A REPORT ON

RESEARCH PROJECH ON INVESTORS PERCEPTION ON

INVESTMENT AVENUES

SUBMITTED BY
V.VENKATRAO
Reg. no: 2011130020

SUBMITTED TO
Dr. T. VASUDHA
Project co-coordinator
CENTER FOR MANAGEENT AND TECHNOLOGY
Visakhapatnam

DECLARATION
I hereby declare that this research project entitled INVESTORS PERCEPTION
ON INVESTMENT AVENUES has been done by me during the year 2013 in
partial fulfillment of requirement for the Post Graduation Diploma in Management
awarded by AICTE.

I also declare that this project is a result of my own efforts and that it has not been
submitted to any other University for the award of a Degree or Diploma before or
published.

Place: Visakhapatnam
Date: 28-05-2013

(V.venkatrao)

CONTENTS
1. INTRODUCTION
1.1

Introduction to investment

1.2

Types of an investment avenues

1.3

Non marketable financial assets

1.4

Bonds

1.5

Mutual funds

1.6

Real estate

1.7

Equity shares

1.8

Money market instruments

1.9

Life insurance polices

1.10 Bullion market

1.11 Financial derivatives
2. RESEARCH METHODOLOGY
2.1

Statement of the problem

2.2

Review of literature

2.3

Need for study

2.4

Objectives of the study

2.5

Hypothesis

2.6

Research design

2.7

Tools of data collection

2.8

Method of analysis

2.9

Limitations of the study

3. INDUSTRY ANALYSIS
3.1

Indian financial market

3.2

Classification of financial markets

3.3

Money market

3.4

Money market

3.4.1 Primary Market

3.4.2 Secondary market

4. ANALYSIS AND INTERPRETATION

5. FINDINGS AND SUGGESTIONS
6. CONCLUSION
7. BIBLOGRAPHY
8. ANNEXURE

CHAPTER-1
INTRODUCTION

1.1INTRODUCTION TO INVESTMENT
The money one earns partly spent and the rest is saved to meeting future
expenses, instead of keeping savings idle one may like to use savings in order to
get returns on it in the future, this is called as investment. In an economic sense,
an investment is the purpose of goods that are not consumed today but are used
in the future to create wealth. In finance, an investment is a monitory asset
purchased with the idea that the asset will provide income in the future or
appreciate and be sold at a higher price. Here earnings will not help one to secure
the future, so it becomes important to invest.
One of the important reasons why one needs to invest wisely is to meet the
cost of inflation. Inflation is the rate at which the cost of living increases. The cost
of living simply what it costs to buy goods and services you need to live. Inflation
causes money to lose value because it will not buy the same amount of a good or
service in the future as it does now or did in the past. The sooner one starts
investing the better. By investing early one allows ones investments more time to
accumulating the principal and the interest or dividend earned on it. Year after
year.
The dictionary meaning of investment is to commit money in order to earn a
financial return or to make use of money for future benefits or advantages. People
commit money to investments with expectations to increase their future wealth by
investing money to spend in future years. For example, if you invest Rs 1000
today and earn 10% over the next year, you will have Rs.1100 one year from
today.
An investment can be described as perfect if it satisfies all the needs of all
investors. So, the starting point in searching for the perfect investment would be to
examine investor needs. If all those needs are met by the investment, then that
investment can be termed the perfect investment.

1.2. TYPES OF AN INVESTMENT AVENUE

Figure 1.1: Various Investment Alternatives

Figure 1.1 shows various investment alternatives which are explained

below. One can invest money in different types of instruments. These instruments
can be financial or non financial in nature. They are many factors that affect one`s
choice of investment. Millions of Indians buy Fixed Deposits, post office savings
certificates, stocks, bonds or mutual funds, purchase gold, silver, or make similar
Investments. They all have a reason for investing their Money. Let us first
understand the basics of some of some of the popular investment avenues.

1.3Non marketable financial assets: A good portion of financial assets is

represented by non marketable financial assets. These can be classified into the
following broad categories.

Bank deposits: The simplest of investment avenues, by opening a bank account

and depositing money in it one can make a bank deposit. There are various kinds
of bank accounts: current accounts, savings account and fixed deposit account.
The interest rate on fixed deposits various with the term of the deposit, in general
it is lower for fixed deposits for shorter term and higher for fixed deposits of longer
term. Bank deposits enjoy exceptionally high liquidity.

Post office savings account: A post office savings account is similar to a

savings bank account. The interest rate is percent for annum.

Post office time deposits (POTD`S): similar to fixed deposits of commercial

banks, POTD can be made In multiplies of 50 without any limit. The interest rates
on POTD`S are, in general, slightly higher than those on bank deposits. The
interest rate is calculated half-yearly and paid annually.

Monthly income scheme of the post office (MISPO): A popular scheme of the
post office, the MISPO is meant to provide regular monthly income to the
depositors. The term of the scheme is 6 years. The minimum amount of
investment is 1,000. The maximum investment can be 3, 00,000 in a single
account or 6, 00,000 in a joint account. The interest rate is 8.0 percent for annum,
payable monthly. A bonus of 10 percent is payable on maturity.

Kisan vikas patra (KVP): A scheme of the post office, for which the minimum
amount of investment is 1,000. There is no maximum limit. The investment
doubles in 8 years and 7 months. Hence the compound interest rate works out to
8.4 percent there is a withdrawal facility after 2 years 6 months.

