Investment Behavior and Investment Preference of Investors

CHAPTER – 1
INTRODUCTION
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INTRODUCTION
“Investment is a commitment of funds made in the expectation of some positive rate of

return”.
“Investment management is the process of managing money, including investments,

budgeting, banking and taxes, also called as money management.”
Saving generally involves putting money into a bank or building society account or money
market fund that is relatively safe and pays a fixed, although typically low rate of interest.
However, a savings plan may not earn you wealth enhancing returns over the long term and
taking into account the impact of inflation the real purchasing power of your money will likely
decline.
Investing, on the other hand, can help you to both create and preserve your wealth. By taking
an appropriate level of risk you may have the opportunity to earn potentially higher long-term
returns. It is important to remember that the value of investments, and the income from them,
may fall or rise and investors may get back less than they invested. Thus, every investment
involves return and risk.
Savings are generated when a person or an organization abstains from present consumption
for a future use. The person saving a part of his income tries to find a temporary repository for
his savings until they are required to finance his future expenditure. This results in investment.
OBJECTIVES OF THE STUDY
The main purpose of the study is to understand the investment behavior and investment
preference of investors. Determining investor perception will provide a way to accurately
measure how the investor think about the products and services provided by the company.
1. To identify the preference investment avenues of investors and the factors which
influence their investment decisions.
2. To understand in depth about different investment avenues available in India.
3. To find out the main objectives of the investors in kasaragod Taluk towards making
investments.
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4. To offer suggestions for making investments.
STATEMENT OF THE PROBLEM
This survey titled, "An Empirical Analysis on Preferred Investment Avenues among
Investors With Reference To Kasaragod Taluk" was conducted in the Kasaragod district.
The main criteria for selecting this District were that this is one of the fastest developing
districts in Kerala. This district has seen all-round development in the field of investment,
business, Service sector etc. The other consideration was that the increase of investment in
different areas of the districts and the positive attitude of the people towards various
investment avenues available.
Stock market has been subjected to speculations and inefficiencies, which are beached
to the rationality of the investor. Traditional finance theory is based on the two assumptions.
Firstly, investor's make rational decisions; and secondly investors are unbiased in their
predictions about future returns of the stock. However financial economist now realized that
the long held assumptions of traditional finance theory are wrong and found that investors can
be irrational and make predictable errors about the return on their investments. This analysis
on individual investor's behavior is an attempt to know the profile of the investor and also know
the characteristics of the investors so as to know their preference with respect to their
investments. The study also tries to unravel the influence of demographic factors like age on
risk tolerance level of the investor.
METHODOLOGY OF THE STUDY
The method of collection of data and information to be used for the study has been taken from
two types of sources, are primary source and secondary source. It includes the data source,
sample size, sampling technique and tools of analysis. In this study the researcher has used the
primary data obtained form 50 respondents selected by applying simple random sampling
technique in kasaragod Taluk.
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COLLECTION OF PRIMARY DATA:
The primary data refers to the data collected from direct questioning and which has not been
collected or gathered earlier by any other research study. The data for this study was collected
by structured questionnaire prepared by researcher keeping the objectives of the studies and
distributed to 50 respondents.
COLLECTION OF SECONDARY DATA:
This secondary data is generated from outside. Articles, investment magazines, Business
magazines, expert opinion, different books from different authors, Data available in internet,
etc. are used as secondary data.
SAMPLING FRAME:
I have taken whole Kasaragod Taluk as sample frame for conducting research.
SAMPLING METHOD:
I have used proportionate Random Sampling to select the respondent from the entire
population.
SAMPLE SIZE:
The sample size covered for the purpose of this study is 50.
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SAMPLING UNIT:
The respondents who will be asked to fill out questionnaire are the sampling units. These
comprise government employees, semi government employees, retired persons, house wives,
self employed, professionals, and other investors.
TOOLS FOR DATA COLLECTION:
For the purpose of data collection questionnaire, in depth interview, telephone interview and
email were used.
TOOLS FOR DATA PRESENTA TION:
Usual statistical tools such as tables, percentages, pie diagrams, bar charts etc. were used .
LIMITATIONS OF THE STUDY
This analysis is based upon investor's behavior for investment preferences during normal time
vice versa recessionary period. This analysis would be focusing on the information from the
investors about their knowledge, perception and behavior on different financial products.
The various limitations of the study are:
➢ There are a large number of investment avenues are available in the market and
analyzing them all is too difficult and time consuming.
➢ As the analysis based on primary as well as secondary data, possibility of unauthorized
information cannot be avoided
➢ The study is purely based on primary and secondary data so that possibility of incurring
unauthorized or biased information can’t be avoided.
➢ Lack of intend of the people to provide correct information may affect the validity of
the analysis.
➢ The lack of knowledge of investors about the investment avenues can be major
limitation.
➢ The available information may be biased.
➢ Study is an expensive one.
➢ For this study the sample size taken is very short than the actual investors population,
may affect the reliability of the study.
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CHAPTER SCHEME
CHAPTER 1- deals with introduction, objectives of the study, statement of the problem,
scope of the study, methodology of the study, limitations of the study.
CHAPTER 2- Containing Introduction, Investment objectives, Investment Alternatives,

Background of the Topic, Conceptual Frame Work, Current Scenario and Review of
Literature.
CHAPTER 3- Deals with Industry Profile.
CHAPTER 4- Deals with Analysis and Interpretation
CHAPTER 5- Deals with Findings and Suggestions and Conclusion.
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CHAPTER – 2
THEORETICAL FRAMEWORK
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INTRODUCTION
An investment is an asset or item that is purchased with the hope that it will generate income
or will appreciate in the future. In an economic sense, an investment is the purchase of goods
that are not consumed today but are used in the future to create wealth. In finance, an
investment is a monetary asset purchased with the idea that the asset will be sold at a higher
price for a profit. One of the important reasons for investing money is to meet the cost of
inflation. Because while placing our money in investment vehicles, such as stocks and mutual
funds, introduces an element of risk, we stand a much better chance of outpacing the inflation
rate throughout a period of years. The sooner one starts investing the better. By investing early
we allow our investment more time to grow, where by the concept of compounding increases
our income, by accumulating principal and interest or dividend earned on it, year after year.
People commit money to investments with the expectations to increase their future wealth by
investing money to spend in the future. It allows you to turn the tide by making your money
work for you. Through the magic of compound interests, for example, your accumulated
interest actually earns additional money without you having to lift a finger. Consequently your
original investment can multiply gradually over time. For example, if you invested $1,000 at
an interest rate of 7% compounded annually, your investment would grow to $7,612.26 after
30 years. An investment can be described as perfect if it satisfies all the needs of all investors.
Thus the starting point in searching for the perfect investments would be to examine the
investor needs. Investment activity includes buying and selling or trading in the above claims
on money and / or promissory notes. An investment for one may be disinvestment of another
as in the case of stock market trading or may be a fresh investment in a new issue. In the New
Issue Market, one can only buy securities. Investments can also be made in non-marketable
securities or instruments or other avenues. All purchases of securities are thus investment
although for the economy as a whole, some investments are offset by corresponding
disinvestments. There are two terms which are relevant for this context namely, Gross and Net
Investments. Gross are total investments made from all sources by an economy or a single
economic unit. Net investments are those which are Gross investments minus depreciation for
the economy or a company or corporate sector or Govt. sector, is net investment, which is
termed also as capital formation.
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INVESTMENT OBJECTIVES
Most people will find that their investment objectives change throughout their lives. Capital
appreciation may be more important for the young investor, but once she enters her golden
years, that same investor may place a greater emphasis on gaining income. Whatever your
objectives, knowing what investment options are out there is key. Furthermore, as most
successful investor will tell you, diversification is king. A diversified portfolio not only reduces
unwanted risk, but also contributes to a winning portfolio. And having a well diversified
portfolio doesn’t necessarily mean just buying more than one stock; breaching out into other
areas of investment could be a viable alternatives. Objectives may be classified as financial or
personal objectives. Financial objectives are safety, profitability, and liquidity. Personal or
individual objectives may be related to personal characteristics of individuals such as family
commitments, status, dependents, educational requirements, income, consumption and
provision for retirement etc. Elements of investments are Risk and Return relationship, Time,
Liquidity and Tax savings. An investor may pursue certain investments in order to adopt tax
minimization as part of his or her investment strategy. A highly-paid executive, for example,
may want to seek investments with favorable tax treatment in order to lessen his or her overall
income tax burden. Making contribution to an IRA or other tax-sheltered retirement plan, such
as 401(k), can be an effective tax minimization strategy.
INVESTMENT ALTERNATIVES
There are various investment alternatives which are available to an Indian investor. An investor
may select and or a combination of the best investment options which appeals to him or her.
The selection of the best investment options also depend on the age, income, dependents, etc
of a particular person.
The following investment avenues are popular and used extensively in India:
✓ Investment in shares, debentures and bonds are issued by different types of companies,
corporations and public sector organizations.
✓ Postal Savings Schemes.
✓ PF, PPF and other Tax sheltered savings schemes such as national savings scheme,
national savings certificates and tax saving schemes of LIC, ICICI, Infrastructure
bonds and so on.
✓ Investment in investment intermediaries such as mutual funds.
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✓ Deposits in companies, fixed deposits and recurring deposits.
✓ Life insurance investment i.e. investment in different life policies such as whole life
policy, endowment policy, annuity plans and so on.
✓ Investment in gold, silver, precious metals and antiques.
✓ Investment in real estates.
✓ Investment in gilt-edged securities and securities of government and semi-government
organizations. (E.g. Bonds, treasury bills, etc.)
There are some avenues/investment schemes where tax benefits are available. Such
schemes are called Tax Savings Schemes of Investment. A tax payer can take the benefit of
such schemes and bring down his total tax liability. The basic purpose of such schemes is to
encourage investment in certain investment avenues. In some schemes, the entire investment
is made tax free, i.e. it is deducted from yearly taxable income.
BACKGROUND OF THE TOPIC
Investment is referred to as the concept of deferred consumption, which could be in the form
of an asset, rendering a loan, keeping the saved funds in a bank account such that it might
generate lucrative returns in the future etc. The options of investments are huge, all of them
having different risk-reward trade off. This concludes that the investment industry in India is
really broad and that is why understanding the core concepts of investments and accordingly
analyzing them is essential.
Only after thorough understanding of the investment industry, can an investor create and
manage his own investment portfolio such that the returns are maximized with the minimum
level of risk. Today's investor has a variety of options to choose from while making his/her
investment decision. Keeping pace with the changing times and under the liberalized financial
sector regime, the financial institutions are also decorated with innovative instruments to meet
the growing demand of modern investors. But this innovative and diversified financial system
could not lost the appeal of traditional means of investment. Through this study, an analysis
has been made into preferred investment avenues of the household.
CONCEPTUAL FRAME WORK
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Investment - parking of funds (current) to earn benefits or securing growth in future can be
termed as Investments. It is a sacrifice from current income to gain returns at a later stage/date.
Investment should be done to yield more return than rate of inflation. The current income of an
individual can be put aside for two things - either consumption or savings. The money once
consumed is gone forever, whereas the savings bears fruit. Major element of any investment is
time and risk. It purely depends upon individual capacity to give importance to either of the
two elements, on the basis of one's need. There are plenty of areas where money can be invested
like- government bonds, equities, gold, real estate, stocks, fixed deposits, etc. A proper
planning and analysis should be done in order to reach to a perfect decision of investment/or
portfolio management. One's skill improves with the timely investments. In this uncertain and
volatile life, even the markets (secondary/commodity, etc.) refuse to perform as per the
expectations of the investor. Hence, one needs to analyze well in advance which security can
be considered worth to invest into, which security is suitable to game for. With the changing
times, inclusion of youngster's decision has also taken a solid ground while deciding which
investment avenue to exercise. There may be a difference of opinion in selecting a good stock;
a statistical approach may solve the issue. A proper and systematic analysis of stock leads to
the formation of a flexible portfolio that may be churned easily as the needs of the hour. There
can be various investment avenues like Treasury Bills, 10 Years Security Bonds, Mutual Funds,
etc. Parking money in tax haven is a better/safer way of evading tax. One needs to check out
the pros and cons, before getting into any such elements.
CURRENT INVESTMENT SCENARIO
Globalization and Foreign Direct Investment (FDI) is playing an important role in

