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A Project report on “MUTUAL FUNDS AS PERSONAL FINANCIAL PLANNING TOOL” Bajaj Allianz Life Insurance ltd,
Conducted at SINDHANUR

Submitted By MANJUNATHA Roll- 1283472


Department Of P.G Studies GOVT-P.G CENTER KUSTGI Road, SINDHANUR- 584128


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The study was done at Bajaj Allianz Life Insurance Ltd. That is situated at Sindhanur, Raichur. The study was conducted in two parts. The first part comprises of basics of financial planning. The second part of the study was done on some of the real case studies on financial planning.

The only thing permanent in life is change. Times change. People change. So does life. You expect life to be much better tomorrow than it is today. Tomorrow, you hope to fulfill all your dreams and aspirations. But what happens if things take an untoward turn? Or, if there is an eventuality? Perhaps it’s time for you to change the way you plan your investment. Each one of us needs, ‘financial’ information at various stages of our life, and to ensure that we have the money available at the right time, when needed. We may need money at the time of marriage of a daughter or son, and we need it then, not later! Or at the time of a medical emergency, and again at that time, as later the money will not help. Or money will be needed simply at the time of retirement. In other words, we need finance at different times for different goals. Buying a home, providing for a child’s education and marriage or for retirement are all examples of goals in life that can be measured in monetary terms.

Personal financial planning is the process of meeting your life goals through the proper management of your finances. Life goals can include buying a home, saving for your child’s education or planning for retirement.


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History of Indian Mutual Fund Industry
The history of Mutual Funds in India can be broadly divided into 4 Phases: 1. First phase (1964-1987)  The Unit Trust of India (UTI) was established in the year 1963 by passing an Act in the Parliament.

 The UTI was setup by the Reserve Bank of India (RBI) and functioned under the
Regulatory and Administrative control of the RBI.

 The First scheme in the history of mutual funds was UNIT SCHEME-64, which is
popularly known as US-64.

 In 1978, UTI was de-linked from RBI. The Industrial Development Bank of India (IDBI)
took over the Regulatory and Administrative control.

 At the end of the year 1988, UTI had Rs.6700/- Crores of Assets Under Management. 2. Second phase (1987-1993)
 Entry of Public Sector Funds.  In the year 1987, public sector Mutual Funds setup by public sector banks, Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC) are came in to existence.  State Bank of India Mutual Fund was the first non-UTI Mutual Fund.  The following are the non-UTI Mutual Funds at initial stages.  SBI Mutual Fund in June 1987.  Can Bank Mutual Fund in December 1987.  LIC Mutual Fund in June 1989.  Punjab National Bank Mutual Fund in August 1989.  Indian Bank Mutual Fund in November 1989.  Bank of India Mutual Fund in June 1990. GOVT-P.G CENTER SINDHANUR Page Page 3

 GIC Mutual Fund in December 1990.  Bank of Baroda Mutual Fund in October 1992. At the end of 1993, the entire Mutual Fund Industry had Assets Under Management of 004/- Crores. Rs.47,

3. Third phase (1993-2003)
 Entry of Private Sector Funds - a wide choice to Indian Mutual Fund investors.  In 1993, the first Mutual Fund Regulations came into existence, under which all mutual funds except UTI were to be registered and governed.  The Erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector Mutual Fund Registered in July 1993.  In 1996, the 1993 Securities Exchange Board of India (SEBI) Mutual Funds Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations.  The number of Mutual Fund houses went on increasing, with many foreign mutual funds setting up funds in India.  In this time, the Mutual Fund industry has witnessed several Mergers &Acquisitions.  The UTI with Rs.44, 541/- Crores. Of Assets Under management was way ahead of all other Mutual Funds.  The following was the status at end of February 2003: Number of schemes Amount (in Crores) 82,693 4497 87,190

Open-ended schemes
Close-ended schemes

321 51 372 (Source – AMFI website)



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4 Fourth phase (since 2012 February)
 Following the repeal of the UTI Act in February 2003, it was (UTI) bifurcated into 2 separate entities.  One is the specified undertaking of the UTI with asset under management of Rs.29, 835/Crores as at the end of January 2003.  The second is the UTI Mutual Funds Limited, sponsored by State Bank of India, Punjab National Bank, Bank of Baroda and Life Insurance Corporation of India.  UTI is functioning under an Administrator and under the Rules framed by the Government of India and does not come under the purview of the Mutual Fund Regulations.  The UTI Mutual Funds Limited is registered with SEBI and functions under the Mutual Funds Regulations.


