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CHAPTER I

INTRODUCTION

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INTRODUCTION

Human wants are unlimited and sometimes these wants even exceed one’s
resources. Money management is therefore, a complex task and involves
making important financial choices. It is better to make these choices after
rational consideration and planning rather than making them instinctively. The
real purpose of managing is to establishing an objective of providing financial
security and well-being for the future. In short personal financial planning
includes one’s savings and investment.

The vital role of savings and investments in the economic progress


of the country has been well recognized by economics since the time of Adam
Smith. The savings and investments of private individuals form the basis of
wealth accumulation in the society. The savings in financial assets has great
relevance in a developing country like India from the fact that savings can be
mobilized for investment in priority areas in conformity with the planning
strategies. The savings and investments of individuals affect to a great extent
the national investments, economic growth and national income.

Although some people consider the terms savings and investments


synonymous, they are not similar. Though they are different, they are like the
two sides of a coin which are inseparable. There is a link between savings and
investments. Without saving there can be no investment and vice versa.
Savings may be thought of as money put aside for future use, while investment
may be thought as a way of getting return on your savings in the form of
interest, dividend, profit or other things.

Every investment is characterized by return and risk. Investors


intuitively understand the concept of risk. In general it refers to the possibility
of incurring a loss in a financial transaction. A person making an investment
expects to get some return from the investment in the future. But, as future in

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uncertain so is the future expected return. It is this uncertainty associated with
the returns from an investment that introduces risk in to an investment.

We can distinguish between the expected return and the realized


return from an investment. The expected return in the uncertain future returns
that an investor expects to get from his investment. The realized return, on the
contrary is the certain return that an investor has actually obtained from his
investment at the end of the holding period. The investor makes the investment
decision based on the expected return from the investment. The possibility of
variation of the actual return from the expected return is termed risk. Risk
arises where there is a possibility of variation between expectation and
realizations with regard to an investment. Thus risk can be defined in terms of
variability of returns. Risk is the potential for variability in returns.

Investors may be individuals and institutions. Individual investors


operate alongside institutional investors in the area. However, their
characteristics are different. Individual investors are large in number but their
investable resources are comparatively smaller. They generally lack the skill to
carry out extensive evaluation and analysis before investing. Moreover they do
not have the time and resources to engage in such an analysis.

Institutional investors, on the other hand, are the organizations with


surplus funds who engage in investment activities. Mutual funds, investment
companies, banking and non- banking, insurance corporations etc. are the
organizations with large accounts of surplus funds to be invested in various
profitable avenues. These institutional investors are fewer in number compared
to individual investors, but their investable resources are much larger. The
institutional investors engage professional fund managers to carry out extensive
analysis and evaluation of different investment opportunities. As a result their
investment activity tends to be more rational and scientific. They have a better

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chance of maximizing returns and minimizing risk. The professional investors
and the unskilled investors combine to make the investment area dynamic.

Statement of the Problem

The study on investment pattern is of great importance in present


day situation. More investment schemes are introduced everyday and it is time
to change to new investment schemes from the usually followed line of
investments. There are numerous investment avenues exist for salaried
employees. Investment in various avenues provides a balance between
liquidity, return and risk. Government employees are considered to be an elite
group among the salaried class. So this study has wider significance in the
present day situation. Hence the study is titled as investment pattern of
government employees.

Objectives of the Study

1. To study the investment pattern of government employees.


2. To know the saving habits of governmet employees.
3. To analyse various modes of investment opportunities available.
4. To ascertain the most preferred investment avenues by
government employees
5. To ascertian the factors affecting their investment decisions

6. To analyse the duration of investment the government employees


prefer.

7. To give a recommendations to the investors that where they


should invest

Scope of the Study

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This study aims to examine the investment pattern of government.
The survey is limited to 50 government employees in kottayam district.
Methodology
The study is based on the data collected from primary and secondary sources.
Primary data was collected through questionnaire method. The data have been
collected from 50 government employees working in various government
institutions in Kottayam District. Secondary data was collected from booklets,
journals and internet.

 Tools for analysis


The data collected have been analysed by various techniques for
the purpose of analysis simple statistical tools like averages and percentages
were used . Tables, diagrams and charts were also used for the interpretation
of the collected data.
 Period of the Study

The period of the study is three months (1st January to 31st March).

Significance of the Study


Investment plays an important role in the economic development of the
country. Therefore, it is important to study the saving habits and investment
pattern of government employees. More and more investment schemes are
introduced every day. Thus the investment policy selected must be tailored to
meet one’s tastes and requirements. The wise investment of funds aids in the
fulfillment of wealth accumulation.
Limitations of the Study
1. The area of the study was limited to two colleges. Thus the main limitation
of the study is the small sample size.
2. Some of the information sought was very personal in nature. Therefore
people were reluctant to reveal such information.

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3. Time constraint was a limiting factor.

Chapterisation

The study has been organized in four chapters.

Chapter I - Introduction

II - An Overview of Investment Pattern

III - Data analysis and Interpretation

IV - Summary of Findings, suggestions and Conclusion

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CHAPTER 2

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AN OVERVIEW OF INVESTMENT PATTERN

Investment is the employment of funds with the aim of achieving additional


income or growth in value. The essential quality of an investment is that it
involves ‘waiting for a reward’. It involves commitment of resources which
have been saved or put away from current consumption in the hope that, some
benefits will accrue in future. In other words, an investment is a sacrifice of
current money or other resources for future benefits.

