A STUDY ON SAVINGS AND INVESTMENT BEHAVIOUR OF RURAL

HOUSEHOLD WITH SPECIAL REFERENCE TO NILAMBUR TALUK

PROJECT SUBMITTED TO
THE FACULTY OF THE MASTER OF COMMERCE PROGRAMME

SUBMITTED BY
SUVARSHA P
Reg.No: MPAUMCM024

UNDER THE GUIDANCE OF

MS. ALEENA FRANCIS
ASSISTANT PROFESSOR
IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE POST
GRADUATE DEGREE
M.COM FINANCE

PG AND RESEARCH DEPARTMENT OF COMMERCE & MANAGEMENT

STUDIES
MES MAMPAD COLLEGE (AUTONOMOUS)
AFFILIATED TO UNIVERSITY OF CALICUT
MARCH 2022
 DECLARATION

I hereby declare that the project entitled “A STUDY ON SAVINGS AND

INVESTMENT BEHAVIOUR OF RURALHOUSEHOLDS WITH SPECIAL
REFERENCE TO NILAMBUR TALUK” submitted for the degree of Master of
Commerce is my original work and the project has not formed the basis for the award of
any degree, associate ship, fellowship, or any other similar titles.

Signature of the Student

Date of submission:

Name & Signature of the project advisor

Head of the Department Principal

 M.E.S MAMPAD COLLEGE (AUTONOMOUS)

CERTIFICATE
This is to certify that the project report entitled “A STUDY ON SAVINGS AND
INVESTMENT BEHAVIOUR OF RURALHOUSEHOLD WITH SPECIAL
REFERENCE TO NILAMBUR TALUK” is the work carried out by SUVARSHA P
with register number MPAUMCM024, the student of M.COM M.E.S Mampad College
during the year 2020-22 in partial fulfillment of the requirement for the award of the
degree of MASTER OF COMMERCE and that project has not formed the basis for the
award previously of any other similar title.

Name & Signature of the project advisor:

Place:
Date:

External Examiner

1.

2.
 PLAGIARISM CERTIFICATE

DECLARATION OF THE CANDIDATE:

I, SUVARSHA P, (Register no.MPAUMCM024of) hereby declare that I am the sole

author of the project report entitled “A STUDY ON SAVINGS AND INVESTMENT
BEHAVIOUR OF RURAL HOUSEHOLD WITH SPECIAL REFERENCE TO
NILAMBUR TALUK” and that neither any part of the report nor the whole of the report
has been submitted to any University or Institution for obtaining any degree / diploma /
academic award.

I declare, to the best of my knowledge that my project work is free of any kind of
plagiarism and does not breach upon anyone’s ideas, techniques, copyright or quotations.
The materials from the work of other people which has been included in my study have
been acknowledged according to the standard reference practices.

I shall be solely responsible for any dispute or plagiarism issue arising out of the project
report.

Signature of the student:

Department and class: PG and Research Department of commerce and Management

studies, M4 Mcom

Mobile no: 8943390727

e-mailID: suvarshap62@gmail.com

Date:

Place: Mampad
 MES MAMPAD COLLEGE

(Autonomous & Accredited by NAAC with A grade)

PLAGIARISM CERTIFICATE

CERTIFICATE FROM THE SUPERVISOR

This is to certify that the project entitled “A STUDY ON SAVINGS AND

INVESTMENT BEHAVIOUR OF RURAL HOUSEHOLDS WITH SPECIAL
REFERENCE TO NILAMBUR TALUK” submitted by SUVARSHA P Registration
No MPAUMCM018 of M. COM FINANCE post-graduation is absolutely based upon
her own work and neither her project report nor any part of it has been submitted for
either any degree/diploma or academic awards anywhere before.

The project has been carried out in the Department of Commerce and Management
Studies under my supervision and the Project report is worthy of submission for the
award of MASTER OF COMMERCE degree in 2020-2022 .I further certify that this
thesis has undergone plagiarism verification and the plagiarism is found to be within the
permissible limit of 30%.

Counter signed by

Head of the Department Signature:

with official seal & date

Name of Supervisor:

Designation:
 ACKNOWLEDGEMENT

The first word of gratitude to be recorded here is to Almighty God who has showed
bounties of blessings to facilitate the smooth progress of the project work and making it a
success.

With immense pleasure, I express deep gratitude Dr. MANZUR ALI PP., the Principal,
M.E.S Mampad College and acknowledge my indebtedness to all persons whose help and
support has guided me to carry out this work. At the outset, I would like to express my
deep sense of gratitude to Dr. K.P. Vinod Kumar, Head of the Department of
Commerce & Management Studies, DGMMES Mampad College, for his co-operation
and valuable suggestions in preparing this report.

I am indebted to my trustworthy esteemed guide Ms. Aleena francis, Assistant

Professor, Department of Commerce & Management Studies,MES Mampad College, for
his valuable guidance, instructions, encouragements and continuous assistance extended
to me throughout the course of this work.

Last but not least, I would like to express gratitude to my parents, relatives, respondents
and friends who helped me directly or indirectly or indirectly in the preparation of this
project.

SUVARSHA P
 LIST OF CONTENTS
CHAPTER TITLE PAGE NO

NO
LIST OF TABLES

LIST OF CHARTS

1 INTRODUCTION 1-6

2 REVIEW OF LITERATURE OF SAVINGS 7-15

3 THEORATICAL FRAME WORK 16-53

4 DATA ANALYSIS AND INTERPRETATION OF 54-72

STUDY
5 SUMMARY, FINDINGS, SUGGESTIONS AND 73-77
CONCLUSION

BIBLIOGRAPHY

APPENDIX
 LIST OF TABLE
SERIAL NO CONTENT PAGE
NO
4.1 GENDER OF RESPONDENTS 55
4.2 AGE OF RESPONDENTS OF RESPONDENTS 56
4.3 EDUCATIONAL QUALIFICATION 57
4.4 MONTHLY INCOME OF RESPONDENTS 58
4.5 OCCUPATION OF RESPONDENTS 59
4.6 FAMILY SIZE 60
4.7 MATERIAL STATUS 61
4.8 SOURCE OF INCOME 62
4.9 METHOD OF SAVINGS 63
4.10 TYPE OF ACCOUNT 64
4.11 INSURANCE POLICY 65
4.12 RANKING ANAYSIS TO IDENTIFY MOTIVE OF 66
SAVINGS
4.13 RANKING ANALYSIS TO IDENTIFY OBJECTIVE OF 67
INVESTMENT
4.14 ANALYSIS OF SAVINGS BEHAVIOUR ACROSS 68
INCOME LEVEL WITH AGE GROUP
4.15 ANALYSIS OF MONTHLY INCOME AND 69
SATISFACTION LEVELOF INVESTMENT OPTION
4.16 ANALYSIS OF AWARENESS LEVEL OF HOUSEHOLD 70
WITHEDUCATIONAL QUALIFICATION
4.17 ANALYSIS OF GENDER WITH INVESTORS 71-72
PERCEPTION TOWARDS SAVINGS AND INVESTMENT

LIST OF CHART
SERIAL NO CONTENT PAGE NO
4.1 GENDER OF RESPONDENTS 58
4.2 AGE OF RESPONDENTS 59
4.3 EDUCATIONAL QUALIFICATION 60
4.4 MONTHLY INCOME OF RESPONDENTS 61
4.5 OCCUPATION OF RESPONDENTS 62
4.6 FAMILY SIZE 63
4.7 MATERIAL STATUS 64
4.8 SOURCE OF INCOME 65
4.9 METHOD OF SAVING 66
4.10 TYPE OF ACCOUNT 67
4.11 INSURANCE POLICY 68
 CHAPTER 1
INTRODUCTION

1
1.1 INTRODUCTION
Household sector is one of the most important sectors. It plays an important role in economic
growth of the country as it provides pool of capital in the form of financial savings such as
currency, bank deposits, shares, bonds, mutual funds, life insurance etc. There are a plenty of
opportunities to make investments in financial assets. According to the report of the working
group on savings in the 11th five-year plan, the investment in financial assets falls down at the
same time investments in physical assets have increased and only 5% of their savings invested in
capital markets.
The savings and investment pattern by people vary from person to person and even with
same person during two periods due to differ in motives. There are many motives for savings and
their investment. However capital appreciation, regular income, tax planning etc. are some
important motives behind savings and investment in people. However, capital appreciation,
regular income, tax planning, diversification and minimization of risks, health and education of
family members, performance of ceremonial activities like marriage, birth and death, purchase of
fixed and current assets, construction of houses etc., are some important motives behind savings
and investment in people.
The determinants and patterns of saving differ from rural to urban region. In rural areas, the
marginal propensity to consume is more rather than the marginal propensity to save which seems
to be vice-versa in urban areas where the marginal propensity to save is more than that of the
marginal propensity to consume. According to Lewis (1954), the central problem in the theory of
economic development is to understand the process by which a community which was
previously saving and investing four or five percent of its national income changes into an
economy where voluntary saving is running at about twelve to percent or more of the national
income.

1.2 STATEMENT OF THE PROBLEM

Saving is a very important component which is responsible for combating or meeting any
emergency accrued by the individuals or the households or any corporate agencies. Saving is
more of meant for meeting contingencies but sometimes it also acts as a form of investment. But

2
sometimes people are not inclined towards saving and the very delicate reason is lack of
awareness. The present study can be a relevant one to know the reason of saving and if saving
occurs then what are the determinants which are responsible for saving. Aggregate saving in any
economy is dependent on a number of interdependent variables. For economic planning, the
planners should have an idea regarding the volume of saving and investment of different groups
of people and the method by which saving and investment can be improved more over in a better
way. An understanding of the saving and investment preference will also help in designing
saving and investment instruments which effectively simulate saving and investment. Thus, there
is the need to carefully understand the determinants of both the household saving and
investment.
Investment behavior of the rural household is very poor. Thus, a study is
required to find out the factors responsible for such behavior. The study also rises to explore the
level of saving among rural households. Saving as a source of capital is necessary for the
economic development of the nation.

1.3 OBJECTIVES OF THE STUDY

 To identify the savings and investment objectives of individual investors in Nilambur
Taluk.
 To Analyse the saving habits of individual investors across the income level of
individuals.
 To Analyse the awareness level of rural household on various investment opportunities.
 To evaluate the Satisfaction level of individuals on various investment.

1.4 SIGNIFICANCE OF THE STUDY

India, being predominantly rural, rural saving and investment studies assumes great
significance. However rural savings and investment behavior varies from region to region. Hence
to geographical diversity of India requires specific micro level studies.
Kerala is a unique region of India with distinct eco-agriculture and socio- economic
environment. The features of Kerala economy like high literacy, urbanization and social
perception are likely to influence the saving and investment behavior of rural household is
important in analyze the natural of the households.

3
 Discussion on macroeconomics indicators is a very complex issue. The treatment of
saving and investment and related variable are further complex because of the host of variables
influencing saving and investment. The income and expenditure pattern, and source of income of
the rural households having a bearing on the saving and expenditure pattern, and sources of
income of the rural household have a bearing on the saving and investment pattern. In the same
way, disposal of saving by rural households, which, in turn, depends on occupation, level of
income and level of education needs a detailed analysis along with the determinants of saving
and investment.
1.5 SCOPE OF THE STUDY
In developing countries where agriculture holds key position, rural saving has been accepted as
one of the crucial factors affecting the process of economic development. However, by large,
they are in an impression that the marginal propensity of the rural families to consume is high
and hence their capacity and desire to save is low. It is probably out of this conception that the
program of mobilizing households saving has not received the needed attention of policy makers.
This impression has, however, not been scientifically tested and substantiated due to lack of
reliable data on saving and investment patterns of households.
1.6 METHODOLOGY OF THE STUDY
1.6.1 SOURCE OF DATA
Both primary as well as secondary data were used for this study to have a better focus on the objectives
framed.

PRIMARY DATA
The study is mainly based on primary data collected from 80 individuals who have been selected from
various social groups in Nilambur taluk through well-structured questionnaire .

SECONDARY DATA
Secondary data which is used to support the analysis taken from textbooks, journals, magazines,
other publications and websites.
1.6.2 SAMPLING METHOD
Convenient sampling method is used for selecting samples.

4
1.6.3 SAMPLE SIZE
The sample size consist of 80 respondents on random basis were selected for the study.
1.6.4 AREA OF THE STUDY
The study concentrated in Nilambur taluk
1.6.5 TOOLS USED FOR DATA COLLECTION
The tools used for data collection is a well-structured questionnaire .
1.6.6 PERIOD OF STUDY
The study took a period of days from 20th February 2021 to 12th March 2022.
1.6.7 TOOLS FOR ANALYS
 Percentage Analysis
 Graphs
 ANOVA
 T-test
 Friedman rank

1.7 LIMITATIONS OF THE STUDY

The major limitation of this work during the study was pointed out below:
 The major limitation of the study is time interval. It taken only few days to complete the
research. It is very difficult to conduct a study in such a short period.
 The respondent answered very casually as they are busy while the researcher meets them.
 It is difficult to obtain accurate primary data from the samples. So, the ability of correct
information is a difficult task.

