Marketing Research Project Report

Topic: The Changing Trends in Investment Pattern of People in India In Partial Fulfilment of the Course Marketing Research

Submitted To: Dr Shalini Trivedi, Assistant Professor, Department of

Economics, Amity Business School, Amity University.

Submitted by:
Shivani Mehta (E 12) Nupur Mittal (E 21) Abdul Azeem (E 24) Prateek Saini (E 27) Jalees Ahmed (E 57) Rashmita Bora (E 61)

DECLARATION

We hereby declare that all the work presented in the project report entitled The changing trends in investment patterns of people in India of the subject Marketing Research at Amity Business School, Amity University, Noida is an authentic record of our own work carried out under the guidance of Dr. Shalini Trivedi, Assistant Professor, Department of Economics, Amity Business School, Amity University.

CERTIFICATE
This is to certify that project report entitled The changing trends in investment patterns of people in India of the subject Marketing Research, which is submitted by Nupur Mittal, Rashmita Bora, Shivani Mehta, Prateek Saini, Abdul Azeem and Jalees Ahmed at Amity Business School, Amity University, Noida is an authentic record of the candidates own work carried out by them under our guidance. The matter embodied in this thesis is original and has not been submitted for the award of any other degree.

Dr. Shalini Trivedi, Assistant Professor, Department of Economics (Project Guide)

ACKNOWLEDGEMENT

We express our deep gratitude to Dr. Shalini Trivedi, Assistant Professor, Department of Economics, Amity Business School, Amity University for her constant support, guidance and motivation which helped us immensely in completing this project. The project provided us with an opportunity to understand the fundamentals of research methods in a better manner and apply them. The insistence on taking up a socially relevant topic the changing trends in investment patterns of people in India help us to understand the psychology of the people and correlate the research to human behavioural aspect. We also would like to thank our respondents for giving us their valuable time and providing us with the information needed to carry out the research successfully.

ABSTRACT
This project studies the changing trends in the investment patterns over the years of the people in India, with a sample size of 50 and the research was conducted in the metropolitan cities. The problem definition was that to know the behavioural aspect of people in India towards the investment options. The gap area in the research papers were that none of them has explained about the changing behavioural aspect of people towards the investment patterns, it just talked about which is the most favourable investment option among people but no particular reason has been given for the same that why is that so. This study aims to know if the investment pattern changes with the change in age, sex or demography. The study was done to analyse if the investors of present scenario are more risk takers compared to the past. The research was conducted through surveys like in-home, online and telephonic surveys to know the behavioural aspect of people towards investments. The research was an exploratory research. The sampling plan used here was the cluster sampling and the research that we conducted was done by the questionnaire with around 26 questions. The conclusion came out that the preference of people has drastically changed towards investments over the period due to age, income, recession, savings and awareness among people that has increased over the period.

INDEX
1. Introduction 1.1 Background of the Study 1.2 Statement of the problem

2. Review of Literature

3. Methodology 3.1 Objective of Research 3.2 Operationalization of the Variables 3.3 Model Construction 3.4 Research Techniques 3.5 Sampling Techniques 3.6 Research Instrument

4. Results and Discussions

5. Conclusion

6. Policy Recommendations

7. Limitations and Future Scope of the Research

8. References 9. Appendix

INTRODUCTION

1.1 BACKGROUND INFORMATION

The research was about how the Investor's Behaviour has changed and they have left behind the traditional investment options like the fixed deposits, company deposits, gold etc. Investors now look towards equity linked investment options like Mutual Funds, Debt Market, Government Securities, and Insurance etc. This report has thus tried to study the specific reasons behind choosing more of equity linked investments. The areas that were covered in the research are mainly the Metropolitan cities. The Indian capital market has been growing tremendously with the reforms of the industrial policy, reforms of public sector and financial sector and new economic policies of liberalization, deregulation and restructuring. The Indian economy has opened up and many developments have been taking place in the Indian capital market and money market with the help of financial system and financial institutions or intermediaries which foster savings and channels them to their most efficient use. One such financial intermediary who has played a significant role in the development and growth of capital markets is equity linked investments.

The concept of equity linked investments has been on the financial landscape for long in a primitive form. The launching of innovative schemes in India has been rather slow due to prevailing investment psychology and infrastructural inadequacies. Risk adverse investors are interested in schemes with tolerable capital risk and return over bank deposit, which has restricted the launching of more risky products in the Indian Capital market. But this objective of the equity linked investment industry has changed over the decades. For many years funds were more of a service than a product, the service being professional money management. In the last 15 years investments have evolved to be a product. The term product is used because investment is not merely to park investors savings but schemes are tailor made to cater to investors needs, whatever their age, financial position, risk tolerance and return expectations. This issue of combining service and product will be an important one for the next decade. Equity based investments have opened new vistas to millions of small investors by virtually taking investment to their doorstep. In India, a small investor generally goes for bank deposits, which do not provide hedge against inflation and often have negative real returns. He has limited access

to price sensitive information and if available, may not be able to comprehend publicly available information couched in technical and legal jargons. He finds himself to be an odd man out in the investment game. Equity base investments have come, as a much needed help to these investors. These are looked upon by individual investors as financial intermediaries/ portfolio managers who process information, identify investment opportunities, formulate investment strategies, invest funds and monitor progress at a very low cost. Thus the success of these investments is essentially the result of the combined efforts of competent fund managers and alert investors. A competent fund manager should analyze investor behaviour and understand their needs and expectations, to gear up the performance to meet investor requirements.

