ITRODLCTIO !

nvcsrmcnr insrrumcnrs can lc dividcd inro rwo lasic

1lcorcrically spcaking wlcn a lousclold clooscs an lcads.
avcnuc ro carn rcrurn on rlc surplus incomc ir las, ir is 1. Plysical savings likc inrcal csrarc & gold
known as savings. Wlcrcas, rlosc insrrumcnrs or avcnucs 2. inancial savings rlar arc rlc lank dcposirs, slarcs &
lrom wlicl onc carns incomc & wcalrl is known as murual lunds, insurancc & orlcr small saving sclcmcs.
invcsrmcnr.
Saving & invcsrmcnr lclaviour las always lccn an arca
l/ncn/c| 4///ncr/ likc www.invcsrorwords.com dclinc ol inrcrcsr ro rlc cconomisrs. 1lc cconomic cyclcs ol loom,
invcsrmcnr as rlc purclasc ol a linancial producr or orlcr rcccssion, dcprcssion & rccovcry nor only cllccr rlc lcvcl ol
ircm ol valuc wirl an cxpccrarion ol lavorallc lururc GP lur also rlc incomc ol rlc lousclolds & lcncc rlc
rcrurns. !n gcncral rcrms, invcsrmcnr mcans rlc usc moncy saving rario & invcsrmcnr lclavior. 1lc movcmcnr ol rlc
in rlc lopc ol making morc moncy. Saving is lclr ovcr ol rlc cconomy lromonc plasc ol rlc cconomic cyclc ro anorlcr
disposallc incomc wlcrcas wlcn rlcsc savings arc uscd ro lrings a clangc in rlc saving & invcsrmcnr lclavior ol rlc
gcncrarc lurrlcr rcrurns ir is known as invcsrmcnr. pcoplc.
!nvcsring wiscly nor only gcncrarcs rcrurns lor rlc 1lc linancial glolalizarion ol rlc world cconomy las
individual invcsror lur is moliliscd ro rlc cconomy ly lcd ro rlc inrcgrarion ol various linancial markcrs ol rlc
cnrcring inrorlc clainol capiral lormarion. world. 1lc rcscarcl conducrcd ly Andrcs Solimano &
Mario Guricrrczin rlcir papcr "Savings, invcsrmcnr and
growrl in rlc glolal agc. analyrical and policy issucs" lound Brr Bcn| j In4/c lowcvcr docs nor dillcrcnriarc
rlar rlcrc is an amliguous cllccr ol linancial variallcs on lcrwccn savings & invcsrmcnrs madc ly rlc lousclolds pcr
narional savings. ccpcr linancial markcrs and sc. 1lc Fcscrvc Bank ol !ndia classilics rlc lousclold
srrcngrlcncd prudcnrial rcgularion ol linancial insrirurions savings in rwo lcads i.c. inancial asscrs likc in slarcs &
lclp ro cnlancc saving (and invcsrmcnr) opporrunirics ly murual lunds, insurancc, lank dcposirs crc. & Plysical
ollcring a widcr varicry ol linancial insrrumcnrs ro clanncl asscrs i.c. in rcal csrarc & gold. Casl lcld in land is ncirlcr a
savings and also ly providing morc sccuriry (in rlc casc ol saving nor invcsrmcnr.
ITERATIOAL JOLRAL OF SOCIAL SCIECES
& ITERDISCIPLIARY RESEARCH
\ol.1 No. 5, May 2012, !SSN 2277 S6S0
Onlinc Availablc at indianrcscarchjournals.com
DR.APARA SAMLDRA, DR.M.A.BLRGHATE
`Assistent Prjcssr, Dr. Penje|re Dcshmu|h lnstitutc j Menecmcnt 1cchn/y c Bcscerch, Nepur
``Hce4 j thc Dcpertmcnt, Dr. Penje|re Dcshmu|h lnstitutc j Menecmcnt 1cchn/y c Bcscerch, Nepur
ABSTRACT
1lc aim ol rlis rcscarcl was ro cxaminc rlc invcsrmcnr lclaviour ol rlc middlc incomc class lousclolds in Nagpur.
1lc rarionalc lclind cloosing rlis rcscarcl ropic is rlc prcmisc rlar rlc middlc class in !ndia las gaincd arrcnrion ol rlc
cconomisrs, policy makcrs & rlc markcrcrs, as srill rlcrc rcmains a considcrallc unrappcd porcnrial in rlis incomc class
ol !ndia. 1lc rcscarcl las lccn conducrcd ro answcr lcw imporranr qucsrions on rlc prclcrcncc ol rlc invcsrmcnr
insrrumcnrs & invcsrmcnr parrcrn ol rlc middlc class lousclolds, ro know rlc various oljccrivcs ol invcsrmcnr ol rlc
middlc incomc class lousclolds and ro knowwlcrlcr rlcrc las lccn any incrcasc in rlcir savings & rlc rcasons lor rlc
samc. !r is nor only rlc incomc ol rlc lousclold rlar las an immcdiarc lcaring on rlc invcsrmcnr prclcrcnccs lur also
rlc agc group ro wlicl rlc lcad ol rlc lousclold lclongs rlar inllucnccs rlc cloicc ol invcsrmcnr avcnuc. 1lcrclorc
rlc papcr las also lccn dirccrcd rowards linding rlc dillcrcncc in cloicc ol invcsrmcnr avcnucs in dillcrcnr agc-groups
& incomc classcs ol rlc middlc incomc class scgmcnr inNagpur.
