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A study on Investment pattern of youngsters (age group 21-30)

Prof. Satish Pawar, Harshal Aher, Ankush Pandey, Rahul Ashtankar, Sonika Bhave, Shankar Bhor, Pankaj Chirmade, Mihir Choksy, Swapnil Choubal

Abstract
Savings form an important part of the economy of any nation. With the savings invested in various options available to the people, the money acts as the driver for growth of the country. There are a lot of investment choices and one must select the most appropriate one. The person dealing with the planning must know all the various investment choices and how these can be chosen for the purpose of attaining the overall objectives. The purpose of this study is to determine the awareness of young generation (age group 21-30) towards various investment avenues available, the various investment avenues preferred by youngsters for investing their savings and factors that are generally considered by them while making their investment. The study also aims at determining whether the current generation has shifted from the conventional investment avenues towards the emerging investment avenues. Investors perception will provide a way to accurately measure what the investors think about the various investment avenues. For this we conducted a survey in the areas of Nasik, Pune and 300 respondents randomly selected were analyzed to know their perception regarding the various avenues of investment, their objectives and their preferences. The respondents belong to the age group 21 to 30

Introduction:
The dictionary meaning of investment is to commit money in order to earn a financial return or to make use of the money for future benefits or advantages. Indian financial scene presents a plethora of avenues to the investors. Though certainly not the best or deepest of markets in the world, it has reasonable options for an ordinary man to invest his savings. The money people earn is partly spent and the rest saved for meeting future expenses. Instead of keeping the savings idle they may like to use savings in order to get return on it in the future. This is called Investment. One needs to invest to and earn return on his idle resources and generate a specified sum of money for a specific goal in life and make a provision for an uncertain future. The sooner one starts investing the better. By investing early you allow your investments to grow for longer duration, whereby the concept of compounding increases your income, by accumulating the principal and the dividend earned on it year after year. Investing early allows shaping the future and building equity; paying later chains us to fixing the missed opportunities of the past. Also the developing countries like India face the enormous task of finding sufficient capital in their development efforts. With high capital output ratio, India needs very high rates of investments to make a leap forward in her efforts of attaining high levels of growth. Since the beginning of planning, the emphasis was on investment as the primary instruments
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of economic growth and increase in national income. In order to have production as per target, investment was considered the crucial determinant and capital formation had to be supported by appropriate volume of saving. Thus to strive towards growth of Indian economy it is essential for us to invest in the avenues available. Some of the investment avenues available are
Mutual funds, Bonds , Commodity market , Stock market, Government securities , Insurance policies , Corporate debentures,

Company fixed deposit, Post office savings, Real estate, Bullion, Forex Market, Fixed
deposits. The emerging investment avenues include virtual real estate, hedge funds, private equity investments, etc.

Based on their objectives, purpose and expectations the youngsters (21-30) choose the best alternative amongst the above to invest.
This analysis on individual investor behavior is an attempt to know the profile of the investor and also know the characteristics of the investor so as to know their preferences with respect to their

Bangalore investors are more aware about various investment avenues & the risk associated with that. All the age groups give more important to invest in equity & except people those who are above 50 give important to insurance, fixed deposits and tax saving benefits. Generally those investors who are invested in equity, are personally follow the stock market frequently i.e. in daily basis. But those who are invested in mutual funds are watch stock market weekly or fortnightly. In Bangalore, investors are more aware about various investment avenues and the risk associated with that. But in Bhubaneswar, investors are more conservative in nature and they prefer to invest in those avenues where risk is less like bank deposits, small savings, post office savings etc. Gaurav Kabra , Prashant Kumar Mishra , Manoj Kumar Dash (2010) in their study gain knowledge about key factors that influence investment behavior and ways these factors impact investment risk tolerance and decision making process among men and women and among different age groups concluded that the modern investor is a mature and adequately groomed person. In spite of the phenomenal growth in the security market and quality Initial Public Offerings (IPOs) in the market, the individual investors prefer investments according to their risk preference. For e.g. Risk averse peoples chooses life insurance policies, fixed deposits with banks and post office, PPF and NSC. Occasions of blind investments are scarce, as a majority of investors are found to be using some source and reference groups for taking decisions. Though they are in the trap of some kind of cognitive illusions such as overconfidence and narrow framing, they consider multiple factors and seek diversified information before executing some kind of investment
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investment. The study also tries to unravel the influence of demographic factors like age, occupation on investment of the investor.

