ISSN 2348 - 8891

INVESTORS BEHAVIOUR TOWARDS INVESTMENT AVENUES: A STUDY WITH

REFERENCE TO INDORE CITY

Heena Kothari*

ABSTRACT

In this modern era, money plays an important role in one’s life. In order to overcome the problems in
future they have to invest their money. Investment of hard earned money is a crucial activity of every
human being. Investment is the commitment of funds which have been saved from current consumption
with the hope that some benefits will be received in future. Thus, it is a reward for waiting for money.
Savings of the people are invested in assets depending on their risk and return demands, Safety of
money, Liquidity, the available avenues for investment, various financial institutions, etc.

Through this study, an analysis has been made into preferred investor’s behaviour towards investment
avenues in Indore city. It has also studied the difference of opinion of age on investor behaviour while
selection of any avenue.

Keywords: Investment avenues, Risk and Return, Liquidity.

INTRODUCTION

Investment is a purchase of a financial product or  other  item  of value with  an  expectation  of

favorable future returns. Investing is a serious subject that can have a major impact on investor’s future
well-being. Virtually everyone makes investments. Investors have a lot of investment avenues to park
their savings. The risk and returns available from each of these investment avenues differ from one
avenue to another. Even if the individual does not select specific assets such as stock, investments are
still made through participation in pension plan, and employee saving programme or through purchase
of life insurance or a home.Employee behavior deals with analyzing the behavior of an employee based
on his psychographic and demographic factors like age, gender, education and income groups. The
respondents of this study will consist of only the banking employees working in private and public
sector as they are having knowledge of financial products available at large. They have unique features
of safety, security, regular income, retirement benefit than the other occupation people like business
man.

Heena Kothari* Asst. Professor*, Altius Institute of Universal Studies, Indore

Altius Shodh Journal of Management & Commerce

 ISSN 2348 - 8891

When it comes to investing, the volume of facts and information available can be incredibly time consuming
to wade through and for many individuals it is just too confusing. Yet we need a good understanding of
the financial options available to us to be able to make good investment decisions. In India, many
investment avenues are available where some are marketable and liquid while others are non-marketable
and some of them are highly risky while others are almost riskless. The investor has to choose Proper
Avenue depending upon his specific need, risk preference, and returns expected. Different avenues are:

Safe/Low Risk Avenues: Savings Account, Bank Fixed Deposits, Public Provident fund, Government
Securities, etc.

Moderate Risk Avenues: Mutual Funds, Life Insurance, Debentures, Bonds.

High Risk Avenues: Equity Share Market, Commodity Market, FOREX Market.

Traditional Avenues: Real Estate (property), Gold/Silver, Chit Funds.

Emerging Avenues: Virtual Real Estate, Hedge Funds/Private Equity Investments, Art and Passion.

LITERATURE REVIEW

Puneet Bhushan & Yajulu Medury (2013) concluded that women are more conservative and takes
less risk and significant gender differences occur in investment preferences for health insurance, fixed
deposits and market investments among employees.

V.R.Palanivelu & K.Chandrakumar (2013) highlights that certain factors of salaried employees like
education level, awareness about the current financial system, age of investors etc. make significant
impact while deciding the investment avenues.

Lalit Mohan Kathuria & Kanika Singhania (2012) concluded that private sector banking employees
were investing a larger portion of their savings into safe and risk-free investment avenues, like employee
provident fund, public provident fund and life insurance policy and only forty per cent of the respondents
had high level of awareness regarding various investment avenues.

D. Harikanth & B. Pragathi (2012) indicated that there is a significant role of income and occupation
in investment avenue selection by the male and female investors. Geographical horizon of the investors,
risks bearing capacity, educational level, age, gender and risk tolerance capacity etc, also impacts their
selection.

Sanjay Kanti Das (2012) summarized that the bank deposits remain the most popular instrument of
investment followed by insurance and small saving scheme to get benefit of safety and security of their
life and investment. It was found that there is a need for increasing the financial literacy among the
middle class households.

Altius Shodh Journal of Management & Commerce

 ISSN 2348 - 8891

Meenakshi Chaturvedi & Shruti Khare (2012) revealed that most investor preferred Bank Deposits
as their first choice of investment, secondly small saving scheme followed by the life insurance policies.

Giridhari Mohanta & Sathya Swaroop Debasish (2011) states that people were ready to invest
for meeting their financial, social and psychological need. But the investor always had a mindset of
safety and security, higher capital gain, secured future, tax benefit, getting periodic return or dividends,
easy purchase and meeting future contingency.

