CHAPTER 4: DATA ANALYSIS & INTERPRETATION

4.1 Analysis in this report:

An analysis is made on the responses received from 102 sample investors. The

avenues, to find out the needs of the current and future investors.

The questionnaire contains various qu financial

experience, based on these experiences an analysis is made to find out a pattern in
their investments.

Based on these investment experiences of the 102 sample investors an analysis

is made and interpretations are drawn. Interpretations are made on a rational basis,
these interpretations may be correct or may not be correct but care is taken to draw a
valid and approvable interpretation.

Analysis is made only from the information collected through questionnaires no

other data or information is taken in to consideration for purpose of the analysis.

12
4.2 Analysis of the Survey:
Table: 1 Demographics of the Sample Investor

PARAMETER NO. OF. INVESTOR PERCENTAGE

GENDER

Male 60 59%
Female 42 41%
TOTAL 102 100%

AGE GROUP

Below 20 0 0
Between 20-30 37 36%
Between 31-40 35 34%
Above 41 30 30%
TOTAL 102 100%

QUALIFICATION

Under Graduate 9 9%
Graduate 46 45%
Post Graduate 39 38%
Others 8 8%
TOTAL 102 100%

OCCUPATION

Salaried 54 53%
Business 22 21%
Professional 14 14%
House Wife 11 11%
Re red 1 1%

TOTAL 102 100%

ANNUAL INCOME

Below Rs.2,00,000 37 36%

Rs.2,00,000-4,00,000 33 32%
Rs.4,00,000-6,00,000 18 18%
Above Rs.6,00,000 14 14%

TOTAL 102 100%

13
Interpretation:

Table 1 above shows, that 60 (59%) of the investors are men and the rest
42(41%) are females. Generally males bear the financial responsibility in Indian
society, and therefore they have to make investment (and other) decisions to fulfill the
financial obligations.

When it comes to age, it was found that 36% are young and significant number
under the age group of 20-30. 34% of them are in the age group of 31-40. 30% of
them are above 40 years of age. There are no investors below 20 years of age.

Nearly 53% of the investors belong to the salaried class, 21% were business
class, 14% were professionals, 11% were housewives and the rest were retired.

It was found that irrespective of annual income they earn all the investors
interested in inv
save for their future needs, and invest those saved resources efficiently.

39(38%) of the individual investors covered in the study are postgraduates;

46(45%) investors are graduates and 9(9%) of the investors are under-graduates, and
8(8%) investors are categorized as others who are either illiterates, had less education
than under graduation or who are more qualified than post graduates. It is
interesting to note that most investors (covered in the study) can be said to possess
higher education (Bachelor Degree and above), and this factor will increase the
reliability of conclusions drawn about the matters under investigation.

37(36%) of the investors are earning less than 2 lakhs per annum, 33(32%)
investors are earning between 2 lakhs and 4 lakhs, 18(18%) investors are earning
between 4 lakhs and 6 lakhs, 14(14%) investors are earning more than 6 Lakhs P.a.
Since most of investors are below 4 lakhs annual earnings, many of them are non
risk takers.

14
Table 2 Other Characteristics of Sample Investors

Table 2.1 INVESTORS WILLING TO LOSE PRINCIPAL AMOUNT

PARAMETER NO OF INVESTOR PERCENTAGE
YES 7 7%
NO 95 93%
TOTAL 102 100%

NO OF INVESTORS
7%

YES
No
93%

Interpretation:

Since many of the investors annual earnings are below 2 lakhs and 4 lakhs,
many of them do not take the risk of losing their principal investment amount. 93%
of the sample investors are not ready to lose their principal investment amount. 7%
are ready to take risk of losing their principal up to certain extent.

Table 2.2 TIME PERIOD PEREFERED TO INVEST

PARAMETER NO OF INVESTOR PERCENTAGE
SHORT TERM 12 12%
MEDIUM 60 59%
LONG TERM 30 29%
TOTAL 102% 100%

No of Investors

12%
29% SHORT TERM
MEDIUM
LONG TERM
59%

15
Interpretation:

It is interesting to know that many investors prefer to invest their money for
medium term i.e. from 1 - 5 years, instead of short term and long term.12% preferred
short term, 59% preferred medium term and 29% preferred long term.

