a study on investment pattern among employed … · whose works have been quoted in my thesis. ......

A STUDY ON INVESTMENT PATTERN AMONG

EMPLOYED WOMEN

Thesis submitted in partial fulfilment for the award of

Degree of Doctor of Philosophy

In Management

By

V Venkateshraj

Under the Supervision of

Dr H Nagaraj

VINAYAKA MISSIONS UNIVERSITY

SALEM,TAMILNADU, INDIA

June 2015

Dr. Nagaraj H

Associate Professor

Head of the Department (Commerce)

St. Joseph’s Evening College

Museum Road, Bangalore – 560025

Certificate

I , Dr Nagaraj H , Associate Professor and Head of the Department

of Commerce, St. Joseph‟s Evening College , Bangalore , Certify

that the thesisentitled “A Study on Investment Pattern of

Employed Women” submitted for the Degree of Doctor of

Philosophy by Mr. V Venkateshraj is the record of research work

carried out by him during the period from June 2009 to August

2014 under my guidance and supervision and that this work has

not formed the basis for the award of any degree, diploma ,

associate-ship , fellowship, titles in this or any other University or

other similar institutions of higher learning

Date:Dr. Nagaraj H

Research Supervisor

Declaration

I,V Venkateshraj declare that the thesis entitled “A Study on

Investment Pattern among Employed Women” submitted by me

for the Degree of Doctor of Philosophy is the record of work

carried out by me during the period from June 2009 to August

2014 under the guidance of Dr.Nagaraj H , Associate Professor

and Head of the Department , St. Joseph‟s Evening College ,

Bangalore and has not formed the basis for the award of any

degree, diploma , associate-ship , fellowship, titles in this or any

other University or other similar institutions of higher learning.

Place: Bangalore

Date:Venkateshraj V

Acknowledgement

Several Individuals and Institutions have rendered their invaluable

guidance and support for carrying out this research work and

important among them deserve to be mentioned here. Dr. H

Nagaraj,the Head of the Department of Commerce, St. Joseph‟s

Evening College, not only guided and supervised the research but

stood along with me as friend and philosopher right from day one.

His words, wisdom and encouragement has led me to complete

my work.

I am greatly indebted to Dr.Nagaraj H for providing me an

opportunity to carry out this research under his noble guidance.

Without his scholarly direction, sympathetic interaction and

professional approach, it would not have been possible for me to

complete this study.

I am thankful to Dr. K. Rajendran, Dean, Research, Vinayaka

Missions University for critically evaluating my report and for his

valuable suggestions in order to improve the quality of my

research work.

I am thankful to the Director of SJCBA for providing me the

opportunity to purse higher studies. My work would not have been

possible without the help of theLibrarian of SJCBA, Mr. Prabhu

andassistant Librarian Mr Shivakumar, whoarranged the journals

and online research data bases for carrying out the literature

survey.

Mr. Anand, Faculty and Computer lab in charge, SJCBA, needs

special mention for providing continuous support during the

analysis of data using SPSS package.

I am thankful to Ms Jinsey and Ms Dishafor proof reading the

report and suggesting the required changes for improving the

quality of the report.

I am thankful to all the respondents, authors and researchers

whose works have been quoted in my thesis.

I am thankful to my wife Dr. Vasanthi for enduring with me during

the entire research period and pushing me during the times when

things were not going well.

Venkateshraj V

i

TABLE OF CONTENTS

Chapter Title Page No.

CERTIFICATE DECLARATION ACKNOWLEDGEMENT TABLE OF CONTENTS LIST OF TABLES LIST OF FIGURES LIST OF ABBREVIATIONS

i v viii ix

CHAPTER – I

INTRODUCTION 1.0 Introduction to investments 1.1 Classification of investments 1.2 Investment concepts 1.3 Investment theories 1.4 Indian investment scenario 1.5 Types of financial markets

1 – 35 1 7 14 20 24 26

ii


CHAPTER – II

REVIEW OF LITERATURE 2.0 Introduction 2.1 Conclusion of literature survey 2.2 Research gap

36 – 67 36 63 67

CHAPTER – III

INVESTMENTSAVENUES 3.1 Banking products 3.2 Company deposits 3.3 Postal department products 3.4 Provident fund 3.5 National pension scheme 3.6 Bonds 3.7 Insurance 3.8 Mutual funds 3.9 Equities 3.10 Derivatives market 3.11 Chit funds 3.12 Gold 3.13 Real estate 3.14 Commodity market 3.15 Operational definitions

68 – 109 70 73 74 75 77 78 83 92 98 101 101 103 104 106 107

iii


CHAPTER – IV

RESEARCH METHODOLOGY 4.1 Introduction 4.2 Statement of the problem 4.3 Need for the study 4.4 Scope of the study 4.5 Objectives of the study 4.6 Hypotheses 4.7 Research Methodology 4.8 Limitation of the study 4.9 Chapter scheme

110– 124 110 111 111 112 113 114 115 122 124

CHAPTER – V

ANALYSIS OF DATA 5.1 Profile of respondents 5.2 Analysis of investment pattern of respondents 5.3 Analysis of financial literacy level and investment pattern 5.4 Analysis of preferred financial products of the respondents 5.5 Attributes influencing investment decisions 5.6Hypothesis testing

125 – 189 125 136 161 169 175 181

iv

Chapter Title Page no.

CHAPTER - V

Summary of Hypothesis test results Correlation Coefficient between select variables

187 189

CHAPTER – VI

FINDINGS AND CONCLUSION 6.1 Profile of respondents 6.2 Investment Pattern of employed women 6.3 Financial literacy 6.4 Types of assets held by employed women 6.5 Suggestions 6.6 Scope for further Research

191 – 209 192 196 200 202 208 209

Bibliography

Annexure Survey Questionnaire

v

ListofTables

Sl. No Title of the table Page No

1.1 Distribution of Investments (as % of Total

investment)