1.2 PROBLEM DEFINITION

In India, though the equity based investment industry has been in existence since 1964, (with the establishment of UTI); no major study has been done regarding the investor behavioural aspect with specific reference to these investments, in India. It should be noted that the expectations of investors play a vital role in the financial markets. They influence the price of the securities, the volume traded and various other financial operations in actual practice. These expectations of investors are influenced by their perception and humans generally relate perception to action. The beliefs and actions of many investors are influenced by the dissonance effect and endowment effect.

In general, rules for investment, the analysis of investment and discussion of financial behaviour tend to assume behaviour, which is logical and internally consistent in various ways. Investor behaviour does not; however, always appear to conform to such expectation norms. Much of economic and financial theory is based on the notion that individuals act rationally and consider all available information in the decision making process. However, in the financial literature, there are no clear models, which explain the influence of perception and beliefs on expectations and decision making. No doubt, reality is so complex that trying to fit individual investors behaviour into a model is impossible. Investors behaviour may change from period to period even if the other variables influencing the behaviour are held constant. However, to a certain extent, we can borrow concepts from social psychology where behavioural patterns, rational and irrational are observed and empirically tested. On the same lines we can develop certain models to identify the financial behaviour, to the extent of the availability of the explanatory variables. Such models can help to understand the why and how? aspect of investor behaviour, which can have managerial implications for policy makers.

Hence, with this background, this study has attempted to evaluate the behavioural aspects of fund selection techniques of individual investors.

REVIEW OF LITERATURE

Pirinsky, 2000: This paper had attempted to analyze the contribution of the investment performance of several major classes of institutional investors. This research paper investigated the investment performance of the comprehensive group of financial institutions including banks, insurance companies, mutual funds, independent investment advisors and corporate and state pension funds based on quarterly disclosure of their equity portfolio holdings. The various institutional types do not contribute equally to the superior performance: banks, independent investment advisors and mutual funds outperform significantly insurance companies and state pension funds while corporate pension funds do not perform significantly different from all remaining institutions. Jain, 2001: Inflation is one of the causes for peoples decision on investment plans. Inflation is a situation where there is ' too much money chasing too few goods' This research paper attempted to study how the Investor's Behaviour is changing and they are now leaving behind the sacred investment options like the fixed deposits, company deposits, gold etc. Investors are now looking towards equity linked investment options. According to this research paper many individuals find investments to be fascinating because they can participate in the decision making process and see the results of their choices. The individual starts by specifying investment goals. Once these goals are established, the individual get aware of the mechanics of investing and the environment in which investment decisions are made. The strategy of people of targeting dividends in equities over a period is expected to improve the yield of the fund. From the above investment strategy people expects to minimize capital loss in adverse market condition and receive moderate returns in stable/positive market conditions.

Sethi, 2003: Investment scenario is changing very rapidly. Emergence of modern instruments of investment like Mutual Funds, Systematic Investment Plan, RBI Bonds, and Infrastructure Bonds proves to be a better option for the investors in comparison to the old instruments of investment such as fixed deposits, savings, recurring deposits etc. This research paper has attempted to do a

thorough study of these modern instruments in respect of their returns, liquidity, and tenure & safety aspect etc. The objective of this research was to assess the trends towards the investment pattern, to study the traditional instruments of investments at HDFC BANK such as Fixed Deposits, Recurring Deposits, saving account, current account etc., modern instruments of investments such as Mutual funds, SIP, ULIP etc. at HDFC and Fixed deposits. Vs. RD It was found that in this new emerging business scenario people still are investing their hard earned cash in Traditional instruments of investment like FDs rather than in modern instruments like Mutual Funds. This is very surprising and is due to the unawareness of people regarding the latest available investment options. Also, people are not satisfied with the low and taxable returns they are getting after a certain time period by investing in fixed deposits but they have no other choice because people are unaware about modern techniques of investment. After making them aware about the existence of these techniques and their features they have shown keen interest in these. The limitations were the constraint of time available for carrying out this study is limited; the findings of the research are limited to a particular area &cannot be applied to all places, as the human behaviour is not constant so the results collected through, questionnaire may or may not apply to future period of time and human Bias can also be considered as an important limitation of the research.

Katie Connors, 2006: This journal attempts to give a brisk idea about SMAs (separately managed accounts), and changing preference of investors while investing and their increasing expectations from the broking houses. This journal has made an attempt to explain the reasons, why people prefer separately managed accounts these days and the reasons for increasing popularity of SMAs among individual investors. This journal has studied that the account holders of SMAs have a very high satisfaction rate i.e. 90%. The idea behind SMAs is giving individual investors what they dont get from mutual funds and stocks, in SMAs the customer can hold the securities in their own account and hence

gives you better control of your funds by giving you facilities like transparency, customization of your portfolio, tax benefit, gives you maximum flexibility and control of your finds. This journal did not talk about the heavy expenses associated with SMAs and their usability by low income and middle income group people, and their limited approach among individual investors. Bhandari, 2007: Investment pattern changes with the change in demographic categories of individuals.

This paper had tried to understand the investment pattern of different demographic categories of individuals representing the three segments of India, viz. rural, urban & metropolis, PHD Chamber conducted an All-India survey of more than 1000 people. The census considered persons from four basic occupations viz. Agriculturists, Businessmen, Professionals, and Salaried.

People have most preferred choices varied across different segments. Rural India was more inclined towards investing in fixed deposits, while the Urban India and Metropolitan India segments chose equity-linked insurance schemes over other investment tools. Despite the stock market going through a boom period, most of the people opted for a traditional mode of investment like fixed deposits; even professionals and businessmen have not opted for stock market, as found during the survey.

Mr. Bhandari needs effective channelization of savings into investments to maintain the capital formation around 35-40% of GDP and to reduce dependency on foreign capital flows To deepen the penetration levels, it is believed that, there is a strong need to mobilize households savings into market linked financial products stock market, equity linked insurance, and mutual funds.

