A REPORT ON

RESEARCH PROJECH ON INVESTORS PERCEPTION ON

INVESTMENT AVENUES

SUBMITTED BY
V.VENKATRAO

Reg. no: 2011130020

SUBMITTED TO

Dr. T. VASUDHA
Project co-coordinator

CENTER FOR MANAGEENT AND TECHNOLOGY

Visakhapatnam

DECLARATION

I hereby declare that this research project entitled INVESTORS PERCEPTION

ON INVESTMENT AVENUES has been done by me during the year 2013 in

partial fulfillment of requirement for the Post Graduation Diploma in Management
awarded by AICTE.

I also declare that this project is a result of my own efforts and that it has not been
submitted to any other University for the award of a Degree or Diploma before or
published.

Place: Visakhapatnam

Date: 28-05-2013

(V.venkatrao)

CONTENTS
INTRODUCTION
Introduction to investment
Types of an investment
avenues

Non marketable financial

assets
Bonds
Mutual funds
Real estate
Equity shares
Money market instruments
Life insurance polices
Bullion market
Financial derivatives

RESEARCH METHODOLOGY
Statement of the problem
Review of literature
Need for study
Objectives of the study
Hypothesis
Research design
Tools of data collection
Method of analysis
Limitations of the study

INDUSTRY ANALYSIS
Indian financial market
Classification of financial
markets

Money market
Money market
Primary Market
Secondary market

ANALYSIS AND
INTERPRETATION
FINDINGS AND SUGGESTIONS
CONCLUSION
BIBLOGRAPHY
ANNEXURE

CHAPTER-1

INTRODUCT
ION

1.1INTRODUCTION TO INVESTMENT

The money one earns partly spent and the rest is saved to meeting future
expenses, instead of keeping savings idle one may like to use savings in order to
get returns on it in the future, this is called as investment. In an economic sense,
an investment is the purpose of goods that are not consumed today but are used
in the future to create wealth. In finance, an investment is a monitory asset
purchased with the idea that the asset will provide income in the future or
appreciate and be sold at a higher price. Here earnings will not help one to secure
the future, so it becomes important to invest.

One of the important reasons why one needs to invest wisely is to meet the cost
of inflation. Inflation is the rate at which the cost of living increases. The cost of
living simply what it costs to buy goods and services you need to live. Inflation
causes money to lose value because it will not buy the same amount of a good or
service in the future as it does now or did in the past. The sooner one starts
investing the better. By investing early one allows ones investments more time to
accumulating the principal and the interest or dividend earned on it. Year after
year.

The dictionary meaning of investment is to commit money in order to earn a

financial return or to make use of money for future benefits or advantages. People
commit money to investments with expectations to increase their future wealth by
investing money to spend in future years. For example, if you invest Rs 1000
today and earn 10% over the next year, you will have Rs.1100 one year from
today.

An investment can be described as perfect if it satisfies all the needs of all

investors. So, the starting point in searching for the perfect investment would be to
examine investor needs. If all those needs are met by the investment, then that
investment can be termed the perfect investment.

1.2. TYPES OF AN INVESTMENT AVENUE

Figure 1.1: Various Investment Alternatives

Figure 1.1 shows various investment alternatives which are explained below. One
can invest money in different types of instruments. These instruments can be
financial or non financial in nature. They are many factors that affect one`s choice
of investment. Millions of Indians buy Fixed Deposits, post office savings
certificates, stocks, bonds or mutual funds, purchase gold, silver, or make similar
Investments. They all have a reason for investing their Money. Let us first
understand the basics of some of some of the popular investment avenues.

1.3Non marketable financial assets: A good portion of financial assets is

represented by non marketable financial assets. These can be classified into the
following broad categories.

Bank deposits: The simplest of investment avenues, by opening a bank account and
depositing money in it one can make a bank deposit. There are various kinds of bank
accounts: current accounts, savings account and fixed deposit account. The interest
rate on fixed deposits various with the term of the deposit, in general it is lower for
fixed deposits for shorter term and higher for fixed deposits of longer term. Bank
deposits enjoy exceptionally high liquidity.

Post office savings account: A post office savings account is similar to a

savings bank account. The interest rate is percent for annum.

Post office time deposits (POTD`S): similar to fixed deposits of commercial banks,
POTD can be made In multiplies of 50 without any limit. The interest rates on
POTD`S are, in general, slightly higher than those on bank deposits. The interest rate
is calculated half-yearly and paid annually.

Monthly income scheme of the post office (MISPO): A popular scheme of the post
office, the MISPO is meant to provide regular monthly income to the depositors. The
term of the scheme is 6 years. The minimum amount of investment is 1,000. The
maximum investment can be 3, 00,000 in a single account or 6, 00,000 in a joint
account. The interest rate is 8.0 percent for annum, payable monthly. A bonus of 10
percent is payable on maturity.

Kisan vikas patra (KVP): A scheme of the post office, for which the minimum
amount of investment is 1,000. There is no maximum limit. The investment doubles in
8 years and 7 months. Hence the compound interest rate works out to 8.4 percent
there is a withdrawal facility after 2 years 6 months.

National savings certificate: Issued at the post offices, national savings certificate
comes in denominations of 100, 500, 1000, 5000 and 10000. It has a term of 6 years.
Over his period Rs 100 becomes Rs. 160.1. Hence the compound rate of return
works out to 8.16 percent.