National savings certificate: Issued at the post offices, national savings

certificate comes in denominations of 100, 500, 1000, 5000 and 10000. It has a
term of 6 years. Over his period Rs 100 becomes Rs. 160.1. Hence the
compound rate of return works out to 8.16 percent.

Company deposits: many companies large and small solicit fixed deposits from
the public. Fixed deposits mobilized by manufacturing companies are regulated by
the company law board and fixed deposits mobilized by finance company are
regulated by the reserve bank of India. The interest rates on company deposits
are higher than those on bank deposits, but so is risk.

Employee provided fund scheme: A major vehicle of savings for salaried

employees, where each employee has a separate provident fund account in which
both the employer and employee are required to contribute a certain minimum
amount on a monthly basis.

Public Provident Fund Scheme: One of the most attractive investment avenues
available in India. Individuals and HUFs can participate in this scheme. A PPF
account may be opened at any branch of State Bank of India or its subsidiaries or
at specified branches of the other public sector banks. The subscriber to a PPF
account is required to make a minimum deposit of 100 per year. The maximum
permissible deposit per year is 70,000. PPF deposits currently earn a compound
interest rate of 8.0 percent per annum, which is totally exempt from taxes.
1.4 Bonds: Bonds are fixed income instruments which are issued for the purpose
of raising capital. Both private entities, such as companies, financial institutions,
and the central or state government and other government institutions use this
instrument as a means of garnering funds. Bonds issued by the Government carry
the lowest level of risk but could deliver fair returns. Many people invest in bonds
with an objective of earning certain amount of interest on their deposits and/or to
save tax. Bonds are considered to be a less risky investment option and are
generally preferred by risk-averse investors. Bond prices are also subject to
market risk. Bonds may be classified into the following categories:

Government securities: Debt securities issued by the central government state

government and quasi government agencies are referred as gilt edge securities. It
has maturities ranging from 3-20 years and carry interest rate that usually vary
between 7 to 10 percent.

Debentures of private sector companies: Debentures are viewed as a mixture

of having a shareholding and a fixed interest loan. Debenture holders are normally
entitled to a return equivalent to a fixed percentage of their initial investment. The
security inherent in debentures makes them a safer investment than shares.

Preference shares: Investing in shares is safer and dividends are assured every
yearn Savings bonds.

1.5 Mutual funds: A mutual fund allows a group of people to pool their money
together and have it professionally managed, in keeping with a predetermined
investment objective. This investment avenue is popular because of its costefficiency, risk-diversification, professional management and sound regulation. There
are three broad types of mutual fund schemes classified on basis of investment
objective:

Equity schemes: The aim of growth funds is to provide capital appreciation over
the medium to long- term. Such schemes normally invest a major part of their
corpus in equities. Such funds have comparatively high risks. These schemes
provide different options to the investors like dividend option, capital appreciation,
etc. and the investors may choose an option depending on their preferences.
Growth schemes are good for investors having a long-term outlook seeking
appreciation over a period of time.

Debt schemes: The aim of income funds is to provide regular and steady income
to investors. Such schemes generally invest in fixed income securities such as
bonds, corporate debentures, Government securities and money market
instruments. Such funds are less risky compared to equity schemes. These funds
are not affected because of fluctuations in equity markets. However, opportunities

Of capital appreciation are also limited in such funds. The NAVs of such funds are
affected because of change in interest rates in the country. If the Interest rates
fall, NAVs of such funds are likely to increase in the short run and vice versa.
However, long term investors may not bother about these fluctuations.

Balanced schemes: The aim of balanced funds is to provide both growth and
regular income as such schemes invest both in equities and fixed income
securities in the proportion indicated in their offer documents. These are
appropriate for investors looking for moderate growth. They generally invest 4060% in equity and debt instruments. These funds are also affected because of
fluctuations in share prices in the stock markets. However, NAVs of such funds
are likely to be less volatile compared to pure equity funds.

1.6 Real Estate: Residential real estate is more than just an investment. There are
more ways than ever before to profit from real estate investment. Real estate is a
great investment option. It can generate an ongoing income source. It can also rise
in value overtime and prove a good investment in the cash value of the home or
land. Many advisors warn against borrowing money to purchase investments. The
best way to do this is to save up and pay cash for the home. One should be able to
afford the payments on the property when the property is vacant, otherwise the
property may end up being a burden instead of helping to build wealth.
1.7 Equity Shares: Equities are a type of security that represents the ownership in a
company. Equities are traded (bought and sold) in stock markets. Alternatively, they
can be purchased via the Initial Public Offering (IPO) route, i.e. directly from the
company. Investing in equities is a good long-term investment option as the returns
on equities over a long time horizon are generally higher than most other investment
avenues. However, along with the possibility of greater returns comes greater risk.
1.8 Money market instruments: The money market is the market in which short
term funds are borrowed and lent. These instruments can be broadly classified as:

Treasury Bills: These are the lowest risk category instruments for the short
term. RBI issues treasury bills [T-bills] at a prefixed day and for a fixed
amount. There are 4 types of treasury bills: 14-day T-bill, 91-day T-bill, 182day T-bill and 364-day T-bill.

Certificates of Deposits: After treasury bills, the next lowest risk category
investment option is certificate of deposit (CD) issued by banks and financial
Institution (Fl). A CD is a negotiable promissory note, secure and short term,
of up to a year, in nature. Although RBI allows CDs up to one-year maturity,
the maturity most quoted in the market is for 90 days.