4

1.2 Preferred form of saving based on population of

cities

5

1.3 House hold saving as percentage of GDP 12

1.4 Asset break up 12

1.5 Return on Sensex and gold 13

1.6 Proportion of household investment in Equity

31

3.1 Fixed deposit Rates 72

3.2 Tax saving products returns 77

3.3 Return on government bonds 82

3.4 Stock Indices returns 100

3.5 Return on physical gold ( 10 grams coin) 104

3.6 Return on residential property index ( in % ) 106

5.1.1 Citi wise distribution of respondents 126

5.1.2 Age wise distribution of respondents 127

5.1.3 Marital status of respondents 128

5.1.4 Education profile of respondents 129

5.1.5 Sector wise distribution of respondents 130

5.1.6 Nature of the job of respondents 131

5.1.7 Sector and nature of employment

132

5.1.8 Family size of respondents 133

5.1.9 Work experience of respondents 134

5.1.10 Income profile of respondents 135

5.2.1 City wise investment Pattern 136

5.2.1.1 Chi Square test for Association between investment pattern and city of residence

138

vi

List of Tables


5.2.2 Age wise investment Pattern 140

5.2.2.1 Chi Square test for Association between

investment pattern and age 142

5.2.3 Investment Pattern and Education 143

5.2.3.1 Chi Square test for Association between investment pattern and educational background

145

5.2.4 Investment Pattern and Income 146

5.2.4.1 ANOVA for investment pattern and annual

income 148

5.2.5.1 Investment Pattern and Sector of employment 149

5.2.5.2 Investment Pattern and nature of Job

149


investment pattern and sector of employment 151


investment pattern and nature of job 153

5.2.6 Marital status and investment Pattern 154


investment pattern and marital status

155

5.2.7 Investment Pattern and family size 157


investment pattern and family size 158

5.2.8 Investment Pattern and Work Experience 159

5.3.1 Financial literacy level of respondents 162

5.3.2 Financial literacy and investment pattern 163


investment pattern and financial literacy level

164

vii

List of Tables


5.3.3 Top five risky products 166

5.3.4 Equity risk perception and financial literacy level 167


financial literacy level and risk perception of

financial products

level and risk perception of financial

products

168

5.4.1 Investments held by respondents 169

5.4.2 Awareness level and actual investments held

171

5.4.3 Respondents awareness, investment and risk perceptionof financial products

173

5.5.1 Criterion for Investment 175

5.5.2 Purpose of Investment 176

5.5.3 Source of Information 178

5.5.4 Tax saving product preference 179

5.6.1 Type of advisor and investment Pattern

181

5.6.1.1 Chi Square test for Association between investment pattern and investment consultant

181

5.6.2 Review period and investment Pattern

183

5.6.2.1 Chi Square test for Association between investment pattern and review period

184

5.6.3 Purpose of investment and Investment Pattern

185

5.6.3.1 Chi Square test for Association between investment pattern and purpose of investment

185

5.6.4 Summary of Hypothesis test results to find

associationbetween identified variable and

investment pattern

187-188

5.6.5 Identifying relationship between select

variables using correlation coefficient

189

6.1 Demographic profile of Respondents 193

viii

List of Figures

Sl. No Title of the figure Page No

5.2.1 City wise investment pattern 136

5.2.2 Age wise investment pattern 140

5.2.3 Education wise investment pattern 143

5.2.4 Investment Pattern and Annual Income 146

5.2.5.1 Sector wise investment pattern 150

5.2.5.2 Investment pattern and nature of job 152

5.2.6 Marital status and Investment pattern 154

5.2.7 Investment Pattern and family size

157

5.2.8 Investment Pattern and Work Experience 159

5.3.1 Financial literacy and investment pattern 163

5.4.1 Investments held by respondents

170

5.4.2 Awareness and actual investments held

172

ix

LIST OF ABBREVIATIONS

AMC Asset Management Company

BSE Bombay Stock Exchange

CAPM Capital Asset Pricing Model

D’Mat Dematerialization

ELSS Equity Linked Saving Scheme

EMH Efficient Market Hypothesis

EPF Employee Provident Fund

ETF Exchange Traded Funds

FMC Forward Market Commission

IPO Initial Public Offer

IRDA Insurance Regulatory and Development Authority

MIS Monthly Income Scheme

MRPP Moderately Risky Portfolio Pattern

NAV Net Asset Value

NCD Non-Convertible Debenture

NCAER National Centre for Applied Economic Research

NFO New Fund Offer

NHB National Housing Board

Nifty Index of National Stock Exchange

NPS National Pension Scheme

NRPP Non Risky Portfolio Pattern

NSC National Savings Certificate

x

LIST OF ABBREVIATIONS

NSE National Stock Exchange

NSS National Saving Scheme

OTC Over the Counter

PFRDA Pension Fund Regulatory Development Authority

PPF Public Provident Fund

RBI Reserve Bank of India

RD Recurring Deposit

REIT Real Estate Investment Trust

RPP Risky Portfolio Pattern

SCF Survey of Consumer Finance

SEBI Securities Exchange Board of India

Sensex Equity Index of BSE

ULIP Unit Linked Insurance Plan

1

CHAPTER – I

INTRODUCTION

1.0 Introduction to Investments

Economy of any country is driven by investments leading to

capital formation. Savings lead to investments. In India, the

household sector occupies the prime place as far as savings is

concerned in comparison to institutional sectors,whether it is

private or public. Every government in the world would like

households to save, as personal saving constitutes the largest

segment of national saving in most of the countries. This is

followed by savings of the corporate sector, with government

savings being least or negligible in most of the countries.

According to the economists and central bankers, for sustained

economic growth of a country, rise in domestic savings is

necessary.As per 2013 RBI annual report, household saving for

2012-13 is 22.3 percent of theGDP.

Every individual earning money, spends it to meet his or her

ownpersonal needs or to fulfil the basic needs of his or her family.

Individuals use money for various purposes including funding their

2

daily house hold expenses and expenses incurred for buying

luxuries for a better life. Moneyearned is generally used to fund

some immediate expenses or saved to meet some future needs.

Those who spend less than what they earn end up with savings.

These savings can be accumulated and grown to fund various

goals, such as, for education, marriage, vehicle purchase, house

purchase or for acquiring any other asset, for medical

emergencies and for meeting the post retirement financial needs.

In general, the entire amount saved is not held in cash, but is

invested in different asset classes or investment avenues in order

to get areturn, which can be in the form of regular income orcapital

appreciation or sometimes both.

Women, in general are saversaccording to the Association of

Bankers 2013 report. Even in India, under the recently launched

Janadhan Scheme,a large number of new bank accounts were

opened. In rural areas, major part of the new accounts was

opened in the names of women according to the report released in

2014 by Punjab National Bank, resulting in a greater contribution

by women. This scheme provided an opportunity for women to

open bank accounts thereby increasing the percentage of the

population under financial inclusion program of the government.