Cederburg, 2008: Investment pattern of the investors are different in different stage of the business cycle i.e. in expansion or in recession.

This research paper aimed to examine whether mutual fund investors exhibit positive fund selection ability by comparing the performance of positive and negative net cash flow mutual funds in expansions and recessions. Expansion investors and recession investors behaved differently. Expansion investors chased returns and alpha. There was evidence of a smart money effect whereas recession investors do not chase mutual fund returns has several implications for mutual fund research.

The research had shown that there was difference in the investment behaviour of mutual fund investors within the business cycle. It had basically shown opposite buying behaviour in recession and expansion but it failed to bring out as to why it is so and what happened when there is neither of these two situations.

Kapoor, 2009: It was observed that people prefer real estate investment to stock market investment. This report examined why people go for real estate investment rather than stock markets. According to this article the most common known areas where people invest money were stocks, bonds, mutual funds, real estate, and e-commerce. People wanted to invest in real estate because it is a much safer investment than the stock market and still has the potential to be highly profitable. People had to keep great tax records due to the frequent amount of purchases, these plans were a safe way to get involved in investing and make money over time

Kabra/Dash, 2009: Many individuals found investments to be fascinating because they can participate in the decision making process and see the results of their choices.

This study aimed to gain knowledge about key factors that influence investment behaviour and ways these factors have impact on investment risk tolerance and decision making process among men and women and among different age groups.

The modern investor was a mature and adequately groomed person. In spite of the phenomenal growth in the security market and quality Initial Public Offerings (IPOs) in the market, the individual investors prefer investments according to their risk preference.

This study did not show the whole of India but only a few areas within India.

JoEllen Weatherholt, 2009: According to JoEllen Weatherholt (investment manager, Wells Fargo Private Client Services) in her article Choosing Investments- Seven Key Principles Strengthen Portfolios, Seven key principles should be incorporated into every investment plan for private investors to maximize the chance of reaching their financial goals. By following the seven key investment principles outlined in her article, one can create a plan that truly addresses his/her personal needs and helps a person reach their goals.

The Seven key principles were: 1. Know your numbers 2. Your time horizon makes all the difference 3. Discover the mix of investments suitable for your personal circumstance 4. Strive for consistent returns through diversification 5. Risk is far more that volatility 6. Due diligence goes beyond historical returns 7. Ensure your portfolio is adequately monitored and rebalanced

Gearino, 2010: People were going for high-risked investment in stock markets rather than going for investment in government bonds where risk was negligible. The research paper attempted to examine whether it was worth taking the risk to go for investment in stock market. There was no pattern in which the returns maybe high or low. The risk takers had to invest in them and hence a better way is to use mutual funds. The researcher hasnt come up with proper idea as how when to invest in stock markets.

Scott C. McCartney, 2010: The sluggish business conditions in US have from past 2-3 years had

led to decline in interest rates which has in turn affected the conservative low income investors in US. This journal attempted to explain the impact of dividend on investment decision of investors keeping in mind their time horizon. Investors felt cheated if they invested in long term investments and the investments that had less creditability, so if investors go for long term investments like fixed deposits, bonds they want some security of their funds, or else they would have gone for investments like mutual funds and stocks to beat the impact of inflation.

Rao & Rao, 2010: Growth of Indian mutual fund investments. The objective was to study whether different types of institutions have discernible trading motives in response to portfolio disclosures and studied investment patterns and performance of foreign investors, individual investors, and five types of institutional investors. Corporate were the dominant investor group in the Indian Mutual Fund Industry and they account for almost 48% of the total investment (AUM) in the industry. The second dominant group in the industry was the Retail investors group which accounts for almost 24% of the total investment (AUM) in the industry. The third dominant group in the industry was the High Net worth Individuals group and they account for almost 16% of the total investment (AUM) in the industry. The fourth dominant group in the industry was the Banks/Financial Institutions and they account for almost 11% of the total investment (AUM) in the industry. The study is based on data for one year (2009) and probably this may have led to lack of statistical evidence. Data over a longer period may overcome this shortcoming. Micro analysis of the investment patterns of Retail investor group has ample scope for further research.

Rao & Daita, 2010:

This research paper attempted to analyze the influence of several

economic, industry and company factors on the performance of mutual funds. This study also explained several macroeconomic factors that affect the investment decisions. The objective was to study the impact of different factors on investment like domestic savings, Forex reserves, GDP growth, per capita income, risk appetite, security of your investments.

From this research it was learnt that there is a positive correlation between earnings and the fund size, book value and P/E ratio indicating that earnings increase with increase in the fund size. The researcher had established that there is some relation between return, fund size, B/V and P/V. It also brought out relations between different factors affecting mutual funds but fails to address social factors affecting mutual fund investment i.e. perception, social acceptability. It might be because in a country like India people are still not ready to accept mutual funds as an investment instrument.

Santhosh, 2011: This study identified the perceptual factors which influenced the investors to invest in mutual funds and why some of the investors are not ready to invest in mutual funds. The authors explained that due to limited knowledge of the individual investors, the individual investors find it easier to invest in mutual funds. But some investors do not know much about the mutual fund industry and thus do not ready to invest in it. The study also analyzed the various motivational factors of mutual fund investors.

Rajeshwari, 2009: The objectives of this research paper were to understand the savings avenue preference among MF investors, to identify the features the investors look for in Mutual Fund products, to identify the scheme preference of investors, to identify the factors that influences the investors fund/scheme selection, to identify the information sources influencing the scheme selection decision and to identify the preferred communication mode.

