An Analysis of Investors’ behavior towards various Investment Avenues in India

8/10/2019 An Analysis of Investors behavior towards various Investment Avenues in India

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cknowledgement

We extend our sincere gratitude and thanks to Dr. Kumar Bijoy and Ms. Vibhuti Vasisht for theirguidance while making this roject.


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o)ntroduction

o )ndustry rofile

o Descrition of *arious in*estment

o Data analysis and interretation

o +yothesis

o $bser*ations , %indings

o (ummary

o &onclusion

o nnexure - uestionnaire

o Bibliograhy


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(a*ings form an imortant art of the economy of any nation. With the sa*ings in*ested in

*arious otions a*ailable to the eole1 the money acts as the dri*er for growth of thecountry.)ndian financial scene too resents a lethora of a*enues to the in*estors. !houghcertainly not

the best or deeest of markets in the world1 it has reasonable otions for an ordinary man to

in*est his sa*ings.

$ne needs to in*est and earn return on their idle resources and generate a secified sum of

money for a secific goal in life and make a ro*ision for an uncertain future.

$ne of the imortant reasons why one needs to in*est wisely is to meet the cost of inflation.

)nflation isthe rate at which the cost of li*ing increases.

!he cost of li*ing is simly what it cost to buy the goods and ser*ices you need to li*e.

)nflation causes money to lose *alue because it will not buy the same amount of a good or

ser*ice in the future as it does now or did in the ast. !he sooner one starts in*esting the better.

By in*esting early you allow your in*estments more time to grow1 whereby the concet of

comounding increases your income1 by accumulating the rincial and the interest or

di*idend earned on it1 year after year.

!he three golden rules for all in*estors are2

3 )n*est early

3 )n*est regularly

3 )n*est for long term and not for short term

!he urose of the analysis is to determine the in*estment beha*iour of in*estors and

in*estment references for the same.


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)ndian financial industry is considered as one of the strongest financial sectors among

the world markets. Many industry exerts may gi*e *arious reasons for such )ndian financialindustry reutation1 but there is only one answer which no one can deny1 is the effecti*e

control and go*ernance of the country s sureme monetary authority the /#(#/V# B 'K $%

)'D) 6/B)7.

%inancial sector in )ndia has exerienced a better en*ironment to grow with the

resence of higher cometition. !he financial system in )ndia is regulated by indeendent

regulators in the field of banking1 insurance1 mortgage and caital market.

8o*ernment of )ndia lays a significant role in controlling the financial market in )ndia.

Ministry of %inance1 8o*ernment of )ndia controls the financial sector in )ndia. #*ery

year the finance ministry resents the annual budget on 9:th %ebruary. !he /eser*e Bank of

)ndia is an aex institution in controlling banking system in the country. )ts monetary olicy

acts as a major weaon in )ndia;s financial market.

Various go*erning bodies in financial sector2


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ha*e any regulatory authority for in*estments in gold. Ministry of %inance1 8o*ernment of

)ndia has a control o*er all the financialbodies in )ndia. 8o*ernment securities1 5ublic

5ro*ident %und 655%71 'ational (a*ings &ertificat 6'(&71 5ost $ffice (a*ings are all under the

control of the central go*ernment.

)n*estment are normally categoried using the risk in*ol*ed in it 1 risk is

deendent on *arious

factors like the ast erformance1 its go*erning body1

in*ol*ement of the go*ernment etc. 1 in

this scenario )ndian in*estments are

classified in to > categories based on risk. !hey are


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As the name denotes1 this account is erfect for arking your temorary sa*ings. !hese

accounts are one of the most oular deosits for indi*idual accounts. !hese accounts ro*ide

cheue facility and a lot of flexibility for deosits and withdrawal of funds from the account.

Most of the banks ha*e rules for the maximum number of withdrawals in a eriod and the

maximum amount of withdrawal1 but no bank enforces these. +owe*er1 banks ha*e e*ery right

to enforce such boundaries if it is felt that the account is being misused as a current account. At


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resent the interest on these accounts is regulated by /eser*e Bank of )ndia. 5resently )ndian

banks are offering >.@E .a. interest rate on such deosits.