Commercial Papers: Commercial papers are negotiable short-term

unsecured promissory notes with fixed maturities, issued by well-rated
organizations. These are generally sold on discount basis. Organizations
can issue CPs either directly or through banks or merchant banks. These
instruments are normally issued for 30/45/60/90/120/180/270/364 days.

Commercial Bills: Bills of exchange are negotiable instruments drawn by

the seller or drawer of the goods on the buyer or drawee of the good for the
value of the goods delivered. These are called as trade bills and when they
are accepted by commercial banks they are called as commercial bills. If the
bill is payable at a future date and the seller needs money during the
currency of the bill then the seller may approach the bank for discounting
the bill.

1.9 Life insurance policies: Insurance is a form of risk management that is

primarily used to hedge the risk of a contingent loss. Insurance is defined as
the equitable transfer of the risk of a loss, from one entity to another, in
exchange for a premium. An insurer is a company that sells insurance;
insured or the policyholder is a person or entity buying the insurance. The
insurance rate is a factor that is used to determine the amount which is to
be charged for a certain amount of insurance coverage, and is called the
premium. It can be classified as:

Money-back Insurance: Money-back Insurance schemes are used as

investment avenues as they offer partial cash-back at certain intervals. This
money can be utilized for children's education, marriage, etc.

.Endowment Insurance: These are term policies. Investors have to pay the
premiums for a particular term, and at maturity the accrued bonus and other
benefits are returned to the policyholder if he survives at maturity.

1.10 Bullion Market: Precious metals like gold and silver had been a safe haven for
Indian investors since ages. Besides jeweler these metals are used for investment
purposes also. Since last 1 year, both Gold and Silver have highly appreciated in
value both in the domestic as well as the international markets. In addition to its
attributes as a store of value, the case for investing in gold revolves around the role
it can play as a portfolio diversifier.
1.11 Financial Derivatives: Derivatives are contracts and can be used as an
underlying asset. Various types of Derivatives are:

Forwards: A forward contract is a customized contract between two entities, where

settlement takes place on a specific date in the future at today's pre-agreed price.

Futures: A futures contract is an agreement between two parties to buy or sell an

asset at a certain time in the future at a certain price. Futures contracts are special
types of forward contracts in the sense that the former are standardized exchange
Traded contracts

Options: Options are of two types - calls and puts. Calls give the buyer the right but
not the obligation to buy a given quantity of the underlying asset, at a given price on
or before a given future date. Puts give the buyer the right, but not the obligation to
sell a given quantity of the underlying asset at a given price on or before a given
date.

Swaps: Swaps are private agreements between two parties to exchange cash flows
in the future according to a prearranged formula. They can be regarded as portfolios
of forward contracts. E.g. Currency swaps, interest swaps.

CHAPTER 2
RESEARCH
METHODOLOGY

2.1 STATEMENT OF THE PROBLEM

This study on investor's behavior is an attempt to know the perception and the
characteristics of the investors so as to understand their preference with respect
to their investments. The main focus of the study is to discover the influence of
Demographic factors like gender and age on risk tolerance level of the investor.
The study mainly concentrates on the factors that influence an individual
investor before making an investment. It also studies the various patterns in
which investors like to invest their money based on their risk tolerance level and
other demographic factors like income level, occupation etc.
2.2 REVIEW OF LITERATURE
The literature review section examines the importance of research
studies, company data or industry reports that serve as a foundation for the
setup of study. The research dimension of the related literature and the relevant
information begins from an explanatory perspective, approaching towards
specific studies which do related to judge the limitations and informational gaps
in data from the secondary sources. This analysis may reveal conclusions from
past studies to realize the reliability of the secondary sources and their
credibility. This in turn enables one to rely on a comprehensive review for the
study.

2.3 NEED FOR STUDY

Investing money is a crucial and deciding the avenues where to invest needs a
lot of planning. In India people are more conservative and hence prefer
investments that are less risky. Similarly there are other demographic factors
like age, income level, gender which affect their decision. As the availability of
financial products increase, perception of investors towards such avenues
changes over a period of time. It becomes important for a marketer to
understand the perception of investors towards investment avenues to

Successfully pitch the product. If the marketer is able to understand the mindset
of investor towards a product then he/she will be in a position to market the
product. This report attempts to study the behavior of Indian investors while
making an investment. Hence the need for this study arises to understand what
exactly an Indian investor thinks before investing his/her money and how much
risk he/she is willing to take.

2.4 OBJECTIVES OF THE STUDY

1 Primary Objective

To study the investors perception on investments

To study the objectives of investment plan of an investors

To study the demographic information of investors

2 Secondary Objectives

To know the preferred investment avenues of investors

To identify the preferred sources of information influencing investment

decisions

To understand the risk tolerance level of the investors and suggest a

suitable portfolio

To study the dependence/independences of the demographic factors

(Gender, Age, income level) of the investor and his/her risk tolerance
level.

2.5 HYPOTHESIS
A hypothesis describes the relationship between or among variables. A
good hypothesis is one that can explain what it claims to explain, is testable
and has greater range, probability and simplicity than its rivals. There are two
approach of hypothesis testing:

1) Classical or sampling theory statistics and 2) The Bayesian approach

In the present dissertation chi square test has been used to find out the
dependence/independence of various factors that influence investment
decision. Hypothesis has been found between following factors:

Gender and risk tolerance of respondents

Age and preferred investment avenues by the respondents

Income and investment avenues preferred by the respondents

Age of respondents and time horizon for investment

Age and risk tolerance of the respondents

2.6 RESEARCH DESIGN

Sample description
The sample was drawn from the population of the potential investors from
Visakhapatnam. A survey was conducted to understand the investor's behavior
with the help of questionnaire. It was carried out with a sample size of 100
investors.