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3.1 Introduction Financial planning is a process of establishing personal and financial goals and creating a way to reach there. It is an on-going process and involves knowing your existing resources, your shortterm & long-term needs and systematically implementing a plan to achieve the same. It involves regular monitoring and review to make adjustments, if necessary, to keep you on track towards your goals. Financial planning process......basic  

Where do you want to be & when    Define your financial goals in terms of how much you will need and when

Where are you? Check your financial resources Check your financial commitments

How do you get there? Page Page 6


   The financial plan/asset allocation

Are you on course? Periodic review of your investments/your own condition

So financial planning is essential for every one............

3.2 Statement of the problem “Mutual Fund as personal financial planning tool”

3.2.1 Definition of Problem Financial planning offers to most people significant benefits including peace of mind and happiness. Unaided, most people find it difficult to identify and accept their financial planning needs. It is for this reason that a financial planner is one of the most respected professions in the developed countries. It is for the same reason that financial profession is now emerging to be important in India. After all, financial health is as important as physical and spiritual health, and people should approach a financial planner who can advise them on achieving financial fitness. Generally, people have two types of financial needs-protection and investment. Insurance

companies seek to offer products for protection needs. Mutual funds broadly cater to the investment needs. Mutual fund products from a powerful set of tools available to financial planners and investors. Hence, it is in the fitness of things that those individuals who are in the business of distributing fund products also learn how to help investors do appropriate financial planning before making investment decisions.

3.3 Objectives of the Study
 To understand the financial needs of a person  To know about the concept and process of financial planning.  To analyze the various financial tools available for financial planning  To study the Investment planning.  To understand tax planning  To study practically how to do the financial planning.


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 This study covers information about the major tools of the personal financial planning.  It mainly concentrates on the mutual funds.  This analysis is only to create awareness about financial planning and their benefits.  This study attempts to find out the future of investments in mutual funds.

3.5 Benefits of the Study
 The study enhances the knowledge of financial planning.  The analysis enables one to understand the current position and trends in mutual funds.  The study serves as the basis for knowing the various investment avenues.  The study also facilitates the people to know how to fulfill their dreams.  This study is also helpful in knowing the financial needs of the people.

3.6 Limitations of the Study
 There was lot of study to be covered but due to time constraints i.e. 6 weeks it was not possible to study all the aspect in detail.  The study may be biased by information provided by the investors.  The returns and inflation are assumed and it may change in future.  Investments in mutual funds are subject to market risk. We cannot predict the exact returns.

3.7 Review of literature

There is a saying that one can’t compare apples and oranges, does the old adage mean you can’t make comparisons between companies? The answer depends on how you define apples and GOVT-P.G CENTER SINDHANUR Page Page 8

oranges! If you look at two companies as whole one apple and one the orange- comparison would be difficult, if not impossible. Instead, you must break the comparison into small

segments. You can compare individual performance categories of apple and the orange says the amount of debt that each company has in proportion to its assets. Such performance comparison between companies in the same industry can be made by analyzing pieces of data in published financial statements.