KEYWORDS: Middlc incomc class, invcsrmcnr, savings
A STLDY O IVESTMET BEHAVIOR OF MIDDLE
CLASS HOLSEHOLDS I AGPLR
+3
cllccrivc rcgularion) roinvcsrors. 1lc samc dclinirion would lc uscd lor rlis rcscarcl
1lc clangcs in onc parr ol rlc world lring an purposc and rlc rlrcc srrara ol rlc popularion would lc
immcdiarc cllccr on rlc orlcr parr ol rlc world. 1lis dividcd on rlc alovc crircria. 1lc samplc was also dividcd
inrcgrarion ol rlc world linancial markcrs lcad ro rlc clangc on rlc lasis ol agc in cacl samplc ro incomc group. Primary
cloicc ol saving & invcsrmcnr avcnucs availallc ro rlc dara was collccrcd lromS00 lousclolds wlicl wcrc sclccrcd
invcsrors. 1lc rcccnr downrurn in 2008 ol rlc world lromcaclol rlc rlrcc incomc slals as dclincdly NCAF.
cconomy nor only lcd ro clangc in rlc rcrurn paid ly rlc 1lc samplc las also lccn dividcd on rlc lasis ol rlc agc
invcsrmcnr oprions (lorl linancial & plysical) lur also ol rlc lcad ol rlc lousclold as - undcr S5 ycars, S5-5+ ycars
clangcdrlc way invcsrors invcsrcdrlcir lunds. & alovc 55 ycars. 1lis classilicarion ol rlc samplc would
lclp in an in-dcprl analysis ol rlc invcsrmcnr prclcrcncc ol
RESEARCH OBJECTIVES: rlc samplc.
1lc rcscarcl las rlc lollowing oljccrivcs.
1. 1o know rlc Prclcrcncc ol rlc invcsrmcnr insrrumcnrs REVIEW OF LITERATLRE
ol rlc middlc class lousclolds Psyclological lcarurcs play an imporranr rolc in rlc
2. 1o know rlc various oljccrivcs ol invcsrmcnr ol rlc individual invcsrmcnr dccision proccss. 1lc psyclological
middlc class lousclolds claracrcrisrics likc risk raking aliliry & mcnral accounring
S. 1o knowwlcrlcr rlcrc las lccn any incrcasc in savings rclarc ro lousclolds' cxpccrarions, rlcir scll-rcporrcd
& rcasons lor rlc samc. linancial risk raking lclaviour and rlcir scll-rcporrcd risk
avcrsion arc somc ol rlc imporranr variallcs laving an
1lc papcr rook inro considcrarion invcsrmcnr oprions impacr on rlc invcsrmcnr dccision ol an individual. An
likc lank dcposirs (pullic sccror & privarc sccror lanks), undcrsranding ol lousclold porrlolio allocarion may
insurancc (pullic & privarc), slarcs & murual lunds, rcal addirionally go somc way lclping policymakcrs csrimarc rlc
csrarc & small saving sclcmcs likc Iisan \ikas Parra, Posr likcly impacrs ol various policy dccisions sucl as clangc in
ollicc dcposirs crc. as rlc invcsrmcnr insrrumcnrs in rlc rlc wcllarc paymcnrs and rlc inrroducrion ol a consumprion
porrloliool rlc lousclolds. rax as cvidcnccdly ilnor (1990) & rcclairn(1991).
or rlc purposc ol rlis srudy savings & invcsrmcnrs arc vidcncc lor rlc lyporlcsis ol !aliassos and Bcrraur
classilicd ly analyzing rlc amounr ol moncy lclr alrcr (1995) rlar individuals sccmro dcparr lromcxpccrcd uriliry
consumprion & paying raxcs & wlcn rlcsc savings arc uscd maximizarion plays an imporranr rolc lcrc. !n srandard
lor all sorrs ol carnings likc rcrurn on invcsrmcnr, gcncraring cxpccrcd uriliry maximizarion, risk avcrsc agcnrs arc willing
wcalrl, lormarion ol asscrs, gold crc. rlcy arc rrcarcd as ro rakc risk lor rlc lcnclir ol liglcr cxpccrcd rcrurns; rlc
invcsrmcnr. As rlis srudy is limircd lor !ousclold sccror morc rlc agcnr is risk avcrsc, rlc liglcr rlc cxpccrcd rcrurn
rlc amounr invcsrcd lor srarring lusincss or any orlcr las rolc inordcr rocompcnsarc lor risk.
