns. Therefore,
portfolio diversification should be managed properly. The optimum portfolio
diversification is to owe a number of individual investments large enough to nearly
eliminate unsystematic risk but small enough to concentrate on the best opportunities.
There are also many investors who concentrate their stocks and investments in one
company or industry leading to higher risk. Portfolio diversification is a balance
between concentration and over diversification. With a better understanding of what
portfolio diversification is, investors can build their risk management plan and establish
their optimal amount of concentration.
Asset Allocation in a Portfolio
While diversification involves spreading assets around to various investment types, the
general approach of an asset allocation strategy is to determine which asset class to
invest in based on the investor’s risk tolerance and return on the risk level. Asset
allocation establishes the framework of an investor’s portfolio and sets forth a plan of
specifically identifying where to invest one’s money. It is said that proper asset
allocation has the potential to increase investment results and lower the overall portfolio
volatility. It is to be noted that asset allocation is the most basic and important
component of investing.

Asset allocation is an investment portfolio technique which goes to balance different

types of risk and creates diversification by dividing tangible assets, current assets, and
movable assets, immovable assets among major categories such as cash, bonds, stocks,
real estate, options, futures and contracts of derivatives. Each type of assets has different
types and returns and risk, hence, each shall behave differently in over the different
periods of time. The amount in assets of an investor might have in stocks and bonds
which are based on two different factors. First the allocation is based on the expected
returns that an investor needs to meet their financial aims, and second, it is based on the
amount of investment, risk that a person can accept by knowing beta value.

A fruitful and successful allocation is one that achieves an investor’s financial

achievement (profit) without so much volatility that it causes the investors to make
different behavioral mistakes. Proper asset allocation is the key to all kinds of financial
empowerment. Even the highest-returns generating asset like equity funds can be of no
use unless the investor does prudent asset allocation. In asset allocation, investors seek
answers to questions such as where to invest, how to invest, how much to invest, etc. It
means that investors need to identify the assets classes and the proportion in which they
are holding these assets in their portfolio.

Asset allocation is important in two distinct ways. The first is from a portfolio design
standpoint. The theory assets that in any given period, some investment styles will be
winners and some will be losers, and this varies over time. The addition of investment
styles that perform differently than the rest of the portfolio (that is, have a low
correlation) can reduce overall portfolio volatility. This is because individual assets can
be volatile, but in a well-constructed portfolio, there will be other investments that
partially offset that volatility, both on the upside and downside, thus producing a more
stable return pattern.

The second reason asset allocation is important is because it helps investors in keeping
a long-term perspective and avoids knee-jerk reactions. Investors have a tendency to
chase the best-performing segments of the market and shun poor performing areas. Yet
it is difficult to guess what areas will continue to shine and what the next market leaders
will be. Asset allocation therefore, in its most basic form is the decision of how to
weight stocks, bonds and cash in a portfolio in a way that provides the potential for the
best investment return for the amount of risk investors are willing to accept.

Traditionally, financial planning models focused on expected return and neglected the
variability of outcomes that is associated with increased volatility. With the advent of
probability-based planning tools, investors can see the potential impact of accepting
more (or less) risk by selecting a different model. A portfolio with greater risk may
provide a greater chance for exceeding one’s goals, but it also increases the chance of
falling far short. When using an asset allocation approach to designing a portfolio, it is
important to not focus just on the expected return of that portfolio. The risk associated
with an increasing, or decreasing, portfolio return is just as important to the success of
an investment strategy.
Investment avenues for Investors
Investors have now a huge number of securities lined up for the investors to invest in.
It is always important to know about the investment avenues made available to the
investors so that the investor can choose to invest in those securities that are suitable
for the investors and help them achieve their financial needs and goals. Investors should
be aware of the investment avenues being offered to them by the market and other
investment alternatives.

Equity Shares
Equity shares represent ownership capital. Equity investments represent ownership in
a running company. By ownership, it means share in the profits and assets of the
company but generally, there are no fixed returns. It is considered as a risky investment
but at the same time, depending upon situation, it is a liquid investment due to the
presence of stock markets. As an equity shareholder, investors have an ownership stake
in the company. This is essential means that the investors have a residual interest in
income and wealth.
Perhaps the most romantic among various investment avenues, equity shares are further
bifurcated into blue chip shares, growth shares, income shares, cyclical shares,
speculative shares, etc. Investing in equity shares are preferred by those who like to
take risks. Equity shareholders are the owners of the company and therefore they have
a say in the decision making, etc. However, the investors have the disadvantage of
higher risk as compared to the preference shareholders and debenture holders. Their
returns depend upon how much profit the company earns.

Therefore, if the company is flourishing they earn higher returns, whereas, if the
company is not doing so well in its business, the investors will earn lesser returns or
even incur losses. Therefore, it should be known that investing in equity stocks and
shares can be rewarding, both personally and financially, but it does involve risk. The
ones that have the ability and willingness to take up such risks should invest more in
equity shares. But, at the same time, investors should also invest in other assets class in
order to avoid major losses that could incur through equity shares.

Investments in equities or stock of companies are done through stock market and hence
such investments are subject to market risk. Investors may enter into equity investments
directly by investing in shares of different companies or through diversified portfolios
of mutual funds (MFs). Staying invested in equities for a long term would fade the
impact of market risk and generate a return which is superior to all other asset classes.
As equities have the ability to beat inflation in the long run, they may be used for a long
run, they may be used for long term wealth creation. Equities are also tax efficient.
However, market risk affects the return directly in short term; therefore, investors
should avoid putting their funds in equity.

Mutual Funds
For the ones who have recently entered the market, mutual funds are something they
should start with. Instead of directly buying equity shares and/ or fixed income
instruments, investors can participate in various schemes floated by mutual funds
which, in turn, invest in equity shares and fixed income securities. Mutual funds can be
classified into equity schemes, debt schemes, balanced schemes, etc. For a new
investor, mutual funds offer a safer option to enter into the equity market. Mutual funds
are not only managed by professional fund managers who know their job of investing
in the right sectors at the right time, but mutual funds also offer a systematic investment
plan allowing fixed monthly investments rather than a lump sum investment in case of
equity markets. However, for the more advanced investors who know the fundamentals
and the market dynamics of any company and its growth prospects, investing in shares
of that company could directly lead to a better growth cycle compared to mutual funds.

Mutual funds have various schemes that help an investor, such as the systematic
investment scheme that helps investors to invest in smaller portions of fixed monthly
investments rather than investing a lump sum amount. This is a feasible option for those
who do not want to take huge risk. However, the ones who have the urge to earn high
returns maybe invest the whole amount in either mutual funds or into the market in
stocks and shares. But as it is said, there are two sides to a coin, just like there are certain
advantages and disadvantages of equity shares, while even mutual funds have certain
disadvantages. It is important to know and be aware of the various mistakes investors
make while investing in any security for that matter. Investors should be aware of the
frauds that take place while they invest in any security and should always stay away
from misleading rumors and information.

Mutual funds are subject to market risks, therefore it is very important for mutual funds
investors to read and be aware above all the terms and conditions mentioned in the
scheme, to avoid fraud or losses. Mutual funds help the investor to diversify his/her
portfolio. However, though the diversification helps in minimization of risk, these do
not result in maximization of returns to the investors. Therefore, the right skill,
knowledge and presence of mind are required while investing. For the ones who do not
have enough market knowledge, it is better to invest under professional guidance in
order to avoid make huge loses and enter into risky securities. Therefore, investing all
depends upon the factors mentioned above.

However, mutual funds and equity stocks, both, have their advantages and
disadvantages. It depends upon what suits the individual. There are multiple factors that
are to be considered such as age, ability to take up risk, time period of investment,
amount of investment, knowledge about the market, etc. Depending upon all these
factors an individual can select the kind of asset mix he/she that best suits his/her
interests. It is very essential for the investor to know how much of risk he/ she are
willing to take upon themselves. This is because risk is the main factor that leads people
into either profit or loss. By setting a perfect balance and mix of investments, investors
can flourish in their investments.
Debt funds
Another way through which one can earn returns is through investment in debt funds.
There are multiple types of debt funds such as debentures, bonds and other forms of
hybrid debt securities. However, bonds and debentures represent the majority of issued
debt capital. A bond is typically a loan that is secured by a specific physical asset.
Whereas, a debenture is a secured only by the issuer’s promise to pay the interest and
loan principal. Through such kind of debt investments, the investor gets assured of a
fixed or stable income.

This type of investment is the best option for an investor with low risk appetite. Debt
funds are an important instrument of investment and as an investor one should always
figure out what are the factors that make these funds relevant to invest. Debt funds are
an important component of a well-diversified portfolio as their returns are typically
more stable, that is less volatile, than that of equity funds. Thus, diversifying through
debt funds reduces the overall portfolio risk.

If one has a long-term goal that is to be achieved, debt funds are an ideal place to invest.
This is because debt funds are less volatile in comparison to equity funds, and one can
have predictable returns which help to plan and achieve the desired goal or objective.
Bonds and debentures represent long term debt instruments. The issuer of the bond
promises to pay a stipulated stream of cash flows. Bonds may be classified into
government bonds, saving bonds, government agency securities, PSU bonds,
debentures of private sector companies, preference shares, etc. The main reason why
one should invest in debt funds is the risk factor. Debt funds are less risky and are very
optimal for those who desire to have a fixed and stable income.
The myth is that the older generation prefers to invest in fixed income generated
investments; therefore, debt funds are best suited for the older generation. They are the
ones who try to use their money in the best possible way as they are closer to their
retirement, etc. and thus try to avoid taking huge risks. But though debt funds prove to
be very fruitful for many, some investors do not prefer to invest in debt funds. Debt
funds are less risky, but at the same time they provide lesser returns to the investor in
comparison to that of equity funds. Debt funds are also very complex to understand at
times, as there are many options to choose from while investing in debt funds and it
becomes difficult for an investor to understand the best options to select that fits their
interest the best.
Non-marketable securities
A good portion of financial assets are represented by non-marketable financial assets.
A non-marketable security, typically a debt security, that is difficult to buy or due to
the fact that they are not traded on any normal, major secondary market exchanges.
Such securities, if traded in any secondary market, are usually only bought and sold
through private transactions or in an over-the-counter (OTC) market. Nonmarketable
can be classified into bank deposits, post office deposits, company deposits, provident
fund deposits, etc.

Non-marketable securities are frequently sold at a discount to their face value at

maturity. The gain for the investor from these non-marketable securities is then the
difference between the purchase prices of the security and its face value amount. When
making an investment in securities it is vitally important to understand the difference
between marketable securities and non-marketable securities. If one is making an
investment in order to resell a particular product or security with an aim to realize a
profit, then investing in non-marketable securities would not be recommendable.

However, on the other hand, if an investor is investing for their own future and are not
interested in offering their investment into the open market then nonmarketable
securities might be a perfect investment offer for such investors. These securities are
not traded in the market and therefore it is suitable for investors who do not want to
invest their money into the market.

Money market securities

Money market is the organized exchange on which participants can lend and borrow
large sums of money for a period of one year or less. While it is an extremely efficient
arena for businesses, governments, banks and other large institutions to transact funds,
the money market also provides an important service to individuals who want to invest
smaller amounts while enjoying perhaps the best liquidity and safety found anywhere.
Individuals invest in the money market for much the same reason that a business or
government will lend or borrow funds in the money market: Sometimes having funds
does not coincide with the need for them.