3

Successive governments in India have stressed on providing and

improving the educational opportunities for children, especially girl

children. The efforts of the government have led to an increase in

the number of educated women, who are well qualified and have

the necessary skills to gain employment. With the opening up of

the economy and the progress and investment made in the

banking, financial services, insurance, software and educational

sector, job opportunities have increased for women in India. The

increase in the number of employed women has led to rise in the

number of savers as well as the quantum of savings by women.

As per Census 2011, the population of India is 1210.19 million

comprising 586.47 million (48.5%) females and 623.72 million

(51.5%) males. Females have a share of 48.1% in the urban

population and of 48.6% in the rural population. Women find more

opportunities to work in urban cities. According to the NCAER

survey of 2004 -05, the main source of income is through salary,

for people living in urban areas is 36.9 percent and 81.4 percent of

households at the all-India level save a part of their earnings. The

figure is 88% for urban India and 78.5 % for rural India. The work

force participation by women in urban sector was 13.8% for

females and 54.3% for males. Employment to population ratio for

4

female in India was last measured at 27.50 % in 2011. Table 1.1

helps us understand the avenues of investment according to the

NCAER survey.This table gives the distribution of investment in

percentage of the total investment made by households.Avenues

of investment in this table are us as part of investment

classification in the current study.

Table 1.1

Distribution of Investment (as% of Total Investment)

Avenue of investment Urban Rural

Stock Market 7.5 6.3

Small savings 5.4 6.7

Life Insurance 26.6 16.7

Jewellery 12.8 16.6

Consumer goods 32.3 39.1

Others 15.4 14.6

Total 100.0 100.0 Source: NCAER Survey 2004-05

Table 1.2 displays the findings of the survey based on the

population of the city. This helped in further refining of the asset

classes available for people living in cities taken up for the current

study having population of more than 50 lakhs. Investment in stock

market is higher in cities compared to a town with population of

less than 50 lakhs. This information indicates the prevalence of

investment in stock market in cities which are taken for the study

and stock market investment related questions are added in the

survey questionnaire.

5

Table1.2

Preferred form of saving based on thepopulation of cities

Population 5 – 10 lakhs

10 – 50 lakhs

Over 50 lakhs

Stock Market 3.7 2.1 11.4

Small savings 3.2 2.0 6.4

Life Insurance 20.6 11.0 24.2

Jewellery 16.4 15.6 11.0

Consumer goods 40.6 42.6 30.3

Others 15.5 26.7 16.7

Total 100.0 100.0 100.0 Source: NCAER Survey 2004-05

Financial Marketers are increasingly looking towards women

investors for growing their sales. The range of products is

multiplying manifold due to globalizationand interconnectivity of

financial and commodity markets across the world.There is general

notion that, men are more comfortable in managing money in

comparison to women. However, with the increase in the number

of women having an independent source of income, there is an

increase in the participation of women in the area of

investments.Financial products liked by and suitable for men may

not meet the needs of a women as they may have their own

yardstick for taking investment decisions.

Majority of the studies carried out compare the investment pattern

of men and women. Very few institutions and asset management

companies have tried to understand the investment pattern and

6

behaviour of women towards financial products.As India is a

patriarchal society, investment decisions are taken by the male

members of the family. This reduces the interest of women to

understand financial investments. Women are consulted regarding

investments in real asset investment like property and precious

metals such as gold and silver are concerned. There is dearth of

studies related to investment by women. Details about various

studies carried out are covered in chapter two under Literature

Review. Based on past studies and the research gap identified

about the investments by women in chapter two, it will be

illuminating to know how the savings made by employed women

are channelled into different investment avenues and the reason

for the same. It is in this background,that a detailed study and

analysis of the investment pattern among employed women has

been carried out.

To have a better understanding about different investment asset

classes and their features, a brief, starting from classification of

investments and their specific features related to risk and return is

covered in this section. Product wise details are provided in

Chapter III for understanding the salient features of individual

products under each asset class.

7

1.1 Classification of Investments

Investments by individuals are made with an objective of

generating capital appreciation, regular income or both. There are

various assets which offer investors a combination of capital

appreciation and income. There is a wide range of product choices

available for investors to meet their needs. All assets available for

investment for individuals are broadly classified into two types:

1. Real Assets

2. Financial assets

Real Assets

Real assets are tangible in nature and contribute towards the

growth of an economy directly. Investment in land, building and

machinery are considered as investments in real assets. Gold,

silver and other precious metals are tangible in nature but are not

considered as real assets, as they do not directly contribute in the

growth of an economy. Investment in precious metal is considered

as investment in commodities. The predominant investments by

individuals under real assets are in residential properties.

Investment in residential property could be in an empty site, an

independent house, flat or a rent yielding commercial or residential

property. If not self-occupied, a residential building can fetch an

investor regular income by way of rent as well as capital

8

appreciation in case if there isan increase in the price of the

realestate. Investment in residential property by individuals is for

own use and also provides an individual a place to stay post

retirement and if required can be monetized using reverse

mortgage. Studies covered under literature review show that

women prefer investment in gold and real estate. Classification of

investment in gold and real estate has been broadened in the

current study

Financial Assets

The major investment opportunity for individuals is available in this

asset class.Financial assets are indirect claims on real assets.

They are intangible in nature and are available in different forms

like bonds,equities, mutual funds, exchange traded funds, real

estate investment trusts or a combination of debt and equity in

various proportions. Indirect claim on precious metals like gold and

silver are also classified as financial assets. Financial assetsbased

on their features and characteristics are broadly classified into:

Debt

Equity

Hybrid instruments

9

Debt

This category of assets or securities provide regularreturn over the

life span of the instrument. The return is inthe formof interest and,

the rate of interest payable is specified at the time of making the

investment in the instrument. Interest is paid on the face value of

the security and the most common frequency of payment of

interest is semi-annual. The rate of interest payable is also known

as coupon rate. Interest is paid till the maturity date of the

debtinstrument.

Debt instrument having a life of less than a year is traded on the

money market. Popular instruments traded onthe money market

are, treasurybills, commercial papers and certificate of deposit.

Debt instrument having maturity period of one year or more

istraded on stock exchanges as well as on the over the counter

(OTC) market. India government dated securities having a

maximum maturity period of 30 years are available for investors

looking for risk free long term debt instruments. There are cases

where more than 30years‟ bonds are issued including perpetual

bonds, which do not have any maturity period.