1.8 HYPOTHESIS
1) H0: There is no significant difference between age group relating to saving behavior
across income level.
2) H0: There is no significant difference between monthly incomes towards the satisfaction
level of investment option.
3) H0: There is no significant difference between gender of the respondent and investors
perception towards savings and investment.

5
 4) H0: There is no significant difference between educational qualification and awareness
level of individuals.

1.9 CHAPTER SCHEME

Chapter1: Introduction
Chapter2: Review of literature
Chapter3: Theoretical frame work
Chapter4: Data analysis and interpretation
Chapter5: Summary, findings, suggestions and conclusion

6
 CHAPTER 2
REVIEW OF LITERATURE

7
 Sharif mohd and o p verma (2018) examined the awareness among
households regarding different savings and investment avenues. There are 100 samples were
used to examine the objective of the study. The study has been based on both primary as well as
secondary data. The primary data are collected through questionnaire method. The collected data
have been analyzed by using mean, SD, kurtosis, skewness and chi-square test. The study found
that there are many avenues of the investment available for investors to invest their savings in the
present scenario of market but these avenues have focused more on urban areas. In view this, the
rural investors are not coming accelerative to invest their savings and investment due to lack of
knowledge of these avenues to manage their investment portfolio to maximize their return and to
minimize risk
T.Maheswari (2016) conducted study to know the savings and investment
behavior of rural household.It has been analysed by using linear regression method.The sample
consist of 250 respondent select for the study by adopting convenience non profitability
sampling method.The study is based on the primary data and secondary data.Primary data is
collected through scheduled questionnaire method.The secondary data has been collected from
the published records,journals,magazines and web portals.The study found that most of the
respondents earning capacity is less,even if they earned more.They distributed only minimum
portion of their income of saving.Number of respondents invested in financial asset isbut amount
invested in financial asset is less.Respondents in rural area are low income people,less educated
and they contributed to bank deposit,post office and life insurance and not to mutual
fund,shares,debentures,bonds and govt securities.It showed that rural households are not much
aware of highly risk financial assets.
Madhumala Pathy (2017) studied the rural household saving behavior. The main
objective of the study is to evaluate the saving preference of rural people. The study is conducted
through primary survey with 50 rural household of Cuttack district. The primary data have been
collected through questionnaire method and survey method. Secondary data have also been used
for the study percentage method. The study suggested that the campaign should be organized by
the banks with the motive of creating awareness among the rural household regarding the
concept of savings and investment.
J.Amudha, V.Aravamudhan Varathan (2015) studied the determinants and
patterns of saving behavior in rural household. The saving determinants are analysed empirically
8
by linear regression method. The study revealed that the rural household varies in terms of the
distribution of income and occupation. The study found that the most of the country side
household have low educational status which is resulting in less awareness of people towards the
benefits of saving
Abhaykumar Gasti (2017) studied the different reasons of savings awareness level
and association between demographic factors and awareness level among rural household. The
main objective of the study is to examine reasons and causes of low interest in institutional
investment. The study has based on both primary as well as secondary data. The primary data are
collected through pretest questionnaire from 450 respondents from rural area of Dharwad
district. The collected data are analysed by using statistical tool like chi-square. The study found
that investors have given less importance for their old age requirements and unexpected
contingencies and bank deposits till hold higher priority among institutional investment in rural
area
Santhosha Kumar Mallick, Dr. Sathya Swaroop Debasish (2017) the study
conducted from within the theoretical framework of behavioral finance. The objective of the
study to examine the determinants of household savings and its different aspect of Indian
households. The data comprises a random sampling of 115respondent drawn through a field
survey. The result showed that the household income is the major determinants in explaining the
cross-sectional variation of household saving. The study revealed that the age-old saving
mentality among Indian households is still very high in spite of the turbulent times. Most of the
household save for meeting long term goals rather than meeting and short-term requirement.
Gowari Nair, Pravitha NR (2015) studied the present investment trends in
Kollam corporation. The main objective of the study to know more about various investment
alternatives. The study is basically explorative in nature and mainly based on primary and
secondary data. The collection of primary data field survey method was conducted from different
areas of Kollam corporation. The result showed that the most selected alternative is fixed
deposit. Most of them are having the opinion that fixed deposits are more safe and secure. And
low-income groups are not interested in investment because they are having only for their daily
needs.
Dr.Nidhi Bansal and Nazia Hassan (2019) study examined the reasons
of saving awareness level and investment pattern and behavior of investors in Delhi/NCR .The
9
objective of the study is to know the source of awareness of different investment avenues .There
are 126 samples used in the study .The researcher have used correlation and regression method
for hypothesis testing. The study suggested that the savings are to be pooled and channelized in
to productive investment .There by enhancing the return to the investor which may result in the
further investment in corporate securities also .The study found that there is significant inter
correlation between perception of security ,perception of benefits ,duration of investment,
awareness level of investors ,source of opinion and investment behavior of investors.
Manikandan A, Dr .Muthumeenakshi M (2017) studied the main objective
of the study is to know about investment avenues offer attractive returns but with high risks,
some propose lower returns with very low risks .An overall analysis of these investment avenues
with risk and return trade .The study found that most of the investors are to preferred bank
deposit because more of the investors could not aware of investing their money in mutual
funds .Therefore, mutual funds will give more compliment and awareness it will help to invest
their money in the mutual fund and the capital market.
Geetha Sree (2015) study analysed investment pattern of the investors
with respect to different investment avenues and their awareness on the mutual funds. The study
showed that the behavior of various categories of investors selection of a perfect investment
avenues is a difficult task to any investor and various investment avenues are identified based on
their occupation. Investors risk in selecting a particular avenue the individual investor still
prefers to invest in financial products which give risk free returns.
Alebachew Goshim Azeref, Yohanes Tefera Gelagil (2018) the study aims at
investigating of household saving in north Shewa Zone of Ambara region. Data of 150
respondents are drawn through the study. The result showed that total dependency rate, total
income of household and family size significantly raise housesehold savings and education of
household head, number of livestock, size of land holdings, sex and marital status of household
head are significantly and inversely affecting household savings.
.
Dr. Taqadus Bashir, Hassan Raza Ahmed, Sherz Jahanglr, Samina Zaigham, Hifza
Saeed and Sameera Shafi (2013) studied on the topic “investment preferences and risk
level:Behaviour of salaried individuals” with objective of the study to analyses the relationship
of demographic variables with the investment preferences consisting of stock investment and
10
gambling decisions of salaried individuals of finance teachers and bankers of Gujarath and
stalkot. The study data collected through questionnaire and taking sample of 120 individuals.
The study found that Gujarath is small city, people have low income and they hardly bear their
family expenses.
Gaurav Chhabra and Ankesh Mundra (2014) studied on “understanding the
investment behavior”. The main objective of the study to know the importance of saving in the
form of hard cash, gold/silver ornaments, precious stones etc.… and saving period of time. The
study found that people with superior in come might not be interested to save or if found
interested the amount of saving might be minimal.
Meenakshi Chaturvedi, Shruti Khare (2012) studied on the investment pattern and
awareness of the Indian investors about different investment instrument such as bank deposits,
real estate, small savings, life insurance scheme, bullions, commercial deposits, corporate
security-bonds, mutual fund shares. The main objective of the study to analyses the investment
preferences of individual household in India. The study suggested that there is a dire need to
initiate step to inculcate saving habit among the growing middle-class families. The study found
that the impact of age, education and income level of the individual on investment.
V. Dhayalan, CR Senthilnathan, P Venkatesh and M. Krishna Moorthy (2019) the
study conducted in the area of saving habits and investment preference of govt school teachers in
Jolarpet Union. The main objective of the study is to investigate the socio-demographic factors.
The source of data is collected through the questionnaire from the respondent. Population is 340
and180 number of samples is used for data collection. The study found that the living standard of
the people increasing day by day so teacher community has started realizing the importance of
saving and proper investment of their savings.

Deepak Sood, Dr Navdeep Kaur (2015) studied the objective of the study is to
determine the relationship between the savings and investment pattern among the salaried class
people of Chandigarh(India). The data was collected through structured questionnaire distributed
to 200 people working in different sectors at Chandigarh. It found that the analysis there is
relationship between annual saving and age, income, sector wise employment, education of
people at Chandigarh. Analysis has been done through one-way ANOVA.

11
 Arti Fattepuria, Sukeshni Telgote, Hemali Choudhary (2015) studied on the
responses of the respondent’s that is private school teachers towards the savings and investment
pattern in Wardha city Maharastra. The aim of the study to determine the relationship between
the savings and investment literacy among the private school teachers. The data was collected by
distributing questionnaire to 100 private school teachers in different school of Wardha city. The
study showed that majority of the respondents are saving money as bank deposit for the safety of
future.
TK. Jayaraman (1979) studied on the topic “saving behavior in
Gujarath”. The main objective of the study is to explore the possibilities of generating data in
Gujarath and to undertake an analysis of the determinants of savings. The study conducted
survey for collecting data. The study concluded that the attention on the difficulties experienced
by the states in regard to data on savings deposit the availability of data on state domestic
product.
The study titled “saving and investment behavior of rural household (with special
reference to Mandya ) done by H S Umesh (2019)”. The study made attempt to study the
demographic profile of rural household and their pattern of rural household in investment. The
data are collected from 306 respondents selected from mandya district. The study based on
convenient nonprobability sampling method. The study reveals that majority of respondent were
made and agriculture farmers. Majority of the respondents had monthly income of rupees ten
thousand as well as saved less than thousand.
Deepika Dhawqan ,Sushil kumar Mehta(2019) evaluated saving and
investment pattern of investors. The study conducted to look into the investors rationality by
examining the pattern of saving and investment in the city of Jammu situated in Jammu and
Kashmir, India. It is based on convenient method to study the association of saving and income,
reason for saving, preference of investors for different investment instruments. The study reveals
people prefer safe and liquid investment with tax benefits higher returns, fewer lock in period,
Gender and financial literacy and awareness is found.
S Amsaveni and S vasantha (2018) conducted a study on investment pattern of
rural households in Coimbatore district. The study is aims to ascertain the rural investors
preference towards investment. The collected data is collected from 570 rural investors in
12
Coimbatore district. The study is based on convenient sampling method. The study reveals that
rural public prefer to save and invest money for ‘purchase house,’ ‘for their children education
’and for their children marriage. majority of rural investors prefer bank deposited followed by
gold, post office saving etc.
Humaria Syed, Shaheen Nigar, Samiullah (2017) study analysed the saving and
investment behavior among different income groups of the urban household of Hayatabad,
Peshawar. A sample of 201 respondent from different phases was interviewed. The study found
that the level of literacy was 97.51% in the study area whereas the employment status of the
household was 99.5%. The study recommended that more employment opportunities should be
created to minimize the negative impact of dependents on household saving and investment.
Wogene Markos (2015) studied the objectives to identify determinants of
household saving. Data of 150 respondents are drawn through field survey by adopting
multistage random sampling technique. The study mainly used primary data and secondary data.
Primary data were collected directly from household head by using face to face interview of
structured questionnaire. Secondary data were collected from the different reports, published and
unpublished materials. The study found that age has positive relationship and square of age is
negatively related to household saving

13
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14
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investment behavior among different income groups in urban area of district
Peshawar,vol.9, Pp.188-202.
20. TK Jayaraman (1979) saving behavior in Gujarath, Vol .12

15
 CHAPTER 3
THEORETICAL FRAMEWORK

16
3.1 INTRODUCTION
Household sector is one of the most important sectors. It plays an important role in economic
growth of the country as it provides pool of capital in the form of financial savings such as
currency, bank deposits, shares, bonds, mutual funds, life insurance etc. The savings and
investment pattern by people vary from person to person and even with same person during two
periods due to differ in motives. There are many motives for savings and their investment.
However capital appreciation, regular income, tax planning etc. are the some important motives
behind savings and investment in people. It is an attempt is made to give a brief explanation of
the topic ‘saving and investment behaviour of rural household’.
3.2 HOUSEHOLD SECTOR
The definition of household sector in India is very abroad. It includes economic units in the
country which cannot be classified as belonging to government sector or private sector including
co-operative institutions and farming sector. The household sector includes a sizeable segment of
household engaged in union corporate business as also the private non-profit institutions.
o Rural Community: Characteristics of the Rural Community
The ten essential characteristics of the rural community are as follows: a. Size of the Community
b. Density of Population c. Agriculture is the Main Occupation d. Close Contact with Nature e.
Homogeneity of Population f. Social Stratification g. Social Interaction h. Social Mobility i.
Social Solidarity j. Joint Family.
a. Size of the Community:
The village communities are smaller in area than the urban communities. As the village
communities are small, the population is also low.
b. Density of Population:
As the density of population is low, the people have intimate relationships and face-to-face
contacts with each other. In a village, everyone knows everyone.
c. Agriculture is the Main Occupation:
Agriculture is the fundamental occupation of the rural people and forms the basis of rural
economy. A farmer has to perform various agricultural activities for which he needs the
cooperation of other members. Usually, these members are from his family. Thus, the members

17
of the entire family share agricultural activities. That is the reason why Lowry Nelson has
mentioned that farming is a family enterprise.
d. Close Contact with Nature:
The rural people are in close contact with nature as most of their daily activities revolve around
the natural environment. This is the reason why a ruralite is more influenced by nature than an
urbanite. The villagers consider land as their real mother as they depend on it for their food,
clothing and shelter.
e. Homogeneity of Population:
The village communities are homogenous in nature. Most of their inhabitants are connected with
agriculture and its allied occupations, though there are people belonging to different castes,
religions and classes.
f. Social Stratification:
In rural society, social stratification is a traditional characteristic, based on caste. The rural
society is divided into various strata on the basis of caste.
g. Social Interaction:
The frequency of social interaction in rural areas is comparatively lower than in urban areas.
However, the interaction level possesses more stability and continuity. The relationships and
interactions in the primary groups are intimate. The family fulfills the needs of the members and
exercises control over them.It is the family, which introduces the members to the customs,
traditions and culture of the society. Due to limited contacts, they do not develop individuality
and their viewpoint towards the outside world is very narrow, which makes them oppose any
kind of violent change.
h. Social Mobility:
In rural areas, mobility is rigid as all the occupations are based on caste. Shifting from one
occupation to another is difficult as caste is determined by birth. Thus, caste hierarchy
determines the social status of the rural people.
i. Social Solidarity:
The degree of social solidarity is greater in villages as compared to urban areas. Common
experience, purposes, customs and traditions form the basis of unity in the villages.