acriviry is nor considcrcd lor rlc purposc ol rlc srudy. 1lc lilc cyclc lyporlcsis is rlc mosr common
rlcorcrical approacl ro consumprion & saving ar rlc
SAMPLE DESIG: microcconomic lcvcl, and suggcsrs rlar saving & dissaving
According ro rlc Narional Council ol Applicd conomic arc undcrrakcn ro smoorl consumprion & uriliry wlilc
Fcscarcl in rlc Markcr !nlormarion Survcy ol lousclolds in ycarly incomc varics ovcr rlc sragcs ol lilccyclc. Alrlougl
associarion wirl Busincss Srandard in Augusr 2005, rlc rlc vasr majoriry ol srudics wirl asscssing rlc
rcrm "middlc class" applics ro rlosc carning lcrwccn appropriarcncss ol rlis lyporlcsis as dcscriprion ol rlc
Fs.90,000 ro Fs.10,00,000 a ycar. 1lc lousclolds arc lousclold saving lclaviour, irs onc drawlack is rlar ir docs
lurrlcr dividcd inro aspircrs, middlc- middlc class & uppcr nor disringuisl lcrwccn various rypcs ol asscs. !owcvcr
middlc class. 1lc lousclolds wirl an annual incomc commcnrarors lavc suggcsrcd sucl inlormarion can lclp
lcrwccn Fs.90000-Fs. 200000 lavc lccn dclincd as cvaluarc compcring modcls ol 0
aspircrs, incomc lcrwccn Fs. 2,00,000 ro Fs. 5,00,000 arc Srclan !oclgucrrcl cr al (1997) srudicd Ncrlcrlands
middlc -middlc class & incomc lcrwccn Fs.5,00,000 ro Fs. lousclolds' porrlolio allocarion and lound rlar incomc,
10,00,000arc classilicd as uppcr middlc class. cducarion, and rax lavc posirivc impacr on rlc proporrion ol
DR.APARA SAMLDRA, DR.M.A.BLRGHATE
++
linancial wcalrl lcld in risky asscrs, wlilc agc lad a lump urlook Moncy-C lorc survcy (200+) ol incomc rax
slapcdrclarionslip. paycrs in six cirics-Bangalorc, Clcnnai, clli, !ydcralad,
uigi Guiso and 1ullio {appclli (1999) srudicd rlc Iolkara, Mumlai lound rlar only onc-rlird ol rlc
porrlolio ol 8000 !ralian lousclolds and lound rlar wcalrl, rcspondcnrs lavourcd rlc oprion ol pcnsion lunds invcsring
collcgc cducarion and indcx ol linancial inlormarion lad in cquiry and an cqual numlcr il rlc govcrnmcnr guaranrccs
signilicanr cllccr on rlc risky asscrs owncrslip and slarc in rlc liglcr rcrurns. 1lc rcsr onc-rlird rcjccrcd rlc oprion, as
rlcir porrlolio, wlilc agc slowcda lump slapcdprolilc. ir is 'roorisky'.
Fol Alcssic cr al (1999) srudicd rlc lousclold
PREFERECE OF THE I VESTMET porrlolio lcrcrogcnciry and lound rlar non-capiral incomc,
I S T RLME T BY T HE S E L E CT E D roral ncr worrl, inrcrcsr on linancial marrcrs, cmploymcnr
HOLSEHOLDS srarus lad posirivc impacr on rlc owncrslip ol dillcrcnr
1lc rcspondcnrs in rlc samplc wcrc askcd ro givc rlcir asscr classcs. !ousclold sizc was lound ro lavc a ncgarivc
prclcrcncc ro rlc livc invcsrmcnr oprions srarring lrommosr impacr, wlilc agc lollowcda lump slapcdprolilc.
prclcrrcd invcsrmcnr oprion ro lcasr prclcrrcd invcsrmcnr Fajarajan (1999) srudicd Clcnnai invcsrors and lound
oprion. 1lc aggrcgarc rcsulrs ol rlc invcsrmcnr oprions rlar lilc cyclc sragc ol individual invcsrors is an imporranr
markcd ly rlc rcspondcnrs slow rlar rlc lank dcposirs variallc in dcrcrmining rlc sizc ol rlc invcsrmcnrs in
rcmains rlc mosr prclcrrcd invcsrmcnr oprion ol rlc middlc linancial asscrs and rlc pcrccnragc ol linancial asscrs in risky
class incomc lousclolds in Nagpur wirl +1 pcrccnr carcgory.
rcspondcnrs marking ir as rlc mosr prclcrrcd invcsrmcnr SB!-NCAF (2000) srudy lound rlar lousclolds'
oprion. invcsrmcnr in Slarcs & clcnrurcs and in Murual unds
1lis is lollowcd ly rlc lilc insurancc wlcrc S0 pcrccnr rangcs lrom 7% ro 9%. Majoriry ol rlc quiry invcsror
rcspondcnrs markcd ir as rclarivcly prclcrrcd invcsrmcnr lousclolds porrlolio was lound ro lc undivcrsilicd and ol
oprion. 1lc plausillc rcason lor rlcsc rwo lcing rlc rop rwo rclarivcly small valuc ol lcss rlan Fs. 25000. !r also lound
prclcrcnccs ol rlc middlc class incomc lousclolds is rlc rlar onc scr ol lousclolds, in spirc ol rlcir lowcr incomc &
rclarivc sccuriry in luilr in rlcsc insrrumcnrs & rlcsc lcing lowcr pcncrrarion lcvcl ol consumcr durallcs, arc in rlc
rradirional saving insrrumcnrs ol rlc invcsrmcnr. sccurirics markcr, wlilc anorlcr scr ol lousclold wirl
Small saving sclcmcs sucl as Pullic providcnr lund, liglcr incomc and liglcr pcncrrarion lcvcl ol consumcr
Posr ollicc saving dcposirs arc rlc rlird prclcrrcd invcsrmcnr durallcs donor lavc invcsrmcnrs insccurirics markcr.
oprion as rlcsc arc again sccurc cvcn rlougl rlc rcrurn lrom Yilmazcr (2001) analyscd rlc 1989, 1992, 1995, and
rlcsc invcsrmcnrs is lcss. Slarcs & murual lunds arc gaining 1998 Survcy ol Consumcr inancc dara and slowcd rlar rlc
ground lur rcmain ar rlc lourrl posirion as rlcsc arc prolaliliry ol a lousclold owning a lomc incrcascs, wlilc
rclarivcly ncw & rlc invcsrors arc wary ol rlc unccrrain rlc proporrion ol invcsrmcnrs in slarcs dccrcascs wirl cacl
rcrurn. addirional clild.