!his account gi*es the customer a nominal rate of interest and he can withdraw money

as and when the need arises. !he osition of account is deicted in a small book known as ;5ass

Book;. (uch accounts should be treated as a temorary arking area because the rate ofinterestis much less than %ixed Deosits. As soon as one s sa*ings accumulate to an amount which he

can sare for a certain eriod of time1 shift this money to %ixed Deosit. !he returnson the

money ket in (a*ings Bank account will be less but the freedom to withdraw is the highest.

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!he term GfixedG in %ixed Deosits denotes the eriod of maturity or tenor. %ixed

Deosit1 therefore1 re lans a length of time for which the deositor decides to kee themoney

with the Bank and the rate of interest ayable to the deositor is decided by this tenure. /ate of

interest differs from Bank to Bank. 'ormally1 the rate is highest for deosits for >=@ years. !his1

howe*er1 does not mean that the deositor loses all his rights o*er the money for the duration

of the tenor decided. Deosits can be withdrawn before the eriod is o*er.

+owe*er1 the amount of interest ayable to the deositor1 in such cases goes down.

#*ery Banks offer fixed deosits schemes with a wide range of tenures for eriods from

H days to


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banks and ost offices.

#ligibility2 Any indi*idual salaried or non=salaried can oen a 55% account. +e may also

ledgeon behalf of a minor1 +0%1 A$5 and B$). #*en '/)s can oen 55% account. A erson can

contain only one 55% account. Also two adults cannot oen a combined 55% account. !hecollecti*e annual ayment by an indi*idual on account of himself his minor child and

+0%CA$5CB$) 6of which indi*idual is member7 cannot exceed /s.H1 or else the excess

amount will be returned without any interest.

(ubscrition2 !he yearly contribution to 55% account ranges from a least of /s.@ to a

maximum of /s.H1 ayable in multile of /s.@ either in lum sum or in con*enient

installments1 not exceeding


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' !)$' " ( V)'8( /!)%)& !# 6'(&7

'ational (a*ings &ertificate 6'(&7 is a fixed interest1 long term instrument for

in*estment. '(&s are issued by the Deartment of 5ost1 8o*ernment of )ndia. (ince they arebacked by the 8o*ernment of )ndia1 '(&s are a ractically risk free a*enue of in*estment. !hey

can be bought from authoried ost offices. '(&s ha*e a maturity of I years. !hey offer a rate

of return of :E er annum. !his interest is calculated e*ery six months1 and is merged with the

rincial. !hat is1 the interest is rein*ested1 and is aid along with the rincial at the time of

maturity. %or e*ery /s.


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8o*ernment securities 68=secs7 are sureme securities which are issued by the /eser*eBank of

)ndia on behalf of 8o*ernment of )ndia in lieu of the &entral 8o*ernment;s marketborrowing

rogram.

!he term 8o*ernment (ecurities includes2&entral 8o*ernment (ecurities.

(tate 8o*ernment (ecurities

!reasury bills

!he &entral 8o*ernment borrows funds to finance its ;fiscal deficit;. !he market

borrowing of the &entral 8o*ernment is increased through the issue of dated securities and

>I? days treasury bills either by auction or by floatation of loans. )n addition to the abo*e1

treasury bills of J< days are issued for managing the temorary cash mismatches of the

8o*ernment. !hese do not form art of the borrowing rogram of the &entral 8o*ernment.

%eatures

= )ssued at face *alue

= 'o default risk as the securities carry so*ereign guarantee.

= Amle liuidity as the in*estor can sell the security in the secondary market

= )nterest ayment on a half yearly basis on face *alue

= 'o tax deducted at source

= &an be held in Demat form.

= /edeemed at face *alue on maturity= Maturity ranges from of 9=> years.

= (ecurities ualify as ("/ in*estments 6unless otherwise stated7.

Benefits of )n*esting in 8o*ernment (ecurities

= 'o tax deducted at source

= Additional )ncome !ax benefit uCs :" of the )ncome !ax Act for )ndi*iduals

= ualifies for ("/ urose

= ero default risk being so*ereign aer

= +ighly liuid.

= !ransarency in transactions and simlified settlement rocedures through &(8"C'(D".