Review of Literature:
Behavioral fianc is a new emerging science that studies the irrational behavior of the people. The study entitled "Investment Pattern of People" written by Avinash Kumar Singh (2006) has been undertaken with the objective, to analyze the investment pattern of people in Bangalore city and Bhubaneswar analysis of the study was undertaken with the help of survey conducted .After analysis and interpretation of data it is concluded that in

transaction. The purpose of this study was to determine whether the variables such as demographic characteristics (age, gender) and investment patterns could be used individually or in combination to both differentiate among levels of men and women investment decisions and risk tolerance and develop some guidelines to the investment managers to design their investment schemes by considering these views of individuals. N.Geetha and Dr M.Ramesh in their study regarding factors that influence investment behavior of the people and attitude of respondents of Kurumbalur town towards different investment avenues concluded that insurance, PPF, NSC and bank deposits were the more preferred avenues. Also there was no relation found between qualifications and avenues preferred. The lower income level respondents were more awarded about investment avenues than higher level respondents. It implied that lower income level groups preferred to take more safety in investment rather than higher income level. It was concluded that Kurumbalur respondents were medium aware about the choices. Also there was less awareness regarding stock market.

2) To find out the type of financial instruments the youngsters prefer to invest 3) To find out how investors get information about the various financial instruments 4) To find out the duration for which they prefer to invest 5) To find out the factors they consider while investing 6) To identify the objectives of savings of the investor 7) To identify the effect of demographics of an investor on his/ her investment. HYPOTHESIS There is association between investment experience and gender. There is association between investment experience and age groups. There is association between investment experience and education There is association between investment experience and occupation. There is association between investment experience and annual income. There is association between amount invested and income level There is association between amount invested and gender There is association between amount invested and age group There is association between amount invested and occupation. Research design type: Descriptive Sampling technique: The investors are selected by convenience sampling method. The selection of units from population based on their easy availability and
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Research Methodology:
The aim of this study is to shed light on awareness of people between age 21-30 regarding the various investment avenues, their preferred investment avenues, their purpose and objectives behind the investment and the factors considered while investing. Objective of the study: 1) To find out awareness of youngsters regarding different investment avenues available

accessibility to the researcher is known as convenience sampling. Sampling Unit: The respondents who were asked to fill the questionnaire are sampling units comprising of youngsters belonging to age group 21-30 who are employees, professionals, housewifes and other investors. Sample size: The sample size is restricted to only 300, which comprised of mainly people from Nasik and Pune. Data collection: Primary data was collected from 300 respondents from the areas of Pune and Nasik through questionnaire method. Data was also collected using a free online survey. Survey Instrument: A structured questionnaire was used to collect data. The questionnaire consisted of three types of questions. They are single choice questions, multiple choice questions and descriptive questions. The questionnaire was divided into three parts, the first part contained questions regarding the demographics of the respondent, the second part consisted of details regarding the awareness and preferred investment avenues of the youngsters along with their investment amounts, the third part consists of objectives, purpose of respondents investment and savings. Statistical tool: Excel sheet and SPSS software were used for analyzing the data. The use of these tools simplified the study made the analysis easy to operate.

Data analysis and interpretation Table 1. Demographics of the respondents Parameter No of Percentage respondents Gender Female 85 28.3% Male 215 71.7% Total 300 100.0% Age group 21-23 years 75 25.0% 24-26 years 137 45.7% 27-30 years 88 29.3% Total 300 100.0% Education Primary 19 6.3% Graduation 156 52.0% Post graduation 106 35.3% Professional 16 5.3% Others 3 1.0% Total 300 100.0% Occupation Government 27 9.0% service Private service 200 66.7% Self employee 56 18.7% Others 17 5.6% Total 300 100.0% Annual income Less than 1 33 11.0% lakh 1 3 lakhs 129 43.0% 3 - 6 lakhs 106 35.3% 6 9 lakhs 28 9.3% More than 9 4 1.3% lakhs Total 300 100.0% Marital status Married 94 31.3% Single 206 68.7% Total 300 100.0%

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Table 2: Investment experience of respondents

Inference: Table 1 shows that out of the total 300 respondents, 61 respondents don not invest in any financial instruments whereas remaining 239(79.7%) respondents invest in some or the other financial instrument. Table 2 shows the investment experience of the respondents where 61 respondents( 20.3%) have no investment experience, 66.7% have some investment experience while remaining 13% have been investing from several years Graph 1: Awareness regarding investment avenues
100.00% 80.00% 60.00% 40.00% 20.00% 0.00%

Inference: The above graphs show the awareness of the respondents about various avenues available. It was seen that most of the youngsters were aware of the safe/ low risk investment avenues and traditional investment avenues. Savings account, bank fixed deposits, real estate, bullion being the popular avenues. Also Life insurance and mutual funds which are the moderate risk investment avenues are popular with the youngsters. Equity share market is the popular avenue that the youngsters are aware of when it comes to high risk investment avenues. It is seen that the there is less awareness regarding the emerging investment avenues and some other avenues like Forex market, debentures, chit funds etc. Table 3: Investment preferences of respondents Investment avenue Bank deposits Life Insurance Mutual funds Post office savings Bullion Real estate Company fixed deposits Shares Corporate debentures Votes 215 160 158 133 125 91 86 24 15 Percentage 71.66% 53.33% 52.66% 44.33% 41.66% 30.33% 28.66% 8% 5%

various

Savings Bank fixed Post office Public National Governme Mutual Life Debentures Bonds