the development of developed developing and underdeveloped economies. The reasons are
simple like introduction of new products, new skills, easy approachable markets and modern
technology to the host countries. Every country around the world is playing an important role
in the encouragement of foreign and overseas investors and their investments. India is being
ranked as the second most favored destination for foreign investments after china by showing
a growth year after year.
Against the backdrop of the global financial crisis and contagion to the developing
world, discussion on recent financial market development and regulation in India has assumed
a new urgency. India has witnessed a considerable development in the credit and capital
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markets both from a regulatory and legal perspective. In the past decade the Indian financial
sector has deepened and more integrated globally.
End of fiscal year 2008-09 India received FDI inflows totaling approximately
USD$11.2 billion with Mauritius as the highest contributor. Sectors like services including
financial and nonfinancial services attracted the maximum amount of US$6.1 billion. As per
the figures released by Department of Industrial Policy and Promotion (FDI) inflows during
2008-09 (from April 2008 to March 2009) stood at approx. US$6.2 billion. Government on
time to time has taken various initiatives to liberalize FDI policies so as to receive maximum
investment keeping in mind that domestic products should not get blemished. The FDI outflow
from India has also been increased and expected to reach to very high mark.
As per the figures released by Reserve Bank of India the total outward investment
from India, excluding that were made by individuals and banks, rose 29.6 per cent to US$17.4
billion in 2007-08. The second highest foreign employer in the UK is India after the US,
according to the UK inward foreign direct investment (FDI) official data. With various mergers
and acquisitions Indian businessmen are expanding their horizons and creating a mark in the
International area. Companies like Apollo Tires, Eveready Industries etc are among some of
the companies which are investing abroad. Indian banks, financial institutions are amongst
them also to invest abroad. Government as in terms of increasing FDI inflow has taken various
initiatives for outflow as well. Like raising the overall limit for overseas investment by
domestic mutual funds from US$7 billion, increasing the limit of remittance and allowing
mutual funds to make an aggregate investment etc.
BEST INVESTMENT AVENUES OF CURRENT SCENARIO
India has become one of the fastest growing economies. Investment growth is
eventually linked to the growth of the economy. So most of the investors look for emerging
markets where the growth rate is higher than the developed economies. Best investment
avenues are;
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EQUITY MUTUAL FUNDS (especially comprising blue chip companies)
Through the market has gone down, there is not much downside in blue chip companies and
mutual funds comprising of these companies. The government is clear about manufacturing
and is providing faster clearances for factories to be set up, production to start, and energy to
be given to the industry.
Direct equities: it is a type of securities where the investor buys the ownership of company.
Equities are tradable (bought & sold) in the stock exchanges. Equities can be a good investment
options for a long term horizons as it beats all the asset class in terms of returns over longer
time frame. This can be considered as one of the riskiest asset as well. The risk of loss of capital
is very high. NRI can also explore this avenue for investment by opening of repatriation of
non- repatriation at the time of opening an account.
Mutual fund: a group of people pools the money and gives it to get it managed professionally.
The investment avenue offers cost efficiency, professional management, risk- diversion, good
regularity body. Mutual investment allows investor to start with minimum of Rs.500. like
Direct Equity, NRI can also invest in India & KYC (know your client) to invest in Indian
mutual fund, mutual fund investment also offers option of repatriation of non-repatriation.
LIFE INSURANCE: Life insurance is a contract between a buyer and insurance company.
Insurance company pays a predominant amount to the nominee in case of death of a buyer. The
primary purpose of insurance is to protect the family (financially) in case of an event of death
of the earning member of the family. Life insurance was a traditional product and it was giving
fix returns of 6%-7% until the introduction of Unit Linked Insurance Plan (ULIP). ULIP gives
the benefit of risk cover as well as the returns of equity market as it invest the premium into
equity linked instruments. Now, Insurance is also open for NRI investment. To buy insurance
in India, NRI has to go through few formalities. NRI needs to submit proposal from (available
in prescribed format), Medical Report, and Proof of age and Income etc.
COMMODITIES: commodities has emerged as one the asset class in recent time. Gov.t has
allowed investment into listed commodities. Commodity trading is in its nascent stage in India.
Currently, commodity trading is available in bullions, base metals and Agri commodities.
Investor needs to open an account with the broker to trade in a commodity market. Commodity
market is very risky. Investor with sound knowledge should only invest in commodities. As of
now, NRIs are not allowed to trade in commodity market in India.
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REAL ESTATES: real estate is an ever green investment option in India. Most of the investor
prefers investment into real-estate; it can be a residential or commercial property. The thumb
rule of investment in real estate says investor should look at the property available at 15-20 km
away from the city with the time frame of 5-7 years. Real estate investment offers very low
level of liquidity. It also generate higher rate of returns. NRI can also invest into Indian real
estate. They can buy and own property in India, however few real estate investment are not
open for NRI investment.
FIXED DEPOSIT: a fixed deposit allows investors to deposit money into bank/corporate for a
specific period of time, which in return earns an investment. Rate of returns in fixed deposits
are higher than bank savings account. An investment into 5 year fix deposit is eligible for tax
benefit under Sec.80 C. maximum of Rs.100000. NRI can also avail this facility & invest into
fix deposits offered by national as well as private banks.
NSC: National Savings Certificate (NSC) offers a fixed interest. NSCs are issued by the
Department of Post, Govt. of India. NSC is available at authorized post offices. NSCs are a
practically risk free avenue of investment as they are backed by the Govt. of India. NSC is
available at authorized post offices. It has a maturity of 6 years. It offers a rate of return of 8%
per annum.NSC is gives tax benefit under Sec.80 C. Minimum investment amount is Rs.500.
The option is not available for NRI’s investment.
POST OFFICE- MIS- Post office monthly income scheme is specially made for the purpose of
providing regular pension to the investors. It offers 8% per annum, paid on monthly basis.
Maximum limit for investment is Rs.4.5 lakh & maturity period is 6 years. It can be prematurely
enchased after 1 year but before 3 years at the discount of 2% & after 3 years at the discount
of 1%. The option is not available for NRI’s investment.
PPF – The PPF is a Govt backed, long-term small saving scheme of the Central Government.
It was started with the objective of providing income security to the unorganized sector & self
employed individuals in their old age. PPF offers tax benefit under Sec.80 C up to Rs.70000.
PPF has lock in of 15 years. However, it allows withdrawing 50% of the balance at the end of
the fourth year, proceeding the year in which the amount is withdrawn or the end of the
preceding year whichever is lower. The option is not available for NRIs investment.
BONDS: Bonds is a form of lending money to Govt or company. In exchange, Govt or