2.7 TOOLS OF DATA COLLECTION

Primary data: The data has been collected directly from respondent with the
help of structured questionnaires.

Secondary data: The secondary data has been collected from various
magazines, journals, newspapers, text books and related websites

2.8 METHOD OF ANALYSIS

Statistical techniques like, simple percentage method are used to analyze
and

interpret

raw

data.

Hypothesis

was

used

to

show

the

dependency/independency of various factors.

After collecting the data its variable having defined character, it was
tabulated and analyzed with the help of charts and graphs in Microsoft Excel.

2.9 LIMITATIONS OF STUDY

Sample size is small because of the time constraint

Respondent may be hesitant to provide their investment details

Behavior of investors doesn't remain same for long time

Time for the study is limited

CHAPTER3
INDUSTRY PROFILE

3.1 INDIAN FINANCIAL MARKET

Money always flows from surplus sector to deficit sector. That means
persons having excess of money lend it to those who need money to fulfil their
requirement. Similarly, in business sectors the surplus money flows from the
investors or lenders to the businessmen for the purpose of production or sale of
goods and services. So, we find two different groups, one who invest money or
lend money and the others, who borrow or use the money.
The financial markets act as a link between these two different groups. It
facilitates this function by acting as an intermediary between the borrowers and
lenders of money. So, financial market may be defined as 'a transmission
mechanism between investors (or lenders) and the borrowers (or users)
through which transfer of funds is facilitated'. It consists of individual investors,
financial institutions and other intermediaries who are linked by a formal trading
rules and communication network for trading the various financial assets and
credit instruments.
Financial market talks about the primary market, FDIs, alternative
investment options, banking and insurance and the pension sectors, asset
management segment as well. India Financial market happens to be one of the
oldest across the globe and is the fastest growing and best among all the
financial markets of the emerging economies. The history of Indian capital
markets spans back 200 years, around the end of the 18th century. It was at
this time that India was under the rule of the East India Company. The capital
market of India initially developed around Mumbai; with around 200 to 250
securities brokers participating in active trade during the second half of the 19th
century.

3.2 CLASSIFICATION OF FINANCIAL MARKETS

Figure 3.1: Classification of financial markets

Figure 3.1 shows the classification of financial markets. From this figure we
can interpret that there are different ways of classifying financial market.

One is to classify financial market by the type of financial claim. The debt
Market is the financial market foe fixed claims (debt instrument) and the
Equity market is the financial market for residual claims (equity
instruments)

The second way is to classify financial markets by the maturity of claims.

The market for short term financial claims is referred to as the money
market and the market for long term financial claims is referred to as the
capital market.

The third way to classify financial markets is based on whether the claims
represent new issues or outstanding issues. The market where issues sell
new claims is referred as primary market and the market where issues sell
outstanding claims is referred as secondary market.

The fourth way to classify financial markets is by the timing of delivery. A

cash or spot market is one where the delivery occurs immediately and
forward or futures markets are those markets where the delivery occurs at a
pre determined time in future.

The fifth way to classify financial markets is by the nature of its

organizational structure. An exchange traded market is characterized by a
centralized organization with standardized procedures and an over the
counter market is a decentralized market with customized procedures.
These markets are further explained in detail.

3.3 MONEY MARKET

The money market is a market for short-term funds, which deals in
financial assets whose period of maturity is up to one year. It should be noted
that money market does not deal in cash or money as such but simply provides
a market for credit instruments such as bills of exchange, promissory notes,
commercial paper, treasury bills, etc. These financial instruments are close
substitute of money. These instruments help the business units, other
organizations and the Government to borrow the funds to meet their short-term
requirement.
Money market does not imply to any specific market place. Rather it
refers to the whole networks of financial institutions dealing in short-term funds,
which provides an outlet to lenders and a source of supply for such funds to
borrowers. Most of the money market transactions are taken place on
telephone, fax or Internet. The Indian money market consists of Reserve Bank
of India, Commercial banks, Co-operative banks, and other specialized financial
institutions. The Reserve Bank of India is the leader of the money market in
India. Some Non-Banking Financial Companies (NBFCs) and financial
institutions like LIC, GIC, UTI, etc. also operate in the Indian money market.

3.4 CAPITAL MARKET

Capital Market may be defined as a market dealing in medium and longterm funds. It is an institutional arrangement for borrowing medium and longterm funds and which provides facilities for marketing and trading of securities.
So it constitutes all long-term borrowings from banks and financial institutions,
borrowings from foreign markets and raising of capital by issue various
securities such as shares debentures, bonds, etc.
The market where securities are traded known as Securities market. It
consists of two different segments namely primary and secondary market. The
primary market deals with new or fresh issue of securities and is, therefore,
also known as new issue market; whereas the secondary market provides a
place for purchase and sale of existing securities and is often termed as stock
market or stock exchange.

3.4.1 PRIMARY MARKET

The Primary Market consists of arrangements, which facilitate the procurement
of long-term funds by companies by making fresh issue of shares and
debentures. You know that companies make fresh issue of shares and/or
debentures at their formation stage and, if necessary, subsequently for the
expansion of business. It is usually done through private placement to friends,
relatives and financial institutions or by making public issue. In any case, the
companies have to follow a well-established legal procedure and involve a
number of intermediaries such as underwriters, brokers, etc. who form an
integral part of the primary market. You must have learnt about many initial
public offers (IPOs) made recently by a number of public sector undertakings
such as ONGC, GAIL, NTPC and the private sector companies like Tata
Consultancy Services (TCS), Biocon, Jet-Airways and so on.