MF was a retail product designed to target small investors, salaried people and others who were intimidated by the mysteries of stock market but, nevertheless, like to reap the benefits of stock market investing. At the retail level, investors were unique and are a highly heterogeneous group. Hence, their fund/scheme selection also widely differs. Investors demand inter-temporal wealth shifting as he or she progresses through the life cycle. This necessitated the Asset Management Companies (AMCs) to understand the fund/scheme selection/switching behaviour of the investors to design suitable products to meet the changing financial needs of the investors. With this background a survey was conducted among 350 Mutual Fund Investors in 10 Urban and Semi Urban centres to study the factors influencing the fund/scheme selection behaviour of

Retail Investors. This paper discusses the survey findings. It is hoped that it will have some useful managerial implication for the AMCs in their product designing and marketing.

The limitations were sample size is limited to 350 educated investors in urban and Semi-Urban cities only. The sample size might not adequately represent the national market. This study had not been conducted over an extended period of time having both market ups and downs. The market state had a significant influence on the buying patterns and preferences of investors.

Running a successful MF requires complete understanding of the peculiarities of the Indian Stock Market and also the psyche of the small investor. This study had made an attempt to understand the financial behaviour of MF investors in connection with the scheme preference and selection. The post survey developments were likely to have an influence on the findings. Behavioural trends usually take time to stabilize and they get disturbed even by a slight change in any of the influencing variables. Hence, surveys similar to the present one needed to be conducted at intervals to develop useful models. Nevertheless, it was hoped that the survey findings will have some useful managerial implication for the AMCs in their product designing and marketing.

Sultana, 2010: The objectives of the study were to develop a profile of sample Indian individual investor in terms of their demographics, to identify the objective of investment plan of an Indian individual investor, to know the preferred investment avenues of the Indian individual investor, to know the extent of financial literacy of individual investors and to identify the preferred sources of information influencing investment decisions.

The learning were that it revealed that male investors dominate the investment market in India, most of the investors possess higher education like graduation and above, majority of the Investors belong to accountancy and related employment, non-financial management and some other occupations are very few, most investors read two or more sources of information to make investment decisions, the investors decisions are based on their own initiative and the investment habit was noted in a majority of the people who participated in the study.

Indian investors today had to endure a sluggish economy, the steep market declines prompted by deteriorating revenues, alarming reports of scandals ranging from illegal corporate accounting practices like that of Satyam to insider trading to make investment decisions. Stock markets performance was not simply the result of intelligible characteristics but also due to the emotions that are still baffling to the analysts. Despite loads of information bombarding from all directions, it was not the cold calculations of financial wizards, or companys performance or widely accepted criterion of stock performance but the investors irrational emotions like overconfidence, fear, risk aversion, etc., seem to decisively drive and dictate the fortunes of the market. This paper while discussing the characteristics of the Indian individual investors along makes an attempt to discover the relationship between a dependent variable i.e., Risk Tolerance level and independent variables such as Age, Gender of an individual investor on the basis of the survey.

This study confirmed the earlier findings with regard to the relationship between gender and age, the risk tolerance level of individual investors. The present study had important implications for investment managers as it has come out with certain interesting facets 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 could 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.

Former President of FICCI, 2011: The objectives were to examine the impact of reforms of the foreign institutional investors' (FIIs) investment policy and studied the impact of FII portfolio flows to the Indian stock markets and investment decisions.

This paper examined the impact of reforms of the foreign institutional investors' (FIIs) investment policy, on FII portfolio flows to the Indian stock markets, an aspect, studies on determinants of FII flows to India so far have not taken into consideration. FIIs had been allowed to invest in the domestic financial market since 1992; the decision to open up the Indian financial market to FII portfolio flows was influenced by several factors such as the disarray in India's

external finances in 1991 and a disorder in the country's capital market. Aimed primarily at ensuring non-debt creating capital inflows at a time of an extreme balance of payment crisis and at developing and disciplining the nascent capital market, foreign investment funds were welcomed to the country. FII inflow to India grew manifold from US $0.18 million (net, monthly) in January 1993 to about US $400 million within a year's time. Given the volatile nature of capital flows to emerging markets seen in the early 1990s and the nature and growth of such flows to India, FII investment in India, obviously called for special regulatory attention. Investment by FIIs in India is jointly regulated by Securities and Exchange Board of India (SEBI) through the SEBI (Foreign Institutional Investors) Regulations, 1995 and by the Reserve Bank of India through Regulation 5(2) of the Foreign Exchange Management Act (FEMA), 1999.

The results strongly suggested that the liberalization policies that expand the membership of FII categories and their scope of investment in the Indian market, enhance sectoral and individual caps, provide for hedging of risks of investing in the Indian stock markets by allowing FIIs to enter the foreign exchange and derivatives market and policies that bring about procedural simplifications and fees reduction, seem to have significant expansionary effect on net inflows. Each of the liberalization policies has either increased the mean level of FII inflows and/or the sensitivity of these flows to a change in BSE return and/or the inertia of these flows.

Sethi, 2011: There were a lot of investment avenues available in the financial market for an investor with an investable surplus. He can invest in Bank Deposits, Corporate Debentures, and Bonds where there is low risk but low return. He might invest in Stock of companies where the risk is high and the returns are also proportionately high. The recent trends in the Stock Market had shown that an average retail investor always lost with periodic bearish tends. People began opting for portfolio managers with expertise in stock markets who would invest on their behalf. Thus we had wealth management services provided by many institutions. However they proved too costly for a small investor. These investors have found a good shelter with the mutual funds. The objective was to give a brief idea about the benefits available from Mutual Fund investment, to give an idea of the types of schemes available, to discuss about the market trends of Mutual

Fund investment, to study some of the mutual fund schemes and analyze them, observe the fund management process of mutual funds, explore the recent developments in the mutual funds in India and to give an idea about the regulations of mutual funds The learnings were that diversified equity has done very well while sectorial categories have fared poorly in Indian market, index Funds had delivered much less compared to actively managed Funds and Gilt and Income Funds had performed very well during the last three years. They perform best in a falling interest environment. Since interest rates are now much lower, short term Funds were preferable.