Company deposits: many companies large and small solicit fixed deposits from the
public. Fixed deposits mobilized by manufacturing companies are regulated by the
company law board and fixed deposits mobilized by finance company are regulated
by the reserve bank of India. The interest rates on company deposits are higher than
those on bank deposits, but so is risk.

Employee provided fund scheme: A major vehicle of savings for salaried

employees, where each employee has a separate provident fund account in which
both the employer and employee are required to contribute a certain minimum
amount on a monthly basis.

Public Provident Fund Scheme: One of the most attractive investment avenues
available in India. Individuals and HUFs can participate in this scheme. A PPF
account may be opened at any branch of State Bank of India or its subsidiaries or at
specified branches of the other public sector banks. The subscriber to a PPF account
is required to make a minimum deposit of 100 per year. The maximum permissible
deposit per year is 70,000. PPF deposits currently earn a compound interest rate of
8.0 percent per annum, which is totally exempt from taxes.

1.4 Bonds: Bonds are fixed income instruments which are issued for the purpose of
raising capital. Both private entities, such as companies, financial institutions, and the
central or state government and other government institutions use this instrument as
a means of garnering funds. Bonds issued by the Government carry the lowest level
of risk but could deliver fair returns. Many people invest in bonds with an objective of
earning certain amount of interest on their deposits and/or to save tax. Bonds are
considered to be a less risky investment option and are generally preferred by riskaverse investors. Bond prices are also subject to market risk. Bonds may be
classified into the following categories:

Government securities: Debt securities issued by the central government state

government and quasi government agencies are referred as gilt edge securities. It
has maturities ranging from 3-20 years and carry interest rate that usually vary
between 7 to 10 percent.

Debentures of private sector companies: Debentures are viewed as a mixture of

having a shareholding and a fixed interest loan. Debenture holders are normally
entitled to a return equivalent to a fixed percentage of their initial investment. The
security inherent in debentures makes them a safer investment than shares.

Preference shares: Investing in shares is safer and dividends are assured every
yearn Savings bonds.

1.5 Mutual funds: A mutual fund allows a group of people to pool their money
together and have it professionally managed, in keeping with a predetermined
investment objective. This investment avenue is popular because of its costefficiency, risk-diversification, professional management and sound regulation. There
are three broad types of mutual fund schemes classified on basis of investment
objective:

Equity schemes: The aim of growth funds is to provide capital appreciation over the
medium to long- term. Such schemes normally invest a major part of their corpus in
equities. Such funds have comparatively high risks. These schemes provide different
options to the investors like dividend option, capital appreciation, etc. and the
investors may choose an option depending on their preferences. Growth schemes
are good for investors having a long-term outlook seeking appreciation over a period
of time.

Debt schemes: The aim of income funds is to provide regular and steady income to
investors. Such schemes generally invest in fixed income securities such as bonds,
corporate debentures, Government securities and money market instruments. Such

funds are less risky compared to equity schemes. These funds are not affected
because of fluctuations in equity markets. However, opportunities

Of capital appreciation are also limited in such funds. The NAVs of such funds are
affected because of change in interest rates in the country. If the Interest rates fall,
NAVs of such funds are likely to increase in the short run and vice versa. However, long
term investors may not bother about these fluctuations.

Balanced schemes: The aim of balanced funds is to provide both growth and regular
income as such schemes invest both in equities and fixed income securities in the
proportion indicated in their offer documents. These are appropriate for investors
looking for moderate growth. They generally invest 40-60% in equity and debt
instruments. These funds are also affected because of fluctuations in share prices in
the stock markets. However, NAVs of such funds are likely to be less volatile
compared to pure equity funds.

Real Estate: Residential real estate is more than just an investment. There are more
ways than ever before to profit from real estate investment. Real estate is a great
investment option. It can generate an ongoing income source. It can also rise in value
overtime and prove a good investment in the cash value of the home or land. Many
advisors warn against borrowing money to purchase investments. The best way to do
this is to save up and pay cash for the home. One should be able to afford the
payments on the property when the property is vacant, otherwise the property may
end up being a burden instead of helping to build wealth.

Equity Shares: Equities are a type of security that represents the ownership in a
company. Equities are traded (bought and sold) in stock markets. Alternatively, they
can be purchased via the Initial Public Offering (IPO) route, i.e. directly from the
company. Investing in equities is a good long-term investment option as the returns
on equities over a long time horizon are generally higher than most other investment
avenues. However, along with the possibility of greater returns comes greater risk.

Money market instruments: The money market is the market in which short term
funds are borrowed and lent. These instruments can be broadly classified as:

Treasury Bills: These are the lowest risk category instruments for the short
term. RBI issues treasury bills [T-bills] at a prefixed day and for a fixed amount.
There are 4 types of treasury bills: 14-day T-bill, 91-day T-bill, 182-day T-bill
and 364-day T-bill.

Certificates of Deposits: After treasury bills, the next lowest risk category
investment option is certificate of deposit (CD) issued by banks and financial
Institution (Fl). A CD is a negotiable promissory note, secure and short term, of
up to a year, in nature. Although RBI allows CDs up to one-year maturity, the
maturity most quoted in the market is for 90 days.

Commercial Papers: Commercial papers are negotiable short-term unsecured

promissory notes with fixed maturities, issued by well-rated organizations.
These are generally sold on discount basis. Organizations can issue CPs either
directly or through banks or merchant banks. These instruments are normally
issued for 30/45/60/90/120/180/270/364 days.