3.4.2 SECONDARY MARKET

The secondary market known as stock market or stock exchange plays
an equally important role in mobilizing long-term funds by providing the
necessary liquidity to holdings in shares and debentures. It provides a place
where these securities can be encased without any difficulty and delay. It is an
organized market where shares and debentures are traded regularly with high
degree of transparency and security. In fact, an active secondary market
facilitates the growth of primary market as the investors in the primary market
are assured of a continuous market for liquidity of their holdings. The major
players in the primary market are merchant bankers, mutual funds, financial
institutions, and the individual investors; and in the secondary market you have
all these and the stockbrokers who are members of the stock exchange who
facilitate the trading.

CHAPTER 4
ANALYSIS
AND
INTERPRETATION

Data analysis and interpretation

Table 4.1: Gender wise classification of Respondents
Gender

Number of

Percentage (%)

Respondents
Male
Female
Total

83
17
100

83
17
100

Interpretation:
Table 4.1 shows the Gender wise classification of Respondents. It was found
that 83% of the Respondents are men and the rest are females. Generally
males bear the financial responsibility in Indian society, and therefore they have
to make investment decisions to fulfill the financial obligations.
On the other hand females are not involved in such activities as majority of
them are busy with their household activities. Also there are very less houses
which depend on a female income most of them are male dominated
households. Hence investment activities are more seen in males than females.

Clasification of respondendts on basis

of gender
male

female

17%

83%

Table 4.2: Age wise classification of Respondents

Age( in years)
Below 25years
25-35years
35-45years
above 45years
Total

Number of

Percentage (%)

Respondents
12
20
44
24
100

12
20
44
24
100

Interpretation: Table 4.2 shows the Age wise classification of Respondents. When it comes
to
age, it was found that 12% are young i.e. of age group below 35 years and 20%
of them are in the age group of 25 to 35. Other than these 44% of them belong
to age group of 35 to 45 and rest them belongs to age group above 45. This
shows that age group of 35 years an above are more interested in investments
while people below 25 years make less investments and above age of 45 and
would start planning for retirement.

Clasification of respondents on the

basis of age
25-35 years

35-45 years

27%

23%

50%

Above 45 years

Table 4.3: Classification of Respondents on the basis of their Marital Status

Marital

Number of

Percentage (%)

status
Single
Married
Total

Respondents
22
78
100

22
78
100

Interpretation:
Table 4.3 shows classification of Respondents on the basis of their Marital
Status. It was found that marital status of 78% of the Respondents was found to
be married and the rest 22% are unmarried. This is because a married
individual is considered to have dependents so they are involved in making
financial investments. Whereas Respondents who are unmarried mostly invest
to generate wealth but they do not have any financial responsibility.

clasification of respondendts onthe

basis of marital status
Single

Married

22%

78%

Table 4.4: Classification of Respondents on basis of Occupation

OCCUPATION
Business
government employee
home maker
private sector
self employee
student

NUBBER OF RESPONDENDTS
13
30
3
38
15
1

Grand Total

100

Interpretation:
Table 4.4 shows classification of Respondents on basis of Occupation. From
the above graph indicates that 38% of the Respondents are from the private
sector, 30% of them are government employees, 15% of them are self
employees and rest is working in other sectors. Respondents who are
employed in government and private sectors they are investing more.

Clasification of respondendts on basis of

occupation
38

40

business

30
30
20
10

government employee
15

13

home maker
private sector

Total

sely employee
student

Table 4.5: Classification of Respondents on basis of Annual Income

Annual Income

Number of

Percentage (%)

Below 2 Lakhs
2 Lakhs - 5 Lakhs
5 Lakhs - 7 Lakhs
7 Lakhs 10 Lakhs
above 10 Lakhs
Total

Respondents
10
53
21
6
6
100

14
53
21
6
6
100

Interpretation:
Table 4.5 shows the classification of Respondents on basis of Annual
Income. It was found that 53% of Respondents with annual earnings
between 2to5 Lakhs are interested in investments because their savings are
more which they invest to generate wealth, 10% of them are earning below
2Lakhs annually, the other 21% are earning between 5 to 7 Lakhs in a year,
6% of them earn 7 to 10 Lakhs in an year but there were 6% of respondents
with annual income above 10 Lakhs per year.

Clasification of respondendts on the

basis of income level
Series1

53%

21%
10%

Below 2 lakhs

2 lakhs to 5
lakhs

5 lakhs to 7
lakhs

6%

6%

7 lakhs to 10
lakhs

Above 10 lakhs

Table 4.6: Classification of Respondents on basis of Education Level.

Education level
th

10 class
Intermediate
Graduate
PG
And above
Total

Number of

Percentage (%)

Respondents
2
2
41
29
26
100

2
2
41
29
26
100

Interpretation:
Table 4.6 shows the classification of Respondents on basis of Education Level. It
indicates that 41% of the Respondents covered in the study are graduates;
29% Respondents are post graduates and 26% of the Respondents are above
qualification. Investors with graduate degree would be more exposed to market
situation which make them more interested in investments. Also post graduates
would have fair knowledge about investments. Whereas Respondents who are
undergraduates mostly do not invest due to unfamiliarity to investment avenues
or unavailability if information about investments.