Investments in debt instrument carry default risk. Companies

issuing any form of debt instrument should obtain credit rating from

approved rating agencies. The rating assigned indicate the

10

financial ability of the company to fulfil the obligations as per

provisions of the bond indenture, which include timely payment of

interest and the ability to pay back bond value as per the terms of

issue at the time of maturity of bonds.

Government issued bonds are considered to be the safest among

the debt instruments. As far as Indian markets are concerned,

liquidity is a major challenge for investors.Hence, Investors looking

for stable and regular income are the major investors in this

category of asset class. There is limited scope for capital

appreciation in these instruments. Past studies covered in chapter

II indicate that women prefer to invest in debt instruments issued

by postal department and bank deposits. An attempt is made in the

current study to add a broad range of debt instruments available in

the market including the debt mutual funds.

Equity

In simple words, investment in the equity of any company makes

the investor ashareholder of the company. Investors in equity

market focus mainly on capital appreciation rather than regular

income. Many profitable companies declare and pay dividend to

the equity shareholders. Not all equity shares are liquid. Equity

shares of a listed company get traded on the stock exchanges,

11

providing a high level of liquidity in comparison to debt

instruments. The perceived risk associatedwith equity shares is

much higherin comparison to many financial products available in

the market. The two major stock exchanges in India where equity

shares are actively traded are National Stock Exchange (NSE) and

Bombay Stock Exchange (BSE). Review of literature carried out in

chapter II, indicates the increase in the number of women investing

in equity directly or through mutual funds. An attempt is made in

the current study to understand the source of information and

influencers leading to investment in equity by women.

Hybrid instruments

There are financial instruments thathave characteristics of a debt

instrument for a certain period and then acquire the features of an

equity. Such instruments are called as hybrid instruments.

Common example of hybrid instruments are preference shares,

convertible debentures, where the debenture is converted into

equity shares, foreign currency convertible bonds and warrants.

As discussed earlier, House hold savings contribute significantly in

capital building. Table 1.3 gives the details of house hold saving in

India,as percentage of GDP for the period 2009 – 2013. Savings

are sub classified under physical assets and financial assets.

12

Table 1.3

House hold saving as percentage of GDP

Financial

Year

Financial

Assets

Physical

Assets

2009 – 10 12% 13.2%

2010 – 11 9.9 % 13.2%

2011 – 12 7.0 % 15.8%

2012 – 13 7.1 % 14.8% Source: The Economic Times dated 15/4/14

Table 1.4

Asset break up

Source:CMIE, Mint datedMay 28, 2014

It can be observed from Table 1.4 that from 2008 to 2013, there is

a gradual reduction of investmentsin financial assets. It has

dropped from 51.88 percent to 32.41 percent in the financial year

2013, indicating that individuals preferredinvesting in physical

assets in comparison to financial assets. In this period, the major

investment in physical assets consisted of investments in gold.

During the period from 2008 till 2012 gold price was on continuous

Financial Year Physical

Assets%

Financial

2008 48.12 51.88

2009 57.09 42.91

2010 52.49 47.51

2011 57.01 42.99

2012 69.23 30.77

20 13 67.59 32.41

13

rise giving handsome return for investors in gold. Table 1.5

provides the return on gold and equity represented by Sensex.

Table 1.5

Returns on Sensex and Gold

Source:CMIE, Mint dated May 28, 2014

Year Sensex

return in %

MCX Gold

return in %

FY 08 19.68 29.38

FY 09 -37.94 24.41

FY 10 80.54 8.19

FY 11 10.94 27.36

FY 12 -10.50 35.24

FY 13 8.23 4.81

FY 14 18.85 -2.74

14

1.2 Investment Concepts

Millions of investors buy bonds, mutualfunds, equity, gold or similar

investment products,for different purposes. The decision to invest

in a specific assets class or classes of assets is primarily driven by

the risk and the return associated with the product.

Any investment made carries certain amount of risk, which isthe

uncertainty of return on the investment made or even losing the

capital invested. There is no uniformity of opinion about the risk

associated with a particular investment product across investors.

What may seem to be highly riskyto one investor may be

considered to be average risk product by another investor.

Evaluation of risk associated with a financialinstrument may

depend on the past experience of the investor, financial expertise

or dependence on others for investment. These factors may drive

an individual‟s opinion about the risk level of a certainfinancial

product. The perception of investors about the risk associated with

a financial instrument ranges from no risk tovery high risk in

relative terms. The perception of investors towards different asset

classes is captured in the currentresearch using suitable

questions. The findings are discussed in later chapters

15

Return and Risk

Return on investment can vary depending on the type of

investments held by the investor. Government securities can give

a pre specified rate of return based on the coupon rate, whereas

return from equity or equity related instrument isunpredictable.

Return on investment on assets held over a period of time is

calculated as:

CMVA – IVA Holding Period Return = ------------------ -------- Eq– 1 IVA where CMVA: Current Market Value of Assets IVA: Investment Value of Assets

Theabove equation gives the notional holding period return,if the

assets are not soldbut held on the date of return calculation. If the

assets are sold then we get the realized holding period return

using the above equations, where in the ending value is the value

at which the asset was sold.

For comparison of returns across assets, holding period return is

converted into annual return by using equation given below.

Holding Period return Annual Return = ---------------------------------- -------- Eq– 2 Time period of investments

16

The time period of investment is in terms of number of years to

calculate annualized return.

It is easy to measurethe return, but it is difficult to measure the

riskin quantitative terms acceptable to all market participants. One

of the most common accepted methods to measure andquantify

risk is, the variance of the rates of returnsover the period of

investment. Standard deviation, which is the square root of

variance is another popular measure of risk. However,the

interpretation of both variance and standard deviation remains the

same. Mathematically for a single asset, Risk (Variance)is

calculated using the formula given below

Variance = σ2 = 1

𝑛−1 (𝑥 − 𝑥 𝑛𝑖=1 )2 -------- Eq – 3

where

𝑥= return in percentage for a particular period

𝑥 = average of rate of return

σ= standard deviation Higher the variance or standard deviation, higher the risk

associated with the financial instrument in comparison to a

financial product having lower variance or standard deviation.