The Bajaj Allianz life insurance co ltd genarlly provide the life insurances. It the one the financial and insurance service. Health insurance Car insurance Travel insurance Home insurance

2) The Basis of The Financial Planning Life Cycle & Wealth Cycle Stages

2.1 The Life cycle Stage Guide The need for financial planning persists throughout life of an individual. Most people have at least one unsatisfied need at any time. Most people will have both financial protection and investment needs simultaneously throughout life. However, the priorities of these financial needs change as people grow older and their personnel circumstances changes. The age at which each stage of life cycle starts may vary from individual to another, but in our society most people would fall into a standard cycle. Associated with each stage is a certain income level. We earn different amounts of income at different stages in life. If we superimpose the stages on the typical income graph of a salaried employee or a self-employed person, it well help in understanding how financial planning priorities, and the ability to fund them, change with each stage in the life cycle. GOVT-P.G CENTER SINDHANUR Page Page 9


Lifecycle of financial planning

2.2 Childhood Stage Childhood is a period of dependency that usually lasts until children finish their full-time education. The children’s financial needs are met by parents or other relatives. Most of the basic requirements of children will be met from the income of parents or relatives. However, most people who want to give their children more privileged opportunities will have to start investing money for this purpose when their children are still young.

Hence, the main need for children may be to invest cash gifts to provide a lump sum when they are adults. The parents or guardians make even these arrangements until the children reach adulthood.

2.3 Young Unmarried Stage GOVT-P.G CENTER SINDHANUR Page Page 10

With the end of childhood, most young people pass through a stage when they depend to an extent on their parents before full independence. If they are single with no dependents, they have little need for life assurance products. Normally, the main protection need of a young single person in work is to protect his or her earnings against disability resulting from injury or longterm sickness. Young unmarried persons will also have considerable investment needs. They may wish to invest in equities as they have a longer time horizon and as a result a higher risk appetite. They may wish to invest in equities as they have a longer time horizon and as a result a higher risk appetite. They may also wish to take a long term saving plan. It is never too early to start contributing to a pension scheme, which will provide an income on retirement; the earlier the scheme starts the lower the annual cost will be.

However, most young people will have relatively low incomes and cannot afford to devote large amounts to financial planning. Also, the young person may already have more urgent short term needs, such as saving to marry and establish a home. Thus, money should normally be devoted to long-term plans only when adequate short-term savings have been set aside.

2.4 Young Married Stage The needs of young people may change considerably as soon as they marry. Immediately, a young couple becomes interdependent with a shared responsibility for the achievement of future goals. Both partners may work and contribute to the family income or only one may be in paid employment with the other looking after the family home. a) Where both partners work, they have two incomes to meet the burden of their costs. Although each of them often still be fairly low on the earnings scale, they should have sufficient surplus funds to meet their most important financial planning needs. Since the couple depends on two incomes, the loss of one income would be a serious blow to their domestic economy. The priority need is therefore to protect each of their incomes against loss through disability resulting from injury or long term sickness. Further, if a partner dies, life assurance to replace at least part of the income of the deceased partner may be advisable. It is also very important to create an emergency found of before committing much money to long-term plans. The purpose of the emergency found is to provide a GOVT-P.G CENTER SINDHANUR Page Page 11

store of money to meet urgent and unexpected expenditure such as urgently required house or car repairs or enough money to live on in the event of a few weeks’ unemployment. Once a sufficient emergency fund has been set aside, our young couple can consider longer-term investment plans to found pensions or other personal aspirations.

b) If only one of the two partners earns the family living, their financial planning priorities will be different. The death of the wage earner would deprive the non-working partner of family income and therefore there is a need for life assurance on the earning member’s life. The sum assured should be sufficient to replace a large part of their earnings, possibly for the rest of the surviving partner’s life. Also, with only one working partner, the need to start pension provision early greater, should the money be available to pay for it.

2.5 Young Married with Children Stage The arrival of children very quickly changes the financial situation of any young couple. This is a difficult stage as expenditure is rising at a faster rate than income. This will reduce the money available to spend on financial planning but the protection needs of the family will increase greatly. A substantial life assurance on the wage earner’s life is now absolutely necessary. Precisely how much cover is needed will depend on the family’s standard of living and the age at which children are expected to complete their education. If the mother returns to work, the total life assurance on both their lives should be divided between them in proportion to the contribution of each to the family budget. Even in our society, which has a strong tradition of family care for unfortunate relatives, the availability of insurance money will help to reduce the financial burden. GOVT-P.G CENTER SINDHANUR Page Page 12


Once protection needs are taken care of, the family will have to make provisions for investments. These investment needs could take various forms. The most common are saving for children’s education and marriage. To achieve these objectives for their children, the parents may have to start investing from the day the first child is born. Additional investment needs are saving for a house, car, holidays and most importantly, adequate for retirement.