M0!0 " %0'D(


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A mutual fund is a rofessionally=managed firm of collecti*e in*estments that ools

money from many in*estors and in*ests it in stocks1 bonds1 short=term money market

instruments1 andCor other securities. )n a mutual fund1 the fund manager1 who is also known as

the ortfolio manager1 trades the fund;s underlying securities1 realiing caital gains or losses1

and collects the di*idend or interest income. !he in*estment roceeds are then assed along to

the indi*idual in*estors. !he *alue of a share of the mutual fund1 known as the net asset *alue

er share 6'AV71 is calculated daily based on the total *alue of the fund di*ided by the number

of shares currently issued and outstanding.

d*antages of Mutual %unds

. /egulatory o*ersight

?. "iuidity

@. &on*enience

I. !ransarency

H. %lexibility

:. &hoice of schemes

J. !ax benefits


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"ike other insurance olicies1 life insurance is also a contract between the insurer and

the olicy owner whereby a benefit is aid to the nominated beneficiaries if an insured e*ent

occurs which is co*ered by the olicy. !he assessment for the olicyholder is deri*ed not from

an actual claim e*ent. But to a certain extent it is the *alue deri*ed from the ;eace of mind;

exerienced by the olicyholder1 because of the negating of ad*erse financial conseuencescaused by the death of the "ife Assured. !o be a life olicy the insured e*ent must be based

uon the li*es of the eole named in the olicy.

d*antages of a "ife )nsurance 5olicy

. %acilitates #conomic Mo*ements

?. +els to A*ail !ax #xemtions

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Bonds , Debentures1 these two words can be used interchangeably. )n )ndian markets1

we use the word bonds to indicate debt securities issued by go*ernment1 semi=go*ernment

bodies and ublic sector financial institutions and comanies. We use the word debenture to

refer to the debt securities issued by ri*ate sector comanies.

Bonds = Debt securities issued by 8o*t. or 5ublic sector comanies

Debentures = Debt securities issued by ri*ate sector comanies

)n other words we can tell that a bond is a debt security1 similar to an ).$.0. When you

urchasea bond1 you are lending money to a go*ernment1 municiality1 cororation1 or 5ublic

entityknown as the issuer. !he issuer romises to ay you a secified rate of interest during the

life ofthe bond1 in return for the loan. !hey also romises to reay the face *alue of the bond

6the rincial7 when it matures.


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%ollowing are allowed to issue bonds

8o*ernments

Municialities

Variety of institutions

&ororations

Buying and +olding of Bonds2 )n*estors can subscribe to rimary issues of &ororates and

%inancial )nstitutions 6%)s7. )t is common ractice for %)s and &ororates to raise funds for asset

financing or caital exenditure through rimary bond issues. (ome bonds are also a*ailable in

the secondary market. !he minimum in*estment for bonds can either be /s @1 or /s


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!he first ste is to understand the stock market. A share of stock is the smallest unit of

ownershi in a comany. )f you own a share of a comany s stock1 you considered as the art

owner of the comany.

(tock Market !rading

(tock market trading consists of buying and selling of comany stocks and as well as

stock deri*ati*es. !his tye of trading usually takes lace in a stock exchange1 in which

comanies need to be listed in order for their shares to be bought and sold. !his trading market

ro*ides with substantial earnings otential and is one among the most oular in*estment

otions.

Working of (tock Market

(tock market trading is normally done by brokers. As a result1 the first ste is to seek a

reliable in*estment broker. (tock market trading occurs at a hysical stock exchange1 where

buyers and sellers of comany shares meet and agree on the rice at which the transactions

would materialie.

&on*entional stock trading entails an in*estor lacing an order for a secific number of

shares of a comany with hisCher broker resent in the hysical stock market. !he broker

forwards the order to the floor clerk1 who then attemts to locate a trader desire to sell those

shares. Bids are then exchanged. !he transaction closes only after the buyer agrees on the rice

uoted by the seller. !his techniue is also called oen outcry1 because it in*ol*es traders

crying out their bids.

(tock market trading will also takes lace online. !his rocedure is much uicker and

less comlicated than trading in the hysical stock market. $nline stock market trading

engrosses the real time lacement of buying and selling orders for stocks. !he transaction is

accomlished when the trading system is caable to match bids and a confirmation is recei*ed.

Benefits of (tock Market !rading

. )t ensures that money is in*ested in businesses to enhance rofit otential.

?. )t hels in*estors realie substantial rofits.

Drawbacks of (tock Market !rading2


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. )t is traded for limited hours in a day.

