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FACTOR AFFECTNG SELECTION OF INVESTMENT TOOLS FOR PEOPLE IN INDIA

Table of Contents

SNo. 1 2 3 4 5 6 7 8 9

Content Executive summary Preface Introduction Literature Review Research methodology Analysis and Interpretation Findings, conclusion and limitations Bibliography Annexure

Page No. 1-2 3 4-30 31-38 39-42 43-68 69-74 75-76 77-79

EXECUTIVE SUMMARY The project shows the relationship between investment made and the reasons behind preferring the investment pattern by Indian investors and also to find out the relationship between investment Tools and the Factors affecting the investors investment decision. This study would provide us the significance of various investment tools available in Indian markets in the opinion of investors. The Objectives of the study are: - To determine the preference of investors for various investment options. To determine the factor affecting purchasing decision for various investment options. The study depicts that every salaried person invest in one of these investment tools. Primary objective of study is to determine the factors that affect the selection of investment tools. The study would provide us the knowledge of the reasons opted by investors while opting for any investment pattern and the factors that affect the selection of investment tools.

INTRODUCTION The research study aims to find out the relationship between investment made and the reasons behind preferring the investment pattern by Indian investors and also to find out the relationship between investment Tools and the Factors that affecting the investors investment decision. The whole research study will be done with help of primary sources of data by personal interviews and using questionnaires. This study would provide us the significance of various investment tools available in Indian markets in the opinion of investors.

What is Investment?

Investment is the commitment of money or capital to purchase financial instruments or other assets in order to gain profitable returns in form of interest, income, or appreciation of the value of the instrument. It is related to saving or deferring consumption. Investment is involved in many areas of the economy, such as business management and finance no matter for households, firms, or governments. An investment involves the choice by an individual or an organization such as a pension fund, after some analysis or thought, to place or lend money in a vehicle, instrument or asset, such as property, commodity, stock, bond, financial derivatives (e.g. futures or options), or the foreign asset denominated in foreign currency, that has
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certain level of risk and provides the possibility of generating returns over a period of time.

Investment comes with the risk of the loss of the principal sum. The investment that has not been thoroughly analyzed can be highly risky with respect to the investment owner because the possibility of losing money is not within the owner's control. The difference between speculation and investment can be subtle. It depends on the investment owner's mind whether the purpose is for lending the resource to someone else for economic purpose or not.

The term "investment" is used differently in economics and in finance. Economists refer to a real investment (such as a machine or a house), while financial economists refer to a financial asset, such as money that is put into a bank or the market, which may then be used to buy a real asset. As referred earlier investment refers to acquisition of some assets. It is also means the conversion of money into claims on money and use of funds for productive and income earning assets. In essence, its means the use of funds for productive purpose, for securing some objectives like income, appreciation of capital or capital gains, or for further production of goods and services with the objective of securing profits.

Investment activity involves the use of funds or savings for further creation of assets or acquisition of existing assets.

In this study four investment tools are considered namely Mutual Fund, Bank F/Ds, Real Estate, Gold and other options. This study measuring the affect of factors affecting investors perception towards these investment options. Various factor affect the selection of investment tools like Risk, Return, Capital appericiation,etc. According to the affect of these factors investors choose investment avenue. Every investor analyse the features of investment tools before making investment in it. For example:-

Table 1:- Features of Investment Avenues Particulars Risk Return Capital appr. Equity Shares Debentures Bank Deposits Public P.F. Life Nil Nil Nil Nil Low Low Low Low Moderate Moderate Low Low High Low Very Low Very Low Nil High Nil Nil High Low High High High Marketability Tax benefits

Insurance Real Estate Low Low High in Moderate Change according to rules Gold Silver and Low Nil High in Moderate Nil

long term

long term

Theories of investment

The theories of investment date back to Keynes (1936) who first advocated an independent investment function in the economy. The central feature of Keynesian analysis is the observation that savings and investment must be identical ex post but there is no reason why ex-ante savings should equal ex-ante investment. Since the era of Keynes, there have been several hypotheses concerning macroeconomic variables that play a decisive role in explaining investment behavior. Keynesians have traditionally favored the accelerator theory of investment while disregarding the role of factor costs. Jorgenson (1971) and others have formulated the neoclassical approach which is a version of the flexible accelerator model. In this approach, the desired or optimal capital stock is proportional to output and the user cost of capital (which in turn depends on the price of capital goods, the real rate of interest, the rate of depreciation and the tax structure). In Tobin's "Q" theory of investment (which is also a neoclassical theory), the ratio of the market value of the existing capital stock to its replacement cost (the Q ratio) is the main force driving investment. More recent literature has introduced an element of uncertainty into investment theory due to irreversible investment (Pindyck, 1991). A recent but rapidly growing literature has shifted the analytical focus to the adjustment costs implied by the acquisition and installation of capital emphasizing the irreversible nature of most fixed investment project (Dixit and Pindyck, 1994).

The argument is that since capital goods are often firm-specific and have low resale value, disinvestment is more costly than positive investment. According to this theory, the value of the unit must exceed its purchase and installation cost by an amount equal to the value of keeping the investment option alive. Conventional investment theories focused on different variants of the cost of capital. These theories provided useful insights about the decision to invest but failed to fully consider the following three main features of investment decisions (Dixit and Pindyck, 1994): (a)The partial or complete irreversibility of most investment decisions - once the capital stock is installed; it cannot be put to a new use without incurring substantial economic cost. (b)Most investment decisions face inherent uncertainty regarding future benefits and costs- the best investors can do is to attach (subjective) probabilities to the net returns of different investment projects. (c)Investors can control the timing of investment waiting for relevant information that can reduce the uncertainty surrounding investment. These crucial features have led to a new option to buy an asset at different points in time, balancing the value of waiting with the opportunity cost of postponing investment decisions.

VARIOUS INVESTMENT TOOLS Mutual Fund Bank F/D Gold Real Estate etc.

MUTUAL FUND Mutual Fund is an instrument of investing money. Nowadays, bank rates have fallen down and are generally below the inflation rate. Therefore, keeping large amounts of money in bank is not a wise option, as in real terms the value of money decreases over a period of time. One of the options is to invest the money in stock market. But a common investor is not informed and competent enough to understand the intricacies of stock market. This is where mutual funds come to the rescue.

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A mutual fund is a group of investors operating through a fund manager to purchase a diverse portfolio of stocks or bonds. Mutual funds are highly cost efficient and very easy to invest in. By pooling money together in a mutual fund, investors can purchase stocks or bonds with much lower trading costs than if they tried to do it on their own. Also, one doesn't have to figure out which stocks or bonds to buy. But the biggest advantage of mutual funds is diversification. Diversification means spreading out money across many different types of investments. When one investment is down another might be up. Diversification of investment holdings reduces the risk tremendously. On the basis of their structure and objective, mutual funds can be classified into following major types:

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Closed-end funds A closed-end mutual fund has a set number of shares issued to the public through an initial public offering.