Inference: Table 3 shows that 71.66% percent of the respondents invest their savings in bank deposits, while 53.33% invest in life
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Commodi Equity Forex Gold/silver Real estate Chit funds Private Virtual Art and Hedge

100.00% 80.00% 60.00% 40.00% 20.00% 0.00%

insurance, 52.66% in mutual funds while only 5% of investors invest in corporate debentures. Thus bank deposits, Life insurance, mutual funds, post office savings are the most preferred investment avenues of the youngsters i.e. the safe/ low and moderate risk investment avenues are more preferred by the youngsters. Graph 2: Reasons behind the investment

Inference: It can be concluded from the above graph that most of the respondents consider the return given by the investment avenue while making investment decisions. The second factor considered is future growth. I.e most of the respondents prefer safer investments rather than risky ones. Graph 4: Purpose behind investment
Others

Media Friends/relatives Brokers advice Financial advisors Self awareness 0 20 40 60

Future expenses Earn returns Tax saving Wealth creation 0% 20% 40% 60%

Inference: The reason behind investment of majority of respondents is self awareness for long term benefits. The second major influencing factor for investing is friends and relatives. The guidance and information that is gained from friends and relatives is observed to be the second most influencing factor Graph 3: Investment decision depends on
50 45 40 35 30 25 20 15 10 5 0

Inference: The graph above shows that most of the respondents invest to gain returns followed by other purposes of tax saving and wealth creation. Very few of the respondents have future expenses as there sole purpose. Graph 5: investing
60% 50% 40% 30% 20% 10% 0%

Factors

considered

while

Inference: Majority of the respondents consider returns while investing followed by liquidity and Long term growth.
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Graph 6: saving objectives of youngsters


Others, 18.80% Children s marriage , 6.90% Children s educatio n, 11.43%Home Inference: Retireme nt, 20.21%
Pearson Chi-Square Contingency

Value 26.388

df 4

Asymp. Sig. .000

Home purchase , 23.90% Healthca re, 18.60%

Coefficient

.284

.000

purchase and retirement are the major saving objectives of the youngsters Table 4: Interaction between age group and investment experience

Inference: Chi square test results show that the calculated value (26.308) is more than the table value (13.27), hence the null hypothesis There is no association between Age group and Investment experience is rejected. and the researcher hypotheses is accepted. Though the association is not that significant but there is an association. Thus age group and investment experience are positively correlated Table 5: Interaction between occupation and investment experience

Age group 21-23 Investment experience Basic No exp 26 (43.3%) 49 24-26 18 27-30 16 Total 60

(30%) (26.6%) 98 54

Occupation 201 Gover 39 Invest No 300 ment experi Basic nment Private 2 44 Self emplo yee 11 Other Total 3 60

(24.7%) (48.7%) (26.8%) Several 0 21 18

0% (53.8%) (46.1%) Total 75 137 88

(7%) (22%) (20%) (18%) 23 135 31 12

Inference: It can be concluded that as age increases the no of respondents having no experience decreases .i.e. initially there is low rate of investment but as age increases there is increase in investment experience Also it can concluded that most of the respondents in the age group 21-30 have basic investing experience. To prove that there is relation between age group and investment experience we carried out the following analysis.

ence Several

(85%) (68%) (55%) (71%) 2 21 14 2

201

(7%) (11%) (25%) (12%) Total 27 200 56 17

39 300

Inference: It can be concluded that respondents who are self employees have higher percentage of investment experience when it comes to investing from several years. Also it can be seen the percentage of no experience respondents is more in private. To observe whether there is relation between occupation and investment experience we conducted the following analysis
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Value Pearson Chi-Square Contingency Coefficient 12.931

df 6

Asymp. Sig. .044

.205

.044

table value (20.09), hence the null hypothesis There is no association between Annual income and Investment experience is rejected. That means research hypothesis is true and hence accepted. In other words we can say that the association between Annual income and Investment experience is statistically significant.