Prcfcrcncc of thc invcstmcnt instrumcnt
Sourcc. Survcy dara
A STLDY O IVESTMET BEHAVIOR OF MIDDLE CLASS HOLSEHOLDS I AGPLR
+S
Fcal csrarc is rlc lcasr prclcrrcd invcsrmcnr oprion ol dcclincs wirl rlc youngcr agc group. 1lis prclcrcncc can lc
rlc middlc class incomc lousclolds in Nagpur. 1lc cxplaincd ly an agc or lilc-cyclc cllccr on rlc onc land.
apparcnr rcasons lclind rlis can lc rlc illiquidiry associarcd oldcr individuals miglr lavour rlis rypc ol invcsrmcnr as ir is
wirl rlis invcsrmcnr oprions & rlc grcarcr amounr ol vcry salc and docs nor cxlilir any pricc volariliry. Fisk and
moncy rcquircd lor invcsring inrcal csrarc. volariliry arc undcsirallc lor mosr rcrircd pcoplc as rlcy
miglr lavc ro liquidarc parrs ol rlcir savings lor
AGE, ICOME & ASSET CHOICE consumprion. n rlc orlcr land, ir miglr lc rlc rcsulr ol a
Wlcrlcr rlc asscr cloicc srrucrurcs vary wirl rcspccr ro agc colorr cllccr. oldcr colorrs grcw up wirl savings accounrs
and incomc is invcsrigarcd in rlc ncxr rallcs. Fclarivc as rlc major savings insrrumcnr wlcrcas youngcr
lrcqucncics ol lousclolds lolding a rypc ol asscr as a gcncrarions arc also lamiliar wirl ncwcr rypcs ol linancial
luncrion ol rlrcc agc groups arc summarizcd in 1allc 1.1 ro invcsrmcnrs.
1.S wlcrcas 1allc 1.+ slows rlc lrcqucncics ly rlrcc
incomc classcs. 1lc agc srrucrurc ol lilc insurancc is prolally cxplaincd ly a
AGE WISE lilc-cyclc cllccr Wlolc lilc insuranccs arc mosr likcly ro lc
1lc rcscarcl rcsulrs lound our rlar rlc mosr prclcrrcd modc lound among middlc- agcd lousclolds. Again, many ol rlc
ol invcsrmcnr lor rlc lousclolds is rlc lank dcposirs. youngcsr rcspondcnrs do nor lavc sullicicnr incomc ro
!owcvcr rlc rcspondcnrs in rlc oldcsr agc carcgory rlar is invcsr, wlilc lor rlc majoriry ol oldcr lousclolds lilc
as many as 55% ol rlc rcspondcnrs markcd lank dcposirs as insuranccs lavc alrcady lccndislurscd.
mosr prclcrrcd invcsrmcnr insrrumcnr & rlis prclcrcncc
Tablc 1.1
Agc Structurc of Assct Choicc
Prcfcrcnccs of undcr 35 ycars of agc rcspondcnts in various invcstmcnt instrumcnts
Sourcc. Survcy dara
DR.APARA SAMLDRA, DR.M.A.BLRGHATE
+6
1lcrc is a vasr amounr ol lircrarurc rrying ro cxplain Consranrinidcs, onaldson and Mclra (2002) in
invcsrors' rclucrancc ro parriciparc in rlc srock markcr. connccrion wirl lilc-cyclc considcrarions in a S-pcriod
Guiso, {appclli and 1crlizzcsc (1996) analyzc porrlolio and ovcrlapping gcncrarions (G) modcl. !n rlcir modcl, rlc
asscr cloicc undcr lorrowing consrrainrs. 1lc cllccrs ol majoriry ol rlc young gcncrarion's lururc incomc is
lorrowing consrrainrs arc also invcsrigarcd ly dcrcrmincd ly irs lururc wagcs wlilc rlc middlc-agcd lavc
Tablc 1.2
Agc Structurc of Assct Choicc
Prcfcrcnccs of 35-54 ycars of agc rcspondcnts in various invcstmcnt instrumcnts
Sourcc. Survcy dara
Tablc 1.3
Agc Structurc of Assct Choicc
Prcfcrcnccs of abovc 55 ycars of agc rcspondcnts in various invcstmcnt instrumcnts
Sourcc. Survcy dara
A STLDY O IVESTMET BEHAVIOR OF MIDDLE CLASS HOLSEHOLDS I AGPLR
+7
rorcly onrlcir savings as rlc major sourcc ol lururc incomc. rcal csrarc & small saving sclcmcs.
1lc young would likc ro lorrow and invcsr in rlc srock Gcncrally, wcalrlicr lousclolds arc morc likcly ro lold
markcr ro prolir lrom liglcr rcrurns, lur rlc lorrowing any rypc ol linancial or rcrircmcnr savings asscr.
consrrainr prcvcnrs rlcm lrom doing so. 1lc middlc-agcd iscrcpancics lcrwccn rlc lirsr incomc class and rlc uppcr
and rcrircd prclcr a largc slarc ol lixcd incomc sccurirics in incomc class arc cspccially ligl lor lank dcposirs & lilc
rlcir porrlolio lccausc ol rlc lowcr volariliry. 1lus, rlc insurancc as wcll as lor srocks and rcal csrarc lunds. or
aurlors arguc, rlc cquiry prcmiumis drivcn ly rlc rclarivcly cxamplc, only 29% ol rlc lousclolds in Fs. 90,000- 2 lacs
low dcmand lor cquiry ol rlc young and rlc rclarivcly ligl p.a. and S5% in incomc group ol Fs. 5 lacs- 10 lacs p.a.
dcmand lor lixcd-incomc sccurirics ly rlc oldcr considcrcd lilc insurancc as a prclcrrcd invcsrmcnr
gcncrarions. insrrumcnr rcspccrivcly.