The major attributes that will draw an investor to short-term money market instruments
are superior safety and liquidity. Money market instruments have maturities that range
from one day to one year, but they are most often three months or less. Because these
investments are associated with massive and actively traded secondary markets, you
can almost always sell them prior to maturity, albeit at the price of forgoing the interest
you would have gained by holding them until maturity. Most individual investors
participate in the money market with the assistance (and experience) of their financial
advisor, accountant or banking institution.
A large number of financial instruments have been created for the purposes of short-
term lending and borrowing. Many of these money market instruments are quite
specialized, and they are typically traded only by those with intimate knowledge of the
money market, such as banks and large financial institutions. Some examples of these
specialized instruments are federal funds, discount window, negotiable certificates of
deposit (NCDs), euro dollar time deposits, repurchase agreements, government-
sponsored enterprise securities, and shares in money market instruments, futures
contracts, futures options and swaps.

Aside from these specialized instruments on the money market are the investment
vehicles with which individual investors will be more familiar, such as short-term
investment pools (STIPs) and money market mutual funds, Treasury bills, short-term
municipal securities, commercial paper and bankers' acceptances. When an individual
investor builds a portfolio of financial instruments and securities, they typically allocate
a certain percentage of funds towards the safest and most liquid vehicle available: cash.
This cash component may sit in their investment account in purely liquid funds, just as
it would if deposited into a bank savings or checking account.

However, investors are much better off placing the cash component of their portfolios
into the money market, which offers interest income while still retaining the safety and
liquidity of cash. Many money market instruments are available to investors, most
simply through well-diversified money market mutual funds. Should investors be
willing to go it alone, there are other money market investment opportunities, most
notably in purchasing T-bills through Treasury Direct.

Derivatives
Derivatives are financial securities with a value that is reliant upon, or derived from, an
underlying asset or group of assets. It is a contract between two or more parties, and its
price is determined by fluctuations in the underlying asset. Common derivatives include
forward contracts, futures contracts, swaps, options, etc. There are also many
derivatives that can be used for risk management or for the purpose of speculation.
However, derivatives are difficult to value because they are based on the price of
another asset. It should to be taken into consideration that derivatives are good for those
investors who are looking out for investment opportunities that can pay off in a shorter
time frame.

If investors have a portfolio consisting of long term investments, such as stocks, etc.
and if such investors want to put their money to work, then derivatives is a good option
to invest in. The nature of derivatives essentially means that the opportunities for
trading this type of investment are limited only by the imagination. Derivatives can also
be a good way to add balance to your total portfolio, thereby spreading risk throughout
a variety of investments rather than in only a few. Making derivatives work requires
careful research and consideration just like any other investment opportunity. In short,
derivates trading can be an excellent way to either break into the trading market or
round out an existing portfolio. However, just like any other investment, investors
should do a proper research before investing into the derivatives market. Life Insurance
Policies

As the debate of whether investing in life insurance is a good idea or not continues till
date, one can surely come to the conclusion that there are more reasons why one should
do it instead of not investing if only one look around a bit. Investing in life insurance
can result in being one of the best and most important financial decisions that investors
can make. Life insurance comes down to the fact that it is a step taken to protect, care
and safeguard for the future. The first thing that can be thought of as the pros of life
insurance is the security for ones‟ family and loved ones that it offers.

This is certainly the most important aspect that concerns persons. With life insurance
policies investors are assured in their minds that there is enough security for their family
in uncertain situations. Be it a property loan, a personal loan, a credit loan or any auto
loan, the insurance policies that one buy will help repay these debts. Investors also get
the benefits of different investment options by the variety of policies, which help the
investors achieve those long-term goals. But investors should be careful to read and go
through the risk factors very well before signing up for a particular policy.
There are various kinds of insurance policies like the term insurance, which lets
investors have protection for a fixed term and the benefits are paid during the event of
one’s death. One of the many reasons why people prefer to invest in a life insurance is
because of its tax saving aspect. Irrespective of the plan that one has taken, investors
can save tax with the different insurance policies. Therefore, life insurance policies also
prove to be beneficial to the investors as it offers tax benefits to the investors. Therefore,
it is an instrument, which helps you invest for a long time and achieve your goals later
on. Therefore, it was very important for investors to understand the risk aspect and how
much risk they are willing to take while investing.

Real Estate
Another option open for investors is investment in real estate. For many people, real
estate is the easiest to understand investment because it is simple and straight-forward.
When one invests in real estate, the main aim should be to put money to work today in
order to make it grow so that one has more money in the future. For the bulk of the
investors the most important asset in their portfolio is a residential house. Real estate
buying can be really profitable to the investor, if the investor does a good research about
the price fluctuations, etc. There is always a possibility of making huge losses, running
in Lakh of money, if the dealing is not done efficiently.

In addition to a residential house, the more affluent investors are likely to be interested
in the few other types of real estate investments too such as agricultural land, semi urban
land, commercial property, a resort home, a second house, etc. Investors aim at making
enough profit/ returns to cover the risk that is taken, taxes that are paid, and the cost of
owning the real estate investment. Real estate investment can either be a commercial
estate, residential real estate, retail real estate, etc. each of these having its own benefits.
One of the major benefits of investing in real estate is the stable income it provides to
the investors. Investing in real estate is very beneficial as it provides investors with long
term financial security. It provides a steady income to the investor if put to proper use,
for example, given on rent, and thus provides financial security.

However, investing in real estate also has some cons, from high transaction cost to lack
of liquidity. Investment done at the right time after studying the market will help
investing in earning good rewards. Investors must learn how to find great deals, how to
evaluate real estate investment, and how to finance any properties the investor intends
to buy. Additionally, investors should treat their property as a business and nurture it as
it matures. It is likely not going to be totally passive up front, but as millions of
individuals throughout history have discovered, the payoff is well worth the journey.

But it is the same with all investment. Every investment has its advantages and
disadvantages. It all depends upon what kind of an investment portfolio the investor is
looking for, and what amount of risk is he/she willing to take up for that particular
investment. While some will want to invest in debt, some will go for investments in
equity funds. Few others will want to invest into mutual funds. The best way is to select
such a portfolio that will, despite the risk involved help to minimize the risk, if at all, it
cannot be eliminated completely. Investors are very fortunate as they have a vast range
of asset classes to choose from.

Precious Securities
Yet another investment option is investment in gold and other precious securities.
Investment in gold and other precious stones has been going on from ages. It is an age
of investment trend that is still being followed by a lot of investors and it has proved to
be fruitful for ample of investors. Any investor has to be aware about the different forms
of buying gold. It is to be known and understood that investment made in gold is not
generally going to help in achieving short term goals and desires. Investment in gold is
long term investment and does not give any current income to the investor. The only
exception to this is the dividend option it provides in the gold ETFs. If gold is held in
physical form, there is only of cash for the maintenance of lockers. Historically, gold
has been the perfect hedge for inflation.

But in terms of absolute returns has fared rather poorly giving returns above inflation.
Real estate and shares, however, beat gold squarely on the capital appreciation front. In
the short run, however, gold is a very strong bet compared to shares that are highly
volatile. The idea of gold investment is to use it at times when the markets are falling
and when the inflation is very high. Gold rates remain almost unaffected at the time of
inflation and therefore, one doesn’t have to suffer a loss when the inflation hits and even
when the currency rates go down in the global market. It is to be understood that gold
does not carry much risk (at least in India) as deflation is hardly seen in the real sense.
However, the real risk with buying gold is in the opportunity cost of investing in other
avenues that can actually give higher returns.
It is seen that gold scores the highest in terms of liquidity, compared to all other
investments. At any time of the day, an investor can convert gold into cash, making
gold an extremely liquid investment. Another benefit of investing in gold is that it is
much easier to buy gold than real estate or any other securities. It is a safe option for
the ones who want to start investing as the risk involved in gold investment is fairly
very low. To find out exactly, if this is a good idea to invest in gold lately, one must
consider the cons of it because one just doesn’t buy the pros, but also buys the cons and
thus, one should know what downsides he/she will have to face while investing in gold.

People make investments to arrange for a source of income for their postretirement life
or for their children. Gold investment is not the one made for this specific purpose as
one invests in gold once and sells the gold once, there is no continuous profit involved
that flows into the investors pocket. Therefore, gold probably is one of the best hard
assets but when it comes to investing in an income, it fails. Another drawback of
investing in gold is that the return rates of physical gold are never profitable if one
invests in the gold jewels. Also, it is difficult to store physical gold and there is a
possibility of theft and safety issues.

In the current scenario where there is quality money in the markets, portfolio
management is very essential as it helps investors to reap the best fruits through their
investments by helping the investors to diversify their portfolio and minimize risk while
aiming at maximizing returns. Investors should consider and evaluate their risk-taking
ability in order to choose such investments that will be suitable for their amount of risk
they can take. Investors have a vast range to products to choose from and it becomes a
task to understand which investments suit the investors‟ interest and needs. There
comes the task of portfolio managers and other financial advisors who help their clients
to invest in securities that are as per the investors‟ needs. Portfolio management proves
to be of great help as it tries to minimize risk in circumstances where mitigating risk
completely is not possible.

Cryptocurrency
Cryptocurrency is a digital or virtual form of currency that utilizes cryptography for
secure financial transactions, control the creation of new units, and verify the transfer
of assets. Unlike traditional currencies issued by governments, cryptocurrencies operate
on decentralized networks based on blockchain technology. This technology ensures
transparency, immutability, and security by recording all transactions across a
distributed network of computers. Bitcoin, introduced in 2009, was the first
decentralized cryptocurrency, and since then, numerous other cryptocurrencies, such as
Ethereum, Litecoin, and Ripple, have emerged. Cryptocurrencies offer benefits such as
borderless transactions, lower fees, and increased financial privacy. However, they also
face challenges such as regulatory uncertainty, volatility, and security risks. Despite
these challenges, the popularity and adoption of cryptocurrencies continue to grow,
with applications ranging from investment and remittances to decentralized finance and
non-fungible tokens (NFTs). As the cryptocurrency ecosystem evolves, ongoing
research and innovation are crucial for understanding its impact on finance, economics,
technology, and society.

Cryptocurrencies come in various forms, each with its own unique features and
purposes. Here are some of the main types:

1. Bitcoin (BTC): Bitcoin is the first and most well-known cryptocurrency, created by
an anonymous person or group of people using the pseudonym Satoshi Nakamoto in
2009. It operates on a decentralized peer-to-peer network and serves as a digital store
of value and medium of exchange.

2. Altcoins: Altcoins refer to any cryptocurrency other than Bitcoin. These coins often
seek to improve upon Bitcoin's limitations or offer different features. Examples include
Ethereum (ETH), which introduced smart contract functionality, and Litecoin (LTC),
known for faster transaction times.

3. Tokens: Tokens are a type of cryptocurrency that represent an asset or utility on a

blockchain. They can represent anything from a share in a company to access rights for
a specific platform. Tokens are often built on existing blockchain platforms like
Ethereum, utilizing its smart contract capabilities. Examples include ERC-20 tokens,
which comply with a standard on the Ethereum blockchain.

4. Stablecoins: Stablecoins are cryptocurrencies designed to minimize price volatility

by pegging their value to a stable asset like fiat currency (e.g., USD) or commodities
(e.g., gold). This stability makes them suitable for use in everyday transactions and as
a hedge against volatility in other cryptocurrencies. Examples include Tether (USDT)
and USD Coin (USDC).
5. Privacy Coins: Privacy coins prioritize anonymity and privacy in transactions. They
utilize various cryptographic techniques to obfuscate transaction details, making it
difficult to trace transactions back to their senders or receivers. Examples include
Monero (XMR) and Zcash (ZEC).

6. Central Bank Digital Currencies (CBDCs): CBDCs are digital currencies issued by
central banks, representing a digitized form of a country's fiat currency. Unlike
decentralized cryptocurrencies, CBDCs are centralized and regulated by governments.
Several countries are exploring or developing CBDCs as a digital counterpart to
physical cash.