Clasification of respondendts on the

basis of education level
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%

41%
29%

2%

2%

26%

Series1

Table 4.7: Classification of Respondents on basis of Preferred Investment

Avenues (combination of investments)
Investment avenues

Number of

Percentage (%)

Respondents
Fd`s
Ulip`s
Stock market

67
19
28

24.18
6.85
10.10

Derivatives
Real estate

3
6

1.08
2.16

Gold
Ppf
Mutual funds
Post office MIS
bonds

45
29
70
8
2

16.24
10.46
25.27
2.88
0.72

Total

100

Interpretation: Table 4.7 shows classification of Respondents on basis of Preferred

Investment
Avenues. It can be concluded that the Respondents prefer Mutual
Funds`/FD`S/GOLDs avenues than PPF schemes next to stock market, Ulips
and derivatives. It was interesting to know that Indian individual investors still
prefer to invest their surplus amount in risk free investment avenues next to
Fds schemes. It confirms that Indian investors are conservative investors.

Clasification of respondendts on basis of

prefered investment
Fd`s

Ulip`s

Stock market

Derivatives

Real estate

Gold

Ppf

Mutual funds

Post office MIS

Bonds

3% 1%
24%

25%

7%
11%

10%

16%
2% 1%

Table 4.8: Classification of Respondents investing of top 3 investments

Investment avenues
Fd`s
Gold
Mutual funds
Total

Number of

Percentage (%)

Respondents
79
62
61
100

39.11
30.19
30.20
100

Interpretation: table4.8 shows that classification of respondents investing of top 3

investments. It can be concluded that investors preferring mostly these three
investments as a source of income or profits for their future. Fd`s are most preferred
investment in all the time.

Clasification of respondendts on basis

of top 3 investments
Fd`s

Gold

30%

Mutual funds

40%

30%

Page 33

Table 4.9: Classification of Respondents on the basis of Factors Influencing an

Investment Decision
Factors influencing an
investment decision
Returns
Minimum amount
Risk
Locking period
Liquidity
Other factors
total

Number of

Percentage (%)

Respondents
39
16
29
0
14
2
100

39
16
29
0
14
2
100

Interpretation: Table 4.9 shows the classification of Respondents on the basis of Factors
considered before making an Investment. Out of all majorities of the Respondents i.e.
39% prefer to invest where there is high return. 29% of the Respondents look for risk
involved in the investment, 16% of the Respondents invest in those avenues wherein
they will get minimum amount. 14% of Respondents look for liquidity and the rest look
for ease with which the investment can be made.

Clasification of respondendts on basi

of factors influence on investment
options
Returns

Minimum amount

Risk

Locking period

Liquidity

Other factors

0%

14%

2%
39%

29%

16%

Table 4.10: Classification of Respondents on the basis of Demate a/c Holders

Demate a/c holders

Number of

Percentage (%)

Yes
No
Total

Respondents
79
21
100

79
21
100

Interpretation: classification of respondents on the basis of demates a/c

holders. It says that 79% of the people are having demate a/c`s, 21% of the
people are not having the demate a/c`s, it tells that most of the people are
investing their money in the mutual funds and stock market.

Clasification of respondendts on basis

of Demate a/c`s
Yes

No

21%

79%

Table 4.11: Classification of Respondents on basis of managing of their investments.

Managing of their
investments
Individual
Agent, mediator
Financial planner
others
Total

Number of

Percentage (%)

Respondents
25
59
16
0
100

25
59
16
0
100

Interpretation:
Table 4.11 shows classification of Respondents on basis Influence on Investment
Decision. It was found that Respondents are mostly depending upon expert advice and
help while making investment decisions. However, the majority of the Respondents i.e.
59% make investment decisions with the help and advice from experts; only 25%
investors are making their investments alone. 16% of the investors taking the help of
financial planner.

Clasification of respondendts on basis

of managing of their investments
Individual

Agent, Mediater

Financial planner

0%
16%

59%

25%

Others

Table 4.12: Classification of Respondents on the basis of Time Horizon for

Investment

Investment time horizon

Number of

Percentage (%)

Below 1year
1 to 3years
3 to 5 years
5 to 10 years
Above 10 years
Total

Respondents
2
23
57
14
4
100

2
23
57
14
4
100

Interpretation: Table 4.12 shows the classification of Respondents on the basis of Time
Horizon
For Investment. From the above table we can interpret that majority of the
Respondents i.e. 57% of the total sample invest for 3 to 5 year, 23% of them
invest for time period of 1 to 3 years, 14% of them invest for period of 5 to 10
years and the 4% of them invest for period of above 10 years 2% of them invest
for less than 1 year. It is found that most of the Respondents want to make
money quickly hence they invest for 3to5 years period.

Clasification of respondedts on basis

of Investment time Horizon
57%

60%
50%
40%

23%

30%
10%

Series1

14%

20%

4%

2%

0%
Below 1
year

1 to 3
years

3 to 5
years

5 to 10
years

Above 10
years

Figure 4.13: Classification of Respondents on basis of Risk Tolerance Level

Risk taking capacity

Number of

Percentage (%)

High
Medium
Low
No risk safe
Total

Respondents
7
78
13
2
100

7
78
13
2
100

Interpretation: Table 4.13 shows the classification of Respondents on basis of Risk

Tolerance
Level. From the table 4.13 we can conclude that 78% of Respondents are
preferring portfolio with medium risk, 7% of them prefer highly risky portfolio
with high returns and the 13% of them prefer portfolio with low risk. Indian
investors are still conservative in nature and avoid taking huge risk while
investing their funds.