Numerous avenues of investments are available in the market and individuals


can invest their savings in different ways. A person having more money than
what he requires for current consumption known by potential investors’ can
either deposit money in a bank or purchase a long-term government bonds or
invest in the equity shares of a company or contribute to a provident fund
account or buy a stock option or acquire a plot of land or investment in some
other form. The two key aspects of any investment are time and risk. The
sacrifice takes place now and is certain. The benefit is expected in the future and
tends to be uncertain. In some investments (like government bonds) the time
element is the dominant attribute. In other investments (like stock options) the
risk element is the dominant attribute.in some other investments (like equity
shares) both time and risk are important.

DEFINITION

The term ‘investment’ can be used in variety of ways. According to Donald E


Fisher and Ronald J Jorden “an investment is a commitment of funds made in
the expectation of some positive return”. In the words of Lawrence J Gitmen
and Michael D Joehnic “investment is a vehicle into which, funds can be placed
with the expectation that they will be preserved or increased in value and
generate positive returns”. Investment is the process of putting away apportion
of the current income for satisfactory yield with minimum risk.

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Concepts of investments

There are basically three concepts of investment

1. Economic Investment

To the economic point of view, investment means the net additions to


economy’s capital stock which consist of goods and services which are used in
the production of other goods and services. The term ‘net addition’ to the capital
stock means the increase in the building, equipment or inventories that are
included in the economist’s definition of investment.

2. Commitment Investment

Commitment investment usually refers to a money commitment of some sort to


‘the man on the street’, since no rate of return is involved or a financial return or
capital growth is expected. For example commitment of money to buy a new car
meant for his private use.

3. Financial Investment

Financialinvestment is the allocation of monetary resources to assets that are


expected to yield some gain or positive return over a givenperiod of time. These
assets range from safe investments to risky investments. It means an exchange
of financial claim in stock and bonds, real estate mortgages etc. it involves long
term commitment and waiting for a reward.

ELEMENTS OF INVESTMENTS

1. Risk

The word risk is synonymous with the phrase variability of return. Investments
risk is just as important as measuring its expected rate of return because
minimizing risk and maximizing the rate of return are interrelated objectives in
the investment management. An investment whose rate of return varies widely
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from period to period is risky than whose return that does not change much.
Every investor likes to reduce the risk of his investments by proper combination
of different securities.

2. Returns

Investors may buy and sell assets in order to earn returns on them; returns may
be simply defined as the difference between the purchase price and the selling
price. The return, better known as reward from investments include both current
income and capital gains or losses, which are by increase or decrease of the
security price.

3. Time

Time period depends on the attitude of the investor who follows a buy and hold
policy. A longer term fund allocation is termed as an investment. An investor is
interested in a reasonable rate of return over a period of time. A short term
holding is associated with trading for quick term and is called speculation.

OBJECTIVES OF INVESTMENT

People make investment for a variety of purposes. The objectives of


investments should be understood before initiating the process of investment.
Selection of investments should rather be based on research of various factors.
The fundamental consideration for investment should be a growth oriented
company with substantial future potential. The major objectives of investment
are as follows:-

1. Income

The major objective of every investment is to earn income in the form of


dividend, yield or interest. Suitable securities are those whose prices are
relatively stable but still pay reasonable dividends or interest, such as blue chip

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companies. Certain investments like bank deposits, debentures, bonds etc. carry
fixed rate of return payable periodically. On investments made in shares of
companies, the periodic payments are not assured but it may ensure higher
return from fixed income securities; but these investments carry higher risk than
fixed income securities.

2. Capital appreciation

The other important objective of investments is appreciation in the capital


invested over a period of time. Capital appreciation can achievedin the
following three ways:

(a) Conservative growth

Investors who seek to achieve conservative growth seek to build an investment


portfolio that will make money over the long term by capital appreciation
known as wealth building over time.

(b) aggressive growth

Investors who seek to achieve short term and long term capital gains opt for
aggressive growth in stocks. Current income from dividends is of a low priority
and the investors are risk seekers.

(c) Speculation

An investor with speculation as an objective wants to maximize returns by


buying and selling shares and securities so often solely to make profit from
short term price fluctuations. Speculators do not expect to hold securities for
long periodic. High rate of risk is involved with this objective.

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3. Forms of return

The returns expected from securities may be of two types:

(a) Periodic cash receipts

Cash dividends are payable as and when the board of directors of the company
decides to distribute the after tax earnings of the company to the shareholders.
In case of debentures ,bonds, bank deposits etc. the coupon rate is payable at the
end of each specified period.

(b) Capital gain

The second component of return is the change in the price of investment called
the capital gain or loss. This element of return is the difference between the
purchase price and the price at which the asset can be or is hold.

The combination of periodic cash receipts and capital gain made on investments
constitute the total return on particular investment.

4. Safety and security of funds

Another important consideration in making investment is that the funds so


invested should be safe and secure. The investment should be capable for
redemption as and when due.

5. Risk

The level of risk depends on the object of investment. An investor who


expects greater return should be prepared to take greater risk. By careful
planning and periodical review of the market situation, the investor can
minimize his risk on the investments.

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6. Liquidity

The liquidity of investments is another consideration to be kept in mind by the


investor. Before making the investment, the investor should consider the degree
of liquidity required. Certain securities are capable of being sold in the readily
available market and some securities may not be so liquid. The investors
generally prefer securities which ensure liquidity and marketability.

7. Tax considerations

Before making the investments the investor should also take into consideration
the provisions of income tax, capital gains tax, wealth tax and tax Acts, to
minimize his tax burden and avail all tax exemptions available to him.