Open-end funds Open end funds are operated by a mutual fund house which raises money from shareholders and invests in a group of assets

Large cap funds Large cap funds are those mutual funds, which seek capital appreciation by investing primarily in stocks of large blue chip companies

Mid-cap funds Mid cap funds are those mutual funds, which invest in small / medium sized companies. As there is no standard definition classifying companies

Equity funds Equity mutual funds are also known as stock mutual funds. Equity mutual funds invest pooled amounts of money in the stocks of public companies.

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Balanced funds Balanced fund is also known as hybrid fund. It is a type of mutual fund that buys a combination of common stock, preferred stock, bonds, and short-term bonds

Growth funds Growth funds are those mutual funds that aim to achieve capital appreciation by investing in growth stocks.

No load funds Mutual funds can be classified into two types - Load mutual funds and NoLoad mutual funds. Exchange traded funds Exchange Traded Funds (ETFs) represent a basket of securities that is traded on an exchange, similar to a stock. Hence, unlike conventional mutual funds

Value funds Value funds are those mutual funds that tend to focus on safety rather than growth, and often choose investments providing dividends as well as capital appreciation.

Money market funds A money market fund is a mutual fund that invests solely in money market instruments. Money market instruments are forms of debt that mature in less
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than one year and are very liquid.

International mutual funds International mutual funds are those funds that invest in non-domestic securities markets throughout the world.

Regional mutual funds Regional mutual fund is a mutual fund that confines itself to investments in securities from a specified geographical area, usually, the fund's local region.

Sector funds Sector mutual funds are those mutual funds that restrict their investments to a particular segment or sector of the economy.

Index funds An index fund is a a mutual fund or exchange-traded fund) that aims to replicate the movements of an index of a specific financial market.

Fund of funds A fund of funds (FoF) is an investment fund that holds a portfolio of other investment funds rather than investing directly in shares, bonds or other securities.

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Benefits of Mutual Funds Mutual funds are preferred for their cost-effectiveness and easy investment process. By investing all the money in a mutual fund, investors can buy stocks or bonds at lower trading charges. This is indeed one of the main benefits, which is not available otherwise. You don't need to see which stock or bond would be better to buy. Another advantage is diversification. Diversification stands for diffusing money across various different categories of investments. There is every possibility that when one investment is down, the other can be up. In simple terms, this is helpful in reducing risks. Transparency, flexibility, professional investment management, variety and liquidity are some of the other benefits of the mutual funds, which are not found in case of other investments to such an extent. List of mutual fund companies in India Some of the popular firms that deal in mutual funds in India are: Reliance Mutual Funds HDFC ABN Amro AIG Bank of Baroda Canara Bank
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Birla Sun Life DSP Merrill Lynch DBS Chola Mandalam AMC Escorts Mutual Deutsche Bank

ING HSBC ICICI Prudential LIC JP Morgan Kotak Mahindra Lotus India JM Financial Morgan Stanley State Bank of India (SBI) Sahara Mutual Funds Sundaram BNP Paribas Taurus Mutual Funds Tata UTI Standard Chartered

BANK FIXED DEPOSITS


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Bank Fixed Deposits are also known as Term Deposits. In a Fixed Deposit Account, a certain sum of money is deposited in the bank for a specified time period with a fixed rate of interest. The rate of interest for Bank Fixed Deposits depends on the maturity period. It is higher in case of longer maturity period. There is great flexibility in maturity period and it ranges from 15days to 5 years. The interest can be compounded quarterly, half-yearly or annually and varies from bank to bank. Minimum deposit amount is Rs 1000/- and there is no upper limit. Loan / overdraft facility is available against bank fixed deposits. Premature withdrawal is permissible but it involves loss of interest.

TYPES OF BANK DEPOSITS / ACCOUNTS (BY BANKS IN INDIA) Traditionally banks in India have four types of deposit accounts, namely Current Accounts, Saving Banking Accounts, Recurring Deposits, Fixed Deposits. However, in recent years, due to ever increasing

competition, some banks have introduced new products, which combine the features of above two or more deposits. These are known by different names in different banks, e.g 2-in-1 deposits, Smart Deposits, Power Saving Deposits, Automatic Sweep Deposits etc. 1. CURRENT DEPOSITS /ACCOUNTS: These accounts are used mainly by businessmen and are not generally used for the purpose of investment. These deposits are the most liquid deposits and there are no limits for number of transactions or the amount of transactions in a day. Most of the current account are firm / company
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accounts. Cheque book facility is provided and the account holder can deposit all types of the cheques and drafts in their name or endorsed in their favour by third parties. No interest is paid by banks on these accounts. On the other hand, banks charge service charges, on such accounts. 2. SAVING DEPOSITS / ACCOUNTS: These deposits / accounts are one of the most popular deposits for individual accounts. These accounts not only provide cheque facility but also have lot of flexibility for deposits and withdrawal of funds from the account. Most of the banks have rules for the maximum number of withdrawals in a period and the maximum amount of withdrawal, but hardly any bank enforces these. However, banks have every right to enforce such restrictions if it is felt that the account is being misused as a current account. The interest on these accounts at present is regulated by Reserve Bank of India. Banks in India at present offer 3.50% p.a. interest rate on such deposits.

3. RECURRING DEPOSITS / ACCOUNTS: These kind of deposits are most suitable for people who do not have lump sum amount of savings, but are ready to save a small amount every month. Normally, such deposits earn interest on the amount already deposited (through monthly installments) at the same rates as are applicable for Fixed Deposits / Term Deposits. These are best if you wish to create a fund for

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your child's education or marriage of your daughter or buy a car without loans. Under these type of deposits, the person has to usually deposit a fixed amount of money every month (usually a minimum of Rs,100/- p.m.). Any default in payment within the month attracts a small penalty. However,

some Banks besides offering a fixed installment RD, have also introduced a flexible / variable RD. Under these flexible RDs the person is allowed to deposit even higher amount of installments, with an upper limit fixed for the same e.g. 10 times of the minimum amount agreed upon. Such accounts are normally allowed for maturities ranging from 6 months to 120 months. A Pass book issued where the person can get the entries for all the deposits made by him / her and the interest earned. Premature

withdrawal of accumulated amount permitted is usually allowed (however, penalty may be imposed for early withdrawals). These accounts can be