company pays fix amount of interest on principal. Corporate bonds offer higher returns
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compare to Govt bonds, because of the risk factor. Before investing into bonds, investor should
always look for the rating & the interest the interest rate offered by the bond. NRI can also
invest into bonds. Generally issuer of the bond mention the eligibility criteria for investors,
NRI can refer the offer document and invest into bond if they are allowed.
REVIEW OF LITERATURE
Literature suggests that major research in the area of investor's behavior has been done by
behavioral scientists such as Weber, Shiller and Shefrin. Shiller who strongly advocated that
stock market is governed by the market information which directly affects the behavior of the
investors. Several studies have brought out the relationship between the demographic such as
Gender, Age and risk tolerance level of individuals. Of this the relationship between Age and
risk tolerance level has attracted much attention.
Ilorvath and Zukerman suggested that one's biological, demographic and socio-economic
characteristics; together with his/her psychological makeup affects one's risk tolerance level.
Malkiel suggested that an individual's risk tolerance is related to his/her household situation,
life cycle stage and subjective factor. Mittra discussed factors that were related to individual
risk tolerance, which included years until retirement, knowledge sophistication, income and
net worth. Guiso, Jappelly and Terlizzes, Bajtelsmit and Venderhei, Powell and Ansic,
Jinakoplosand Bemasek, Harihara, Chapman and Domain, Hartog,Ferrer-l-Carbonnel and
Jonkerconcluded that males are more risk tolerant than female. Wallach and Kogan were
perhaps the first to study the relationship between risk tolerance and age. Cohn, Lewellen found
risky asset fraction of the portfolio to be positively correlated with marital status. Morin and
Sueraz found evidence of increasing risk aversion with age although the households appear to
become less risk averse as their wealth increases. Yoo found that the change in the risky asset
holdings were not uniform. He found individuals to increase their investment in risky assets
throughout their working life time, and decrease their risk exposure once they retire. Lewellen
while identifying' the systematic patterns of investment behavior exhibited by individuals
found age and expressed risk taking propensities to be inversely related with major shifts taking
place at age 55 and beyond. Indian studied individual investor's were mostly confined to studies
on share ownership, except a few. The RBIs survey of ownership of shares and L.C. Gupta's
enquiry into the ownership pattern of industrial shares in India were a few in this direction. The
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NCAER's studies brought out the frequent from savings of individuals and the components of
financial instruments of rural households. The Indian shareowners survey brought out a volley
of information on shareowners. Rajarajan .V classified investors on the basis of their
demographics. He has also brought out the investor's characteristics on the basis of their
investment size. He found that the percentage of risky assets to total financial investments had
declined as the investor moves up through various stages in life cycle.
Also investor's lifestyles based characteristics has been identified. The above discussion
presents a detailed picture about the various facets of risk studies that have taken place in the
past. In the present study, the findings of many of these studies are verified and updated.
Behavioral fiance is a new emerging science that studies the irrational behavior of the people.
Arangasami, 1992 has observed that more and more dependence on mobilization of resources
through small savings will ensure and promote self-reliance. He concluded that the Central
government should give proper assistance and encouragement to the small savings agencies,
which will be useful not only in mobilization of funds but also for the economic development.
The Securities and Exchange Board of India (SEBI) and NCAER 2000, Survey of
Indian Investors has reported that safety and liquidity were the primary considerations which
determined the choice of an asset. Ranked by an ascending order of risk perception fixed
deposit accounts in bank were considered very safe, followed by gold, units of UTI-US64,
fixed deposits of nongovernment companies, mutual funds, equity shares, and debentures.
Household's preference for instruments in which they commonly invested matched the risk
perception. Higher proportions of households invest in instruments with a lower risk
perception. Bank deposits, which had an appeal across all income classes, and tax-saving
schemes were preferred by middle-income and higher- income groups. There was a correlation
between the income levels and investments of households in market-related securities.
Karthikeyan, 2001 has conducted research on Small Investors" Perception on Post Office
Saving Schemes and found that there was significant difference among the four age groups, in
the level of awareness for KisanVikasPatra (KVP), National Savings Schemes (NSS), and
Deposit Scheme for Retired Employees (DSRE), and the overall score confirmed that the level
of awareness among investors in the old age group was higher than in those of the young age
group. No difference was observed between male and female investors except for the NSS and
KVP. Out of the factors analyzed, necessities of life and tax benefits were the two major ones
that influence the investors both in semi-urban and urban areas. Majority (73.3 per cent) of
investors of both semi urban and
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urban areas were very much willing to invest in small savings schemes in future provided they
have more for savings. Kathryn M. McCarthy in her article "Engaging Investment Advisors for
a Family Foundation" published in The Journal of Wealth Management, 2001 in this article;
the author addresses the multi-faceted question of hiring investment talent for a foundation.
She starts with a review of possible goals for an investment program and the kinds of assistance
required to meet those goals. She continues with a description of what to expect from an
investment advisor, including investment services and periodic reporting, as well as ongoing
communication. She concludes with a discussion of the circumstances under which an in-
house advisor should be considered and the processes for finding, selecting, and working with
an outside professional.
Krishnamoorthi C in his research paper "Changing Pattern of Indian Households: Savings in

Financial Assets" published in RVS Journal of management, 2009 concluded that irrespective
of the developments in the capital market/economic conditions, investors like to invest
regularly and this investment behavior is highly related to educational background. Their
occupation, reading habit of investment news and the time taken for investment decision
making process.
Saravana Kumar in his article "An Analysis of Investor Preference towards Equity and
Derivatives" published in The Indian journal of commerce, July-September 2010 concluded
that the most of the investor are aware of high risk involved in the derivative market. To reduce
the risk in the market, the investors should strictly follow the stop loss method. The study
reveals that most of the investor prefers cash market where the script can be held for long term
and the risk is less and it is transferable to others with minimal time period. Even though risk
is higher, some investors prefer derivative market where return is also higher.
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CHAPTER- 3
INDUSTRY PROFILE
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INDUSTRY PROFILE
Indian financial industry is considered as one of the strongest financial sector among the
world market. Many industry experts may give various reasons for such Indian financial
industry reputation, but there is only one answer which no one can deny, is the effective
governance of the country's supreme monitory authority the "RESERVE BANK OF INDIA
(RBI)". Financial sector in India has experienced a better environment to grow with the
presence of higher competition. The financial system in India is regulated by independent
regulators in the field of banking, insurance, mortgage, and capital market. Government of
India plays a significant role in controlling the financial market in India. Ministry of Finance,
Government of India controls the financial sector in India. Every year the finance ministry
presents the annual budget on 28thFebruary. The Reserve Bank OF India is an apex institution
in controlling banking system in the country. Its monetary policy acts as a major weapon in
India's financial market. Various governing factors in financial sector are;
❖ RBI - Reserve Bank of India is the supreme authority and regulatory body for all the
monetary transactions in India. RBI is the regulatory body for various Banking and Non
-Banking financial institutions in India.
❖ SEBI - Securities and Exchange Board of India is one of the regulatory authorities for
India's capital market.
❖ IRDA - Insurance Regulatory and Development authority in India regulates all the
insurance companies in India.
❖ AMFI - Association of Mutual Fund in India regulates all mutual fund companies in
India.
❖ FIPB - Foreign Investment Promotion Board regulates all the foreign direct investments
made in India.
❖ Investment in gold is governed by the World Gold Council; in India we do not have
any regulatory authority for investment in gold.
❖ Ministry of finance, Government of India has a control of all the financial bodies in
India.
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❖ Government securities, Public Provident fund (PPF), National Savings Certificate
(NSC), and Post Office Savings are all under the control of the central government.
Investment are normally categorized using the risk involved in it, risk is dependent on various
factors like the past performance, its governing body, involvement of the government etc., in
this scenario Indian investments are classified in to 3 categories based on risk. They are;
1. Low Risk/No Risk Investments.