METHODOLOGY

OBJECTIVES OF RESEARCH

The objective of this research on The Changing trends in the investment pattern of People in India, were: To know the preference of the people with respect to the investments over the period. To understand the risk perception of Indian investors.
To understand the best option for investment in todays scenario

To study the impact of economic recession of 2008 on the risk perception and investment style
of people. To understand the impact of age on the investing options adopted by the people (riskier options as compared to traditional options). To understand the attitude of people towards Bank deposits, Mutual Funds, Real estate as an option of investment (favourable or not).

OPERATIONALISATION OF VARIABLES

What is operationalizing? Operationalizing a variable means finding a measurable, quantifiable, and valid index for your variable (independent and dependent variables), and (sometimes) finding a way to manipulate that variable in such a way as to have two or more levels. Why operationalize? Not all variables are easily measured. Factors that are objective, effort independent or involuntary, and concrete are more easily measured (with appropriate equipment). Factors that are subjective, effort dependent or abstract are hard to measure.

Generalized Procedure for operationalization by Jean McMillian 1. Identify the concept we hope to measure. For example, height, intelligence, or workload. 2. Determine one or more quantitative measures of the concept. For example, height can be measured in inches or centimetres; intelligence can be measured by the score on an IQ test; and workload can be measured by a score on the NASA Task Load Index (TLX) self-rating scale. There can be multiple measures of the same concept. 3. Determine the method for obtaining this measure. For example, the use of a ruler or tape measure to obtain a measure of height in inches; the specific paper-and-pencil instrument used to produce an IQ score (e.g., the Stanford-Binet) and the methods for administering it properly and producing the numerical IQ score from the results; the NASA TLX selfreport instrument and the instructions for when/how people should fill it out as well as the methods for summing up the results.

For the objective of the research various variables were taken into consideration like:1) Income disparity (Income Class) of the working population of India. The income disparity has been measured by dividing the population into three income groupsi. ii. iii. iv. v. Below 1,00,000 1,00,000 3,00,000 3,00,001 5,00,000 5,00,001 - 10,00,000 Above 10, 00,000

2) Investment pattern according to the age of the working population of India. The population was divided into four different age groups likei. ii. iii. iv. Below 25 26 to 35 36 to 50 Above 50,

3) Income proportion to save. The saving was measure in three categoriesi. ii. iii. Less than 1,00,000 1,00,001 to 3,00,000 Above 3,00,000

4) Investment preferences of the people. To measure the investment preference the following options were consideredi. ii. iii. iv. v. vi. vii. viii. ix. x. Life Insurance Real Estate Gold ETF Stock Bank Deposits Units of UTI and Mutual Funds Postal Savings Pension & Provident Fund Currency Chits

5) Investment Appetite. To measure the investment appetite the duration of investment preferred by investors were divided into three partsi. ii. iii. Short Term (1-6 months) Medium Term (6 months-3 years) Long Term (3 years and above)

6) Investor approach of the investor. To measure the investment approach, the following kinds of investment and investors preference towards them were studiedi. ii. iii. iv. v. vi. vii. viii. Equity Mutual Funds Debentures Govt. Securities Bank Deposits Real Estate Gold Estate Stock etc.

As we all know about the need of the investment and the impact of the financial market for any economy. We have done our research on the basis of these variables. We come out with many surprising conclusion that we discussed ahead.

RESEARCH TECHNIQUES
Using concise, straight forward questionnaire, this research has attempted to analyse a sample group that represents the target market. (i) In-home surveys are one-on-one interviews which allow to present people with samples of products, packaging or advertising and gather immediate feedback. (ii) Telephone surveys were used to get to the people residing in different parts of India over the telephone. (iii) Online surveys were used to get the views of our respondents from different parts of India.

The hypothesis of the research work was as follows: The research objective was to study that whether the preference of the people has changed with respect to the investments over the period, people have become more open to riskier investments or do they follow the traditional methods of investments.

HYPOTHESIS 1 The preference of the people has not changed with respect to the investments over the period.

HYPOTHESIS 2 H0: People have become open to riskier investments. H1: people have not become open to riskier investments.

HYPOTHESIS 3 H0: Investments in gold are the most favourite. H1: Investments in gold are not the most favourite ones.

HYPOTHESIS 4 The economic recession has changed the attitude of people towards riskier investing options.

HYPOTHESIS 5 Age plays a role in determining the risk perception of Individuals.

HYPOTHESIS 6 Ho: Mutual funds, bank deposits and real estate are a good option for investment. H1: Mutual funds, Bank deposits and Real estate are not a good option for investment.

SAMPLING PLAN
In order to do this market research a sample size of 50 people was used to represent the whole target market. There were various types of sampling techniques used in this marketing research.

For this market research only people who do investment in various investment policies have been picked up carefully. Hence cluster sampling technique was used. It is particularly useful in situations for which no list of the elements within a population is available and therefore cannot be selected directly. As this form of sampling is conducted by randomly selecting subgroups of the population, possibly in several stages, it should produce results equivalent to a simple random sample.

MODEL CONSTRUCTION
The various variables that were taken into consideration are as follows: 1. The first variable that was taken was the income disparity (Income Class) of the working population of India. 2. The second variable was the age group of the working population of India. 3. The third variable was the percentage of income people save annually. 4. The other important variable was the objective of the people to invest their savings i.e. why people invest their savingsa. To provide for Retirement b. To meet contingencies c. Accumulating wealth for another financial goal d. For children s education e. For tax reduction f. Provide income for my current lifestyle 5. The other variable was their investment Appetite? 6. Changes that had come in perception in the mind of the people in comparison to the past. 7. The preferences of the people in investing i.e., in what kind of investment they invest their savings. 8. How the recession affects the income as well as the investment decision of the people. 9. What a common investor think about the current scenario of the economy of India today and what kind of growth will India have in coming 10 years. Are they optimistic or pessimistic or moderate about Indian economy?