18
 j. Joint Family:
Another characteristic feature of the rural society is the joint family system. The family controls
the behaviour of the individuals. Generally, the father is the head of the family and is also
responsible for maintaining the discipline among members. He manages the affairs of the family.
3.3 SOCIAL DEFINITIONS OF HOUSEHOLDS

In social work, a household is defined similarly: a residential group in which housework is

divided and performed by householders. Care may be delivered by one householder to another,
depending upon their respective needs, abilities, and (perhaps) disabilities. Household
composition may affect life and health expectations and outcomes for its members. Eligibility
for community services and welfare benefits may depend upon household composition.

In sociology, household work strategy (a term coined by Ray Pahl in his 1984 book, Divisions of
Labour) is the division of labour among members of a household. Household work strategies
vary over the life cycle as household members age, or with the economic environment; they may
be imposed by one person, or be decided collectively.

Feminism examines how gender roles affect the division of labour in households. In The Second
Shift and The Time Bind, sociologist Arlie Russell Hochschild presents evidence that in two-
career couples men and women spend about equal amounts of time working; however, women
spend more time on housework. Cathy Young (another feminist writer) says that in some cases,
women may prevent the equal participation of men in housework and parenting.

3.4 SAVING BEHAVIOUR

Saving means the act of refraining from spending one’s income on consumption. The part of the
income, which is unspent, is called saving. From the economist’s perspective people allocate
disposable income between consumption and savings and at various level of income, there will
be corresponding level of consumption and saving. According to classical definition, saving is
“income minus consumption” and is residual in character. Savings can also be defined as stock,
where in savings stands for change in the wealth over a period of time. In this sense it is regarded
as the sacrifice in the present consumption for future.
As an accounting concept, saving may be defined as the residual that is left from
income after the consumption choices has been made as part of the household utility
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maximization process. Substantially, saving is future consumption, and it is an important
example of an inter-temporal decision. Division of income between consumption and savings is
driven by preferences between present and future consumption and the utility derived from
consumption.
Every individual has a psychological preference for present consumption to equally certain
future consumption. Saving means going against this preference and hence involves sacrifices of
the preference. Thus, saving is an activity that involves both pain of foregoing consumption and
pleasure at a particular moment in time for an anticipated future.
3.5 VARIABLE INFLUENCING SAVING BEHAVIOUR
Saving behaviour is influenced by several factors , important among them are:
income ,wealth ,education,employment status, stages in lifecycle ,dependency ratio ,fiscal
policy,pension ,insurance and banking infrastructure.
1) Income :- It is considered as the most important explanatory variable of the household
saving .The influence of variable concepts of income such as absolute income ,permanent
income ,relative income ,transitory income on saving behaviour have been explained
variously.
2) Wealth: - When a household experiences an increase in wealth. It is expected to
consume both the added interest income and some portion of the increase in principal. If
attractive rate of return encourage savings, then those with greater wealth have stronger
incentives to defer consumption.
3) Education: - Several studies indicate that savings rate increase with education, even after
considering a variety of control variables. Solmon also found that motives for saving
varied with education. Less educated individuals were more likely to save providing for
emergencies as their primary goal, while those with more education cited the desire to
provide for children education and to help them setup households. Since educated
individual appears to have longer time horizons, Solmon suggests that education may
alter individual preferences. Although it is likely that education affects willingness to
save, more research is needed to confirm this hypothesis and to identify the mechanism
through which this process occurs.
4) Age distribution: - Age and stage of population will also affect the fraction of aggregate
income spent. Both ends of the age distribution, the old and the young tend to spend a
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 higher proportion of their incomes than those in middle do. The savings income ratio is
small for younger groups, high for middle age groups and again low among old age
groups.
5) Employment Status: - It is likely to have important indirect effects on saving rates. Full
time ,year round employees are more likely to have access to institutionalized saving
mechanism ,financial information and education ; saving subsidies and payroll
education , employment status may help explain saving in low income households.
6) Fiscal Policies: - It is also would influence saving behavior. Government generally
provides tax shelters for private saving. Willingness to save is influenced by taxation. In
order to avoid or reduce the tax burden, people may prefer to save their money in various
forms of financial assets. However, it is not clear, whether the tax incentives really rise
the aggregate saving.
7) Inflation: - It has been argued that inflation has negative impact on saving particularly in
a country like India with low consumption levels where consumers are likely to resist
cuts into real consumption. Empirical evidence on the impact of savings has been mixed.
8) Rate of Interest: - It exerts influence on the way in which any given level of aggregate
disposable income is allocated between consumption and savings. People save money
and try to get good profit in future. This is because they prefer a larger real consumption
at a later date than a smaller immediate consumption.
9) Size of the Family: - Propensity to save and propensity to consume are also influenced
by the size of family with an increase in family size, the propensity to consume increase
due to increased demand for food, clothing and other necessaries of life. Every aspect of
household economic behavior is significantly correlated with the presence of children in
the household. Children affect the allocation of a given family budget; they affect the
household demand patterns in a well-defined way.
The saving behaviour and propensity to consume differ between government employee
households and private employee households. It is well known that self-employed people
generally save more than others probably because of their definite interest in expanding
their business or profession.
The various studies reviewed above reveal that dividing household income between
consumption and saving is a complex process. Several factors influencing them vary over

21
 region, time and community, in this context; it would be interesting to analyze the
consumption and saving behaviour.

3.6 PURPOSE OR OBJECTIVE OF SAVING

i) Children education and Marriage
Every parent in their budgets, keep a provision for their child needs. Besides, investors save part
of their income either to cater to their child’s educational needs. Once these needs are met, the
next target is to save for their marriage.
ii) Provision for contingency
Always one cannot predict the expenditure. Some expenses arise from nowhere. Investors have
to take care of such expenses. Provision for contingencies arising in the future must be adhered
to.
iii) Purchase of physical assets
Every individual in his life makes or wishes to make some purchases, that are capital in nature.
Purchase of some assets that are tangible in nature. Exam to lend locally anindividual may save
to lend in the local market, to give a helping hand to its friends and relatives etc. One would lend
money only if it is surplus after meeting his/her own needs. Such surpluses could arise only out
of savings.
v) To earn interest
An individual may save to earn some extra income, over and above what one already has in the
present.
vi) To earn stable and regular income
Some individuals may save so as to earn a regular and stable income in the future.

3.7 MOTIVES OF SAVING

Investors usually have certain motives behind the savings. The different types of saving motives
are:
1. Transaction motive
2. Precautionary motive
3. Contingency motive

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 3.8 TYPE OF SAVINGS
1. Contractual Savings: These are savings are made out of obligations as a compulsion to meet
certain targets or to avoid certain implications. Eg: Savings and Investment done for tax
benefits.
2. Voluntary Savings: These are savings that are made voluntarily, as a result of the attractive
returns or other features of the investment.
3.9 SAVING PLANS
Saving plans are essentially a form of life insurance plans that offer individuals an opportunity to
save, invest and accumulate funds to meet their needs in the future. They are designed in a way
that helps policyholders develop a regular saving habit and enjoy significant returns at a time
when they might need it most.
The right saving plans, with flexible features they offer for each individual’s specific
requirement, can often prove to be some of the best investment plans in India. Moreover, saving
plans offer insurance coverage which helps you safeguard your family’s financial future even in
your absence.
One of the first financial habits we are taught right from the earliest days of our childhood is that
of saving. The concept of setting aside a little today in order to enjoy a lot tomorrow is ingrained
into every goal we strive for in our lifetimes. It is keeping this fact in mind that saving plans are
considered by many to be some of the best investment plans in India.
3.10 BENEFITS OF SAVING PLANS
Saving plans are the preferred investment choice for people who value the various saving and
future-centered benefits these plans provide. Here are a few of such important benefits:
 Coverage + Payouts: Being essentially a life insurance product, saving plans offers much-
needed financial coverage to your loved ones in the event of your untimely demise. Apart from
the payouts you receive from the saving plan, this added benefit of coverage helps financially
protect your family in a more comprehensive way.
 Encourages Financial Discipline: While being aware of the importance of financial savings is
one thing, making those savings a regular habit in our lives is quite another. That is where saving
plans prove useful. One of the greatest advantages of investing in a saving plan is that it
encourages you to inculcate financial discipline in your life.

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 Offers Flexibility: Every individual is different, and so are their life goals and priorities. Saving
plans take into account such differences in saving purposes and offer a wide variety of flexible
features that can be customised to suit each individual’s needs. They offer options in funds and
other investment criteria as well as options in terms and payouts. You can also switch around
with your choice of investments as and when your risk appetite and capital needs change.
 Helps Save Taxes: Since saving plans are essentially life insurance plans, they offer the same
tax benefits offered by other insurance plans. In particular, you can avail an exemption of up to
Rs 1.5 lakh towards your premium payments, as per Section 80C of the Income Tax Act.
 Helps You Meet Goals Efficiently: Certain saving plans which are specifically geared towards
meeting some of the most important life goals for many individuals and families. For instance,
some saving plans are designed as investment plans to help you save up and meet the ambitious
educational goals you may have set for your children.

3.11 FEATURES OF BEST SAVING PLANS

1) Tax Savings
Tax saving is one of the most important and unique features of these saving plans. The best plans
will offer tax saving in all the following situations:
a) Invest any amount without losing the tax-free status of maturity amount
Guaranteed savings plans from life insurance companies offer all the three tax-exemption status
to your money. Thus, if you chose to use one of these plans to save for your goal, the goal value
could be entirely tax-free.
One factor you will need to keep in mind, though, is that your annual investment in the plan
should not exceed 10% of the life cover in the plan.
For example, if you want to accumulate Rs. 50 lakhs, the guaranteed saving plan will accept Rs.
50 lakhs as the base life cover and decide your premium. All you need to do is to make sure that
the annual premium in any financial year is not more than Rs. 5 lakhs.