FEATURES OF AN INVESTMENT PROGRAMME

While investing their money,the investors must have some definite ideas
regarding the features their investments must possess. These features must be
consistent with the objectives, preferences and constraints of the investors.
These investments must also offer optimum facilities and advantages to
investors as far as the circumstances permit. The investors, generally, form their
investment policies on the basis of the following features:

1. Safety

The safety sought in investment is not absolute and complete. It rather implies
protection against loss under reasonably likely conditions or variations. The
investor should carefully review the economic and industry trends before
choosing the type of investment. To ensure safety of principal the investor
should consider diversification of assets. Adequate diversification involves
mixing investment commitments by industry, geographically by management,
by financial type and by maturities. A proper combination would reduce losses.

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Approval of law itself adds as flavour of safety to the investment to another.
Investments with the government assure more safety than with private party.

2. Liquidity

If a portion of the investment can be converted into cash without much loss of
time, it will help the investor to meet emergencies. This depends upon the
marketability and trading facility. Liquidity will be ensured if the investor buys
a proportion of readily saleable securities out of his total portfolio. Investments
like stocks and property or real estate cannot ensure liquidity whereas cash,
fixed deposits and units ensure liquidity. An investment is highly liquid if it can
be transacted quickly (without much loss of time), transaction cost is low and
the price change between the two transactions is negligible.

3. Income stability

Regularity of income at a consistent rate is necessary in any investment pattern.


Not only stability, it is also important to see that income is adequate after taxes.
It is possible to find out some god securities which pay practically all their
earnings in dividends.

4. Appreciation and Purchasing Power Stability

Investors should balance their portfolios to fight against any purchasing power
instability. Investors should judge price level inflation, explore the possibility of
gain and loss in the investments available to them, limitations of personal and
family considerations. The investors should also try and forecast which
securities will possibly appreciate. A purchase of property at the right time will
lead to appreciation in time. Growth stock will also appreciate over time. These,
however, should be done thoughtfully and not in a manner of speculation or
gamble.

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5. Legality and Freedom from Care

All investments should be approved by law. Law relating to minors, estates,


trusts, shares and insurance should be studied. Illegal securities will bring out
many problems for the investor. One way of being free from care is to invest in
securities like unit trust of India, life insurance corporation or savings
certificates. The management of securities is then left to the care of the trust
who diversifies the investments according to safety, stability and liquidity with
the consideration of their investment policy. The identity of legal securities and
investments in such securities will also help the investor in avoiding many
problems.

6. Tangibility

Intangible securities have many times lost their value due to price level
inflation, confiscatory laws or social collapse. Some investors prefer to keep a
part of their wealth invested in tangible properties like building, machinery and
land. It may, however, be considered that tangible property does not yield an
income apart from the direct satisfaction of possession.

7. Profitability

When safety of the principal is assured the next aspect of the investment are
expected returns. The higher rate of interest leads to increased savings.
Regularity and periodicity of these returns should be taken into consideration. A
prudent investment policy should be enableto enjoy the fruits of higher returns
and at the same time ensure the desired liquidity. High interest yielding
securities generally carry greater risk. The safety of the principle and rate of
return usually move in opposite directions. Some investments such as equity
shares may appreciate in value over time while some may depreciate. Such
change in capital values should also be considered in evaluating the profitability
of an investment.
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8. Tax benefits

Tax saving investment schemes help to reduce tax liability. People reluctant to
pay tax from their earnings can invest in tax saving schemes. The Income Tax
Act provides deductions, exemptions and rebates to invest in certain funds.

FACTORS AFFECTING INVESTMENT DECISIONS

Investment decisions are influenced by a number of factors. Some of these


factors are as follows.

1. Amount of investment

The amount of funds available for investment will influence the form of
investment. In case of an individual investor the amount may be small. There
are a number of avenues for making such investments like bank deposits,
mutual funds, etc. If the investible funds are more than transferable financial
securities like shares, debentures etc. may be purchased. Investment in real
estate can be thought of if the amount is large.

2. Purpose of investment

The purpose of investment must be very clear before making it. The purpose
makes one think in the same way. The object of an individual investor may be
to save tax, fixed return, appreciation in value of securities etc. If the purpose is
to save tax then master equity linked schemes, public provident fund, general
provident fund etc. may be the avenues of investment. Similarly other factors
will be taken into account while making an investment.

3. Type of investment

Another important factor which influences investment decision is the selection


of securities. A decision about where to invest is very important. A number of
securities are available in the market and which one suits the investor’s

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objective should be taken up. Varied securities may be taken up to suit different
needs. If provident fund of employees is to be invested then fixed return
securities will be preferred, treasury bills may be the priority if idle funds are to
be employed for a short period.

4. 1Timing of purchase

The time of purchasing securities is very important. A proper timing of


purchase and sale of securities can bring profits to the investor. The securities
should be purchased when their prices are low and should be sold when prices
have arisen. Normally, investors, do not time their transactions properly. When
prices are low will still go down. On the other hand they do not sell when prices
are higher still hoping that prices will still rise. A careful analysis of price
changes may help the investor to decide the proper timing of purchase and sale
of shares.

THE INVESTMENT PROCESS

The investment process involves a series of activities leading to the purchase of


securities or other investment alternatives. The investment process can be
divided into five stages.

1. Framing of investment policy


2. Investment analysis
3. Valuation
4. Portfolio construction
5. Portfolio evaluation and revision
1. Investment policy

This stage involves personal financial affairs and objectives. It may also be
called preparation of the investment policy stage. The investor has to see that he
should be able to create an emergency fund, an element of liquidity and quick

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convertibility of securities into cash. This stage may, therefore, be considered as
appropriate for identifying investment assets and considering the various
features of investments.

