Affiliated to

University of Mumbai

Revised Syllabus for

Programme:
B.Com
(Financial Markets)
Semester VI
Under Choice Based Credit System
Academic Year 2021-2022
PROJECT ON
(AN IMPACT OF INFLATION ON SAVINGS AND INVESTMENT OF
SALARIED INDIVIDUAL )

1
 PROJECT REPORT
ON
[AN IMPACT OF INFLATION ON SAVINGS AND INVESTMENT OF
SALARIED INDIVIDUAL ]

SUBMITTED BY

TYBCom (Financial Markets)

(SEMESTER VI)

UNDER THE GUIDANCE OF

(Surhud Marathe)

ACADEMIC YEAR

2022 - 2023

2
 DECLARATION

I, Harshita Gandhi the student of T.Y.BCom Financial Markets Semester VI

(2022 - 2023) hereby declare that I have completed the Project on An Impact
Of Inflation On Savings And Investment Of Salaried Individual .

I also declare that this report which is the partial fulfilment of the requirement
for the degree of T.Y.BCom Financial Markets of KES SHROFF COLLEGE
OF ARTS AND COMMERCE, is the result of my own efforts with the help of
experts.
 

3
 CERTIFICATE
 
This is to certify that Ms. Harshita Gandhi of Third Year B.Com
Investment Management Semester VI (2022 - 2023) has successfully
completed the Project on An Impact Of Inflation On Savings And
Investment Of Salaried Individual .
as per the guidelines of KES’ Shroff College of Arts and Commerce,
Kandivali(W), Mumbai-400067.
 

Head of Department Guide

Dr. Vaibhav R. Ashar (Surhud Marathe)

Principal
Dr L Bhushan

ACKNOWLEDGEMENT
4
To list who all have helped me is difficult because they are so numerous and
the depth is so enormous.
I would like to acknowledge the following as being idealistic channels and
fresh dimensions in the completion of this internship.
I take this opportunity to thank the KES SHROFF COLLEGE OF ARTS
AND COMMERCE (AUTONOMOUS) for giving me chance to present this
report.
I am thankful to KES SHROFF COLLEGE OF ARTS AND COMMERCE
(AUTONOMOUS) and <Name of a person, if any> for providing me
opportunity to work on the project/internship with their company and gaining
work experience.
I would like to thank my Principal, Dr. Lily Bhushan for providing the
support required for the internship.
I take this opportunity to thank our Guide (Surhud Marathe), for his moral
support and guidance.
Lastly, I would like to thank each and every person who directly or indirectly
helped me specially my parents and peers who supported me throughout my
project.

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 LIBRARY ATTENDANCE CERTIFICATE

This is to certify that Ms. Harshita Gandhi of third year B.Com Financial
Markets having Roll No. 48, division A has successfully completed her
minimum hours of attendance in the library to complete the 100 marks
project on topic titled An Impact Of Inflation On Savings And Investment
Of Salaried Individual

Sign Sign Sign

Librarian Project Guide Head of Department

6
 Chapter 1: Introduction
Definition of Inflation
Inflation is a situation of rising prices in the economy. A more exact definition of inflation is
a sustained increase in the general price level in an economy. Inflation means an increase in
the cost of living as the price of goods and services rise.The rate of inflation measures the
annual percentage change in the general price level.

Meaning
What Is Inflation?

Inflation is a quantitative measure of the rate at which the average price level of a basket of
selected goods and services in an economy increases over a period of time. It is the constant
rise in the general level of prices where a unit of currency buys less than it did in prior
periods. Often expressed as a percentage, inflation indicates a decrease in the purchasing
power of a nation’s currency.

Types of Inflation

 Cost push Inflation- When the rise in prices is caused by a rise in the cost of
production.
 Demand pull inflation- when the rise in the price is caused by rising aggregate
demand and firms pushing due to the shortage of goods.

Key Takeaways

 Inflation exists when prices rise but purchasing power falls over a certain period.
 Demand, supply, and expectations about goods affect inflation rates.
 The Federal Reserve uses monetary policy to manage inflation.
 You can protect yourself from inflation through wise investments.

In economics, inflation is a sustained increase in the general price level of goods and
services in an economy over a period of time. When the general price level rises, each
unit of currency buys fewer goods and services; consequently, inflation reflects a
reduction in the purchasing power per unit of money a loss of real value in the medium of

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exchange and unit of account within the economy. The opposite of inflation is
deflation, a sustained decrease in the general price level of goods and services.
The common measure of inflation is the inflation rate, the annualized percentage
change in a general price index
, the consumer price index, over time.

Economists generally believe that very high rates of inflation and hyperinflation
are caused by an excessive growth of the money supply. Views on which factors
determine low to moderate rates of inflation are more varied. Low or moderate
inflation may be attributed to fluctuations in real demand for goods and services,
or changes in available supplies such as during scarcities. However, the consensus
view is that a long sustained period of inflation is caused by money supply
growing faster than the rate of economic growth.

Inflation affects economies in various positive and negative ways. The negative
effects of inflation include an increase in the opportunity cost of holding money,
uncertainty over future inflation which may discourage investment and savings,
and if inflation were rapid enough, shortages of goods as consumers begin
hoarding out of concern that prices will increase in the future. Positive effects
include reducing unemployment due to nominal wage rigidity, allowing the
central bank more leeway in carrying out monetary policy, encouraging loans and
investment instead of money hoarding, and avoiding the inefficiencies associated
with deflation.

Today, most economists favor a low and steady rate of inflation. Low (as opposed
to zero or negative) inflation reduces the severity of economic recessions by
enabling the labor market to adjust more quickly in a downturn, and reduces
the risk that a liquidity trap prevents monetary policy from stabilizing the
economy. The task of keeping the rate of inflation low and stable is usually given
to monetary authorities. Generally, these monetary authorities are the central
banks that control monetary

policy through the setting of interest rates, through open market operations, and
through the setting of banking reserve requirements.

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History
Historically, rapid increases in the quantity of money or in the overall money supply have
occurred in many different societies throughout history, changing with different forms of
money used. For instance, when gold was used as currency, the government could collect
gold coins, melt them down, mix them with other metals such as silver, copper, or lead, and
reissue them at the same nominal value. By diluting the gold with other metals, the government
could issue more coins without increasing the amount of gold used to make them. When the
cost of each coin is lowered in this way, the government profits from an increase in seignior
age. This practice would increase the money supply but at the same time the relative value of
each coin would be lowered. As the relative value of the coins becomes lower, consumers
would need to give more coins in exchange for the same goods and services as before. These
goods and services would experience a price increase as the value of each coin is reduced.

Song Dynasty China introduced the practice of printing paper money to create fiat currency.
During the Mongol Yuan Dynasty, the government spent a great deal of money fighting costly
wars, and reacted by printing more money, leading to inflation. Fearing the inflation that
plagued the Yuan dynasty, the Ming Dynasty initially rejected the use of paper money, and
reverted to using copper coins.

Historically, large infusions of gold or silver into an economy also led to inflation. From the
second half of the 15th century to the first half of the 17th, Western Europe experienced a major
inflationary cycle referred to as the "price revolution", with prices on average rising perhaps six
fold over 150 years. This was largely caused by the sudden influx of gold and silver from the
New World into Habsburg Spain. The silver spread throughout a previously cash-starved
Europe and caused widespread inflation. Demographic factors also contributed to upward
pressure on prices, with European population growth after depopulation caused by the Black
Death pandemic.

By the nineteenth century, economists categorized three separate factors that cause a rise or fall
in the price of goods: a change in the value or production costs of the good, a change in the
price of money which then was usually a fluctuation in the commodity price of the metallic
content in the currency, and currency depreciation resulting from an increased supply of
currency relative to the quantity of redeemable metal backing the currency. Following the
proliferation of private banknote currency printed during the American Civil War, the term
"inflation" started to appear as a direct reference to the currency depreciation that occurred
as the quantity of redeemable banknotes outstripped the quantity of metal available for
their redemption. At that time, the term inflation referred to the devaluation of the
currency, and not to a rise in the price of goods.
9
This relationship between the over-supply of banknotes and a resulting depreciation in their
value was noted by earlier classical economists such as David Hume and David Ricardo, who
would go on to examine and debate what effect a currency devaluation (later
termed monetary inflation) has on the price of goods (later termed price inflation, and
eventually just inflation).

