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What is an 'Investment'

An investment is an asset or item that is purchased with the hope that

it will generate income or will appreciate in the future. In an economic
sense, an investment is the purchase of goods that are not consumed
today but are used in the future to create wealth. In finance, an
investment is a monetary asset purchased with the idea that the asset
will provide income in the future or will be sold at a higher price for a

BREAKING DOWN 'Investment'

The term "investment" can be used to refer to any mechanism used for
the purpose of generating future income. In the financial sense, this
includes the purchase of bonds, stocks or real estate property.
Additionally, the constructed building or other facility used to produce
goods can be seen as an investment. The production of goods required
to produce other goods may also be seen as investing.

Investment Decision
The Investment Decision relates to the decision made by the
investors or the top level management with respect to the amount of
funds to be deployed in the investment opportunities.
Factors Influencing Investment

This study aims to 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.
The individuals may be equal in all aspects, may even be
living next door, but their financial planning needs are very
different. It is by using different age groups along with
Gender that synergism between investors can be generated.
In this context, demographics alone no longer suffice as the
basis of segmentation of individual investors. Hence keeping
this in mind, the present study is an attempt to find out
Factors which affects individual investment decision and
Differences in the perception of Investors in the decision of
investing on basis of Age and on the basis of Gender. The
study concludes that investors age and gender
predominantly decides the risk taking capacity of investors.

Various investment avenues available for


Investments made in the finance industry can be divided into

two distinct types namely, Traditional and Alternative. Let us
look into each of these types one by one and see what
investment categories fall into which type.
Traditional Investments
Investing in well-known financial products falls into the
category of traditional investments. These include bonds,
shares, real estate etc. These are categories which are quite
popular among investors as active investment strategies to
make your money grow. Following are the investment products
that fall under the category of traditional investment.
A Bond can be understood as an IOU which is issued by an
issuer (borrower) and to a lender. Generally, bonds are
instruments used by public and private sector enterprises to
raise huge sums of money which any bank is incapable of
lending. These bonds are then issued in the public market by
the borrowing entity and are bought by lenders for specific
amounts of money. Thousands of lenders then come together
to lend the required amount and the borrowing organization is
able to raise capital for its operational or growth purposes.
However, since money is being lent to the issuer of bonds,
there is also an interest component involved that is paid back
to the investor in turn for his/her money. This interest is paid at
a predetermined rate and for a specific period of time. Bonds
fall under the category of fixed income securities since the
interest on these can be exactly calculated for the time for
which the bond is held. Bonds fall under the debt category and
are therefore, comparatively safer financial instruments to
invest in. However, with all financial tools risk is inversely
proportional to returns and as such the low-risk attribute of
this tool makes it a low return instrument as well.
Stocks or equity are shares that are issued by companies and
are bought by the general public. This offers an avenue to
companies to raise funds. Stocks entitle a customer ownership
of a company. Shares, stocks and equity all imply the same
thing. Shares are one of the most popular investment avenues
in the world. This is because the returns offered by stocks is
generally higher than any other financial instrument. However,
to balance out the high return associated with stocks, the risk
associated with these products is also quite high.
Any business may issues different types of shares based on
the financial urgency and need. In exchange for the money,
shareholders are issued Stock certificates.
Stocks are mostly divided into two basic types, common
stocks and preferred stocks.
Small saving schemes
Small savings is another popular savings tool in the Indian
financial market. The name itself suggests that these tools are
meant for saving money in small amounts. The idea behind this
financial tool is to enable the habit of saving in people from
almost all economic sections. Some of the most common small
savings tools are Sukanya Samriddhi Scheme, EPF (Employees
Provident Fund), NPS (National Pension Scheme, Kisan Vikas
Patra, Personal Provident Fund (PPF) etc. Almost all small
savings schemes are initiated and facilitated by the
government so as to enhance the spread and penetration of
savings schemes in the country. Let us look into some of the
most prominent schemes out of these.
Employees Provident Fund

Employees Provident Fund is another small savings scheme

that is primarily offered by your employer. This includes
salaried individuals of both private and public organizations.
Any company with a workforce of more than 20 employees is
mandated to register for the EPF scheme. Around 12% each
month is deducted from the salary and contributed towards the
EPF account of an employee. This EPF account is maintained
by the Employees Provident Fund Organization, commonly
known as the EPFO. The amount deposited towards EPF is
eligible for tax exemption under section 80C of the Income Tax
Sukanya Samriddhi Scheme

Sukanya Samriddhi Yojana is a special scheme which has been

launched by the central government to facilitate the financial
wellbeing of girl child in the country. This scheme can be
availed by parents or legal guardian of a girl child and an
amount as low as Rs.1000 per annum can be deposited under
the scheme. The account matures only after the girl child
reaches the age of 21. Premature withdrawal is allowed only
after the girl reaches the age of 18 years and has financial
need pertaining to wedding or education.
National Pension Scheme

National pension Scheme is one of the most popular schemes

for ensuring a regular pension amount to individuals working in
both the private and the public sector. NPS is offered to
individuals either as part of their corporate perks or is availed
by individuals on their own. The amount set aside
towards NPS is eligible for tax rebate under section 80C of
the Income Tax Act. The scheme offers withdrawal of
deposited amount only once the account holder reaches the
age of 60 years. The corpus withdrawn on maturity is
absolutely tax-free.