Table 2.3 FREQUENCY OF MONITORING THE INVESTMENT

PARAMETER No of Investors Percentage
DAILY 17 17%
MONTHLY 35 34%
OCCATIONALLY 41 40%
OTHER 9 9%
TOTAL 102 100%

Sales

9%
17% DAILY
MONTHLY

40% OCCATIONALLY
34%
OTHER

Interpretation:

Due to the busy life schedule, many of the investors are not able to spend time
in monitoring their investments, only 17% of the investors are monitoring their
investments daily,34% are monitoring on a monthly basis, 40% , the majority
investors are monitoring their Investments occasionally. Many of them who have
invested in safe investment avenues do not bother about their investments, some of
them forget about the investments for many years.

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Table 2.4 INVESTMENT IN EQUITY MARET
PARAMETER No of Investors Percentage
YES 32 31%
NO 70 69%
TOTAL 100 100%

Interpretation:

Out of the total sample investors only 31% of the investors invest in equity share
market through their DEMAT A/C, 69% of the investors never invested in equity
shares. The investors who invest in equity share market are asked another question,
what would they do if the stock market falls immediately after their investment, many
of them replied that they would wait till the market increases instead of selling them
at a loss, very few answered that they would average the investment by buying some
more shares.

Table 2.5 FAMILY BUDGET

PARAMETER No of Inventors Percentage
YES 73 72%
NO 29 28%
TOTAL 102 100%

Sales

28%

YES
NO

72%

17
Interpretation:

72% of the sample investors had a monthly family budget for their daily
expenditure.28% of the investors replied they never thought of having a budget
calculation, and few think of having a budget but never implemented so far. Many
people with excess money never cared to make any family budgets.

Table 2.6 INVESTMENT TARGET

PARAMETER No of Investors Percentage
YES 48 47%
NO 54 53%
Total 102 100%

Interpretation:

Its interesting to know that almost same proportion of investors have different
thoughts, 47% of the investors have an investment target every year, and 53% of the
investors do not go for any targets for investment. On personal questioning many of
the investors who had an investment target every year are not able to reach their
targets due to contingent expenses. Few investors invest regularly but never thought
of having a target every year.

Table 2.7 FINANCIAL ADVISOR

PARAMETER No of Investors Percentage
YES 25 25%
NO 77 75%
TOTAL 102 100%

No of Investors

80%
60%
40% No of Investors
20%
0%
YES NO

18
Interpretation:

75% of the investors never had a financial advisor, they never approached an
advisor for their financial needs, the reason may be inadequate income and excess
5% of the
investors have financial advisors, who manage their investments.

Table 3 Objectives of Investment

Table 3.1 SAVING OBJECTIVE

PARAMETER VOTES WEIGHTS RANKING
71 29 1
RETIREMENT 47 19 3
HOME PURCHASE 38 15 4
30 12 5
HEALTHCARE 57 23 2
OTHERS 05 02 6

TOTAL 248 100

Votes
OTHERS
HEALTHCARE

HOME PURCHASE Votes

RETIREMENT

0 20 40 60 80

Interpretation:

Table 3.1 shows the savings objectives of the sample investors, investors are
given option to select one or more savings objectives, since there may be one or more
answers, weights are given for each parameter bases on the votes given by the
investors, the maximum weightage represents many investors have that as main
objective. Based on the weights calculated ranks are given in the order of maximum
weightage given by investors. First ran s education, many

19
investors feel that, investing money for the future of the Child s education is very
important than any other need. Many of the investors are in the age group of 20-30
and 31- 40 as of now they are thinking of savin s marriage. So
children s marriage is given last rank. After children s education investors are saving
for their own health care. There is a greater need for Indians to save for their health
care who are living a mechanical life. Retirement and home purchase are given
subsequent ranks after health care.