Clasification of respondendts on basis

of risk tolerance level
High

Mediam

Low
2% 7%

13%

78%

No risk& Safe

Figure 4.14: Classification of Respondents on basis of investing in mutual funds.

Mutual funds options

Number of

Percentage (%)

Debt funds
Growth funds
Balanced funds
Total

Respondents
20
45
35
100

20
45
35
100

Interpretation: classification of respondents on basis of investing in mutual

funds. It can be concluded that 45% most of the investors are investing their
money in growth funds, 35% of the people are investing in the balanced funds,
20% of the investors are investing in the debt funds.

Clasification of respondendts on basis

of mutual funds options
50%
40%
30%
45%

20%
10%

35%
20%

0%
Debt funds

Growth funds

Balanced funds

Series1

Figure 4.15: Classification of Respondents on basis of source of investment

information.
Sources of Investment

Number of

Percentage (%)

Information
News Paper/ Magazines
Electronic Media (T.V)
Peer group/ Friends
Broker/ Financial Advisor
Internet
Total

Respondents
2
4
3
58
33
100

2
4
3
58
33
100

Interpretation: Table 4.15 shows the classification of Respondents on basis of

Sources of Investment Information. Most of the Respondents get their
information related to investment through broker/financial advisor next to
internet This could be because internet is easy and readily accessible
investment information when compared to the other sources of investment
information whereas broker/financial advisor provide the useful information
about investment.

Clasification of respondendts on basis

of investment information
70
60
50
40
30
20
10
0

59
32
4

Total

Figure 4.16: Classification of Respondents on basis of most attractive investment in

today.
Most attractive
investment

Number of

Percentage (%)

Respondents

Fd`s
Ulip`s
Stock market

19
13
5

19
13
5

Real estate

Gold
Mutual funds
total

26
36
100

26
36
100

Interpretation: classification of respondents on basis of most attractive

investment in today. It concluded that mutual funds are the most attractive
investment in today and the gold, FDs, Ulips also getting more attractive.

Clasification of respondendts on basis

of most attractive investment today
Fd`s

Ulip`s

Stock market

Real eatate

19%
36%
13%

26%

5%
1%

Gold

Mutual funds

Hypothesis
The relationship between important factors has been analyzed with the
help of chi-square test. The following pairs have been analyzed.
A. Gender and risk tolerance: Gender and risk tolerance level of an
investor are two independent attributes. The relationship between the
gender and risk tolerance of investors can be presented with the
following table and diagram.

Figure 4.17: relationship between gender and risk tolerance of

respondents.
RISK APPEITE&
GENDER
High
F
M
Grand Total

low medium No risk safe

3
13
1
11
64
1
14
77
2

7
7

Grand
Total
17
83
100

Interpretation: Table 4.17 shows the relationship between gender and risk
tolerance of respondents.

100
50

100
50

84.52
14.45

0
H&M

76.5

Series1
L & NR

Series1
23.52

0
f

H & M L & NR

HI: Is not equal values

HO: is an equal value
Hypothesis-I: Both are showing interest take H&M risk
This data shows that this hypothesis can be accepted. By the research both
variables are showing difference. HI Is accepted

The relationship between Age and time horizon of investments

b) Age and time horizon: the relationship between age and time horizon of
investment can be presented with the following table and diagram.

Figure 4.18: Relationship between age and time horizon of investments

TIME HORIZON
FOR
INVESTMENTS&
AGE
25to35
35to45
above45
below25
Grand Total

1to3years
5
8
10
23

3to5years 5to10years above10 below1year Grand Total

12
2
1
20
29
6
1
44
14
6
3
1
24
2
12
57
14
4
2
100

Interpretation: Table 4.18 shows the relationship between age of respondents

and time horizon for investment.

Below 35Age

Above 35Age

100
50

100
50

87.5

23.54

Series1

below5ye above5ye

93.75

Series1
6.25

0
below5ye

above5ye

HI: Is not equal values

HO: Is equal values
Hypothesis- 1: Two age group people are preferred to invest their money
below 5years time period. HI Is accepted

The relationship between age and risk tolerance level of investors

a) Age and risk tolerance: The relationship between age and risk tolerance of
the investors can be presented with help of following table and diagram.

Figure4.19:

Relationship between age and risk tolerance of

the

respondents.
Count of RISK
APPEITE

Column Labels

Row Labels
25to35
35to45
above45
below25
Grand Total

high
1
2
4
7

no
Grand
low medium risk&safe
Total
5
14
20
5
35
2
44
3
17
24
1
11
12
14
77
2
100

Table 4.19 shows the relationship between age and risk tolerance of the
respondents.

Below35Age

Above35Age

100
50

100
50

81.25

Series1
18.75

0
H&M

L&NR

85.29

Series1
14.71

0
H&M

L&NR

HI: Is not equal values

HO: Is equal values
Hypothesis- 1: two age group people are preferred to take H&M risk. HI Is
accepted

CHAPTER 5
FINDING`S &
SUGGESTION

5.1 FINDINGS
In the present project, an attempt is made to study the investment
characteristics of Indian investors. Based on the data collected and analyzed
about perception on investment preferences of the investors, the following
findings are given.

It is found that most of the investors belong to the age group of 35 years and 35
to 45 years indicating youngsters and the middle aged people are predominant
in the financial investment sector.

Most of the investors possess higher education qualification like post

graduation and above.

Majority of respondents are investing who are government employed and

private sector people.