17

For debt instrument issued by the central government, the

standard deviation is zero. There is no deviation observed in the

returns on a government security and because of this investor feel

that government securities carry no risk. All the risk elements are

not captured by variance or standard deviation. Risks like business

risk, political risk, default risk, currency risk etc. are not captured

by standard deviation.

Comparing products based only on return or only based on risk

may mislead investors in taking investment decisions. It becomes

difficult totake investment decisions when we would like to

compare two investments with different levels of return and risk

(standard deviation). In such situations, Coefficient of variation is

found to be useful.Coefficient of variation is calculated as

σ Coefficient of Variation = ------ -------- Eq – 4

𝑥 where σ = standard deviation

𝑥 = mean rate of return

Investments are ranked based on the fact that lower is the

coefficient of variation better is the risk reward relationship.

Every investor is risk averse bynature as far as investment

preference is concerned. For a given level of risk, investors will

18

look for investmentsthat provides the highest return and carries the

least risk, among the assets available for investment. To reduce

the risk, investors make investments in more than one asset or

asset classes. A collection or holding of various combinations of

different classes of assets isknown as investment portfolio of an

individual. The basic assumption made by the investor while

making investments in multiple classes of assetsis, that the overall

portfolio risks is reduced, as investments are spread across

different classes ofassets.Investor assumes that, all asset classes

may not perform equally all the times. This process of investing in

more than one security is also called as principle of

diversification.Till the early 60s there was always debate on

portfolio risk reduction because of diversification. There were

methods to calculate the portfolio return, but there was lack of

understanding on how the risk of a portfolio, consisting of more

than one security is measured quantitatively.

Portfolio Risk and Return

Harry Markowitz derived the model to measure the expected return

and risk of a portfolio. According to Markowitz variance of the rate

of returns is a meaningful way of measuring the risk of a portfolio.

He proved that diversification of investments by investors is a

19

method of reducing the total risk. If security weights, which is the

proportion of investments, and returns are available for the

constituents of the portfolio, then the portfolio return is calculated

as

R port = ∑ wiri-------Eq – 5

where

wi = weight of the individual asset i in the portfolio

ri= rates of return for asset i

The formula for calculating the variance of a portfolio is

Variance = 𝜎𝑝𝑜𝑟𝑡2 = 𝑤𝑖

2𝑛𝑖=1 𝜎𝑖

2 +

𝑤𝑖𝑛𝑗=1

𝑛𝑖=1 𝐶𝑜𝑣𝑖𝑗 ------ Eq – 6

where

σport= Standard deviation of the portfolio wi= Weight of the individual asset i in the portfolio σI = Standard deviation of rates of return for asset i Cov ij = Covariance between assets i and j Markowitz portfolio theory suggested that, to effectively diversify,

investors should study the coefficient of correlation among the

assets constituting the portfolio. The model suggests to select

assets that are negatively correlated.

This model explains the importance of correlation between the

constituents of assets forming the portfolio. If the assets within the

portfolio are positively correlated,then, the value of the portfolio

standard deviation will go up and if they are negatively correlated

i≠j

20

the portfolio standard deviation will go down. If the assets have

positive correlation among themselves then the risk of the portfolio

is increased rather than decreasing.

1.3 Investment Theories

Efficient Frontier Markowitz plotted risk and return for all possible portfolios

consisting of various combination of assets. Out of the plotted

values, he created an envelope of the most efficient

portfolios,called the efficient frontier. The portfolios lying on the

efficient frontier offered the maximum return for a given level of risk

and the least risk for a given level of return.

Capital Market Theory

Capital market theory took forward the Markowitz portfolio theory

and led to the development of Capital Asset Pricing Model (CAPM)

by William Sharpe. It was observed that the total risk of portfolio

consisted of systematic (non-diversifiable) andnon-

systematic(diversifiable) risk. Unsystematic risk could be reduced

by adding more securities to aportfolio, but the systematic risk

associated with a portfolio could not be reduced, exceptional case

being international diversification. Remained, it may not possible to

21

reduce the systematic risk associated with a portfolio. For a well-

diversifiedportfolio, the systematic risk is represented by beta (β).

Beta value indicates the percentage change in the equity value, for

one percent change in the market index value. Higher is thebeta,

higher is the systematic risk. CAPM takes into account the

combination of a non-risky portfolio (σ=0 and β=0) with a portfolio

of risky assets and helps in finding the expected or required rate of

return for a risky asset under the assumption made by William

Sharpe for the capital asset pricing model.

The expected rate of return is calculated as

E (r) = Rrfr + β (RM – Rrfr) ------- Eq – 7

where

Rrfr= Risk free rate of return

RM= Marketreturn

β = beta of the portfolio

σM = Standard deviation of the market index

22

CAPM is not only used in the field of investment, but also

extensively in the world of corporate finance to set the minimum

return expected from a risky project.

23

Efficient Market Hypothesis

It is always a difficult proposition for investors to understand the

price behaviour of securities. In an efficient capital market, the

current price of securities reflects all the information available to

the market. It is found that some investors or portfolio managers

generate above market returnsconsistently. Fama carried lot of

research to study the efficiency of the market and came out with

three forms of Efficient Market Hypothesis (EMH)

1. Weak Form of EMH: According to this form, the security price

reflects all historical information like the past price history,

trading volume, number of trades and all other information

provided by the stock exchanges. Investors cannot generate

abnormal returns based on the historical information.

2. Semi Strong Form of EMH: Accordingto thisform,the price

reflects all historical data and public data like the price to

earningsratio, price to book value, stock split, and all such

information‟s. Investors cannot generate abnormal returns

based on the historical and public information.

3.Strong Form of EMH: According to this form,security price

reflects not only the historical and public data but also the

24

private information or data. There is no scope to generate

abnormal return by any investor.

The debate still continues about the forms of EMH,as technical

analysts disagree with the weak form,whereas fundamental

analysts support it.

There is continuous research going on in the field of investment

including the valuation of securities, pricing of initial public offers

andinvestment style management. Many researchersare focussing

on behavioural finance, which studies the behaviour of investors

under different market conditions and the factors affecting

investment decisions. Very few studies related to investment by

women have been conducted especially on employed women as

far as the field of investments is concerned. This study makes an

attempt to identify the investments held by employed women and

the factors which could influence their investment decisions. This

may help financial product creators to keep these factors in mind

while developing women centric investment products.