These are just a few examples, and the cryptocurrency landscape continues to evolve
with new innovations and developments. Each type of cryptocurrency serves different
purposes and caters to different use cases within the broader digital economy.
 OBJECTIVE OF STUDY

Research objectives are set at the very start of a project to guide the research. Their
main role is to ensure you gain insights that are relevant and useful. The objective of
research project summarizes what is to be achieved by the study. The researcher
objectives are specific accomplishments the researcher hopes to achieves the study. It
includes obtaining answers to research questions or testing the research hypothesis.

Well-defined objectives of research are an essential component of successful research

engagement. If you want to drive all aspects of your research methodology such as data
collection, design, analysis and recommendation, you need to lay down the objectives
of research methodology. In other words, the objectives of research should address the
underlying purpose of investigation and analysis. It should outline the steps you’d take
to achieve desirable outcomes. Research objectives help you stay focused and adjust
your expectations as you progress. The objectives of research should be closely related
to the problem statement, giving way to specific and achievable goals.

Before conducting a market research, your research objectives needs to be defined.

Research objectives quite simply answer a simple question – Why are you conducting
this market research? Off course, that question does not have a simple answer. The
answer can go down in depth and become 10 more questions.

If the objective is too large, then you spend a lot of time on collecting information which
is ultimately not useful to you. If on the other hand, if the research objective is narrow,
then you do not get adequate information in one go. Thus, the challenge is to set the
right research objective.

Types of Research Objectives

1. General Objective.

2. Specific Objectives.

3. Immediate Objectives.

4. Ultimate Objective.
General Objective

The general objective of a study states what is expected to be achieved by the study

in general terms. For example, if the problem identified is the low utilization of Child
Welfare Clinics

(CWC), the general objective of the study could be:

● To identify the reasons for the low utilization of Child Welfare Clinics in order to
find solutions. Similarly, in a study on anemia in pregnancy, the general objective could
be stated as:

● To study the changes in the hemoglobin level with an increase in the duration of
pregnancy. Or in a study to examine the contribution of goat farming in poverty
alleviation, the general objective may be framed as follows:

● To assess the impact of investment in goat farming for poverty alleviation in rural
Bangladesh.

Specific Objectives

Given that we have rightly stated the general objectives, it is advisable to break it down
into several smaller, logically connected parts. These are normally referred to as
specific objectives.

Specific objectives should systematically address the various aspects of the problems
defined under the statement of the problem and the key factors that are assumed to
influence or cause the problems. They should specify what you will do in your study,
where this study will be done, and for what purpose.

If formulated properly, specific objectives will facilitate the development of the

research methodology and will help the researcher to orient the collection, analysis,
interpretation, and utilization of data.

Thus in the anemia survey, just cited above, the specific objectives could be

● To determine through history, the duration of pregnancy, parity and the last birth
interval of pregnant women in the study;
● To assess hemoglobin level of the pregnant women using Sahli’s method;

● To determine the changes in hemoglobin level with the duration of pregnancy,

controlling for birth and parity.

Immediate Objectives

In addition to general objective and specific objectives, a few studies, particularly

evaluative studies, attempt to specify immediate objectives. Immediate objective serves
to indicate the focus of the proposed research in behavioral terms.

The objective should specify the following points:

● Why are we going to do the study?

● Who will conduct the study?

● When will the study be conducted?

● What are we going to study?

● Whom will the study cover?

● How will the study be conducted?

The ‘why’ question addresses the rationale and objectives of the study.

The ‘whose’ question is designed to identify the individuals, firms, or organizations

responsible for implementing the study, while the ‘when’ question seeks to know the
study period.

The ‘what’ question addresses the issue of a statement of the problem, including the
key variables.

The ‘whom’ question seeks to answer the population to be studied. The ‘how’ question
seeks to know the methodology to be followed, including the research design and
sampling strategy to be employed.
Ultimate Objective

Most applied research studies have a statement of ultimate objective that focuses on
how the results will be used to motivate the program managers and policymakers for
implementing and executing the recommendations followed from the survey results.

In the anemia survey, the ultimate objective may be stated as follows:

It is expected that findings of the study will help in enhancing understanding of the
effect of pregnancy on hemoglobin levels of mothers and thereby guide the physicians
incorrect iron therapy for pregnant women during the different gestational periods. In
the child nutrition survey cited above, the ultimate objectives were to highlight issues
that policymakers and program managers need to address to improve the nutrition status
of children in the country.

IMPORTANCE OF OBJECTIVE

Well-crafted objectives provide clarity. They are specific about what will be achieved
as a result of the work, so that others can see what you are working towards, and so that
you can demonstrate achievement, by measuring and reporting on progress. They aid
better communication and provide focus for effort over time.

• Providing focus and direction

• Objectives give direction to the paper

The objectives in a study provide a clear direction. As soon as the researcher defines
the objectives, the scope is defined. On the basis of the objectives, further processes are
carried out including primary and secondary data collection, data analysis, drawing
interpretation and conclusion of the research. All these research processes are
dependent on the objectives and are carried out in accordance to it.

• Objectives help to avoid any diversion from the topic

Once the researcher starts gathering data for the research, especially the secondary data,
he/she comes across abundant data related to the research subject. The researcher often
gets blinded by the wide amount of data available on variety of sources and frequently
diverts from the core subject. The abundance of data brings in confusion as to which
data to be utilized for present research and which data should be discarded. The
objectives help the researcher to stick to the current research and avoid any diversion
from the research topic.

• Research objectives minimize wastage of resources

By preventing the researcher to deviate from the research topic, objectives minimize
the wastage of researcher’s time, money and energy. Objectives help the researcher to
concentrate on the current research. Wastage of the research resources is reduced with
clearly-defined objectives and hence, efficiency of the study is enhanced.

• Objectives ease the understanding of the research by the target audience

All research go in vain if the target audience i.e. the beneficiaries of the research fail to
understand it. The objectives help the target audience to clearly understand the purpose
of a particular research and it therefore eases understanding. Thus, objectives also make
research meaningful for the target audience.

Objectives of the study:

1. To know whether investors are risk takers or non-risk takers, that is whether the
individual investors are open to invest in risky securities.
2. To find out which investment avenues do investors prefer to invest in, and what are
their choices of funds.
3. To find out whether investors are knowledgeable enough to invest in the market by
themselves or do they prefer taking the guidance of financial advisers.
4. To understand whether an investor’s ability to take risks is directly related to his age.
It is important to know whether the risk factor and ability to take risk depends upon the
investors age.
5. To find out what are the inconveniences and difficulties investors face while making
investments
6. To find out how do investors manage their portfolio, that is, having more of equity
and less of debt or vice versa.
7. To find out whether investors are satisfied with the investments made.
 SCOPE OF THE STUDY

What Is Scope?

The extent of the area or subject matter that something deals with or to which it is
relevant.

In some literature, the scope of the study is also known as the delimitation of the study.
In this sense, they are the boundaries, a researcher, set on the study and can be said to
be within the researcher’s control Researchers must also be able to justifiably explain
what advantages the scope will have on the research and the output in terms of validity
and reliability. All these efforts are meant to frame the focus of research both in the
substantive area or limits of the topic of inquiry and the research areas or the study
settings and sample. Therefore, the delimitation of the study entails the choice of
research questions researchers’ ask, the details of research objectives, the theoretical
position(s) researchers choose to adopt and the population relevant for the research The
scope is a very important part of a research endeavor and must not be in any way seen
to be just one of the less important sections of reports or proposals. It is also a very
interesting and technically useful section. The scope of the study is a section in a
research proposal/thesis/report where the researcher engages in the discussion of the
research areas, research questions, objectives, population and study area covered
(which also implies those not covered) in the study to show that you know where your
research fits in its scholarly community and that you know what you can accomplish.
In this regard, the scope of the study is a detailed exposition of the study to ensure that
the breadth, depth and detail of the study are compatible and sufficient to address the
stated study objectives within available time in manners that will optimize available
resources.

Identifying the scope of the project: One of the first tasks you need to do when
completing research is to identify the scope of the project. When identifying the scope,
you need to address not only the problem or issue that you want to study but the
population you want to examine.

The study of portfolio management and investment decisions is a very vast concept.
The study mainly focuses on how to design the ideal portfolio in order to maximize
returns while trying to minimize risk. The right amount of funds required in order to
obtain and achieve the aims and desired goals of investors is also necessary to be taken
into account. This research is restricted to the study investments in stocks and debt funds
and also in mutual funds. It discusses how investors can benefit from their investments
and which types of investment avenues are available for investing. The study of
portfolio management is studied in detail and the research also gives importance to the
concept of diversification.

The study explains how diversification of various investments will help investors to
reduce risk, as eliminating risk completely is inevitable. The study shows why
diversification is important and how will it benefit the investors in the long run as well
as in the short run. Diversification helps investors to diversify their risk, helping the
investors incur lesser losses in comparison to that when diversification is not done. By
considering the concept of diversification while investing, investors can put their
investments to better use.

The study is conducted for the individual investors in and around the city of Mumbai,
and it consists of investors at different ages. This will help to understand what the
investors expect at different levels of age group. The study takes into account all the
factors that are necessary to be given importance while investing, for example, age of
the investor, amount of funds available for investment, preference and choice of funds,
time period for investing, and many more. The main aim of the research is to know
what investors expect from their portfolio and what their definition of an ideal portfolio
is. The study focuses on how to enhance one’s portfolio through the help of one’s
personal knowledge or through the guidance of financial advisors and agents.

The research also suggests why portfolio management is essential in the modern world.
It shows how portfolio management has adapted from the traditional approach to the
modern approach of portfolio management and how investors have the scope and
opportunity to choose from huge lines of securities. While the traditional method
focused on minimizing risk of one security or of multiple securities, the modern study
aims that diversifying the investors‟ risk so as to help them reap better fruits from their
investments.
 LIMITATIONS

Limitation of study is not in any way negative issues of the study contrary to popular
misconceptions among students, researchers and development partners. Limitations are
also not necessarily problems/issues that reduce the usefulness and validity of the
research. The ultimate impacts of limitations on any research will depend on the
researcher’s expertise, pro activeness, experience and nature of the study. A limitation
is therefore not necessarily anything/everything inimical and negative about a project.
As opposed to delimitation/scope of the study, limitation/this section of research
reporting or project writing deals with the issues that are sometimes beyond the control
of researchers but affects the methodology/outcome of the research in some ways. They
can also be unforeseen issues the research could/would have covered but could not.
Basically, according to Price, research limitations are the characteristics inherent in the
research methodology or design that changes the meaning and interpretation of the
research results. That is, they are the constraints on generalizability, applications to
practice, and/or utility of findings that are the result of how a researcher initially chose
to design the study and/or the method used to establish internal and external validity.

Limitations of the study are issues and challenges that researchers face during the study
that may influence or impact the results and interpretations of those results. According
to the study, limitations are factors, usually beyond the researcher’s control, that may
affect the results of the study or how the results are interpreted. All studies, regardless
of how well-planned or well-conducted they are, have one limit or another. This limit
can be on the issues of the theoretical or methodological choice for the study, or in
terms of problems faced during the process of data collection. For example, a researcher
might adopt the convenience sampling method instead of a systematic technique due to
some unavoidable and genuine reasons; s/he might be unable to get hold of some
information s/he needs for the study from either government agencies or an
organization, or there might be difficulties in arranging interview sessions with some
respondents that are central to the study.

These difficulties or limitations are not the researcher’s fault and they may only remove
from the credibility of the research if they are not duly reported or handle. It is important
to note that researchers must be able to build and develop capacities to the extent that
they can professionally manage their limitations of the study to the extent that they do
not implicate and limit the validity and reliability of studies. Since limitations may be
unforeseen and inevitable in many instances, the researcher must manage and strategize
to limit or eliminate the negative implications of limitations. This is what will ultimately
determine the impact of limitations on the research. A researcher should not just resign
to fate when they confront limitations. They must brace up and creatively manage the
limitations. There are always ways around limitations. This is what we call Limitation
Management in Social Research. Of necessity, a researcher must be, generally,
significantly experienced, proactive, able to manage situations and resources, be a
leader and be a reporter. All these characteristics must come to bear when research is
involved, and particularly when imitations are involved.