Inference: Chi square test results show that the calculated value (12.93) is more than the table value (12.51), hence the null hypothesis There is no association between occupation and Investment experience is rejected. Though the association is not that significant but there is an association. Table 6: Interaction between annual income and investment experience

Inference: From below table it can be observed that age group 21-23 prefer to invest between 0-25k amounts and percentage of the respondents investing Rs 0-25k decreases with Table 7: Interaction between age group and amount invested

Age group 21-23 24-26 63 37 4 18 15 137 27-30 35 18 5 18 12 88 Total 147 66 13 44 30 300

Annual income <1lac 1-3L 3-6L Invest Ment exper ience Total several 3 33 6 129 16 106 11 28 3 4 39 300 No Basic 14 16 33 90 13 77 6-9L 0 17 >9L 0 1 Total 60 201

Amount invested

0-25k 26-50k 51-75k 75-1lac More than 1L

49 11 4 8 3 75

Total

Inference: It can be clearly indicated that as income increases the investment experience also increases. To test the relationship the following analysis is done

Asymp. Sig. Value Pearson Chi-Square Contingency Coefficient 57.807 .402 df 8 (2-sided) .000 .000

increase in age, as it can be seen for the age group 24-26 and 27-30. The age group 24-26 prefers to invest an amount of Rs 26k-50k. Higher amount investment has been seen for the age group 27-30. Thus we can conclude that the amount of investment increases with increase in age to support the above conclusion we carried out following analysis.

Inference : Chi square test results show that the calculated value (57.807) is more than the
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Table 8: Interaction between income and amount invested

annual

Annnual income <1lac 1-3L Amount invested 0-25 26-50 51-75 75-1lac >1L Total 26 5 2 0 0 78 30 2 14 5 3-6L 41 25 6 22 12 106 6-9L >9L Total 2 5 2 7 12 28 0 1 1 1 1 4 147 66 13 44 30 300

33 129

Inference: As income increases the amount invested also increases. This is proved using the following analysis.

Asymp. Sig. (2Value Pearson Chi-Square Contingency Coefficient .465 .000 82.860
a

Df 16

sided) .000

Chi square test results show that the calculated value (82.86) is more than the table value (32.00), hence the null hypothesis There is no association between Annual income and Investment experience is rejected. That means research hypothesis is true and hence accepted. In other words we can say that the association between Annual income and amount invested is statistically significant.

Findings:
There is less awareness regarding the emerging investment avenues. It was seen that most of the youngsters were aware of the safe/ low risk investment avenues and traditional investment avenues

Bank deposits, Life insurance, mutual funds, post office savings are the most preferred investment avenues of the youngsters. I.e the youngsters prefer to invest in the conventional avenues rather than shifting towards the emerging avenues. The reason behind investment of majority of respondents is self awareness. Most of the respondents consider the return given by the investment avenue while making investment decisions. The second factor considered is future growth. The graph above shows that most of the respondents invest to gain returns followed by other purposes of tax saving and wealth creation. The demographic factors such as age group, occupation and annual income have association with investment experience and amount invested. The rest factors like gender, education, marital status have no association with either investment experience or amount invested. 50 % of the respondents who invest prefer to invest in safer investments whereas 31% of them are willing to tolerate ups and downs in value of investments. Only 18% of the respondents are not concerned about short term decreases in investment values. This indicates that very few youngsters are willing to take risk. Majority of the youngsters(44.8%) want their investment to grow at average rate whereas 27.6% wish the investment to grow at slow rate and remaining 27.6% wish to have fast growth rates in relation to their investment It can be seen that a number of respondents belonging to the age group 24- 26 have higher consideration for the return and past
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performance of the investment avenue before investing as compared to the other 2 age group. Similarly when it comes to risk and future growth the age group 21-23 and 27-30 have higher consideration for the factors than the age group 24-26. References: 1. N. Geetha, Dr. M. Ramesh, A Study On Peoples Preferences In Investment Behaviour, (IJEMR November 2011-Vol 1 Issue 6 - Online - ISSN 2249 2585 - Print - ISSN 2249 8672) 2. Gaurav Kabra, Prashant Kumar Mishra, Manoj Kumar Dash, Factors Influencing Investment Decision Of Generations In India: An Econometric Study, (Asian Journal Of Management Research Issn 2229 3795) 3. Dr.V.Shanmugasundaram, Dr.V.Balakrishnan, Dr.M.Syed.Zafar, Impact Of Life-Style Characteristics In Investment Decisions (Eproceedings For 2011 International Research Conference And Colloquium) 4. Widayat, Wahjoedi, M. Syafiie Idrus , Modelling The Behaviour Of Households Investment, (Economic Journals Of Emerging Markets August 2011 3(2) 165-177) 5. Suleyman Gokhan Gunay, Engin Demirel, Interaction Between Demographic And Financial Behavior Factors In Terms Of Investment Decision Making (International Research Journal Of Finance And Economics Issn 1450-2887 Issue 66 (2011) Eurojournals Publishing, Inc. 2011) 6. Kothari, C.R., (2004) Research Methodology-Methods and techniques

7. www.scribd.com 8. www.investtopedia.com 9. www.moneycontrol.com

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