25

1.4 IndianInvestment Scenario

Over the last 25 years the world of investments in India has

undergone a sea change. The change is in terms of the variety of

products, alteration in the market participants, rules and

regulations, grievance redressal mechanisms and the functioning

of the markets. This change was due to the growth of the Indian

economy and the opening of the economy to foreign investors.

Foreign investments in the Indian securities markets were

restricted till late 80s. There was restriction on foreign direct

investment and portfolio investments by foreigners. Indians were

not free to invest in markets abroad. Investors had very limited

investment options and products to choose from. Investment

opportunities were limited to bank deposits, postal department

savings schemes, national savings certificates (NSC) of different

maturity periods, monthly incomes schemes(MIS), traditionallife

insurance products offered by the life insurance corporation, unit

trust of India (UTI) operatedunit -64 mutual fund scheme,

employee provident fund, public provident fund, equities and

debentures. Due to the large reach of postal department, investors

wereinvesting in most of the small savings schemes offered

through postal department and where ever stock exchanges were

26

there,investors had the opportunity to invest in equity shares of

listed companies.For urban investors opportunities wereavailable

for investing in equity,bonds, debentures and other instruments

available in the capital market. For rural populations there were

chit funds in addition to postal schemes. There is possibility that,

due to lack of investment opportunities, rural India focussed on

buying gold, other precious metals and stones along with

agricultural land and other real estate assets. At one point of time

people invested in gold bonds. Due to the presence of Life

Insurance Corporations of India in smaller towns and district

headquarters, life insurance had popularity with some investors.

Till mid-90s, Life Insurance Corporation of India was synonymous

with life Insurance. Banks had limited presence, and options

available to investors were recurring deposits and fixed deposits.

Unlike the present scenario, banks were not marketing any third

party products.

27

1.5Types of Financial Markets

Based on the types of instruments and the tenor of the instrument,

financial Markets are divided into two broad categories:

1. Money market

2. Capital market

Money Market

This market deals with short term instruments. Short term

instruments have a maturity period of less than one year. Popular

instruments traded are treasury bills issued by Reserve Bank of

India (RBI), commercial papers issued by private sector,and

certificate of deposit issued by banks. This market is a wholesale

market where the major participants are banks, insurance

companies, mutual funds and other institutions. Retail

investorshave limited presence. Small investors can take part in

this market through primary dealers or mutual fund houses, that

offer schemes investing in instruments traded on the money

market. Reserve Bank of India is the regulator for this market.

28

Capital Market

In this market financial instruments with life spans of more than a

year are traded. The instruments available in this market are equity

shares, debenturesbonds, mutual funds including exchange traded

funds (ETF‟s).Capital market is regulated in India by Securities

Exchange Board of India (SEBI). This market is further divided into

primary and secondary market

Primary Market

In this market companies raise capital by offeringsecurities to

public. The instruments offered are equity shares, bonds,

debentures or any other security approved by the capital market

regulator. The offer made to the public is also called as Initial

Public Offer (IPO). If any firm approaches the market for further

issue of capital, then such issues are called as further public offer

or Follow on Public Offer (FPO). There is reservation of 35 % for

retail investors in all IPOs. In spite of reservation the subscription

by retail investors are not very encouraging. Mutual funds also

approach investors through new fund offer (NFO) and private and

government companies take the premarket route for raising capital

by issuing bonds and debentures.

29

Secondary Market

In this market,all the securities issued in the primary market are

dealt. This market offers liquidity for the securities offered in the

primary market. The transaction in securities in the secondary

market are done through the stock exchanges and over the

counter (OTC) market. Major investment opportunity for retail

investors exists in this market. Securities to be traded on the stock

exchanges have to follow all the rules and regulations of the stock

exchanges and SEBI. BSE and NSE are the two major exchanges

of India. More than 5500 companies‟ securities are listed on BSE,

but active trade takes place in about 3000 company shares. Many

fly by night companies delisted from exchanges for not conforming

to the rules and regulations of exchanges and SEBI.

With the opening of the mutual fund sector for entities other than

Unit Trust of India(UTI) in mid 80s, there was a rapid growth in the

mutual fund schemes offered by Indian banks and foreign mutual

fund houses. This brought in product innovation due to the

expertise of the foreign fund houses as well as due to the

competition. Investors were able to get a wider range of mutual

fund schemes meeting their requirements. As of today the market

30

size of mutual funds in India is close to Rs 10 lakh crores, and

many investors enter the securities market through mutual fund

investing.

Till the creation of SEBI,retail investors suffered in the hands of

brokers and other financial intermediaries due to lack of

transparency in the execution of the trade and pricing of securities.

Investors in stock market were at the mercy of stock brokers. In

early 90s many investors lost money and faith in the capital market

due to various scams led by Harshad Mehta‟s stock market scam,

which exposed the weakness in regulation of the stock market.

Investors lost money due to lack of transparency in brokers,

manipulative promoters and fly by night companies that entered

the capital market,as well as due to lack of regulatory control.

Stock exchanges were controlled by brokers which resulted in

further sufferings for theretail investors, as exchangeauthorities

were not bothered about the resolution of investor complaints and

grievances. Investors were plagued with defective documents

including fake share certificates, damaged transfer deeds,

signature mismatching transfer deeds, delay in transferring of

shares, non-receipt of dividends and many more issues which

weakened the confidence of the investors.

31

A major change in the Indian market took place with the setting up

of Securities Exchange Board of India (SEBI), the regulator for the

securities market. Major objective of SEBI is investor protection

and investor grievances resolution

Major reforms in the market started with the formation of SEBI,

which was given sufficient powers to prosecute and penalise errant

brokers, stock exchanges, companies and manipulators. Opening

of National Stock Exchange (NSE) in a demutualised form, where

the owners of the exchange were different from the members

having trading rights brought in the transparency in the trades and

prices. NSE embraced technology from inception and brokers

could set up office in any part of the country due to the screen

based trading on NSE. Foreign investors were allowed to

participate in the Indian capital market in mid 90s which led to

further growth in the Indian capital market. Further impetus to the

market was provided by the passing of Depositaries Act 1996,

which paved the way for holding the securities in the electronic

form by investors. This reduced the investor‟s complaints

regarding delay in transfer of shares, removal of duplicate and fake

shares from the market and all other problems faced when the

securities are held in physical form. Participation by foreign

investors and holding of securities in electronic form brought in the

32

demand for derivatives marketwhich was opened for Indian

investors in the year 2000,that again led to the surge in the capital

market investment.With the growth in the capital market the mutual

fund industry started to grow and isnow offering a very wide range

of products meeting the needs of various types of investors. As of

today more than 40 asset management companies offer more than

1400 types of mutual fund schemes including systematic

investment plans index funds,ETF‟s and manage assets close to

Rs.10 lakh cores. In the year 2008 NSE and BSE have started

offering foreign currency trades. With the rapid penetration of

internet and the mobile phone services along with the online

money transfer facility, trading in securities is different from what it

used to be a decade back.