Each year without initiating financial programs to achieve investment goals makes it harder to achieve these goals. Unfortunately, there is rarely sufficient money to pay for all the family’s protection and investment needs. Difficult choices have to be made. However, with a young family, protection needs must normally take priority over investment, leaving investment needs to be funded as soon as possible. Fortunately, most people become better off as they grow older and this enables them to keep increasing their contribution to financial planning programs as they advance in life.

Hence the study has been under taken “Mutual Fund as a personal financial planning tool”



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 In today's financial marketplace, a well-maintained portfolio is vital to any investor’s success. Portfolio should meet investor’s future needs for capital and give peace of mind.  Now a day’s it is very difficult to understand where to invest in which company & in which industry. To proper utilization of funds to get maximum returns which were invested in the stocks.

Research design:
This project is exploratory research design. Exploratory research helps determine the best research design, data collection method and selection of subjects. It should draw definitive conclusions only with extreme caution. Given its GOVT-P.G CENTER SINDHANUR Page Page 14

fundamental nature, exploratory research often concludes that a perceived problem does not actually exist.

Primary data was collected through direct interview with concerned authority, personal discussion, interview and data from reports, stores manual & records.

Secondary data:
Secondary data was collected through journals, newspapers, company records, textbooks and websites, SEBI reports etc.

1. Company website. 2. Company library.

Areas Covered:
1. The study covers the history of the mutual fund industry. 2. Present and future expected scenario of the industry. 3. Different schemes of the funds 4. Different marketing strategies adopted for the schemes. 5. The concept of Rupee cost averaging and different types of investment strategy.



The process of extracting some units or a sample from the population is termed as sampling.   Sampling Unit

The sampling unit consists of BSE; NSE & HST listed companies from the various sectors. Method of Sampling

The method of sampling in this study is Judgmental sampling.

In the present world the management of investment is a very important concept because of the availability of various investment options and their different characteristics. Investment management is considered to be both art and science thus requiring knowledge and skill. This project mainly aim at projecting Mutual Funds and one of the investment options Equity Share. Mutual fund includes all the major advantage of other investment options by eliminating various disadvantages. From this study we can find the risk and return associate with the various portfolios of companies.

Chapter1: This chapter gives information about MUTUAL FUNDS AS A PERSONAL FINANCIAL PLANNING TOOL. Chapter2:


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This chapter is called the Research methodology. It consists of the title of the project, statement of the problem, objective of the study, limitations of the study, need of the study, chapter scheme.

This chapter gives a brief discussion about industry and company profile and their activities.

This chapter deals with analysis and interpretation of data

Findings, Suggestions and Conclusion

How will 360 Financial Planning help? Instead of investing in an ad-hoc manner, 360 financial planning helps you take a holistic, all round view. Briefly, 360 Financial Planning comprises. Investment planning: To make your wealth grow. GOVT-P.G CENTER SINDHANUR Page Page 17

Cash flow planning: To provide for assets and meet the periodic cash requirements. Tax planning: To save on taxes and increase you income Insurance Planning: To protect yourself, your family and your assets. Children’s Future Planning: To give your children a financially secure future Retirement planning: because retirement is a time to relax, not to get worried.

5.1 Investment planning
Everyone needs to save for a rainy day. Once you have saved enough to take care of emergencies, you should start thinking about investing and to make your money grow. We can help you plan your investments so that you can reap adequate benefits and achieve your financial goals.

5.1.1 Investment planning Service includes:     Risk Profiling Asset Allocation and Portfolio Construction Creation and Accumulation of Wealth through Systematic Investment Plans (SIP) Regular review of progress and Portfolio Rebalancing.

