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ABSTRACT
The key objective of this research was to examine the investment behaviour of the middle
income class investors in Ahmedabad city. The foundation behind picking this research
theme is the premise that the middle class in our country has increased attention of thepolicy
makers, economists& the market researchers, as still there leftovers a considerable
untouchedprospective in this income class of the nation. The research study has been
directed to answer few significant questions related to the investor behaviour of the middle
income class group of Ahmedabad and their investment pattern, to know the numerousgoals
of investment of the middle income class investors of Ahmedabad city and to recognise
whether there has been any growth in their savings and the explanations for the same. It is
not only the income if the key factor of middle income class group investors that has an
instant bearing on the speculation preferences but also the age group of investors to which
the head of the household belongs that effects the selection of investment avenue.
Hencethisresearch paper has also been focused towards discovery the difference in selection
of investment pattern in different age-groups & income classes of the middle income class
group of Ahmedabad city.
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INTRODUCTION
Indian financial industry is considered as one of the strongest financial sectors among the
world markets. Many industry experts may give various reasons for such Indian financial
industry reputation, but there is only one answer which no one can deny, is the effective
control and governance of the country’s supreme monetary authority the “RESERVE
BANK OF INDIA” (RBI).
Financial sector in India has experienced a better environment to grow with the presence of
higher competition. The financial system in India is regulated by independent regulators in
the field of banking, insurance, and mortgage and capital market. Government of India plays
a significant role in controlling the financial market in India.
Ministry of Finance, Government of India controls the financial sector in India. Every year
the finance ministry presents the annual budget on 28th February. The Reserve Bank of
India is an apex institution in controlling banking system in the country. Its monetary policy
acts as a major weapon in India's financial market.
Various governing bodies in financial sector:
1. RBI - Reserve Bank of India is the supreme authority and regulatory body for all the
monetary transactions in India. RBI is the regulatory body for various Banking and
Non-Banking financial institutions in India.
2. SEBI - Securities and Exchange Board of India is one of the regulatory authorities
for India's capital market.
3. IRDA – Insurance regulatory and development authority in India regulates all the
insurance companies in India.
4. AMFI – Association of mutual funds in India regulates all the mutual fund
companies in India.
5. FIPB – Foreign investments promotion board regulates all the foreign direct
investments made in India.
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Investment are normally categorized using the risk involved in it, risk is dependent on
various factors like the past performance, its governing body, involvement of the
government etc., in this scenario Indian investments are classified in to 3 categories based
on risk. They are
Apart from these, there are traditional investment avenues and emerging investment
avenues.
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● Debentures.
● Bonds.
Traditional Avenues:
● Real Estate (property).
● GoldƒSilver.
● Chit Funds.
Emerging Avenues:
● Virtual Real Estate.
● Hedge FundsƒPrivate Equity Investments.
● Art and Passion.
RESEARCH METHODOLOGY
The research design is the conceptual structure within which research is conducted. It
constitutes the blueprint for the collection, measurement and analysis of data.
Descriptive research
This study is descriptive in nature where the data is collected through well-structured
questionnaire and from the information taken from the investors.
RESEARCH OBJECTIVE
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SAMPLING DESIGN/TECHNIQUES
Sampling is the process of selecting a sufficient number of elements from the population,
so that a study of the sample and an understanding of its properties or characteristics would
make it possible for us to generalize such properties or characteristics to the population
elements.
Sampling design is to clearly define set of objects, technically called the universe to be
studied. The sampling design used in this study is judgment sampling. Sampling technique
used is Simple judgment sampling.
Population:
Sample size:
Collection of data includes both primary and secondary data. The researcher has collected
both of the above data. The data collected constitutes both primary and secondary data.
Primary data
Primary datum are collected through observation, direct communication with respondent,
and finally by distributing questionnaire to the investors using Random sampling technique
the investors are selected to fill the questionnaire.
Secondary Data
Secondary datum is collected from the official record to obtain information’s regarding the
rate of absenteeism and the various reasons for absenteeism.
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1. Reluctance of the people to provide complete information about them can affect the
validity of the responses.
2. The lack of knowledge of customers about the financial instruments can be a major
limitation
3. Since the researcher selected 100 sample size it is not sufficient to cover opinion of
entire population.
4. Time duration in conducting the research is very low.
REVIEW OF LITERATURE
Kahneman and Tversky (1979) found in their work, "Prospect Theory - An Analysis of
Decision under Risk", people settle on choices in view of the potential estimation of
misfortunes and gains instead of the last result, and individuals assess these misfortunes and
gains utilizing fascinating heuristics.
Phillip (1995) reported changes in budgetary choice making and investor preference as an
aftereffect of taking an interest in speculator training programs supported by representatives.
In the country like India, SEBI began such mindfulness program for little speculator, which
has begun giving advantages, regarding esteem contributing and educated contributing from
retail speculators.
Nasir and Khalid (2004) inferred that Savings in Pakistan demonstrated a positive reaction
to GDP development and government's present consumption while it stayed harsh to loan
rate.