The adoption of fiat currency by many countries, from the 18th century onwards, made much
larger variations in the supply of money possible. Rapid increases in the money supply have
taken place a number of times in countries experiencing political crises,
producing hyperinflations – episodes of extreme inflation rates much higher than those
observed in earlier periods of commodity money. The hyperinflation in the Weimar
Republic of Germany is a notable example. Currently, the hyperinflation in Venezuela is the
highest in the world, with an annual inflation rate of 833,997% as of October 2018.

However, since the 1980s, inflation has been held low and stable in countries with strong
independent central banks. This has led to a moderation of the business cycle and a reduction
in variation in most macroeconomic indicators - an event known as the Great Moderation.

Causes of Inflation

 Primary Causes

 Increase in Public Spending

 Deficit Financing of Government Spending

 Increased Velocity of Circulation

 Population Growth

 Hoarding

 Genuine Shortage

 Exports

 Trade Unions

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 Tax Reduction

Let’s have a look at the factors that cause inflation.

Primary Cause

In an economy, when the demand for a commodity exceeds its supply, then the excess
demand pushes the price up. On the other hand, when the factor prices increase, the cost of
production rises too. This leads to an increase in the price level as well.

Increase in Public Spending

In any modern economy, Government spending is an important element of the total spending.
It is also an important determinant of aggregate demand.

Usually, in lesser developed economies, the Govt. spending increases which invariably
creates inflationary pressure on the economy.

Deficit Financing of Government Spending

There are times when the spending of Government increases beyond what taxation can
finance. Therefore, in order to incur the extra expenditure, the Government resorts to deficit
financing.

Increased Velocity of Circulation

In an economy, the total use of money = the money supply by the Government x the velocity
of circulation of money. When an economy is going through a booming phase, people tend to
spend money at a faster rate increasing the velocity of circulation of money.

Population Growth

As the population grows, it increases the total demand in the market. Further, excessive
demand creates inflation.

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Hoarding

Hoarders are people or entities who stockpile commodities and do not release them to the
market. Therefore, there is an artificially created demand excess in the economy. This also
leads to inflation.

Genuine Shortage

It is possible that at certain times, the factors of production are short in supply. This affects
production. Therefore, supply is less than the demand, leading to an increase in prices and
inflation.

Exports

In an economy, the total production must fulfill the domestic as well as foreign demand. If it
fails to meet these demands, then exports create inflation in the domestic economy.

Trade Unions

Tradeunion work in favor of the employees. As the prices increase, these unions demand an
increase in wages for workers. This invariably increases the cost of production and leads to a
further increase in prices.

Tax Reduction

While taxes are known to increase with time, sometimes, Governments reduce taxes to gain
popularity among people. The people are happy because they have more money in their hands.

However, if the rate of production does not increase with a corresponding rate, then the
excess cash in hand leads to inflation.

Effects Of Inflation

1. Effects on Distribution of Income and Wealth:

The impact of inflation is felt unevenly by the different groups of individuals within the
national economy some groups of people gain by making big fortune and some others lose.

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2. Effects on Production:
The rising prices stimulate the production of all goods both of consumption and of capital
goods. As producers get more and more profit, they try to produce more and more by utilising
all the available resources at their disposal.

But, after the stage of full employment the production cannot increase as all the resources are
fully employed. Moreover, the producers and the farmers would increase their stock in the
expectation of a further rise in prices. As a result hoarding and cornering of commodities will
increase.

But such favourable effects of inflation upon production are not always found. Sometimes,
production may come to a standstill position despite rising prices, as was found in recent
years in developing countries like India, Thailand and Bangladesh. This situation is described
as stagflation.

3. Effects on Income and Employment:

Inflation tends to increase the aggregate money income (i.e., national income) of the
community as a whole on account of larger spending and greater production. Similarly, the
volume of employment increases under the impact of increased production. But the real
income of the people fails to increase proportionately due to a fall in the purchasing power of
money.

4. Effects on Business and Trade:

The aggregate volume of internal trade tends to increase during inflation due to higher
incomes, greater production and larger spending. But the export trade is likely to suffer on
account of a rise in the prices of domestic goods. However, the business firms expand their
businesses to make larger profits.

During most inflation since costs do not rise as fast as prices profits soar. But wages do not
increase proportionate with prices, causing hardships to workers and making more and more
inequality. As the old saying goes, during inflation prices move in escalator and wages in
stairs.

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5. Effects on the Government Finance:
During inflation, the government revenue increases as it gets more revenue from income tax,
sales tax, excise duties, etc. Similarly, public expenditure increases as the government is
required to spend more and more for administrative and other purposes. But the rising prices
reduce the real burden of public debt because a fix sum has to be paid in instalment per
period.

6. Effects on Growth:
A mild inflation promotes economic growth, but a runaway inflation obstructs economic
growth as it raises cost of development projects. Although a mild dose of inflation is
inevitable and desirable in a developing economy, a high rate of inflation tends to lower the
growth rate by slowing down the rate of capital formation and creating uncertainty.

Savings

Definition of savings

The portion of disposable income not spent on consumption of consumer goods but
accumulated or invested directly in capital equipment or in paying off a home mortgage, or
indirectly through purchase of securities

What is Savings?

In economics, savings is the amount that is left after spending. In banking, savings refers to
savings accounts, which are short-term, interest-bearing deposits with a bank or other
financial institution.

Why savings is important?

Savings is the portion of income not spent on current expenditures. Because a person does not
know what will happen in the future, money should be saved to pay for unexpected events or
emergencies. An individual’s car may breakdown, their dishwasher could begin to leak, or a
medical emergency could occur. Without savings, unexpected events can become large
financial burdens. Therefore, savings helps an individual or family become financially secure.
Money can also be saved to purchase expensive items that are too costly to buy with monthly

14
income. Buying a new camera, purchasing an automobile, or paying for a vacation can all be
accomplished by saving a portion of income.

How much money should be saved?

To be considered financially secure, an individual or household should save at least six

months’ worth of expenses. For example, a household that has 20000 per month of expenses
should have at least 12,000 in savings (2,000 multiplied by 6 months). To reach this amount,
it is recommended that 10- 20% of net income should be saved until the appropriate amount
of savings is reached. Net income is the amount of an individual’s take-home pay after taxes
and other deductions have been taken out of a paycheck.

Where can money be saved?

Some savers place their money in a jar, coffee can or a piggy bank. For short periods of time
and small amounts of money, the piggy bank method may work, but long-term savers should
use a safer method. It is wise to store money at a depository institution. A depository
institution is a business that offers financial services to people, such as savings and checking
accounts. Unlike money stored at home which could be lost to a fire, burglary, or some other
type of disaster, money stored at a depository institution is protected from loss. Depository
institutions offer accounts that earn interest, allowing customers to take advantage of the time
value of money. The time value of money means money paid out or received in the future is
not equivalent to money paid out or received today. Interest is the price of money. When
depositing money at a depository institution, an individual may earn money from interest.
The amount of interest earned is determined by calculating a percent of the total amount of
money deposited. This percentage rate is known as the interest rate. Savings accounts, money
market deposit accounts, and Certificate of Deposits are the most common depository
institution accounts that earn interest. A savings account is an account with a depository
institution that holds money not spent on current expenditures. Money can be kept in a
savings account until the owner needs to use it for emergencies or to purchase expensive
items. A money market deposit account is a type of account that pays a higher interest rate
than a savings account. However, money market deposit accounts usually require more
money to open and have limits on the number of times money can be withdrawn from the
account every month.