Now talking about the first variable (var1) i.e., income disparity which is an independent variable and the percentage of income people save annually (var3) is a dependent variable as it will depend on ones income that how much he/she saves annually. More the income more will be the savings, less the income lesser will be the savings.

Now here again variable1 and var7 have a relationship between them. Income decides the preferences of the people in the investment options. Higher the income more will be the probability of investing in risky investments and lesser the income lesser will be the probability of investing in the risky investments. Here too income acts as an independent variable and preference in investing acts as dependent variable.

The second variable2 (var2) i.e., age group has a relationship with the var4. Age has a lot to do with the objectives people carry while investing. For example old aged people are having an objective, To provide for Retirement, or For childrens education. But youth mostly invest to fulfil their lifestyle needs.

Var 2 and var5 also have a relationship between them. Age has also a lot to do with the investment appetite of an individual. Mostly youth have short or very rarely medium term appetite but aged people mostly have patience and have a long term appetite.

Talking about the var2 and var7. Var2 is the independent variable and var7 is the dependent variable. It has been found that age has lot to do with the preference of the people in the investments. In the old age mostly the people like to play safe and invest in the bank deposits or gold but youth dont play safe, they love doing the experiments and invest in riskier options.

It has also been found out that women also play safe and dont take much risk.

RESEARCH INSTRUMENT
For the research a questionnaire was used to know the investors preferences for the different form of investment plans in India. The survey was done by mall intercept, in-home, e-mail and telephonic methods with a sample size of 50. To know the preference of the people with respect to investment over a period of time three questions were put across them: 1. Where did you prefer investing around 5 years ago? 2. Where would you prefer investing your money in todays scenario? 3. Do you believe your investment preferences have changed over the past few years? To understand the perception of people on these statements a Liker Scale was used: 1. People have become more open to riskier investments. 2. Real Estate is a good option for investing. 3. Fixed Deposits are the best way to invest. 4. People prefer high returns despite the risks attached with it. To know the most favourite investing options of the people in todays scenario various questions were put across such as: 1. What is your current preference of Savings Avenue? (Rank from 1 to 10) [1- First preference, 10- Last preference] 2. What is your current attitude towards the following Investments? To understand the behaviour of the people towards riskier investing options after the economic recession of 2008 the questionnaire asked Has the economic recession of 2008 affected your investment style? To understand the impact of age on the investing options adopted by the people (riskier options as compared to traditional options) questions were asked about their risk preference and age. To understand the attitude of people towards Bank deposits, Life insurance, Real estate as an option of investment (favourable or not) the researchers asked them their current attitude towards various investment options.

RESULT AND DISCUSSION

Objective 1:- To know the preference of the people with respect to the investments over the period.
Test Statistics Have the investment preferences changed over the past few years? Chi-Square df Asymp. Sig. a. 0 cells (.0%) have expected frequencies less than 5. The minimum expected cell frequency is 16.7. 25.480
a

Have the investment preferences changed over the past few years?
10% 24% 66% Yes No May Be

2 .000

The frequency table was obtained to check whether the investment preference have changed over the period. From this it was concluded that 33 people said that from the past few years their investment preference changed. From this diagram it was seen that preference of people have changed over period of time and shifted from fixed income accruing securities to riskier investments like Mutual Funds, stocks, Real Estate.

INFERENCE The purpose was to check whether there is a change in the investment pattern of people over the period of time. So chi square has been used for this. The calculated value was more than the table value i.e. 25.48>9.21 so it was concluded that the hypothesis has been rejected which means there is a significant change in the pattern of investment of people over the years.

Objective 2:- To understand the risk perception of Indian investors.

One-Sample Test Test Value = 2 95% Confidence Interval of the Difference T People have become more open to riskier investments .477 df 49 Sig. (2-tailed) .636 Mean Difference .060 Lower -.19 Upper .31

As the degree of freedom was 49 and the confidence level was 95% the t-value was 0.636 which is greater than 0.05. Therefore the hypothesis was accepted. INFERENCE The researchers have tried to understand the risk perception of people, for this they have used one sample t-test because it was a Likert Scale. As the hypothesis had been accepted, it means that people now prefer riskier investments despite risk attached with them. Objective 3:- To understand the best option for investment in todays scenario
One-Sample Test Test Value = 2 95% Confidence Interval of the Difference t Real Estate -.292 df 49 Sig. (2-tailed) .771 Mean Difference -.040 Lower -.32 Upper .24

Real estate was a favourable option for investing among the sample as the calculated value .771 is greater than.05. As the degrees of freedom was 49 and the confidence level was 95%, the calculated t-value was .771 which is greater than 0.05 therefore the hypothesis was accepted.

INFERENCE To understand the best investment option in todays scenario one sample t-test has been used as the question was on a Likert scale. As the hypothesis has been accepted, this means that the investment in real estate is most favourable for investors these days.

Objective 4:- To study the impact of economic recession of 2008 on the risk perception and investment style of people.

Did the economic recession of 2008 affect the investment style?

18 44
Yes No May be

38
Test Statistics

Did the economic recession of 2008 affect the investment style?

Chi-Square Df Asymp. Sig. 5.560
a

2 .062

a. 0 cells (.0%) have expected frequencies less than 5. The minimum expected cell frequency is 16.7. Since the chi value is less than tabulated value i.e. 5.56<9.21 so the hypothesis has been accepted.