Wlcrcas rlc lirsr rwo incomc groups considcrcd small
ICOME WISE saving sclcmcs as rlc rlird mosr prclcrrcd invcsrmcnr
1lc cloicc ol asscrs lrokcn down ly incomc slows a mucl insrrumcnr, ir was considcrcd lcasr prclcrrcd ly rlc liglcr
morc unilorm parrcrn rlan rlc asscr cloicc ly agc. vcrall incomc group. Similarly slarcs & murual lunds arc rlird on
rlc lank dcposirs & insurancc arc rlc mosr prclcrrcd rlc lisr lor incomc group ol Fs. 5 lacs - 10 lacs p.a. ir was
invcsrmcnr insrrumcnrs in all rlc incomc groups, lourrl onrlc lisr lor rlc lirsr rwoincomc groups.
inconsisrcncy is sccn in prclcrcncc in slarcs & murual lunds,
Tablc 1.4
Incomc Structurc of Assct Choicc
OBJECTIVESOF IVESTMET !n srandard cxpccrcd uriliry maximizarion, risk avcrsc agcnrs
Psyclological lcarurcs play an imporranr rolc in rlc arc willing ro rakc risk lor rlc lcnclir ol liglcr cxpccrcd
individual invcsrmcnr dccision proccss. 1lc psyclological rcrurns; rlc morc rlc agcnr is risk avcrsc, rlc liglcr rlc
claracrcrisrics likc risk raking aliliry & mcnral accounring cxpccrcdrcrurnlas rolc inordcr rocompcnsarc lor risk.
rclarc ro lousclolds' cxpccrarions, rlcir scll-rcporrcd 1lc rcspondcnrs wcrc givcn rlc cloicc ol lour oprions
linancial risk raking lclaviour and rlcir scll-rcporrcd risk ro know rlc oljccrivcs ol rlc invcsrmcnr rlar rlcy makc or
avcrsion. vidcncc lor rlc lyporlcsis ol !aliassos and lcarurcs rlar rlcy look lor wlilc dcciding ro invcsr in any
Bcrraur (1995) rlar individuals sccm ro dcparr lrom invcsrmcnr insrrumcnr. !r was lound rlar majoriry ol rlc
cxpccrcd uriliry maximizarion plays an imporranr rolc lcrc. rcspondcnrs said rlar rlcy look lor ligl rcrurns wlilc
Sourcc. Survcy dara
DR.APARA SAMLDRA, DR.M.A.BLRGHATE
+8
invcsring in any insrrumcnr. 1lis is mainly ro conscrvc rlc An incomc wisc division ol rlc rcsulr lrings ro rlc
valuc ol moncy & rlc inllarion rarc in rlc cconomy. Sccond inconsisrcncy in lclaviour ol rlc incomc groups wirl
mosr lookcd in lcarurc is rlc liquidiry in any invcsrmcnr rcspccr ro rlcsc lcarurcs. 1lc dcsiraliliry ol rax advanragc in
insrrumcnr. 1lcsc rcspondcnrs prclcr ro lavc acccss ro rlcir an invcsrmcnr insrrumcnrs incrcascs as rlc incomc lcvcl ol
invcsrmcnrs & don'r wanr ro lold rlcir invcsrmcnrs lor rlc lousclold incrcascs. As sccn in rlc rcscarcl rcsulrs, rax
long. 1ax advanragc ol rlc invcsrmcnr was rlc rlird dcsircd advanragc is dcsircd ly 18% ol rlc rcspondcnrs in rlc uppcr
lcarurc & iquidiry ol rlc invcsrmcnr insrrumcnr is rlc lcasr incomc group wlcrcas only 11% in rlc lowcr incomc group
dcsircd lcarurc. rlouglr ir rolc dcsircd lcarurc.
Tablc 1.5
Objcctivcs of an Invcstmcnt of thc sclcctcd middlc incomc houscholds
(Figurcs in pcrccnt)
Sourcc. Survcy dara
!nvcsror psyclology plays an imporranr rolc in rlcir invcsrmcnrs in a mcdium rcrm rimc. 1lc rcasons
dcrcrmining rlc rimc pcriod lor wlicl rlcy wisl ro makc an lclind rlis lclaviour can lc rlar rlcy cirlcr don'r wisl ro
invcsrmcnr. 1lc rcspondcnrs wcrc askcd ro givc rlcir parr away wirl liquidiry lor longcr rimc pcriod or rlcy arc
invcsrmcnr lorizon wlicl will lclp ro undcrsrand rlc nor vcry surc ol rlc invcsrmcnr dccision rlar rlcy lavc
psyclology ol rlc invcsror lclind any invcsrmcnr dccisions rakcn.
An incomc group dispariry is again noriccd wlcrc
rlar rlcy makc. 1lis can also lclp in ollcring rlc invcsrmcnr
luilding a lugc linancial corpus is markcd only ly rlc
oprions ro rlc invcsrors ly rlc companics & lormularc
rcspondcnrs in incomc group ol Fs. 5 lacs -10 lacs p.a. Slorr
rclcvanr govcrnmcnr policics.
!r was rcvcalcd in rlc rcscarcl rlar rlc middlc class rcrm invcsrmcnr lorizon was markcd ly 60% rcspondcnrs
incomc lousclolds in Nagpur lavc an invcsrmcnr lorizon ol annual incomc lcrwccn Fs. 2 lacs-5 lacs wlcrcas only 8%
ol mcdiumrcrmor in orlcr word rlar rlcy wisl ro gcr lack rcspondcnrs markcd a slorr rcrminvcsrmcnr lorizon.