 Investible funds

The entire investment procedure revolves around the availability of investible


funds. The fund may be generated through savings or from borrowings. If the
funds are borrowed , the investor has to be extra careful in the selection of
investment alternatives. The return should be higher than the interest he pays.
Mutual funds invest their owner’s money in securities.

 Objectives

The objectives are framed on the premises of the required rate of return , need
for liquidity. The risk taker’s objective is to earn high rate of return in the form
of capital appreciation, whereas the primary objective of the risk averse is the
safety of the principal.

 Knowledge

The knowledge about the investment alternatives and markets plays a key role
in the policy formulation. The investment alternatives range from security to
real estate. The risk and return associated with investment alternatives differ
from each other. Investment in equity is high yielding but has more risk than the
fixed income securities. The tax sheltered schemes offer tax benefits to the
investors.

2. Investment analysis

After arranging a logical order of the types of investments in the portfolio, the
next step is to analyse the securities available for investment. It involves
probing a number of individual securities or group of securities within the broad

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categories of financial assets formerly identified in first phase. A comparative
analysis of the type of industry and type of security should be made. The
securities bought have to be scrutinised through the analysis of market,
industries and companies.

o Market analysis

The stock market mirrors general economic scenario. The growth in gross
domestic product and inflation are reflected in the stock prices. The recession in
the economy results in a bear market. The stock prices may be fluctuating in the
short run but in the long run they move in trends i.e. either upwards or
downwards. The investor can fix his entry and exit points through technical
analysis.

o Industry analysis

The industries that contribute to the output of the major segments of the
economy vary in their growth rates and their overall contribution to economic
activity. Some industries grow faster than the GDP and are expected to continue
in their growth.

o Company analysis

The purpose of company analysis is to help the investors to make better


decisions. The company’s earnings, profitability, operating efficiency, capital
structure and management have to be screened. These factors have direct
bearing on the stock prices and the return of the investors. Appreciation of the
stock value is a function of the performance of the company. Companies with
high market share are able to create wealth to the investors in the form of capital
appreciation.

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3. Valuation

Investment value, in general, is the present worth of future benefits from the
investments. The valuation helps the investor to determine the return and risk
expected from an investment in the common stock. The intrinsic value of the
share is measured through the book value of the share and price earningratio.
Simple discounting models also can be adopted to value the shares. The stock
market analysts have developed many advanced models to value the shares. The
real worth of the share is compared with the market price and then the
investment decisions are made.

o Future value

Future value of the securities could be estimated by using a simple statistical


technique like trend analysis. The analysis of the historical behavior of the price
enables the investor to predict the future value.

4. Construction of portfolio

The fourth step in the investment process is portfolio construction. A portfolio


is a combination of securities and is meant to meet the investors’ goals and
obligations. The investor should decide how best to reach the goals with the
securities available. The investor tries to attain maximum return with minimum
risk. A thorough knowledge and analysis of the different aspects of the
securities is essential for the construction of a portfolio. These include
determination of the diversification level (to reduce risk – Debt and Equity-
Industry – Company), consideration of investment timing, selection of
investment assets, allocation of investment wealth to investment assets etc.

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o Diversification

The main objective of diversification is the reduction of risk in the loss of


capital and income. A diversified portfolio is comparatively less risky than
holding a single portfolio. There are several ways to diversify the portfolio.

o Debt and equity diversification

Debt instruments provide assured return with limited capital appreciation.


Common stocks provide income and capital gain but with the flavor of
uncertainty. Both debt instruments and equity are combined to complement
each other.

o Industry diversification

Industries’ growth and their reaction to government policies differ from each
other. Banking industry shares may provide regular returns but with limited
capital appreciation. Thus, industry diversification is needed and it reduces risk.

o Company diversification

Securities from different companies are purchased to reduce risk. Technical


analysts suggest the investors to buy securities based on the price movement.
Fundamental analysts suggest the selection of financially sound and investor
friendly companies

o Selection

Based on the diversification level, industry and company analyses the securities
have to be selected. Funds are allocated for the selected securities. Selection of
securities and the allocation of funds and seals the construction of portfolio.

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5. Portfolio evaluation and revision

Investments are made under conditions of uncertainty. The return and risk of the
security vary from time to time. The investor should constantly evaluate the
performance of his investments. The developments of the economy, industry
and the relevant companies have to be appraised. Non performing securities or
securities with low rate of return are to be replaced with high yielding securities
with low risk.

o Appraisal

The return and risk performance of the security vary from time to time. The
variability in returns of the securities is measured and compared. The
developments in the economy, industry and relevant companies from which the
stocks are bought have to be appraised. The appraisal warns the loss and steps
can be taken to avoid such losses.

o Revision

Revision depends on the results of the appraisal. The low yielding securities
with high risk are replaced with high yielding securities with low risk factor. To
keep the return at a particular level necessitates the investor to revise the
components of the portfolio periodically.

Investment avenues or investment alternatives

Many channels or modes of making investment are available with the investors.
Different investments confer different sets of rights on the investors and
different set of conditions under which these rights can be exercised. Some
investments are very simple and direct, whereas some are quite complex and
require a lot of analysis and investigation. The ultimate objective of every
investor is to have a variety of investments that meet his priorities of risk and
return. Various investment alternatives are as follows:

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(A)Direct investment alternatives:

Direct investments are those where the individual makes his own choice and
takes his own investment decisions. The direct investments may be fixed
principal investments, variable principal investments and non-security
investments:

(a) Fixed principal investments: in fixed principal investments, the


principal amount and the maturity amount are known with certainty.
The examples of these investments are:
 Cash
 Saving-bank account
 Savings certificates
 Government bonds
 Corporate bonds
 Corporate debentures
(b) Variable principal securities: in variable principal securities the
maturity value is not known with certainty. The examples of these
securities are:
 Equity shares
 Preference shares
 Convertible debentures and preference shares

Equity shares have no fixed return or maturity data. Preference shares have a
fixed return but their market price is determined by demand and supply
forces.Convertible securities viz-debentures and preference shares themselves
into equity shares according to some prescribed conditions. These are fixed
principal securities supplemented by the possibility of a variable maturity value.