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 2)Guaranteed Returns
The best saving plans in the market offer guaranteed returns. Meaning, you know the minimum
amount you will get upon maturity at the inception of investment. This makes it very easy to plan
for important life goals using these plans.
For example, you want to accumulate Rs. 50 lakhs for your child’s higher education in 20 years.
You can invest about Rs. 13,000 per month for the next 10 years, to receive Rs. 50 lakhs in 20
years.Since the returns are guaranteed, all you need to worry about is completing your
investments for the next 10 years. Also, since you also have a similar amount of life cover in the
plan, your family will receive the money even in case of your premature demise.
3) Wealth Boosters
The guaranteed sum is only the minimum assured return. Wealth boosters, as the name suggests,
add to your portfolio value over time. These are regular bonuses which add to your plan as long
as you stay invested. Longer-term investments naturally accumulate higher bonuses.
Guaranteed Saving Plan and Invest 4G from Canara HSBC Oriental Bank of Commerce Life
Insurance add bonuses to your investment plan, boosting your overall maturity value. The plan
offers two bonuses to all investors:
a) Guaranteed loyalty additions (based on policy term, larger bonus for the longer term)
Thus, not only you can be sure to receive the minimum sum at maturity of the plan, chances are
you will receive a lot more than the guaranteed sum.
So, as we wanted to accumulate Rs. 50 lakhs in our previous example and we had to invest Rs.
13,000 per month for 10 years. With wealth boosters, your monthly investments will drop to
about Rs 5,500 per month.
4) Goal Protection
Goal protection or premium protection is another unique feature of the guaranteed saving plan.
This feature means that even if you meet the ultimate fate before completing your investment
into the plan, your family will meet the goal.
To understand this unique benefit, consider this example:
In the previous example, we had a goal of funding a child’s higher education with Rs. 50 lakhs in
20 years. To achieve this goal using the guaranteed savings plan you needed to invest Rs. 5,500
per month for the next 10 years.
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Now, if you opt for goal protection option, the insurer will cover your premium payments as well
as the normal life cover. Without this option, in case of your demise in the 5th policy year, your
family would receive Rs. 50 lakhs plus any bonuses and the policy will discontinue.
However, with goal protection option, the insurer will deposit the remaining five years’ premium
on your behalf, after paying the death claim of Rs. 50 lakhs. The plan continues even after the
death claim and the family will receive the maturity value with all the accumulated bonuses at 20
years’ maturity.
5) Investment Flexibility

Investment flexibility allows you to invest in a way most convenient for you. For example, if you
are salaried, you would like to invest every month, while business professionals may prefer
quarterly or annual mode of investment.
Also, you have multiple goals in life, and if possible, you would like to invest in different goals
at different times. Limited pay option of the guaranteed saving plan gives you this flexibility of
investing in the plan for a limited period.
This is also useful since the plan will accept only a level premium, and as your income grows,
you will be better off investing a larger sum every month.
With these many features, selecting the best savings plan should not be a difficult choice. So,
start investing and stop worrying about the turbulent times.
3.12 SECTORIAL COMPOSITION OF SAVING
GROSS DOMESTIC SAVINGS ACCRUE FROM 3 SECTORS
1) Government or public sector
2) Private corporate sector
3) The household sector
The public sector includes government administration, departmental undertakings,
government companies and statutory corporations. The private corporate sector comprises of
non-government non-financial corporate enterprise. The rest is termed household sector. Thus,
the household sector, being residual in character, includes a host of economic agents who engage
in production / consumption activity.Among the 3 sectors, as in most other countries, the
household sector in India too contributes the bulk- more than two-third of the total savings. The

26
government sector and the corporate sector contribute the balance. That is about one-third of
total saving in the country.
3.13 SOURCE OF SAVING
Main source of savings in India are as follows;
1) HOUSEHOLD SAVING
The household sector is the largest contributor to domestic saving. It is important as it reflects
how efficiently savings are converted in to investment with the role of financial sectors
intermediation in the process. These sectors include the saving of,
a. Households (families)
b. Non-profit institutions like college, hospitals etc.
c. Non-corporate business units
Household savings can be divided into 3 parts as follows,
A) Physical Assets: The physical assets include housing, machinery, furniture, fixtures and real
estate.
B) Financial Assets: This takes the form of currency, bank deposits, shares and debentures
claims on government, mutual funds, national saving certificates, life insurance funds and
provident and pension funds.
C) The unaccounted savings of the household sector: The unaccounted savings of the
household sector are always kept in the form of gold, silver and durable goods on which
information is very scanty. However, on the basis of estimates the proportion of these assets is
placed in a range of 3 to 10 percent of GNP in any year.
2) GOVERNMENT SAVING
Government savings come from surpluses of public enterprises and other public financial
institutions. Government savings formed 7.4 percent of GDP in the economy.
Among the factors responsible for this trend, the most important are;
A) Deterioration in the overall tax GDP ratio, and
B) The increasing losses over time made by public sector utilizes such as state electricity
and water boards, state road Transport Corporation and the railways.

27
3) PRIVATE CORPORATE SAVINGS
The share of private corporate sector in total savings was 9.4 percent. This, however, came
down to 7.4 percent. But it has been moving upwards since then, reaching at of 8.24 percent .In
developed countries; the corporate sector has contributed significantly to national savings. While
it has not done so India, in spite of the development within the secondary and tertiary sectors of
the economy and the significant increase in manufactured output.
This is attributed to the following factors.
A) Massive increase in the use of loan capital in Indian industry and the full in the share
of profits in factor incomes.
B) Significant position of the unincorporated private sector in Indian manufacturing and
commerce which is reflected in household savings and not in the ‘private corporate
savings’ ; and
C) The taxation policy, which discourages the accumulation of undistributed profits in
companies and corporations coupled with a low profitability syndrome
SUMMARY OF FACTORS THAT INFLUENCE SAVING LEVEL
 Interest rates – higher interest rates makes saving more attractive.
 Rising income enables higher saving. People on very low income cannot afford the
luxury of saving
 Economic growth – high growth and high consumer confidence encourages relatively
higher spending and a fall in the savings ratio.
 The age of individuals – People in their 40s and 50s tend to save for retirement. Old
people run savings down.
 Cultural trends – some cultures have stronger ‘saving culture’ – others pursue higher
spending and borrowing.
 Wealth – Rising house prices increase household wealth and diminishes the need to save
in other forms.
 Inflation – high inflation may discourage cash saving, but encourage the purchase of
fixed assets.
There are two ways of measuring saving levels
1. Total (gross) saving levels

28
 2. Saving ratio – the percentage of income that is saved.

1. Interest rates
Higher interest rates mean that households will gain a higher rate of return on depositing savings
in a bank. At interest rates of 1%, a £1,000 bank account, will only get £10 a year interest. If
interest rates rise to 6%, then the interest payments will rise to £60 – giving a relatively higher
return on savings. Ceteris paribus, higher interest rates should encourage saving.
 However, it is not straightforward – interest rates can be offset by other factors. For
example, in the recession of 2009, interest rates were cut to 0.5%, but this did not reduce
saving ratios, saving ratios increased because consumers were pessimistic about the
future.
2. Income levels/Economic growth
Rising income levels will lead to a rise in total saving levels. As households gain more
disposable income and have the ability to save more. However, periods of economic growth can
also create optimism and confidence amongst consumers and encourage a relatively higher
percentage of consumption. When households expect rising incomes, then they are more likely to
borrow to finance luxury goods and cut back on spending.
3. Income distribution
Typically households on low income will have very low saving levels. They need to buy
necessities and do not have the ‘luxury’ of being able to save. As incomes rise, households tend
to have a higher marginal propensity to save. This is because with higher incomes there is a
diminishing marginal utility to consumption – households with extra income are more likely to
save it. If there is a rise in incomes of the low paid, this will have a bigger impact on increasing
savings than if there is a rise in incomes of the wealthy. A reduction in inequality can increase
saving levels.
4. Wealth
In a period of rising asset prices, households may feel less necessity to save. For example, a rise
in house prices leads to an increase in wealth, that homeowners can access through mortgage
equity withdrawal. In the 1980s and early 2000s, there was a significant rise in house prices

29
which increased the wealth of homeowners – this gives households more confidence to reduce
saving levels.
5. Confidence
Confidence and expectations of the future have a large bearing on saving. If households are
optimistic about the future, they are more willing to borrow and run down savings. But, if
confidence is low, then it is an incentive to save for unexpected problems. Factors that will
influence economic confidence are closely related to the current economic climate, e.g. the rate
of economic growth, unemployment levels, house prices.
6. Demographics/Age distribution
Life cycle theories of consumption argue that individuals try to smooth consumption over a
lifetime. During a person’s student years, they will typically borrow (student loans), then in their
40s and 50s, with high income, they will save. Then during retirement, they will run down their
savings. An ageing population can lead to a fall in the saving ratio.However, there is no
guarantee that retired people will run down savings. They may wish to pass savings on to their
children or feel they will live a very long time.
7. Inflation
Inflation can have an effect on saving. If there is high inflation – and if inflation is higher than
interest rates, then this will discourage saving. Households may look to either spend money
before it falls in value or buy assets which hold their value during inflation.

3.14 DIFFERENT NATIONAL SAVING SCHEMES OFFERED BY THE CENTRAL

GOVERNMENT
1) Post office saving account
This account offers an interest rate of 3.5% per annum on both the individual as well as
joint account. The tenure for this account is not fixed. The account can be opened by investing
any amount, subject to a minimum of rupees 50 to a maximum of rupees 1 lakh for individual
account and rupees 2 lakh for joint account. Cheque and debit card facility is also available to
this product.

30
 2) Kisan Vikas Patra (KVP)
The KVP is one of the premier and popular saving scheme offering from the Indian
Postal department. This product has had a very chequered history initially successful, deemed a
product that could be misused and thus terminated in 2011.
3) Sukanya samriddhi account
Saving scheme offering from the Indian ministry of finance, the Sukanya Samriddhi
Yojana (SSY) accounts are aimed at ensuring a bright future for the girl children in India.
4) Atal pension yojana
It is one of India’s most popular erstwhile prime ministers; the Atal Pension yojana is
aimed squarely of the weaker sections of the society as well as those individuals who can benefit
from a government sponsored welfare program.
5) National pension system
This scheme is available to the employees of the state and central government
organizations, employees of corporate and MNC entities, individuals as well as workers from the
various organized sectors.
6) Voluntary provident fund
The term ‘voluntary’ signifies willingly or doing something when guided by their own
free will. The concept of Voluntary Provident Fund (VDF) draws on this, where in the
subscribers willingly contributes up to 100% of their basic salary and dearness allowance into
their respective Employees Provident Fund (EPF) instead of the usual 12%.
7) Deposit scheme for retiring government employees
This scheme is particularly targeted to benefit retiring public sector employees.
8) Senior Citizen Schemes(SCSS)
This saving scheme option is exclusively to senior citizens in India
3.15 INVESTMENT BEHAVIOUR
Personal disposable income of the household is divided between consumption and savings.
Savings may be idle or active. Saving becomes active, when it is canalized into return bearing
avenues. The act of canalizing savings into return bearing avenues is investment. In this sense,
investment refers to the increase in real capital, which leads to the generation of income. It is the
addition to the existing stock of capital assets and leads to capital formation.

31
 Investment is a wider concept and household investment reflects the microform of it.
Household investment mainly, refers to channelizing household saving in to return giving
options. Here decisions are very much based on risks involved and risk bearing capacity of the
investors.
Every investment is exposed to one or another type of risk. There are 5 major risks in
investment. Which may be present in varying degrees, in different sort of investment:
nonpayment risk, business risk, inflation risk, political risk and social risk. Therefore an investor,
while investing money would try to satisfy the 3 objectives- safety, profitability and liquidity.
The skill in management of investment does not lie in generating high returns alone. It lies in
achieving a sound balance between the 3objectives- profitability- liquidity- safety. Investment
planning is not a game of maximizing returns, but a game of delicate balancing. Every
investment is a” trade off” between risk and returns. Apart from risk and return other factors that
influence investment decisions are; marketability, initial investment, tax benefit, loan facility,
institution, past experience, age and needs, social conditions and liquidity.
Household investment may be in the form- financial investment and physical or real investment.
Financial investment comprises deposits in banks, shares, debentures, securities in companies
contributions to provident fund/ public provident fund, contribution to chit funds and insurance
while physical investment include land, buildings, vehicles and stock of raw materials.
3.16 DETERMINANTS OF INVESTMENT BEHAVIOUR
Investment avenues for an individual or family or household are many generally known as
instruments. The preference shown by investors in choosing a particular instrument is called
investment behaviour. The process of investment commences with surplus income which
includes operating and non-operating earnings.
The prime determinants of investment behaviour of an individual are: sociological factors, such
as culture or sub culture, social classes, reference group; and psychological factors like
personality, attitudes, belief, values and perceived investment related benefits.Cultural
surroundings and the various groups of people with whom an individual interrelates, greatly
influences his perception, thinking and belief about different forms of investment.People’s
investment behavior is strongly influenced by the class to which they belong. Investor’s behavior
is also influenced by the small group to which investors belong or aspire to belong. These groups

32
may include family, fraternal organization, labor unions, church or religious group or circle of
close friends or neighbors (William D Wells; 1975).
Attitudes and belief have strong and direct impact on the investor’s perceptions in
household investment behaviour. Household investment attitudes are formed, generally speaking,
by the information investors acquire through their past learning experiences with the investment
opportunity, or through their relations with their reference groups such as family, social and
work group etc. The perception of this information is influenced by personality traits. It is
generally agreed that investor personality traits influence their perceptions and investment
behaviour.
Studies have shown that informal personal advice in face-to-face groups is much more effective
as a behavioural determinant than advertising in newspapers, magazines, journals, television or
other mass media. That is, when it comes to selecting investment avenues or changing
investment patterns, a prospective investor is more likely to be influenced by word of mouth
advertising from the satisfied investors in his or her reference group. This is true especially when
the speaker is considered to be knowledgeable regarding the particular investment opportunity.
3.17 IMPORTANCE OF INVESTMENT
Investments are both important and useful in the context of present day conditions. Some factors
that made investment decisions increasingly important are;
1. Income
The growth and development of country leading to greater economic activity has led to
introduction of a vast array of investment outlets. The investors in his choice of investment will
have to try and achieve a proper mix between high rate of return and stability of return to reap
the benefit of both.
2. Interest Rates
Another aspect which is necessary for a sound investment plan is the level of interest
rates. It may vary between one investment and another. These many vary between risky and safe
investments. They may also differ due to different benefits schemes offered by the investments.
3. Inflation
Since the last decade inflation has become continue as problem. In these years of rising
prices, several problems are associated coupled with a falling standard of living. The investors