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Importance of saving money

Here are few reasons why we save:

 Emergency cushion- This could me any number of things: anew roof for your house,
out-of-pocket medical expenses, or sudden loss of income. You will need money set
aside for these emergencies to avoid going into debt to pay for your necessaries.
 Retirement-If you intend to retire someday, you will probably need savings and/or
investments to take the place of the income you will no longer get from your job.
 Average Life Expentancy- With more advances in medicine and public health, people
are now living longer and needing more money to get by.
 Volatility of Social Security- Social Security was never intended to the primary
source of income and should be treated as a supplement to income.
 Education- The costs for private and public education are rising every year and it’s
getting tougher to meet these demands.

How much can you potentially save ?

It’s important that you develop a budget using your net income as it reflects your take home
pay after taxes and dedications. A common mistake people make is developing a budget off
of their gross income. It’s a mistake because you are budgeting money you never possessed.
Remember your potential savings is the difference between your net income and your
expenses.

Tips for saving money

Save windfall income- Any unexpected money such as income tax return money.

Collect loose change and deposit it in the bank- Use a piggy bank and deposits its contents
when its full.

Try frugality- Purchase cheaper off brand items and save money.

Break a habit- Try doing one led thing you expensive venture a week and apply that money to
your savings.

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Save lunch money-According to a study by Forbes Magazine, Americans on average spend
$1000 annually on going out to lunch. Bring your lunch to work and invest that $1000 in
yourself

Have a “buy nothing week”.

Compare costs of major items before purchasing anything- Do your due diligence, shop
around before making major purchases.

Use coupons- Coupons are a great way to reduce living expenses.

Investments

Definitions of Investments

Investment is using money to purchase assets in the hope that the asset will generate income
over time or appreciate over time. Consumption, on the other hand, is when you purchase
something with the immediate intent of personal use and with no expectation that it will
generate money or increase in value.

Investment also helps grow the economy because it creates economic activity, such as the
buying and selling of goods and services and employing people. Employed people get paid
and either save, invest, or spend their money. If they spend their money, businesses make
more profits. Businesses can then reinvest the profits in further business activities that expand
the economy.

Of course, too much of a good thing can be bad. If everyone is investing, then no one is
consuming. If no one is consuming, consumer-orientated businesses, such as restaurants and
retail establishments, will suffer. This may lead to layoffs. The key is to find the proper
balance between investment and consumption.

What is an Investment?

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An investment is an asset or item acquired with the goal of generating income or
appreciation. 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 later be sold at a higher price for a profit.

History
The Code of Hammurabi (around 1700 BC) provided a legal framework for investment,
establishing a means for the pledge of collateral by codifying debtor and creditor rights in
regard to pledged land. Punishments for breaking financial obligations were not as severe as
those for crimes involving injury or death.

In the medieval Islamic world, the qirad was a major financial instrument. This was an
arrangement between one or more investors and an agent where the investors entrusted
capital to an agent who then traded with it in hopes of making profit. Both parties then
received a previously settled portion of the profit, though the agent was not liable for any
losses. Many will notice that the qirad is almost identical to the institution of
the commenda later used in western Europe, though whether the qirad transformed into the
commenda, or the two institutions evolved independently cannot be stated with certainty.

In the early 1900s, purchasers of stocks, bonds, and other securities were described in media,
academia, and commerce as speculators. Since the Wall Street crash of 1929, and particularly
by the 1950s, the term investment had come to denote the more conservative end of the
securities spectrum, while speculation was applied by financial brokers and their advertising
agencies to higher risk securities much in vogue at that time. Since the last half of the 20th
century, the terms speculation and speculator have specifically referred to higher risk
ventures.

Types of Investments

Investing intimidates a lot of people. There are a lot of options, and it can be hard to figure
out which investments are right for your portfolio. There are some 10 common types of
investments which are as follows:-

Stocks

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Stocks may be the most well-known and simple type of investment. When you buy stock,
you’re buying an ownership share in a publicly traded company. Many of the biggest
companies in the country think General Motors, Apple and Facebook are publicly traded,
meaning you can buy stock in them.

When you buy a stock, you’re hoping that the price will go up so you can then sell it for a
profit. The risk, of course, is that the price of the stock could go down, in which case you’d
lose money.

Brokers sell stocks to investors. You can either opt for an online brokerage firm or work face-
to-face with a broker.

Bonds

When you buy a bond, you’re essentially lending money to an entity. Generally, this is a
business or a government entity. Companies issue corporate bonds, whereas local
governments issue municipal bonds. The U.S. Treasury issues treasury bonds.

After the bond matures that is, you’ve held it for a predetermined amount of time you earn
back the principal you spent on the bond, plus a determined rate of interest.

The rate of return for bonds is typically much lower than it is for stocks, but bonds also tend
to be lower risk. There is some risk involved, of course. The company you buy a bond from
could fold, or the government could default. Treasury bonds especially, however, are
considered a very safe investment.

Mutual Funds

A mutual fund is a pool of many investors’ money that is invested broadly in a number of
companies. Mutual funds can be actively managed or passively managed. An actively
managed fund has a fund manager who picks companies and other instruments in which to
put investors’ money. Fund managers try to beat the market by choosing investments that will
increase in value. A passively managed fund simply tracks a major stock market index like
the Dow Jones Industrial Average or the S&P 500. Some mutual funds invest only in stocks,
others only in bonds and some in a mixture of the two.

19
Mutual funds carry many of the same risks as stocks and bonds, depending on what they are
invested in. The risk is lesser, though, because the investments are inherently diversified.

Exchange-Traded Funds

Exchange-traded funds (ETFs) are similar to mutual funds in that they are a collection of
investments that tracks a market index. Unlike mutual funds, which are purchased through a
fund company, ETFs are bought and sold on the stock markets. Their price fluctuates
throughout the trading day, whereas mutual funds’ value is simply the net value of your
investments.

ETFs are often recommended to new investors because they’re more diversified than
individual stocks. You can further minimize risk by choosing an ETF that tracks a broad
index.

Certificates of Deposit

A certificate of deposit (CD) is a very low-risk investment. You give a bank a certain amount
of money for a predetermined amount of time. When that time period is over, you get your
principal back, plus a predetermined amount of interest. The longer the loan period, the
higher your interest rate.

There are no major risks to CDs. They are FDIC-insured up to $250,000, which would cover
your money even if your bank were to collapse. That said, you have to make sure you won’t
need the money during the term of the CD, as there are major penalties for early withdrawals.

Retirement Plans

There are a number of types of retirement plans. Workplace retirement plans, sponsored by
your employer. If you don’t have access to a retirement plan, you could get an individual
retirement plan (IRA), of either the traditional or Roth variety.

20
Retirement plans aren’t a separate category of investment, per se, but a vehicle for making
investments, including purchasing stocks, bonds and funds. The biggest advantage for
retirement plans other than Roth IRA plans is that you put in pre-tax dollars. You won’t pay
taxes on the money until you withdraw it in retirement, when you will presumably be in a
lower tax bracket. The risks for the investments are the same as if you were buying the
investments outside of a retirement plan.

Options

An option is a somewhat more complicated way to buy a stock. When you buy an option,
you’re purchasing the ability to buy or sell an asset at a certain price at a given time. There
are two types of options: call options, for buying assets, and put options, for selling options.

The risk of an option is that the stock will decrease in value. If the stock decreases from its
initial price, you lose your money. Options are a highly advanced investing technique, and
you must get approval to participate in the options market.

Annuities

Many people use annuities as part of their retirement savings plan. When you buy an annuity,
you purchase a contract with an insurance company and, in return, you get periodic
payments. The payments may begin right away or at a specified future date. They may last
until death or only for a predetermined period of time.

While annuities are fairly low risk, they aren’t high-growth. They make a good supplement to
retirement savings, rather than an integral source of funding.

Commodities

Commodities are physical products you can buy. They could be agricultural products like
wheat, barley and corn, or energy products like oil, coal or solar power. Precious metals like
gold and silver are some of the most common commodities.

Commodities investing runs the risk that the price of the product will go down quickly. For
instance, political actions can greatly change the value of something like oil, while weather
can impact the value of agricultural products.