A STLDY O IVESTMET BEHAVIOR OF MIDDLE CLASS HOLSEHOLDS I AGPLR
+9
CHAGE I THE SAVIGS & IVESTMET !n rlc sclcdulc rlc rcspondcnrs wcrc askcd. !as rlcrc
PATTER OF THE HOLSEHOLDS lccn an incrcasc in your savings sincc lasr livc ycars 1lc
nc ol rlc oljccrivcs ol rlc rcscarcl was ro asccrrain
rcscarcl rcsulrs wirl rcspccr ro incomc group slowcd rlar
wlcrlcr rlc savings ol rlc lousclolds lavc clangcd ovcr
rlc majoriry ol rlc rcspondcnrs ol all incomc groups lavc
rlc sclccrcd rimc pcriod ol livc ycars. 1lc rcspondcnrs wcrc
rcporrcd rlar rlcir savings lavc incrcascd in pasr livc ycars.
askcd ro markcd rlcir answcrs lor wlcrlcr rlcrc las lccn an
!owcvcr rlc pcrccnragc ol rcspondcnrs rcporring an
incrcasc in rlcir saving in rlc lasr livc ycars. 1lcy wcrc also
incrcasc in saving rarcs is also incrcasing wirl progrcssion in
askcd rogivc rlc rcasons lor rlc clangc inrlc savings.
incomc.
Tablc 1.
Invcstmcnt horizon of thc sclcctcd houscholds
Figurcs in pcrccnt
Sourcc. Survcy dara
Tablc 1.7
Incrcasc in savings of thc sclcctcd houscholds
(In numbcrs)
Sourcc. Survcy dara
DR.APARA SAMLDRA, DR.M.A.BLRGHATE
S0
1lc rcscarcl rcsulrs lrouglr our rlc lacr rlar 71% ol rlc parrcrn ol rlc middlc class incomc lousclolds clangcd in
rcspondcnrs lavc rccordcd rlar rlcir savings lavc incrcascd lasr livc ycars. As givcn lclow 60% ol rlc rcspondcnrs lavc
inpasr livc ycars. rcporrcd rlar rlcrc las lccn a clangc in rlcir invcsrmcnr
parrcrninlasr livc ycars. 1lis provcs rlc rcscarcl lyporlcsis.
REASOSFORICREASE I SAVIGS
1lc rcspondcnrs also gavc rlc rcasons lor rlc incrcasc in
Graph 1.2
Changc in invcstmcnt pattcrn of samplc houscholds rlcir savings. !r was lound our rlar S1% ol rlc lousclolds
said rlar rlcir savings lavc incrcascd lccausc ol incrcasc in
rlcir incomc wlicl supporrs rlc lyporlcsis rlar rlc incomc
& savings arc dirccrly rclarcd. !r can lc inlcrrcd rlar wlcn
rlc savings ol rlc lousclolds incrcasc rlcir capaciry ro savc
incrcascs or rlc marginal propcnsiry ro savc is incrcasing
wirl anincrcasc inincomc.
1lc sccond imporranr rcason lclind rlc incrcascd
savings is rlc incrcascd nccd ro savc ly rlcsc lousclolds
wlicl is lasically duc ro rlc srrucrural clangc in rlc !ndian
Sourcc. Survcy dara
cconomy. 1lc growrl ol GP in rlc cconomy lrings a
1lc rcscarcl also prolcd in knowing wlar las lrouglr
dirccr impacr onsaving rarc ol rlc counrry.
alour rlc clangc in rlc invcsrmcnr parrcrn ol rlc middlc
1lc rlird rcason lor incrcasc in savings is rlc ncw &
class incomc lousclolds in Nagpur. 1lc rcscarcl rcsulrs
arrracrivc invcsrmcnr oprions availallc ro rlc lousclolds.
poinrcd our rlar 52% ol rlc rcspondcnrs said rlar clangc in
1lc cconomic lilcralizarion & rlc opcning ol rlc linancial
incomc (incrcasc in incomc) las lccn rlc primc rcason lor
markcrs lavc lrouglr in loray many novcl invcsrmcnr
rlc clangc in rlcir invcsrmcnr parrcrn. 1lis rcsponsc
insrrumcnrs wlicl las cncouragcd rlc pcoplc ro srarr supporrs rlc carlicr rcsulrs rlar rlar lor majoriry ol
lousclolds in rlc samplc rlc savings rarc lavc incrcascd &
invcsring inrlcsc ncwinsrrumcnrs.
rlar roomainly duc roincrcasc inrlc incomc.
1lc sccond rcason circd ly rlc rcspondcnrs is rlc
Graph 1.1
clangc in govcrnmcnr policics wlicl las also inllucnccd rlc
Rcasons for incrcasc in savings
invcsrmcnr parrcrn ol rlc lousclolds. 1lc linancial
lilcralisarion ol rlc !ndian cconomy duc ro wlicl rlc
linancial markcr saw an inllux ol ncw invcsrmcnr
insrrumcnrs las madc rlc lousclolds ro invcsr in rlcsc
insrrumcnrs. !n any markcr cconomy, rlc lanking and
linancial sysrcm plays a kcy rolc in molilizing a socicry's
savings and in clannclising rlcsc savings inro producrivc
uscs andinvcsrmcnrs.
!n providing an cllicicnr and rigorous proccss lor
inrcrmcdiaring rlc llowol a socicry's savings inro producrivc
uscs, rlc lanking and linancial sysrcm is onc ol rlc corc
Sourcc. Survcy dara
dcrcrminanrs ol rlc pacc ol a counrry's cconomic
dcvclopmcnr and incrcasc in rlc srandards ol living ol irs
IVESTMET PATTER OF SELECTED
cirizcns. 1lc govcrnmcnr ol !ndian ly lilcralizing rlc
HOLSEHOLDS
lanking & insurancc sccror las inllucnccd rlc invcsrmcnr
nc ol rlc rcscarcl lyporlcscs was wlcrlcr rlc invcsrmcnr
parrcrnol rlc lousclolds in!ndia.