opened in single or joint names. Nomination facility is also available. 4. FIXED DEPOSIT ACCOUNTS / TERM DEPOSITS: All Banks offer fixed deposits schemes with a wide range of tenures for periods from 7 days to 10 years. The term "fixed" in Fixed Deposits (FD) denotes the period of maturity or tenor. Therefore, the depositors are supposed to continue such Fixed Deposits for the length of time for which the depositor decides to keep the money with the bank. However, in case of need, the depositor can ask for closing (or breaking) the fixed deposit prematurely by paying a penalty (usually of 1%, but some banks even do not charge any penalty). (Soon some banks have even introduced variable
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interest fixed deposits. The rate of interest in such deposits will keep on varying with the prevalent market rates i.e. it will go up if market interest rate goes and it will come down if the market rates fall). The rate of interest for Fixed Deposits differ from bank to bank (unlike previously when the same were regulated by RBI and all banks used to have the same interest rate structure. The present trends indicate that private sector and foreign banks offer higher rate of interest. The rate of interest for Fixed Deposits differs from bank to bank (unlike previously when the same were regulated by RBI and all banks used to have the same interest rate structure. The present trends indicate that private sector and foreign banks offer higher rate of interest. Usually a bank FD is

paid in lump sum on the date of maturity. However, some banks have facility to pay interest at the end of every quarter. If one desires to get interest paid every month, then the interest paid will be at a discounted rate. The Interest payable on Fixed Deposit can also be transferred to Savings Bank or Current Account of the customer. Advantages of Fixed Deposit Fixed deposits with the banks are nearly 100% safe as all the banks operating in the country, irrespective of whether they are nationalised, private, or foreign, are governed by the RBI's rules and regulations, and give due weightage to the interest of the investor. Till recently, all bank deposits were insured under the Deposit Insurance & Credit Guarantee Scheme of India, which has now been made optional. Nonetheless, bank deposits are among the safest modes of investment.
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One can get loans up to 75- 90% of the deposit amount from banks against fixed deposit receipts. Though the interest charged will be slightly more than the interest earned by the deposit. Tax Implications The amount invested in fixed deposits with a maturity period of 5 years in a Scheduled bank is eligible for tax deduction under section 80C. However, the interest earned on the deposit is taxable. Tax will be deducted at the source, if the interest income on a fixed deposit per annum exceeds Rs.10000.

GOLD Thought to be one of the first known metals, gold has been coveted throughout history for its beauty, scarcity, malleability, and uncanny resistance to rust and corrosion. Centuries ago, golds unique combination of properties its sun-like color, its soft hardness, and, especially, its imperviousness to decay and corruption imbued it with magical associations in the eyes of many. Because of these unique properties, gold has traditionally been the currency of choice for much of the worlds population. The value of gold has transcended all national, political, and cultural borders, making it the ideal currency. Of all the precious metals, gold is the most popular as an investment. Investors generally buy gold as a
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hedge or safe haven against any economic, political, social or currencybased crises. These crises include investment market declines, burgeoning national debt, currency failure, inflation, war and social unrest. Investors also buy gold early in a bull market and aim to sell it before a bear market begins, in an attempt to gain financially.

Methods of investing in gold Gold bullion and bars Owing physical gold in the form of gold bullion and barsis one of the most conservative ways of holding and preserving wealth. Gold bullion can be purchased in various sizes ranging from 1 gram to 100 ounces. It can also be purchased online using a credit card fairly easily or through a local dealer. Gold Coins Many national mints produce gold coins in various sizes ranging from 1/20 th ounce to 1 ounce and greater. The coins may actually be worth significantly more than simply the value of the gold itself. Jewelry Gold jewelry plays a prominent role in indian culture. In fact, India is the largest market for gold jewelry in the world and much of the seasonality of the gold price is attributed to the wedding season in India.

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ETFS Recently the popularity of exchange traded funds has lead to the creation of an exchange traded funds for physical gold. The fund actually purchases physical gold on behalf of the investors and stores it in london. The advantage is that the logistics of physical storage and insurance are managed by the EFT while the cost is part of the management fee.

REAL ESTATE Real Estate Investment in India is one of most successful investment phenomenon in the last few decades. Real Estate industry in India has reached a culmination point ever since, the gates were opened to the foreign investors. This is the reason why many foreign investors are investing huge amounts of money in this sector.

The real estate developments in the country consist of the following:

Constructing houses
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Townships Residential complexes Office buildings Shopping malls IT parks Real estate laws in India

India Transfer of Property Act Indian Registration Act, 1908 Indian Urban Land (Ceiling & Regulation) Act, 1976 Stamp Duty Property Tax

RISKS INVOLVED IN TAKING INVESTMENT DECISIONS: The fact is that you cannot get rich without taking risks. Risks and rewards go hand in hand; and, typically, higher the risk you take, higher the returns you can expect. In fact, the first major Zurich Axiom on risk says: "Worry is not a sickness but a sign of health. If you are not worried, you are not risking enough". Then the minor axiom says: "Always play for meaningful stakes.
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The secret, in other words, is to take calculated risks, not reckless risks. Every investment opportunity carries some risks or the other. In some investments, a certain type of risk may be predominant, and others not so significant. A full understanding of the various important risks is essential for taking calculated risks and making sensible investment decisions. In financial terms, among other things, it implies the possibility of receiving lower than expected return, or not receiving any return at all, or even not getting your principal amount back. Seven major risks are present in varying degrees in different types of investments. These risks also effect our investment decisions. These risks are discussed below: 1) Default risk: The possibility that a bond issuer will default, by failing to repay principal and interest in a timely manner. Bonds issued by the federal government, for the most part, are immune from default (if the government needs money it can just print more). Bonds issued by corporations are more likely to be defaulted on, since companies often go bankrupt. Municipalities occasionally default as well, although it is much less common. Also called credit risk. This is the most frightening of all investment risks. The risk of non-payment refers to both the principal and the interest. For all unsecured loans, e.g. loans based on promissory notes, company deposits, etc., this risk is very high. Since there is no security attached, you can do nothing except, of course, go to a court when there is a default in refund of capital or payment of accrued interest.

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2) Business risk: Risk associated with the unique circumstances of a particular company, as they might affect the price of that company's securities. Business risk is the most dangerous risk. The market value of your investment in equity shares depends upon the performance of the

company you invest in. If a company's business suffers and the company does not perform well, the market value of your share can go down sharply. When you invest money in commercial, industrial and business enterprises, there is always the possibility of failure of that business; and you may then get nothing, or very little, on a pro-rata basis in case of the firm's bankruptcy. A recent example of a banking company where investors were exposed to business risk was of Global Trust Bank. Global Trust Bank, promoted by Ramesh Gelli, slipped into serious problems towards the end of 2003 due to NPA-related issues. 3) Liquidity risk: Liquidity risk refers to the possibility of the investor not being able to realize its value when required. This may happen either because the security cannot be sold in the market or prematurely terminated, or because the resultant loss in value may be unrealistically high. Current and savings accounts in a bank, National Savings Certificates, actively traded equity shares and debentures, etc. are fairly liquid investments. In the case of a bank fixed deposit, you can raise loans up to 75% to 90% of the value of the deposit; and to that extent, it is a liquid investment. Money has only a limited value if it is not readily available to you as and when you need it. In financial jargon, the ready availability of money is called liquidity. An investment should not only be safe and profitable, but also reasonably liquid.