2. Medium Risk Investments.
3. High Risk Investments.
Apart from these, there are traditional investment avenues and emerging investment avenues
VARIOUS INVESTMENT AVENUES AVAILABLE IN INDIA
Savings form an important part of the economy of any nation. With the savings invested in
various options available to the people, the money acts as the driver for growth of the country.
Indian financial scene too presents a plethora of avenues to the investors. Through certainly
not the best or deepest of markets in the world, it has reasonable options for an ordinary man
to invest his saving. Investments are generally categorized based on its risk involved in it. That
is low risky, medium risky and high risky investment avenues. Also there are apart from
traditional investment avenues some emerging investment avenues were also exists.
SAFE / LOW RISKY INVESTMENT AVENUES
BANK DEPOSITS
Banks are considered as the safest of all options, banks have been the roots of the financial
systems in India. For an ordinary person though, they have acted as the safest investment
avenue wherein a person deposits money and earns interest on it. The two main modes of
investment in banks, savings accounts and fixed deposits have been effectively used by one
and all.
Savings deposit account: commercial banks accept savings deposits. It is mainly done to
encourage the savings habit of the people. These accounts are mean for middle and low income
groups. It can be opened with a minimum amount of Rs.5. there is variations in the minimum
amount to be kept by different banks. The minimum balance is Rs.500 for saving accounts with
cheque facility in urban centres and metro cities branches of SBI. Proper satisfactory
introduction is required for opening this. Certain restrictions are imposed on No. of times for
20
withdrawal of money from the deposit account and the amount of withdrawal with in a period.
The rate of interest paid is less than the rate of interest paid on fixed deposits.
Fixed deposit accounts: it is one of the important functions of the commercial bank. It
accepts deposits from every class and from every source. To attract savings from all sorts of
individuals, the bank maintains different types of deposit accounts.
PROVIDENT FUND SCHEMES
Provident fund schemes are compulsory deposit schemes applicable to employees in the public
and private sector. There are three kinds of provident funds applicable to different sectors of
employment, namely Statutory Provident Fund, Recognized Provident Fund and Unrecognized
Provident Fund.
In addition to these, there is a voluntary provident fund scheme which is open to any investor
whether employed or not. This is known as the Public Provident Fund (PPF). Any number of
the public can join the scheme which is operated by the post offices and the State Bank of India.
PUBLIC PROVIDENT FUND; PPF is a 30 year old constitutional plan of the central
government happening with the objective of providing old age profits security to the
unorganized division workers and self-employed persons. Currently, there are almost 30 lakhs
PPF account holders in India across banks and post offices.
Eligibility: Any individual salaried or non-salaried can open a PPF account he may also pledge
on behalf of a minor, HUF, AOP and BOI.
Even NRIs can open PPF account. A person can contain only one PPF account. Also two adults
cannot open a combined PPF account. The collective annual payment by an individual on
account of himself, his minor child and HUF/AOP/BOI (of which individual is member) cannot
exceed Rs.70, 000 or else the excess amount will be returned without any interest.
Subscription: The yearly contribution to PPF account ranges from a least of Rs.500 to a
maximum of Rs.70000 payable in multiple of Rs.5 either in lump sum or in convenient
installments, not exceeding 12 in year.
Penalty in case of non-subscription: The account will happen to obsolete if the required
minimum of Rs.500 is not deposited in any year. The amount before now deposited will
21
continue to earn interest but with no facility of taking loan or making withdrawals. The account
can be regularized by depositing for each year of default, arrears of Rs.500 along with penalty
of Rs. 100.
POST OFFICE SAVINGS
The investment avenues provided by post offices are generally non-marketable. Moreover, the
major investments in post office enjoy tax concessions also. Post offices accept savings
deposits as well as fixed deposits from the public. There is also a recurring deposits scheme
which is an instrument of regular monthly savings.
Six-year National Savings Certificates (NSC) is issued by post offices to investors. The
interest on the amount invested is compounded half-yearly and is payable along with the
principal at the time of maturity which is six years from the date of issue.
Indira Vikas Patra and Kissan Vikas Patra are savings certificates issued by post office.
GOVERNMENT SECURITIES
A government security is a bond issued by a Govt. authority with a promise of repayment upon
maturity. Govt. securities such as savings bonds, treasury bills and notes also promise periodic
coupon or interest payments. These securities are considered low-risk, since they are backed
by the taxing power of the Govt. These securities are usually issued for two different reasons.
The primary reason that most Govt. securities are issued is to raise funds for Govt.
expenditures. The federal Govt. issues treasury securities to cover shortfalls in its annual
budget. Additionally, cities will often issues bonds for construction of schools, libraries,
stadiums, and other public infrastructure programs.
A central bank of a country, such as the U.S. Federal Reserve, will sell debt securities for
another reason: to control the supply of money in an economy. If the Federal Reserve wants to
slow the growth rate of money in the economy, it will sell Govt. securities. This means that it
is sucking up dollars from the economy and replacing them with Govt. securities, which results
in a slowing of the rate of growth in the economy will help keep inflation under control.
Types of Govt. securities are; Treasury bills: are short-term securities issued by the federal
Govt. their maturity period range from days to 52 weeks. These securities are sold at a discount
rate and will be paid at face value, which is how the investors make their money.
22
Treasury notes are Govt. securities with maturity period longer than treasury bills. Their
maturity periods can be two, three four, five, seven, and ten years. Interest is paid every six
months.
Treasury inflation protected securities (TIPS) are securities that are protected from inflation.
The principal increases, if there is inflation, and decreases, if there is deflation. They have
maturities of five, ten and thirty years. Interest is paid every six months.
MUTUAL FUND
A mutual fund is a pool of money from numerous investors who wish to save or make money.
Investing in a mutual fund can be a lot easier than buying and selling individual stocks and
bonds on once own. Investors can sell their shares when they want.
Mutual funds are associations or trusts of public members who wish to make investment in the
financial instruments or assets of the business sector or corporate sector for the mutual benefit
of its members. The fund collects the money of these members from their savings and invests
them in a diversified portfolio of financial assets with a view to reduce risks and to maximize
their income and capital appreciation for distribution to its members on a pro-rata basis. They
enjoy collectively the benefits of expertise in investment by specialists in the trust, economies
of scale which no single individual by himself could enjoy. Mutual fund is thus a concept of
mutual help of subscribers for portfolio investment and management of these investments by
experts in the field. These funds are set up under the Indian Trust Act. UTI is governed by its
own Act.
These funds are of various types and set up for purposes and objectives. Some are closed-ended
with contributions from its members collected during a definite time frame of a few days to a
few months. Thus the issue of Can Growth was kept open for only a few days, while the LIC
Mutual Fund was kept open for a few months. The life of the fund which is closed ended may
also e for a specific period of 5 to 7 years after which the income and profits in the form of
capital appreciation etc. are all distributed back to the members after deduction of expenses of
the funds by its trustees. Some of the mutual funds are open-ended like the UTI Schemes of
1964 under which units are purchased and sold throughout the year and member can enter the
scheme any time or walk out of it also any time. These are perpetual schemes without an end,
each individual member enjoying the benefit of expert investment in the form of income and
growth during the period of his stay with the UTI.
23
Further these funds can be classified into three types by objectives, namely, those for income
alone, for growth alone (capital appreciation) and for both. The income funds aims at the
maximization of income without pursuing the growth objectives, while the growth funds
specializes in securing capital appreciation, irrespective of income. But income and growth
fund aims at both and in a judicious mix.
LIFE INSURANCE
Life insurance or life assurance is a contract between an insurance policy holder and an insurer
or assurer, where the insurer promises to pay a designated beneficiary a sum of money (the
benefit) in exchange for a premium, upon the death of an insured person (often the policy
holder). Depending on the contract, other events such as terminal illness or critical illness can
also trigger payment. The policy holder typically pays a premium, either regularly or as one
lump sum. Other expenses (such as funeral expenses) can also be included in the benefits.
Life policies are legal contracts and the terms of the contract describes the limitations of the
insured events. Specific exclusions are often written into the contract to limit the liability of
the insurer; common examples are claims relating to suicide, fraud, war, riot, and civil
commotion.
Life-based contracts tend to fall into two major categories:
Protection policies- designed to provide a benefit, typically a lump sum payment, in the event
of specified event. A common form of a protection policy design is term insurance.
Investment policy- where it’s the main objective is to facilitate the growth of capital by regular
or single premiums.
DEBENTURES
If a company needs funds for extension and development purpose without increasing its share
capital, it can borrow from the general public by issuing certificates for a fixed period of time
and at a fixed rate of interest. Such a loan certificate is called a debenture. Debentures are
24
offered to the public for subscription in the same way as for issue of equity shares. Debenture
is issued under the common seal of the receipt of the money.
The important features of debentures are the debentures are;
• Debenture holders are the creditors of the creditors of the company carrying fixed rate
of interest.
• Debenture is redeemed after a fixed period of time.
• Debenture may be either secured or unsecured.
• Interest payable on debenture is a charge against profit and hence it is tax deductiale
expenditure.
• Debenture holders do not enjoy any voting right.
• Interest on debenture is payable even if there is a loss.
A debenture is one of the capital market instruments which is used to raise medium or long
term funds from public. A debenture is essentially a debt instrument that acknowledges a loan
to the company and is executed under the common seal of the company. The debenture
documents called debenture deed contains provisions as to payment, of interest and the
repayment of principal amount.
BONDS
Bond is an instrument of indebtedness of the bond issuer to the holders. It is a debt security,
under which the issuer owes the holders a debt and, depending on the terms of the bond, is
obliged to pay them interest (the coupon) and/or to repay the principal at a later date, termed
the maturity. Interest is usually payable at fixed intervals (semiannual, annual, and sometimes
monthly). Very often the bond is negotiable, i.e. the ownership of the instrument can be
transferred in the secondary market. Thus a bond is a form of loan or IOU: the holder of the
bond is the lender (creditor), the issuer of the bond is the borrower (debtor), and the coupon is
the interest. Bonds provide the borrower with external funds to finance long-term investments,
or, in the case of government bonds, to finance current expenditure. Bonds and stocks are both
securities, but the major difference between the two is that (capital) stockholders have an equity
stake in the company (i.e. they are owners), whereas bondholders have a creditor stake in the
company (i.e. they are lenders). Another difference is that bonds usually have a defined term,
or maturity, after which the bond is redeemed, whereas stocks may be outstanding indefinitely.
25
An exception is an irredeemable bond, such as Consoles, which is perpetuity, i.e. a bond with
no maturity.
Bond is a negotiable certificate evidencing indebtedness. Some of the bonds are secured by
collaterals. However, bonds are normally unsecured. A debt security is generally issued by a
company, municipality or Govt. agency. A bond investor lends money to the issuer and in
exchange, the issuer promises to repay the loan amount on a specified maturity date. The issuer
usually pays the bond holder periodic interest payments over the life of the loan.
Bonds are debt secured when debt securities are issued by the Govt. and public sector
organizations they are called bonds. When such securities are issued by corporate in private
sector they are called debentures. A corporate bond represents a promise of the borrower to
make interest and principal payments to the lender according to a specified timetable.
Thus a bond is a long term contract in which a bondholder lend money to a company. In return,
the company promises to pay the bond owners a series of interest, known as the coupon
payments, until the bond matures. The coupon can be paid annually or semi-annually. At
maturity the bondholder receives a specified principal sum called par, face or nominal value of
the bond.
HIGH RISK INVESTMENT AVENUES
STOCK MARKET
A stock market or equity market or share market is the aggregation of buyers and sellers
of stocks, which represent ownership claims on business; these may include securities listed on
a stock exchange as well as those only traded privately.
Once new securities have been sold in the primary market, they are traded in the secondary
market- where one investor buys shares from another investor at the prevailing market price or
at whatever prices both the buyer and seller agree upon. The secondary market or stock
exchanges are regulated by the regulatory authority. In India, the primary and secondary are
governed by the Security and Exchange Board of India (SEBI).
A stock exchange facilitates stock brokers to trade company stocks and other securities. A
stock may be bought or sold only if it is listed on an exchange. Thus it is the meeting place of
26
the stock buyers and sellers. India’s primary stock exchanges are the Bombay Stock Exchange
and the National Stock Exchange.
COMMON STOCK
Common stock is a form of corporate equity ownership, a type of security. The terms voting
shares and ordinary shares are also used frequently in order parts of the world; “common stock”
being primarily used in the US. They are known as Equity shares or Ordinary shares in the SK
and other commonwealth realms. This type of shares give the stock holder the right to share in
the profit of the company, and to vote on matters of corporate policy and the composition of
the members of the board of directors.
It is called “common” to distinguish it from preferred stock. If both types of stock exist,
common/equity stockholders usually cannot be paid dividends until all preferred/preference
stock dividends are paid alongside the preferred stock.
In the event of bankruptcy, common stock investors receive any remaining funds after
bondholders, creditors (including employees), and preferred stock holders are paid. As such,
common stock investors often receive nothing after a liquidation bankruptcy.
Common stockholders can also earn money through capital appreciation. Common shares
may perform better than preferred shares or bonds over time, in part to accommodate the
increased risk.
Common/Equity stock is classified to differentiate it from preferred stock. Each is