21
Risk of Investments: Risk basically means the possibility of losing some or all of original
investments. In other words it can be understood as the chance that an investment’s actual
return will be different than expected. In considering the various economic and political
factors, investors commonly identify five major risks which their investments are exposed
and these are as follows:

Business and Financial Risk: Business risk, which is also called, operating risk, is the risk
which is associated with the normal day to day operations of the firm. On the other hand
financial risk is the risk which is created by the use of fixed cost securities (that is, debt and
preference shares).

Purchasing Power Risk: whenever investors desire to preserve economic position over time,
they utilize investment outlets whose values vary with the price level. They select
investments whose market values change with consumer prices which compensates them for
cost of living increase.

Market Risk: Market risk can be understood as the risk related to the likelihood of incurring
capital losses from price changes engendered by a speculative psychology.

Interest Rate Risk: Interest rate risk is the risk related to the changes that occur in the various
interest rates and this type of risk affects all kind of investors.

Social or Regulatory Risk: The social or regulatory risk arises when an otherwise profitable
investment is impaired as a result of adverse legislation, harsh regulatory climate, or in
extreme instance nationalization by a socialistic government.

We can divide the various investment avenues according to their risk patter in broadly four
categories which are as follows:

Low Risk Avenue: Saving Accounts, Bank Fixed Deposits, Public Provident Fund,
Government Securities, etc.

Moderate Risk Avenue: Mutual Fund, Life Insurance Policy, Debentures, Bonds,

etc. High Risk Avenue: Share Market, Commodity Market, FOREX Market, etc.

Traditional Avenues: Real Estates (Property), Gold, Silver, etc.

22
 Chapter 2: Review of Literature

Assistant Professor, P G Department of Commerce and Management Studies, Hope (1997), in his
paper, Growth, savings and investment in Botswana / Croissance, the results suggests that there is no
significant relation between the gross domestic investment and growth. This paper also concludes that
only government investment is preferred by investors and private investment remains weak and needs
to be enhanced.
Dulebohn & Murray (2007), in their research paper, Retirement Savings Behavior Of
HigherEducation Employees , they found that attitudinal preference towards a risk and a perception of
opportunity served as mediators for the relationships among employees‘ dispositional characteristics
and their retirement saving behavior. They also found that investment knowledge directly affected the
risk taking behavior.
Charkha, Sanket L:- Investment is an type of activity that is engaged in by the people who have to do
savings i.e. investments are made from their savings, or in other words it is the people invest their
savings. A variety of different investment options are available that are bank, Gold, Real estate, post
services, mutual funds & so on much more. Investors are always investing their money with the
different types of purpose and objectives such as profit, security, appreciation, Income stability.
Actually, here the present study identifies about the preferred investment avenues among individual
investors using their own self-assessment test. The researcher has analyzed and found that that
salaried employees consider the safety as well as good return on investment that is invested on regular
basis. Respondents are much more aware about the different investment avenues available in India
except female investors.
Pitonakova Renata The majority of household savings are in the form of bank deposits. It is therefore
of interest for credit institutions to tailor their deposits policy for getting finances from non-banking
entities and to provide the private sector with the loans that are necessary for investment activities and
consumption. Economic, financial and demographic variables influence savings. Growth of income per
capita, private disposable income, elderly dependency ratio, real interest rate and inflation have a
positive impact on savings, while increases in public savings indicate a crowding out effect average,
did not expect their nominal income growth to match inflation, and therefore an increase in expected
inflation would create a negative income effect that discourages spending in both the present and the
future. The findings suggest that, as a policy measure, raising inflation expectations may not be
effective in boosting present consumption.

23
Dr. VarshaVirani (2012) propounded in her study that in spite of low income the people have been
saving for future needs. The major impact on savings is due to the level of the income of the people.
The research shows that majority of the respondents are saving money as Bank deposits for the safety
of an unpredictable future. The main avenues of investment are Bank deposits and the main purpose
of investment is for children education, marriage, and security after retirement.

24
`

Chapter 3: Research Methodology

Introduction:

Research methodology is taught as a supporting subject in several ways in many academic

disciplines at various levels by people committed to a variety of research paradigms. Though
paradigms vary in their contents and substance, their broad approach to enquiry, in the
author’s opinion, is similar. Such ideas have also been expressed by Festinger and Katz, who
in the foreword of their book Research Methods in Behavioral Sciences say that, ‘Although
the basic logic of scientific methodology is the same in all fields, its specific techniques and
approaches will vary, depending upon the subject matter’. Therefore, the model developed
here is generic in nature and can be applied to a number of disciplines in the social sciences.
It is based upon a practical and step-by-step approach to a research enquiry and each step
provides a smorgasbord of methods, models and procedures.

The research process is same as undertaking the journey. As with your drive two important
decisions to make. The first is to decide what you want to find out about or, in different
words, what research questions you want to find answers to. Having decided upon your
research questions or research problems, you need to decide how to go about finding their
answers. The way to finding answers to your research questions constitutes research
methodology. The research methodology will achieve you to get the best research objectives.
This is where your knowledge base of research methodology plays an important role.

Quantitative and qualitative research methodologies differ both in their underpinning

philosophy and to certain extent, in the methods, models and procedures used. Through the
research process is broadly the similar in both, quantitative and qualitative research are
differentiated in terms of the methods of data collection, the procedure adopted for data
collection and analysis, and the style of communication of the findings. When analysing data
in qualitative research, you go through the process of identifying themes and describing what
you have found out during your interviews or observation rather than subjecting your data to
statistical procedures.

Objectives:
1. To know about the preference of women as investors, investment avenues, mode

25
 and form of investments.
2. To analyse the risk factor on investments done by the working women.
3. To study the awareness level of investment and savings amongst working women.

Sampling:
Sampling is a technique used in statistical analysis in which a predetermined number of
observations are taken from a bigger populace. The methodology used to sample from a
bigger populace depends at the form of analysis being done, however it may consist of
easy random sampling or systematic sampling.
A studies layout ought to contain the clean assertion of the studies hassle, tactics and
techniques for collecting statistics, the populace to be studied and the strategies used in
processing and reading records.
In this paper, descriptive research methodology is used. Data is collected from primary as well as
secondary sources. Primary data collection was collected through well-structured questionnaire.
Data was collected from the investors through survey method. Secondary data was gathered from
various sources such as journals, web sites, books and research articles etc.
Sample size:
The survey was carried among 100 working women in the city. Of the 100 questionnaires, 117
filled forms were returned, representing more than 100% response rate that is considered an
acceptable level of response rate in this type of research.
Sampling procedure:
In this study, convenient sampling procedure is followed. While selecting the respondents,
factors, such as age, educational qualification, and professional background of the working
women were considered.

Types of research:
Descriptive research -
The type of research used is descriptive. This has been used this research centres around the
typically structured investigative questions. In this case descriptions of characteristics associate
with population of women investors are formulated. Estimates of the proportions of women who
possess particular investment behaviour is evaluated. And after this process association was made
to different aspects of the investment habits of women and their appetite of risk and investment

26
styles of women is discovered.

Sampling plan:
A sampling plan is a detailed outline of measurements to be taken for researcher to
identify the various ways he can collect data from the target respondents. Sampling can
be divided into two categories, the probability and the non- probability sampling. Under
probability sampling each and every women respondents has equal chances of being
chosen for the study, but for non-probability its depends on the researcher whom he
chooses for his research.
In order to have a wider group of respondents suitable for the study, the women
respondent were chosen from the different sectors and belonging to different age groups
and educational back ground. The investment options provided for the respondents to
choose were Bank deposits, Postal savings, bonds, mutual funds, insurance, Gold, real
estate, equity shares, commodities.
Considering the time factor and the cost involved in going for random sampling,
convenience sampling was used for selecting the respondents for the study.
Due to a large population of working women in the india, repondents where taken from
Mumbai based.
The sample framework for the study included all employed women and practicing
professional and self-employed women from the Mumbai city for drawing the samples.
Convenience sampling was used for drawing samples from the three cities chosen for the
study.