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An asset or investment is said to be liquid if it can be converted into cash quickly, and with little loss in value.

The relative liquidity of different investments is highlighted in Table 1. Table 1 Liquidity of Various Investments Liquidity Very high Some Examples Cash, gold, silver, savings and current accounts in banks High Fixed deposits with banks, shares of listed companies that are actively traded, units, mutual fund shares Medium Fixed deposits high with companies rating,

enjoying

credit

debentures of good companies that are actively traded Low and Deposits and debentures of lossmaking and cash-strapped
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very low

companies, inactively traded shares, unlisted shares and debentures, real estate

4) Purchasing power risk or Inflation risk: Inflation means being broke with a lot of money in your pocket. When prices shoot up, the purchasing power of your money goes down. Some economists consider inflation to be a disguised tax. Given the present rates of inflation, it may sound surprising but among developing countries, India is often given good marks for effective management of inflation. The average rate of inflation in India has been less than 8% p.a. during the last two decades. However, the recent trend of rising inflation across the globe is posing serious challenge to the governments and central banks. In India's case, inflation, in terms of the wholesale prices, which remained benign during the last few years, began

firming up from June 2006 onwards and topped double digits in the third week of June 2008. 5) Interest rate risk: In this deregulated era, interest rate fluctuation is a common phenomenon with its consequent impact on investment values and yields. Interest rate risk affects fixed income securities and refers to the risk of a change in the value of your investment as a result of movement in interest rates. Suppose you have invested in a security yielding 8 per cent p.a. for 3 years. If the interest rates move up to 9 per cent one year

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down the line, a similar security can then be issued only at 9 per cent. Due to the lower yield, the value of your security gets reduced. 6) Political risk: Change in government policies is one reason for political risk. One government may go and another come with a totally different set of political and economic ideologies. Whenever there is a threat of war, financial markets become panicky. Nervous selling begins. Through increased world trade, India is likely to become much more prone to political events in its trading partner-countries. 7) Market risk: Market risk is the risk of movement in security prices due to factors that affect the market as a whole. Natural disasters can be one such factor. The most important of these factors is the phase (bearish or bullish) the markets are going through. Stock markets and bond markets are affected by rising and falling prices due to alternating bullish and bearish periods: Thus: * Bearish stock markets usually precede economic recessions. * Bearish bond markets result generally from high market interest rates, which, in turn, are pushed by high rates of inflation.

* Bullish stock markets are witnessed during economic recovery and boom periods. * Bullish bond markets result from low interest rates and low rates of inflation.

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INDIVIDUAL INVESTOR LIFE CYCLE:

Typically, investment strategies change during an individual's lifetime. It is divided into different phases. These phases are: *Accumulation Phase. *Consolidation Phase. *Spending Phase. *Gifting Phase. Explanations of these phases are as below: 1) Accumulation Phase: In the accumulating phase, the individual is accumulating net worth to satisfy short-term needs (e.g., house and car purchases) and long-term goals (e.g., retirement and children's college needs). In this phase, the individual is willing to invest in moderately highrisk investments in order to achieve above-average rates of return. 2) Consolidation Phase: In the consolidating phase, an investor has paid off many outstanding debts and typically has earnings which exceed expenses. In this phase, the investor is becoming more concerned with long-term needs of retirement or estate planning. Although the investor is willing to accept moderate portfolio risk, he/she is not willing to jeopardize the "nest egg."

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3) Spending Phase: In the spending phase, the typical investor is retired or semi-retired. This investor wishes to protect the nominal value of his/her savings, but at the same time must make some investments for inflation protection.

4) Gifting Phase: The gifting phase is often concurrent with the spending phase. The individual believes that the portfolio will provide sufficient income to meet expenses, plus a reserve for uncertainties. If an investor believes there are excess amounts available in the portfolio, he/she may decide to make "gifts" to family or friends, institute charitable trusts, or establish trusts to minimize estate taxes.

PREFERENCES OF INVESTORS BEHIND INVESTMENTS:

Every investor has their own preferences behind investment. Some investors expect a high rate of return and some investors demand security and liquidity. There are also some investors who invest their money for the sake of saving tax. These preferences are discussed below briefly:

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1) Return: A profitability measure that evaluates the performance of a business by dividing net profit by net worth. Return on investment, or ROI, is the most common profitability ratio. There are several ways to determine ROI, but the most frequently used method is to divide net profit by total assets. So if your net profit is $100,000 and your total assets are $300,000, your ROI would be .33 or 33 percent.

The return on investment formula: ROI = (Gain from investment Cost of investment) Cost of investment Return on investment is a very popular metric because of its versatility and simplicity. That is, if an investment does not have a positive ROI, or if there are other opportunities with a higher ROI, then the investment should be not be undertaken. 2) Liquidity: Liquidity is a financial term that means the amount of capital, or money, that is available for investment. High liquidity means there is a lot of money because interest rates are low, and so capital is easily available. However, a liquidity glut can develop if there is really too much money looking for too few investments. This is usually a precursor to a recession, as more of this capital becomes invested in bad ventures. As the ventures go

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defunct and don't pay out their promised return, investors are left holding worthless assets. Often a panic can ensue, resulting in a withdrawal of investment money. This is what happened during the 2007 Banking Liquidity Crisis. Constrained liquidity means that there is not a lot of money around and that bank and other lenders are hesitant about making loans. It is usually a result of high interest rates.

Also Known As: money supply, M1, M2, M3, capital Examples: Low Treasury bond yields have contributed to liquidity in the U.S. economy. 3) Security: Security is the state of being or feeling secure; freedom from fear, anxiety, danger, doubt, etc. It is something that gives or assures safety, certainty, etc. It is a protection or defense against attack, interference, espionage, etc. Security can be any of the following type: Something given as a pledge of repayment, fulfillment of a promise, etc.; guarantee.
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A person who agrees to make good the failure of another to pay, perform a duty, etc.; surety. 4) Tax Saving: Tax Saving is also one of the preferences of the investors behind investment. Income Tax is payable by every citizen of India when his/her annual income exceeds the prescribed limit. However one can reduce the tax liability through tax planning. Tax planning envisages arranging the financial income & investment in such a way so as to enjoy the maximum tax benefits. Maximum tax benefits can be availed by investing his / her savings in notified Savings scheme. Most of the persons invest their money only for the sake of investing money.