INFERENCE To know the impact of economic recession of 2008 on investment style of people chi square test was applied as the sample size was 50. As the hypothesis was accepted, thus it was inferred that the economic recession had an impact on the investment preferences of individuals.

Objective 5:- To understand the impact of age on the investing options adopted by the people (riskier options as compared to traditional options).
Chi-Square Tests Value Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases 1.752 2.403 .218 50
a

Df 6 6 1

Asymp. Sig. (2-sided) .941 .879 .641

In this the calculated value was 1.752 and the tabulated value for degrees of freedom 6 and confidence level 99% is 16.8. This means that calculated value was less than the tabulated value. Thus hypothesis was accepted. INFERENCE To know the impact of age on investment preference and investment style of people chi-square test was used. As the hypothesis was accepted it was inferred that age has an impact on investment attitude and preference of people i.e. in terms of risk assumption. Objective 6:- To understand the attitude of people towards Bank deposits, Mutual Funds, Real estate as an option of investment(favourable or not). 1) Real Estate
One-Sample Test Test Value = 2 95% Confidence Interval of the Difference T Real Estate -.292 df 49 Sig. (2-tailed) .771 Mean Difference -.040 Lower -.32 Upper .24

The calculated value .771 is greater than.05. So the hypothesis was accepted at 95% confidence level. INFERENCE To understand the attitude of people towards real estate as an option for investment one sample ttest was used as the question was asked on a Likert scale. As the hypothesis was accepted, it was inferred that real estate is one of the good options for investment.

2) Bank Deposits
One-Sample Test Test Value = 2 95% Confidence Interval of the Difference t Bank Deposits 1.613 df 49 Sig. (2-tailed) .113 Mean Difference .260 Lower -.06 Upper .58

The calculated value was .113 >.05 at 95% confidence level and at degrees of freedom 49. Thus the hypothesis was accepted.

INFERENCE To understand the attitude of people towards bank deposits as an option for investment one sample t-test was used as the question was asked on a Likert scale. As the hypothesis was accepted it was inferred that bank deposit is one of the god options for investment.

CONCLUSION
1) The preference of people has drastically changed towards investments over the period and now people are more inclined towards equity linked investments like Mutual funds, shares and real estate rather than the traditional investment patterns like fixed deposits, bank deposits etc. 2) People now are more inclined to the riskier investment patterns as their saving capacity has increased over the period. 3) It was also found that the best investment option in the present scenario among investors is the real estate investment option. 4) The economic recession in 2008 has also greatly affected the investors investment patterns in the present scenario. 5) Age plays a significant role in investment pattern of people as more the age, less risky investment options are taken by the people and their appetite would be inclined towards the long term investment options.

POLICY RECOMMENDATIONS
This research found out that todays scenario of investing is completely changed in comparison to the past. People are now ready to take more risk to earn more returns. Thus, it is recommended that: 1. One should identify the objective of investing i.e., why one is investing, for contingencies, for current lifestyle etc. 2. One should have knowledge about the current scenario of the economy. 3. One should have knowledge of the performance of the investment i.e., what return is available in the respective investment plan and the maturity period. 4. One should invest taking into consideration the growth path and the return available rather than following the perception of other investors.

LIMITATIONS AND FUTURE SCOPE OF THE RESEARCH

1) Sample size is limited to 50 educated investors in urban and Semi-Urban cities only. The sample size may not adequately represent the national market. 2) This study has not been conducted over an extended period of time having both market ups and downs. The market state has a significant influence on the buying patterns and preferences of investors. 3) As the human behaviour is not constant so the results collected through Questionnaire may or may not apply to future period of time. 4) Human Bias can also be considered as an important limitation of the research. 5) The researchers have not come up with proper idea as how when to invest in stock markets. 6) The research fails to address social factors affecting mutual fund investment i.e. perception, social acceptability.

REFERENCES
Pirinsky Christo (2002), Are financial institutions better investors? Jain Vikas (2001), Changing Trends in Investment Patterns. Sethi Seema (2003), Changes in the Trends of the Investment Pattern. Connors Kattie (2006), Recent Investment Trends- Separately Managed Accounts/Feb 10, 2006 Bhandari (2007), Investment Still Traditional Across Segments, Stock Market Not the First Choice Scott Cederburg (January, 2008), Mutual fund Behaviour across the Business Cycle Kapoor Meena (2009), Money Investments Kabra Gaurav, Mishra P.K. and Dash Manoj Kumar (2009), Factors Influencing Investment Decision of Generations in India. Weatherholt JoEllen (October, 2009) Alaska Business Monthly. Gearino G.D. (November, 2010) Taking the Reward out of Risk.
Scott C. McCartney (August, 2010), Consider Dividend Stocks for Dividends

Rao, D.N. & Rao, S.B. (2010), Investment patterns and Its Strategic Implications for Fund Managers: An Empirical Study of Indian Mutual Funds Industry. Rao & Daita (2010), Fundamental factors influencing investment in mutual funds approach- a case study of RCAML Santhosh (2011), Investors Perception towards Investment in Mutual Funds Rajeshwari (2009), An Empirical Study on Factors Influencing the Mutual Fund/Scheme Selection by Retail Investors Sultana (2010), An Empirical Study of Indian Individual Investors Behaviour Former President of FICCI (2011), The Impact of FII Regulations in India Sethi (2011), Study of mutual funds in India. http://www.ssrn.com EBSCO research papers http://sites.security.com