Commercial Bills: Bills of exchange are negotiable instruments drawn by the

seller or drawer of the goods on the buyer or drawee of the good for the value
of the goods delivered. These are called as trade bills and when they are
accepted by commercial banks they are called as commercial bills. If the bill is
payable at a future date and the seller needs money during the currency of the
bill then the seller may approach the bank for discounting the bill.

Life insurance policies: Insurance is a form of risk management that is

primarily used to hedge the risk of a contingent loss. Insurance is defined as
the equitable transfer of the risk of a loss, from one entity to another, in
exchange for a premium. An insurer is a company that sells insurance; insured
or the policyholder is a person or entity buying the insurance. The insurance
rate is a factor that is used to determine the amount which is to be charged for
a certain amount of insurance coverage, and is called the premium. It can be
classified as:

Money-back Insurance: Money-back Insurance schemes are used as investment

avenues as they offer partial cash-back at certain intervals. This money can be utilized
for children's education, marriage, etc.

.Endowment Insurance: These are term policies. Investors have to pay the premiums
for a particular term, and at maturity the accrued bonus and other benefits are returned
to the policyholder if he survives at maturity.

Bullion Market: Precious metals like gold and silver had been a safe haven for Indian
investors since ages. Besides jeweler these metals are used for investment purposes
also. Since last 1 year, both Gold and Silver have highly appreciated in value both in the
domestic as well as the international markets. In addition to its attributes as a store of
value, the case for investing in gold revolves around the role it can play as a portfolio
diversifier.

Financial Derivatives: Derivatives are contracts and can be used as an underlying

asset. Various types of Derivatives are:

Forwards: A forward contract is a customized contract between two entities, where

settlement takes place on a specific date in the future at today's pre-agreed price.

Futures: A futures contract is an agreement between two parties to buy or sell an asset
at a certain time in the future at a certain price. Futures contracts are special types of
forward contracts in the sense that the former are standardized exchange Traded
contracts

Options: Options are of two types - calls and puts. Calls give the buyer the right but not
the obligation to buy a given quantity of the underlying asset, at a given price on or

before a given future date. Puts give the buyer the right, but not the obligation to sell a
given quantity of the underlying asset at a given price on or before a given date.

Swaps: Swaps are private agreements between two parties to exchange cash flows in
the future according to a prearranged formula. They can be regarded as portfolios of
forward contracts. E.g. Currency swaps, interest swaps.

CHAPTER 2
RESEARCH

METHODOLOGY

2.1 STATEMENT OF THE PROBLEM

This study on investor's behavior is an attempt to know the perception and the
characteristics of the investors so as to understand their preference with respect
to their investments. The main focus of the study is to discover the influence of
Demographic factors like gender and age on risk tolerance level of the investor.

The study mainly concentrates on the factors that influence an individual

investor before making an investment. It also studies the various patterns in
which investors like to invest their money based on their risk tolerance level and
other demographic factors like income level, occupation etc.

2.2 REVIEW OF LITERATURE

The literature review section examines the importance of research studies,

company data or industry reports that serve as a foundation for the setup of
study. The research dimension of the related literature and the relevant
information begins from an explanatory perspective, approaching towards
specific studies which do related to judge the limitations and informational gaps
in data from the secondary sources. This analysis may reveal conclusions from
past studies to realize the reliability of the secondary sources and their
credibility. This in turn enables one to rely on a comprehensive review for the
study.

2.3 NEED FOR STUDY

Investing money is a crucial and deciding the avenues where to invest needs a
lot of planning. In India people are more conservative and hence prefer
investments that are less risky. Similarly there are other demographic factors like
age, income level, gender which affect their decision. As the availability of
financial products increase, perception of investors towards such avenues

changes over a period of time. It becomes important for a marketer to

understand the perception of investors towards investment avenues to

Successfully pitch the product. If the marketer is able to understand the mindset
of investor towards a product then he/she will be in a position to market the
product. This report attempts to study the behavior of Indian investors while
making an investment. Hence the need for this study arises to understand what
exactly an Indian investor thinks before investing his/her money and how much
risk he/she is willing to take.

OBJECTIVES OF THE STUDY

Primary Objective

To study the investors perception on investments

To study the objectives of investment plan of an investors

To study the demographic information of investors

Secondary Objectives

To know the preferred investment avenues of investors

To identify the preferred sources of information influencing investment decisions

To understand the risk tolerance level of the investors and suggest a suitable
portfolio

To study the dependence/independences of the demographic factors (Gender,

Age, income level) of the investor and his/her risk tolerance level.

HYPOTHESIS

A hypothesis describes the relationship between or among variables. A good

hypothesis is one that can explain what it claims to explain, is testable and has
greater range, probability and simplicity than its rivals. There are two approach
of hypothesis testing:

1) Classical or sampling theory statistics and 2) The Bayesian approach

In the present dissertation chi square test has been used to find out the
dependence/independence of various factors that influence investment
decision. Hypothesis has been found between following factors:

Gender and risk tolerance of respondents

Age and preferred investment avenues by the respondents

Income and investment avenues preferred by the respondents

Age of respondents and time horizon for investment

Age and risk tolerance of the respondents

2.6 RESEARCH DESIGN

Sample description

The sample was drawn from the population of the potential investors from
Visakhapatnam. A survey was conducted to understand the investor's behavior
with the help of questionnaire. It was carried out with a sample size of 100
investors.

2.7 TOOLS OF DATA COLLECTION

Primary data: The data has been collected directly from respondent with the
help of structured questionnaires.