considered a “class” of stock, with different series B Preferred Stock. Nevertheless, using
“class B Common Stock” is a common label for a super-voting series of common stock.
COMMODITY MARKET
Commodity market is a market that trades in primary economic sector rather than
manufactured products. Soft commodities are agricultural products such as wheat, coffee,
cocoa and sugar. Hard commodities are mined, such as gold and oil.
Investors access about 50 major commodity markets worldwide with purely financial
transactions increasingly outnumbering physical trades in which goods are delivered. Future
contracts are the oldest way of investing in commodities. Commodity markets can include
physical trading and derivatives trading using spot prices, forwards, future, and options on
27
futures. Farmers have used a simple form of derivative trading in the commodity market for
centuries for price risk management.
A financial instrument whose value is derived from a commodity termed an underlie.

Derivatives are either exchange-traded or over-the-counter (OTN). An increasing number of
derivatives are traded via clearing houses some with Central Counterparty Clearing, which
provide clearing and settlement services on a futures exchange, as well as off-exchange in the
OTC market. Derivatives such as futures contracts, swaps, exchange-traded commodities
(ETC), forward contracts have become the primary trading instrument in commodity markets.
Futures are traded on regulated commodities exchanges. Over-the Counter (OTC) contracts are
“privately negotiated bilateral contracts entered into between the contracting parties directly”.
Exchange-traded funds (ETFs) began to feature commodities in 2003. Gold ETFs are based
on “electronic gold” that does not entail the ownership of physical bullions, with its added costs
of insurance and storage in repositories such as the London bullion market. According to the
World Gold Council, ETFs allow investors to be exposed to the gold market without the risk
of price volatility associated with gold as a physical commodity.
FOREX MARKET (FX OR CURRENCY MARKET)
The term ‘Forex’ stands for Foreign Exchange. Forex trading in simple terms is the trading
in simple terms is the trading in currencies from different countries against each other; for
example the US Dollar against the Euro. Anyone who deals with a foreign country – be it a
holding there, or wanting to purchase something from that country or pay for a service,
generally requires the currency of that country to do so.
The foreign exchange market is a global decentralized market for the trading of currencies.
This includes all aspects of buying, selling and foreign exchanging currencies at current
determined prices. In terms of volume of trading, it is by far the largest market in the world,
followed by the credit market. The main participants in this market are the largest international
banks. Financial centers around the world function as anchors of trading between a wide range
of multiple types of buyers and sellers around the clock, with the exception of weekends. The
foreign exchange market does not determine the relative values of different currencies, but sets
the current market price of the value of one currency as demanded against another.
28
The foreign exchange market works through financial instruments, and it operates on several
levels. Behind the scenes banks turn to a smaller number of financial firms known as “dealers”,
who are actively involved in large quantities of foreign exchange trading. Most foreign
exchange dealers are banks, so this behind-the-scenes market is something called “interbank
market”, although a few insurance companies and other kinds of financial firms are involved.
Trades between foreign exchange dealers can be very large, involving hundreds of millions of
dollars. Because of the sovereignty issue when involving two currencies, forex has little
supervisory entity regulating its actions.
The foreign exchange market assists international trade and investments by enabling currency
conversion. For example, it permits a business in the US to import goods from European Union
member states, especially European Union member, and pay Euros, even though its income is
in US dollars. It also supports direct speculation and evaluation relative to the value of
currencies, and the carry trade, speculation based on the interest rate differential between two
currencies.
TRADITIONAL INVESTMENT AVENUES
REAL ESTATE
For most people, their major investment in property will be that of owning their own home.
As home ownership represents a significant proportion of an investors’ wealth, many people

will decide that this gives them a high enough proportion of property in their portfolio.
However, for investors who want to increase their exposure to property, it is possible to
diversify into commercial property. This can be done through specialist property funds which
are run by professional managers (in the same way as equity or bond funds).
These funds may invest in the UK or internationally, in a variety of different types of

