Financial Instruments



The present financial market is flooded with a lot investment instruments, viz., Shares, Bonds, Mutual funds, Insurance plans, Fixed Deposits, other money and capital market instruments and also various options of investment in Real Estate and Commodity Market etc. Sometimes people refer to these options as "investment vehicles," which is just another way of saying "a way to invest." Each of these vehicles has its own positives and negatives and ultimate decision of investment is influenced by the individual investor’s perception regarding the risk and return of concerned investment opportunity available in the market. Further, the investment decisions is full of complexity because of volatility of market conditions, Inflation rate fluctuations, impact of Global environment, Cash reserve ratio, and Repo rates. Therefore, it is imperative to analyze these factors while taking an investment decision.

Keeping above in mind, the study has been done to see the perception of investors which provides understanding to readers about the various factors which should be keep in mind at the time of investment. The study is useful to company in providing the understanding about the investors’ perception to devise the suitable product/marketing strategies, which would helps it in making their policies or strategies in order to attract them.

Further. financial planner get advent to make portfolio according to response given by respondents, which belong to different occupations, having different income level, different age level or which instrument is mostly like by the investors for investment. The study would further helpful for readers in understanding about the various investment opportunities available in the market.

Objectives of the Study

The various objectives of the study are

1) To study the various financial opportunities available for investment.

2) To study about the investors perception regarding various investment opportunities available in the market

3) To analyze the investment patterns of the investment.

4) To examine the investors changing behavior regarding various investment opportunities.

The study is descriptive and analytical in nature. It is descriptive as it describes the existing financial instruments available in the market. It is analytical as it analyses the perception of the investors.,

NCR region have been taken as universe of the study. Convenient sampling technique is used and a sample of 100 investors has been taken for the purpose of the study.

Interview and questionnaire have been used to conduct the study. A structured questionnaire consisting close-ended questions have been made, which is filled by the trainee during direct interaction with the respondents. Interviews have been taken of Relationship managers of different NBFC's and BANKS to seek the investor’s behavior towards investment.

Types of Investments

There are many ways to invest your money. Of course, to decide which investment vehicles are suitable for you, you need to know their characteristics and why they may be suitable for a particular investing objective.

• Debt Market
• Public Provident Fund
• Fixed Deposits
• Bonds
• Mutual Funds
• Banks Deposits
• Equity Market
• Initial Public Offer
• Insurance
• Forex
• Cash
• Gold
• Real Estate

Short Term Investment

They are good for short term goals, you can look at liquid funds, floating rate funds and shortterm bank deposits as options for this category of investments. Liquid funds have retuned around 5% post-tax returns as compared to 5.6% post-tax that your one-year 8% bank fixed deposit gives you. So, if you have funds for investment for over a period of one year, it is better to go in for bank deposits. However, liquid funds are better, if your time horizon is less than one-year, say around six months. This is because the bank deposit rates decrease proportionately with lower periods, while liquid funds will yield the same annualized returns for any period of time. Short-term floating rate funds can be considered at par to liquid funds for short term investments.

Fixed Maturity Plan (FMP):

If you know exactly for how much time you need to invest your surplus, a smarter option is to invest in FMPs. They are shorter-tenured debt schemes that buy and hold securities till maturity, thereby eliminating the interest rate risk. Try and opt for FMPs that offer a double indexation benefit. Fund houses usually launch double-indexation FMP’s during the end of the financial year so that they cover two financial year closings.

Medium & Long-Term Options:

These options typically offer low or virtually no liquidity. They are, however, largely useful as income accumulation tools because of the assured interest rates they offer. These instruments (small savings schemes) should find place in your long-term debt portfolio.

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