IMPORTANCE OF THE LIMITATIONS:

ALWAYS ACKNOWLEDGE A STUDY’S LIMITATION.

It is far better that you identify and acknowledge your study’s limitations than to have
them pointed out by your professor and have your grade lowered because you appeared
to have ignored them.

KEEP IN MIND THAT ACKNOWLEDGEMENT OF STUDY’S LIMITATION IS

AN OPPORTUNITY TO MAKE SUGESSTIONS FOR FURTHER RESEARCH.

If you do connect your study's limitations to suggestions for further research, be sure to
explain the ways in which these unanswered questions may become more focused
because of your study.

ACKNOWLEDGEMENT OF A STUDY’S LIMITATIONS ALSO PROVIDES YOU

WITH AN OPPORTUNITY

To demonstrate that you have thought critically about the research problem, understood
the relevant literature published about it, and correctly assessed the methods chosen for
studying the problem. A key objective of the research process is not only discovering
new knowledge but to also confront assumptions and explore what we don't know.

CLAMINING LIMITATIONS IS A SUBJECTIVE PROCESS BECAUSE YOU

MUST EVALUATE THE IMPACT OF THOSE LIMITATIONS.
Don't just list key weaknesses and the magnitude of a study's limitations. To do so
diminishes the validity of your research because it leaves the reader wondering whether,
or in what ways, limitation(s) in your study may have impacted the results and
conclusions. Limitations require a critical, overall appraisal and interpretation of their
impact. You should answer the question: do these problems with errors, methods,
validity, etc. eventually matter and, if so, to what extend?.

LIMITATION OF THE STUDY

Collection of data is always a tedious task. There were a number of constraints and
difficulties faced by me during the collection of data for this project. They can enlist as
follows:

• Some of the persons were not so responsive.

• Possibility of error in data collection because many of investors may have not
given actual answers of my questionnaire
• Sample size is limited to 100 people
• Size may not adequately represent the whole market.
• The study of portfolio management and investment planning is a vast concept
and the time period is limited for collection of data.

• The study of portfolio management is a huge concept; however, all the

investment avenues are not taken into account. Only investments in equity,
debt and mutual funds are given importance. The study does not focus on
investments made in real estates, gold, etc.

• Since the study is restricted to the place and age group of investors it gets
difficult to get respondents for the study.
• The research was carried out in a small span of time, wherein research study
couldn’t be widen.
• The geographical area are covered was only Mumbai, the answer of the survey
cannot be considered for other cities as it may vary from city to city.
 SIGNIFANCE OF THE STUDY
Making the right investment decisions is important in order to not incur a huge loss of
money due to lack of knowledge about the investment avenues and market
conditions. Therefore, the study will help investors to understand the importance of
managing their portfolio. Investors should use their personal knowledge if they have
sufficient knowledge about the markets to invest or else take the advice of financial
advisors and agents. Investment in today’s world is very essential as the income
earned by doing a job is just not sufficient to provide and finance all the needs of an
individual. Therefore, investment in the right place that suits the investor the best
should be taken note of. For the ones who are willing to up risks should invest in
equity funds as it will ensure them good amount of returns if they invest at the right
time. While those who are restricted to taking risk, should invest in debt funds or
fixed income generating securities.

It is always better to save and invest at an early age, as the ones who invest while
their young have a longer time period of putting their savings to use. They have more
scope and opportunity to put grow their money. However, it is never late to start
investing. Investing can always benefit both the older as well as the younger
generation of investors as it is always better to put money to use rather than just
storing the money and not making efforts to earn some revenue on it. Investing
always involves risks; however, the right mix of investments will help investors to
minimize their risk, though eliminating risk completely is inevitable. Therefore, while
investing investors should always make a note to invest in different line of products in
order to diversify the risk that is involved in particular securities.
 HYPOTHESIS
Portfolio management is all about having a mix of investments in order to minimize
risk by diversifying the risk across different investments while trying to maximize the
returns. It is necessary to understand and study the perspective of different investors
from the younger generation to the older generation. Therefore, for better analysis of
the study it is important to assume the design a hypothesis and later test it to check
whether the results stand true to the hypothesis or not. Hypothesis means to assume
situation before doing a proper study on the subject.
Hypothesis 1:
For the purpose of the research, a prediction is made, that is the younger generation is
more into risky securities. Hypothesis is necessary while conducting a research. It helps
to analyze whether what one believes is actually true or not. The investors of this era
are very much aware of the risks and returns an investment will provide them; therefore,
they take every step very carefully. Therefore, the hypothesis is that the younger lot of
investors invests in more risky securities because they have more income at their
disposal, however, the older generation of investors are closer to their retirement, and
therefore invest in less risky or risk-free securities.

Hypothesis 2:
Secondly, out of the few facts known about portfolio management and investment
pattern of individual investors, it is observed that investors prefer to invest in equity if
given a choice. Therefore, this forms the second hypothesis for the study, and with the
help of surveys and questionnaires it will be easier to know what the investors desire.
 2. RESEARCH AND METHODOLOGY

Research

The word ‘Research’ is derived from the French word ‘Researcher’ meaning to search
back. Broadly researcher refers to a search for knowledge. Research is an attempt to
find answer to problems both theoretical and practical, through the application of
scientific methods.

Research motivates a person to undertake critical evaluation and thinking. “Research is

an inquiry into the nature of, the reason for, and the consequences of any particular set
of circumstances, whether they are experimentally controlled or recorded or recorded
as they take place.” Research is an organized effort.

Research is a continuous process. It helps to obtain knowledge about any natural or

human phenomena. Research plays two important roles firstly it adds to existing
knowledge and secondly it helps to solve many complex problems. Research involves
blending of an enormous range of skills and activities.

Research methodology

Research methodology is a systematic way to solve a problem. It is a science of studying

how research is to be carried out. Essentially, the procedures by which researchers go
about their work of describing, explaining and predicting phenomena are called
research methodology. It is also defined as the study of methods by which knowledge
is gained. Its aim is to give the work plan of research.

Research Design

Research design is a logical and systematic outline of research project prepared for
directing, guiding and controlling a research work. It indicates methods and procedures
for collecting necessary information/ data useful for solving the marketing problem.
Research design acts as a board line of the research work. It means to prepare detailed
plan and procedures for the conduct of the research project. It is like preparing a master
plan/ blue print for the conduct of formal investigation. It is like road map which enables
the researcher to conduct various researches activities for orderly completion of
research project.
The design of a research topic explains the type of research

(experimental, survey, correlational, semi-experimental, review) and also its sub-type

(experimental design, research problem, and descriptive case-study).

The type of research problem an organization is facing will determine the research
design and not vice-versa. The design phase of a study determines which tools to use
and how they are used.

A research design is considered as the frame work or plan for a study that guides as
well as helps the data collection and analysis of data. The research design maybe
exploratory, descriptive and experimental for the present study.

Data

Data are facts, figure and other relevant material useful for the research purpose. Data
collection means collecting required data from different sources. Such sources include
field survey, observation method, interview method, statistical data published by
government departments/agencies and so on. It is a costly and time-consuming process
and needs to be completed properly. It is already noted that data are absolutely
necessary is business research. Data provide information for drawing definite
conclusion there are types of data used in the business research process. The types are:

A. Primary Data

A primary data source is an original data source, that is, one in which the data are
collected first hand by the researcher for a specific research purpose or project. Primary
data can be collected through various ways. However most common method is surveys
interviews and experiments.

Survey method through Questionnaire

Primary data for marketing research is collected through survey method. Here, direct
communication with consumers is established and information is collected for from
them through questionnaire. The information is collected through survey method is
direct or first-hand information and is reliable and accurate. Survey method of data
collection is effective and reliable. Field surveys are collected extensively for the
collection of primary data. Personal interview, telephone interview, E-mail and internet
surveys are arranged in field survey method. A survey consists of gathering data by
interviewing limited people. The survey can be census survey or sample survey. In this
survey I used internet survey. Internet surveys refer to surveys that sample respondents
via the Internet, gather data from respondents via the Internet, or both. Using the
Internet to conduct survey research provides a great many opportunities and a great
many challenges to researchers. I prepare questionnaire on google form basis. And also
I used social media survey. Social media survey questions template is designed to
collect information regarding the social media websites and what are the most preferred
activities a person would like to carry out on social media. This sample survey template
consists of questions that gather information about people’s social media usage. This
questionnaire is designed by a team of experts after carefully calibrating the attributes
and personalities of people. Social media like whatsapp, facebook, instagram, twitter,
etc. So I shared google form in whatsapp messengers and status. And I get speedily in
respondents.

B. Secondary data

Secondary data are easily available in census reports and other reports and publication
of banks, financial institutions and so on. Secondary data are available from internal
sources (old records of the company, sales invoices, financial records, etc) and external

sources (trade journals, publication of trade associations, banks, financial institutions

and so on). A researcher can use secondary data to support primary data collected for
research purpose. It is desirable to determine minutely the quality of the secondary data
before using it in the research project.

Sampling procedure:

When you conduct research about a group of people, it’s rarely possible to collect data
from every person in that group. Instead, you select a sample. The sample is the group
of individuals who will actually participate in the research. To draw valid conclusions
from your results, you have to carefully decide how you will select a sample that is
representative of the group as a whole. There are two types of sampling methods:

● Probability sampling involves random selection, allowing you to make strong

statistical inferences about the whole group.

● Non-probability sampling involves non-random selection based on convenience or

other criteria, allowing you to easily collect data.

The sample was selected from various different people of different age group. It was
also collected through Google forms which consisted different questions that helped us
to know their preferences and their view point. The data has been analyzed by using
mathematical/Statistical tool.

Sample Size:

Selecting the right sample size is very essential in order to get the desired results from
the respondents. If the sample size is small it gets difficult to make conclusions,
therefore the small size should be such that will help to get an accurate result. Therefore,
for the study a sample size of 50 respondents is taken into consideration. The sample
size can exceed 50 respondents for more accuracy if desired. The sample size is divided
into three age groups, varying from the ages of 18 years to 60 years. First age group
will consist of the younger generation of investors, that is, 18 years to 25 years of age.
The second age group is the middle ages investors consisting between the ages of 26
years to 45 years. And finally, the last age group is made up of the older generation of
investors, between the age group of 46 years to 60 years.

Sample design:

A sample design is the framework, or road map, that serves as the basis for the selection
of a survey sample and affects many other important aspects of a survey as well. The
sample design provides the basic plan and methodology for selecting the sample. A
sample design can be simple or complex. Data has been presented with the help of bar
graph, pie charts, line graphs etc.
 3. REVIEW OF LITERATURE

A literature review is an evaluation report of information found in the literature related

to your selected area of study. The review should describe, summarize, evaluate and
clarify the literature. The literature review should give a theoretical base for the research
and help the researcher to determine the nature of the study. A literature review is
conducted to know the past studies conducted by various researchers on portfolio
management and investment management of individual investors by going through the
study conducted by the researchers and reviewing the research papers, articles and
books. Various researches, books and articles are written and conducted on the study of
portfolio management and on how to enhance one’s portfolio. Doing a careful and
thorough literature review is essential while conducting a study or research at any level.
It is a basic homework that is assumed to have been done vigilantly, and a given fact in
all research papers. It is not only surveys what research has been done and conducted
in the past on the study, but it also appraises, encapsulates, compares and contrasts, and
correlates various scholarly books, research articles, and other relevant sources that are
directly related to the current study or research. A literature review in any field is
essential as it offers a comprehensive and recapitulation on the given scholarship from
the past to the present, giving the reader a sense of focus as to which direction the study
has headed.