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CHAPTER-2

LITERATURE REVIEW

LITERATURE REVIEW According to The Article Factors Affecting Investors Preference for Mutual Funds in India by Animesh Kumar and Satish Kumar ,(2009) it contains the brief description of the mutual fund industry in general. It also includes the study and comparison of other investment products available in the market like Insurance Plans, ULIPS, Mutual Funds, Saving Accounts, Provident Funds, Postal Savings, Fixed Deposits In banks and Stock available in the market. A survey is conducted to gather the primary data to judge the factors that influence investors before they invest in any of the investment tools and thus the paper scrutinizes the investors perception and analyzes the relation

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between the features of the product and investors requirement. With this back ground an attempt has been made in this paper to categorized investors based on various demographic factors such as age, sex, income level and occupation. The second part of the paper deals exclusively in Mutual funds. It is widely believed that MF is a product designed to target small investors, salaried people and others who are intimidated by the stock market but, nevertheless, like to reap the benefits of stock market investing. According to Vandana Singh (2009) the paper entitled Prospects & Problems of Real Estate in India is an attempt to reveal the issues concerned with real estate investment sector in India. This papers first part deals with the factors affecting the real value of real estate and investment preference of investors like: Demand, Supply, Property, Restrictions to use and site characteristics. In this paper type of occupation and level of income is major factors that affect the real value of real estate and preference of investors. Buying power of investor is other factor

considered in this paper. Major problem is taken to inflation, aggressively increasing price of land, shortage of land for special economic zone etc. Investment trend in public also affect the investment in real estate because there is very less chances of down fall in real value of real estate and foreign direct investment in real estate. In this paper some constraints in the real estate investment Urban land ceiling regulation act, stamp duty & registration, rental laws, building codes,

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standards and permissions, development and planning, etc. Its second and third part explains the causes and the constraints to the present real estate boom respectively in India. After studying all the factors of the real estate it can be concluded that the real estate is highly affected by macroeconomic factors like GDP, FDI, per Capital income, interests and employment in the nation. According to the article Financial literacy and investment decisions of UAE investors by Hassan AL-Tamimi, AL Anood Bin Kalli (2009). The purpose of this paper is to assess the financial literacy of the UAE individual investors who invest in the local financial markets. In addition, it examines the relationship between financial literacy and the influence of the factors that affect the investment decision. The results indicate that the financial literacy of UAE investors is far from the needed level. The financial literacy level is found to be affected by income level, education level, and workplace activity. High-income respondents hold high educational degrees, and those who work in the field of finance/banking or investment had as expected a higher financial literacy level than others. Whereas, financial illiteracy exists regardless of the age of the respondents. A significant difference in the level of financial literacy was found as well between the respondents according to their gender. Specifically, women have a lower level of financial literacy than men. Finally, the results indicate that there is a significant relationship between financial literacy and investment decisions. The most influencing factor that affects the investment decision is religious reasons and the least affecting factor is rumors.

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According to the article Gender differences and factors that affect stock investment decision of Western Canadian investors by Amerjit and Nahum (2009) This study examines the effects of: 1) investment expertise, 2) familiarity with accounting information, 3) knowledge of 'neutral information', 4) consultation with investment advisors on investors' decisions to invest in stocks. Investors from Western Canada were surveyed in order to gather information and estimate these factors and their relationship with their investment decisions. Subjects were asked about their beliefs and feelings regarding their decision to invest in the stock market. We found that their degree of stock investment decision is related to the degree of their own perceptions about their: 1) investment expertise, 2) general knowledge of neutral information, 3) consultation with investment advisors. We also found that the effects of these factors differ with investors' familiarity with accounting information. Gender plays an important role and the nature of the relationship between these factors and the propensity and intensity of investment in stocks differs between male and female individuals. The findings may be useful for investment managers. Kaushal in his book Business Ethics (2006) described the world a rich combination of different cultures and every culture has some unique elements in it that distinguish it from the rest of the other cultures. The fundamental values in the society developed over the time into ideologies or world views. The culture, religion and constitutions are the sources of the values. Value itself is judgmental in nature and they endorse such beliefs in an individual that are important in formulating his personality.
38

According to a publication by Reserve Bank of India a number of factors affecting access to financial services have been indentified in many countries. These factors are Gender issues, Age factors, Legal identity, Limited Literacy, Cultural barriers, Terns and Conditions of investment tools, Level of Income, Type of Occupation, Attractiveness of the Product etc. these factors influence a investors investment decision. According to Samuel S Boye (2005) in his research report Cultural Factors that Shape Investment Decisions Models are abstracts of reality and the primary objective for modeling is to provide us with the ability to manipulate reality without causing any destruction. But for a model to be useful it has to be requisite that is it must contain all the relevant variables of the reality it intends to represent. Usually, economic models do not spell out the procedures by which decisions of the economic unit are made; moreover they tend to be generic without any discrimination on aggregate variables for decision makers, like culture. if anything at all, behavioural models capture cultural influences implicitly. This study is the report of a study to establish and document how investment decisions are made, paying particular attention to the nature

39

of the factors that determine how the prospective investor goes through the choice of investment instrument. Sung and Sandager (1997) investigated the characteristics consumers want from a financial planner. A survey was developed to analyze the attitudes of potential clients for financial planning. The survey results showed that potential clients want advice on retirement planning, investment planning, and tax planning, and prefer a financial planner to be affiliated with an independent financial firm. Consumers preferred a financial planner to have a Certified Financial Planner designation, and 45% preferred a planner with a masters degree. These results

indicate the desire of potential clients for competent, knowledgeable, and well-trained financial planners. Dwyer (2002) used data from nearly 2000 mutual fund investors and investigate whether investor gender is related to risk taking as revealed in mutual fund investment decisions. Consonant with received literature, they find that women exhibit less risk taking than men in their most recent, largest and riskiest mutual fund investment decisions. More importantly, they find that the impact of gender on risk taking is significantly weakened when investor knowledge of financial markets and investments is controlled in the regression equation. This result suggests that the greater level of risk aversion among women that is frequently documented in the literature can be substantially, but not completely, explained by knowledge disparities.
40

Bittlingmayer (1998) in case of Germany found that a political uncertainty is the direct source of increase in stock prices volatility and decrease in the output. The sources of stock volatility and especially higher volatility in recessions have puzzled financial economists. One explanation emerges from recent theoretical work that point to political and regulatory uncertainty as a source of output fluctuations. Since political uncertainty can also generate stock price volatility, its joint effects on stock prices and output may explain why stock volatility is correlated with output declines. Evidence from a particularly instructive natural experiment, the transition from Imperial to Weimar Germany, supports the view that stock price volatility reflects an uncertain political climate. Statistically, stock price volatility and the ultimate factors it represents play a major role in explaining the post-World-War-I collapse of the German economy and subsequent output fluctuations. A doubling of stock volatility implies a decline of output of -6 to -15 percent.