APPENDIX
The questionnaire that we used to know the investors behaviour towards different investment plans is as follows: QUESTIONNAIRE TO THE PRESENT INVESTORS IN INDIA Dear Sir / Madam, The investment pattern of the Indians has been changing since a long time. People now invest not only in the fixed interest investments but also in the investments which are riskier and also which have fluctuating returns. We are currently engaged in a study on Changing Trends in Investment Patterns in India. In this connection we request you to read the following items carefully and answer them. The answers you give will be held confidential and used purely for academic purpose. Please put a tick mark in the square corresponding to your choice. I thank you for your time. 1) What is your Annual Income? Below ` 1, 00, 000 ` 3, 00,0015, 00,000 Above ` 10, 00,000 2) How much do you save annually? (in ` Approx) Less than ` 50,000 ` 50,001 to ` 100000 Above ` 1,00,000 ` 1, 00,001 3, 00,000 ` 5,00,001- 10,00,00

3) Your portfolio design relates to your investment experience, which helps to determine your current investment philosophy. What is the current value of your total investment portfolio? (in `) Less than ` 1,00,000 ` 1,00,001 to ` 3,00,000 Above ` 3,00,000

4) What are the objectives of your investments? To provide for Retirement To meet contingencies For purchase of assets For tax reduction For children s education Others

5) Which of the following objectives are most important to you? (Select One)

Accumulating wealth for another financial goal Accumulating wealth for my childs education Accumulating wealth to fund my retirement Provide income for m current lifestyle Preservation of current capital 6) What factor would you consider most important before choosing an investment? How quickly I will be able to increase my wealth. The opportunity for steady growth. The amount of monthly income the investment will generate. The safety of my investment principal. 7) What is your current preference of Savings Avenue? (Rank from 1 to 10) [1- First preference, 10- Last preference] Currency Pension & Provident Fund Postal Savings Units of UTI and Mutual Funds Bank Deposit Shares Chits Life Insurance Real Estate Gold ETF

8) How much of your income earned from your investment portfolio would you reinvest? Reinvest 100% Reinvest 50-80% Reinvest 0-20% Reinvest 80-99% Reinvest 20-50% Reinvest 0% (Receive all investment earning)

9) What is your investment Appetite? Short Term (1-6 months) Medium Term (6 months - 3 years) Long Term (3 years and above) 10) Which one of the following best describes your investment activities in the past? I have most of my money in a bank account. I have money in a bank account and have experience investing in stocks, bonds, and/or unit trusts/mutual funds that hold stocks or bonds. I have most of my money invested in stocks, bonds, and/or unit trusts/mutual funds that hold stocks or bonds. 11) You receive an unexpected bonus equivalent to three months' salary and you must invest this money. You will: Put the money in a bank deposit. Put the money in an investment that will give a return of around 20% p.a. or a loss of around 10% p.a.

Put the money in an investment that will give a return of around 40% p.a. or a loss of around 30% p.a. 12) Where did you prefer investing around 5 years ago? Currency Pension & Provident Fund Postal Savings Units of UTI and Mutual Funds Bank Deposit Shares Chits Life Insurance Real Estate Gold ETF

13) Where would you prefer investing your money in todays scenario? Currency Bank Deposit Life Insurance Pension & Provident Fund Shares Real Estate Postal Savings Chits Gold Units of UTI and Mutual Funds 14) Has the economic recession of 2008 affected your investment style? Yes No May Be

15) Do you believe your investment preferences have changed over the past few years? Yes No May Be

16) What is your current attitude towards the following Investments? Investment Equity Mutual Funds Debentures Govt. Securities Bank Deposits Life Insurance Real Estate Gold ETF Currency Chits Postal Savings 17) What is your expected rate (Answer in percentage terms) Less than 10% 20-50% of return on your investments in a year? Highly Favourable Favourable Some what Favourable Not very Favourable Not at all Favourable

10-20% More than 50%

18) After how long would you be requiring the amount invested? Less than 1 year 2-3 years 5-10 years 19) Do you prefer mutual funds over stocks? Yes No 1-2 years 3-5 years More than 10 years

20) If yes, why do you prefer mutual funds over stocks? They manage my investment properly They are much more experienced in investment. It helps me to diversify my portfolio. I dont have enough knowledge about the stock market.

21) . The value of most investments fluctuates from year to year as well as over the short-term. How would you feel if an investment you had planned to keep for 10 years lost 20% of its value during the first year? I would be extremely concerned and would sell. I would be moderately concerned and may consider selling my investment. I would be somewhat concerned, but I probably would not consider selling the investment. I would not be overly concerned, given my long-term investment philosophy. 22) In general, your feelings about the Indian economy over the next ten yrs are Pessimistic Optimistic Neutral 23) Given your personal situation and with consultation with your investment advisor, how would you describe your liquidity requirements? Low Average High

24) Do you agree with the following statements? Statement People have become more open to riskier Strongly Agree Agree Neutral Disagree Strongly Disagree

investments. Real Estate is a good option for investing. Fixed Deposits are the best way to invest. People prefer high returns despite the risks attached with it. 25) What is your investment experience? Experience level Stock Mutual Funds Options Bonds None Moderate Extensive

26) When it comes to investing in stocks, bonds, or mutual funds, I would describe myself as a/an. Very inexperienced investor Somewhat inexperienced investor Somewhat experienced investor Experienced investor Very experienced investor 27) Since how long have you been investing? Less than 1 year 2-3 years 5-10 years 28) What kind of investment you prefer? High Risk - High Return Medium Risk - Medium Return Low Risk - Low return I do not like any risks 29) Personal Information: Name: Gender: Male Female _________________________________ Age: Below 25 26-35 36-50 Above 50 1-2 years 3-5 years More than 10 years

No. of Dependents (spouse, children, parents, etc):

More than 3

Academic Qualification: School Final Marital Status: Married Occupation: Professional Business Salaried Retired Student Unmarried Widow Divorced Graduate Post Graduate Professional Degree

Phone no. ______________________________________________________