Secondary data: The secondary data has been collected from various
magazines, journals, newspapers, text books and related websites

2.8 METHOD OF ANALYSIS

Statistical techniques like, simple percentage method are used to analyze and
interpret raw data. Hypothesis was used to show the
dependency/independency of various factors.

After collecting the data its variable having defined character, it was tabulated
and analyzed with the help of charts and graphs in Microsoft Excel.

LIMITATIONS OF STUDY

Sample size is small because of the time constraint

Respondent may be hesitant to provide their investment details

Behavior of investors doesn't remain same for long time

Time for the study is limited

CHAPTER3

INDUSTRY PROFILE

3.1 INDIAN FINANCIAL MARKET

Money always flows from surplus sector to deficit sector. That means persons
having excess of money lend it to those who need money to fulfil their
requirement. Similarly, in business sectors the surplus money flows from the
investors or lenders to the businessmen for the purpose of production or sale of
goods and services. So, we find two different groups, one who invest money or
lend money and the others, who borrow or use the money.

The financial markets act as a link between these two different groups. It
facilitates this function by acting as an intermediary between the borrowers and
lenders of money. So, financial market may be defined as 'a transmission
mechanism between investors (or lenders) and the borrowers (or users)
through which transfer of funds is facilitated'. It consists of individual investors,
financial institutions and other intermediaries who are linked by a formal trading
rules and communication network for trading the various financial assets and
credit instruments.

Financial market talks about the primary market, FDIs, alternative investment
options, banking and insurance and the pension sectors, asset management
segment as well. India Financial market happens to be one of the oldest across
the globe and is the fastest growing and best among all the financial markets of
the emerging economies. The history of Indian capital markets spans back 200
years, around the end of the 18th century. It was at this time that India was
under the rule of the East India Company. The capital market of India initially
developed around Mumbai; with around 200 to 250 securities brokers
participating in active trade during the second half of the 19th century.

3.2 CLASSIFICATION OF FINANCIAL MARKETS

Figure 3.1: Classification of financial markets

Figure 3.1 shows the classification of financial markets. From this figure we can
interpret that there are different ways of classifying financial market.

One is to classify financial market by the type of financial claim. The debt
Market is the financial market foe fixed claims (debt instrument) and the

Equity market is the financial market for residual claims (equity instruments)

The second way is to classify financial markets by the maturity of claims. The
market for short term financial claims is referred to as the money market and
the market for long term financial claims is referred to as the capital market.

The third way to classify financial markets is based on whether the claims
represent new issues or outstanding issues. The market where issues sell new
claims is referred as primary market and the market where issues sell
outstanding claims is referred as secondary market.

The fourth way to classify financial markets is by the timing of delivery. A cash
or spot market is one where the delivery occurs immediately and forward or
futures markets are those markets where the delivery occurs at a pre
determined time in future.

The fifth way to classify financial markets is by the nature of its organizational
structure. An exchange traded market is characterized by a centralized
organization with standardized procedures and an over the counter market is a
decentralized market with customized procedures. These markets are further
explained in detail.

3.3 MONEY MARKET

The money market is a market for short-term funds, which deals in financial
assets whose period of maturity is up to one year. It should be noted that
money market does not deal in cash or money as such but simply provides a
market for credit instruments such as bills of exchange, promissory notes,
commercial paper, treasury bills, etc. These financial instruments are close
substitute of money. These instruments help the business units, other
organizations and the Government to borrow the funds to meet their short-term
requirement.

Money market does not imply to any specific market place. Rather it refers to the
whole networks of financial institutions dealing in short-term funds, which provides
an outlet to lenders and a source of supply for such funds to borrowers. Most of the
money market transactions are taken place on telephone, fax or Internet. The
Indian money market consists of Reserve Bank of India, Commercial banks, Cooperative banks, and other specialized financial institutions. The Reserve Bank of
India is the leader of the money market in India. Some Non-Banking Financial
Companies (NBFCs) and financial institutions like LIC, GIC, UTI, etc. also operate
in the Indian money market.

3.4 CAPITAL MARKET

Capital Market may be defined as a market dealing in medium and long-term

funds. It is an institutional arrangement for borrowing medium and long-term
funds and which provides facilities for marketing and trading of securities. So it
constitutes all long-term borrowings from banks and financial institutions,
borrowings from foreign markets and raising of capital by issue various
securities such as shares debentures, bonds, etc.

The market where securities are traded known as Securities market. It consists
of two different segments namely primary and secondary market. The primary
market deals with new or fresh issue of securities and is, therefore, also known
as new issue market; whereas the secondary market provides a place for
purchase and sale of existing securities and is often termed as stock market or
stock exchange.

3.4.1 PRIMARY MARKET

The Primary Market consists of arrangements, which facilitate the procurement

of long-term funds by companies by making fresh issue of shares and
debentures. You know that companies make fresh issue of shares and/or
debentures at their formation stage and, if necessary, subsequently for the
expansion of business. It is usually done through private placement to friends,
relatives and financial institutions or by making public issue. In any case, the
companies have to follow a well-established legal procedure and involve a
number of intermediaries such as underwriters, brokers, etc. who form an
integral part of the primary market. You must have learnt about many initial
public offers (IPOs) made recently by a number of public sector undertakings
such as ONGC, GAIL, NTPC and the private sector companies like Tata
Consultancy Services (TCS), Biocon, Jet-Airways and so on.