Method of data collection:

There are two types of data, primary and secondary.
1. Primary data
2. Secondary data
Primary data:
Primary data has been used in this study. primary data was collected by administering
a detailed questionnaire. It is collected from field work/ experiment.
Secondary data:

27
For this study secondary was collected through various sources such as magazines,
internet, articles, journal, reports, etc. It is already available from sources like annual reports and
financial statement of articles and journals.

Scope of the study:

The scope of the study is restricted to the market survey conducted on women investors
with respect to the preference of various investment options while doing their financial
planning. It will be helpful to identify the different and better investment options that are
available in the market.

Sampling technique:
For the purpose of the study, judgment sampling has been used. In judgment sampling
technique, on the basis of the researcher’s judgment, sample is selected which is
considered as representative of the population. So, in this case on the basis of my
judgment sample has been selected.
Most of the questions are close ended questions in the questionnaire administered to the
respondents. The simple category scale and multiple responses scale have been used.
Ranking scale has been used wherever appropriate.

Data analysis
This involved reducing he accumulated data to a manageable size, developing
summaries, looking for the patterns which will help the objectives of the study and
applying of statistical techniques. After the collection of data, coding sheet was prepared
to classify the data. The various tools which used to for presentation and testing of
hypothesis are:
1. Bar graphs
2. Column graphs
3. Line graphs.
Limitation of study
1. This is and academic efforts and it is limited to cost, time and geographical
area. As the data is collected from 117 respondents only, generalization to other
women investors is inevitable.
2. An interpretation of this study is based on the assumption that the respondents

28
have given information.
3. It is conducted in Mumbai city.
4. Chances of researcher’s bias might have crept in during collection of data
and while handling incomplete questionnaires.
5. The findings of the study may not be generalized to the entire population
of employed women.
6. The study is restricted to only employed women. Enough care has been taken
while processing, cleaning, editing and analysing the data, to minimize the
impact of these limitations on the findings of the study.
The researcher has considered only women working in private companies with special
reference to IT companies. There is further scope for research in respect of women
working in other sectors and investment pattern of men has not been considered for the
study and hence comparative analysis could not be arrived at. The model can b
improvised by adding various other demographic variables. These offer future research
direction for other researchers.

METHODOLOGY:
The study is a descriptive study which focuses to describe the awareness of working
women about various asset classes and the rationale behind the investment by women
employees. The researcher seeks to describe how women invest, why do they invest, how
much do they invest and where do they invest. The researcher has used the primary
source of data that has been collected through structured self-administered questionnaire
by administering it to women employees in private companies. The researcher has
focused on private companies to target at women earning a moderate to high income as
the rule of thumb says higher the income, higher the investment and vice versa.

29
 DATA ANALYSIS AND INTERPRETATION

Table no 1: Descriptive study between gender and classification of company

Sum of Classification of company

Respondent
Gender Foreign Private Public Grand
Total
Female 5 34 15 54
Male 2 42 18 62
Grand Total 7 76 33 116
Source Primary Data

Chart no 1: Descriptive study between gender and classification of company

45

40

35

30
Foreign
25
20 Private
Public
15

10

0
Female Male

Interpretation: From the above data it is observed that, 6% male and female gender people
invest in foreign companies and 66% both male and female in private companies and 28%
male and female in public companies.

30
Table no-2 Descriptive analysis between gender and No of earning member

Sum of No of earning member

Respondent
Gender 1 2 3 & above Grand Total
Female 15 34 5 54
Male 18 32 12 62
Grand Total 33 66 17 116

Source: Primary Data

Chart no 2: Descriptive analysis between gender and no of earning member

Male

3 & above
2
1

Female

0 5 10 15 20 25 30 35 40

Interpretation: from the above data it is observed that, 28.44% both male and female has
only 1 member who is earning and 56.90% both mal and female has 2 member who is
earning and 14.66% male and female has 3 and above members earning.

31
Table no 3: Descriptive Analysis between gender and no of dependent members in
family.

Sum of Respondent No of dependent member

Gender 1 2 3 4 More Grand
than 4 Total
Female 4 14 18 8 10 54
Male 14 14 12 15 7 62
Grand Total 18 28 30 23 17 116
Source: Primary Data.

Chart no 3: Descriptive analysis between gender and no of dependent members in

family.

18
16

14

12
1
10
2
8
3
6
4
4
More than 4
2

0
Female Male

Interpretation: From the above data it is observed that, 15.52% person have only 1
dependent member in the family and 24.13% people have 2 dependent members, 25.86%
people have 3 dependent members and 19.82% people have 4 dependent members and
14.66% people have more that 4 dependent members.

32
Table no 4: Descriptive analysis between gender and previous investment pattern.

Sum of Previous investment pattern

Respondent
Gender Bonds Fixed Government Mutual Saving Grand
Deposit Security funds s A/c Total
Female 6 15 13 10 10 54
Male 3 14 2 13 30 62
Grand Total 9 29 15 23 40 116
Source: Primary Data.

Chart no 4: Descriptive analysis between gender and previous investment pattern

Male
Savings A/c

Mutual funds
Government Security
Fixed Deposit
Bonds
Female

0 10 20 30 40

Interpretation: From the above data it is observed that, 7.76% male and female both invest
in bonds. 25% male and female invest in fixed deposit. 12.93% male and female invest in
Government security. 19.83% male and female invest in mutual funds. 34.48% male and
female invest in savings account.

33
Table no 5: Descriptive analysis between gender and like to invest in share.

Sum of Like to invest in Share

Respondent
Gender No NOTA Yes Grand Total
Female 6 4 44 54
Male 17 5 40 62
Grand Total 23 9 84 116
Source: Primary Data.

Chart no 5: Descriptive analysis between gender and like to invest in share.

50

45

40

35

30
No
25
NOTA
20
Yes
15

10

0
Female Male

Interpretation: From the above data it is observed that, 19.83% male and female don’t like
to invest in shares. 72.41% male and female like to invest in shares. 7.76% male and female
have their mind set in NOTA.

34
Table no 6: Descriptive analysis between gender and type of market operation.

Sum of Type of market operation

Respondent
Gender Both Primary Secondary Grand
Market Market Total
Female 40 9 5 54
Male 34 16 12 62
Grand Total 74 25 17 116
Source: Primary Data

Chart no 6: Descriptive analysis between gender and type of market operation.

Male

Secondary Market
Primary Market
Both

Female

0 10 20 30 40 50

Interpretation: From the above data it is observed that, 21.55% male and female have
primary type of market operation. 14.65% male and female have secondary type of
market operation. 63.79% male and female have both type of market operation.

35
Table no 7: Descriptive analysis between gender and way of investment.

Sum of Way of investment

Respondent
Gender Agent Other Yourself Grand Total
Female 29 2 23 54
Male 18 7 37 62
Grand Total 47 9 60 116
Source: Primary Data

Chart no 7: Descriptive analysis between gender and way of investment.

40

35

30

25
Agent
20
Other
15 Yourself

10

0
Female Male

Interpretation: From the above data it is observed that, 40.5% male and female has their
way of investment by agents. 51.72% male and female has investment way by their self only
and 7.75% male and female uses both the way of investment.

36
Table no 8: Descriptive analysis between gender and investment pattern affects
your saving and investment pattern.

Sum of Investment pattern affect your

Respondent saving and investment pattern
Gender May be No Yes Grand Total
Female 14 6 34 54
Male 24 6 32 62
Grand Total 38 12 66 116
Source: Primary data

Chart no 8: Descriptive analysis between gender and investment pattern affects

your savings and investment pattern.

40

35

30

25
May be
20
No
15 Yes

10

0
Female Male

Interpretation: From the above data it is observed that, 10.34% male and female say no it
has not affected their saving and investment pattern. 56.9% male and female say yes it has
affected their saving and investment pattern. 32.75% male and female are not sure that it is
affected or not.