Ippolito (1992) and Bogle (1992) reported that store choice by financial specialists depends
on past execution of the assets and cash streams into winning funds more quickly than they
stream out of losing assets.
Gupta (1970) utilizing yearly time series information from the country, investigated the
determinants of saving. He found that perpetual wage theory is a superior fit in the urban
ranges in India while in the provincial territory saving behaviour is more as per the total
wage speculation. He found that peripheral inclination to save is an expanding capacity of
wage at lower level of advancement.
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Shanmugasundaram and Balakrishnan (2011), they led examination to break down the
variables affecting the behaviour of financial specialists in capital business sector. They
presumed that demographic elements impact the speculators' venture choices.
Horvarth and Zuckerman (1993), proposed that individual’s demographic, biological and
financial qualities, together with his/her psychological influences individual’s risk
resistance level.
Murithi Suriya, Narayanan and Arivazhagan (2012), in their study uncover that female
financial specialists overwhelm the speculation market in India. As per their study, dominant
part of the financial specialists are observed to be considering two or more wellsprings of
data to make investment choices. The majority of the financial specialists talk about with
their family and companions before settling on a speculation choice.
Rajarajan V arranged speculators on the base of their demographics. He has likewise drawn
out the financial specialists' attributes on the base of their speculation size. He found that
the rate of risk to aggregate money related speculations had declined as the speculator climbs
through different stages in life cycle. Additionally financial specialists' ways of life based
qualities has been recognized. The above examination displays a point by point picture about
the different aspects of risk related studies that have occurred previously. In the present
study, the discoveries of a considerable lot of these studies are confirmed and redesigned.
Wallach and Kogan were maybe the first to concentrate on the relationship between risk
resistance and age group. Cohn, Lewellen et.al discovered risky resource part of the
portfolio to be emphatically corresponded with salary and age and adversely connected with
conjugal status. Morin and Suarez discovered confirmation of expanding risk avoidance
with age despite the fact that the family units seem to end up less risk unwilling as their
riches increments. YOO found that the adjustment in the risk resource property were not
uniform. He discovered people to build their interests in risk resources all through their
working life time, and diminish their risk exposure at time of retirement.
Lewellen et.al while distinguishing the efficient examples of venture conduct displayed by
people discovered age and communicated risk taking affinities to be contrarily related with
significant movements occurring at age 55 and past. Indian considers on individual
speculators' were generally kept to ponders on offer possession, aside from a couple. The
RBI's overview of responsibility for and L.C. Gupta's enquiry into the possession example
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of Industrial shares in India were a couple in this heading. The NCAER's studies drew out
the incessant type of reserve funds of people and the segments of money related ventures of
rustic families. The Indian Shareowners Survey drew out a volley of data on shareowners.
DATA ANALYSIS
1 CHILDREN'S EDUCATION 71 29
2 HEALTHCARE 57 23
3 RETIREMENT 47 19
4 HOME PURCHASE 38 15
5 CHILDREN'S MARRIAGE 30 12
6 OTHERS 5 2
Above tables shows the savings objectives of the sample investors, investors are given
choice to select one or more savings objectives, as there having a chances of one or more
answers, weights are given for each variables based on the votes given by the investors, the
highest weightage denotesnumerous investors have that as their main objective. Based on
the weights, ranks have been given in the order of highest weightage given by investors.
Children’s education stood number one position, many investors believing in investing
money for the future of their children’ education is the key objective where investor would
like to save their money. Numerous of the investors are in the age group of 20 to 30 and 30
to 40 as of now they are thinking of saving for their children’s marriage. So children’s
marriage stood at last position in saving objective as per investors’ perceptive. After
children’s education investors are believing to save their money in health care. Indians are
always believe in saving some amount of money in their healthcare as medical sector in
India is very expensive. Retirement and home purchase are given subsequent ranks after
health care.
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1 SAFETY OF PRINCIPAL 60 43
2 LOW RISK 35 25
3 HIGH RETURNS 27 19
4 MATURITY PERIOD 16 11
When the investors are asked about the factors considering before investment many of them
have voted for safety of principal and low risk. First rank is given to safety of principal and
2nd to low risk. Here there are some contradicting results, some investors expect high
returns at a very low risk, and this is not possible in practical Indian investment avenues.
Investment believes in a proved principle, “higher the risk higher the returns, lower the risk
lower the returns”. Investors need to know about this principle before investing.
All the investors have very common purposes for investing, they have more than one
purpose for investing their money. Salaried people invest for tax savings, and for future
expenditure, business people invest for the purpose of earning returns. Almost all the
investors have all the 4 purposes behind investing their money.
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CONCLUSION
Based on the above analytical tables it can be concluded that key objective for savings is the
children education, people do saving for their children’ future, followed by healthcare,
retirement, home purchase, marriage and other. Safety of principle would be most critical
factor which is considered most before investment followed by low risk, high returns and
maturity period. Returns is the main reason for investment, future expenditure, tax savings
and wealth creation. Selection of a perfect investment avenue is a difficult task to any
investor. An effort is made to identify the tastes and preferences of a sample of investors
selected randomly out of a large population.
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REFERENCES
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