3.4.2 SECONDARY MARKET

The secondary market known as stock market or stock exchange plays an

equally important role in mobilizing long-term funds by providing the necessary
liquidity to holdings in shares and debentures. It provides a place where these
securities can be encased without any difficulty and delay. It is an organized
market where shares and debentures are traded regularly with high degree of
transparency and security. In fact, an active secondary market facilitates the
growth of primary market as the investors in the primary market are assured of
a continuous market for liquidity of their holdings. The major players in the
primary market are merchant bankers, mutual funds, financial institutions, and
the individual investors; and in the secondary market you have all these and the
stockbrokers who are members of the stock exchange who facilitate the
trading.

CHAPTER 4
ANALYSIS
AND
INTERPRETATION

Data analysis and interpretation

Table 4.1: Gender wise classification of Respondents

Gender
Number of
Percentage (%)

Respondents

Male
83
83

Female
17
17

Total
100
100

Interpretation:

Table 4.1 shows the Gender wise classification of Respondents. It was found
that 83% of the Respondents are men and the rest are females. Generally
males bear the financial responsibility in Indian society, and therefore they have
to make investment decisions to fulfill the financial obligations.

On the other hand females are not involved in such activities as majority of
them are busy with their household activities. Also there are very less houses
which depend on a female income most of them are male dominated
households. Hence investment activities are more seen in males than females.

Clasification of respondendts on basis of

gender
male

17%

83%

female

Table 4.2: Age wise classification of Respondents

Age( in years)
Number of
Percentage (%)

Respondents

Below 25years
12
12

25-35years
20
20

35-45years
44

44

above 45years
24
24

Total
100
100

Interpretation: Table 4.2 shows the Age wise classification of Respondents. When it comes

to

age, it was found that 12% are young i.e. of age group below 35 years and 20%
of them are in the age group of 25 to 35. Other than these 44% of them belong
to age group of 35 to 45 and rest them belongs to age group above 45. This
shows that age group of 35 years an above are more interested in investments
while people below 25 years make less investments and above age of 45 and
would start planning for retirement.

Clasification of respondents on the basis

of age

25-35 years

35-45 years

Above 45 years

27% 23%

50%

Table 4.3: Classification of Respondents on the basis of their Marital Status

Marital
Number of
Percentage (%)
status
Respondents

Single
22
22

Married
78
78

Total
100
100

Interpretation:

Table 4.3 shows classification of Respondents on the basis of their Marital

Status. It was found that marital status of 78% of the Respondents was found to
be married and the rest 22% are unmarried. This is because a married
individual is considered to have dependents so they are involved in making
financial investments. Whereas Respondents who are unmarried mostly invest
to generate wealth but they do not have any financial responsibility.

clasification of respondendts onthe basis

of marital status

Single

Married

22%

78%

Table 4.4: Classification of Respondents on basis of Occupation

OCCUPATION
NUBBER OF RESPONDENDTS
Business
13
government employee
30
home maker
3
private sector
38
self employee
15
student
1

Grand Total
100

Interpretation:

Table 4.4 shows classification of Respondents on basis of Occupation. From

the above graph indicates that 38% of the Respondents are from the private
sector, 30% of them are government employees, 15% of them are self
employees and rest is working in other sectors. Respondents who are
employed in government and private sectors they are investing more.

Clasification of respondendts on basis of

occupation
40

38

30

business

30

government employee

20
13
15

home maker

10

private sector

1
sely employee

student

Total

Table 4.5: Classification of Respondents on basis of Annual Income

Annual Income
Number of
Percentage (%)

Respondents

Below 2 Lakhs
10
14

2 Lakhs - 5 Lakhs
53
53

5 Lakhs - 7 Lakhs
21
21

7 Lakhs 10 Lakhs
6
6

above 10 Lakhs
6
6

Total
100
100

Interpretation:

Table 4.5 shows the classification of Respondents on basis of Annual

Income. It was found that 53% of Respondents with annual earnings
between 2to5 Lakhs are interested in investments because their savings are
more which they invest to generate wealth, 10% of them are earning below
2Lakhs annually, the other 21% are earning between 5 to 7 Lakhs in a year,
6% of them earn 7 to 10 Lakhs in an year but there were 6% of respondents
with annual income above 10 Lakhs per year.

Clasification of respondendts on the

basis of income level
Series1

53%

21%

10%

6%
6%

Below 2 lakhs
2 lakhs to 5
5 lakhs to 7
7 lakhs to 10
Above 10 lakhs

lakhs
lakhs
lakhs

Table 4.6: Classification of Respondents on basis of Education Level.

Education level
Number of
Percentage (%)

Respondents

10th class
2
2
Intermediate
2
2

Graduate
41
41

PG
29
29

And above
26
26

Total
100
100

Interpretation:

Table 4.6 shows the classification of Respondents on basis of Education Level.

It indicates that 41% of the Respondents covered in the study are graduates;
29% Respondents are post graduates and 26% of the Respondents are above
qualification. Investors with graduate degree would be more exposed to market
situation which make them more interested in investments. Also post graduates
would have fair knowledge about investments. Whereas Respondents who are
undergraduates mostly do not invest due to unfamiliarity to investment avenues
or unavailability if information about investments.