37
Table no 9: Descriptive analysis between gender and experience in market.

Sum of Experience in market

Respondent
Gender 3-5 years 5years and Less than Grand Total
above 3years
Female 9 10 35 54
Male 12 6 44 62
Grand 21 16 79 116
Total
Source: Primary data

Chart no 9: Descriptive analysis between gender and experience in market.

45
40
35

30
25
3-5 years
20
5years
15 and above Less than 3years

10

5
0
Female Male

Interpretation: From the above data it is observed that,68.10% male and female has less
than 3 years of experience. 18.10% male and female has 3 to 5 years of experience. 13.79%
male and female has more than 5 years of experience.

38
Table no 10: Descriptive analysis between gender and mode of trading.

Sum of Mode of trading

Respondent
Gender Both Offline Online Grand Total
Female 37 4 13 54
Male 36 5 21 62
Grand Total 73 9 34 116
Source: Primary Data

Chart no 10: Descriptive analysis between gender and mode of trading.

40

35

30

25
Both
20
Offline
15 Online

10

0
Female Male

Interpretation: From the above data it is observed that, 29.3% male and female use online
mode of trading. 7.75% male and female use offline mode of trading. 62.94% male and
females uses both the mode of trading.

39
Table no 11: Descriptive analysis between gender and do you know about tax saving
investment.

Sum of Do you know about tax saving

Respondent investment
Gender No Partly Yes Yes Grand Total
Female 6 15 33 54
Male 16 18 28 62
Grand Total 22 33 61 116
Source: Primary data

Chart no 11: Descriptive Analysis between gender and do you know about tax saving
investment.

35

30

25

20
No
Partly Yes
15
Yes
10

0
FemaleMale

Interpretation: From the above data it is observed that, 52.58% male and female knows
about the tax saving investment. 18.97% male and female don’t know about the tax saving
investment. 28.45% male and female partly yes about tax saving investment.

40
Table no 12: Descriptive analysis between gender and do you feel mutual fund helps to
beat inflation in long run.

Sum of Do you feel mutual fund helps to

Respondent beat inflation in long run
Gender Maybe No Yes Grand Total
Female 21 13 20 54
Male 30 9 23 62
Grand Total 51 22 43 116
Source: Primary Data

Chart no 12: Descriptive analysis between gender and do you feel mutual fund helps to
beat inflation in long run.

30

25

20
Maybe

15 No Yes

10

0
Female Male

Interpretation: From the above data it has been observed that, 37.07% male and female say
yes that mutual fund beat inflation in long run. 18.97% male and female don’t feel that
mutual fund beat inflation. 43.97% male and female are not sure that mutual fund beat the
inflation or not in the long run.

41
Table no 13: Descriptive analysis between gender and investment in diversified portfolio
helps to build funds in long term.

Sum of Investment in diversified portfolio helps to build funds in long

Respondent term
Gender Agree Disagree No opnion Strongly Strongly Grand
Agree Disagree Total
Female 35 0 9 10 0 54
Male 17 2 28 14 1 62
Grand Total 52 2 37 24 1 116
Source: Primary Data

Chart no 13: Descriptive Analysis between gender and investment in diversified

portfolio helps to build funds in long term.

40

35

30

25 Agree

20 Disagree No
opnion
15 Strongly Agree

10 Strongly Disagree

0
Female Male

Interpretation: From the above data it is observed that, 44.83% male and female has agreed
and 20.69% male and female has strongly agree. And other males and females have no
opinion that investment helps to diversified portfolio to build in long terms.

42
Table no 14: Descriptive analysis between age and classification of company

Sum of Classification of company

Respondent
Ages Foreign Private Public Grand Total
26-35 1 18 8 27
36-50 3 4 11 18
Above 50 0 5 2 7
Below 25 3 49 12 64
Grand Total 7 76 33 116
Source: Primary Data

Chart no 14: Descriptive analysis between age and classification of company.

60

50

40

Foreign
30
Private
Public
20

10

0
26-35 36-50 Above 50 Below 25

Interpretation: From the above data it is observed that, 6.03% people like to invest in
foreign companies. 65.51% people like to invest in private sector. 28.45% people like to
invest in public companies.

43
Table no 15: Descriptive analysis between age and no of earning member.

Sum of No of earning member

Respondent
Age 1 2 3 & above Grand Total
26-35 8 17 2 27
36-50 3 14 1 18
Above 50 2 3 2 7
Below 25 20 32 12 64
Grand Total 33 66 17 116
Source: Primary data

Chart no 15: Descriptive analysis between age and no of earning member.

35

30

25

20 1
2
15
3 & above
10

0
26-35 36-50 Above 50 Below 25

Interpretation: From the above data it is observed that, 28.45% people from all the age
group has only 1 earning member. 56.9% people from all the age group has 2 earning
member. 14.5% people from all the age group has 3 and above earning member.

44
Table no 16: Descriptive analysis between age and no of dependent member in family.

Sum of No of dependent member in family

Respondent
Ages 1 2 3 4 More than Grand Total
4
26-35 4 11 8 4 0 27
36-50 3 1 6 8 0 18
Above 50 0 0 5 2 0 7
Below 25 11 16 11 9 17 64
Grand Total 18 28 30 23 17 116
Source: Primary data

Chart no 16: Descriptive analysis between age and no of dependent member in family.

18

16

14

12 1
2
10
3
8 4
6
More than 4
4

0
26-35 36-50 Above 50 Below 25

Interpretation: From the above data it is observed that, 15.5% people from all the age group
except above 50 age group has only 1 member who is dependent. 24.13% people from all the
age group except above 50 age group has 2 dependent member. 25.86% people has 3
dependent members in family. 19.83% people from all age group has 4 dependent member.
14.65% people only from the below 25 age group has more than 4 dependent member.

45
Table no 17: Descriptive analysis between age and previous investment pattern.

Sum of Previous investment pattern

Respondent
Ages Bonds Fixed Government Mutual Saving Grand
Deposit Security funds s A/c Total
26-35 4 5 4 8 6 27
36-50 3 3 5 5 2 18
Above 50 1 0 3 0 3 7
Below 25 1 21 3 10 29 64
Grand Total 9 29 15 23 40 116
Source: Primary data

Chart no 17: Descriptive analysis between age and previous investment pattern.

30

25

20 Bonds

Fixed Deposit
15
Government Security

10 Mutual funds
Savings A/c

0
26-35 36-50 Above 50Below 25

Interpretation: From the above data it is observed that, 7.75% people has previously
invested in bonds from all the age group. 25% people invested in fixed deposit except from
the 50 and above age group. 12.93% people invested in government securities. 19.87%
people invested in mutual funds except 50 and above age group. 34.48% people from all the
age group has invested in savings account.

46
Table no 18: Descriptive analysis between age and would you like to invest in share.

Sum of Like to invest in share

Respondent
Ages No NOTA Yes Grand Total
26-35 3 24 27
36-50 2 1 15 18
Above 50 2 5 7
Below 25 16 8 40 64
Grand Total 23 9 84 116
Source: Primary data

Chart no 18: Descriptive analysis between age and would you like to invest in share

45

40

35

30
No
25
20 NOTA
Yes
15

10

0
26-35 36-50 Above 50 Below 25

Interpretation: From the above data it is observed that, 72.41% people from all the age
group say yes to invest in shares. 19.8% people from all the age group say no to invest in
shares.

47
Table no 19: Descriptive analysis between age and do you think inflation affects your
saving and investment pattern

Sum of Do you think inflation affects your

Respondent saving and investment pattern
Ages May be No Yes Grand Total
26-35 7 3 17 27
36-50 5 3 10 18
Above 50 1 0 6 7
Below 25 25 6 33 64
Grand Total 38 12 66 116
Source: Primary data

Chart no 19: Descriptive analysis between age and do you think inflation affects your
saving and investment pattern.

35

30

25

20
May be
15
No
10 Yes
5

0
26-35
36-50
Above 50
Below 25

Interpretation: From the above data it is observed that, 56.89% from all the age group think
it affects the saving and investment pattern. 10.34% people from all the age group say no it
does not affect the saving and investment pattern. And other people are not sure ir affects or
not.