(c) Non security investments: the examples of non-security investments


are:
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 Real estate
 Mortgages
 Commodities
 Business ventures
 Art, Antiques and other Valuables

Real estate is less liquid than security form of investments. Mortgages represent
financing of real estate. It is characterized by periodic fixed income and
repayment of principal on a stated maturity date.

Commodities are bought and sold in spot markets. Contracts to buy and sell
commodities at a future data are traded in future markets. Business ventures are
direct ownership investments in new or growing businesses. Art, antiques,
jewellary and other valuables are specialized investments which offer aesthetic
qualities also to the investors.

(B) Indirect investment alternatives:


Indirect investment alternative is an important and rapidly growing
segment of our economy. In indirect investments, the individual investors
have no control over the amount invested. Examples of indirect
investment alternatives are:
 Pension fund
 Provident fund
 Insurance
 Investment companies and
 Unit Trust Of India
(C) Transferable financial securities
These securities can be transferred easily. Such securities are:
1. Equity shares
2. Preference shares

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3. Debentures
4. Saving certificates
5. Government securities
6. Money market securities
1. Equity shares

The holders of equity shares are the real owners of the company. They have
voting rights in the meeting of the company. They have a control over the
working of the company. Equity shareholders get dividend after paying it to the
preference shareholders.The rate of dividend depends upon the profits of the
company. The equity shares have certain advantages. The main advantages are:

 Capital appreciation
 Limited liability
 Free tradeability
 Tax advantages (in certain cases) and
 Hedge against inflation
2. Preference shares

These shares have two preferences as compared to other shares.

There is a preference for payment of dividend when the company has


distributable profits. The second preference is regarding repayment of capital at
the time of liquidation of the company.

Preference shareholders do not have voting rights but they are paid a fixed rate
of dividend. The investors who want a regular income even though the rate may
be less will prefer such shares. The dividend to shareholders is paid only when a
company has surplus profits

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3. Debentures

A company can raise long term loan issuing debentures. A debenture is an


acknowledgment of a debt issued under the seal of the company with a promise
to pay interest and repay the principal on maturity of the instrument. The
debenture deed specifies the rights of the debenture holders who can appoint a
trustee for protecting their interest and the obligations of the company.

The Central Government has introduced new schemes for issue of bonds by
public sector undertakings. The bonds mature in 7-10 years in these schemes
and carry interest between 9 to 13 percent per year. The investor gets benefits of
tax too while investing in these securities.

4. Saving certificates

Another avenue for investment is the purchase of saving certificates. The rate of
interest and the maturity period are mentioned on the certificates. In some
certificates there are tax benefits also. The important saving certificates are:

(a) Indira vikaspatra


(b) KisanVikasPatra

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Chapter 3

Analysis of data

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This chapter intends to analyze the investment practices of college teachers. For
this purpose, primary data was collected from fifty college teachers in
Pathanamthitta district. The aim of this analysis is to understand the different
savings pattern selected by the college teachers for the purpose of investment.

1. Sex-wise classification of respondents


Table 3.1 shows the sex- wise classification of the sample respondents

Table 3.1
Sex-wise classification of respondents
sex Number of respondents Percentage of
respondents
Male 22 44

Female 28 56

Total 50 100

(Source: primary data)

Table 3.1 reveals that out of the fifty respondents, 28(56 percentage) are female
and 22(44 percentage) are male. It shows that majority of the respondents
belong to the female segment.

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Figure 3.1

Sex-wise classification of respondents

female
56%
male
44%

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2. Nature of post
Table 3.2 shows the classification of college teachers on the basis of
nature of post.

Table 3.2

Nature of post-wise classification of respondents

Post Male Female Total


Percentage

Percentage

Percentage
Number

Number

Number
Permanent 16 73 19 68 35 70

Temporary 4 18 3 11 7 14

Guest/FIP 2 9 6 21 8 16
Vacancy

Total 22 100 28 100 50 100

(Source: primary data)

Table 3.2 shows that 70 percentof the teachers taken for the study are
permanent, 14 percent are on temporary and the remaining 16 percent are
guest/FIP vacancy. The sex wise analysis discloses that out of the total
respondents, 73 percentof male and 68 percentage of female are permanent, 18
percentof male and 11 percent of female are temporary and the remaining 9
percent of male and 21 percent of female are guest/FIP vacancy.

30
Figure 3.2
Nature of post-wise classification of respondents

80%

70%

60%

50%
percentage

40%
male
female
30%

20%

10%

0%
permanent temporary Guest/FIP Vacancy
post

31
3. Age
Table 3.3 displays the age-wise classification of the sample respondents.
Table 3.3
Age-wise classification of respondents

Age Male Female Total

Percentage

percentage
percentage
Number

Number

Number
Below 30 5 23 5 18 10 20

31-40 11 50 7 25 18 36

41-50 1 4 9 32 10 20

Above 50 5 23 7 25 12 24

total 22 100 28 100 50 100

(Source: primary data)


Table 3.3 shows that out of the 22 male respondents , 23 percentage come
under the age group of below 30, 50 percentage under the age group of
31-40, 4 percentage under the age group of 41-50 and the remaining 23
percentage are above 50 years. Out of the 28 female respondents , 18
percentage come under the age group of below 30, 25 percentage under
the age group of 31-40, 32 percentage under the age group of 41-50 and
the remaining 25 percentage are above 50 years.