Table 1.6

Proportion of household investment in Equity (in %)

Year Investment in equity

1981 3.0

1985 4.5

1991 8.0

1993 11.0

1995 9.0

2001 6.0

2005 4.5

2011 4.0

House hold savings since 1981 is displayed in the above table. It is

observed that equity investment had peaked in 1993 and has been

33

consistently falling since then indicating the lowering of interest in

equities by investors.

Insurance sector also grew along with the capital market. Life

insurance and general insurance were controlled by government

owned companies till the mid-90s. Life Insurance Corporation (LIC)

was synonymous with Life Insurance in India. The Insurance

landscape has changed when government opened up the

insurance sector to private player‟s. A new regulator for this sector

was formed to regulate the Insurance market. Insurance regulatory

development authority (IRDA) is the regulator of the insurance

sector in India.

Due to the intense competition the service level increased and

many new products were launched. Increase in product range

allowed people to buy products meeting theirrequirements. One of

the revolutionary products launched in this sector was the

UnitLinked Insurance Plans (ULIP) that allowed insured people to

participate in the growth of the capital market. Under this scheme

part of the premium paid,goes towards the term insurance cover

and the balance amount is invested through fund houses into

various schemes, including liquid funds, bond funds and equity

funds. There was rampant mis-selling of insurance productsduring

the initial days of ULIP product availability, due to higher

34

commissions offered to the insurance agents and other

intermediaries. IRDA stepped in and put restriction on the

commission level. This step from IRDA has reduced mis-selling of

ULIP schemes. Marketing of insurance schemes has increased

the penetration level, but still India is an under insured country.

Withdrawal of pension by government led to increase in demand

for annuity funds and insurance linked annuity products. We have

reached a stage where IRDA is taking necessary steps to offer

holding of Insurance policies in electronic form, which is likely to

help an investor consolidate all his financial holdings.

In spite of a wide range of products,gold is a preferred investment

for Indian investors for historical reasons. The primary demand is

for gold is in form of jewellery followed by gold coins and bars of

different weights. There is change in the way gold investment

opportunity is availabletoday. Investors have the option to invest in

gold through commodity exchanges. Commodity exchanges allow

investors to hold gold in electronic form. There is a choice for

investors to invest in gold through mutual fund houses,that offer

gold linked schemes as well as gold linked exchange traded funds.

Boom in real estate and its attraction for Indians, serve dual

purpose of investment as well as consumption. The increase in the

35

income level and the increase in nuclear families, haveaided the

growth of the real estate investments. Many investors buy second

and third home from an investment angle and look for capital

appreciation as well for regular income by way of rental.Real

estate investment is a big ticket investment. Real estate as an

investment product is out of the reach of small investors, due to

the lack of availability of suitable products. As of now there is no

product available in the market for small investors to participate in

the real estate sector, for small investors.Government is working

on allowing real estate companies to offer retails participation by

way of Real Estate Investment Trusts(REITS).

Despite regulators and the use of technology, there are still some

grey areas. Chit fund industry, though for many years is

considered to be highlyunregulated, is still popular with small

investors in certain pockets of the country. Chit funds act as an

investment avenue for many investors, as participation in chit

funds has dual option of investment as well as a source of

borrowing money. In the semi urban and rural areas, chit fund is

still considered as a primary source of savings.

In the current scenario,Indian financial markets are robust and well

regulated by the respective regulators. There is a need for banks

to come out with more products for their customers. Investors have

36

limited choice of fixed deposits or recurring deposits. Banks are

allowed to sell mutual funds, pension schemes and insurance

products which has increased products availability across India.

There is an urgent need for creating investor awareness among

retail investors. According to some studies carried out by mutual

fund houses,lack of knowledge and awareness about various

financial products is one of the factors for the slow growth of the

financial sector. Lot of effort is put by regulators, stock exchanges,

insurance companies and mutual fund houses to spread the

financial literacy level in last five years. Financial literacy has

improved during the last five years,due to increase in the

internetusage and portals offering financial education workshops.

All regulators involved with the financial sector conduct investor

awareness programs and workshops in order to help investors in

taking informed investment decisions. There are special

workshops held for women by many companies as percentage of

women taking their own investment decisions is seeing a rise.

37

Chapter – II

REVIEW OF LITERATURE 2.0 Introduction

Literature review is the process of going through the articles

related to the topic of research topic, which are published in

journals, online databases, magazines, newspapers, books or any

other source of information including online sources. Literature

review helps researcher to know and understand the findings and

views of earlier researches who have carried out research in an

area similar or related to topic of study. It also helps in

understanding the data collection methods and the statistical tools

used for analysing the data. The key findings and the conclusion

drawn by researchers are of great help for any new researcher. It

helps us the researcher to find research gaps, which could be

taken up for further studies.

A large body of literature is available in the area of investments

related to institutional investment pattern, portfolio construction

methods, portfolio performance evaluation, retirement planning,

product preferences and many more associated topics. Studies

have been carried out by researchers on the gender differences in

allocation of assets, constituents of domestic savings, saving

38

behaviour of household, gender differences in knowledge about

financial investments, investors risk tolerance, investors perception

of various financial products. Some of the most insightful studies

carried out in India and outside are given below.