33
will try and search an outlet which will give him a high rate of returns in the form of interest to
cover any decrease due to inflation.
4. Increasing Rate of Taxation
Taxation is one of the crucial factors in any country which introduced an element of compulsion
in individual’s savings. There are various forms of savings outlet in our country in the form of
investment which helps in bringing down the tax level by offering the deductions in personal
income. And also some factors like,
5. Past Market Trends
Sometime history repeats itself; sometimes markets learn from their mistakes. The
investor needs to understand how various asset classes have performed in the past before
planning your finances.
A. Risk Appetite
The ability to tolerate risk differs from person to person. It depends on factors such as
investor’s financial responsibilities, environment, basic personality etc. Therefore understanding
an investor’s capacity to take on risk becomes a crucial factor in investment decision making.
B. Investment Horizon
How long an investor can keep the money invested? The longer the time horizon, the
greater are the returns that you should expect. Further, the risk element reduces with time.
C. Investible Surplus
How much money an investor able to keep aside for investment? The investible surplus
plays a vital role in selecting from various asset classes as the minimum investment amounts
differ and so do the risks and returns.
D. Investment Need
How much money an investor need at the time of maturity? This helps the investor
determine the amount of money need to invest every month or year to reach the magic figure.
E. Expected Returns
The expected rate of returns is crucial factors as it will guide the investor’s choice of
investment based on investor’s expectations. He can decide whether you want to invest heavily
into equities or debit or balance his portfolio.
F. Financial Independence
First and the foremost thing is an investment gives you financial freedom. If invest money from
the beginning then we need not to wrong about the future financial needs.
34
 G. Increase Wealth
Besides making you financially, Independent investment makes you rich also.as you invest more
and more money for a long time.it will definitely make you richer in the present generation, it is
of utmost importance in each and every aspect of your life.
H. Fulfilling Personal Goal
If you have a desire for having a luxurious apartment and a luxurious car of your own. Then, it is
obvious that these desires may be fulfilled.by a planned investment and savings as you invest
more, you tend to become richer. And as you become richer, you may find no difficulty in
achieving your personal goal.
I. Reduce Future Risk
If we do investment from the beginning then we can get money of investment in future and so
that our future will become safe and our future risk also reduce.

3.18 INVESTMENT OBJECTIVES

As investors differ from one another, they also differ with respect to their investment objectives,
based on the way they approach them. Broad categorization of investors‟ goals is given below.
i) Near Term High Priority Goals
Investors have a high priority and emotional attachment towards these objectives. He/ she wishes
to achieve these goals as early as possible within a short span of time, may be a few years.
Investors with average income having some near term high priority goals will not go for any
investment which involves a lot of risk.
ii) Long Term High Priority goals
Such goals are those which have high priority associated but there is time to attain these goals.
e.g. Accumulating funds for higher education of a 2 year old child. Since there is time in
achieving such goals, investors do not adopt to aggressive approach while investing in attaining
these goals.
iii) Low Priority Goals
Investors have very little priority for these goals in their portfolio. They do not feel hurt if such
goals are not achieved. E.g. Donation for charity, world tour etc.
iv) Money Making Goals

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These goals relate to those investors who want to make money and are not satisfied with the
traditional savings and investment approach. Investors have such goals are ready to take risk.
3.19 INVESTMENT ATTITUDES
For evaluating investment avenues the following attributes are relevant.
 Rate of Return
A rate of return is the net gain or net loss on an investment over a specified time period,
expressed as a percentage of the investment’s initial cost.
 Risk
The risk of an investment refers to the possibility of losing porter full of the
invested amount. The rate of return from investment likes equity shares, real estates, and gold
can vary rather widely. Rate of return from different investment options vary a lot. Remember
the famous quote, more the risk and more the profits. It is a general phenomenon that more
return is expected out of a high risk investment. Risk means uncertainty of returns. Statistically,
the risk is judged based on parameters like variance, standard deviation and beta. More a security
deviate from its expected outcomes, risk is considered to be high. Challenge for a finance
manager while investing funds is to achieve high returns on investment while keeping the risk at
lowest possible levels.
 Marketability
An investment is highly marketable or liquid. If it can be transacted quickly, the
transaction cost is low and the price change between two successive transactions is negligible.
 Liquidity
Liquidity means marketability of an investment. For example, equity shares of a big
company can be easily liquidated in the stock markets. On the other hand, money invested in an
asset cannot be liquidated as easily as the equity share. An investment is considered highly
marketable or liquid. It can be easily transacted with low transaction cost and low price variation.
A finance manager looks for more liquid investment when the funds are available for short
period. Liquidity is always given a preference because it helps the managers remain flexible.
 Convenience
The selected investment avenues should be under the legal and regular frame work. If it is
not under the frame work, it is difficult to represents grievances, if any approval of the low itself
adds a flavor of safety.

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3.20 INVESTMENT AVENUES
Investment refers to the sacrificing of certain present value for some uncertain future value. It
also means the conversion of money into claims on money and use of funds for productive and
income earned assets.
The investment options available to an investor fall in to 3 board categories viz financial
investment, real investment and non-securitized investment. Financial investments are contracts
written on pieces of paper like equity shares, government securities etc. Real investments are
representing by tangible assets like residential house, agricultural farm, gold, precious stones and
art objects. Non-securitized investments include deposit in banks. The investment avenues
available are described here;
1) Equity Shares
Equity capital represents ownership capital. Equity share holder collectively
owned the company. They bear the risk and enjoy the rewards of ownership potential rewards
and penalties associated with the equity shares make them interesting, even existing proposition.
The shareholders get voting right.
2) Preference Shares
Preference share represent a hybrid security that takes some characteristics of
equity shares and some attributes of debentures, preference shares carry a fixed rate of dividend
and it is redeemable preference shareholders enjoy restricted voting right also.
3) Commercial Banks/ Bank Deposits
Bank deposit is the simple investment avenue open for the investors. Commercial
banks provide to the investor both deposits which are liquid in nature, which has stability and
which also given an element of security. The following kinds of deposits are provided by the
bank
a) Saving Bank Deposit
The most liquid form of investment is maintenance of a saving bank account. The
deposit may be made at any time through the introduction of a person already having a bank
account or through the managers of the bank on competition of the formalities of filling a form
and having it certified, the investor can begin to operate association.
b) Current Account

37
 An investigator is also given the option of having a current account in the bank for
maintaining liquidity. A current account is usually open a business house of this current account,
the account holder is permitted to draw according to a fixed limited provided by the banker in
agreement with the account opening association.
c) Recurring Deposits
Recurring deposit is made by which an investor may at regular intervals deposit a
fixed sum of money in bank.
d) Fixed deposit Schemes
Each bank has certain special schemes. These schemes vary from bank to bank but the
maturity value is normally the same and the interest at a fixed deposit is specified from time to
time by the RBI
e) Mutual Fund Schemes
Commercial banks in India have also started mutual fund schemes. The first bank
take this step was in 1987.
4) Post Office schemes
Post office schemes are generally like the commercial bank schemes. They have a
saving account, a recurring account and a ten year Cumulative Time Deposit (CTD) account
which are also recurring in nature. The saving account operates in the same way as commercial
banks through cheque and there is no restriction on withdrawals.
a. National Saving Schemes
National saving schemes have been started by the government of India mainly to
finance its economic development plans through the mobilization of savings of smaller income
groups. This scheme is operated mainly through the post offices. Because of the tax free nature
of the scheme, its main purpose is to attract higher income group of people also. The investor has
an exact picture of the amount that he will receive at the time of encashment of security. The rate
of interest on NSS is usually higher than the commercial banks. The certificates have an
advantage that they can be used as collateral at the time of taking a loan from the bank.
There are other schemes like,
i) Savings deposits
ii) Fixed deposits
iii) Recurring deposits

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 iv) Monthly income with fixed investment
v) National saving certificate
vi) Indira vikaspatra
vii) Kisan vikas patra
5) Life Insurance
Life is uncertain. But the perils faced by human are certain. A person or his
dependents may face „Economic Death‟, wherein there is end of source of earning, due to death,
or disability of the bread earner in the family. „Economic death‟ also occurs when a person lives
longer, longer than his expectancy,wherein he is not able to meet his financial needs. Life
Insurance is a contract between the person insured and the insurance company, which assures to
protect the insured against the risk i.e. the financial loss from the death, old age, disability etc. of
the insured. Besides protection, investment in insurance gives liquidity and tax benefit to the
investors. Policy holders have to pay a premium at regular intervals. The premiums can be paid
monthly, quarterly, semiannual; annually etc. it is a safe and a profitable investment.
6) Land and House property/ Real estate
Land and house property is also called real estate. This investment is taken by a large
number of people for hedging the inflation rates. The real estate market offers a high return on
investors. People invest in real estate because of the following reasons.
i) High capital appreciation particularly in the urban area.
Ii) Availability of loans for the construction of houses.
7)Agricultural Investment
Investment in agricultural land, agricultural crops, investing in farming activities, purchase of
farming instruments, etc. account to agricultural investment. The agricultural activities have
been declining over the period of years. Government offers various subsidies to the agriculturist
to boost the agriculture, horticulture and the farming sector.
8)Gold
Gold is one of the most valuable assets in the economy. It has been used in India primarily as the
form of saving by the house vice although it is said to appreciate many times yet in India it is
more of a sense of security and fixed assets rather than for the use of sale or for the purchase of
making profit or income on this investment. Gold is a highly popular physical asset in India. It is

39
a very precious metal, which is a very dear metal of every woman. Owning gold is also
associated with myths, religious rites and human psychology. It is the most known investment
avenue among the housewives. Every family in India owns atleast some gold. People also invest
their surplus savings into gold. It is used as a hedge against inflation. Gold may be invested in to
either in the form of gold shares, gold coins, gold bars and gold jewelries.
9)Silver
Silver is sold in the form of weight by kilograms in India. Silver may be owned in the form of
coins, utensils, glasses, bowels, plates, trays and jewelry. This like gold has been a hedge during
inflation. The price of silver although less than gold, also keeps on rising in the same way as
gold. Silver is also used similar to gold in India. It is used either in the form of jewelry, religious
articles etc. Silver is sold in form of jewelry or coins or bars. In the recent years prices of gold
and silver have been increasing.

3.21 INVESTMENT CONSTRAINTS

Though the investors have certain goals and objectives in mind, but their investment decisions
are affected by certain constraints. Few of the constraints faced by the investors are as follows:
I. Age
Age of the investor contributes majorly in determining his goals and objectives, a young
investor, having no or minimal family responsibilities would have different goals, compared to
an elderly investor who is on the verge of retirements. Age also plays an important role in
determining the risk taking abilities of investors.
II. Liquidity
The amount of disposable income or liquid asset one has, also determines his investment
capacities. If an investor invests his entire savings, he would not invest the entire amount in
riskier assets, but invest some part in liquid assets.
III. Need for regular income
Whether the investor aims to earn a regular income also determines his investment portfolio.
IV. Time Horizon
The time period one is able to keep oneself invested, determines the duration one is able to part
away his funds with. It also helps in identifying the kind of asset mix the investor is interested in
investing.
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 V. Risk Tolerance
The risk taking ability of the investor plays a very important role in determining the asset mix
that suits a particular investor. Age of the investor, the responsibilities he shoulders, the income,
the financial literacy etc. affects the risk tolerance level of investors.
VI. Tax Liability
Sometimes, investments are also made with an aim to evade taxes. If the tax saving limits has
been reached or a particular investment does not provide tax benefit also affects the investors
decision making.
3.22 TYPES OF INVESTMENT
1) Autonomous Investment
Investment which does not change with the income level is called as autonomous of
government investment. Autonomous investment remains constant irrespective of income level.
This means even if the income is low, the autonomous investment remains same, It refers to the
investment made on houses, road, public buildings and other part of infrastructure. The
government normally makes such a type of investment.
2) Induced Investment
Investment which changes with changes in the income level is called induced investment.
Induced investment is positively related to the income level. That is, at high level of income
entrepreneurs are induced to invest more and vice-versa. At a high level of income, consumption
expenditure increase. This lead to an increase in investment of capital goods, in order to produce
more consumer goods.
3) Financial Investment
Investment made in buying financial instrument such as new shares, bonds, securities,
etc. to be considered as financial investment.
4) Real Investment
Investment made in new plant and equipment, construction of public utilities like schools,
roads and railways etc. to be considered as real investment.
6. Planned Investment
Investment made with a plan in several Sectors of the economy with specific objectives is
called as planned or intended investment. It is also called intended investment because an
investor while making an investment makes a concrete plan of his investment.