32
Figure 3.3
Age-wise classification of respondents

60

50

40
percentage

30
male
female

20

10

0
below 30 31-40 41-50 above50
Age

33
4. Marital status
Table 3.4 indicates the classification of respondents on the basis of
marital status.

Table 3.4
Classification of respondents on the basis of marital status
Marital Male Female Total
Status
Percentage

Percentage

Percentage
Number

Number

Single 5 23 5 18 Number
10 20

Married 17 77 23 82 40 80

Total 22 100 28 100 50 100

Source primary data

Table 3.4 indicates that majority of the respondents (80 percentage) are
married. Among the male respondents, 5 (23 percentage) are single and
17 (77 percentage) are married. Among the female respondents, 5 (18
percentage) are single and the remaining 23 (82 percentage) are married.

34
5. Years of service
Table 3.5 shows the classification of respondents on the basis of years of
service.

Table3.5
Classification of respondents on the basis of years of service
Years Male Female Total
of Number Percentage Number Percentage Number Percentage
service
Below 14 64 14 50 28 56
10
years
10-15 3 14 2 7 5 10
years
15-20 - - 3 11 3 6
years
20-25 - - 5 18 5 10
years
Above 5 22 4 14 9 18
25
years
total 22 100 28 100 50 100

(Source primary data)

Table 3.5 reveals that 56 percentof the respondents have less than 10
years of service, 10 percenthave 10-15 years of service, 6 percent have 15-20
years of service, 10percent have 20-25 years of service and the remaining 18
percent have above 25 years of service.

35
Table 3.5
Classification of respondents on the basis of years of service

70

60

50
percentage

40

male
30
female

20

10

0
below 10 years 10-15 years 15-20 years 20-25 years above 25 years
years of service

36
6. Sources of income
Table 3.6 intends to show the sources of income of the respondents

Table 3.6
Sources of income
Sources Male Female Total
percentage

percentage

percentage
Number

Number

Number
Salary 18 82 27 96 45 90

Salary and house - - - - - -


property

Salary and other 4 18 1 4 5 10


sources

Salary,house property - - - - - -
and other sources

Total 22 100 28 100 50 100


Source primary data
Table 3.6 discloses that among the total respondents, 90 percentget
income only from salary and the remaining
10 % get income from salary and other sources.

37
Table 3.6
Sources of income

120

100

80
percentage

60

male
female
40

20

0
salary salary&house salary and other salary ,house
property sources property and other
sources
sources

38
7. Monthly salary
Table 3.7 reveals the monthly salary of the respondents

Table 3.7
Monthly salary of respondents
Monthly Male Female Total
salary(Rs.)

Percentage

Percentage

Percentage
Number

Number

Number
Below 3 14 8 29 11 22
25000

25001- 3 14 8 29 11 22
40000

40001- 10 45 7 25 17 34
55000

55000 and 6 27 5 17 11 22
above

total 22 100 28 100 50 100

Table 3.7 indicates that 22 percent of the total respondents have a


monthly salary of less than RS. 25000. Another 22 percent of the
respondents have a salary in between RS.25001 and RS. 40000. 34
percent of the respondents have a salary in between RS.40001 and RS.
55000 and the remaining 22 percent have a monthly salary of RS. 55000
and above.

39
Table 3.7
Monthly salary of respondents

50

45

40

35

30
percentage

25
male

20 female

15

10

0
below 2500 25001-40000 40001-55000 55000and above
monthly salary

40
8. Gross monthly income

Table 3.8 indicates the gross monthly income of the respondents.

Table 3.8
Monthly income of respondents
Monthly Male Female Total
income(RS.)
Percentage

Percentage

Percentage
Number

Number

Number
Below 4 18 6 21 10 20
25000

25001- 9 41 13 47 22 44
50000

50001- 4 18 6 21 10 20
75000

75001- 4 18 2 7 6 12
100000

Above 1 5 1 4 2 4
100000

total 22 100 28 100 50 100

Source primary data


Table 3.8 reveals that majority of male respondents, i.e. 41 percent have a
gross monthly income in between Rs.25001-Rs.50000. In the case of

41
female respondents, 47 percent receive an income in between RS. 25001-
rs 50000.

Table 3.8
Monthly income of respondents

50

45

40

35

30
percentage

25
male

20 female

15

10

0
below 25000 25001-50000 50001-75000 75001-100000 above 100000
monthly income(Rs)

42
9. Monthly expenditure
Table 3.9 exhibits the monthly expenditure of the respondents

Table 3.9

Monthly expenditure of the respondents


Monthly Male Female Total
expenditure(Rs.)

Percentage

Percentage

Percentage
Number

Number

Number
Below 10000 2 9 6 20 8 16
10001-20000 7 32 7 25 14 28
20001-30000 7 32 6 20 13 26
Above 30000 6 27 10 35 16 30
Total 22 100 28 100 50 100

Source primary data


Table 3.9 shows that 30 % of the respondents have a monthly expenditure
of above Rs.300000, 28% have a monthly expenditure in between Rs.
10001-20000, 26% have a monthly expenditure in between Rs.20001-
Rs.30000 and the remaining 16% have a monthly expenditure of less than
Rs.10000.