As per the general perception, it is found respondents with combination of

middle and higher income groups like income above 5 Lakhs were found to
invest more because of their large portions of savings.

The investor's taking the decisions through broke/mediator.

Investors usually invest their funds so as to earn wealth.

Investors prefer to invest their funds in avenues like Mutual Funds /FD`s/Gold
next to insurance and Ppf.

With reference to the objective of investment, most of the respondents

preferred returns, followed by risk, minimum amount, and liquidity.
Most of the investors get their information related to investment through
broker/mediator while others prefer to get information from internet and
electronic media.
Most of the investors prefer to invest in to medium risky investments. Very less
proportion of respondents preferred risky portfolios.
Through hypothesis research found that gender and risk tolerance level of
investors have some difference, it tells that male and female investors are
referred medium and high risk investments.

Hypothesis for Age and time horizon of investors found that two are groups
are preferred the investment time horizon of 5years.

Hypothesis for age and risk tolerance of investors found that two age groups
of below35 and above35 are preferred to take medium, high risk

5.2 SUGGESTIONS
It is suggested that investors are to be educated about various investment
avenues, selection of schemes based on their objectives, their risk
tolerance, importance of diversification.

It is suggested that the schemes can be designed based on matching the

objectives of the investment.

The primary objective of most of the respondents is maximizing return.

Most of the respondents are interested to invest their money through online
mode.

All the investors prefer to maximize their returns and minimize the risk.
Even now fixed deposits and insurance schemes are more famous among
Indian investors. It is suggested that the investors have carefully construct
their portfolios after doing fundamental analysis and through proper
diversification.

It always better that the investors follow a systematic investment process to

invest their money. Investment avenues are to be chosen based on their
objectives and risk preferences.

Page 47

CHAPTER 6
CONCLUSION

The conclusion of the project is that it is found that investors are preferred to
invest their money in medium risk investments and the behavior, perception of
investors is changing based on time and

the type of avenues offered by

investment companies.
This project can be useful to the investors to understand the various
investments and risks involved in those investments and which investment is
give more returns and which is more attractive investment likewise many other
benefits are their for investors to the investors.

CHAPTER7
BIBLOGRAPHY

BIBLIOGRAPHY
Books

C K Kothari, Research Methodology, Wishwa Prakashan Publishing, 1996,

Second Edition

Herbert B. Mayo, Investments, Chennai Micro Print pvt. Ltd Chennai, 2006

Punithavathi Pandyan, Security Analysis and Portfolio Management, Tata

Mc Graw-Hill Publishing Company Ltd , New Delhi,2008 Third Edition

Prasanna Chandra, Investment Analysis And Port Folio Management, Tata

Mc Graw-Hill Publishing Company Ltd , New Delhi,2008

Prasanna Chandra, Financial Management, Tata Mc Graw -Hill Publishing

Company Ltd , New Delhi2007

Websites Reference

www.indiafinance&investmentguide.com

www.wikipedia.org

www.nseindia.com

www.capitalmarkets.com

www.bseindia.com

www.financeindia.org/article

CHAPTER8
ANNEXURE

ANNEXURE

I am V.Venkatrao student of PGDM from Center for management and

technology, Visakhapatnam, conducting survey on investors perception and
selection behavior on investment avenues as a part of my study.

RESEARCH PROJECT ON INVESTMENT OPTIONS

PART-A
1. Name :
3. Age :

2. Gender :
Below 25

4. Marital status:

6. Occupation :
Sector

25 to 35
Single

Married

Government Employee
Businessman

7. Your annual income :

above10
8. Education level :
above

35 to 45

Female

above 45

5. Family size : Children :

Education:
Self employee

Student

Private

Others (specify)..

Below 2lakhs

Xth class

Male

2 to 5

intermediate

PART-B
1. Which of the following have you invested in?
FD`s
ULIP`s
Stock Market
Gold
PPF
Mutual Funds

5 to 7

graduate

Derivatives
Post office MIS

7 to 10

pg

Real Estate
Bonds

and

2. Are you aware of the following investment options available in market? Mark top 3
options?
FD`s
ULIP`S
Stock Market
Derivatives
Real Estate
Gold
PPF
Mutual Funds
Post office MIS
Bonds
3. Which factors influence your investment option?
Returns
Minimum Investment Amount
Liquidity

Risk

Locking period

Other Factors Specify

Rank 1,,,,,.5

4. Do you have a Demate Account?

Yes
No
5. Please mention the list of companies you have invested in?
MF`s
Shares
Insurance
FD`s
a) .... . .
b) . .. .
c) . .. .
d) . .. .
6. How do you manage your investments?
Individual
Agent or Mediator
Financial Planner
Any others specify.
.
7. What is your time horizon of most of your investments?
Below 1year
1 to 3years
3 to 5years
above 10

5 to 10years

8. According to you what is the risk involved in these investments?

ULIP`s
1..,,,,5
Share Market 1..,,,,.5
Mutual Funds 1..,.,,,5
Real estate
1,,,.,..5
9. If you want to invest in mutual funds, which option do you prefer? Which option did
you invested in?
Debt Fund`s

Growth Fund`s

Balanced Funds

10. Which source do you prefer to get investment information?

News Papers/Magazines
Electronic Media (TV)
Broker/Financial Advisor
Internet

Peer`s/Friend`s

11. Which of the risk factors influence the returns on investments in general?

12. Have you invested in fixed deposit`s? Why?

13. What is your risk appetite?

High
Medium

Low

No risk/Safe Investment

14. Which of the investment avenue is attractive to you now-a-days?