TOPIC: A Study About Investors Perception Towards Different Investment Avenues In

India

Capital is a critical factor in the expansion of an economy. The speed of economic development
is conditioned, among other things, by the degree of capital formation. And formation of capital
is conditioned by the utilization and channelization of investible funds. The role of the monetary
system is to channel funds from surplus sectors to deficit sectors. Facilitating such flows on a
national level increases the level of investment and effective demand and thus accelerates
economic development.

Capital market progress has been closely related to an economy's overall development. At low
levels of development, commercial banks tend to dominate the financial system. As an economy
develops, the indirect lending by savers to investors tends to become more efficient. As economy
grows further, specialialised financial intermediaries and securities markets develop. As
securities markets mature, investors, especially individual investors, can invest their funds
directly in financial assets issued by firms.

There are number of financial assets or investment avenues are available in India. Each
investment alternative has its own strengths and weaknesses. Some options seek to achieve
superior returns but with corresponding higher risk. Other provide safety but at the expense of
liquidity and growth. Other options such as FDs offer safety and liquidity, but at the cost of
return. Mutual funds seek to combine the Advantages of investing in arch of these alternatives
while dispensing with the shortcomings. Indian stock market is semi-efficient by nature and, is
considered as One of the most respected stock markets, where information is quickly and widely
disseminated, thereby allowing each security's price to adjust rapidly in an unbiased manner to
new information so that, it reflects the nearest investment value.

Savings form an important part of the economy of any nation. With the savings invested in
various options available to the people, the money acts as the driver for growth of the country.
Indian financial scene too presents a plethora of avenues to the investors. Though certainly not
the best or deepest of markets in the world, it has reasonable options for an ordinary man to
invest his savings.
One needs to invest and earn return on their idle resources and generate a specified sum of
money for a specific goal in life and make a provision for an uncertain future. One of the
important reasons why one needs to invest wisely is to meet the cost of inflation. Inflation is the
rate at which the cost of living increases. The cost of living is simply what it cost to buy the
goods and services you need to live. Inflation causes money to lose value because it will not buy
the same amount of a good or service in the future as it does now or did in the past.

The sooner one starts investing the better. By investing early you allow your investments more
time to grow, whereby the concept of compounding increases your income, by accumulating the
principal and the interest or dividend earned on it, year after year.

While taking investment decision he has to consider certain important factor they are;

 Return Factor: Genuine investors are those who always try to seek equilibrium between
risk and return. How do investors make an assessment about the return on securities?
What return is expected on an average? It is the expected value of the return, which is the
sum of each possible return multiplied by the chance of its occurrence. Genuine
investors, by and large, hold medium and long- term investments and the return aspect
assumes larger importance. There are two types of security analysis, namely, Technical
Analysis and Fundamental Analysis.The technical analysts believe that important
information about future stock price movements can be obtained by studying the
historical price movement of stock prices. Financial data are recorded on graph paper and
the data are scrutinized in search of respective patterns and then deduced from that
pictured history the probable future trend.
 Liquidity Factor- A security must possess the attribute of liquidity to be attractive as an
investment for the ordinary investors. Liquidity refers to easy convertibility without loss.
Liquidity of an investment is measured in terms of the speed and ease with which an
investment can be converted in to cash whenever the investor wants it. Liquid
investments give the investor a feeling of security because they enable one to change
one's mind and correct one's mistakes. A genuine investor is supposed to invest for a
relatively long period for the sake of income as distinguished from a purely trading profit
arising from short-run price fluctuations induced by shifts in market sentiments. A
prudent long term investor would have provided for his immediate cash needs by holding
 cash balances and near cash assets like fixed deposits and only if he has surplus of cash,
would he consider it wise to hold long term investment such as equities. This assumption
is in argument with the usual threefold classification of the motives of holding liquid cash
viz., the transaction motive, the precautionary motive and the speculative motive. If so, a
genuine investor would normally expect moderate liquidity and not 'instant' liquidity.

REVIEW OF LITERATURE

Dr. V. L. Shobhana and J. Jayalakshmi in their study titled “Investors Awareness and
Preferences – A Study” (2006) has examined the level of investor awareness regarding
investment options and investment risks. The analysis revealed that the investment in real estate
is preferred by a majority of the respondents. The second most preferred investment is bank
deposits. Awareness about investment options and risks are high among aged, highly educated
and those who are professionals by occupation. Demographic variables such as age and
education do not have significant influence over investor’s awareness whereas difference in
occupational status leads to difference in the awareness level of Investors.

Arul Stephan and Dr.V.Darling Selvi (2009) in their article entitled “Investment Avenues for
Senior Citizens” stated that it is necessary on the part of the elders to find a definite source of
income for themselves. The senior citizens have various alternative avenues of investments for
their savings in accordance to their preference. A definite idea about investment will provide
senior citizens a steady income which helps them in the phase of rising cost in future. Hence, it is
the need of the hour for the elders to think and act wisely in their investment decision. As all the
investments are not equally good, awareness of various schemes and the privileges of the aged
will help them to select the best suitable investment avenue.