Epstein and Freedman (1994) described that the social disclosure is the relationship of the corporation with the stakeholders. Investors are more concerned about the quality of products and environmental safety than the increased dividends. Most of the investor wants the company to include these informations in their annual reports and that report must be audited.

41

Lunderberg (1994), Although gender differences are fairly consistent when men and women report their general confidence, much less is known about the existence of such differences when subjects are asked to assess the degree of confidence they have in their ability to answer any particular test or exam question. The objective of this research was to investigate gender differences in item-specific confidence judgments. Data were collected from three different psychology courses containing 70 men and 181 women. After answering each item on course exams, students indicated their confidence that their answer to that item was correct. Results showed that gender differences in confidence are dependent on the context (whether items were correct or wrong) and on the domain being tested. In addition, while both men and women were overconfident, undergraduate males were especially overconfident (and inappropriately so) when incorrect. According to Prince M, (1993); This study examines the effect of gender and previous experience with financial hardship on peoples attitude towards money in Singapore. The respondents consisted of 152 undergraduate students who attended management classes at a local university. Factor analysis of items measuring attitudes toward money revealed eight distinct dimensions. Logistic regression analysis was

performed to distinguish between males and females, as well as between the hardship and the no hardship group. The results showed some gender differences, with males often using money as a means of evaluation compared to females in addition the hardship group was more likely to use money as a form of evaluation, to have financial

42

anxiety, and to be more generous to the less fortunate compared to the no hardship group.

Literature

review

section

overall

concludes

that

physiological,

psychological, social, political, cultural and religious factors affect the overall investment decisions of the investors. Furthermore, investors personality traits such as education background, Age, Level of income, Type of occupation, knowledge about the market also have significant impacts of their decision making process.

43

CHAPTER-3

RESEARCH METHODOLOGY

RESEARCH METHODOLOGY The study is an attempt to determine the factors affecting selection of investment tools for people in India and the preference of investors towards various investment tools.
44

Objectives of the Study 1. To determine the preference of investors for various investment options. 2. To determine the factor affecting purchasing decision for various investment options. Procedure For this study a structured questionnaire was prepared which contained both open ended and close ended questions. The questionnaire contained multiple choice questions and questions on a likert scale. Research Plan The research design is exploratory in nature. The established objectives were kept in mind during the study. For the purpose of research, study of the factors affecting selection of investment tools for salaried people in India was done.

45

Data collection Two types of data resources were used Primary data Secondary data Primary data Primary data was collected with the help of self constructed questionnaire- a structure and non distinguished questionnaire was used. The preliminary draft of of the questionnaire was pre tested which helped in improving the questionnaire and also gave an indication as to kind of the responses likely to be obtained. Mostly the questions were multiple choice. Some question also designed on basis of five point scale (likert scale). Secondary data It was collected from various journals, books, articles, internet etc. This books, journals, articles related to the behaviour of investors toward various investment options and factors affecting decision and perception of investors while investing. Usage of internet helps in clearing various concepts and helps in finding article, journals etc.

Sample Plan Sample Size: 200 peoples Sample Unit: People from cities like Patiala, Rajpura

46

Sampling technique: Convenient sampling has been used to collect data

Data Analysis Techniques 1. For the First objective: To determine the preference of investors for various investment options. Simple percentages are used to know which variant outweighs the other. Pie charts and Bar Graphs are used to show the results more clearly.

2. For the second objective: To determine the factor affecting purchasing decision for various investment options. To find out the various factors affecting the selection of investment tools for this purpose again percentages are used to know which variant outweighs the other. Pie charts and Bar Graphs are used to show the results more clearly.

47

CHAPTER-4

DATA ANALYSIS AND INTERPRETATION

48

Investors from different areas as per of their Demographics Patiala Rajpura Total

Young Unmarried

25

25

50

Young Married

20

20

40

Young Married/Children

20

25

45

Married/Old Children Retire person Total

with 25

20

45

10 100

10 100

20 200

INTERPRETATION

49

For the to determine the factors affecting selection of investment tools for people in India and the preference of investors towards various investment tools 200 respondents were taken from Patiala and Rajpura.

Number of people investing

0
YES

100

NO

INTERPRETATION The graph shows that the salaried people prefer to invest in one and more than one investment tools. Every salaried person as a respondent invests
50

according to the influence of factors on selection of investment tool and according to his/her investment preference.

Preferable Investment Tools

120

100

80 53.34 60 72.5 73.44 52.5 80

40 46.66 27.5 0 Mutual funds Bank F/D Gold Real Estate Others %age of respomdents Invested %age of respomdents not Invested 26.66 47.5 20

20

INTERPRETATION
51

The graph shows that the salaried people prefer to invest in Real Estate having 47.5% investment and in Bank F/Ds having 46.66%, this shows that they want long term benefits. After that Mutual fund and Gold takes place having 27.5% and 26.66% respectively and only 20% investors invest in others like Insurance, Share market, Government Provident Fund etc.

Perception About expert advice

%age of respondents

14.17

yes No

85.83

52

INTERPRETATION This Pie Chart shows that 85.83% respondents think expert advice helps while investing and 14.17% respondents think expert advice not helps while investing.

Perception about Advertisement

53

%age of respondents

32.5

yes 67.5 No

INTERPRETATION This Pie chart shows that 67.5% respondents think that TV channels like CNBC, ZEE business and Advertisement in newspapers provide assistance to investors to take decision and 32.5% respondents think that it not provide assistance to investors to take decision.

54

FACTOR STUDY:

1. Returns on investment

7 17 22 22 32

S.A A N.A D S.D

INTERPRETATION This Pie chart shows that 32% of respondents think that they agree that return on investment is an important factor affecting selection of investment tools for salaried people in India and 22% of respondents
55

think that they strongly agree that return on investment is an important factor.

2. RISK ASSOCIATED:

1 14 36 8
SA

41

A
NA D SD

INTERPRETATION This Pie chart shows that 41% of respondents think that they strongly agree that risk associated with the investment is an important factor affecting selection of investment tools for salaried people in India and 36% of
56

respondents think that they agree that risk associated with the investment is an important factor

3. Tax benefits

57

36 6 35 20 3

SA

NA

SD

INTERPRETATION This Pie chart shows that 35% of respondents think that they agree that tax benefit of the investment is an important factor affecting selection of investment tools for salaried people in India and 36% of respondents think that they neither agree nor disagree that tax benefit associated with the investment is an important factor

58

4. Funds available:

0 6 30 62 2

SA A NA D SD

INTERPRETATION This Pie chart shows that 62% of respondents think that they strongly agree that funds available for investment is an important factor affecting selection of investment tools for salaried people in India and 30% of respondents think that they agree that funds available for investment is an important factor.