➢ The Four Pillars of Investing: Lessons for Building a Winning Portfolio By William
Bernstein (2002)
With relatively little effort, you can design and assemble an investment portfolio that,
because of its wide diversification and minimal expenses, will prove superior to the
most professionally managed accounts. Great intelligence and good luck are not
required. This down-to-earth book lays out in easy-to-understand prose the four
essential topics that every investor must master: the relationship of risk and reward,
the history of the market, the psychology of the investor and the market, and the folly
of taking financial advice from investment salespeople. The author of the book pulls
back the curtain to reveal what really goes on in today’s financial industry as the
author outlines a simple program for building wealth while controlling risk.
Straightforward in its presentation and generous in its real-life examples,
“The Four Pillars of Investing” presents a discussion of:
• The art and science of mixing different asset classes into an effective blend.
• The dangers of actively picking stocks, as opposed to investing in the whole market.
• Behavioural finance and how state of mind can adversely affect decision making.

The first pillar of the book states that when one invests in stocks, bonds or for that
matter real estate or any other security or capital asset, one is mainly rewarded to
exposure of one thing, and that is risk. One can learn just how to measure that risk and
explore the interplay of risk to get investment returns. One is certainly not rewarded
for picking the best performing stocks or any other securities or best financial
advisors, says the author, but the biggest risk of all is failing to diversify properly. It
is the behaviour of the portfolio as a whole and not the assets in it that matters most.

The science of mixing different asset classes into the right blend is called a portfolio
says the author. Pillar two is history of the financial market. A study of previous many
years will at least give investors fighting chance when asset prices become certainly
expensive and risky. An understanding of financial history provides an additional
dimension of expertise. It is important to understand the background of certain
securities and that market movements in order to earn returns. Studying the behaviour
of the market and the past history will help investors to understand how the market
functions more efficiently.
The third pillar is psychology, most it is commonly known as human nature. The
author states in this section the most common behavioural mistakes that investors
commit while investing in the market. Investors tend to get driven away by securities
with low pay off in order to avoid risk but do not see that the investment tends to give
much lower returns than other securities. Some of the common mistakes investors
make are that they tend to become grossly over confident, at times systematically pay
too much for certain classes of stocks, trade too much at great costs, regularly make
irrational buy and sell decisions.

Pillar four is business. The author believes that the mutual fund and stock brokers are
just there for the purpose to making money out of the services they provide, while
actually can be dealt with by investors themselves. The author feels that they are just
the money makers and investors tend to incur additional expenses while handing over
their assets to them. He finally states that once an investor learns about these four
pillars well enough, investors will tend to have success from their investments.
Investing is not a destination. Investing is a journey, and along the way are
stockbrokers, journalists, and mutual fund companies whose interests are
diametrically opposed to that of the investor.

More relevant today than ever, “The Four Pillars of Investing” shows one how to
determine one’s own financial direction and assemble an investment program with the
sole goal of building long-term wealth for the investor and his/ her family. The author
mainly focuses on how to be aware of the nature of the investment terrain. The author
gives investors the tools the investors need to construct top-returning portfolios,
without the help of a financial advisor, in a relaxed and nonthreatening manner.

Personal portfolio management (under project management services) By

Sushant

A personal portfolio management comprises of the management of all the investments

and securities held by an investor. The procedure of managing all the securities and
assets is very complicated and thus, many big investors take the services of portfolio
managers that assist in managing their portfolios. The personal portfolio managers
utilize their skills and market knowledge and take help of portfolio management soft-
wares for managing the investor’s portfolio. The planning phase of portfolio
management involves planning like any other business planning where investor has
to determine his/her investment objectives and goals. It helps the investors in
providing a clear vision of his goals and set of requirements. The planning also helps
the investors in selecting efficient portfolio investment over others.

The determination of the investment objectives is not restricted to deciding the amount
of profit one would like to make after investments. Investors should also consider
about various other factors such as time and liquidity factors. It is to be noted that,
investors should also consider the amount of risk he/she can bear and willing to take
up while investing. There are various possible scenarios like inflation, market
economy or changes in law; that should be taken into consideration during the
planning phase. The investors should realize that the returns obtained may differ from
the expected risks and returns therefore all the factors that can lead to uncertainty
should be taken into account.
Once a decision is made on the basis of expected risk & return, time frame, investment
objectives and other factors, other step involves the implementation of selected
strategy. Investors should go for the selected securities and follows the diversification
rule while implementing the investment strategy. The diversification of the securities
and investment in securities helps in minimizing the losses and reduces the risk in
times of financial crisis. To achieve diversification, investors can either select local
market or select even the global markets.
The writer of this article states that investors should keep a constant check on the
market to analysis and evaluating the performance of portfolio in changing conditions
of the dynamic market. As an investor you should make constant modifications in
your portfolio by selling overweight securities and purchasing underweight securities.
It is a challenging task to make all the decisions based on the market fluctuations.
With the passage of time, investor’s experience can grow and he/she can learn
managing the personal portfolio with ease.

All About Asset Allocation, Second Edition Paperback By Richard Ferri (June
2010)

The author of the book states, when it comes to investing for the future, there’s only
one sure bet, that is, Asset Allocation. Asset allocation is the rigorous implementation
of an investment strategy that attempts at balancing the risks involved in a portfolio
versus the returns it gives by adjusting the percentage of each asset in an investment
portfolio according to the investors‟ risk tolerance, goals and the overall investment
time frame of the investors. Richard Ferri, in his book on „All about Asset Allocation,
clearly focuses on the given points:
• Implement a smart asset allocation strategy.
• Diversify your investments with stocks, bonds, real estate, and other classes.
• Change your allocation and lock in gains.

Trying to outwit the market is a bad gamble, says the author. Richard Ferri states that
if one is serious about investing for the long run, he/she will have to take a nononsense,
businesslike approach towards the portfolio. „All About Asset Allocation‟ offers
advice that is both prudent and practical. The author emphasizes on this statement -
keep it simple, diversify, and, above all, keep your expenses low. He empathizes how
diversification will help in enhancing one’s portfolio.
Investment Analysis and Portfolio Management - By Prasanna Chandra (April
2010)

The author, Prasanna Chandra states that the two key aspects of any investment are
time and risk. She also states that as an investor one has a lot of investment avenues
to choose from and that are made available to the investors. For evaluating and
investment avenues, investors must keep in mind certain attributes relating to
investment. Investors should focus and pay heed to the rate of return, the risk involved,
marketability of the investment, tax shield provided by the investment and finally the
convenience factor. The author stresses on these factors and says that while investing
in any kind of security investors should dig into such factors and know what is best
and what suits their needs while making investment decisions. In her book, the author
Prasanna also mentions the various steps involved to manage the portfolio.
Specification of investment objectives and the constraints have to be taken care of.
The right choice of asset mix should be selected that best suits the investors‟ needs
based on various factors such as time horizon, maturity period, safety of principal, etc.
She also states that the right portfolio strategy should be selected in order to enhance
one’s portfolio.

Selecting the right set of securities plays an important role in the portfolio
management process, as the securities should be such that suits the investors needs
and does not prove to be a burden on the investor. It is to be noted that, apart from the
above steps involved, the portfolio execution process is essential. The portfolio should
be executed well enough to help investors yield good returns and rewards. Finally, the
portfolio revision and evaluation step plays an important role too. The investor should
evaluate the portfolio to have a check on the asset mix and to see if the investments
are shedding good returns.
However, the author also states that to investors are prone to various errors while
managing their investments. In order to enhance one’s portfolio investors can also
take assistance from financial advisors and professionals. Prasanna Chandra also
mentions in this book few qualities that help investors in succeeding in their
investments. Contrary thinking, patience, composure, flexibility to adapt changes, and
decisiveness, she stresses, are some important qualities in order to succeed in the game
of investing. Therefore, investors should keep all these factors in mind while they plan
their investments and decide on the right and apt portfolio that suits their needs.
Construction and Management of one’s investment portfolio in 4 simple steps.
By Rohan Chinchwadkar (November 2018)
Managing a complex investment portfolio can be challenging for individual investors,
this is especially if financial planning is not done in a systematic manner. Many a
times, investors focus too much on unnecessary questions and end up with a portfolio
that does not satisfy the important financial needs of the investors. Firstly, the investor
should be aware of the risk ability he/she has. For this purpose, the investor must first
construct a policy statement, says the writer. The policy statement specifies the
amount of risk investors are willing to take. A well-defined policy statement also helps
investors to set a benchmark for their portfolio evaluation in the future.

Second thing to keep in mind is the investment strategy that should be used while
investing. It includes assessing the external financial and economic condition and
developing a point of view about the future. The above assessment of external
financial and economic conditions along with the policy statement constructed will
together help the investor to plan and strategize for the investment. Since the market
conditions undergo and witness significant changes over a period of time, the market
needs to be monitored and studied and similarly appropriate changes have to be made
in the portfolio to reflect future expectations. The investment strategy stage also helps
the investors in setting realistic investment goals and return expectations.

This third step of investment portfolio management according to the writer involves
the construction of portfolio by implementing the investment strategy and by deciding
how to allocate capital and money of the investors across geographies, asset classes
(like equity, debt, real estate and gold) and securities (stock, bonds, etc.). The main
portfolio construction is to meet the needs of the investor by taking the minimum
possible risk. Different approaches can be used by investors and portfolio managers
to construct portfolios. The writer states that investors can focus on the theory of only
focusing on risk and return characteristics of various securities. The approach
recommends a highly diversified portfolio because it believes that the markets are
efficient and it is difficult for investors to find and select a „winner‟ stock. However,
for emerging markets those have significant market inefficiencies, involves the
processes of macroeconomic analysis, industry analysis and company analysis (along
with stock valuation).
By shunning equity investments, you deprive yourself of a legitimate way to grow
your wealth – By Uma Shashikant (March 2019)

The article mainly suggests why one should invest in equity funds, and what are the
benefits invest deprive when they do not invest in equity. The writer is quite equipped
by the fact that not many investors like investing in equity. Some of the investors see
investment in equity as a zero-sum game, and therefore, wasteful. While some even
equate it with gambling, there are some who simply love it, even if they might not
understand it well. The writer believes that mindless trading does not make anyone
rich. Shunning equity as a gamble also does not help, as it shuts one‟s wealth from
multiplying. Therefore, an ordinary investor should keep the following things in mind
while investing in equity funds.

Firstly, to invest in equity is to invest in the future of a business enterprise. Despite

all pretences of expertise, no one can really predict and tell in advance which business
will succeed and which will fail. One should like dealing and gain interest in dealing
with the unknown without getting stressed about it. Secondly, there are multiple
stories investors hear about how people buy stock for a pittance and now sit with
millions, are very one sided. It is easy to look track how brilliantly a stock has moved
over the years but an actual investor in the stock will exactly know how bumpy the
ride is. It is essential to understand that investors should be aware and have a clear
idea about the investments they enter into.