P. Neelakantan (2011) in their article entitled “Impact of Risk analysis in selection of

investment avenues- A study on Debt Market Investors” suggested that investment in Debt
Market instruments as become an imperative choice of the investors with the objectives of return
optimization. Uncertainty of expected returns is a vital part of the investment option in debt
market. Variations in the anticipated returns and actual returns lead to the possible consequences
of the decision related to selection of debt market investment vehicle. Risks in debt market
instruments are poised of the demands that bring variations in the return of income. Market price
and interests play a significant role on the risk associated with the debt markets which are being
influenced by the various internal and external considerations. Uncontrollable external risks have
a greater impact of the volatility of returns on the investment vehicles and they are of systematic
in nature.

Ranjani Komal Srinivasan, Anjali Vivek Chopra (2011) concluded that the respondents showed
significant awareness in matters concerning investment and personal financial planning.
Contrary to popular perception, the sample population showed awareness about financial
planning and willingness to take investment decisions relating to personal finance. However, in
the area of retirement planning, majority of the respondents felt that they had not adequately
planned for their retirement.

Lakshmana Rao (2011) stated in his study the Analysis of investors‟ perceptions towards
mutual fund schemes (with reference to awareness and adoption of personal and family
considerations)‟ that Investors between 31 to 40 years of age have highest awareness and
adoption of different mutual fund schemes. It is also concluded that there is an association
between respondents‟ residential status and awareness of balanced fund and debt fund schemes.

Rao (2011) conducted study on “Analysis of individual investor behavior towards Mutual Fund
Scheme”. In this study author presents mutual fund investor awareness and adoption of different
schemes with educational level. The research findings showed that with increased level of
education is linked with greater risk tolerance. This tends to support the hypothesis developed in
previous researches i.e. positive relationship exists between educational attainment and financial
risk tolerance.
Hossein Panahian (2011) showed that investors' attitude towards transparency and disclosure of
financial information, Board structure and performance, corporate issues and surveillance
measures in stock market and, finally, the ownership structure had the greatest influence in
explaining investors' behavior in Tehran Stock Exchange. Consequently, paying attention to
different aspects of such cases as providing information on time, accessibility and reliability of
information provided for investors considering the preference of content over form as well as
providing appropriate information about Board structure and performance, corporate issues and
ownership structure can be a good strategy to attract investors and encourage them to attend
more actively in stock market.

Meenakshi Chaturvedi, Shruti Khare (2012) proclaimed that the age of investor cannot be
taken to influence their level of awareness and it is very clear from the results that the gender of
the investor has no effect or influence on his or level of awareness about any investment channel.

Singh (2012) conducted an empirical study of Indian investors and observed that most of the
respondents do not have much awareness about the various function of mutual funds and they are
bit confused regarding investment in mutual funds. The study found that some demographic
factors like gender, income and level of education have their significant impact over the attitude
towards mutual funds. On the contrary age and occupation have not been found influencing the
investor’s attitude. The study noticed that return potential and liquidity have been perceived to be
most lucrative benefits of investment in mutual funds and the same are followed by flexibility,
transparency and affordability.

OBJECTIVES OF THE STUDY

 To study the perception of the Investors towards various Investment Alternatives in
Delhi/NCR
 To study the different investment avenues available.
 To study the relation between age, occupation and different investment avenues.
QUESTIONNAIRE

1. Are you aware about the various investment avenues in India?

a. Savings account
b. Fixed deposits
c. Savings in post offices
d. Mutual funds
e. Life insurance
f. Equity market/Commodity market/Currency market
g. Derivatives
h. Real estate
i. Gold/ silver
2. Rank the following investment avenues according to your preference?
Highly Moderately Less
preferred preferred preferred
Savings account
Fixed deposits
Savings in post office
Mutual funds
Life insurance
Equity market/commodity market/ currency
market
Derivatives
Real estate

Gold/silver

3. What is your purpose of investing in different investment avenues?

a. Creation of wealth
b. Tax savings
 c. Earning returns
d. Future benefits
e. Others
4. What is the time period for your investment?
a. Short period ( between 0-2 years)
b. Medium period ( between 2-5 years)
c. Long period (more than 5 years)
5. In which sector do you mostly invest?
a. Private sector
b. Public sector
6. What percentage of your income do you invest in different avenues?
a. Below 10%
b. Between 10%-15%
c. Between 15%-20%
d. More than 20%
7. What is your satisfaction level with the return on your investment?
a. High
b. Moderate
c. Low
8. What are your objectives of saving?
a. Retirement
b. Children’s education
c. Healthcare
d. Others
9. From where do you get advice regarding investment
a. Newspapers
b. Magazines
c. News channels
d. Internet
e. Family/ friends
f. Financial advisors
 g. Others

9. Age

a. Below 30 years
b. Between 30-40 years
c. Between 40 -50 years
d. More than 50 years
10. What is your occupation?
a. Housewife
b. Self-employed (Business/ Profession)
c. Retired
d. Student
e. Employee ( private/ public sector)
11. What is your income per annum?
a. Below 6 lakh
b. Between 6 lakh-8 lakh
c. Between 8 lakh -10 lakh
d. More than 10 lakh