43
Table 3.9

Monthly expenditure of the respondents

40

35

30

25
percentage

20
male
female
15

10

0
below10000 10001-20000 20001-30000 above 30000
monthly expenditure(Rs)

44
10.Distribution of monthly expenditure
Table 3.10
Distribution of monthly expenditure

Expenses Average amount

Male female
Food 6705 8000

Clothing 1750 1500

Shelter 2910 1000

Education 2500 4000

Health 1614 1000

Rent 1727 500

Transportation 2910 4500

Others 1960 5000

Total 22076 25500

(source primary data)

Table 3.10 shows that major portion of the expenditure has been incurred
for food and the remaining amount have been spent for expenses such as
transportation, education and so on.

45
Chart 3.9 (a) monthly expenditure of male respondents

8000
7000
6000
5000
AMOUNT

4000
3000
2000 male

1000
0

Expenses

Chart 3.9(b) monthly expenditure of female respondents

9000
8000
7000
6000
Amount

5000
4000
3000
female
2000
1000
0

Expenses

46
11.Rate of savings

Table 3.11

Classification of respondents on the basis of rate of savings

Rateof Male Female Total


savings(percentage)

Percentage

Percentage

Percentage
Number

Number

Number
Below 10 8 36 13 46 21 42
11-20 4 18 8 29 12 24
21-30 4 18 2 7 6 12
31-40 2 9 2 7 4 8
Above 40 4 18 3 11 7 14
Total 22 100 28 100 50 100
(source primary data)

Table 3.11 reveals that out of the total respondents , 42 percentage save below
10 percentage of their income . 24 percentage save between 11-20percentage,
12 percentage save between 21-30 percentage , 8 percentage save between 31-
40 percentage and the remaining 14 percentage save above 40 percentage of
their income. It is seen that majority of respondents save below 10 percentage of
their income.

47
Table 3.11

Classification of respondents on the basis of rate of savings

50

45

40

35

30 male
Percentage

25 female

20

15

10

0
below 10 11 to 20 21 to 30 31 to 40 above 40
Rate of savings (percentage

48
12.Classification of respondents on the basis of attitude towards investment

Table 3.12 reveals the respondents’ attitude towards investment. It


determines whether the respondents are willing to make an investment
from their savings.

Table 3.12

Attitude of respondents towards investment

Option Male Female Total


Percentage

Percentage

percentage
Number

Number

Number

Yes 22 100 28 100 50 100

No - - - - - -

Total 22 100 28 100 50 100

(source primary data)

Table 3.12 shows that all the respondents make their investments from
their savings.

49
13.Classification of respondents on the basis of factors affecting their
investment decisions

Table 3.13 ranks the various factors affecting the investment decisions taken by
the respondents.

Table 3.13

Ranking of factors affecting investment decisions

Factors Rank I Rank II Rank III Rank IV Rank V Rank VI


No. % No. % No. % No. % No. % No. %
Safety 26 52 16 32 8 16 - - - - - -
Liquidity 7 14 12 24 20 40 9 18 2 4 - -
Return 8 16 10 20 17 34 11 22 2 4 2 4

Tax benefits 9 18 12 24 5 10 12 24 6 12 6 12

Capital - - - - - - 11 22 15 30 24 48
appreciation
Others - - - - - - 7 14 25 50 18 36
Total 50 100 50 100 50 100 50 100 20 100 50 100
(source: primary data)

Table 3.13 indicates that majority of the respondents, i.e. 52 percentage give
utmost importance to the safety of their investments. Of the entire respondents,
18 percentage give prime importance for tax benefits, 16 percentage give
highest preference for return and the remaining 14 percentage give their first
importance for liquidity while carrying out their investment decisions.

While ranking second, the respondents have given the highest preference for
safety. Capital appreciation has been given fourth rank and above. 48 percent of

50
the respondents have given last rank for capital appreciation. None of the
respondents gave their last preference for safety and liquidity.

14. Investment avenues of respondents

Table 3.14 shows the investment avenues of respondents.

Table 3.14

Investment avenues of respondents

Investment avenues No of respondents Percentage


Bank Deposit 31 62
Bond/Debentures - -
Mutual Funds 2 4
Post Office Savings 19 38
Stock Market 3 6
Real Estate - -
Gold/Jewelry 7 14
Insurance 19 38
PF 23 46
Others 1 2
Source: Primary Data

The abovetable indicates that majority of the respondents (i.e. 62 percentage)


made their investments in bank deposit. 46 percentage of the respondents
choose provident fund ,38 percentage selected post office savings and insurance
as their investment avenue. 14 percentage of the respondents have been invested
in gold/jewelry. None of the respondents selected bond/debentures and real
estate as their investment avenues.

51
Figure 3.11

Investment avenues of respondents

35

31
30

25
23

20 19 19

15

10
7

5
3
2
1
0 0
0

52
15. Distribution of respondents on the basis of preferences of more than one
investment opportunity

Table 3.15 shows the distribution of respondents on the basis of


preferences of more than one investment opportunity.

Table 3.15
Distribution of respondents on the basis of preferences of more than
one investment opportunity

Option Male Female Total

No. percentage No. percentage No. percentage


Yes 18 82 19 68 37 74

No 4 18 9 32 13 26

Total 22 100 28 100 50 100

(Source primary data)

Table 3.15 shows that 82 percentage of the male respondents prefer more
than one investment opportunity and 68 percentage of the female
respondents prefer more than one investment opportunity.

53
16. Investment preference based on priority

Table 3.16 shows the rating of investment preference of the respondents


on the basis of priority.