59

5. Investor's Level of income

0 8 12 51 29

SA

NA

SD

INTERPRETATION
60

This Pie chart shows that 29% of respondents think that they agree that investor level of income is an important factor affecting selection of investment tools for salaried people in India and 0% of respondents think that they strongly disagree that investor level of income is an important factor.

6. REGULAR INCOME:

61

0 6 2

SA A NA
73

19

D SD

INTERPRETATION This Pie chart shows that 73% of respondents think that they strongly agree that investor regular income is an important factor affecting selection of investment tools for salaried people in India and 0% of respondents think that they strongly disagree that investor regular income is an important factor.

62

7. Long-term benefits:

15

SA
39

A NA D SD

31 12

INTERPRETATION This Pie chart shows that 39% of respondents think that they strongly agree that long term benefits on investment is an important factor affecting selection of investment tools for salaried people in India and 31% of respondents think that they neither agree nor disagree that long term benefit on investment is an important factor.
63

8. Type of occupation:

15 16

16 17

SA A NA D SD

36

INTERPRETATION

64

This Pie chart shows that 16% of respondents think that the y strongly agree that type of occupation is an important factor affecting selection of investment tools for salaried people in India and 36% of respondents think that they neither agree nor disagree that type of occupation is an important factor.

9. Reference group:

65

12 8

SA
24

A NA D

26

30

SD

INTERPRETATION This Pie chart shows that 30% of respondents think that they agree that reference group is an important factor affecting selection of investment tools for salaried people in India and 24% of respondents think that they strongly agree that reference group is an important factor.

66

10.Lack of awareness:

7 13

SA A
53

NA D SD

21

INTERPRETATION This Pie chart shows that 53% of respondents think that they strongly agree that lack of awareness is an important factor affecting selection of investment tools for salaried people in India and 21% of respondents think that they agree that lack of awareness is an important factor.

67

11.Age factor

1 7 31 46 15

SA
A NA D SD

INTERPRETATION This Pie chart shows that 46% of respondents think that they agree that age factor is an important factor affecting selection of investment tools for salaried people in India and 31% of respondents think that they neither agree nor disagree that age factor is an important factor.

68

12.Terms and condition:

0 21 3

SA A NA
76

D
SD

INTERPRETATION
69

This Pie chart shows that 76% of respondents think that they strongly agree that term and condition of investment policy is an important factor affecting selection of investment tools for salaried people in India and 0% of respondents think that they disagree that term and condition of investment policy is an important factor.

13.Gender Issue:

11 26

8 16

SA A NA
39

D SD

70

INTERPRETATION This Pie chart shows that 16% of respondents think that they agree that gender issue is an important factor affecting selection of investment tools for salaried people in India and 11% of respondents think that they strongly disagree that gender issue is an important factor.

14.Duration of investment period:

71

0 15

SA
39

A NA D

46

SD

INTERPRETATION This Pie chart shows that 46% of respondents think that they agree that duration of investment period is an important factor affecting selection of investment tools for salaried people in India and 0% of respondents think that they strongly disagree that duration of investment period is an important factor.

72

15.General trend:

13 14

12 23 38

SA A NA D SD

INTERPRETATION This Pie chart shows that 38% of respondents think that they neither agree nor disagree that general trend of investment is an important factor affecting selection of investment tools for salaried people in India and 13% of respondents think that they strongly disagree that general trend of investment is an important factor.

73

16.Attractiveness:

1 8 14 39

SA A NA

38

D
SD

INTERPRETATION This Pie chart shows that 39% of respondents think that they strongly agree that attractiveness of investment is an important factor affecting selection of

74

investment tools for salaried people in India and 38% of respondents think that they agree that attractiveness of investment is an important factor.

17.Difficulty in comparing different modes of investment

75

0 4 25 33

SA A NA D

38

SD

INTERPRETATION This Pie chart shows that 38% of respondents think that they agree that difficulty in selecting different mode of investment is an important factor affecting selection of investment tools for salaried people in India and 0% of respondents think that they strongly disagree that difficulty in selecting different mode of investment is an important factor.

76

18.Difficulty in Mode of payment:

15

17

SA A NA D SD

22 27

19

INTERPRETATION This Pie chart shows that 27% of respondents think that they neither agree nor disagree that difficulty in mode of payment is an important factor affecting selection of investment tools for salaried people in India and 15% of respondents think that they strongly disagree that difficulty in mode of payment is an important factor.

77

19.Geographical location:

0 6 31 26

SA A NA
37

D SD

INTERPRETATION This Pie chart shows that 37% of respondents think that they agree that geographical location is an important factor affecting selection of investment tools for salaried people in India and 26% of respondents think that they strongly agree that geographical location is an important factor.
78

20.Cultural barriers

79

SA
19

A
37 35

NA D

SD

INTERPRETATION This Pie chart shows that 35% of respondents think that they agree that cultural barrier is an important factor affecting selection of investment tools for salaried people in India and 37% of respondents think that they disagree that cultural barrier is an important factor.

80

CHAPTER-5

FACT AND FINDINGS CONCLUSION LIMITATIONS

81

FACT AND FINDINGS

1. The study depicts that every salaried person make investment. One hundred twenty respondents are taken to participate in study and every respondent invest in one and more than one investment tools. Every salaried person as a respondent invests according to the influence of factors on selection of investment tool and according to his/her investment preference.

2. The study gives idea that Indian investors are more inclined towards investing in real estate and bank fixed deposits which are considered traditional modes investor prefer to make investment in Real Estate having 47.5% investment and in Bank F/Ds having 46.66%. The Real Estate is most preferred one 57 respondents from 120 invest in Real estate. The Bank F/Ds are second most preferred 56 respondents from 120 invest in Bank F/Ds.

3. The study gives idea that Mutual fund and Gold is preferred by 27.5% and 26.66% investors respectively and only 20% investors invest in others like Insurance, Share market, Government Provident Fund etc.

82

4. The study depicts that 85.83% respondents think expert advice helps while investing . we can say that experts advice is valuable while investing but expert advice also depends upon the nature of investment tools so that 14.17% respondents think expert advice not helps while investing.

5. The study shows that 67.5% respondents think that TV channels like CNBC, ZEE business and Advertisement in newspapers provide assistance to investors to take decision and 32.5% respondents think that it not provide assistance to investors to take decision. 6. The study depicts that selection of investment tools or preference of investors are highly affected by the factors (considered in the study) while investing. 7. The study shows us that there are some very important factors that investors consider. They are: Risk associated Funds available Regular income Lack of awareness Term and condition Investors level of income. 8. Earlier return was considered the only factor but now due importance is given to other factors also. 9. Gender and general trend of investment are the important factors that affect the investment decision of salaried investors.

