A Study of Preferred Investment Decisions among Salaried People of

Indore City

1. Mr. Mayank Lobhane, Student, International Institute of Professional Studies,D.A.V.V,Indore

2. Dr. Surendra Malviya, Asst. Professor, International Institute of Professional Studies,
D.A.V.V, Indore, email: surendra.malviya@gmail.com
3. Dr. Nisha Siddiqui, Asst Professor, Institute of Management studies, D.A.V.V.,Indore

Abstract
Investment is an activity that is engaged in by people who have savings i.e.
investments are made from savings, or in other words people invest their savings.
A variety of investment options are available such as Bank, Gold, Real estate, Post
Services, Mutual Funds & so on. Investors are investing their money with the
different objectives such as Safety Of Investment, Long Term Growth, Short Term
Growth , Income Generation, Tax Planning, Future Liabilities and Retirement
Planning, So this research is being conducted keeping in mind the different
avenues of investments as well as the objectives of it. In this research, with the
sample size of 110 salaried employees’ data collecting is being conducted by the
survey through questionnaire in Indore City. The study is conducted using a
structured questionnaire. The present study identifies the preferred investment
avenues among the individual investors using self assessment test. The study is
based on primary sources of data which are collected by distribution of a close
ended questionnaire. The data has been analyzed using, chi-square test and
frequency distribution test with the help of SPSS software and MS Excel. This
research has analyzed that salaried employees consider the Safety of Investments
as the major objective and Mutual Fund as the best investment avenue.

Key Words: Investments Avenues, Salaried employees,Chi-square test.

 INTRODUCTION
Investment has different meaning in the context of finance and economics. Finance investment is
putting money into something with the expectation of gain that upon thorough analysis has a
high degree of security for the principle amount, as well as security of return, within an expected
period of time. Investment management (selection of one or other investment assets) varies from
businessman and salaried persons. As we know that every salaried individual always prefer to
invest money for saving purpose, some investment money just to save to tax and some people
invest money in order to double it means to make more money and its vary as people are of
different age, education, gender, income and family size are attracted towards different
investment activity, the availability of money to invest decides whether investor is potential or
not. Investment needs rewards and commitment to the sources in order to earn benefits in future.
Any potential investor invest in shares of a company for return in form of dividend and price
appreciation in the market price of his holding .Salaried employees look for proper and timely
return ,their money safety, liquidity in the process, convenience and affordability and appropriate
tax benefits. This research is concerned with investment of salaried individuals in stock and what
are their objectives and preferences of them.

The respondent of research study consist only those people who earning fixed Income as salary
so the study included only salaried group of people. In India there are lot many Investment
avenues are available. The following figure is pretty self explanatory regarding investment
options. Investments are broadly classified into five categories i.e. Equity, Debt, Real Estate,
Gold and Miscellaneous.

LITERATURE REVIEW
Donald E Fischer and Ronald J. Jordan (1994) analyzed the relation between risk, investor
preferences and investor behavior. The risk return measures on portfolios are the main
determinants of an investor's attitude towards them. Most investors seek more return for
additional risk assumed. The conservative investor requires large increase in return for assuming
small increases in risk. The more aggressive investor will accept smaller increases in return for
large increases in risk. They concluded that the psychology of the stock market is based on how
investors form judgments about uncertain future events and how they react to these judgments.

Girdhari and Satya (2011) analyzed the investment preferences of individuals in urban Orrisa
(one of the states in India). Through their study they found that investment decisions and risk
tolerance of investors depends on age, sex, income, marital status, education, family background
and occupation. It was also found that male investors are more risk seekers as compared to
female investors.
Das (2011) analysed the preferred investment avenues of the households in Nagaon district of
Assam. The findings of the study reveal that insurance products are the most preferred
investment avenues of the households. For carrying out this study, a structured questionnaire was
used. Education levels, awareness about the financial system, age of investors were found to be
the significant factors while making investment decisions. Income level was also found to be the
important factor which influences investment decisions. The results of the study shows that
higher income group shows relatively high preference towards investment in share market,
conversely lower and average income group shows keen preference towards insurance and banks
as the most preferred investment avenues

Achar (2012), individual characteristics of respondents such as age, gender, marital status, and
lifestyle determined the savings and investment behavior.

Jain and Mandot (2012) studied the impact of demographic factors on investment decisions of
investors in Rajasthan, India. The questionnaire was developed for this study and total sample of
200 investors from different cities of Rajasthan has been taken for the purpose of the study. The
study concludes that various demographic factors like age, marital status, gender, city, income
level, market knowledge, occupation and educational qualifications have major impact on
investment decision of investors in Rajasthan. Also it was found that gender and city have no
impact on investment decision of investors.