property, such as office space, retail outlets or industrial property. These funds earn returns
from both rents on the property they own and potential gains in the value of that property.
Investment in real estate is real estate that generates or is otherwise intended for investment
purposes rather than as a primary residence. It is common for investors to own multiple pieces
of real estates, one of which serves as a primary residence, while the others are used to generate
rental incomes and profits through price appreciation. The tax implications for investment real
estate are often different than those for residential estate.
29
Common examples for investment properties are apartment buildings and rental houses, in
which the owners do not live in the residential units, but use them to generate ongoing rental
income from tenants. Those who invest in real estate also expect to generate capital gains as
property values increases over time.
Commercial real estate is property that is used for business purposes and that ate leased out
to provide a workspace rather than a living space. Ranging from a single gas station to a huge
shopping center, commercial real estate includes retailers of all kinds, office space, hotels, strip
malls, restaurants and convenience stores. Commercial real estate is one of the three main type
of real estates, along with residential and industrial. As its name implies, commercial real estate
used in commerce (Residential real estate is used for living purposes, while industrial real estate
used for the manufacture and production of goods).
INVESTMENT IN GOLD
Of all the precious metals, gold is the most popular as an investment. Investors generally
buy gold as a hedge or harbor against economic, political, or social fiat currency crises
(including investment market declines, burgeoning national debt, currency failure, inflation,
war and social unrest). The gold market is subject to speculation as are other markets, especially
through the use of futures contracts and derivatives. The history of the gold standard, the role
of gold reserves in Central Banking, gold's low correlation with other commodity prices, and
its pricing in relation to fiat currencies during the 2007-2012 global financial crises, suggest
that gold behaves more like a currency than a commodity
According to the value of research, a mutual fund tracking firm, the gold fund category has
returned an average return of over 15 percent over the last one year.
CHIT FUNDS
For an unbanked semi-literate man, a chit fund is an easy way to raise money for daughter’s
wedding. For a small shop keeper, it it is an easy saving instrument. For a house wife, it is a
kitty party fund that also ensures financial discipline. But for a genuine investor it may appear
to e a Ponzi scheme. One of the traditional investment schemes in India, chit funds may mean
different things to different people but they are also one of the most insecure channels of
investment due to their very nature.
30
They work like a recurring deposit, combining the benefits of a loan scheme. They are
operated by big business houses as well as smaller ones. Various state Govt. are run their own
chit fund schemes. At present, chit funds are regulated under the chit funds act of 1982. Various
states Govt. have also drafted chit fund regulation guidelines.
A chit fund company is a company that manages, conducts, or supervises a chit scheme—
as defined in Section 2 of the Chit Funds Act, 1982. According to Section 2(b) of the Chit Fund
Act, 1982: "Chit means a transaction whether called chit, chit fund, chitty, ‘kuree’ or by any
other name by or under which a person enters into an agreement with a specified number of
persons that every one of them shall subscribe a certain sum of money (or a certain quantity of
grain instead) by way of periodical installments over a definite period and that each such
subscriber shall, in his turn, as determined by lot or by auction or by tender or in such other
manner as may be specified in the chit agreement, be entitled to the prize amount". Such chit
fund schemes may be conducted by organized financial institutions, or may be unorganized
schemes conducted between friends or relatives. In some variations of chit funds, the savings
are for a specific purpose. Chit funds also played an important role in the financial development
of people of south Indian state of Kerala, by providing easier access to credit.
31
CHAPTER- 4
DATA ANALYSIS AND INTERPRETATION
32
An analysis is made on the responses received from 50 sample investors. The objective
of the report is to find out the investment behavior of investor's and investment preferences for the
same. The questionnaire contains various questions on the investor's financial experience, based
on these experiences an analysis is made to find out a pattern in their investments. Based on these
investment experiences of 50 sample investors an analysis is made and interpretations are drawn.
Interpretations are made on a rational basis, these interpretations may be correct or may not be
correct but care is taken to draw a valid and approvable interpretation. Analysis is made only from
the information collected through questionnaires no other data or information is taken in to
consideration for the purpose of the analysis.
33
TABLE: 4.1 GENDERS OF INVESTORS
Gender No. of respondents Percentage
Female 26 52
Male 24 48
Total 50 100
Source: primary data
PERCENTAGE OF INVESTORS IN
DIFFERENT GENDER
male
52% 48%
female
INTERPRETATION
Above diagram shows that 52% of investors are women, 48% of investors are man. That is more
than half percentage of total investors are female.
34
TABLE: 4.2 QUALIFICATIONS OF INVESTORS
Qualification No. of Investors Percentage
Under Graduation 8 16
Graduation 12 24
Post Graduation 30 60
Total 50 100
Source: Primary Data
16%
60% Under gr
24% UG
PG
Source: Primary Data
INTERPRETATION
The diagram shows that 60% of investors are post graduated, 24% of investors are Graduated
Remaining 16% of investors are under graduated.
35
TABLE: 4.3 AGE GROUP OF INVESTORS
Age No. of investors Percentage

Below 25 8 16
25-35 34 68
35-45 6 12
Above 45 2 4
total 50 100
AGE GROUP OF INVESTORS
4%
12% 16%
BELOW 25
25-35
35-45
ABOVE 45
68%
INTERPRETATION
It is clear from the diagram that, 68% of investors are from an age group of 25-35, & 16% of
them are from an age group of below 25. 12% were between the age of 35-45 and remaining 4%
were above 45.
36
TABLE: 4.4 OCCUPATIONS OF INVESTORS
Occupation No. of investors Percentage

Salaried 28 56
Business 2 4
House wife 6 12
Student 4 8
Professional 10 20
Others 0 0
Total 50 100
Source: primary data.
PERCENTAGE OF INVESTORS IN DIFFERENT OCCUPATION

60
56%
50
40
30
20 20%
PERCENTAGE OF INVESTORS
12% 8%
10 4%
0%
0
INTERPRETATION
In this chart, 56% of investors are from salaried class, 4% were business class, 12% are house
wife, 8% are student, 20% are professionals & none of the investors belong from other class.
37
TABLE: 4.5 ANNUAL INCOMES OF INVESTORS
Annual income No. of investors Percentage

Below 2,00,000 24 48
2,00,000- 4,00,000 8 16
4,00,000- 6,00,000 16 32
Above 6,00,000 2 4
Total 50 100
ANNUAL INCOME OF INVESTORS
50 48%
45
40 32%
35
30
25
20 16% PERCENTAGE OF ANNUAL
INCOME OF INVESTORS
15
10 4%
5
0
INTERPRETATION
It is clear from the chart that most of the investors are earning below 2,00,000 that is 48%. 16%
of investors are earning between 2,00,000 – 4,00, 000. 32% investor earn between 4,00,000-
6,00,000. 4% of investors earn an annual income of above 6,00,000.
38
TABLE: 4.6 NUMBERS OF INVESTORS HAVING FINANCIAL ADVISOR
DETAILS No. of investors Percentage

Having advisors 12 24
No advisors 38 76
total 50 100
INVESTORS HAVING ADVISORS
76%
80
70
60
50
40 No. of investors having advisors

24%
30
20
10
0
HAVING NO
ADVISORS ADVISORS
INTERPRETATION
From the chart it is clear that, 76% of investor have no advisors for their investment. 24% of
the investors have advisors, for managing their investment.
39
TABLE: 4.7 SOURCE OF INFORMATION
Source No. of investors Percentage

News papers & magazine 16 32
T.V 13 26
Advisors 2 4
Internet 10 20
All 9 18
Total 50 100
INFORMATION SOURCE OF INVESTORS
35
32%
30
26%
25
20%
20 18%
15
source of information
10
4%
5
0
news T.V Advisors Internet All
papers &
magazines
INTERPRETATION
The chart shows that 32% of investors use up on the News papers & magazines as their
information source, 16% of the investors use T.V, 4% of them use Advisors, and 20% of them use
internet as their information source. 18% of the investors use all of the sources for collecting
information.
40
TABLE: 4.8 INVESTORS AWARENESS ABOUT INVESTMENT AVENUES
Opinion No. of investors Percentage

Yes 26 52
Most probably 10 20
All most 14 28
No 0 0
total 50 100
INVESTORS AWARENESS ABOUT INVESTMENT AVENUES
60
52%
50
40
28%
30 investors awareness about
avenues
20%
20
10
0%
0
yes most probably all most no
INTERPRETATION
The above shown chart make it clear that, 52% of investors are aware about all the investment
avenues, 20% of them most probably know all of the avenues and 28% of them know all most all.
None of the investors are there as no know about any of these avenues.
41
TABLE: 4.9 INVESTORS MORE FAVOURABLE INVESTMENT AVENUES
AVENUES No. of respondents Percentage

Bank fixed deposit 14 28
Post office savings 10 20
Equity share market 11 22
Life insurance 9 18
Real estate 6 12
Fvourable investment avenues
12% 22%
18%
bank fixed deposit
20% post office savings

28% equity share market
life insurance
real estate
Source: primary date
INTERPRETATION
The above diagram shows that in this 5 investment avenues 22% of investors favoring avenue
is equity share market, 28% of more favoring avenue is bank fixed deposits, 20% of favoring
avenue is post office savings and investors favor towards life insurance is 18%. Real estate has an
investment favor of 12%. These 5 are the major investment avenues of investors among all the
sources.
42
TABLE: 4.10 INVESTMENT OBJECTIVES OF INVESTORS
Items No. of investors Percentage