Third thing to keep in mind is that there is no easy way to pick a stock. The ones who
have spent their lives analyzing stocks have developed the expertise to spot the
warning signs. They also might not be too sure, but they have experience for guidance.
Yet, investors might know that they could go wrong, and therefore, are usually silent.
It is necessary to understand that one should discard all tips that are dished out free.
Fourth, the decision to buy a stock is a tough one, for sure. There are several listed
stocks to choose from, and no one knows which a multi-bagger will be. In a formal
investment set up, the specific reasons why an investment or stock is bought is written
down. The writer says that this is a good practice to do the above, do that the
performance of the stock and investment is tracked. Buying of an investment must be
subject to a discipline and the investor should know and keep in mind the purpose of
buying the stock.
Fifth, an ordinary investor is disadvantaged with respect to access of information and
its analysis. A broking house hires and pays for databases, research, qualified
manpower and tracks stock. A mutual fund is able to hire brokers, apart from in-house
expertise in analysis, research, etc. Individual investors have to rely on public scheme,
available information and their own homework. Investors should be prepared for
intensive homework and research. Sixth, money is not made on single bets. Successful
entrepreneurs who set up world changing businesses are the only exception to this
rule. Most of the investors are not courageous enough to stake all in single business.
All investors invest in many stocks and that is exactly how it should be. Seventh, when
investors are uncertain about the future and one buys based on incomplete current
information and when that does not work out, investors should accept their mistakes
and cut down on losses. Money is made in equity investing not from stock picking but
from recognizing that the investment thesis was wrong.

A diversified portfolio of stock, selected for the potential of the investor but replaced
when it does not work out for the investor will deliver the growth investor is seeking.
Investing in an equity mutual fund is an efficient way to invest in equity. Investing is
an index ETF, is both efficient and cheap. Investing by oneself is thrilling but fraught
with mistake as one climbs the learning curve. Investors should choose their pick but
do select equity.
Equity investing offers investors a fair, democratic and efficient opportunity to take
part in the success of a company. One must spend their energy on putting down their
process for participation. Investors should focus on diversifying their portfolio and
should always study the market, either by themselves or through the help and guidance
of financial advisors and professionals. Investors should choose the right mix of
investments but should also choose a portfolio that includes equity investments. The
writer stresses on the statement that shunning away equity investments will not help
an investor in growing their wealth.
Debt funds will give investors the flexibility to withdraw money at any time. By
Lakshmi Narayanan (February 2019)

Debt funds are the investments that provide fixed income. The writer says that it is
important to plan one’s life post-retirement to retain financial independence and for a
comfortable life even when one does not earn an income through their job. It is
essential and good to have clarity on how much money one needs and requires at
different points in time, once one reaches retirement or is living their retired life. Just
like the previous article mentioned about investment in equity funds, the writer of this
article also believes that as much as debt funds are beneficial to the investor at their
retirement age, equity funds should also be a part of one’s portfolio.

Debt funds are very flexible and they provide investors with the benefit of withdrawal
at any point of time. This is mainly because debt funds are open ended funds and have
no exit load on them. But the writer says that one should also consider parking 20% -
25% of their money in equity mutual funds and the rest in debt funds. Returns on
equity mutual funds can definitely be uncertain due to volatility, but considering a
time horizon of investing for a longer period, equities is one of the best options to
invest in, in order to bet the inflation rate and will help investors in growing their
money. Investors while considering investing in equity should set aside money to
invest in debt as well. If 20% - 25% of money is invested in equity the balance 75% -
80% should be invested in debt funds. By doing this, investors can be assured of a
fixed income when then invest in debt funds, even if they do not benefit from their
equity investments. But one can surely benefit from their equity investments, if they
are well versed with their market and do not tend to make hasty decisions.

Therefore, the overall portfolio of any investor should include a mix of equity
investments as well as debt investments, while a small sum of amount can be parked
in fixed deposits as an emergency corpus. The author believes that an investor can
benefit from their portfolio when they have the right mix of equity and debt funds in
the investment portfolio of the investors. It is not always the portfolio that works out,
but it is the investor that has to make the portfolio work for him/her but updating their
portfolio depending on what the market conditions demand.
 4. DATA ANALYSIS AND INTERPRETATION

The concept of portfolio management was made known to the world in the early 1950s,
however in the 1930s there was a time when people had portfolios, but their perception
of a portfolio was very different than what it is now. Firstly, it is necessary to understand
why portfolio management is essential. If an investor does not have more than one
security then it cannot be named as a portfolio. The risk involved in holding on to just
one security is more in comparison to having more than two to three securities lined up
in a portfolio. This is because if that one security, which one has invested in, does not
provide good returns or leads to huge losses for the investor, the investor will not have
any other security to back up that loss. But if the investor invests in more than two
securities, in case one investment does not give the desired returns, the investor will
still not make huge losses because the investor will receive income from the other
investments.

Therefore, it is necessary to have a portfolio of investments, and more importantly, it is

essential to manage the portfolio correctly, in order to maximize returns while aiming
at minimizing risks. For better understanding of the study, a survey was conducted to
understand what the preferences of the investors in Mumbai city are. The survey has
multiple questions lined up in order to enhance the study, from the choice of investment
avenues to whether investors are risk takers or non-risk takers. The survey also shows
the various factors investors take into account while investing, what are the various
sources that influence an investor’s decision, what difficulties do investors‟ face while
investing, and many more questions related to portfolio management and investment
decisions have been taken into account while conducting the survey.

In order to understand the research better, the data collected has been explained
graphically. The figures will explain diagrammatically how different investors at
different ages manage their portfolio, and what various factors do they take into
consideration while investors. Following are the various graphical representations for
better understanding of the study.
➢ Which investment avenues do you prefer to invest in?

Investors have various securities and assets lined up for them to choose from while
investing. A lot of choices are made available such as equity shares, mutual funds, debt
funds, etc.

Which investment avenues do you prefer

you invest in?
Cypto Currency 7

Gold 16

Mutual Funds 40

Non-marketable securities 74

Debentures or Bonds 44

Equity shares 60

0 10 20 30 40 50 60 70 80

Interpretation:

The data indicates a strong preference for non-marketable securities, likely reflecting
an interest in specialized or less liquid investments offering potentially higher returns.
Following closely are equity shares, which represent ownership stakes in publicly
traded companies and offer opportunities for capital appreciation. Debentures or bonds
come next, providing fixed interest payments and lower risk compared to equities.
Mutual funds are also favored, offering diversification and professional management.
Gold holds moderate interest as a hedge against economic uncertainty. However,
cryptocurrency is the least preferred option, possibly due to its volatility and speculative
nature. Overall, investors seem to favor a mix of traditional and alternative investment
avenues, balancing risk and potential returns.
➢ For how long have you been investing?

While making investments, investors need to make a choice as to for what time period
do they want to invest. It depends on various factors such as urgency of money, amount
of funds available, etc. While few investors start investing at an early age, few begin
late. The below figure shows the period from when the respondents have begun
investing.

The data suggests that a significant portion of investors have been investing for less
than a year, comprising 41.7% of the respondents. This could indicate a growing interest
in investing among newcomers or individuals who have recently started their
investment journey. The next largest group, comprising 31.3% of respondents, has been
investing for 3 to 5 years, suggesting a substantial number of relatively experienced
investors. Additionally, 18.4% have been investing for 1 to 3 years, indicating a notable
portion of moderately experienced investors. A smaller proportion, 8.8%, has been
investing for more than 5 years, possibly representing seasoned investors with longer-
term perspectives. Overall, the data reflects a mix of investors at various stages of their
investment journeys, with a notable presence of both newcomers and those with several
years of experience.

➢ How much percentage of your income do you set aside for investing?

Investors must set a right proportion of expenditure and saving and investment. The
figure below shows the percentage of income that the investors (respondents) set aside
for their investments.
 HOW MUCH PERCENTAGE OF YOUR INCOME
DO YOU SET ASIDE FOR INVESTING?
Less than 10% 10% - 20% 20% - 40% More than 40%

21% 24%

26%
29%

Interpretation:

The data illustrates that a considerable portion of respondents allocate a significant

portion of their income towards investing. Specifically, 30% earmark 10% to 20% of
their income for investments, indicating a moderate commitment to building wealth.
Furthermore, 27% dedicate a substantial 20% to 40% of their income to investments,
suggesting a strong focus on long-term financial growth. Interestingly, a noteworthy
21% allocate more than 40% of their income to investing, highlighting a high level of
commitment to wealth accumulation. Conversely, 25% set aside less than 10% of their
income for investments, possibly indicating a more conservative approach or limited
financial resources. Overall, the data reveals a diverse range of investment behaviors,
reflecting varying levels of financial commitment and risk tolerance among
respondents.

➢ What factors do you consider before investing?

It is very necessary for the investors to have a clarity while investing, regarding, factors
that they give priority to while investing.

What factors do you consider before

100
investing?
81
80 69
57
60 50

40

20 8
0
Safety of principal Maturity period High Return Low Risk Others
 Interpretation:

Before investing, respondents consider several key factors to make informed decisions.
Safety of principal is a top concern for 50% of respondents, indicating a focus on
preserving their initial investment amount. Maturity period is also crucial, with 57%
emphasizing the importance of understanding when they can expect returns on their
investment. High return is a primary consideration for 81% of respondents, highlighting
a strong desire for substantial gains. Additionally, 69% prioritize low risk, indicating a
preference for investments with minimal chance of loss. The "Others" category, chosen
by 8% of respondents, likely encompasses various additional factors such as liquidity,
tax implications, or personal financial goals. Overall, the data suggests that investors
prioritize a balance between potential returns and risk mitigation while considering
various aspects such as safety, maturity, and individual preferences.

➢ Do you look up for monthly returns while investing?

Many investments provide updates on monthly returns of the investors. Some investors
might want to have a check on their monthly returns, as they might want to know
whether their investments are giving good rewards and where is the money invested
being utilized.

The data reveals that a significant portion of investors consider monthly returns when
making investment decisions. Specifically, 35.9% of respondents affirmatively look up
monthly returns, indicating a proactive approach to monitoring performance.
Additionally, a considerable 36.9% express a possibility of considering monthly
returns, suggesting a potential interest in tracking performance but not necessarily as a
decisive factor in investment decisions. On the other hand, 27.2% of respondents do not
 prioritize monthly returns, implying a focus on longer-term investment strategies or a
preference for alternative performance metrics. Overall, the data suggests a diverse
range of attitudes towards the significance of monthly returns among investors, with a
notable proportion showing interest or openness to considering this metric.

➢ What are the sources that influence your decision to invest?

There are various factors and sources that can influence the decision of an investor
while they are investing. Some might invest out of their personal knowledge, while few
would take recommendations from friends and relatives. Many investors also look up
to financial advisors and agents, while few works it out depending on advertisements,
etc.

What are the sources that influence your decision

to invest?
3.40%

64.10% 72.80%

46.60% 49.50%

Personal knowledge Social Media Agents and financial advisors

Friends and relatives Financial Website

Interpretation:

Investment decisions are primarily influenced by personal knowledge, accounting for

72.80% of the decision-making process, followed by friends and relatives at 64.10%.
Professional advice from agents and financial advisors contributes 46.60%, while social
media plays a significant role with 49.50% influence. Interestingly, financial websites
have a comparatively minor impact at 3.40%. This highlights the dominance of personal
expertise and social networks in shaping investment choices, supplemented by
professional guidance and online information.
➢ What are your objectives/ goals while investing?

Every investor has certain aims and goals while investing. Generally, investors invest
for the purpose of retirement savings, while few invest to improve their standard of
living and beat the inflation, while others invest for growth of their money and many
other factors.

What are your objectives/goals while

investing?
Keep up with inflation 45

Reduce taxable income 43

Earn higher returns 67

Save for retirement 52

Emergency fund 42

Growth of money 68

0 10 20 30 40 50 60 70 80

Interpretation:

Investing objectives vary among individuals, with the primary goal for most being the
growth of their money, scoring at 64.1%. This reflects the desire to increase wealth over
time through strategic investments. Saving for retirement follows closely behind at
49.5%, indicating a significant focus on long-term financial security. Earn higher
returns is another key objective, scoring at 65%, suggesting a preference for
investments that offer substantial profitability. Keeping up with inflation is also
important, scoring at 43.7%, indicating a desire to preserve the purchasing power of
their assets. Building an emergency fund, at 39.8%, is also a priority, ensuring financial
stability in unforeseen circumstances. Reducing taxable income, though a
consideration, ranks lower at 43.7%, suggesting that while tax efficiency is valued, it
may not be the primary driver of investment decisions. Overall, these objectives reflect
a balanced approach to wealth accumulation, focusing on growth, stability, and long-
term financial planning.
➢ How often do you review your investment portfolio?