A STLDY O IVESTMET BEHAVIOR OF MIDDLE CLASS HOLSEHOLDS I AGPLR
S1
1lc progrcssivc srcps rakcn ly rlc govcrnmcnr lor rlc invcsrmcnr dccisions. 1lis would rcllccr wlcrlcr rlcrc is
dcvclopmcnr ol rlc !ndian sccuriry markcr likc rlc any scopc ol improvcmcnr in rlcir invcsrmcnr lclavior.
dcmarcrializarion ol sccurirics, giving morc powcr ro SB! 52% ol rlc rcspondcnrs lavc rcporrcd rlar rlcy rakc
las also luild rlc conlidcncc ol rlc invcsrors wlicl las invcsrmcnr dccisions on rlcir own wlcrcas only 28% ol rlc
madc rlcm slilr lrom rradirional ro non-rradirional saving rcspondcnrs rakc prolcssional lclp in making rlcir
insrrumcnrs or in orlcr words wc lavc sccn an incrcascd invcsrmcnr cloiccs.
slarc ol rlc linancial savings in rlc roral lousclold savings.
1lc lollowing grapl givcs rlc rcsulr ol rlc rcspondcnrs lor
Graph 1.5
rlcir rcasons roclangc rlcir invcsrmcnr parrcrn.
Invcstmcnt dccisions by thc sclcctcd houscholds
Graph 1.3
Rcasons for thc changc in invcstmcnt pattcrn
Sourcc. Survcy dara
COCLLSIO
1lc saving & invcsrmcnr parrcrn ol rlc middlc class incomc
Sourcc. Survcy dara
lousclolds in Nagpur can lc summarizcd rlar rlc lank
dcposirs rcmain rlc mosr popular insrrumcnr ol invcsrmcnr
vcn rlougl rlc invcsrmcnr parrcrn ol rlc invcsrors in rlc
lollowcd ly insurancc wirl maximum numlcr ol
middlc class incomc lousclolds las clangcd lur srill 76%
rcspondcnrs invcsring inrlcsc lixcd incomc lcaring oprion.
ol rlc rcspondcnrs wisl ro clangc rlcir currcnr porrloilo ol
Bank dcposirs rcmains rlc mosr prclcrrcd invcsrmcnr
rlc asscrs.
oprion ol rlc middlc class incomc lousclolds in Nagpur
wirl +1 pcrccnr rcspondcnrs marking ir as rlc mosr
Graph 1.4
prclcrrcd invcsrmcnr oprion. 1lis is lollowcd ly rlc lilc
Plans to changc thc invcstmcnt pattcrn of sclcctcd
insurancc wlcrc S0 pcrccnr rcspondcnrs markcd ir as
houscholds
rclarivcly prclcrrcd invcsrmcnr oprion. Small saving
sclcmcs sucl as Pullic providcnr lund, Posr ollicc saving
dcposirs arc rlc rlird prclcrrcd invcsrmcnr oprion.
1lc largcsr slarc ol lousclolds wirl savings accounrs
can lc lound in rlc oldcsr agc carcgorics. vcrall rlc lank
dcposirs & insurancc arc rlc mosr prclcrrcd invcsrmcnr
insrrumcnrs in all rlc incomc groups, inconsisrcncy is sccn
in prclcrcncc in slarcs & murual lunds, rcal csrarc & small
saving sclcmcs.
!r was lound rlar majoriry ol rlc rcspondcnrs said rlar
rlcy look lor ligl rcrurns wlilc invcsring in any
Sourcc. Survcy dara
insrrumcnr.
!r was rcalizcd rlar rlc rcscarcl musr also lind our rlar low
1ax advanragc is dcsircd ly 18% ol rlc rcspondcnrs in
do rlc middlc class incomc lousclolds in Nagpur rakc rlcir
DR.APARA SAMLDRA, DR.M.A.BLRGHATE
S2
rlc uppcr incomc group wlcrcas only 11% in rlc lowcr !r was also lound during rlc rcscarcl rlar rlc rax
incomc group rlouglr ir olc dcsircd lcarurc. advanragc in any invcsrmcnr rakcs rlc lasr placc in rlc
minds ol rlc invcsror. 1lc invcsrors look lor ligl rcrurns & 1lc rcscarcl rcsulrs lrouglr our rlc lacr rlar 70% ol
liquidiry rarlcr rlan low risk & rax advanragc ol rlc rlc rcspondcnrs lavc rccordcd rlar rlcir savings lavc
insrrumcnr. 1lis clcarly indicarcs rlar rlc rax conccssions incrcascdinpasr livc ycars.
ol rlc govcrnmcnr on invcsrmcnrs arc lairly lcss arrracrivc
S1% ol rlc lousclolds said rlar rlcir savings lavc
as an invcsrmcnr oljccrivc. vcn in rlc liglcr incomc
incrcascd lccausc ol incrcasc in rlcir incomc wlicl
group rcspondcnrs laving annual incomc ol Fs.5 lacs-10
supporrs rlc lyporlcsis rlar rlc incomc & savings arc
lacs rlis was rlc lcasr imporranr oljccrivc. 1ax lcnclirs on
dirccrly rclarcd.
pcnsions and long-rcrmsavings nccd ro lc incrcascd so rlar
1lc sccond imporranr rcason lclind rlc incrcascd
pcoplc arc cncouragcdroinvcsr lor long rcrm.
savings is rlc incrcascd nccd ro savc ly rlcsc lousclolds
1lcrc is also a nccd lor incrcasing rlc linancial lircracy
wlicl is lasically duc ro rlc srrucrural clangc in rlc !ndian
ol rlc middlc class incomc lousclolds. !r was lound rlar
cconomy.