S.Umamaheswari, Dr.M.Ashok Kumar (2013) awareness of an investor towards savings and

investment is created modified and shaped up by various external sources. The print and
electronic media such as the dailies, weeklies, television, radio etc., and personal contact with
friends, relatives, investment consultants etc, contribute a lot in creating awareness among
investors. As the awareness of investors is considered to be indispensable while studying one’s
savings and investment pattern, an attempt was made to measure the awareness level of
investors.

Saugat Das , Ritika Jain (2014) focuses on the relationship between the four demographic
variables i.e., age, gender, education and occupation with the four most important objectives of
investment such as risk, return, retirement and tax which influences the buying behavior of the
investors. A sample of 150respondents was interviewed and analysis was done through SPSS.
The study emphasizes the fact that demographic variables indeed play a role on the mindset of
the investor community which is driven by age and educational qualification.

Puneet Bhushan (2014) This paper examines the awareness level and investment behavior of
salaried individuals towards financial products. Results of the study suggest that respondents are
quite aware about traditional and safe financial products whereas awareness level of new age
financial products among the population is low. Also majority of the respondents park their
money in traditional and safe investment avenues.

Avinash N(2015) The main aim of the project is to study the awareness and preferences of
investors for different investment options available to them and to analyze the factors influencing
their perceptions and preferences. More specifically, an attempt has been made in this article to
measure the level of awareness of investors about several pre-identified investment products; to
rank the investment products in terms of awareness; to analyze the relation between awareness
and socioeconomic factors relating to the investors; to study the preferences of investors for
different investment products; and finally to identify the factors influencing investor awareness
and preferences. An individual’s investment objectives also depend on various personal factors,
such as his/her age, income level, gender, occupation, education, etc of Hyderabad City.

OBJECTIVES OF STUDY

The major objectives of the research study is:

1. To analysis the salaried individual according to the Age, Gender, Education, Income and
Family Size.
2. To explore the preference investment avenues of salaried individual in Stock.

RESEARCH METHEDOLOGY

Sampling –

Non Probability sampling technique – Convenience sampling. It is a process of selecting units

(e.g. people, organizations) from a population of interest so that by studying the sample we may
fairly generalize our results back to the population from which were chosen.

Non-Probability Sampling – It is a sampling technique where the samples are gathered in a

process that does not give all the individuals in the population equal chances of being selected.

Convenience Sampling – It is a type of non-probability sampling technique. It focuses on

sampling techniques that are based on the judgment of the researcher.

Sample Size – The sample size is an important feature of any empirical study in which the goal
is to make inferences about a population from a sample. In practice, the sample size used in a
study is determined based on the expense of data collection, and the need to have sufficient
statistical power. 110 investors belong to respondents of different age group from 18 to 50 years
and above.
 Data Collection Tools
To meet out the objectives of the study Self designed Structured questionnaire will be will be
used to collect them. Method of administrating the questionnaire will be by survey method and
electronic media like Google doc.

Self Designed Structured Questionnaire – Self designed questionnaire are one of the most
frequently used methods for collecting data for research studies. The development of self
designed questionnaire takes time and thought if the researcher wants to maximize the collection
of complete, reliable and valid data.

Data Analyzing Techniques

After collection of data the process of data coding and editing is applied. Every
questionnaire was given a specific number. The incomplete and irrelevant questionnaire
is removed and duly filled and final selected questionnaire is used for data analyzing. It is
analyzed by using different statistical tools with the help of SPSS 20 version. These tools
are explained as under:

Data Analysis and Interpretations

Percentage Frequency Distribution

TABLE : 1 Age Group

Frequency Percent Valid Percent Cumulative Percent

Valid 20-30 Years 71 64.5 64.5 64.5

31-40 Years 19 17.3 17.3 81.8

41-50 Years 8 7.3 7.3 89.1

50 and above 12 10.9 10.9 100.0

Total 110 100.0 100.0

From the above table 01 , the population of age between 20-30 years is 64.5 %, 31-40 years is
17.3%, 41 to 50 is 7.3% and above 50 years is 10.9 %. So the major investors belong to age
group 20 years to 40 years.

TABLE 2: Gender

Frequency Percent Valid Percent Cumulative Percent

Valid Male 70 63.6 63.6 63.6

Female 40 36.4 36.4 100.0

Total 110 100.0 100.0

From the above table 2, the male population is 63.6% and female population is 36.4%. so the
males are the major investors from the sample taken but female respondents are also showing
there interest and awareness regarding investment avenues.