48
Table no 20: Descriptive analysis between age and type of market operation.

Sum of Type of market operation

Respondent
Ages Both Primary Secondary Grand Total
Market Market
26-35 16 5 6 27
36-50 14 2 2 18
Above 50 5 1 1 7
Below 25 39 17 8 64
Grand Total 74 25 17 116
Source: Primary data

Chart no 20: Descriptive analysis between age and type of market operation

45

40

35

30
Both
25
Primary Market
20 Secondary Market
15

10

0
26-35 36-50 Above 50 Below 25

Interpretation: From the above data it is observed that, 21.55% people from all the age
group primary type of market operation. 14.66% people from all the age group has secondary
type of market operation. 63.78% people from all the age group has both the type of market
operation.

49
Table no 21: Descriptive analysis between age and way of investment.

Sum of Way of investment

Respondent
ages Agent Other Yourself Grand Total
26-35 13 2 12 27
36-50 9 3 6 18
Above 50 3 1 3 7
Below 25 22 3 39 64
Grand Total 47 9 60 116
Source: Primary data

Chart no 21: Descriptive analysis between age and way of investment.

40

35

30

25
Agent
20 Other

15 Yourself

10

0
26-35 36-50 Above 50 Below 25

Interpretation: From the above data it is observed that, 40.5% people from all the age group
has agent as their way of investment. 51.7% people from all the age group invest by
themselves only. 7.75% people from all the age group has others as way of investment.

50
Table no 22: Descriptive analysis between age and experience in market

Sum of Experience in market

Respondent
Ages 3-5 years 5years and above Less than 3years Grand Total
26-35 4 5 18 27
36-50 10 2 6 18
Above 50 0 6 1 7
Below 25 7 3 54 64
Grand Total 21 16 79 116
Source: Primary data

Chart no 22: Descriptive analysis between age and experience in market

60

50

40

3-5 years
30
5years and above
Less than 3years
20

10

0
26-35 36-50 Above 50 Below 25

Interpretation: From the above data it is observed that, 68.10% people from all the age
group has less the 3 years of experience. 18.10% people from all the age group except 50 and
above had 3 to 5 years of experience. 13.79% people from all the age group has 5 years and
above experience.

51
Table no 23: Descriptive analysis between age and mode of trading

Sum of Mode of trading

Respondent
Ages Both Offline Online Grand Total
26-35 17 4 6 27
36-50 15 1 2 18
Above 50 5 2 7
Below 25 36 2 26 64
Grand Total 73 9 34 116
Source: Primary data

Chart no 23: Descriptive analysis between age and mode of trading

40

35

30

25
Both
20 Offline

15 Online

10

0
26-35 36-50 Above 50 Below 25

Interpretation: From the above data it is observed that, 29.31% people from all the age
group uses online mode for trading. 7.75% people from all the age group uses offline mode
of trading. 62.9% people from all the age group uses both the mode for trading.

52
Table no 24: Descriptive analysis between ages and do you know about tax saving
investment.

Sum of Do you know about tax saving investment

Respondent
Ages No Partly Yes Yes Grand Total
26-35 3 6 18 27
36-50 1 5 12 18
Above 50 1 0 6 7
Below 25 17 22 25 64
Grand Total 22 33 61 116
Source: Primary data

Chart no 24: Descriptive analysis between age and do you know about tax saving
investment

25

20

15 No
Partly Yes
10Yes

0
26-35 36-50 Above 50 Below 25

Interpretation: From the above data it is observed that, 52.58% people from all the age
group know about the tax saving investment. 18.97% people from all the age group don’t
know about the tax saving investment.

53
Table no 25: Descriptive analysis between age and do you feel mutual fund helps to beat
inflation in long run.

Sum of Do you feel mutual fund helps to beat

Respondent inflation in long run
Ages Maybe No Yes Grand Total
26-35 9 4 14 27
36-50 8 4 6 18
Above 50 2 2 3 7
Below 25 32 12 20 64
Grand Total 51 22 43 116
Source: Primary data

Chart no 25: Descriptive analysis between age and do you feel mutual fund helps to beat
inflation in long run.

35

30

25

20 Maybe
No Yes
15

10

0
26-35 36-50 Above 50 Below 25

Interpretation: From the above data it is observed that, 37.06% people from all the age
group say yes that mutual fund helps to beat inflation in long run. 18.97% people from all the
age group say no that mutual fund does not beat inflation for long and others are not sure.

54
Table no 26: Descripting analysis between age and investment in diversified portfolio
helps to build funds in long term.

Sum of Investment in diversified portfolio helps to build funds in long term.

Respondent
Ages Agree Disagree No opnion Strongly Strongly Grand Total
Agree Disagree
26-35 11 0 8 8 0 27
36-50 6 0 8 3 1 18
Above 50 1 0 1 5 0 7
Below 25 34 2 20 8 0 64
Grand Total 52 2 37 24 1 116
Source: Primary data

Chart no 26: Descriptive analysis between age and investment in diversified portfolio
helps to build funds in long term.

40

35

30

25 Agree
Disagree
20
No opnion
15 Strongly Agree
Strongly Disagree
10

0
Female Male

Interpretation: From the above data it is observed that, from all the age group maximum
people have agreed that investment diversifies portfolio helps to build funds in long term.

55
Table no 27: Descriptive analysis between income group and classification of
companies.

Sum of Classification of companies

Respondent
Income group Foreign Private Public Grand Total
250001-500000 1 17 13 31
500001-750000 2 11 9 22
7500001 & Above 0 4 0 4
Upto 250000 4 44 11 59
Grand Total 7 76 33 116
Source: Primary data

Chart no 27: Descriptive analysis between income group and classification of

companies.

50

45

40

35

30
Foreign
25
Private
20
Public
15

10

0
250001-500000500001-750000 7500001 & AboveUpto 250000

Interpretation: from the above data it is predicted that, from all thee income group the
people like to invest in private companies only. Very few people like to invest in public and
foreign companies.

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Table no 28: Descriptive analysis between income group and no of earning member.

Sum of Respondent No of earning member

Income group 1 2 3 & above Grand Total
250001-500000 6 20 5 31
500001-750000 5 17 0 22
7500001 & Above 1 1 2 4
Upto 250000 21 28 10 59
Grand Total 33 66 17 116
Source: Primary data

Chart no 28: Descriptive analysis between income group and no of earning member

30

25

20

15 1
10 2

5 3 & above

Interpretation: From the above data it is predicted that, 35.5% people having income upto
2.5 lakh has only 1 member earning. 64.52% people having income between 2.5lakh to 7.5
lakh has 2 earning member. 50% people having income above 7.5 lakh has more than 3
earning member.

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Table no 29: Descriptive analysis between income group and no of dependent members
in family.

Sum of No of dependent members in family

Respondent
Ages 1 2 3 4 More than 4 Grand Total
250001-500000 3 10 10 6 2 31
500001-750000 5 4 8 5 0 22
7500001 & Above 1 1 1 1 0 4
Upto 250000 9 13 11 11 15 59
Grand Total 18 28 30 23 17 116
Source: Primary data

Chart no 29: Descriptive analysis between income group and no of dependent members
in family.

16

14

12

10 1
2
8
3
6
4
4 More than 4

0
250001-500000 500001-750000 7500001 & Upto 250000
Above

Interpretation: From the above data it is predicted that, 25.42% people having income upto
2.5 lakh has more than 4 dependent members. 32.2% people having income between 2.5 lakh
– 5 lakh has 2 dependent members. 36.36% people having income between 5 lakh-7.5 lakh
has 3 dependent members.

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Table no 30: Descriptive analysis between income group and previous investment
pattern.

Sum of Previous investment pattern

Respondent
Income group Bonds Fixed Government Mutual Saving Grand
Deposit Security funds s A/c Total
250001-500000 6 6 2 10 7 31
500001-750000 2 1 9 6 4 22
7500001 & Above 0 1 1 0 2 4
Upto 250000 1 21 3 7 27 59
Grand Total 9 29 15 23 40 116
Source: Primary data

Chart no 30: Descriptive analysis between income group and previous investment
pattern.