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 7. Unplanned Investment
Investment done without any planning is called as an unplanned or unintended
investment. In this, investors make investment randomly without making any concrete plans.
Hence it can also be called unintended investment.
7) Gross Investment
Gross investment means the total amount of money spent for creation of new capital
assets like plant and machinery, factory building etc. It is the total expenditure made on new
capital assets in a period.
8) Net Investment
It is gross investment capital consumption ( depreciation ) during a period of time,
usually a year. It must be noted that a part of the investment is meant for depreciation of the
capital. Asset or for replacing a worn-out. Capital asset hence it must be deducted to arrive at net
investment.
3.23 IMPORTANCE OF INVESTMENT
1) Financial Independence
First and the foremost thing is an investment gives you financial freedom. If invest money from
the beginning then we need not to wrong about the future financial needs.
2) Increase Wealth

Besides making you financially, Independent investment makes you rich also.as you invest more
and more money for a long time.it will definitely make you richer in the present generation, it is
of utmost importance in each and every aspect of your life.
3) Fulfilling Personal Goal
If you have a desire for having a luxurious apartment and a luxurious car of your own. Then, it is
obvious that these desires may be fulfilled.by a planned investment and savings as you invest
more, you tend to become richer. And as you become richer, you may find no difficulty in
achieving your personal goal.
4) Reduce Future Risk
If we do investment from the beginning then we can get money of investment in future and so
that our future will become safe and our future risk also reduce.

42
3.24 INVESTMENT STRATEGIES
Understanding of the investment choices available that may come across specialized term that
explain how many can be invested.
1) Allocation of Investment

Also known as asset allocation, this term refers to the types of investment/ asset categories you
own and the percentage of each you have in your investment portfolio.
2) Diversification
This is a risk management technique that mixes a wide variety of investment to potentially
minimize your investment risk.
3) Cost Averaging
An investment strategy used whereby an investor purchases fixed investment amount at
predetermined times, regardless of the price of the investment.
3.25 CLASSIFICATION OF INVESTMENT
A) ownership Investment
They are the most volatile and profitable class of investment. Generally they are in the form of,
A. Stocks
B. Business
C. Real estates
D. Precious objects
B) Lending Investment
They lend to the lower risk than the ownership investment and return less as result. There are
mostly associated with saving account and bonds.
C) Cash Equivalents
There are ‘as good is cash’, which means they are easy to convert back into cash. Money market
funds are the best example of this category.
Indian households invest the most:
o Provident and Pension Funds.
o Bank Deposits.
o Money-Back Policies.
o Gold.

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o Real Estate.llenges for New Investors
3.26 RELATIONSHIP BETWEEN SAVINGS AND INVESTMENT
 An important controversy in macroeconomics relates to the relationship between saving
and investment. Many economists before J.M. Keynes were generally of the view that
saving and investment are generally not equal; they are equal only under condition of
equilibrium. Besides, they thought that equality between saving and investment is
brought about by changes in the rate of interest. Keynes in his famous work “General
Theory of Employment, Interest and Money” put forward the view that saving and
investment are always equal.
 This gave rise to a severe controversy in economics as to whether saving and investment
are always equal or they are generally unequal. This controversy has now been resolved,
and there is general agreement among the economists about the correct relationship
between saving and investment.
 Modern economists use the concepts of saving and investment in two different senses. In
one sense, saving and investment are always equal, equilibrium or no equilibrium. In the
second sense, saving and investment are equal only in equilibrium; they are unequal
under conditions of disequilibrium. We shall explain below in detail the relationship
between saving and investment in these two different senses.
 When in a certain year there is net addition to the stock of capital, investment is said to
have taken place. It is worth mentioning here that by investment we do not mean the
stock of capital but the net addition to the stock of capital i.e., investment is a flow
concept. Of course, addition to the stock of capital is made through the flow of
investment. In every year stock of capital expands through net investment.
 On the other hand, by saving we mean the part of the income which has not been spent on
consumer goods and services. In other words, saving is the difference between income
and consumption expenditure. It is worth noting that in consumption expenditure all
types of expenditure are not included. If an individual spends a part of his income on
providing irrigation facilities, on buying tools and machinery, then that expenditure is not
the consumption expenditure, it is in fact an investment expenditure.

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 Base Saving Investing

To meet short-term Long-term wealth creation and

Purpose
goals or unplanned expenses capital appreciation

Investing for a longer duration

Duration Ideal for the short-term
usually yields positive returns

Returns Relatively lower returns Potential to earn high returns

Risk Savings entail minimal Investments are subject to market

involved risk risk

CDs (certificates of
Typical Mutual funds, bonds, stocks, ETFs,
deposit), savings account,
products etc.
money-market instruments, etc.

3.27 THE DIFFERENCES BETWEEN SAVING AND INVESTING

“savings” are usually put into the safest places, or products, that allow you access to your
money at any time. Savings products include savings accounts, checking accounts, and
certificates of deposit. Some deposits in these products may be insured by the Federal Deposit
Insurance Corporation or the National Credit Union Administration. But there’s a tradeoff for
security and ready availability. Your money is paid a low wage as it works for you. After paying
off credit cards or other high interest debt, most smart investors put enough money in a savings
product to cover an emergency, like sudden unemployment. Some make sure they have up to six
months of their income in savings so that they know it will absolutely be there for them when
they need it. But how “safe” is a savings account if you leave all of your money there for a long
time, and the interest it earns doesn’t keep up with inflation? What if you save a dollar when it
can buy a loaf of bread. But years later when you withdraw that dollar plus the interest you
earned on it, it can only buy half a loaf? This is why many people put some of their money in
savings, but look to investing so they can earn more over long periods of time, say three years or
longer. Investing When you “invest,” you have a greater chance of losing your money than when
you “save.” The money you invest in securities, mutual funds, and other similar investments
typically is not federally insured. You could lose your “principal”—the amount you’ve invested.
But you also have the opportunity

45
 Some of the difference between savings and investment are
 Objective: The objective behind saving and investing is the biggest difference between the two.
Savings are short-term and are used for emergencies and purchases, and can be done without
much research. Investments are made to achieve bigger goals like building wealth, funding
education, buying a house, etc. They often require long-term commitments and market research.
 Protection against inflation: The value of cash in a saving account drops when inflation is on
the rise, but investments are excellent financial products to combat inflation.
 Returns: You usually earn a fixed and steady amount of interest on your savings. Investments,
on the other hand, have the potential to yield much higher returns.
 Risk: Savings usually have very low or negligible risk. Saving instruments like FDs, RDs and
savings bank accounts will always give you steady interest on them. But, investments carry high
risk as their value can fluctuate according to the market conditions and other economic and
financial factors.
Liquidity: Savings instruments are usually high liquidity instruments. Therefore, they provide
you with immediate access to money as and when you need it. On the other hand, investments
SAVINGS AS ECONOMIC FACTOR INECONOMIC GROWTH

 The level of savings in a given society has a significant impact on economic growth.
 Saving, according to classical economists, is a necessary and sufficient condition for
securing investment, and the interest rate is the price that equates them.They believed that
as savings increased, so would investment, and thus economic growth.
 Savings generate capital formation, which leads to technical innovation and progress,
which aids in the economies of large-scale production and increases specialization, which
aids in the acceleration of labor productivity, resulting in increased GDP.Saving leads
to more efficient use of scarce resources, an increase in the size of national output,
income, and employment, thereby solving the problems of inflation,
 unemployment, and balance of payment, poverty, and inequality; and freeing the
economy from the burden of foreign debt, resulting in a better state of welfare.
 Individuals generate savings by deferring their current consumption by reducing their
expenditures on consumer goods, but individual saving is more or less dependent on:

46
 1. Ability (or Power) to Save

 This is directly related to an individual's income and the government's taxation policy.
 People with higher incomes can save more than those with lower incomes.
 Countries with high per capita income, such as the United States and some Western
countries, have higher savings, whereas undeveloped or underdeveloped countries have
low per capita income and thus have lower saving power.

2. Willingness (or Desire) to Save

 Even if people have greater ability (or power) to save, the most important requirement is
that they have a willingness or desire to save.
 However, the desire to save is influenced by a variety of personal, family, and national
factors such as family affection, a desire to start a business, old age considerations, and
unforeseen emergencies.
 Aside from the foregoing, higher interest rates encourage people to save.
 A reduction in income tax encourages people to save more, whereas an increase in
income tax discourages people from saving.

3. Opportunity to Save

 The opportunity to save refers to the country's conditions of peace and security, as well as
the government's favorable political philosophy to motivate people to save.
 When there is peace and security in a region or country, the trade, business, banking
system, and so on will function normally, and people will be more inclined to save.
 Furthermore, certain measures and schemes implemented by the government and state
agencies, such as the P.F. (provident fund), have aided in instilling the habit of saving
even among people with lower incomes

3.28 INVESTMENT CHALLENGES

 Information Overload
Many people looking to get involved with the stock market google around to discover the basics
and quickly find themselves overwhelmed by the sheer amount of seemingly complex and even

47
contradictory advice on the internet about the financial markets. Luckily, many of the most
reliable trading strategies successful investors use are pretty timeless. New investors may find it
easier to avoid the noise and use books as a resource to get started with their winning investment
portfolio.

 Unknown Risks
New investors may not know about the hidden risks in many seemingly simple investment
strategies, which can cause their portfolios to take significant hits early on in the process. To
combat this pitfall, it’s essential to be as informed as possible. Before considering them as an
investment option, make sure to be familiar with the risks involved with margin, leverage,
options, futures, etc.

 Limited Capital
One of the biggest challenges that new investors face is having limited capital available to invest,
and this is only compounded when certain financial instruments are too expensive. However,
these issues can often be solved by looking into “partial shares.”
Partial shares are essentially workarounds that allow you to invest in equity at a lower price. A
couple of common examples are using REITs to combat real estate investment challenges or
using automated investing tools with low minimum deposits, many of which we review right
here on this website.

 Over-Diversification
This challenge is almost always self-inflicted. Many new investors feel they need to invest in
everything to shield themselves from risk. However, over-diversification can significantly stunt
your portfolio’s growth. It is often best to pick 2-3 options to invest the majority of your
portfolio in.

 Bad Timing
Though the least common of these five challenges, some new investors go into the market right
before a financial downfall, and this has caused investors to lose money before making any!

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However, this risk can easily be mitigated by dollar-cost averaging, a strategy where you invest
into the market bit by bit and mitigate more significant fluctuations in the value in your portfolio
over a long period.
3.29 SAVING AND INVESTMENT IN INDIA

The developing countries like India face the enormous task of finding sufficient capital in their
development efforts. Most of these countries find it difficult to get out of the vicious circle
poverty of low income, low saving, low investment, low employment etc. With high capital
output ratio, India needs very high rates of saving and investment to make a leap forward in her
efforts of attaining high levels of growth. Since the beginning of planning, the emphasis was on
saving and capital formation as the primary instrument of economic growth and increase in
national income. In order to have production as per target, capital formation was considered the
crucial determinant and capital formation had to be supported by appropriate volume of saving.
Growth will set in motion a self-reinforcing process by which investment is encouraged,
investment enhances growth and increased income raising savings.
As Rao (1980) has rightly pointed out, “increasing in saving, use of increased saving for
increased capital formation, use of increased capital formation for increased saving for a further
increase in capital formation constituted the strategy behind economic growth. This process of
increased capital formation leading to increased saving and increased saving leading to increased
capital formation will continue till saving, capital formation and income reach desired levels
after which saving and capital formation gets stabilized and there would be a steady and self-
sustaining increase in national income “.
OVERVIEW OF SAVIGS AND INVESTING MONEY

Saving money and investing it wisely are crucial to long-term financial success. To save money
one must first draft a sensible budget (a catalog of expenses and revenues) to be sure that
monthly expenses do not exceed his or her monthly income. If after tallying all expenses one
discovers that he or she is spending more money than he or she is making, it is crucial that the
person cut back spending or earn more income rather than charging more purchases on a credit
card Maxing out credit cards (going as far into debt on the card as is permitted) and then opening
lines of credit on new credit cards makes it nearly impossible for a person to allocate funds for
future use.
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After creating a budget a person would be wise to commit to storing some excess revenues in a
savings account. Though the money in a savings account earns a small amount of interest (an
annual fee paid by the financial institution to those who store money there), most people do not
maintain these accounts because of the returns they provide. Rather, people maintain savings
accounts so that they can have access to money needed for purchases and expenses beyond the
scope of their monthly budgets. For example, the money in a savings account can be accessed if
someone experiences a spell of bad health and accrues medical bills or if one becomes
unemployed. Many financial advisers recommend that to see oneself through an unexpected
financial crisis, a person should maintain enough money in a savings account to cover four
month worth of expenses.

Investing is spending money in an attempt to generate more revenue in the future.

Purchasing a home is an investment because in most cases the value of a home increases with
time. For example, suppose a person buys a home for $80,000, and the house rises in value to
$110,000 over five years. If desired, the person can sell the home and draw a profit of $30,000 or
can choose to live in the home for several more years, during which time the home will likely
continue to appreciate in value. Unlike buying a home, purchasing a car, a computer, or a
television is not an investment because these items tend to lose value over time. When people
buy these things they do not expect that in the future they will be able to sell them for a profit. In
addition to buying a home, one can invest money sensibly by purchasing stocks (shares of
ownership in a company), bonds (loans to the government or a corporation that are paid back
with interest), or mutual funds (a bundle of investments including stocks, bonds, and other
securities that are managed by an investment company).