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!he terms commodities and futures are often used to deict commodity trading or

futures trading. )t is similar to the way stocks and euities are used when in*estors talk

about the stock market. &ommodities are the actual hysical goods like gold1 crude oil1 corn1

soybeans1 etc. %utures are contracts of commodities that are traded at a commodity exchangelike M&F. Aart from numerous regional exchanges1 )ndia has three national commodity

exchanges namely1 Multi &ommodity #xchange 6M&F71 'ational &ommodity and Deri*ati*es

#xchange 6'&D#F7 and 'ational Multi=&ommodity #xchange 6'M. %orward Markets

&ommission 6%M&7 is the regulatory body of commodity market.

)t is one of a few in*estment areas where an indi*idual with limited caital can make

extraordinary rofits in a relati*ely short eriod of time. Many eole ha*e become *ery rich

byin*esting in commodity markets. &ommodity trading has a bad name as being too risky for

thea*erage indi*idual. !he fact is that commodity trading is only as risky as you want to make

it.

!hose who treat trading as a get=rich=uick scheme are likely to lose because they ha*e to take

big risks. )f you act carefully1 treat your trading like a business and are willing to settle for a

reasonable return1 the ossibility of success is *ery high.

!he course of trading commodities is also known as futures trading. 0nlike other kinds

of in*estments1 such as stocks and bonds1 when you trade futures1 you do not really buy

anything or own anything. 4ou are seculating on the future direction of the rice in the

commodity you are trading. !his is like a bet on future rice direction. !he terms GbuyG and

GsellG merely indicate the direction you exect future rices will mo*e. )f1 for examle1 you wereseculating in wheat1 you would buy a futures contract if you thought the rice would be

going u in the future. 4ou would sell a futures contract if you thought the rice of wheat

would godown. %or e*ery trade1 there is always a buyer and a seller. 'either erson has to own

anywheat to articiate. But he has to deosit sufficient caital with a brokerage firm to insure

that he will be able to ay the losses if his trades lose money.


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Working of &ommodity Market2 &ommodity Market works Lust like stock futures. When you

buy %utures1 you don;t ha*e to ay the entire amount1 just a fixed ercentage of the cost. !his is

known as the margin. "et;s say you are buying a 8old %utures contract. !he minimum contract

sie for a gold future is


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trading accounts to ;retail; traders. All you need to get started is a comuter1 a high=seed

)nternet connection1 and the information.

!he foreign exchange market is exclusi*e because of the following reasons

= )ts trading *olumes= !he tremendous liuidity of the market

= )ts geograhical disersion

= )ts long trading hours

= !he *ariety of factors that affect exchange rates.

= !he low limits of rofit comared with other markets of fixed income but rofits

can be high due to *ery great trading *olumes

= !he use of le*erage

Benefits of %orex !rading


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economy of )ndia as it transforms the skyline of the )ndian cities mobiliing in*estments

segments ranging from commercial1 residential1 retail1 industrial1 hositality1 healthcare etc.

Butmaximum growth is attributed to its growth from the booming )! sector1 since an estimated

H er cent of the new construction is for the )! sector.

/eal estate industry research has also thrown light on in*estment oortunities in thecommercial office segment in )ndia. !he demand for office sace is exected to increase

significantly in the next few years1 rimarily dri*en by the )! and )!#( industry that reuires

anrojected office sace of more than >IH million s ft till 9


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)ndia has the highest demand for gold in the world and more than JE of this gold is

acuired in the form of jewellery. %ollowing are the factors influencing the demand for gold.

!he mo*ement of gold rices is one of the imortant *ariables determining demand for gold.

!he increase in the irrigation1 technological change in agriculture 6through mechaniation and

high yielding *arieties71 ha*e generated large marketable surlus and a highly skewed rural

income distribution is another factors contributing to additional demand for gold.

(uly of 8old2 !he main economic effects that arise from the changes in the suly of gold

can be seen against the uantum of gold that is already in existence in the economy. !he suly

of gold is not u to the reuirements as the roduction of gold is also coming down and

demand for gold is going u *ery sharly.

8old as an )n*estment $tion2

8old as an in*estment tool always gi*es good returns1 flexibility1 safety and liuidity to

the in*estors. !herefore as a financial consultant my ad*ice to you all is1 kindly allocate a

ortion of your ortfolio for gold in*estments. 5ractice the habit of buying at least one gram of

gold e*ery month.