45%

ndendts on the basis of education

level

40%
35%

41%

30%
25%
20%
15%

29%
26%

10%
5%
0%
2%
2%

Cl
as
ifi
ca
ti
o
n
of
re
sp
o

Series1

Table 4.7: Classification of Respondents on basis of Preferred Investment Avenues

(combination of investments)

Investment avenues
Number of
Percentage (%)

Respondents

Fd`s
67
24.18

Ulip`s
19
6.85

Stock market
28
10.10

Derivatives

3
1.08

Real estate
6
2.16

Gold
45
16.24

Ppf
29
10.46

Mutual funds
70
25.27
Post office MIS
8
2.88
bonds

2
0.72
Total

100

Interpretation: Table 4.7 shows classification of Respondents on basis of Preferred

Investment

Avenues.

It can be concluded that the Respondents prefer Mutual

Funds`/FD`S/GOLDs avenues than PPF schemes next to stock market, Ulips

and derivatives. It was interesting to know that Indian individual investors still
prefer to invest their surplus amount in risk free investment avenues next to
Fds schemes. It confirms that Indian investors are conservative investors .

Clasification of respondendts on basis of

prefered investment

Fd`s

Ulip`s

Stock market

Derivatives

Real estate

Gold

Ppf

Mutual funds

Post office MIS

Bonds

3%

1%

24%
25%

7%

11%

16%

2% 1%

10%

Table 4.8: Classification of Respondents investing of top 3 investments

Investment avenues
Number of
Percentage (%)

Respondents

Fd`s
79
39.11

Gold
62
30.19

Mutual funds
61
30.20

Total
100
100

Interpretation: table4.8 shows that classification of respondents investing of top 3

investments. It can be concluded that investors preferring mostly these three
investments as a source of income or profits for their future. Fd`s are most preferred
investment in all the time.

Clasification of respondendts on basis of

top 3 investments

Fd`s

Gold

Mutual funds

30%
40%

30%

Page 33

Table 4.9: Classification of Respondents on the basis of Factors Influencing an

Investment Decision

Factors influencing an
Number of
Percentage (%)

investment decision
Respondents

Returns
39
39

Minimum amount

16
16

Risk
29
29

Locking period
0
0

Liquidity
14
14

Other factors
2
2

total
100
100

Interpretation: Table 4.9 shows the classification of Respondents on the basis of

Factors considered before making an Investment. Out of all majorities of the
Respondents i.e. 39% prefer to invest where there is high return. 29% of the
Respondents look for risk involved in the investment, 16% of the Respondents invest in
those avenues wherein they will get minimum amount. 14% of Respondents look for
liquidity and the rest look for ease with which the investment can be made.

Clasification of respondendts on basi of

factors influence on investment options

Returns

Minimum amount

Risk

Locking period

Liquidity

Other factors

0% 14%
2%

39%

29%

16%

Table 4.10: Classification of Respondents on the basis of Demate a/c Holders

Demate a/c holders

Number of
Percentage (%)

Respondents

Yes
79
79

No
21
21

Total
100
100

Interpretation: classification of respondents on the basis of demates a/c

holders. It says that 79% of the people are having demate a/c`s, 21% of the
people are not having the demate a/c`s, it tells that most of the people are
investing their money in the mutual funds and stock market.

Clasification of respondendts on basis of

Demate a/c`s
Yes

21%

79%

No

Table 4.11: Classification of Respondents on basis of managing of their investments.

Managing of their
Number of
Percentage (%)

investments
Respondents

Individual
25
25

Agent, mediator

59
59

Financial planner
16
16

others
0
0

Total
100
100

Interpretation:

Table 4.11 shows classification of Respondents on basis Influence on Investment

Decision. It was found that Respondents are mostly depending upon expert advice and
help while making investment decisions. However, the majority of the Respondents i.e.
59% make investment decisions with the help and advice from experts; only 25%
investors are making their investments alone. 16% of the investors taking the help of
financial planner.

Clasification of respondendts on basis of

managing of their investments

Individual

Agent, Mediater

Financial planner

Others

0%
16%

59%

25%

Table 4.12: Classification of Respondents on the basis of Time Horizon for

Investment

Investment time horizon

Number of
Percentage (%)

Respondents

Below 1year
2
2

1 to 3years
23
23

3 to 5 years
57
57

5 to 10 years
14
14

Above 10 years
4
4

Total
100
100

Interpretation: Table 4.12 shows the classification of Respondents on the basis of Time

Horizon

For Investment. From the above table we can interpret that majority of the
Respondents i.e. 57% of the total sample invest for 3 to 5 year, 23% of them

invest for time period of 1 to 3 years, 14% of them invest for period of 5 to 10
years and the 4% of them invest for period of above 10 years 2% of them invest
for less than 1 year. It is found that most of the Respondents want to make
money quickly hence they invest for 3to5 years period.

on of respondedts on basis of
Investment time Horizon
57%

23%
60%
2%
50%

40%

14%
4%

30%
Series1
20%

10%

0%

Clasi
ficati

Below
1
1 to 3
3 to 5
5 to 10
Above 10

year

years
years
years
years

Figure 4.13: Classification of Respondents on basis of Risk Tolerance Level

Risk taking capacity

Number of
Percentage (%)

Respondents

High
7
7

Medium
78
78

Low
13
13

No risk safe
2
2

Total
100
100

Interpretation: Table 4.13 shows the classification of Respondents on basis of Risk

Tolerance

Level. From the table 4.13 we can conclude that 78% of Respondents are
preferring portfolio with medium risk, 7% of them prefer highly risky portfolio
with high returns and the 13% of them prefer portfolio with low risk. Indian
investors are still conservative in nature and avoid taking huge risk while
investing their funds.