WHEN DID IT BEGIN

Many historians believe that the practice of saving commodities and currency in banks began in
3000 bc when people stored grains and precious metals in sealed areas of temples. These first
banks were located in temples because these structures were well built, frequently occupied, and
therefore difficult to rob. Furthermore temples were considered a safe place to store valuables
because many people figured that the potential of inciting the wrath of the gods would deter
criminals from stealing. Historical records charting the beginnings of investment are unclear.

50
Some evidence indicates that Roman investors bought shares in groups of publicani (groups of
publicans, people who in modern parlance would be called general contractors, or private
contractors) who collected tolls at ports, recruited for the military, and oversaw building projects.
Other findings suggest that by the eleventh century in Cairo, merchants and investors had
established trade relationships that resembled, in a rudimentary way, the methods of buying and
selling in a stock market.

Many contend that the first formal gatherings of investors took place in the thirteenth
century among Flemish commodities traders in the house of a man named Van Der Beurse in the
city of Bruges. Investors throughout the Netherlands followed suit, and soon there were similar
groups meeting in Amsterdam and Ghent. Elsewhere at this time, Venetian bankers were trading
in government securities. The first company to issue stock was the Dutch East India Company.
Shares in the company were first traded in 1602 at the Amsterdam Stock Exchange. Mutual
funds were introduced much later. MFS Investment Management, formerly known as
Massachusetts Financial Services, is believed to have invented the mutual fund in 1924. Sales of
mutual funds curtailed during the Great Depression (1929 to about 1939) but picked up again in
the 1940s. By the 1960s there were as many as 270 mutual funds, and by the middle of the first
decade of the twenty-first century there were more than 8,000.
ROLE OF SAVINGS AND INVESTMENT

There are two views of the topic titled Savings and Investment. One is considered to apply to real
physical macroeconomic activity, the "Keynesian", or National Accounts view. The other is
considered to apply to money and banking, the "Monetarist" view. They primarily differ slightly
in definitions of terms, which consequently lead to different discussions about very different
subject matter. The two views actually are different subject areas, making it the historical debate
difficult to collate, let alone reconcile.

Keynesians start with accounting definitions, where Savings = Investment, by construction, and
tend to emphasize the non productive (zero sum) nature of all vehicles by which savings
eventually ends up as capital. Monetarists tend to focus on technical distinctions of how savings
is transformed from money balances, eventually into capital, and emphasize the value of those
vehicles in selecting which capital to invest in.

51
In a Keynesian sense, savings is whatever is left over after income is spent on consumption of
goods and services, investment is what is spent on goods and services that are not 'consumed',
but are durable. Since Income = Output, Savings = Investment for the total world's economy (or
for a hypothetical 'closed' economy with zero foreign trade).

In a Monetarist sense, savings is the total rate at which units of account exceed expenditures, and
are accumulated as unit of account (e.g. dollar) balances with financial intermediaries. Or
sometimes hoarded as currency. Investment is the rate at which financial intermediaries and
others expend on items intended to end up as capital that directly creates value, i.e. physical
capital, durable goods, human capital, etc. In general, savings does not equal investment, but
differs slightly at all times, the differences constituting a behavioral relationship, rather than an
accounting one, as in the Keynesian view

Savings

Saving is what households (i.e. participants in the consuption account) do. mThe level of saving
in the economy depends on a number of factors (incomplete list):

 A higher real interest rate will give a greater return on saving as banks offer more favourable
rates.
 Poor returns on risky forms of saving, e.g. stocks and bonds, make it more advantageous to
hold money savings (in contention between Keynesian and Monetarist views here, mostly
because of differences in definitions).
 Poor expectation for future economic growth, increase households' savings as a precaution
for a grim future.
 More disposable income after fixed expenditures (such as mortgage, heating bill, basic goods
purchases) have been made (in contention between Keynesian and Monetarist views here,
mostly because of differences in definitions).
 Perceived likelihood of plunder of the future value of savings, via legal or extralegal means,
will make saving less attractive (in contention between Keynesian and Monetarist views
here, mostly because of differences in definitions).
These factors affect the marginal propensity to save (MPS) - the greater this MPS, the more
saving households will do as a proportion of each additional increment of income

52
Investment

 Investment is made into capital (ie. plant and machinery, also 'human capital' - training and
education), with intent to increase productivity, efficiency and output of goods and services
 In national accounting terms, stocks, bonds, mutual funds, and other items whose value is
risky, are NOT investments. They fall into the savings account, not the investment account.
 In monetary terms, the relationship between savings and investment is modeled, rather than
being an accounting identity. Stocks and bonds are considered to be important intermediary
forms of savings as it gets transformed into a capital investment that produces value. Mutual
funds, CDs, BICs, GICs, pension obligations, insurance annuities, and other forms of savings
marketed by financial intermediaries, all consist of stocks, bonds, and cash balances, services

53
 CHAPTER 4
DATA ANALYSIS AND INTERPRETATION

54
 GENDER OF THE RESPONDENTS

TABLE 4.1

Gender Frequency Percent

Male 29 36.3

Female 51 63.8

Total 80 100.0

INTERPRETATION
The above table reveals that 36.3% of the respondents are male and balance 63.8% are female. It
is inferred from the table that majority of respondents belongs to female category.

Frequency
60

50

40
Frequency
30

20

10

0
Male Female

Figure 4.1: Gender of respondent

55
 AGE OF RESPONDENTS
TABLE 4.2

Age Frequency Percent

below 25 12 15.0

25-35 24 30.0

35-45 22 27.5

above 45 22 27.5

Total 80 100.0

INTERPRETATION
The above table shows that 15% of the respondents are belongs to the group of below 25.30%
are belongs to the group of 25-35.27.5% are belongs to the group of 35-45. And the remaining
27.5% are above 45. The majority respondent’s age belongs to 25-35.

30

25

20

15 Frequency
Series2
10

0
below 25 25-35 35-45 above 45

Figure 4.2: Age of respondents

56
 EDUCATIONAL QUALIFICATION
TABLE 4.3

Education Frequency Percent

upto sslc 31 38.8

HSC 24 30.0
Undergraduate 16 20.0
Postgraduate 6 7.5
Other 3 3.8
Total 80 100.0

INTERPRETATION
The above table show that majority of (38.8%) respondent are belongs to up to SSLC.30% of
respondents are HSC,20% of respondents are under graduated,7.5% of respondents are post
graduated. And only 3.85 of respondents are included in other.

Frequency
90
80
70
60
50
40 Frequency
30
20
10
0
lc C te at
e r
ss HS ua the
to ad adu O
up gr r
der ostg
P
Un

Figure 4.3: Education qualification of respondent

57
 MONTHLY INCOME OF THE REPONDENTS
TABLE 4.4

Income Frequency Percent

Lessthan10000 18 22.5

10000-30000 48 60.0

30000-50000 8 10.0

More than
6 7.5
50000

Total 80 100.0

INTERPRETATION
From the above table we can conclude that majority of the respondents (60%) have monthly
income 10000-30000,followed by (22.55) of respondents has monthly income less than 10000,
10% of respondent have monthly income between 30000-50000. And only 7.5% of respondents
have income more than 50000

Figure 4.4: Monthly income of the respondents

OCCUPATION
TABLE 4.5
Occupation Frequency Percent
self employee 32 40.0
private employee 19 23.8
Agriculture 8 11.3
58
Business 12 15.0
Other 9 10.0
Total 80 100.0
INTERPRETATION
The above table reveals most of the respondents (40%) occupation comes under self
employee.23.8% of respondents are comes under private employee. 15% respondents are comes
under business and .11.3% of individuals comes under the occupation of agriculture. And least
respondents are comes under other jobs.

Chart Title
35
30
25
20
15 Series1
10
5
0
ee ee re s r
oy oy ltu es he
p l pl u sin Ot
em em ric Bu
le f te Ag
s iva
pr

Figure 4.5:occupation

FAMILY SIZE
TABLE 4.6

59
INTERPRETATION
The above table 4.6 reveals that
Family size Frequency Percent
46.3% of respondents are
Up to 3 37 46.3
comes under the family size up to
4 to 6 42 52.5
3. 52.5% of respondents are
above 6 1 1.3
under 4to 6 and 1.3% of
Total 80 100.0
respondents are comes under
above 6.

Frequency
45
40
35
30
25 Frequency

20
15
10
5
0
Up to 3 4 to 6 above 6

Figure 4.6:Family size

60
 MATERIAL STATUS
TABLE 4.7

Frequency Percent

Married 43 53.8

Unmarried 20 25.0

Widow 7 8.8

Divorced 10 12.5

Total 80 100.0

INTERPRETATION
The above table reveals majority of the respondents are (53.8%) are married . 25% of the
respondents are unmarried .12.5 % of the respondents are divorced and 8.8% of the respondents
are widow.

Frequency
90
80
70
60
50 Frequency

40
30
20
10
0
Married Unmarried Widow Divorced Total

Figure 4.7: material status

SOURCE OF INCOME

61
 TABLE 4.8

Source Frequency Percent

spouse income 14 17.5

Agriculture income 17 21.3
income from parents 20 25.0
rent from house 17 21.3
other income 12 15.0
Total 80 100.0

INTERPRETATION
The above table reveals majority of respondent’s source of income is parents .21% of the
respondents source of income is agriculture and rent from house and 17.5% of respondents
income from spouse.

Frequency
25

20

15
Frequency
10

0
spouse agricuture income rent from other
income income from house income
parents

Figure 4.8:source of income

62
 SUITABLE METHOD OF SAVING
TABLE 4.9
Method Frequency Percent

LIC 15 18.8

self-keeping 11 13.8

Bank deposit 42 52.5

post office 12 15.0

Total 80 100.0

INTERPRETATION
The above table shows majority of the respondents method of saving is bank. 18.8% of
respondent is LIC.15% of respondents comes under post office . and only 13.8 % of respondents
are comes under self keeping

Chart Title
45
40
35
30
25 Series1
20
15
10
5
0
LIC self keeping Bank deposit post office

Figure 4.9:method of saving

63
 TYPE OF ACCOUNT
TABLE 4.10

Account Frequency Percent

fixed deposit 15 18.8

current a/c 14 17.5

savings a/c 51 63.8

Total 80 100.0

INTERPRETATION
The above table shows majority(63.8%) of respondents have savings a/c . 18.8% of respondents
have fixed deposit. And 17.5% of the respondents have current a/c

Figure 4.10: type of account

INSURANCE POLICY
TABLE 4.11
Insurance Frequency Percent

life insurance 25 31.3

health insurance 40 50.0

64
general insurance 13 16.3

Other 2 2.5

Total 80 100.0
INTERPRETATION
The above table reveals most of the respondents (50%) comes under health insurance .31.3 %of
the respondents comes under life insurance and 16.3 % respondents comes under general
insurance. And only 2.5% of the respondents are comes under others.

Frequency
90
80
70
60
50
40 Frequency
30
20
10
0
ce ce ce r l
he ta
r an r an r an Ot To
su su su
e in in l in
f h a
li
ealt ne
r
h ge

Figure 4.11:insurance policy

RANKING ANALYSIS TO IDENTIFY MOTIVES OF SAVINGS

RANK
TABLE 4.12
Motives Mean Rank
Children education 2.18
Retirement plan 3.53
Fear of inflation 4.30

65
 Health care 1.76

Home purchase 3.24

INTERPRETATION
The above table reveals the result of Friedman rank test applied to identify motives of
investment. From the above table we can find that health care is the most favourable motive for
savings. Children education comes under rank 2 and home purchase comes under rank 3.
Retirement plans is the fourth motives of investment and fear of inflation comes under rank 5.

RANKING ANLAYSIS TO IDENTIFY OBJECTIVE OF INVESTMENT

RANK
TABLE 4.13
Objective Mean Rank
Safety 1.66
liquidity 2.71
Low risk 3.43
Return 2.46

66
 Other factors 4.76

INTERPRETATION

The above table reveals the result of Friedman rank test applied to identify objective of
investment .from this table we can find that safety is the most favourable objective of saving
have rank 1. Return are come under rank 2and liquidity has rank 3. The low risk comes under
rank 4. And other factors comes under rank 5.

ANALYSIS OF SAVING BEHAVIOUR ACROSS INCOME LEVEL WITH AGE

GROUP

H0: There is no significant difference between age group relating to saving level of individuals.
H1: There is significant difference between age group relating to savings level of individuals

TABLE 4.14

ANOVA

67
 amount of saving per month
Sumof Squares Df Mean Square F Sig.
1.0
Between Groups 1.777 3 .592 .355
98
Within Groups 41.023 76 .540

Total 42.800 79

INTERPRETATION
The above table reveals the result of one way ANOVA applied to find whether mean scored are
vary according to the age group of respondents on savings level of individuals. The calculated p
value is .355; therefore null hypotheses is accepted.so there is no significant difference between
age group relating to savings level of individual.