Interpretation:

Investors review their portfolios with varying frequencies, with daily and monthly
checks being the most common at 25.2% each. This suggests a significant portion of
investors actively monitor their investments either on a daily basis for more hands-on
management or on a monthly basis for regular oversight. Weekly reviews follow
closely behind at 20.4%, indicating a preference for more frequent assessments among
a substantial portion of investors.

Less frequent reviews, such as quarterly (7.8%) or annually (0%), are less common,
implying that many investors prefer more regular monitoring to stay informed about
their portfolio performance and make timely adjustments. However, a notable 21.4%
of investors opt to review their portfolios less frequently, possibly indicating a more
passive or long-term approach to investment management. Overall, these findings
underscore the diverse strategies and preferences among investors in monitoring their
investment portfolios.
➢ Have you ever experienced a significant loss in your investment portfolio

The majority of investors, at 53.4%, have experienced a significant loss in their

investment portfolios. This suggests that market volatility or individual investment
risks have impacted a significant portion of investors, potentially leading to financial
setbacks or reevaluation of investment strategies. On the other hand, 46.6% of
investors have not encountered significant losses, indicating a level of resilience or
successful risk management within their portfolios.

These findings underscore the inherent risks associated with investing and the
importance of diversification, risk management strategies, and prudent decision-
making to mitigate potential losses. Overall, the prevalence of losses highlights the
dynamic nature of financial markets and the need for investors to adapt and navigate
challenges to safeguard their investment portfolios.

➢ How do you respond to market volatility?

Market volatility refers to the rapid and unpredictable fluctuations in asset prices
within financial markets, reflecting changes in investor sentiment, economic
conditions, and other external factors.
Interpretation:

Investors respond to market volatility in diverse ways. A majority, at 54.4%, choose

to adjust their investment strategy, possibly reallocating assets or adopting defensive
measures to mitigate risks during turbulent times. Another significant portion, 43.7%,
opt to stay invested and ride out fluctuations, demonstrating confidence in their long-
term investment objectives and tolerance for short-term market swings.Interestingly,
a sizable portion, 42.7%, take advantage of downturns by increasing their investments,
possibly capitalizing on discounted asset prices to enhance portfolio growth over the
long term. Conversely, 41.7% decrease their investments during downturns,
potentially seeking to minimize losses or preserve capital amidst uncertain market
conditions.

These responses highlight the varied approaches investors take to navigate market
volatility, reflecting differing risk tolerances, investment goals, and strategies.
Overall, adapting to market dynamics plays a crucial role in optimizing investment
outcomes and managing risks effectively.
➢ What is your risk profile?

Interpretation:

Investors exhibit diverse risk profiles, with a notable portion, at 36.9%, categorized
as risk-neutral, indicating a balanced approach to risk and return. Similarly, 30.2%
fall into this category, further emphasizing a willingness to accept moderate levels of
risk in pursuit of potential rewards. On the other hand, 33% identify as risk-averse,
suggesting a preference for conservative investment strategies with lower risk
exposure.

These findings underscore the importance of understanding individual risk

preferences and aligning investment decisions accordingly. While some investors may
prioritize capital preservation and stability, others may be more inclined to pursue
higher returns, even at the expense of increased risk. Ultimately, assessing risk
tolerance is crucial in constructing an investment portfolio that aligns with one's
financial goals and comfort level with uncertainty.

➢ If you have an option to invest in either equity or debt, which investment option
would you select?

A lot of people find it very difficult to invest in equity due to the risk involved,
volatility of the market, etc. Investing in debt is safer than equity, but the returns are
comparatively lower. Therefore, it is a tough decision to choose between the two. The
ones who are willing to take risk in order to earn good rewards will invest in equity,
while those who are ready to let go of the benefit of getting more returns rather than
taking risk, will invest in debt investments.
 Interpretation:

Investors show a varied preference regarding investment options. A substantial

portion, at 40.8%, opt for both equity and debt investments, indicating a diversified
approach to portfolio construction, possibly aiming to balance risk and return.
Meanwhile, 33% prefer equity investments, highlighting a preference for potentially
higher returns associated with stocks despite greater market volatility.

Conversely, 26.2% choose debt investments, suggesting a focus on fixed income

securities with lower risk and more predictable returns. Overall, the distribution
reflects the nuanced strategies investors employ in balancing risk, return objectives,
and asset allocation within their investment portfolios.

➢ Seeking guidance from financial advisors crucial for optimizing and

strengthening one's investment portfolio?
 Interpretation:

The majority of respondents, with 42.7% agreeing and 23.3% strongly agreeing,
recognize the importance of seeking guidance from financial advisors for optimizing
and strengthening their investment portfolios. This suggests a widespread
acknowledgment of the valuable role financial advisors play in providing expertise,
advice, and tailored solutions to navigate complex financial landscapes and achieve
investment goals effectively. A significant portion, at 27.2%, remain neutral, possibly
indicating a range of experiences or perceptions regarding the necessity or efficacy of
financial advice. However, only a small minority, at 4.9% disagreeing and 1%
strongly disagreeing, perceive financial advisor guidance as less crucial.

Overall, these findings underscore the significance of professional financial guidance

in supporting individuals in making informed decisions, managing risks, and
maximizing returns within their investment portfolios.

➢ From the options given below, which according to you is an ideal portfolio?

Interpretation:

A significant portion of respondents, at 47.6%, view a balanced portfolio with equal

parts equity and debt as ideal, reflecting a preference for diversification to manage
risk while potentially capturing growth opportunities from both asset classes.
Meanwhile, 22.3% favor a portfolio mostly comprised of equity with some debt,
indicating a tilt towards higher growth potential while still incorporating some
stability through debt securities.
 A smaller percentage, at 13.6%, prefer mostly debt with some equity, possibly
prioritizing income generation and capital preservation over growth. Only 8.7% opt
for a portfolio consisting solely of equity, and 7.8% for one composed entirely of debt,
suggesting less common preferences for extreme allocations in either asset class.

Overall, the majority inclination towards balanced diversification underscores the

recognition of the benefits of spreading risk across different types of investments.

➢ What are the inconveniences and discomforts you face while investing?

What are the inconveniences and

discomforts you face while investing?
None 23

Liquidity 34

Inconvenient to operate 44

Poor service 38

Low returns 46

Less awareness 44

0 10 20 30 40 50

Interpretation:

Investors encounter various inconveniences and discomforts when investing. A

significant number, at 44%, cite less awareness as a challenge, indicating a need for
improved education or information dissemination to empower investors with better
decision-making abilities. Similarly, 44% find it inconvenient to operate, suggesting
issues with platforms or processes hindering ease of investment.

Low returns are a concern for 46% of investors, highlighting the importance of
achieving satisfactory performance to meet financial goals. Poor service is also a
notable issue, with 38% expressing dissatisfaction, indicating room for improvement
in customer support or advisory services. Liquidity concerns, mentioned by 34%,
underscore the importance of access to funds when needed.
 Interestingly, 23% report experiencing no inconveniences or discomforts, suggesting
a subset of investors who may have found solutions or strategies to mitigate such
challenges. Overall, addressing these concerns could enhance the investor experience
and promote confidence in financial markets.

➢ According to you, which security is more risky to invest in?

Interpretation:

According to my assessment, the security perceived as the riskiest to invest in by the

respondents is equity shares, with 30.1% selecting this option. Real estate follows
closely behind at 21.4%, indicating concerns about the volatility or illiquidity
associated with property investments. Commodities are considered relatively risky by
23.3% of respondents, likely due to their sensitivity to market fluctuations and
geopolitical factors. Cryptocurrency, with 14.6%, also carries perceived risk, likely
due to its high volatility and regulatory uncertainties. Mutual funds, despite offering
diversified portfolios managed by professionals, are perceived as the least risky
among the options, with only 11.7% selecting them. Overall, these perceptions reflect
varying degrees of risk associated with different investment vehicles, influenced by
factors such as volatility, liquidity, and market dynamics.
➢ How satisfied are you with your investment decisions?

Not always investors are satisfied with their investments. Investors may receive
fruitful returns sometimes, while some investors might incur losses while investing.

Interpretation:

Investors' satisfaction with their investment decisions varies, with a majority at 66.1%
expressing moderate to high levels of satisfaction. Specifically, 31.1% rate their
satisfaction at 4, indicating a considerable degree of contentment with their
investment choices. Additionally, 35% rate their satisfaction at 3, suggesting a
somewhat positive sentiment but with room for improvement. A smaller but still
significant portion, at 17.5%, express the highest level of satisfaction with a rating of
5, reflecting a strong sense of confidence and fulfillment in their investment decisions.
Conversely, 12.6% rate their satisfaction at 2, and 3.9% at 1, indicating lower levels
of contentment or possibly regrets regarding investment outcomes.

Overall, while a substantial majority appears satisfied with their investment decisions,
there is a spectrum of sentiment ranging from moderate to high levels of satisfaction.
 5. CONCLUSION

The study and survey of portfolio management of individual investors was conducted
in the city of Mumbai. The findings from the survey and data collected have been
presented in this chapter. It is seen than a variety of investment avenues have been
covered including shares, debentures, bonds, government securities, insurance policies,
mutual funds, various types of fixed deposits, post office saving schemes, gold/silver
and real estate. The main attempt of the study is to understand and learn the portfolio
management ideologies of individual investors and their investment preferences for
various investment avenues.

The study of individual investors preferences for investment avenues and their ideology
of designing a portfolio of their choices were conducted for the city of Mumbai, as the
individual investors‟ share is overwhelmingly large in the country’s savings. The main
purpose of the study was to know objectively the nature, scope, and competitive
superiority and effectiveness of different types of investment avenues and to examine
as to how investors behave while investing their hard-earned money through these
instruments in the present investment climate and how the investors create their
portfolio.

A variety of investment avenues have been covered including shares, debentures,

bonds, government securities, insurance policies, mutual funds, various types of fixed
deposits, post office saving schemes, gold/silver and other precious securities, and real
estate for the purpose. A broad finding and conclusions of the study together with
suggestions as remedial measures to overcome the existing deficiencies are presented
in this chapter.

Findings:

The study on portfolio management of individual investors was conducted with the help
of a questionnaire. The study was conducted with the help of primary data which was
collected from the respondents with the help of the questionnaire. It is important to
study the data collected in order to come to a conclusion. The detailed data analysis was
conducted and the followings findings were drawn:
1. It was found that the investors are aware of the various investment avenues made
available to them. The investors mainly investment in more than one securities and
asset class, which indicates that the investors were aware about the importance of
diversifying their portfolios.

2. Investors favor non-marketable securities for specialized opportunities, followed by

equity shares for capital appreciation. Debentures or bonds offer lower risk, while
mutual funds provide diversification and professional management. Gold serves as a
moderate hedge, but cryptocurrency is the least preferred due to its volatility. This
balanced approach combines traditional and alternative investments to manage risk and
seek returns.

3. Investors prioritize factors such as safety of principal, maturity period, high returns, and
low risk when making investment decisions. While seeking substantial gains, they also
emphasize the importance of preserving their initial investment and understanding
when returns can be expected. The data reflects a balanced approach, considering
various aspects to optimize investment outcomes while aligning with individual
preferences and financial goals.