rlc asscr cloicc ol all rlc agc groups docsn'r dillcr mucl as
1lc rlird rcason lor incrcasc in savings is rlc ncw &
all rcspondcnrs lavourcd lank dcposirs & insurancc as rlc
arrracrivc invcsrmcnr oprions availallc rorlc lousclolds.
prclcrrcd insrrumcnrs ol invcsrmcnr. !r rlus nccds ro lc
60% ol rlc rcspondcnrs lavc rcporrcd rlar rlcrc las
cxplaincd ro rlc middlc class lousclolds rlar rlc linancial
lccn a clangc in rlcir invcsrmcnr parrcrn in lasr livc
nccds & oljccrivcs ar dillcrcnr agcs ol lilc arc also dillcrcnr;
ycars.52% ol rlc rcspondcnrs said rlar clangc in incomc
rlcrclorc rlc asscr cloicc slould lc madc kccping in mind
(incrcasc in incomc) las lccn rlc primc rcason lor rlc
rlcir agc group. 1lc youngcr agc group las rlc capaciry ro
clangc inrlcir invcsrmcnr parrcrn.
rakc morc cxposurc in asscr cloicc rlan rlc oldcr agc
76% ol rlc rcspondcnrs wisl ro clangc rlcir currcnr
group. Sucl linancial lircracy would lclp in lurrlcr
porrloilo ol rlc asscrs. 52% ol rlc rcspondcnrs lavc
improving rlc dcprl ol rlc capiral markcr in !ndia, wlicl
rcporrcd rlar rlcy rakc invcsrmcnr dccisions on rlcir own
would cnallc Corporarc !ndia ro lavc acccss ro largcr pool
wlcrcas only 28% ol rlc rcspondcnrs rakc prolcssional lclp
ol lunds.
inmaking rlcir invcsrmcnr cloiccs.
1lc rcscarcl rcsulrs also illusrrarc rlar majoriry ol rlc
rcspondcnrs ol rlc sclccrcd middlc class lousclolds rakc
DIRECTIOSFORPOLICY FRAMIG:
invcsrmcnr dccision on rlcir own. 1lc govcrnmcnr
1lc rcscarcl rcsulrs lring our rlc lacr rlar rlc saving lalirs
iniriarivcs in rlis dirccrion would lclp rlc invcsrors ro rakc
ol rlc sclccrcd lousclolds ol rlc middlc class arc good lur
morc sound invcsrmcnr dccisions wlicl would in rurn
rlcy don'r wanr ro savc lor long rcrm or luild a linancial
improvc rlc dcgrcc ol soplisricarion rlar lousclolds lring
corpus. 1lis implics rlar rlcsc savings would nor lc
ro lcar in rlcir saving and invcsrmcnr dccisions. 1lc
availallc ro rlc narion lor a long pcriod ol rimc & lcncc
govcrnmcnr slould also dcsign policy ro makc pcoplc
can'r lc pur ro usc lor molilisarion ol projccrs wlicl lavc
invcsr in various insrrumcnrs rarlcr rlan srasling casl ar
long gcsrarion pcriod. 1lcrclorc rlc policics slould lc
lomc.
lramcd in sucl manncr rlar rlcsc lousclolds arc willing ro
parr away wirl rlcir consumprion lor a longcr pcriod ol
REFERECES:
rimc. 1lc rax inccnrivcs slould lc dcsigncd in manncr rlar
Alcssic, Fol; !oclgucrrcl, Srclan; Socsr, Arrlur van,
rlc middlc class arc cncouragcd ro savc lor ar lcasr 15-20
"!ousclold Porrlolio in rlc Ncrlcrlands," Papcr rcad ar rlc
ycars assisring inlong rcrmgrowrlol rlc narion.
Conlcrcncc on !ousclolds Porrlolios rganiscd ly rlc
1lis would also lclp in aclicving rlc oljccrivc ol
uropcan \nivcrsiry !nsrirurc, ircnzc,17-18, cccmlcr
linancial inclusion wlicl may lc dclincd as rlc proccss ol
1999.
cnsuring acccss ro linancial scrviccs and rimcly and
ilnor AW(1990) ' 1lc isrrilurion & Consumprion ol
adcquarc crcdir wlcrc nccdcd ly vulncrallc groups sucl as
Pcrsonal Sccror Wcalrl in Ausrralia', Ausrralian conomic
wcakcr sccrions and low incomc groups ar an allordallc
Fcvicw,1sr Quarrcr, pp SS-+0.
cosr.
A STLDY O IVESTMET BEHAVIOR OF MIDDLE CLASS HOLSEHOLDS I AGPLR
S3
rcclairn {(1991) 'Somc cllccrs ol a consumprion rax on
rlc lcvcl & Composirion ol Ausrralian Saving &
!nvcsrmcnr', Ausrralian conomic Fcvicw,+rl Quarrcr, pp
1S-29.
Guiso, uigi; {appclli, 1ullio, "!ousclolds' Porrlolio in
!raly, Fcad ar rlc Conlcrcncc on !ousclolds Porrlolios
rganiscd ly rlc uropcan \nivcrsiry !nsrirurc, ircnzc,
17-18, cccmlcr 1999.
Porcrla {M & Samwick AA(1997) !ousclold Porrlolio
Allocarionovcr rlc ilc cyslc,NBF Working Appcr 6185
Fajarajan, \, "Sragc in ilc Cyclc and !nvcsrmcnr parrcrn,"
inancc !ndia, \ol xiii (2), {unc 1999, +77-+85.
1anscl, Yilmazcr, "o Clildrcn Allccr !ousclold Porrlolio
Allocarion vidcncc lrom rlc Survcy ol Consumcr
inanccs." (Novcmlcr 10, 2001), jol markcr papcr.
DR.APARA SAMLDRA, DR.M.A.BLRGHATE
S+