ANALYSIS OF MONTHLY INCOME AND SATISFACTION LEVEL OF

INVESTMENT OPTION

H0: There is no significant difference between monthly incomes towards the satisfaction level of
investment option.
H1: There is significant difference between monthly incomes towards satisfaction level of
investment.
TABLE 4.15
ANOVA

68
 Sum of Df Mean Square F Sig.
Squares
Between Groups .967 3 .322 .423 .737
Share Within Groups 57.833 76 .761
Total 58.800 79
Between Groups 1.668 3 .556 1.307 .278
bank deposit Within Groups 32.319 76 .425
Total 33.988 79
Between Groups 7.050 3 2.350 3.519 .019
mutual fund Within Groups 50.750 76 .668
Total 57.800 79
Between Groups .575 3 .192 .221 .881
post office Within Groups 65.812 76 .866
Total 66.387 79
Between Groups 5.793 3 1.931 3.437 .021
gold/real estate Within Groups 42.694 76 .562
Total 48.488 79

INTERPRETATION
The above table reveals the result of one way ANOVA applied to find whether mean scored are
vary according to monthly income of respondents on satisfaction of investment option. In the
case of share , bank deposit and post office , the calculated p value is is more than .05.
Hence ,null hypothesis is accepted. That is there is no significant difference between monthly
income and the satisfaction level of investment option. In the case of mutual fund , and gold/real
estate ,p value is less than .05. Hence hypothesis is rejected.

ANALYSIS OF AWARENESS LEVEL OF HOUSEHOLDS WITH EDUCATIONAL

QUALIFICATION

TABLE 4.16
ANOVA
Sum of df Mean Square F Sig.
Squares
Bank deposit Between Groups 4.942 4 1.235 6.077 .000

69
 Within Groups 15.246 75 .203
Total 20.188 79
Between Groups 4.416 4 1.104 1.902 .119
Gold Within Groups 43.534 75 .580
Total 47.950 79
Between Groups 5.955 4 1.489 1.885 .122
mutual fund Within Groups 59.233 75 .790
Total 65.188 79
Between Groups 11.981 4 2.995 5.109 .001
post office savings Within Groups 43.969 75 .586
Total 55.950 79
Between Groups 17.051 4 4.263 6.781 .000
Bonds and share Within Groups 47.149 75 .629
Total 64.200 79

INTERPRETATION
The above table reveals the result of one way ANOVA applied to find whether mean scored are
vary according to educational qualification of respondents on their awareness level of
respondents. The calculated value is less than 0.05, hence reject null hypothesis. There is
significant difference between educational qualification and awareness level of households .

ANALYSIS ON GENDER WITH INVETORS PERCEPTION TOWARDS

SAVINGS AND INVESTMENTS

H0: There is no significant difference between gender of the respondent and investors perception
towards savings and investment.
H0: There is significant difference between gender of respondent and investors perception
towards savings and investment.
70
 TABLE 4.17
T -Test

Group Statistics
Gender N Mean Std. Deviation Std. Error Mean
Household saving help the Male 29 4.69 .471 .087
economic development of
Female 51 4.57 .608 .085
the country
Bank is better place of Male 29 3.69 .712 .132
investment than other
Female 51 3.84 .703 .099
investment avenues
All Indians have good Male 29 3.38 1.083 .201
savings and investment Female 51 3.37 1.113 .156
Savings and investment Male 29 3.93 .753 .140
increase the income of
Female 51 4.04 .871 .122
family
Male 29 4.03 .865 .161
Help to meet contingencies
Female 51 3.90 .900 .126
Savings help to take benefit Male 29 4.34 .670 .124
of anticipated changes in
Female 51 4.22 .832 .117
the future price

TABLE 4.17:1 Independent Samples Test

t-test for Equality of Means
t df Sig. (2-tailed)

Households saving help the economic Equal variances assumed .924 78 .358
development of the country Equal variances not
.991 70.716 .325
assumed
Bank is better place of investment than Equal variances assumed -.934 78 .353

71
 Equal variances not
other investment avenues -.931 57.728 .356
assumed

Equal variances assumed .026 78 .979

All Indians have good savings and
Equal variances not
investment .027 59.680 .979
assumed
Equal variances assumed -.560 78 .577
Savings and investment increase the
Equal variances not
income of family -.583 65.576 .562
assumed
Equal variances assumed .642 78 .523
Help to meet contingencies Equal variances not
.649 60.277 .519
assumed
Equal variances assumed .714 78 .477
Savings help to take benefit of
Equal variances not
anticipated changes in the future price .758 68.989 .451
assumed

INTERPRETATION
Independents test applied to test the significant difference between the means scores of male and
female investors perception towards savings and investment. The calculated p value is greater
than .05 at 5% level of significant. Hence null hypothesis is accepted. So there is no significant
difference between gender and investors perception.

72
 CHAPTER 5
SUMMARY, FINDINGS, SUGGESTIONS,AND
CONCLUSION

SUMMARY
This project report entitled “SAVINGS AND INVESTMENT BEHAVIOUR OF RURAL
HOUSEHOLD”. The main objective of the study was to find out the savings and investment
behaviour of individuals in the rural household.

This project was successfully completed through five chapters namely, introduction ,review of
literature and theoretical framework, overview about savings and investment behaviour, data
analysis and interpretation and last one is summary, findings, suggestions and conclusions.
73
The first chapter of the project contains introduction of the chapter, objectives, statement of
problem, scope of the study, methodology include , source of data, samples, tools, significance of
the study and limitations.

The second chapter includes literature review. It includes more than 20 studies of different
researchers are analysis carefully.

In third chapter, that is over view about the savings and investment behaviour, variable
influencing saving behaviour etc...

The fourth chapter that is data analysis and interpretation by using various statistical tools.

The researcher while conducting the study comes across many findings, suggestions and
conclusions. All these includes in fifth chapter.

FINDINGS

 63.8% of respondents are in female category.

 30% of the respondents are in the group of between 25-35. And 15% respondents belongs
to below 25
 The highest number of respondents in education qualification is up to SSLC (38.8%)
 60 % of the respondents had monthly income of Rs.10000-30000.
 40 % of the respondents are self-employees.

74
 52.5% of the respondents are in the family size of 4 to 6.
 In material status ,53.8% of respondents belongs to married.
 In source of income ,25 % of the respondents belongs to income from parents .
 52.5 % of respondents method of saving is bank deposit .
 63.8 % of respondents have saving account.
 50 % of the respondents have health insurance policy .
 Health care is the most important motive of saving.
 Safety is the most important objective of investment.
 There is no significant difference between age group relating to savings level if
individuals.
 There is no significant difference between monthly income and satisfaction level of
investment option
 In the case of mutual fund, gold/real estate ,there is significant difference between
monthly income and satisfaction level of option.
 There is significant difference between educational qualification and awareness level of
household .
 There is no significant difference between gender and investors perception.

SUGGESTIONS

 To encourage secured saving behaviour among rural household.

75
 To encourage the saving habits of individual investors across the income
level.
 To improve safety, it is most important objective of investment.
 Government should introduce new saving schemes for rural household.
 To improve education level of individuals.
 To promote the current savings and investment of rural household.

CONCLUSION

76
This study highlighted the overall overview of saving and investment behaviour of rural house
hold in Nilambur taluk. They are very interested to saving their funds into various fields like
bank, kudumbashree, LIC, post office etc Saving means the act of refraining from spending
one’s income on consumption. The part of the income, which is unspent, is called saving. From
the economist’s perspective people allocate disposable income between consumption and savings
and at various level of income, there will be corresponding level of consumption and saving.
According to classical definition, saving is “income minus consumption” and is residual in
character. Savings can also be defined as stock, where in savings stands for change in the wealth
over a period of time. In this sense it is regarded as the sacrifice in the present consumption for
future.Respondent have been selected only from rural area and they are not well educated, not
well employed, lower income, risk perception, etc…The government should take a measures to
provide financial awareness in rural area and should increase opportunities to do the research in
this area to find how the rural households are taking financial decision making.

77
BIBLIOGRAPHY
 WEBSITES:
www.google.com
www.wikipedia.com
www.shodganga.in
www.researchgate.net
REFERENCE:-
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reference to Coimbatore District), International Journal of Multidisciplinary Research
and Development, Vol.3, Pp. 270-274.
23. Madhumala Pathy (2017). Saving and investment habits of rural household in Cuttack
District of Odisha, International Journal of Commerce and Management Research, Vol.3
Pp. 56-58.
24. J. Amudha, V.Aravamundhan Varathan (2015). Saving and investment behavior of rural
household in Salem, International Journal of Multidisciplinary Research and
Development, Vol. 2, Pp. 128-132.
25. Abhaykumar Gasti (2017). Saving and investment behavior of rural household:an
analytical study of household of Dharward District of Karnataka State, Imperial Journal
of Interdisciplinary Research, Vol.3,Pp.548-553.
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behavior: a study on the rural households of India, ZENITH International Journal of
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27. Gowari Nair, Pravitha NR (2015). A study on investment behavior with special reference
to Kollam Corporation, Global Journal for Research Analysis, vol. 4,
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household saving:The case of North Shewa Zone, Amhara regional state, Ethopia,Journal
of Investment and Management, Vol. 7, Pp. 151-156.
32. Wogene Markos (2015).Determinants and behavior of rural household saving:A case of
Dale Woreda, Sidma Zone, Internatinal Journal of Multidisciplinary Advanced Research
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33. Dr . Taqadus Bashir, Hassan Raza Ahmed, Sheraz Jahanglr, Samina Zaigham, Hifza
Saeed and Sameera shafi (2013). Investment preferences and risk level:Behaviour of
salaried individuals,IOSR Journal of Business and Management,Vol. 10, Pp. 68-78.
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habit and investment preference of govt school teacher in Vellore District, international
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Research in Engineering,IT and Social Sciences,Vol.5.
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APPENDIX
 QUESTIONNAIRE
I am suvarsha p second year M com student in MES Mampad college. As part ofmy curriculum
am conducting “A STUDY ON SAVINGS AND INVESTMENT BEHAVIOUR OF RURAL
HOUSEHOLD WITH SPECIAL REFERENCE TO Nilambur taluk”. I will be obliged if you
provide full and correct information up to your knowledge. Whatever information provided by
you is kept confidential and used for the purpose of my study.
Thank you
Name:
1) Gender : Male Female

2) Marital status: Married Unmarried Widow Divorced

3) Age : Below 25 25-35 35-45 Above 45

4) Educational qualification :
HSC UG PG professional

Others
5) Occupation : Self-employee Private employee business

Agriculture Others

6) Family size : Up to 3 4 to 6 Above 6

7) Monthly income:
Less than Rs 10000 Rs 10000 to Rs 30000

Rs 30000 to Rs 50000 Above Rs 50000

8) What are the source of income ?
 Spouse income Agriculture income
Income from parents Rent from house
Other income

9) Specify your suitable method of saving ?

LIC Self keeping
Bank Post office
10) Motives of your saving ?(rank)
Children education
Retirement plan
Home purchase
Fear of inflation
Health care

11) Specify the amount of saving per month ?

Less than 10000 10000- 20000
20000-30000 More than 30000

12) Which type of account you prefer?

Fixed deposit Current a/c
Saving a/c Others
13) Do you have any other type of investment?
Chiti Ayal koottam
kudumbhasri other
14) which is your insurance policies ?
Life insurance Health insurance
General insurance Others
15) Are you satisfied with your saving behaviour across income level?
Yes No
16) State your level of awareness on the following investmrnt option?
 Very high high moderate low Very low
Shares and
bond
Mutual fund
Gold
Post office
saving
Bank deposit

17) State your level of satisfaction on avenues of investment?

Very high high Moderate low Very low
share
Bank deposit
Mutual fund
Post office
Gold/realestate

18) Which type of investment you prefer?

Short term 1 year
Medium term 1 to 3 years

Long term>3 years

19) bjective of your investment: Rank(1 to 5)

Safety
Liquidity
Return
Low risk
Other factors
 20) Are you satisfied with your investment option?
Highly satisfied
Satisfied
Neutral
Dissatisfied
Highly dissatisfied
21) Rank the following source of information which influence your decision in investment?
Source Rank
Newspaper
Friends and relatives
Media
Online search
Post office

22) Investors perception towards savings and investment.

Perception Strongly Agree Neutral Disagree Strongly

agree disagree
Household
saving help
the economic
development
of the country
Bank is better
place of
investment
than in other
investment
avenues
All Indians
are having
good savings
and
investment
habits
Help to meet
contingencies
Saving help
to take
benefits of
anticipated
change in the
future price

23) do you agree that Factors influencing savings and investment habit of households?
Factors Strongly Agree Neutral Disagree Strongly
agree disagree
Interest rates
of investment
Technological
development
Education
problem
Lack of idea
Security
issues

24) Would you have any suggestions or recommendation to improve savings and investment
behaviour?
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