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The review of literature is to guide us in the methodologies to be used, estimation procedures and interpretation of results. Literature review is a body of text that aims to review the critical points of current knowledge on a particular topic. Most often associated with science-oriented literature, such as a thesis, the literature review usually precedes a research proposal, methodology and results section. Its ultimate goal is to bring the reader up to date with current literature on a topic and forms the basis for another goal, such as the justification for future research in the area. A good literature review is characterized by a logical flow of ideas; current and relevant references with consistent, appropriate referencing style; proper use of terminology; and an unbiased and comprehensive view of the previous research on the topic.
Here we discuss on different reviews related to the following:
Investors and Investments
Investors in emerging markets like India look at the market volatility as a good opportunity to increase the level of risk in their portfolio whereas in the developed markets volatility will make them go for an increased allocation in the cash and exercise increased in the caution with regard to the investment. “Investors increasing allocation of cash is not because their ability to bear that risk has been impacted”, says Bansal. Mittal M. and R. K. Vyas (2008) in their article “Personality Type and Investment Choice: An Empirical Study” Observed that investors have certain cognitive and emotional weaknesses which come in the way of their investment decisions.
Krishnamoorthi C. (2009) in his research paper “Changing Pattern of Indian Households: Savings in Financial Assets” published in RVS Journal of management, 2009 concluded that irrespective of the developments in the capital market/economic conditions, investors like to invest regularly and this investment behavior is highly related to educational background i.e. their occupation, reading habit of investment news and the time taken for investment decision making process.
Joseph Anbarasu D, Clifford Paul S and Annette B (2011) observed that the saving pattern of the people is crucial to the government in designing policies to promote savings and investment. Their study reveals that the people are aware about the importance of saving, but the awareness about investment opportunities is lowJohn C. Bogle the former CEO of Vangaurd Group Of Mutual Funds, in his article “Six Lessons for Investors – Be diversified and don’t assume past performance will continue” on Jan 08, 2009 says that, There is almost no limit to the ability of investors to ignore the lessons of the past & this cost them very much last year.
Here are six of the most important of these lessons:
Investment is the employment of funds with the aim of achieving additional income or growth in value with an essential quality involving ‘waiting’ for a reward. The term investment does not appear to be simple as it has been defined. Investment is the allocation of monetary resources to assets that are expected to yield or positive return over a given period of time says Preeti SinghMutual FundsMutual Fund schemes are having an increasing amount of innovation as funds try to ensure that their offerings cover a wide variety of options. This translates into an increasing arrangement of schemes on offer for investors leading to a large choice that means more confusion for investors. Vidhyashankar S (1990) identified a shift from bank or company deposits to mutual funds due to its superiority by way of ensuring a healthy and orderly development of capital market with adequate investor protection through SEBI interference.
Gupta L C (1992) attempted a household survey of investors with the objective of identifying investors’ preferences for mutual funds so as to help policy makers and mutual funds in designing mutual fund products and in shaping the mutual fund industry.Gangadhar V (1992) identified mutual funds as the prime vehicle for mobilization of household sectors’ savings as it ensures the triple benefits of steady return, capital appreciation and low risk.
Tripathy, Nalini Prava (1996) identified that the Indian capital market expanded tremendously as a result of economic reforms, globalization and privatization. Household sector accounted for about 80 percent of country’s savings and only about one-third of such savings were available for the corporate sector.“Mutual Funds have been gaining lot of importance in the Indian Capital Market arena from the time of launch. The growth anticipated in the Mutual Fund Industry has made the Central Government keep a close watch on the issues pertaining to the mutual fund industry. In this process the various governments have brought in regulations as regard to Mutual Funds in the Budgets” says Pradeep Kumar S and Murugavel A.
India’s mutual fund industry is one of the brightest spots in an already fast-growing domestic financial sector. Assets under management have swollen in the past year by almost 60 per cent to more than Rs5,379bn ($137bn) as the country’s once-conservative retail investors have been attracted to equities by new highs on the stock market says Joe Leahy, Andrew Hill and Paul Betts. Mutual Funds are increasingly gaining popularity among the Indian investors and have become the much sought after investment option, a latest Nielsen survey says.” The Nielsen Company Associate Director Customized Research Kalyan Karmakar said.
The high returns and ease of operating in the equity market take precedence over tax benefits as the key reasons for investing in a mutual fund. Even with the drop in Sensex, equity funds at 53 per cent have the highest share of future mutual fund investments, the survey revealed. “We are now seeing a change in mindset, where investors previously regarded Mutual Funds as a tax saving option but are now buying them in the hope of greater financial return as a result of the whopping rise in Sensex bringing greater profit to many investors last year,” Karmarkar added. SIP (Systematic Investment Plan)By Systematic Investment Plan one can invest a pre-determined amount of money in chosen schemes at the applicable NAV based Sale Price on each transaction date. Each transaction will fetch some additional units that will be added to the investment account.
Kairav Shah in his article “Investing in Mutual Funds” says SIP or Systematic Investment Plan is a great way to discipline oneself as it purchases mutual fund units every month at a predetermined date and amount. One can invest in mutual fund as low as Rs 500 through the post-dated cheques or by instructing their bank for an ECS facilities in Tax Funds. SIP is a good habit and a smart way to create wealth and it doesn’t demand lump sum investments, just a little, every month. With SIP, one need not have to time the market, and over a long period, ones investment averages out the market highs and lows. Hence one buys more units when the market is low and less when the market is high.
Here are some of the benefits of SIP:
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