Short term profit seeking 12 24
Tax savings 14 28
Long term profit seeking 22 44
Steady income 2 4
total 50 100
VARIOUS INVESTMENT OBJECTIVES OF INVESTORS
44%
45
40
35
28%
30 24%
25
investment objectives of
20
investors
15
10 4%
5
0
short term tax savings long term steady
profit profit income
seeking seeking
INTERPRETATION
Out of 50, 24% of investors investment objectives is short term profit seeking, 28% of investors
aims at tax savings, 44% of investors aims at long term profit seeking, 4% of investors aims at
steady income.
43
TABLE: 4.11 PREFERENCE SECTOR OF INVESTMENT
Sector of investment No. of investors Percentage

Public sector 12 24
Government sector 23 46
Private sector 15 30
Foreign sector 0 0
Total 50 100
50 46%
45
40
35 30%
30 24%
25 various investment sector
20
15
10
0%
5
0
Public sector Government Private foreign
sector sector sector
INTERPRETATION
The chart shows that most of the investors invest money in Government sector, i.e.46%. 24%
of investor investing in public sector and 30% of investors invest in private sector. None of the
investors prefers to invest in foreign sector.
44
TABLE: 4.12 FACTORS COSIDRED BY INVESTORS FOR INVESTMENT
Factors No. of investors Percentage
High return 8 16
Safety of principal 18 36
Liquidity 7 14
Marketability 10 20
Regular return 7 14
Total 50 100
FACTORS CONSIDERED BEFORE INVESTMENT
40 36%
35
30
25
20%
16%
20 14% 14%
15 factors considered for
investment by investors
10
5
0
INTERPRETATION
The above chart shows that, 16% of investors considering the factor before investing are high
return, 36% of investors considering safety of principal, 14% of investors considers liquidity of
investment, and remaining 14% considers regular return.
45
TABLE: 4.13 NO. OF INVESTORS HAVING FAMILY BUDGET
Opinions No. of investors Percentage

Having family budget 34 68
No family budget total 16 32
total 50 100
NUMBER OF INVESTORS HAVING FAMILY BUDGET
70
60 68%
50
40
32% No. of investors having family
30 budget
20
10
0
HAVING NO FAMILY
FAMILY BUDGET
BUDGET
INTERPRETATION
The chart shows that most of the investors have family budget. That is 68% of investors have
family budget and 32% of investors have no family budget.
46
TABLE: 4.14 PERCENTAGE OF INCOME INVESTMENT
INCOME INVESTMENT No. of investors Percentage

0-15 22 44
15-30 20 40
30-50 4 8
Above 50 4 8
Total 50 100
PERCENTAGE OF INCOME INVESTING IN AVENUES
44%
45 40%
40
35
30
25
income investment
20
15 8% 8%
10
0
0-15 15-30 30-50 above 50
INTERPRETATION
Most of the investors invest 0- 15% of their income. That is 44%. 40% of investors invest
15- 30% of their income. 8% of investors invest 30- 50% of their income. And only 8% of
investors invest more than half percentage of their income.
47
TABLE: 4.15 TIME PERIOD OF INVESTMENT
Time period No. of investors Percentage

Short term (0 to 1 year) 6 12
Medium term (1 to 5 years) 38 76
Long term (above 5 years) 6 12
Total 50 100
TIME PERIOD OF INVESTMENT
80
76%
70
60
50
40 percentage of time period of

30 investment
20 12% 12%
10
0
short term(0 medium long term
to 1 year) term(1 to 5 (above 5
years) years)
INTERPRETATION
Out of the total investors most of the investors that is, 76% of investors prefer to invest in
medium terms, and the 12% of investors are of investing in short term and remaining 12% of
investors are prefers to invest in long term.
48
TABLE: 4.16 RATE OF GROWTH EXPECTING FROM INVESTMENT
Expecting growth No. of investors Percentage

Steady 22 44
At an average 24 48
Fast rate 4 8
Total 50 100
RATE OF GROWTH EXPECTATION OF INVESTORS
50
44% 48%
45
40
35
30
percentage of growth
25 expectation of investors
20
15 8%
10
5
0
steady at an average fast rate
INTERPRETATION
From this chart it is clear that only 8% of investors willing to grow their investment at fast rate.
And 44% of investors willing to grow their investment at steady rate. 48% of investors willing to
grow their investment at an average rate.
49
TABLE: 4.17 INVESTMENT EXPERIENCE
Experience No. of investors Percentage

Beginning 4 8
Moderate 25 50
Knowledge 10 20
Experienced 11 22
Total 50 100
INVESTMENT EXPERIENCE
60
50%
50
40
30
22% experience of investers
20%
20
8%
10
0
beginning moderate knowledge experienced
INTERPRETATION
Out of the total investors 8% of investors are beginners in this field. 50% of investors have
moderate investment experience, 20% of investors are knowledgeable in this field, and remaining
22% of investors are experienced in this field.
50
TABLE: 4.18 INVESTMENTS IN SHARE MARKET
INVESTING No. of investors Percentage
YES 32 64
NO 18 36
TOTAL 50 100
Investment in share market
36%
64%
yes
no
INTERPRETATION
The diagram shows that out of the total investors 64% investors investing in share market and
remaining 36% of investors are not participating in share market.
51
TABLE: 4.19 RISK PERCENTAGE
Risk percentage No. of investors Percentage

0 – 15 26 52
15 – 30 20 40
30 – 50 4 8
Above 50 0 0
Total 50 100
RISK EXPECTATION OF INVESTORS
60
52%
50
40%
40
30 risk percentage
20
8%
0%
10
0
0-15 15-30 30-50 above 50
INTERPRETATION
The chart shows that, 52% of investors expecting 0 – 15% of risk from their investment, and
40% of investors expecting 15- 30% of risk, and 8% investors expecting 30-50 risk from their
investment. But none of them expect above 50% of risk from the investment.
52
TABLE: 4.20 MONITORING OF INVESTMENT
Monitoring of account No. of invertors Percentage

Daily 16 32
Monthly 28 56
Occasionally 6 12
Annually 0 0
Total 50 100
Monitoring of Account
12%
32% daily
monthly
occasionally
annually
56%
INTERPRETATION
It is clear from the diagram that, 32% of investors monitor their accounts daily, 56% of investors
monitoring monthly, and 12% of the investors monitoring their accounts occasionally. None of
them monitors their accounts annually.
53
TABLE: 4.21 INVESTORS WILLINGNESS TO LOSE PRINCIPAL AMOUNT
RESPONSE No. of investors Percentage