Clasification of respondendts on basis of

risk tolerance level

High

Mediam

Low

No risk& Safe

2% 7%

13%

78%

Figure 4.14: Classification of Respondents on basis of investing in mutual funds.

Mutual funds options

Number of
Percentage (%)

Respondents

Debt funds
20
20

Growth funds
45
45

Balanced funds
35
35

Total
100
100

Interpretation: classification of respondents on basis of investing in mutual

funds. It can be concluded that 45% most of the investors are investing their
money in growth funds, 35% of the people are investing in the balanced funds,
20% of the investors are investing in the debt funds.
20%

10%

0%

50%

40%

30%

Clasification of respondendts on basis

of mutual funds options

35%

20%
45%

Seri
es1

Debt funds
Growth funds
Balanced funds

Figure 4.15: Classification of Respondents on basis of source of investment

information.

Sources of Investment
Number of
Percentage (%)
Information
Respondents

News Paper/ Magazines

2
2

Electronic Media (T.V)

4
4

Peer group/ Friends

3
3

Broker/ Financial Advisor

58
58

Internet
33
33

Total
100
100

Interpretation: Table 4.15 shows the classification of Respondents on basis of

Sources of Investment Information. Most of the Respondents get their
information related to investment through broker/financial advisor next to
internet This could be because internet is easy and readily accessible
investment information when compared to the other sources of investment
information whereas broker/financial advisor provide the useful information
about investment.

70
60

ndts on basis of investment

information

50
40
30

59

20
10

C
l
a
s
i
fi
c
a
ti
o
n
o
f
r
e
s
p
o
n
d
e

32

4
1
4

Total

Figure 4.16: Classification of Respondents on basis of most attractive investment in

today.

Most attractive
Number of
Percentage (%)

investment
Respondents

Fd`s
19
19

Ulip`s

13
13

Stock market
5
5

Real estate
1
1

Gold
26
26

Mutual funds
36
36

total
100
100

Interpretation: classification of respondents on basis of most attractive

investment in today. It concluded that mutual funds are the most attractive
investment in today and the gold, FDs, Ulips also getting more attractive.

Clasification of respondendts on basis of

most attractive investment today

Fd`s

Ulip`s

Stock market

Real eatate

Gold

Mutual funds

19%

36%

13%
26%

1%

5%

Hypothesis

The relationship between important factors has been analyzed with the help of
chi-square test. The following pairs have been analyzed.

Gender and risk tolerance: Gender and risk tolerance level of an investor are
two independent attributes. The relationship between the gender and risk
tolerance of investors can be presented with the following table and diagram.

Figure 4.17: relationship between gender and risk tolerance of respondents.

RISK APPEITE&

GENDER

Grand

High
low
medium
No risk safe
Total
F

3
13
1
17
M
7
11
64
1
83
Grand Total

7
14
77
2
100

Interpretation: Table 4.17 shows the relationship between gender and risk
tolerance of respondents.

100

100

50

50

84.52

Series1

76.5

Series1

0
14.45

0
23.52

H & ML & NR

fH & M L & NR

HI: Is not equal values

HO: is an equal value

Hypothesis-I: Both are showing interest take H&M risk

This data shows that this hypothesis can be accepted. By the research both
variables are showing difference. HI Is accepted

The relationship between Age and time horizon of investments

b) Age and time horizon: the relationship between age and time horizon of
investment can be presented with the following table and diagram.

Figure 4.18: Relationship between age and time horizon of investments

TIME HORIZON

FOR

INVESTMENTS&

AGE

1to3years

3to5years

5to10years

above10

below1year

Grand Total

25to35
5
12
2

1
20

35to45
8
29
6
1

44

above45

14
6

3
1
24

below25
10
2

12

Grand Total

23

57

14

100

Interpretation: Table 4.18 shows the relationship between age of respondents and
time horizon for investment.

Below 35Age

Above 35Age
100

100

50

50

87.5

Series1

93.75

Series1

0
23.54

6.25

below5ye above5ye

below5ye above5ye

HI: Is not equal values

HO: Is equal values

Hypothesis- 1: Two age group people are preferred to invest their money below
5years time period. HI Is accepted

The relationship between age and risk tolerance level of investors

Age and risk tolerance: The relationship between age and risk tolerance of
the investors can be presented with help of following table and diagram.

Figure4.19: Relationship between age and risk tolerance of the respondents.

Count of RISK

APPEITE

Column Labels

no

Grand
Row Labels

high
low
medium
risk&safe

Total
25to35
1
5
14

20
35to45
2
5
35

2
44
above45

4
3
17

24
below25

1
11

12
Grand Total

7
14
77

2
100

Table 4.19 shows the relationship between age and risk tolerance of the
respondents.

Below35Age
100

100

Above35Age

50

50

81.25

18.75

Series1

85.29

14.71

Series1

H&M
L&NR

H&M
L&NR

HI: Is not equal values

HO: Is equal values

Hypothesis- 1: two age group people are preferred to take H&M risk. HI Is
accepted

CHAPTER 5
FINDING`S &

SUGGESTION

5.1 FINDINGS

In the present project, an attempt is made to study the investment characteristics of

Indian investors. Based on the data collected and analyzed about perception on
investment preferences of the investors, the following findings are given.

It is found that most of the investors belong to the age group of 35 years and 35 to 45
years indicating youngsters and the middle aged people are predominant in the
financial investment sector.

Most of the investors possess higher education qualification like post graduation and
above.

Majority of respondents are investing who are government employed and private
sector people.