#M#/8)'8 )'V#(!M#'! V#'0#(

According to a study undertaken jointly by Merrill "ynch1 &a 8emini1 and #rnst ,

4oung1 +igh 'et worth )ndi*iduals P+')sQ or wealthy in*estors are roacti*e in ortfolio

management1 risk management1 consolidation financial assets and use of di*ersification

strategies as acti*ely as large institutions. +')s are roacti*e in identifying new in*estment

otions and take inuts from rofessional ad*isors in *olatile market conditions.

+')s are dynamic in modifying their asset allocation and were among the first in*estors

to mo*e from euities to fixed income during 9


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in*ested directly in real estate and indirectly through real estate in*estment trusts.

rt and assion2Wealthy in*estors also ha*e their in*estment in art1 wine1 antiues1

and collectibles

5recious Metals2 8old and other recious metals are attracti*e in*estment otions to

balance the asset allocation&ommodities2 Wealthy in*estors ha*e turned to commodities to offset the lower

returns from fixed income securities.

lternati*e in*estments 2+edge funds and 5ri*ate euity in*estments such as *enture

funds are becoming increasingly oular with wealthy in*estors to reduce the in*estment risks

related to stock market fluctuations. !his is because these instruments ha*e low correlation

with euity asset class erformance. )n*estment in non correlated assets1 such as commoditieshels to

imro*e di*ersification of the ortfolio amidst *olatile market conditions.

)'V#(!M#'! )' /!

!oday1 we find that an increasing number of indi*iduals are looking at alternati*e

in*estments1 which ro*ide them with a di*ersification away from a articular asset class.

5eole are willing to in*est and looking for areas other than the stock market for in*esting.

)n*esting in the *intage wine1 coins1 stams and Art1 is now an indulgence which gi*es them an

oortunity to cash in on their hobbies1 without ha*ing the le*el of exertise that is reuired

for other direct in*estments.

Art is being incororated into the in*estor;s o*erall asset allocation decision. !he art

scene around the world is growing significantly. With more and more in*estors looking at artas an alternati*e asset class and a store of a long term *alue1 a*erage annual art *aluations

ha*eoutaced a*erage annual stock market *aluations by more than three times since 9.

+#D8# %0'D(

$*er the last


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+edge %und /isks2

= "ack of transarency

= "imited liuidity

= Difficulty accessing uality hedge funds

= 0nreliable or incomlete return data= Valuation risk

= Asymmetrical nature of +edge fund returns distributions P(K#WQ

= &ounterarty risk P"e*erageQ


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5/)V !# #0)!4 )'V#(!M#'!(

)s the most imortant funding source in the entrereneurial marketlaceR 5ri*ate

euity in*estments contribute to the funding of around 9@ times the number of businesses the

*enture caitalists fund each year.

5ri*ate euity in*estments are usually deri*ed from a high net=worth indi*idual who

reresents an essential source of funding for early stage1 high=risk *entures. )t is estimated that

one=se*enth of the >1 S startCearly growth firms in the 0( recei*e funding from angel

in*estors. !his translates into o*er T9 billion of in*estment in aroximately @1 deals

eachyear. !his in*estment grou exceeds *enture caital sources which are estimated at T@ =

THbillion sread o*er


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D ! ' "4()( ,

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nalysis in this reort2

An analysis is made on the resonses recei*ed from


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)nterretation2

!able abo*e shows1 that @: 6@:E7 of the in*estors are men and the rest ?96?9E7 are

females. 8enerally males bear the financial resonsibility in )ndian society1 and therefore they

ha*e to make in*estment 6and other7 decisions to fulfill the financial obligations.

When it comes to age1 it was found that >@E are young and significant number under

the age grou of 9 >. >@E of them are in the age grou of > to ?. >E of them are abo*e

? years of age. !here are no in*estors below 9 years of age.

'early @9E of the in*estors belong to the salaried class1 99E were business class1


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needs1 and in*est those sa*ed resources efficiently.

>J6>JE7 of the indi*idual in*estors co*ered in the study are ostgraduates ?I6?IE7

in*estors are graduates and H6HE7 of the in*estors are under=graduates1 and :6:E7 in*estors

are categoried as others who are either illiterates1 had less education than under graduation

or who are more ualified than ost graduates. )t is interesting to note that most in*estors6co*ered in the study7 can be said to ossess higher education 6Bachelor Degree and abo*e71

and this factor will increase the reliability of conclusions drawn about the matters under

in*estigation.