TABLE 3: Education Qualification

Frequency Percent Valid Percent Cumulative Percent

Valid Post Graduates 56 50.9 50.9 50.9

Graduates 54 49.1 49.1 100.0

Total 110 100.0 100.0

From the above table 3, the population of Post Graduates is 50.9 % and Graduate is 49.1% , so
the major investors are graduate and post graduate investors. So we can say that majority of
investers investing various options are educated persons.
 TABLE 4: Public and Private Sector employes preferences

Frequency Percent Valid Percent Cumulative Percent

Valid Private 87 79.1 79.1 79.1

Public 23 20.9 20.9 100.0

Total 110 100.0 100.0

From the above table 4. the population of Private employee is 79.1%, and Public Employees is
only 20.9%. which represents that private sector employees invest more as they want to get
higher returns by taking high risk. Whereas the public sector employees don’t want to take risk
so the percentage of public sector employee investors is very less.

TABLE 5. Monthly Income

Frequency Percent Valid Percent Cumulative Percent

Valid Upto Rs 20000 21 19.1 19.1 19.1

Rs 20001-Rs 50000 50 45.5 45.5 64.5

Rs 50001-Rs 100000 26 23.6 23.6 88.2

Above Rs 100000 13 11.8 11.8 100.0

Total 110 100.0 100.0

From the above table 5., the population having Income up to Rs 20000 is 19.1% ,the population
having income of Rs 20001-50000 is 45.5% , population having income is 50001-100000 is 23.6
and population having income above Rs 100000 is 11.8%.
 TABLE 6: Frequency Of Investment

Frequency Percent Valid Percent Cumulative Percent

Valid Daily 5 4.5 4.5 4.5

Weekly 6 5.5 5.5 10.0

Quarterly 38 34.5 34.5 44.5

Half Yearly 14 12.7 12.7 57.3

Yearly 18 16.4 16.4 73.6

Monthly 29 26.4 26.4 100.0

Total 110 100.0 100.0

From the above table 6., the Frequency of Investment daily is 4.5% Weekly 5.5% Quarterly
34.5% Half Yearly 12.7% Yearly 16.4% and Monthly 26.4%. so majority of investory invest
monthly and yearly basis.

TABLE 07.: Preferred_Investment_Objective

Frequency Percent Valid Percent Cumulative Percent

Valid Safety of Investment 33 30.0 30.0 30.0

Long Term Growth 29 26.4 26.4 56.4

Short Term Growth 14 12.7 12.7 69.1

Income Generation 10 9.1 9.1 78.2

Tax Planning 14 12.7 12.7 90.9

Provision For Future Liabilities 4 3.6 3.6 94.5

Retirement Planning 6 5.5 5.5 100.0

Total 110 100.0 100.0

From the above table 07, it is clear that 30% of respondents prefer into Safety of Investment,
where as 30% respondents invest into Long Term Growth options. But there are users who want
to invest into short term growth plans is 26.4%. whereas 12.7% respondents prefer investment
options as their Income Generation and Tax planning. Also only 9.1% users invest into
Provision for Future Liabilities and Retirement Planning . It is clear from the above table that
majority of users invest into Safety investments,long term and short term gains. Also very less
users prefer to invest for retirement planning and for future liabilities.

TABLE 08.: Preferred Avenues

Frequency Percent Valid Percent Cumulative Percent

Valid Insurance 22 20.0 20.0 20.0

Bank 10 9.1 9.1 29.1

Post Office 17 15.5 15.5 44.5

Equities 8 7.3 7.3 51.8

Real Estate 11 10.0 10.0 61.8

Mutual Fund 27 24.5 24.5 86.4

Government Securities 10 9.1 9.1 95.5

Gold 5 4.5 4.5 100.0

Total 110 100.0 100.0

From the above table 08, preferred investment avenues by the users of Indore is as followes,
Insurance is 20.0%, Bank 9.1%,Post Office 15.5,Equitites 7.3%, Real Estate 10.0%, Mutual
Fund 24.5%, Government Securities 9.1% and Gold 4.5% is the Preferred Avenues. From the
above table it is clear that majority of users prefer Mutual funds,Insurance and post office as
their preferred investment avenues.

Conclusion
Investment behavior differs among different individuals. This study is about finding what factors
affect the investment behavior. It has been found that factors such as age, gender, family size etc.
affect the investment decisions of salaried employees of Indore city. Thus it may be concluded
that males are the major investors, who are educated with qualification upto post graduation. The
major investors work with private sector having risk taking capabilities having annual income
not more than five lacks.

The major investors want to for long term or duration so that they can get maximum returns.
Also the preferred investment avenue is for safety and securities. The users want to invest for
their tax planning also. This research also find that salaried class of Indore City has a Safety of
Investment is a major Objectives and Mutual Fund is the best Investment Avenues. Finally we
can say that the major investors are highly qualified, high risk takers and want to invest into long
term and short term avenues.
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