Syed Tabassum Sultana (2010) concluded that individual investor still prefer to invest in financial
products which give risk free returns. The study confirmed that Indian investors even if they are of high
income, well-educated, salaried, and independent are conservative investors who prefer to play safe in
the market.

Rajakumar (2008) states that customers’ attitude towards purchase of insurance products concludes
that there is a low level of awareness about insurance products among customers in India.

Arvind Kumar Singh (2006) concluded that in Bangalore investors are more aware about various
investment avenues and the risk associated with that and in Bhubaneswar, investors are more conservative
in nature and they prefer to invest in those avenues where risk is less like bank deposits, small savings,
post office savings etc.

Ranganathan (2006) noted that financial markets are affected by the financial behavior of investors
and consumer behavior from the marketing world and financial economics had brought together a need
to study an exciting area of ‘behavioral finance’ and thus studying the behaviour of investors holds
importance.

Kar Pratip, Natrajan & J P Singh (2000) concluded that the household’s investment in shares,
debentures and mutual funds was below 10% and the equity investor household’s portfolio was of
relatively small value and undiversified. It was also found that one set of households, in spite of their
lower income and lower penetration level of consumer durables, were in the securities market, while
another set of household with higher income and higher penetration level of consumer durables did not
have investment in securities market.

Sujit Sikidar & Amrit Pal Singh (1996) revealed that the salaried and self-employed formed the

major investors in mutual fund primarily due to tax concessions.

OBJECTIVES

1. To study the investment behaviour towards investment avenues in Indore city.

2. To study the perceptions of different age groups towards investment avenues.

Altius Shodh Journal of Management & Commerce

 ISSN 2348 - 8891

HYPOTHESIS

H01: There is no significant difference between the perceptions of different age groups towards investment
avenues.

RESEARCH DESIGN

Descriptive research is carried out to describe the phenomenon. This study is done to understand
investment behaviour of different age groups towards investment avenues.

SAMPLING AND SAMPLE SIZE

For the present study the sample size was 100 collected from the respondents through convenient
judgmental sampling method in Indore city.

DATA COLLECTION

The study was done with the primary data using questionnaire as a tool to assess the investment behaviour.
Since the aim of the survey is to allow every person to list his opinion about investment avenues. A
closed ended questionnaire was prepared with total thirty characteristics of attributes to assess the
relative importance of each statement on a five-point Likert scale. The secondary data was collected
through various websites.

TOOLS APPLIED

The present study applied Mean and SD. The tools were applied through Statistical Software SPSS 19
through which mean and variance were revealed.

ANALYSIS AND INTERPRETATION

To test the reliability of data gathered for the current study Cronbanch alpha was used which showed
that data are reliable, as it came 0.829.

Altius Shodh Journal of Management & Commerce

 ISSN 2348 - 8891

RELIABILITY ANALYSIS - SCALE (ALPHA)

In reliability analysis, No of Cases were 100 and No of Items were 30.Cronbanch Alpha is .829 which
is greater than .75, hence the data is reliable and can be used for interpreting the behaviour of investors.

Reliability Statistics

Cronbach's Alpha Based on

Cronbach's Alpha Standardized Items N of Items
.829 .840 30

Combined Mean and Variance:

The combined mean noted was 3.523 and variance was .259 in the above study.

Summary Item Statistics

Minimu Maximu Maximum / N of
Mean m m Range Minimum Variance Items
Item Means 3.523 2.567 4.433 1.867 1.727 .259 30
Item 1.049 .461 1.789 1.328 3.880 .111 30
Variances

Individual means and variances of different age groups.

TABLE 1

AGE GROUP: “BELOW” 30

Summary Item Statistics

Maximum /
Mean Minimum Maximum Range Minimum Variance N of Items
Item Means 3.654 2.500 4.625 2.125 1.850 .358 30
Item Variances .767 .214 2.268 2.054 10.583 .273 30

Altius Shodh Journal of Management & Commerce

 ISSN 2348 - 8891

TABLE 2

AGE GROUP: “BETWEEN” 30-40

Summary Item Statistics

Maximum /
Mean Minimum Maximum Range Minimum Variance N of Items
Item Means 3.504 2.563 4.438 1.875 1.732 .278 30
Item Variances 1.140 .250 2.263 2.013 9.050 .149 30

TABLE 3

AGE GROUP: “ABOVE” 40

Summary Item Statistics

Maximum /
Mean Minimum Maximum Range Minimum Variance N of Items
Item Means 3.400 2.000 4.333 2.333 2.167 .367 30
Item Variances 1.209 .167 3.467 3.300 20.800 .810 30

TABLE 4

SUMMARIZED MEAN AND SD OF IMPACT OF AGE ON INVESTMENT AVENUE

PARAMETER AGE(IN MEAN STANDARD.