Table 3.2 PURPOSE BEHIND INVESTMENT

PARAMETER VOTES WEIGHTS RANK
WEALTH CREATION 37 22 4
TAX SAVING 43 25 3
EARN RETURNS 45 27 1
FUTURE 44 26 2

TOTAL 169 100

Votes
50
40
30
20
Votes
10
0
WEALTH TAX SAVING EARN FUTURE
CREATION RETURNS

Interpretation:

All the investors have very common purposes for investing; they have more than
one purpose for investing their money. Salaried people invest for tax savings, and for
future expenditure, business people invest for the purpose of earning returns. Almost
all the investors have all the 4 purposes behind investing their money.

20
Table 3.3 FACTORS CONSIDERING BEFORE INVESTIING
PARAMETER VOTES WEIGHTS RANKING
SAFETY OF PRINCIPAL 60 43 1
LOW RISK 35 25 2
HIGH RETURNS 27 19 3
MATURITY PERIOD 16 11 4
TOTAL 138 100

Votes
80
60
40
20 Votes
0
SAFETY OF LOW RISK HIGH RETURNS MATURITY
PRINCIPAL PERIOD

Interpretation:

When the investors are asked about the factors considering before investment
many of them have voted for safety of principal and low risk. First rank is given to
safety of principal and 2nd to low risk. Here there are some contradicting results,
some investors expect high returns at a very low risk, and this is not possible in
practical Indian investment avenues. Investment believes in a proved principle,
higher the risk higher the returns, lower the risk lowers the returns. Investors need
to know about this principle before investing.

21
Below are the demographics of the sample investors based on the category
occupation.

Table 4 Demographics Based On Occupation

Parameter No of Salaried Percentage

Age Group
Below 20 0 0%
Between 21-30 24 44%
Between 31-40 18 33%
Above 40 12 23%
Total 54 100%
Quali ca on
Under Graduate 0 0%
Graduates 23 43%
Post Graduate 25 46%
Others 06 11%
Total 54 100%
Annual Income
Below Rs.2,00,000 15 28%
Rs.2,00,000-4,00,000 17 31%
Rs.4,00,000-6,00,000 17 31%
Above Rs.6,00,000 5 10%
Total 54 100%

Parameter No of Business Percentage

Age Group
Below 20 0 0%
Between 21-30 2 9%
Between 31-40 10 45%
Above 40 10 45%
Total 22 100%
Quali ca on
Under Graduate 5 23%
Graduates 11 50%
Post Graduate 6 27%
Others 0 0%
Total 22 100%
Annual Income
Below Rs.2,00,000 11 50%
Rs.2,00,000-4,00,000 5 23%
Rs.4,00,000-6,00,000 1 5%
Above Rs.6,00,000 5 23%
Total 22 100%

22
Parameter No of Professional Percentage
Age Group
Below 20 0 0%
Between 21-30 8 57%
Between 31-40 2 14%
Above 40 4 29%
Total 14 100%
Quali ca on
Under Graduate 0 0%
Graduates 6 43%
Post Graduate 6 43%
Others 2 14%
Total 14 100%
Annual Income
Below Rs.2,00,000 2 14%
Rs.2,00,000-4,00,000 8 57%
Rs.4,00,000-6,00,000 1 7%
Above Rs.6,00,000 3 21%
Total 14 100%

Parameter No of House Wife Percentage

Age Group
Below 20 0 0%
Between 21-30 4 36%
Between 31-40 3 27%
Above 40 4 36%
Total 11 100%
Quali ca on
Under Graduate 1 9%
Graduates 6 55%
Post Graduate 2 18%
Others 2 18%
Total 11 100%
Annual Income
Below Rs.2,00,000 9 82%
Rs.2,00,000-4,00,000 1 9%
Rs.4,00,000-6,00,000 0 0%
Above Rs.6,00,000 1 9%
Total 11 100%

23
Assumption:

As a part of the analysis I assumed that preference for investment avenues is

dependent on the occupation of the investor. Hence preferred investment avenue are
derived from the demographics of the sample investor based on occupation.