4. Investing objectives vary, but growth, retirement savings, and earning higher returns
are primary goals, reflecting a focus on wealth accumulation and long-term security.
Keeping up with inflation and building emergency funds are also priorities, ensuring
financial stability. Tax efficiency is considered but ranks lower, indicating other
objectives take precedence. Overall, these goals underscore a balanced approach to
wealth management, combining growth, stability, and long-term planning.

5. A significant portion of investors have experienced notable losses in their portfolios,

reflecting the inherent risks of investing. However, many have managed to avoid
significant losses, suggesting successful risk management strategies. These findings
underscore the importance of diversification and prudent decision-making to mitigate
risks in financial markets. Overall, the prevalence of losses highlights the dynamic
nature of investing, emphasizing the need for adaptability and vigilance to safeguard
investment portfolios.

6. Investors exhibit diverse risk profiles, with some leaning towards a balanced approach
and others preferring conservative strategies. These findings highlight the importance
of aligning investment decisions with individual risk preferences and financial goals.
 Understanding risk tolerance is crucial for constructing a portfolio that balances
stability and potential returns effectively.

7. Investors exhibit varied preferences in investment options. A substantial portion prefers

a diversified approach with both equity and debt investments, aiming to balance risk
and return. Meanwhile, others lean towards equity for potentially higher returns despite
volatility, while some opt for debt for lower risk and predictable returns. Overall, this
reflects the nuanced strategies investors employ to balance risk and return objectives
within their portfolios.

8. The data underscores the vital role of financial advisors in optimizing and strengthening
investment portfolios. A majority of respondents acknowledge the importance of
seeking guidance from advisors for informed decision-making and risk management.
While some remain neutral, indicating varied perceptions, only a small minority
disagree with the significance of financial advisor guidance. Overall, these findings
highlight the invaluable contribution of professional financial advice in achieving
investment goals effectively.

9. Investors perceive equity shares as the riskiest investment, closely followed by real
estate, commodities, and cryptocurrency. Mutual funds are considered the least risky
option. These perceptions reflect the varying degrees of risk associated with different
investment vehicles, influenced by factors such as volatility, liquidity, and market
dynamics. Overall, these insights underscore the importance of understanding risk
perceptions when constructing investment portfolios.

10. Investors' satisfaction with their investment decisions varies, with a spectrum of
sentiment ranging from moderate to high levels of satisfaction. While a substantial
majority appears satisfied, some express considerable contentment or strong
confidence, while others indicate lower levels of satisfaction or possibly regrets
regarding investment outcomes.
 RECOMMENDATIONS AND SUGGESTION

The findings of the study will have some implications. The study has direct bearing on
the market for financial products such as shares, debentures, mutual funds, life
insurance, post office saving schemes, fixed deposits and also real estate and precious
securities like silver and gold, etc. Therefore, it is of special interest to policy makers
and regulatory authorities concerned with financial market. The regulatory body can
safeguard the interest of the new investors on the basis of their investing pattern.

Today, the financial market is increasingly complex and managing one’s own portfolio
will take up a lot of time and effort. There are situations when investors do not have
time or knowledge to explore the best investment alternatives in the market. This is a
common problem faced by many wannabe investors. At this juncture, portfolio
management services can help investor get out of this dilemma. So, investor can simply
assign his investments to portfolio management services who will report to him
regularly on his portfolio performance. Thus, investor will not feel lost in this complex
world of investments and the experts will do their job. However, the investors should
management their portfolios by themselves if they have the time and skill. Investors
should do their research in order to benefit from their investments.

The following suggestions maybe worth considering in this respect:

1. It is suggested that investors should evaluate their risk appetite and risk tolerance.
Risk appetite does not only reduce due to the age factor, but due to other factors such
as investor’s level of income, spending and expenditure pattern of investors, etc.
Therefore, investors should keep these factors in mind and then evaluate their risk
appetite to see which investments fall within their scope of interest.

2. It is also suggested that investors should design a portfolio that consists of a mix of
equity investments as well as debt investments. Investors, after knowing their ability to
risk, should create the mix of debt-equity investments.

3. Investors before investing into the market or any security for that matter should do a
proper research by themselves or through the guidance and help of financial advisors
or professionals before investing the money into the security.
4. Investors should avoid paying attention to misleading comments and misconceptions
about the investment. Investors should also do their self-study before investing rather
than only depending on financial advisors and professionals.

5. It is suggested to the investors that irrespective of their awareness regarding the

various investment avenues, investors should select the appropriate investment avenue
which is suitable for the investors.

6. It is suggested to the investors that at least the equity portion of the investor’s
portfolio must be reviewed regularly so that if any stock is not performing then
necessary diversification can be made. Investors should consider and give importance
to diversifying in order to gain fruitful returns.

7. The study revealed that the debentures are less popular in the Indian capital market,
which means that they are not investor friendly. Therefore, in addition to equity
markets, the debt market should also be improved.

8. It is advisable to the investors that they should keep on upgrading themselves with
new guidelines and changes in terms and conditions. Not only should they have
knowledge about the investment avenues where have invested, but they should be aware
of the overall investment avenues so that they can make necessary diversification for
keeping their portfolio profitable.

9. It is also suggested to the investors that while investing in any kind of real estate the
investors must do the required due diligence, specially while investing in
nonagricultural plots. From the data collected it was observed that a lot of investors
found investing in real estate risky, therefore, the investors should not hesitate to invest
in real estate, but should do a proper study from their end before investing.

10. It is also suggested that investors should not invest in securities just for the sake of
investing. If investors find it difficult in evaluating and selecting the right investment,
in such a case investor should definitely seek the help of financial advisors and
professionals.

11. It is suggested to the investors that regardless of whether you need a portfolio that
is more concentrated in stocks or bonds, you should consider diversifying within each
asset class
 6. BIBLIOGRAPHY

Sources of research matter/journals referred to while drafting the report are noted at the
end of the report in the form of footnotes. Here, details of published material referred
to by the researcher are also recorded. Most of the research reports contain a
bibliography of the books, journals, reports, etc. used in the preparation of the report.
The readers can refer to these references if they desire to go to the original source of
information. A bibliography is a list of all of the sources you have used (whether
referenced or not) in the process of researching your work. In general, a bibliography
should include: the authors' names. the titles of the works. the names and locations of
the companies that published your copies of the sources. The bibliography appears at
the end. The main purpose of a bibliography entry is to give credit to authors whose
work you've consulted in your research. It also makes it easy for a reader to find out
more about your topic by delving into the research that you used to write your paper.

Websites:

➢ http://wwwfranklintempeltonindia.com/article/beginners-guide-
chapter24io04og31/using-debt-funds-to-help-stabilize-your-equity-portfolio

➢ http://www.dixon.com.au/investment-advice/benefits-of-diversification

➢ http://www.moneycontrol.com/news/business/mutual-funds/how-to-playsafeequity-
investments-1546297.html

➢ http://www.policybazaar.com/gold-rate/articles/why-investing-in-gold-a-goodidea/

➢ http://www.arborinvestmentplanner.com/portfolio-diversification-definitionand-
purpose/

➢ http://money.federaltimes.com/2014/11/17/the-characteristics-of-a-goodportfolio/

➢ http://www.yourarticlelibrary.com/investment/portfolio-analysis/traditionaland-
modern-portfolio-analysis/82677

➢ http://books.google.co.in/books/about/All_About_Asset_Allocation_Second_

➢ http://www.portfoliomanagement.in/personal-portfolio-management.html
➢ http://www.investopedia.com/terms/n/non-marketable_securities.asp

➢ http://www.investopedia.com/articles/younginvestors/12/portfoliomanagement

➢ http://m.economictimes.com/wealth/plam/how-to-construct-and-manage-
yourinvestment-portfolio-in-4-simple-steps/articleshow/66564454.cms

➢ http://www.investopedia.com/articles/03/072303.asp

➢ http://www.moneycontrol.com/investor-education/classroom/debt-funds-orequity-
funds-the-right-answer-may-be-both-1232548.html?classic=true

➢ http://www.cnbc.com/2015/06/20/age-and-risk-tolerance-key-to-masteringasset-
allocation.html

➢ http://m.economictimes.com/analysis/all-about-evaluating-risk-tolerance-andrisk-
appetite/articleshow/23301855.cms

➢ http://www.entrepreneur.com/amphtml/250677

➢ https://www.livemint.com/Money/acOEUdiTuf5Ga0UJ08uUpL/Why-its-important-
to-ascertain-risk-appetite-before-investi.html

➢ https://www.iol.co.za/personal-finance/how-to-gauge-your-appetite-forinvestment-
risk-16320791

➢ https://www.fidelity.com/viewpoints/investing-ideas/guide-to-diversification

Books:

• All About Asset Allocation, Second Edition Paperback By Richard Ferri (June 2010)
• The Four Pillars of Investing: Lessons for Building a Winning Portfolio By William
Bernstein (2002)

• Portfolio Management 1st Revised Edition By Samir K Barua, J K Varma, V

Raghunathan (1996)
 7. APPENDIX

Questionnaire:

A study on Portfolio Management of Individual Investors in Mumbai City

This survey is conducted as part of my college research. The survey will help me to
study what investors expect from their investments and how they manage their
portfolios.

1) Name: -------------------------------------------
2) Age:
• 18 - 24 years
• 25 – 35 years
• 36 – 45 years
• 46 – 55 years

3) Gender:
• Male
• Female
• Others

4) Occupation:
• Student
• Employed
• Unemployed
• Self- employed
• Other

5) Annual Income:
• Below 2.5 lakhs
• 2.5 lakhs – 5 lakhs
• 5 lakhs – 8 lakhs
• 8 lakhs and above

6) Which investment avenues do you prefer you invest in?

…Equity shares
…Debentures or Bonds
…Mutual Funds
…Non-marketable securities
…Others

7) For how long have you been investing?

• Less than a year
• 1 – 3 years
• 3 – 5 years
• More than 5 years
8) How much percentage of your income do you set aside for investing?
• Less than 10%
• 10% - 20%
• 20% - 40%
• More than 40%

9) What factors do you consider before investing?

…Safety of principal
…Maturity period
…High returns
…Low risk
…Others

10) Do you look up for monthly returns while investing?

• Yes
• No
• Maybe

11) What are the sources that influence your decision to invest?
…Personal knowledge
…Advertisements
…Agents and financial advisors
…Friends and relatives
…Others

12) What are your objectives/ goals while investing?

…Growth of money
…Emergency fund
…Save for retirement
…Earn higher returns
…Reduce taxable income
…Keep up with inflation
…Others

13) How often do you review your investment portfolio?

• Daily
• Weekly
• Monthly
• Quarterly
• Annually
• Less frequently

14) Have you ever experienced a significant loss in your investment portfolio?
• Yes
• No

15) How do you respond to market volatility?

…Stay invested and ride out fluctuations
… Adjust investment strategy
… Increase investments during downturns
… Decrease investments during downturns
16) What is your investor profile when it comes to risk?
• Risk-averse (prefer lower-risk options)
• Risk-neutral
• Risk-seeking (prefer higher-risk options)

17) If you have an option to invest in either equity or debt, which investment
option would you select?
• Equity investments
• Debt investments
• Both

18) Seeking guidance from financial advisors crucial for optimizing and strengthening one's
investment portfolio? Do you agree?
• Strongly Disagree
• Disagree
• Neutral
• Agree
• Strongly Agree

19) From the options given below, which according to you is an ideal
portfolio?
• Mostly equity, some debt
• Mostly debt, some equity
• Balanced portfolio with equal parts equity and debt
• 100% equity
• 100% debt

20) What are the inconveniences and discomforts, you face while investing?
…Less awareness
…Low returns
…Poor service
…Inconvenient to operate
…Liquidity
…None

21) According to you, which security is more risky to invest in?

• Equity shares
• Mutual funds
• Real estate
• Commodities
• Others

22) How satisfied are you with your investment decisions?