83

CONCLUSION: The research study aims to find out the relationship between investment made and the reasons behind preferring the investment pattern by Indian investors. The study was conducted to know the Factors that affect the selection of investment tools for salaried people in India and preference of investors toward investment tools. The Objectives of the study are:- To determine the preference of investors for various investment options., To determine the factor affecting purchasing decision for various investment options. The study has given positive results that selection of investment tools are highly influenced by the factors which are considered in study. One hundred twenty respondents had taken to participate in this study these respondents are salaried peoples. Real estate, Mutual fund, Gold, Bank F/Ds is taken as investment tools. The study depicts that every salaried
84

person invest in one of these investment tools some respondents make investment in other options like Share Market, Insurance, Government provident fund etc. Real Estate is most preferred by salaried investors 47.5% of respondents make investment in Real estate and Bank F/Ds takes second place by 46.66% responses. Mutual fund and Gold also preferred by salaried people having 27.5% and 26.66% responses. Other option capture 20% respondents investment. Primary objective of study is to determine the factors that affect the selection of investment tools. The results of factor analysis achieved this objective that the factors influenced the selection of investment tools. We include twenty variables which influence the investors decision.

Basically from the study it is found out those investors basically strongly agree on below mentioned factors as the important factors: Risk associated Funds available Regular income Lack of awareness Term and condition

85

Investors level of income.

Limitations Although the survey has been conducted cautiously. But due to small sample size as compared to the whole universe, limitations must be there.
86

The main limitation can be: The sample size is small as compared to the universe. Survey is conducted only in areas prescribed. Some times respondent does not give exact information due to some personal reasons. Lack of published and unpublished literature on the study is also a limitation. Lack of time is also a reason of some incomprehensive (if any). Frequent developments in this sector can be a major reason of limitation in the study. Resistance on the part of the respondents to give the information is also a limitation. Biasness in views of respondents cant be ruled out. Lack of scientific awareness among the respondents is also a handicap.

87

BIBLIOGRAPHY Journals and Books Referred

1. Shyam L. K., (2006). Business ethics- concepts, crisis & solution. Deep & Deep Publications, India.

2. Sung B., C., Sandager, J.P., (1997). What consumers look for in financial planners. Association For Financial Counseling and Planning Education. 3. Dwyer, P.D., J.H. Gilkeson,. List.. J.A., (2002). Gender differences in revealed risk taking: evidence from mutual fund investors. Economics Letters, Vol. 76, Pp. 151-158 4. Bittlingmayer. G., (1998). Output, stock volatility, and political uncertainty in a natural experiment: Germany, 18801940. The Journal of Finance, Vol. 53 (6), Pp. 22432257 5. Epstein., M.J. and Freedman., M., (1994). Social disclosure and the individual investor. Journal of Accounting, Anditing and Accountability, Vol. 7(4), Pp. 94-109. 6. Lundeberg, M. A; Fox P. W., and Punccohar. J., (1994). Highly confident but wrong: gender differences and similarities in confidence judgments. Journal of Educational Psychology, Vol. 86, pp. 114121. 7. Prince, M.,(1993). Women, en and money styles. Journal of Economic Psychology, Vol. 14, Pp. 175-182 8. Naresh k. Malhotra-factor analysis 4th edition, prentice hall of India, New Delhi (2005)
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Web Sites Referred www.investmentduniya.blogspot.com www.eurojournals.com www.infibeam.com www.rbi.org.in www.medwellonline.net www.docstoc.com www.ingentaconnect.com www.econpapers.repec.org www.docstoc.com www.my.apa.org www.sciencedirect.com www.emeraldinsight.com www.inderscience.metapress.com http://en.wikipedia.org

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Respondent no -----------

ANNEXURE

My name is Meenakshi malhotra. I am a student of Master of Business Administration. As a part of my course curriculum, I am conducting research project on Factors affecting selection of investment tools for salaried people in India". You are one of the selected respondents to participate in this survey. Your cooperation would be highly appreciated. All information given by you will be kept confidential and will only be used for research purpose.

Q1: Do you invest


90

Q2: In which of the following tools of the investment do you invest

Q3: Do you think expert advice helps while investing

Q4: Do you think that TV channels like CNBC, ZEE business and Advertisements in Newspapers provide assistance to investors to take right decision

91

Q5: Rank the following factors which influence you to select an investment tool (Give (S.A.) Strongly Agree, (A.) Agree, (N.) Neither agrees nor disagrees, (D.) Disagree, (S.D.) strongly disagree to factor according to influence on your investment decision)

1.

Returns on investment

S.A A N D S.D . . . . .

2.

Risk Associated

S.A A N D S.D . . . .

3.

Tax benefits

S.A A N D S.D . . . . .

4.

Funds available

S.A A N D S.D . . . . .

5.

Investor's Level of income

S.A A N D S.D . . . . .

6.

Regular income (This factor will help us to know whether the investor gives preference to the regular (monthly/quarterly/yearly) inflows of income)

S.A A N D S.D . . . . .

7.

Long-term benefits

S.A A N D S.D . . . . .

92

8.

Type of occupation

S.A A N D S.D . . . . .

9.

Reference group

S.A A N D S.D . . . . .

10 Lack of awareness . 11 Difficulty in Mode of payment (This factor will help us . to know whether the investor is interested in one time investment or in subsequent post date instalments) 12 Difficulty in Comparing different modes of investment . (This factor will help us to know whether the level of difficulty faced by the group of respondents while choosing the preferred mode of investment) 13 Gender issue (This factor will help us to understand . whether the investment criteria of any individual is influence by his gender) e.g. mostly ladies wants to invest in gold and gents in real estate. 14 Age factor . 15 Cultural barriers (This factor will help us to understand . whether the cultural values of the respondent effects his investment decision) e.g. preference given to precious metals like gold when compared to gold. 16 Geographical location (This factor will help us to know . whether the geographical location of investor provide him/her the infrastructure to make the investment in a

S.A A N D S.D . . . . .

S.A A N D S.D . . . . .

S.A A N D S.D . . . . .

S.A A N D S.D . . . . .

S.A A N D S.D . . . . .

S.A A N D S.D . . . . .

S.A A N D S.D . . . . .

93

particular mode) e.g. A person who is desirer of investment in gold (MCX) may opted for gold jewellery in place due to lack of internet facility. 17 Terms and conditions of investment tool . 18 Attractiveness of investment tool . 19 Duration of investment period (This factor will help us . to know whether the investor wants to invest for short term or long term period) 20 General trend of investment in public (This factor will . help us to know whether the investor follow the general trend of investment in public) e.g. according to trend people think that the price of gold is increase in near future and everybody starts to invest in gold. S.A A N D S.D . . . . . S.A A N D S.D . . . . .

S.A A N D S.D . . . . .

S.A A N D S.D . . . . .

Personal Details

Gender

Age Group -

-25 -

-30

Investors from different areas as per of their Demographics

94

Young Unmarried

Young Married

Young Married/Children

Married/Old with Children Retire person

95