Table: 5 Investment Preference Based On Occupation

Table 5.1 Preferred investment avenues for salaried

Investment Avenues Votes Weights Rank

Life Insurance 35 16 1
Gold 25 12 2
Bank Fixed Deposits 24 11 3
Mutual Funds 23 11 4
Real Estate 23 11 5
Post O ce Saving 20 9 6
PPF 18 8 7
NSC 17 8 8
Equity Shares 16 7 9
Saving Account 14 7 10
Total 215 100

Since the investor has an option to invest in more than one Investment Avenue,
weights are given on the basis of preference to investment avenues. The avenue
which is given maximum weightage by the investors is ranked first. First Ten ranks
are given to the first ten preferred investment avenues. First preference is given to life
insurance, second to investing in gold, third to bank fixed deposits. Tenth preference
is given to bank savings account.

24
Table 5.2 Preferred investment avenues for Business people

Investment Avenues Votes Weights Rank

Bank Fixed Deposits 13 16 1
Life Insurance 13 16 2
Real Estate 11 14 3
Mutual Funds 10 12 4
Gold 8 10 5
Equity Shares 7 9 6
Chit Funds 6 7 7
Post O ce Saving 5 6 8
Saving Account 4 5 9
NSC 4 5 10
Total 81 100

Thinking of the business people is almost same to that of salaried people, both
is similar in preferring insurance and bank fixed deposits, but given third preference
to real estate. Gold is given 5th place here. Last place is given to national savings
certificates.

Table 5.3 Preferred investment avenues for Professional

Investment Avenues Votes Weights Rank

Bank Fixed Deposits 10 19 1
Life Insurance 10 18 2
Gold 6 11 3
Real Estate 6 11 4
Post O ce Saving 5 9 5
Saving Account 4 7 6
Mutual Funds 4 7 7
PPF 3 6 8
Bonds 3 6 9
Govt Securi es 3 6 10
Total 54 100

There is no much difference in the preferences of professionals when compared

to salaried and business people. A professional does not prefer mutual funds where
salaried and business people prefer at 4th place. Professionals are more interested in
post office savings rather than mutual funds. As business people professionals also
prefer bank fixed deposits in the first place, then life insurance. Professionals does
not prefer national saving certificates at all, eliminated it from the top 10.

25
Table 5.4 Preferred investment avenues for House Wife

Investment Avenues Votes Weights Rank

Gold 9 18 1
Life Insurance 9 18 2
Bank Fixed Deposits 8 16 3
Real Estate 5 10 4
Post O ce Saving 5 10 5
Chit Funds 4 8 6
Equity 4 8 7
Saving Account 3 6 8
NSC 2 4 9
Mutual Funds 1 2 10
Total 50 100

Indian housewives love gold as much as themselves. Housewives have given

first rank to gold pushing insurance and bank fixed deposits to second and third
place. House wives gave least preference to mutual funds. They are more attracted to
traditional investment avenues like gold, real estate, post office savings and chit
funds.
Table 5.5 Preferred investment avenues for Overall

Investment Avenues Votes Weights Rank

Life Insurance 67 17 1
Bank Fixed Deposits 55 14 2
Gold 50 13 3
Real Estate 45 12 4
Mutual Funds 38 10 5
Post O ce Saving 35 9 6
Equity Shares 29 8 7
Saving Account 25 6 8
NSC 25 6 9
PPF 22 5 10
Total 391 100

26
HYPOTHESIS - Increase in Age decreases the Risk tolerance level.

Relation between Age and risk tolerance

Level of risk tolerance dependent on the age of the investor.
Risk tolerance of an investor shows a negative relation to the age of
that investor
Lower the age higher the risk capabilities, higher the age lower the risk
capabilities.

LEVEL OF RISK TOLERANCE WITH RESPECT TO AGE GROUP

For the purpose of analysis investors are placed under three

categories.
1. Low risk category
2. Medium risk
3. High risk

Classification is done based on three factors

1. Past investments of the investor.
2. Investor experience in investing (level of experience).
3. Investor preference for investments.

First the total sample of 102 is divided in to 3 age groups.