As per the general perception, it is found respondents with combination of middle and
higher income groups like income above 5 Lakhs were found to invest more because
of their large portions of savings.

The investor's taking the decisions through broke/mediator.

Investors usually invest their funds so as to earn wealth.

Investors prefer to invest their funds in avenues like Mutual Funds /FD`s/Gold next to
insurance and Ppf.

With reference to the objective of investment, most of the respondents preferred

returns, followed by risk, minimum amount, and liquidity.

Most of the investors get their information related to investment through

broker/mediator while others prefer to get information from internet and electronic
media.

Most of the investors prefer to invest in to medium risky investments. Very less
proportion of respondents preferred risky portfolios.

Through hypothesis research found that gender and risk tolerance level of investors
have some difference, it tells that male and female investors are referred medium and
high risk investments.

Hypothesis for Age and time horizon of investors found that two are groups are
preferred the investment time horizon of 5years.

Hypothesis for age and risk tolerance of investors found that two age groups of
below35 and above35 are preferred to take medium, high risk

SUGGESTIONS

It is suggested that investors are to be educated about various investment

avenues, selection of schemes based on their objectives, their risk tolerance,
importance of diversification.

It is suggested that the schemes can be designed based on matching the

objectives of the investment.

The primary objective of most of the respondents is maximizing return.

Most of the respondents are interested to invest their money through online
mode.

All the investors prefer to maximize their returns and minimize the risk. Even
now fixed deposits and insurance schemes are more famous among Indian
investors. It is suggested that the investors have carefully construct their
portfolios after doing fundamental analysis and through proper diversification.

It always better that the investors follow a systematic investment process to

invest their money. Investment avenues are to be chosen based on their
objectives and risk preferences.

Page 47

CHAPTER 6
CONCLUSION

The conclusion of the project is that it is found that investors are preferred to
invest their money in medium risk investments and the behavior, perception of
investors is changing based on time and the type of avenues offered by
investment companies.

This project can be useful to the investors to understand the various

investments and risks involved in those investments and which investment is
give more returns and which is more attractive investment likewise many other
benefits are their for investors to the investors.

CHAPTER7

BIBLOGRAPHY

BIBLIOGRAPHY

Books

C K Kothari, Research Methodology, Wishwa Prakashan Publishing, 1996, Second

Edition

Herbert B. Mayo, Investments, Chennai Micro Print pvt. Ltd Chennai, 2006

Punithavathi Pandyan, Security Analysis and Portfolio Management, Tata Mc GrawHill Publishing Company Ltd , New Delhi,2008 Third Edition

Prasanna Chandra, Investment Analysis And Port Folio Management, Tata Mc

Graw-Hill Publishing Company Ltd , New Delhi,2008

Prasanna Chandra, Financial Management, Tata Mc Graw -Hill Publishing Company

Ltd , New Delhi2007

Websites Reference

www.indiafinance&investmentguide.com

www.wikipedia.org

www.nseindia.com

www.capitalmarkets.com

www.bseindia.com

www.financeindia.org/article

CHAPTER8

ANNEXURE

ANNEXURE

I am V.Venkatrao student of PGDM from Center for management and

technology, Visakhapatnam, conducting survey on investors perception and
selection behavior on investment avenues as a part of my study.

RESEARCH PROJECT ON INVESTMENT OPTIONS

PART-A

1.
Name :

2. Gender :

Male

Female

3.
Age :

Below 25

25 to 35

35 to 45

above 45

4.
Marital status:

Single

Married
5. Family size : Children :

Education:

6.
Occupation :

Government Employee

Self employee

Student

Private

Sector

Businessman

Others (specify)..

7.
Your annual income :

Below 2lakhs

to 5

to 7

7 to 10

above10

8.
Education level :

Xth class

intermediate

graduate

pg
and

above

PART-B

1. Which of the following have you invested in?

FD`s

ULIP`s

Stock Market

Derivatives

Real Estate

Gold

PPF

Mutual Funds

Post office MIS

Bonds

2.
Are you aware of the following investment options available in market?
Mark top 3

options?

FD`s

ULIP`S

Stock Market

Derivatives

Real Estate

Gold

PPF

Mutual Funds

Post office MIS

Bonds

3.
Which factors influence your investment option?

Returns

Minimum Investment Amount

Risk

Locking period

Liquidity

Other Factors Specify

Rank 1,,,,,.5

4.
Do you have a Demate Account?

Yes

No

5.
Please mention the list of companies you have invested in?

MF`s
Shares
Insurance
FD`s

.... .
.

. ..
.

. ..
.

. ..
.

How do you manage your investments?

Individual

Agent or Mediator

Financial Planner

Any others specify.

7. What is your time horizon of most of your investments?

Below 1year

1 to 3years

3 to 5years

5 to 10years

above 10

8. According to you what is the risk involved in these investments?

ULIP`s
1..,,,,5

Share Market
1..,,,,.5

Mutual Funds
1..,.,,,5

Real estate
1,,,.,..5

If you want to invest in mutual funds, which option do you prefer? Which
option did you invested in?

Debt Fund`s

Growth Fund`s

Balanced Funds

10. Which source do you prefer to get investment information?

News Papers/Magazines

Electronic Media (TV)

Peer`s/Friend`s

Broker/Financial Advisor

Internet

Which of the risk factors influence the returns on investments

in general?

Have you invested in fixed deposit`s? Why?

What is your risk appetite?

High

Medium

Low

No risk/Safe Investment

14. Which of the investment avenue is attractive to you nowa-days?