Essentially, investment planning involves identifying your financial goals throughout your life, and prioritizing them. Investment planning is important because it helps you to derive the maximum benefit from your investments. Your success as an investor depends upon your ability to choose the right investment options. This, in turn, depends on your requirements, needs and goals. For most investors, however, the three prime criteria of evaluating any investment option are liquidity, safety and return, depends on your requirements, needs and goals. For most investors, however, the three prime criteria of evaluating any investment option are liquidity, safety and return. Investment planning also helps you to decide upon the right investment strategy. Besides your individual requirement, your investment strategy would also depend upon your age, personal circumstances and your risk appetite. These aspects are typically taken care of during

investment planning. Investment planning also helps you to strike a balance between risk and GOVT-P.G CENTER SINDHANUR Page Page 18

returns. By prudent planning, it is possible to arrive at an optimal mix of risk and returns that suits your particular needs and requirements.

5.1.2 Who needs Investment Planning? Investment planning is necessary for every one who wishes to achieve any financial goal. You have to plan your limited resources to avail the maximum benefit out of them. You should plan your investments to fulfill major needs like.    Creating wealth over the long term Acquiring assets like a dream house or a dream car Fulfilling your need for financial security.

Thus, Investment Planning is nothing but a holistic approach to meet your life’s goals

5.1.3 Choosing the Right Investment Options The choice of the best investment options for you will depend on your personal circumstances as well as general market conditions. For example, a good investment for a long term retirement plan may not be a good investment for higher education expenses. In most cases, the right investment is a balance of three things; Liquidity, Safety and Return.

Liquidity-how accessible is your money? How easily an investment can be converted to cash, since part of your invested money must be available to cover financial emergencies.

Safety- what is the risk involved? The biggest risk is the risk of losing the money you have invested. Another equally important risk is that your investments will not provide enough growth or income to offset the impact of inflation, which could lead to a gradual increase in the cost of living. There are additional risks as well (life decline in economic growth). But the biggest risk of all is not investing at all.

Return –what can you expect to get back on your investment? Investments are made for the purpose of generating returns. To a large extent, the choice of the right investment option will GOVT-P.G CENTER SINDHANUR Page Page 19

also depend upon your financial goals. For example, if you want to invest for funding your vacation next year, don’t choose an investment vehicle that has a three year lock-in. Similarly, if you want to invest for your daughter’ marriage after 10 years, don’s invest in 1 year bonds for the next 10 years. Instead, choose an option that matches your investment horizon.

Risk V/s Return: Risk and Return go hand in hand. Higher the risk, higher is the possibility of earning a good return. Thus, it follows that all types of investment have some form of risk attached to it. Theoretically, even ‘safe’ investments (such as bank deposits) are not without some element of risk. Broadly, here are the various types of risks that you might have to face as an investor.

Credit risk: The risk is that the issuer of the security will default, or not repay the principal amount. This is valid for corporate bonds etc.

Liquidity Risk: If you invest in securities, stocks, bonds, you are risking their sellabililty. In other words, your money gets stuck unnecessarily, creating an asset liability mismatch.

Market Risk: Financial markets are volatile in nature. Volatility means sudden swings in value from high to low, or the reverse. The more volatile an investment is, the more profit or loss you can make, since there can be a big spread between what you sell it for. But you also have to be prepared for the price to drop by the same amount. Those who invest in stocks and mutual funds typically run this risk.

Interest Rate Risk: Depending on the interest rate movement in the economy, the rates of interest investment instruments may go up or come down, resulting in a subsequent reverse movement of their prices. Such a scenario of economic instability might affect mutual funds etc. GOVT-P.G CENTER SINDHANUR Page Page 20

The whole idea behind investment planning is to evaluate the risk associated with various types of investments and take steps so as to balance it with the desire return.



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Name of the book Mutual funds in India H-saduak Author

Merchant Banking

Gorden & Natarajan

News papers:

1.Business line. 2. Economic times.


1. www.googlesearch.com. 2. www.amfiindia.com. 3. www.reliancemf.com. 4. www.sebi.gov.in 5. www.bajajcapital.com. 6. www.indiainfoline.com. 7. www.timesofindia.com 8. www.economictime.com 9. www.moneycontrole.com


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