Mutual Funds
Mutual funds are financial instruments that are professionally
managed and that invest money on behalf of any investor, in
different securities. These mutual funds are classified into
various types based on the type of securities that they invest
in. Some of the most popular mutual fund types are balanced
funds, stock funds, open-ended funds etc. These funds are
classified based on their percentage allocation in different
securities. So, an equity fund invests purely is equity and is a
high risk high return product while a debt fund invests purely
in debt and money market instruments and is hence a low risk
low return financial product.
Fixed Deposits
As the name itself indicates, fixed deposits are financial
instruments that are one of the oldest and safest ways to save
money. These are not necessarily active investment tools, but
are rather a passive way to save and earn returns. A fixed
amount of money is kept aside with a financial institution for a
fixed number of days or months or years. In turn, interest is
earned on this money. The rate of interest differs with the
deposit tenure and also with the banking entity.
Similar to fixed deposit is the concept of recurring deposit.
However, the only point of difference in the two investment
tools is that while a lump-sum amount needs to be fixed in
case of fixed deposit, a smaller amount needs to be deposited
at regular intervals in case of a recurring deposit. Hence,
customers who do not have a large chunk of money to fix in a
single go can opt for a recurring deposit wherein money is
usually deposited monthly for a specific deposit tenure. The
rate of interest earned on recurring deposit is similar and
comparable to that earned on fixed deposit.
Real Estate
Property rates are soaring with every passing day which has
made real estate a hot investment avenue for investors.
Buying, selling and leasing of property offers substantial
returns to investors. Appreciation of property makes real
estate a good investment tool. With urbanization gaining
ground rapidly, real estate prices in certain major cities like
Mumbai, Bangalore, New Delhi, are skyrocketing. This has
made these places hot hubs for real estate investors. Most
investors take loans from banks to purchase real estate and
then lease out or sell the same property to enjoy returns
offered due to appreciation in price of the property.
Alternative Investments
Alternative Investments are those that are not regular
investments like stocks, bonds etc. These are investments
made in order to acquire jewelry, precious metals etc. which
are expected to yield returns in future. Hedge funds, some real
estate types, venture capital and derivatives also form a part
of alternative investment. Alternative investments are so
called due to their non-traditional as well as complex nature.
Also, another distinguishing feature of alternative investments
is relatively low liquidity and well as very high minimum
investment limits.
While a common investor may not access alternative
investments like hedge funds or derivatives due to their
complex nature, others like gold and real estate are available
to even the common man. Let us look into some of the most
prominent alternative investment tools known to investors.
Hedge Funds
These can be understood as a professionally managed private
investment company or partnership structure. Techniques to
manage the fund can be those that are not commonly allowed
for SEC regulated companies. Hedge funds invest in both
financial derivatives and/or publicly traded securities. These
are popular as an alternative investment tool owing to their
high leverage and high returns. However, they are
characterized by high fees as well as low liquidity. It is seen
that managers of hedge funds generally have a personal stake
in the fund.
Private Equity
Private equity is trading in shares of an operating company
that is not publicly listed and whose shares are not available
on the stock market. Institutional investors employ various
strategies to indulge in private equity trading. Private equity is
popular since it offers diversification of financial portfolio by
allowing investment in avenues that are not tightly coupled to
normal investments.
Venture Capital
Venture Capital is one of the most popular investment
strategies currently being deployed by investors in the Indian
start-up scene. The idea behind this investment strategy is to
invest substantial capital in a budding company in return for
stocks of the same. This is done with companies who are
either in their initiation phase or in their growth phase. Venture
capitalism is generally based on ideas that find substance with
the investors or any new technology that the investors feel
might take the market by storm in future.
Managed Futures
This type alternative investment involves managers using
futures also as part of their investment portfolio. Managed
futures are a great tool to offer portfolio diversification and
therefore are a great alternative to minimize risk and maximize
returns. In general, a managed futures account will have
sufficient exposure to different markets like energy,
agriculture, commodities, currency etc.
Structured Products
Structured products are alternative investment tools that
generally combine two or more financial instruments to make
a packaged investment strategy in a single product. Most
often, derivatives are combined with securities or with other
derivatives. Structured products have a fixed maturity date like
bonds. These offer a convenient strategy to implement a
complex investment strategy across various financial
Collectible items
Collecting artifacts that have substantial value and those that
have historical and artistic significance is one of the most
difficult types of alternative investments. This requires
knowledge of the article that you are purchasing. Mostly,
collectibles like stamps, jewelry, boats, planes, art works etc.
tend to appreciate in value and are considered good and
profitable assets to own. The value of artifacts is generally
expected to appreciate and keep pace with inflation and hence
collectibles make a good form of alternative investment.
There are a few more alternative investment instruments
available in the financial world. However, their use is limited
since these are more complex products and are hence not
considered by the common investor. Seasoned investors and
professional investors tend to consider these alternative
investment strategies to increase wealth.


They are one of the important parts of good investment portfolios. Life insurance
is an investment for the security of life. The main objective of other investment
avenues is to earn a return but the primary objective of life insurance is to
secure our families against unfortunate event of our death. It is popular in
individuals. Other kinds of general insurances are useful for corporates. There
are different types of insurances which are as follows:

Endowment Insurance Policy

Money Back Policy
Whole Life Policy
Term Insurance Policy
General Insurance for any kind of assets.


Non-marketable securities are those securities which cannot be liquidated in the

financial markets. Such securities include:

Bank Deposits
Post Office Deposits
Company Deposits

Need of the study:

The need of the study was to fill the gap that was identified
in the previous researches that where reviewed for the
purpose of this study. From the researches reviewed for
the purpose of this study it was it was found out that there
is no awareness about investment decision in Chennai.
The researches conducted earlier have emphasized that
awareness about investment decision can be increased
through various initiatives of government and banking and
financial institution.

Chennai city and is


* The lack of knowledge of customers about the
instruments can be major limitation.
* The information can be biased due to use of
* Area of the study was restricted to Chennai city only.
Conducting a research on a large scale was not possible
with the given time.