>H6>HE7 of the in*estors are earning less than 9 lakhs er annum1 >


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)nterretation2)t is interesting to know that many of the in*estors refer to in*est their

money for medium term i.e. from < @ yrs1 instead of short term or long term. E referred long term.


28/45

)nterretation2Due to the busy life schedule1 many of the in*estors are not able to send

time

in monitoring their in*estments1 only @E are monitoring on a monthly basis1 ?E of the in*estors ne*er in*ested in euity shares. !he in*estors

who in*est in euity share market are asked another uestion1 what would they do if the stock

market falls immediately after their in*estment1 many of them relied that they would wait till

the market increases instead of selling them at a loss1 *ery few answered that they would

a*erage the in*estment by buying some more shares.


29/45

H>E of the samle in*estors had a monthly family budget for their daily exenditure.

9HE of the in*estors relied they ne*er thought of ha*ing a budget calculation1 and few think

ofha*ing a budget but ne*er imlemented so far. Many eole with excess money ne*er cared

tomake any family budgets.

)t is interesting to know that almost same roortion of in*estors ha*e different

thoughts1 ?:E of the in*estors ha*e an in*estment target e*ery year1 and @9E of the in*estors

do not go for any targets for in*estment. $n ersonal uestioning many of the in*estors who

had an in*estment target e*ery year are not able to reach their targets due to contingent

exenses. %ew in*estors in*est regularly but ne*er thought of ha*ing a target e*ery year.


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HHE of the in*estors ne*er had a financial ad*isor1 they ne*er aroached an ad*isor for their

financial needs1 the reason may be inadeuate income and excess exenditure1 and there

wouldnOt be surlus money to worry about. 9> E of the in*estors ha*e financial ad*isors1 who

manage their in*estments.


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!he abo*e table shows the sa*ings objecti*es of the samle in*estors1 in*estors are gi*en

otion to select one or more sa*ings objecti*es1 since there may be one or more answers1

weights are gi*en for each arameter bases on the *otes gi*en by the in*estors1 the maximum

weight age reresents many in*estors ha*e that as main objecti*e. Based on the weights

calculated ranks are gi*en in the order of maximum weightage gi*en by in*estors. %irst rank isgi*en to children s education1 many in*estors feel that1 in*esting money for the future of the

&hilds education is *ery imortant than any other need. Many of the in*estors are in the age

grou of 9 > and > ? as of now they are thinking of sa*ing for their children s marriage.

(o children s marriage is gi*en last rank. After children s education in*estors are sa*ing for

theirown health care. !here is a greater need for )ndians to sa*e for their health care who are

li*ing a mechanical life. /etirement and home urchase are gi*en subseuent ranks after

health care.

All the in*estors ha*e *ery common uroses for in*esting1 they ha*e more than oneurose for in*esting their money. (alaried eole in*est for tax sa*ings1 and for future

exenditure1 business eole in*est for the urose of earning returns. Almost all the in*estors

ha*e all the ? uroses behind in*esting their money.


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When the in*estors are asked about the factors considering before in*estment many of

them ha*e *oted for safety of rincial and low risk. %irst rank is gi*en to safety of rincial

andsecond to low risk. +ere there are some contradicting results1 some in*estors exect high

returns at a *ery low risk1 and this is not ossible in ractical )ndian in*estment a*enues.

)n*estment belie*es in a ro*ed rincile1 higher the risk higher the returns1 lower the risk

lower thereturns . )n*estors need to know about this rincile before in*esting.

)ndeendent Variables and Deendent Variables

!here are total four indeendent *ariables

. ualification

?. Annual income

!here can be many deendent *ariables like


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!hese indeendent *ariables can be comared with any deendent *ariables for finding the

relations between the arameters.

)n our analysis we ha*e taken occuation category for comarison with deendent *ariable

in*estment reference and age grou comaring with the deendent *ariable le*el of risk

tolerance.

Below are the demograhics of the samle in*estors based on the category

occuation.


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((0M5!)$'

As a art of the analysis we ha*e assumed that reference for in*estment a*enues is deendenton the occuation of the in*estor. +ence referred in*estment a*enue are deri*ed from the

demograhics of the samle in*estor based on occuation.