YRS) DEVIATION

YOUNGER < 30 3.65 .60

MIDDLE 30-40 3.50 .53

ELDER >40 3.40 .60

Altius Shodh Journal of Management & Commerce

 ISSN 2348 - 8891

RESULTS AND DISCUSSION

After fact finding techniques and implementation of the mean and SD results, it was found that younger
people are more interested in investment in comparison to elder and middle age people. Significant of
the research paper confidence goes with youngest investors. In future, updations of the research depend
on the number of respondents. These results are found with the help of primary data collection through
handmade questionnaire with statistical analysis.

According to the findings it was revealed that null hypothesis is rejected as there is a significant difference
between the perceptions of different age groups towards investment avenues. That means that investors
belonging to different age groups have different behaviour while doing investment and there selection of
any investment avenue highly depends upon their age. It was found that age affect investor’s preferences
(Lewellen, Lease and Schlarbaum, 1977).

CONCLUSION

The present study endeavored to give a look on behaviour of investors towards investment avenues.
The different avenues can be preferred provided it is put forth before young and different age group
investors in the desired form. If the younger generation starts investing at such an early stage on regular
basis, they will be able to save more for their future. Facts revealed in this study highlight the perception
of varied age group investors who desire to invest in different avenues which give high returns and
growth prospect.

Survey findings of this study have got significant managerial implications that can be used by investment
companies in restructuring their existing practices and finally innovating new ways of service delivery.

SCOPE FOR FURTHER RESEARCH

1. In this research, impact of age has been found out. The impact of other demographics can also
be researched.

2. Relation between various factors can also be researched.

Altius Shodh Journal of Management & Commerce

 ISSN 2348 - 8891

REFERENCES

 Bhushan,P. & Medury, Y. (2013). Gender Differences in Investment Behaviour among

Employees. Asian Journal of Research in Business Economics and Management, 3 (12), 147-
157.

 Chaturvedi, M and Khare, S. (2012).A Study of saving pattern and investment preferences of
individual household in India. International Journal of Research in Commerce & Management,
3 (5).

 Harikanth,D. & Pragathi B.(2012). Role Of Behavioural Finance In Investment Decision Making-
A Study On Select Districts Of Andhra Pradesh, INDIA .International Journal in
Multidisciplinary and Academic Research (SSIJMAR), 1( 4).

 Kanti Das, S. (2012). Middle Class Household’s Investment Behaviour: An Empirical Analysis.
Journal of Radix International Educational and Research Consortium, 1(9).

 Kar Pratip, Natarajan I and Singh J. P. (2000).Survey of Indian Investors. SEBI-NCAER.

 Kathuria,L.M. & Singhania.K. (2012). Investment Decision Making: A Gender-Based Study

of Private Sector Bank Employees. The IUP Journal of Behavioral Finance, 9(1), 45-56.

 Kumar Singh, A. (2006). A study of investment behaviour of investors, MBA dissertation

report.

 Lewellen, W., Lease, R. and Schlarbaum, G. (1977). Patterns of investment strategy and behavior
among individual investors. Journal of Business, 50, 296-333.

 Mohanta G. & Debasish S. (2011). A Study on Investment Preferences among Urban Investors
in Orissa. Prerna Journal of Management Thought and Practice, 3(1), 1-9.

 Palanivelu, V.R. & Chandrakumar, K. (2013). A Study on Preferred Investment Avenues

among Salaried Peoples with Reference to Namakkal Taluk, Tamil Nadu, India. IBEA,
International Conference on Business, Economics, and Accounting.

 Rajakumar, J. Dennis, (2008). Studies of corporate financing and investment behavior in India:
A survey. The ICFAI University Journal of Applied Finance, 14(12), 5-29.

 Ranganathan K. (2006). A Study of Fund Selection Behavior of Individual Investors towards

Mutual Funds: With Reference To Mumbai City. ICFAI Journal of Behavioral Finance, 3(2),
63-88.

 Sikidar, S. and Singh, A. (1996). Financial services: Investment in equity and mutual funds - A
behavioral study, In: Bhatia, B. and Batra, G., (Eds), Management of Financial Services, New
Delhi: Deep and Deep Publications, 136-45.

 Syed.S.T. (2010). An Empirical Study of Indian Individual Investors Behavior. Global Journal
of Finance and Management, 2(1), 19-33.

Altius Shodh Journal of Management & Commerce