30

25

20

Bonds
15
Fixed Deposit
10 Government Security

5 Mutual funds
Savings A/c
0

Interpretation: From the above data it is predicted that, 49.51% people having income upto
2.5 lakjh and above 7.5 lakh invested in savings account. 32.25% people having income
between 2.5 lakh - 5 lakh invested in mutual funds. 4.091% people having income between 5
lakh – 7.5 lakh has invested in government securities.

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 Chapter 5: Conclusion

Financial literacy is an important predictor of financial behavior in the developing countries

around the world. Indeed, even within the relatively homogenous Indian population, levels of
financial literacy vary greatly, and that financial literacy predicts financial behavior. From
this empirical study it has been observed that women investors are more familiar and have
gained high financial literacy in compared to their male counter parts. Similarly, the study
reveals that young investors in the age category of 25-35 years are more interested in
investing in financial market products, than the adult investors in age grouping of 40 years
and above.
The elaborate data analysis also reveals the fact that the urban households inhabited in
Coimbatore city, prefer to save or invest their money for meeting more of social obligation
like: wards marriage, self‟s marriage, or for repaying debts etc. Moreover, the study
identified that households in the study region prefer highly liquid and safe mode of saving &
investment. The study results also concluded that there exist wide differences between the
saving/investment practices of households‟ and their satisfaction levels. Based on the
empirical findings of the study, it is apt to conclude that financial education is increasingly
important, and not just for investors. It is becoming essential for the average family trying to
decide how to balance its budget, buy a home, fund the children‟s education and ensure an
income when the people retire. Of course people have always been responsible for managing
their own finances on a day to day basis – spend on a holiday or save for new furniture; how
much to put aside for a child‟s education or to set them up in life – but recent developments
have made financial education and awareness increasingly important for financial well-being.
The household individuals must gain more financial knowledge for the effective financial
management and planning. The Government of India, should educate the urban households
about the importance of financial literacy and planning because: the percentage of investors is
nearly 20 in urban areas while it is much lower (6 per cent) in rural India. The estimated
number of investor households in India is 24.5 million who constitute about 11 per cent of
total households.
There is a significant magnitude of small savers among all households. Moreover, households
and individual investors supply a pool of capital that creates liquidity in the market and make
it dynamic. Thus, household income, its consumption and its distribution are fundamental to
any economic analysis. These determine the nature and rate of saving in an economy which,
in turn, implies the rate of economic growth.

60
 Annexure 1 – References
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Class Investors in Triuvannamalai District of Tamilnadu’, Asia Pacific Journal of
Research,Vol1,IssueXXVI,April 2015,pp75-83.
Murugan G. Dura and Chandrasekaran. G, ’The Opinion and Attitude of Investors Towards
Investment Schemes in Tripur District(With Special Reference to Salaried
Class’,International Journal of Research in Management and Business
Studies,Vol1,Issue3, July-Sep 2014, pp 54-56.
Patil. S and Nandawar. K,”A Study on Preferred Investment Avenues Among
Salaried People With Reference to Pune,India,IOSR Journal of Economics and
Finance,Vol5,Issue2,Sep-Oct2014,pp9-17.
Bhushan. P, ’Relationship between Financial literacy and Investment Behavior of Salaried
Individual’, Journal of Business Management & Social Sciences Research, Vol. 3, No. 5,
May 2014.
Devi S.D and Chitra. P, (2014), ‘A Study on Salaried Employees Behavior towards
Domestic Savings and Investment in Rasipuram Town’, Research Explorer, Vol. III, Issue
9, July-Dec 2014, pp 40-43.
Joseph A. L and Prakash .M., ‘A Study on Preferred Investment Avenues Among the People
and the Factors Considered for Investment’, International Journal of Management and
Commerce Innovation, Vol. 2, Issue 1, pp 120-12
Umamaheshwari and Kumar M. A, ‘A Study of Investment Pattern & Awareness’ of
Salaried Class Investors in Coimbatore District’, Indian Journal of Research, Vol 2, Issue 9,
September 2013.
Palanivelu. V. R. and Chandrakumar. K, ‘A Study on Preferred Investment Avenues among
Salaried People with Reference to Namakkal Taluk, Tamil Nadu, India’, International
Conference on Business Economics and Accounting, BangkokThailand, 20-23 March, 2013.
Bhardwaj. B, Sharma. N and Sharma. D, ‘Income saving and Investment Pattern of
Employees of Bahara University, Solan’, International Journal of Management and Business
Studies, Vol.3, Issue 1, Jan-March 2013, pp 137-141.
Patel P .Y and Patel Y .C, ‘A Study of Investment Perspective of Salaried people (Private
Sector)’, Asia Pacific Journal of Marketing and Management Review, Vol. 1, No. 2, October
2012.
Samudra and Burgate M.A., ‘A Study of Investment Behavior of Middle Class Households in
Nagpur’, International Journal of Social Sciences and Interdisciplinary Research, Vol 1,No.
5, May 2012, pp 43-54.
Geetha. N and Ramesh. M, ‘A Study on Relevance of Demographic Factors in Investment
Decisions’, Perspective of Innovations, Economics and Business, Vol. 10, Issue 1, 2012.

61
Pandiyan. L and Aranganathan .T, ‘Saving and Investment Attitude of Salaried Class in
Cuddalore District’, IQSR Journal of Business and Management, Vol 1, issue 1, May- June
2012, pp 40-49.
Geetha. N and Ramesh. M, ‘A Study of People’s Preference in Investment Behavior’,
IJMER, Vol 1, Issue 6, November 2011, pp 1-10.
Sheikh and Kalkundarikar, ‘Analysis of Investors Behavior in Belgaun District, Karnataka
State’, International Journal for Management Research, Vol.1, No 2, July 2011, pp 22-39.
Mathivannan. S and Selvakumar. M, ‘Savings and Investment Pattern of School Teachers- A
Study with Reference to SivakasiTaluk, Tamil Nadu’, Indian Journal of Finance, April 2011,
pp 12-26. 20
Shaikh H. Rehman Arifur and Kalkundrikar. B. Anil, ‘Impact of Demographic Factors on
Retail Investor’s Investment Decision – An Explanatory Study’, Indian Journal of
Finance, September 2011, pp 35-44.
Jasmeen. Sofia, ‘Investment Choice of Individual Investors’ The Indian Journal of
Commerce, Vol. 62, No. 4, Oct- Dec 2009, pp 58-63.
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Dissertation, 1995, Alagappa University, Karaikudi, India.
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Dissertation, 1996, /Magappa University, Karaikudi, India.

62
 Annexure 2: Questionnaire
1. Age Group
 Below 25
 26 – 35
 36 – 50
 Above 50
2. Income Group
 Upto 250000
 250001 – 500000
 500001 – 750000
 750001 and above
3. Qualification
 SSC
 HSC
 Undergraduate
 Graduate
 Professional
 Post graduation
4. Classification of Companies
 Private
 Public
 Foreign
5. No of earning member
 1
 2
 3 and above
6. No of dependent member in family
 1
 2
 3
 4
 More than 4
7. Previous investment pattern
 Fixed deposits
 Savings account
 Mutual funds
 Bonds
 Government securities
8. Would you like to invest in share
 Yes
 No

63
  NOTA
9. Do you think inflation affects your savings and investment pattern
 Yes
 No
 May be
10. Type of market operation
 Primary market
 Secondary market
 Both
11. Way of investment
 Yourself
 Agent
 Other
12. Experience in market
 Less than 3 years
 3-5 years
 5 years and above
13. Mode of trading
 Online
 Offline
 Both
14. Do you know about tax saving investment
 Yes
 No
 Partly yes
15. Do you feel mutual fund helps to beat inflation in long run
 Yes
 No
 Maybe
16. Investment in diversified portfolio helps to build funds in long term
 Strongly agree
 Agree
 No opinion
 Disagree
 Strongly disagree

64