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rather than mutual funds. As business eole rofessionals also refer bank fixed deosits in

the first lace1 then life insurance. 5rofessionals does not refer national sa*ing certificates at

all1 eliminated it from the to


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+45$!+#()(

)ncrease in Age decreases the /isk tolerance le*el.

/elation between Age and risk tolerance

"e*el of risk tolerance deendent on the age of the in*estor.

/isk tolerance of an in*estor shows a negati*e relation to the age of that in*estor

"ower the age higher the risk caabilities1 higher the age lower the risk caabilities.

"#V#" $% /)(K !$"#/ ' W)!+ /#(5#&! !$ 8# 8/$05

%or the urose of analysis in*estors are laced under three categories.


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$B(#/V !)$'(2

$bser*ations from table

We find that ?JE of )n*estors between the age grou of 9 > came under medium risk

category1 where as the ercentage of in*estors who came under mediumrisk in the age grouof > ? has decreased to >9E. )t still came down in the case of in*estorsin the age grou of

? abo*e1 which is only 9E. We can see a decreasing trend in the beha*iour of in*estors

towards medium risk when their age increased.

>HE of the in*estors in the age grou of 9 > are in the low risk category1 where as

)n*estors under the age grou > ?1 @HE came under the low risk category1 there is a large


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increase in the in*estors who came under low risk category in this age grou. )t has further

increased1 HE of the in*estors in the age grou abo*e ? came under the low risk category.

We can see an increasing trend with resect to low risk category as the age increases.

(ame obser*ations are arri*ed at1 when comaring the high risk category with resect

to the age grous. As the age increases the le*el of risk tolerance is coming down.


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/eal #state.


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!his reort is a reflection of the beha*iour of *arious categories of in*estors.

(election of a erfect in*estment a*enue is a difficult task to any in*estor. An effort is made to

identify the tastes and references of a samle of in*estors selected randomly out of a large

oulation. Desite of many limitations to the study ) was successful in identifying some

in*estment atterns1 there is some commonness in these in*estors and many of themresonded ositi*ely to the study.

!his reort concentrated in identifying the needs of current and future in*estors1

in*estor s reference towards *arious in*estment a*enues are identified based on their

occuation. )n*estors risk in selecting a articular a*enue is deendent on the age of that

in*estor.

&$'&"0()$'

!his study confirms the earlier findings with regard to the relationshi between Age and

risk tolerance le*el of indi*idual in*estors. !he 5resent study has imortant imlications for

in*estment managers as it has come out with certain interesting facets of an indi*idual

in*estor. !he indi*idual in*estor still refers to in*est in financial roducts which gi*e risk free

returns. !his confirms that )ndian in*estors e*en if they are of high income1 well educated1

salaried1 indeendent are conser*ati*e in*estors refer to lay safe. !he in*estment roduct

designers can design roducts which can cater to the in*estors who are low risk tolerant anduse !V as a marketing media as they seem to send long time watching !Vs.

uestionnaire


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Bank %ixed Deosits.

5ublic 5ro*ident %und.

'ational (a*ings &ertificates.

5ost $ffice (a*ings.

8o*ernment (ecurities.

Moderate /isk )n*estment *enues2

Mutual %unds.

"ife )nsurance.

#uity (hare Market.

&ommodity Market.

%$/#F Market.

!raditional )n*estment *enues2

/eal #state 6roerty7.

8oldC(il*er.

&hit %unds.

#merging )n*estment *enues2

Virtual /eal #state.

+edge %unds.

5ri*ate #uity )n*estments.

Art and 5assion. Debentures.

Bonds.

9. What do you think are the best otions for in*esting your moneyR 6choose from abo*e list7

6/ank in the order of reference7

.UUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUU

?.UUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUU @.UUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUU

I.UUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUU

>. /easons for selecting these otions 2


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&hildren s #ducation /etirement +ome 5urchase &hildren s Marriage +ealthcare

othersUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUU

:. What is your in*estment objecti*eR

)ncome and &aital 5reser*ation "ong=term 8rowth 8rowth and )ncome short=term 8rowth

$thersUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUU

UUUUUUUUU

J. What is the urose behind in*estmentR

Wealth &reation !ax (a*ing #arn /eturns %uture #xenses

$thersUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUU

UUUUUUUU


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An Analysis of Investors’ behavior towards various Investment Avenues in India

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