Investors in each age group are classified in to 3 risk categories based on the above
factors.

27
Table 6: Finding Relationship between Age Group and Level of Risk Tolerance

Table 6.1 Risk tolerance of age group 20-30

Parameters No of Investors Percentage

Level of Risk

Low Risk 13 35%

Medium Risk 19 51%
High Risk 5 14%
Total 37 100%

Table 6.2 Risk tolerance of age group 30-40

Parameters No of Investors Percentage

Level of Risk

Low Risk 20 57%

Medium Risk 11 32%
High Risk 4 11%
Total 35 100%

Table 6.3 Risk tolerance of age group above 40

Parameters No of Investors Percentage

Level of Risk

Low Risk 21 70%

Medium Risk 6 20%
High Risk 3 10%
Total 30 100%

28
Observations:
Observations from table 6.1, 6.2, 6.3
From the table 6.1 we find that 51% of Investors between the age group of 20-
30 came under medium risk category, where as the percentage of investors who
came under medium risk in the age group of 30-40 has decreased to 32%. It still
came down in the case of investors in the age group of 40 above, which is only 20%.
We can see a decreasing trend in the behavior of investors towards medium risk
when their age increased.
35% of the investors in the age group of 20-30 are in the low risk category,
where as Investors under the age group 30-40, 57% came under the low risk
category, there is a large increase in the investors who came under low risk category
in this age group. It has further increased, 70% of the investors in the age group
above 40 came under the low risk category. We can see an increasing trend with
respect to low risk category as the age increases.
Same observations are arrived at, when comparing the high risk category with
respect to the age groups. As the age increases the level of risk tolerance is coming
down. 14% came under the high risk category under the age group 20 - 30, when it
came to age group above 40 above only 10% came under the high risk category.
From the above observations we can conclude that there is a strong inverse or
negative relationship between risk tolerance and age group.
Attributes Risk Tolerance Level
Age -0.74
correlation coefficient is calculated, it is found to be -0.74
by which we can conclude that there is a strong negative correlation between Age
and Risk tolerance. Age accounts for the major differences in risk taking decisions by
the investors. The older an investor, the better seemed his/her performance in
comparison to the younger ones. Over-confidence in their own investment ability
among the youngsters largely accounts for the excessive trading among younger
investors leading to lower returns and this direct to decline in the risk tolerance
level.

29
 CHAPTER 5: FINDINGS & SUGGESTIONS

5.1 Findings:

1. The study reveals that male investors dominate the investment market in
India.

2. Most of the possess higher education like graduation and above.

3. Majority of the active and regular Investors belong to accountancy and

relate employment, non-financial management and some other occupations
are very few.

4. Most investors opt for two or more sources of information to make

investment decisions.

5. Most of the investors discuss with their family and friends before making an
investment decision.

6. Percentage of income that they invest depend on their annual income, more
the income more percentage of income they invest.

7. The decisions are based on their own initiative.

8. The investment habit was noted in a majority of the people who participated
in the study.

9. Most Investors prefer to park their funds in avenues like Life insurance, FD,
Gold and Real Estate.

30
10. Most of the investors get their information related to investment through
electronic media (TV) next to print media (News paper/ Business news paper/
Magazines)

11. Most of the investors are financial illiterates.

12. Increase in age decrease the risk tolerance level.

13. Women are attracted towards investing gold than any other investment
avenue.

31
 CHAPTER 6: SUMMARY & CONCLUSION

6.1 Summary:

This report is a reflection of the behavior of various categories of investors.

Selection of a perfect investment avenue is a difficult task to any investor. An effort is
made to identify the tastes and preferences of a sample of investors selected
randomly out of a large population. Despite of many limitations to the study I was
successful in identifying some investment patterns, there is some commonness in
these investors and many of them responded positively to the study.

This report concentrated in identifying the needs of current and future

investors, investor s preference towards various investment avenues are identified
based on their occupation. Investors risk in selecting a particular avenue is
dependent on the age of that investor.