YES 2 4
NO 48 96
TOTAL 50 100
NUMBER OF INVESTORS WILLING TO LOSS PRINCIPAL AMOUNT
100
96%
90
80
70
60
Willingness to loss principal
50 amount
40
30
20 4%
10
0
yes no
INTERPRETATION
The above chart shows that, 96% not willing to loss their principal amount, and remaining 4%
of investors willing to loss the principal amount.
54
CHAPTER 5
FINDINGS, SUGGESTIONS AND
CONCLUSION
55
FINDINGS
The following are the important findings of the study
➢ The study reveals that the Female dominates more than half percentage i.e. 52% of the
investment market in the Kasaragod Taluk.
➢ Most of the investors of the Kasaragod taluk are Post Graduated or higher educated like
graduation that is above 80% of the total investors.
➢ Age group of 68% of investors are belongs to 25-35, and only 4% of the investors are above
45.
➢ Occupation of almost investors can be seen as salaried, they were possessing 56% of total
investors.
➢ Most of the investors of the district are from an age group of 25-35 that’s why the equity
share market become one of the favorable avenue of investment, because it give growth in
income.
➢ 48% of investors earn an annual income of below 2,00,000 from their investment. Only
4% of investors gets an earnings of above 6,00,000.
➢ Only 24% of investors have a financial advisor and remaining 76% of investors are making
decisions based on their own assumptions.
➢ Financial advisors of all of the investors who have them are stock brokers or bank
employees.
➢ Almost all investors use more than one source for collecting information, and most used
source among them is news papers & magazines.
➢ 44% of investors investing their savings with an aim of long term profit seeking.
➢ The preference sources of almost all investors are Govt. and private sectors. None of the
investors invest in foreign sector.
➢ Experienced investors are very few, that is 22%, and most of the investors have a moderate
experience.
➢ Most of the investors desire to grow their income at an average rate, and almost all of the
investors are not ready to take a risk of above 30-50%.
➢ Very few investors that is 4% of investors are ready to loss their principal amount.
56
SUGGESTIONS
The following points are the important suggestions which are derived from the study.
❖ The people should develop the habit of investment especially female, and also middle age
group.
❖ The middle age group should learn about new and emerging investment avenues like
FOREX, commodity market, mutual fund etc. saving in the bank is an old method so people
should also consider modern ways.
❖ The investors should be always alert about what, why, where, when, and how to invest
their money.
❖ Consulting a financial advisor is essential for the investors because which will increase
their confidence and knowledge in investment that may enable them to take risk.
❖ Communication about investment opportunities should be increased and more personalized
service should be given to investors to earn trust and long run participation in investment.
❖ Conducting different kinds of investment awareness programs will be usefull to the
investors.
❖ Companies should encourage the investors to monitor their investment daily. It will help
the investors to gain experience, high return and reduce risk.
❖ The investors must also consider the opportunities provided by foreign sector along with
public, private sectors.
❖ Investors need to consider our traditional investment avenues like gold, chit fund also in
their investment portfolio.
❖ Income from investment is low for almost all investors because they are not willing to take
risk, or they invest for tax savings, changing this attitude may be help them to earn more
return.
❖ Only few investors monitoring their investment daily. Regular monitoring of account will
gain experience and high return.
57
CONCLUSION
From this study, we can say that people the amount not consumed are saved and invested. But
investments are also useful for present and future consumption in the case of consumer durables,
cars, gold and silver etc. But investments generally promote large consumption in future as they
lead to more income and larger capital appreciation in the year to come.
The study reveals that investors invest in different investment avenues for fulfilling financial,
social and psychological need. While selecting any financial avenue they also expect other type of
benefits like, safety and security, getting periodic return or dividends, high capital gain, secured
future, liquidity, easy purchase, tax benefit, meeting future contingency etc.
This study also reveals that majority of the investors were of the age above 45. This means that,
the youth are unaware about investment opportunities. Hence, all sample investors are aware about
Bank Deposits. But, saving money in bank is an old method so the people should invest their
money in modern way in order to get maximum return.
The study concludes that there are various investment avenues available in the market. The
different people prefer to invest in different avenues according to their choice. It also concludes
that life cycle stages and investment objectives are dependent on each other.
58
BIBLIOGRAPHY
BIBLIOGRAPHY
59
1. V.A. Avadhani, “Investment Management” 7th Revised Edition2008
2. S.Kevin- “Security Analysis and Portfolio Management”
3. V K Bhalla, "Investment Analysis and Portfolio Management". Edition – 16th S.Chand
and Company, Nam Nagar
4. Preeti Singh, "Investment Management- Securities Analysis and Portfolio Management".
Edition-14th, Himalaya Publishing House
5. Mark Hirschey and John Nofsinger, “Investment Analysis and Behaviour”. Special
Indian Edition
6. Dr. Abdul Assis Koroth, “Security Analysis and Portfolio Management”
WEBLIOGRAPHY
1. http:/www.investment-fundamentals-guid.com
2. http:/www.icrierapil09int.com
3. www.investmentsceanariointhecurrentceanario.com
4. www.indiainvestmentpolicy032.com
60
APPENDIX
QUESTIONNAIRE
Dear Sir/Madam,
I am a Fourth semester M.com student pursuing my Master of Commerce degree at

Dr.Ambedkar Arts & Science College, Periye, under Kannur University. As a part of the study I
am conducting a project study on "INVESTMENT AVENUES" - an analysis on investor behavior
on various investment avenues available in India. This project is taken as a partial requirement for
the completion of my M. Com Degree under Kannur University.
I seek your kind assistance in completing the questionnaire which would take approximately
10 minutes of your valuable time. Your response will be treated as strictly confidential.
61
1. Name :
2 Gender a) Male b) Female
3. Educational Status a) Under graduate b) graduate

c) Post graduate
4. Age group a) below 25 b) 25-35
c)35-45 d)above 45s
5. Occupation a) salaried b) business
c) Housewife d) student
e) Professional f) others
6. Annual income from investment
a. Below 2,00,000 b. 2,00,000 - 4,00,000 c. 4,00,000-6,00,000
d. Above 6,00,000
7. Do you have financial advisor?
a) Yes b) No
8. If yes, details of financial advisor
9. What is your source of information for investment avenues selection?
a). News paper b)T.V c)Advisors
d). internet c) All
62
10. Are you aware about the following investment avenues -
Bank deposit , NSC, post office savings, Govt. securities PPF, equity share market,
commodity market, foreign exchange market, mutual fund, life insurance,
debentures, bonds, real estate, gold/silver, chit fund
a). yes
b). most probably
c). almost all
d). no
11. In which investment avenue you prefer to invest?
a) Bank fixed deposit b) National savings certificate
c) Post office savings d) Government securities
e) Public provident fund e) Equity share market
f) Commodity market g) Foreign exchange market
h) mutual fund i). Life insurance
j) Debentures k) Bonds
l) Real estate m) Gold/silver
n) Chit fund
12). What is your investment objective?
a). Short term profit seeking b)tax savings
c). Long term profit seeking d). Steady income (dividend)
13. In which sector do you prefer to invest the money?
63
a). Public sector b). Government sector
c). Private sector d). Foreign sector
14. What factor do you consider before investing?
a). High return b)safety of principal c)liquidity
d). Marketability e) Regular return
15. Do you have formal budget for your family expenditure?
a). Yes b)no
16. What percentage of your income do you invest?
a). 0-15% b)15-30% c)30-50
d) Above 50%
17. What is the time period you prefer to invest?
a). Short term(0 to 1 year) b). Medium term (1 to 5 years)
c). Long term (above 5 years)
18. At which rate do you want to grow your investment?
a) Steadily b) At an average c) Fast rate
19. What is your investment experience?
a). Beginning (No investment experience)
b). Moderate (comfortable with fixed deposits, chit funds, post
office savings etc)

c) Knowledge
64
d) Experienced
20. Do you invest your money in share market? (through DEMAT A/C)
a) Yes b) No
21. What is the Percentage of risk expecting from your Investment?
a) 0-15% b) 15-30% c) 30-50%
d) Above 50%
22. How often do you monitor your A/C?
a) Daily b) Monthly c) Occasionally
d) Annually
23. Do you willing to lose principal amount?
a) Yes b) No
65

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Investment Behavior and Investment Preference of Investors

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CHAPTER – 1

“Investment is a commitment of funds made in the expectation of some positive rate of

“Investment management is the process of managing money, including investments,

OBJECTIVES OF THE STUDY

2. To understand in depth about different investment avenues available in India.

STATEMENT OF THE PROBLEM

METHODOLOGY OF THE STUDY

COLLECTION OF SECONDARY DATA:

TOOLS FOR DATA COLLECTION:

TOOLS FOR DATA PRESENTA TION:

LIMITATIONS OF THE STUDY

The various limitations of the study are:

CHAPTER 2- Containing Introduction, Investment objectives, Investment Alternatives,

CHAPTER 3- Deals with Industry Profile.

CHAPTER 4- Deals with Analysis and Interpretation

CHAPTER 5- Deals with Findings and Suggestions and Conclusion.

BACKGROUND OF THE TOPIC

CONCEPTUAL FRAME WORK

CURRENT INVESTMENT SCENARIO

Globalization and Foreign Direct Investment (FDI) is playing an important role in

BEST INVESTMENT AVENUES OF CURRENT SCENARIO

BONDS: Bonds is a form of lending money to Govt or company. In exchange, Govt or

Krishnamoorthi C in his research paper "Changing Pattern of Indian Households: Savings in

1. Low Risk/No Risk Investments.

VARIOUS INVESTMENT AVENUES AVAILABLE IN INDIA

SAFE / LOW RISKY INVESTMENT AVENUES

PROVIDENT FUND SCHEMES

POST OFFICE SAVINGS

Life-based contracts tend to fall into two major categories:

The important features of debentures are the debentures are;

HIGH RISK INVESTMENT AVENUES

Common/Equity stock is classified to differentiate it from preferred stock. Each is

A financial instrument whose value is derived from a commodity termed an underlie.

FOREX MARKET (FX OR CURRENCY MARKET)

TRADITIONAL INVESTMENT AVENUES

As home ownership represents a significant proportion of an investors’ wealth, many people

These funds may invest in the UK or internationally, in a variety of different types of

DATA ANALYSIS AND INTERPRETATION

Gender No. of respondents Percentage

Source: primary data

Source: primary data

than half percentage of total investors are female.

Source: Primary Data

Remaining 16% of investors are under graduated.

Age No. of investors Percentage

AGE GROUP OF INVESTORS

Source: primary data

Occupation No. of investors Percentage

PERCENTAGE OF INVESTORS IN DIFFERENT OCCUPATION

Source: primary data

Annual income No. of investors Percentage

ANNUAL INCOME OF INVESTORS

Source: primary data

DETAILS No. of investors Percentage

INVESTORS HAVING ADVISORS

40 No. of investors having advisors

Source: primary data

Source No. of investors Percentage

INFORMATION SOURCE OF INVESTORS

Source: primary data

Opinion No. of investors Percentage

INVESTORS AWARENESS ABOUT INVESTMENT AVENUES