Table 3.16

Investment preference of respondents

Highly Moderately Least Not


preferred preferred preferred preferred
Investment
of

of

of

of
responden

responden

responden

responden
Percentag

Percentag

Percentag

percentag
avenues
No

No

No

eNo
ts

ts

ts

ts
e

e
Shares - - 8 16 7 14 35 70
Debentures - - 3 6 9 18 38 76
Bonds - - 3 6 9 18 38 76
Mutual Funds 5 10 2 4 8 16 35 70
Post Office
8 16 14 28 3 6 25 50
Savings
Bank Deposit 30 60 7 14 1 2 12 24
LIC 12 24 15 30 2 4 21 42
PF 26 52 5 10 3 6 16 32
Real Estate 3 6 6 12 4 8 37 74
Gold/Jewelry 3 6 10 20 3 6 34 68
Source: Primary Data

Table 3.16 indicates that 60 percentage of the respondents are highly preferred
bank deposit. 52 percentage give high preference to provident fund, 24
percentage highly preferred LIC and 16 percentage of the respondents selected
post office savings as their highly preferred investment avenue. None of the
respondents give high preference to shares, debentures and bonds. Only 4
percentage of the respondents moderately preferred mutual funds. 76 percentage
not preferred debentures and bonds.

54
Figure 3.12

Investment preference of respondents

40 38 38
37
35 35
35 34

30
30
26
25
25
21
20
16
15
15 14
12 12
10
10 9 9
8 8 8
7 7
6
5 5
5 4
3 3 3 3 3 3 3
2 2
1
0 0 0
0

highly preferred moderately preferred least preferred not preferred

55
17. Tenure of investment

Table 3.17 exhibits the investment period of the respondents.

Table 3.17
Tenure of investment

Male Female Total


Tenure
No. percentage No. Percentage No. Percentage
Less 3 14 3 11 6 12
than 1
year
1 to 3 8 36 11 39 19 38
years
3-5 3 14 8 29 11 22
years
5-7 2 9 1 4 3 6
years
7 years 6 27 5 17 11 22
and
above
Total 72 100 28 100 50 100

(Source primary data)

Table 3.17 shows that out of the total respondents, majority of the
respondents (i.e. 38percentage) have an investment period in between 1-3
years, 22 percentage between 3-5 years, 12 percentage have an
investment period of less than one year and the remaining 6 percentage
have an investment period in between 5-7 years.

56
Figure 3.13
Tenure of investment

45

40

35

30
Percentage

25

20 male
female
15

10

0
less than 1 year 1-3 years 3-5 years 5-7 years 7 years and
above
Tenure

57
Chapter 4

Findings, suggestions and conclusions

58
Findings of the study

1. The majority of respondents (56 percentages) belong to the female segment.


2. 70 percentage of the respondents work on a permanent basis.
3. Most of the respondents (36 percentages) are under the age group of 31 to
40.
4. Majority of the respondents (80 percentages) are married.
5. 56 percentages of the respondents have only below 10 years of service.
6. For most of the respondents (90 percentage), salary is the only source of
income and among which 34 percentage have a monthly salary in between
Rs.40001 and Rs.55000.
7. 44 percentage of the respondents have a gross monthly income in between
Rs.25001 and Rs.50000.
8. Most of the respondents (30 percentages) have a monthly expenditure of
above Rs.30000.
9. Among various monthly expenses highest amount has been spent for food.
10. Out of the total respondents, 42 percentages have below 10 percentages of
savings.
11. All the respondents make investment from their savings and while taking
investment decisions, most of them give prime importance for safety.
12. Most of the respondents (62 percentages) made their investment in banks.
13. 74 percentages of the respondents prefer more than one Investment Avenue.
14. Bank deposit is the highly preferred avenue of investment.
15.The tenure of investment preferred mostly by the respondents is 1 to 3 years.

59
Suggestions of the study

The study put forward the following suggestions and recommendations.

1. The college teachers should acquire greater awareness about the dynamic
changes in the investment avenues available.
2. The college teachers should try more to invest more into high yielding areas
such as mutual funds and share market.
3. The college teachers should try to utilize the services provided by the
financial consultants also for taking wise investment decisions.
4. The college teachers should select the fixed income instruments judiciously.
5. The college teachers should adopt a suitable strategy for making investment.
6. Proper diversification should be made by the college teachers in their
investment portfolio.
7. The college teachers should make a periodical review and revision of their
portfolio.
8. If the investment is in the shares of the company, college teachers should
acquire greater knowledge about the recent changes in the stock market
such as futures and options.
9. Since the cost of living of the college teachers is very high, efforts should be
taken to reduce or minimize the monthly expenditure thereby increasing
savings and making investments.
10. A large number of tax saving investment schemes are available and college
teachers can wisely invest in it in order to reduce their tax liability.

11.Government should provide more assistance in developing investment


activities among college teachers by offering more tax savings investment
schemes.

60
Conclusion

Many individuals find investment to be fascinating because they can participate


in the decision making process and see the results of their choices. But
investment comes with the risk of loss of the principal amount. Each investment
has common characteristics such as potential return as well as risk. The future is
uncertain and one must determine how much risk he is willing to bear since
higher return is associated with greater risk.

Usually investments are made through participation in pension plans, employee


saving programme, purchase of life insurance, constructing a home etc. The
saving decision is influenced by different aspects. The three aspects of a
decision to save are the ability to save, the willingness to save and opportunity
to save. As the college teachers are highly salaried they have the ability to save
a sizable amount. All the college teachers are interested in saving as they are
aware of the benefits obtained from different saving schemes. There are many
investment opportunities available to college teachers, which provide tax
benefits and high return.

Thus, investment is not a game but a serious subject that can have an impact on
the wellbeing of the investor as well as the society.

61
Bibliography

Avadhani V.A.M., SECURITIES ANALYSIS AND PORTFOLIO


MANAGEMENT, Himalaya publishing house, Mumbai, 2000

Punithavathypandian, security analysis and portfolio management, vikas


publishing house pvt. Ltd., new delhi, 2005

62