6.2 Conclusion:

This study confirms the earlier findings with regard to the relationship between
Age and risk tolerance level of individual investors. The Present study has important
implications for investment managers as it has come out with certain interesting
facts of an individual investor.

The individual investor still prefers to invest in financial products which give
risk free returns. This confirms that Indian investors even if they are of high income,
well educated, salaried, independent are conservative investors prefer to play safe.
The investment product designers can design products which can cater to the
investors who are low risk tolerant and use TV as a marketing media as they seem to
spend long time watching TVs.

32
 ANNEXURE 1 QUESTIONNAIRE
1. Are you aware of the following investment avenues? (Tick which ever applicable in the
boxes).

A) Safe/Low Risk Investment Avenues:

Savings Account. Bank Fixed Deposits, Public Provident Fund, National Savings Certificates.
Post Office Savings. Government Securities.

B) Moderate Risk Investment Avenues:

Mutual Funds, Life Insurance. Debentures. Bonds.

C) High Risk Investment Avenues:

Equity Share Market. Commodity Market. FOREX Market.

D) Traditional Investment Avenues:

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

E) Emerging Investment Avenues:

Virtual Real Estate. Hedge Funds. Private Equity Investments. Art and Passion.

2. What do you think are the best options for investing your money? (Choose from above list, Rank
in the order of preference)

1. 3.
2. 4.

3. Reasons for selecting these options

1.

2.

4. In the past, you have invested mostly in (write as many as applicable)

5. In which sector do you prefer to invest your money?

1. Private Sector 2.Public Sector 3.Foreign Sector

33
6. What are the important factors guiding your investment decisions?(Return, safety of principal,
Diversification, progressive values, etc.)?

7. What are your savings objectives?

Retirement Plan Home Purchase Children Marriage

Health Care Others (Specify)

8. What is your investment objective?

Income and Capital Preservation Long-term Growth

Growth and Income Short-term Growth

9. What is the purpose behind investment?

Wealth Creation Tax Saving Earn Returns Future Expenses

10. Have you set aside funds specifically for the education and marriage of your
children? If yes, please give amounts and how the funds are held

Education: Amount Rs.__________________________________ invested in: ____________

Marriage: Amount Rs.__________________________________ invested in: _____________

11. Do you have a formal budget for family expenditure?

Yes No

12. Do you have a savings and investment target amount you aim for each year?

Yes No (if YES Specify Amount) :____________

13. At which rate do you want your investment to grow?

Steadily At an Average Rate Fast

14. Which factor do you consider before investing?

Safety of Principal Low Risk High Returns Maturity Period

15. Do you invest your money in share market? (Through a DEMAT A/C)
Yes No

If yes: Imagine that stock market drops after you invest in it then what will you do?
Withdraw your money Wait to increase Invest more in it

16. How often do you monitor your investment?

Daily Monthly Occasionally

34
17. What percentage of your income do you invest?
0-15% 15-30% 30-50%

18. What is the time period you prefer to invest?

Short-term (0-1yrs) Medium-term (1-5yrs) Long-term (>5yrs)

19. Can you take the risk of losing your principal investment amount?

Yes No If yes: What percentage

20. What is your source of investment advice?

Newspapers News Channels Family or Friends

Books Internet Magazines
Advisors Certified Market Professional/Financial Planners

Personal Details:

Name:

Gender:

Designation:

Organization:

Age: Below 20 Between 20-30 Between 30-40 Above 40

Qualification: Under Graduate Graduate Post Graduate Other_____

Occupation: Salaried Business Student Housewife Retired

Annual Income: Below Rs.2,00,000 Rs.2,00,000-4,00,000

Rs.4,00,000-6,00,000 Above Rs.6,00,000

Financial Advisor: Yes No

35
 BIBILIOGRAPHY

Books:
Investment Analysis and Portfolio Management, by Prasanna Chandra.

Research Paper

Sultana.

Web Sites
www.economictimes.Indiatimes.com
www.business-standard.com
www.Indiamoney.com
www.moneymanagementideas.com
http://www.ijbarr.com/downloads/3001201511.pdf

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