1. Nupur Gupta and Vijay Agarwal (2013) looked at the

constituents of domestic savings and investments by investors,

from the cities of Mumbai and Delhi. A total of 251 respondents

were administered a structured questionnaire in person and with

the help of online survey portal. The type of sampling chosen for

the study was convenience and snowball sampling. Respondents

from different age groups and professions were contacted for the

study. Data was collected from April to November 2011. The

reliability of the questionnaire was ascertained by Cronbach‟s

alpha value. Important variables for the study were extracted using

factor analysis. The three factors identified were stock market

factor, savings factor and interest rate factor. For discrete data like,

investment in stock market and city of dwelling, Chi square test

was used to establish the presence or absence of association. For

finding the relationship between discrete independent variables

like income level and the investment pattern, one-way ANOVA test

was used. The investment patterns were categorized as, Non

39

Risky, Risky and Combination. Classification was based on the

composition of the investment held by the respondents. It was

found that bank deposit was the most preferred form of investment

followed by mutual funds, real estate and gold. Significant

differences were found in the investment patterns of households

between the cities of Mumbai and Delhi. Stock market investment

was third most preferred investment avenue in Mumbai whereas it

was not so with the respondents from Delhi. There was significant

dependence of investment pattern on household income only in

the age group of 40 to 49years. Interest rate did not have any

relation with the investment patterns.This is in contrast to the study

by Kabra (2010) where one of the factor influencing investment

decision was the prevailing interest rate.

2. Geetha. N and Ramesh M, (2012), studied the role of

demographic factors in investment decisions. Response received

from 475 respondents from Nagapattinam district of Tamil Nadu

was used for analysis. The sampling method used was convenient

sampling. A well-structured questionnaire was used to collect the

data from the respondents. Statistical inference was drawn using

ANOVA and Chi square tests. The demographic attributes

included age, gender, education, occupation, income, savings size

40

and family size. The investment avenue considered for the study

were gold, provident fund,life insurance, real estate, bank deposits,

postal savings, mutual funds and equities.

According to the study, riskprotection, safety of investment, rate of

return and liquidity were main factors which influenced investment

decisions. This is in line with the findings of Elder & Rudolph

(2003).

Graduates and post graduates were more likely to invest in long

term investment products. This is in contrast to the study by Al-

Tammie (2009), who found no relationship between educational

background and investments. People in the age group of 31 to 40

years preferred investing in long term investment products. People

with a family size of four and above preferred short term

investments. Self-analysis and advice from friends and relatives

were the major source of investment information. This study found

that most of the respondents preferred monthly investments.

Further it was found that majority of the respondents were driven

by technical analysis and newspaper reports while taking

investment decisions.

The most preferred investment was life insurance followed by real

estate, provident fund, gold and silver respectively. The

researchers concluded that preference for real estate and gold

41

was may be due to the boom in the prices of gold and silver during

their period of study.

3. P. Parmashivivaiah, Puttaswamy and Ramya (2013) conducted

a study in the city of Mysore, to understand he factors influencing

investment decisions. The sample size for the study was 120

respondents. They used judgment and snow ball sampling to

collect the data. The study was conducted in the first half of 2013

in the city of Mysore. Statistical tools used for analysing the data

were Percentage, mean, standard deviation, Chi square test, F

test, ANOVA and regression. Data was classified based on the

demographic profile of the respondents. It was found that liquidity

was the most important factor while choosing an investment

portfolio as far as government employees and entrepreneurs were

concerned.This is similar to the findings of Geetha. N and Ramesh

M, (2012). Private employees and professionals gave equal priority

to growth and liquidity. Women did not select investments on the

basis of safety of the principal. This is in line with studies

conducted by Annika, Sunden and Surrette (2009) and Bernasek

(2002).

Based on the correlation between occupation and investment

objective, it was found that investment objective had no relation to

42

the occupation of the respondent. Liquidity and tax reduction were

found to be the two important criteria for the selection of the

investment portfolio in this study.

4. Ravi Vyas and Suresh C Moonat (2012) carried out a study on

the perception and behaviour of mutual fund investors. The study

was carried out to understand the preference of investors

investment avenues, mode and form of investment preferred by

investors at Indore with a sample size of 500 respondents out of

which 363 respondents were investing in mutual funds, and these

363 respondent‟s data was analysed to come out with conclusions.

A structured questionnaire was used to collect the data during

personal interviews. To understand the nature of holding by the

respondents, chi square test was used along with the calculation of

median and mode. After analysis of data, it was found that Gold

was the most preferred investment option followed by bank

deposits and fixed deposits. Mutual fund investment got average

score in parameters like safety,liquidity, reliability and tax benefits.

Majority of the investors were aware about the risk involved with

mutual funds. Direct equity investment was not the most preferred

investment avenue. Respondents preferred less risk products in

comparison to the risky financial products.

43

5. Giridhari Mohanta and S S Debasish (2011), conducted a study

on the investor preferences among the investors from the city

Cuttack and Khurda in Orissa. Sample size used for the study was

210 respondents, consisting of men and women residing in the

geographical area of the study. They used a structured

questionnaire consisting of 35 question for collecting the data. The

questionnaire had 12 questions regarding the demographic

attributes and 23 questions related to the various factors

influencing the investment avenue. A total of five investment

avenues were considered for the study, namely, equity shares,

mutual funds,insurance, bank recurring deposits and postal

schemes. Data was analysed using mean and percentage. Equity

investment was considered to be risky. The study found that

respondents having an annual income of rupees 10 lakhs and

above were willing to invest in equity market, whereas lower

income respondents preferred bank deposits and postal

savings.This is in line with the findings of Raja ram (2010) and

Ravi Vyas and Muoonat (2012) Further the study found a

relationship between occupation and Investment Avenue.

Business class respondents were willing to invest in equity and

mutual funds, whereas government employees preferred mutual

44

funds, insurance and bank deposits. Investors considered safety of

investment as a major criterion.

6. Umamaheshwari.S, Ashok Kumar (2011) carried out a study to

understand the investment pattern and awareness level of

individuals belonging to the salaried class from the city of

Coimbatore. A structured questionnaire was used to collect the

data during December 2010 to July 2011. Responses from 1000

respondents were collected over a period of eight months from the

areas of Valparai, Pollachi, Metupalayam and Coimbatore.

Statistical tools used for analysis were Chi Square test and

ANOVA along with mean value calculation. The awareness level

was divided into three types:low, medium and high. Classification

was based on the mean score obtained for the respondent. It was

found that the most preferred avenue of investment was provident

fund followed by insurance gold and Jewellery. The financial

product awareness level among men and women was low. Married

people had better awareness compared to the unmarried ones.

Savings and investment pattern were influenced by the education

level of the respondents. A strong correlation was found between

monthly income level and the number of dependents.

45

7. Gaurav Kabra, Prashant KMishra and Manoj Kumar Dash

(2010) carried out a study in order to identify the factors that could

influence investment decisions of individual investors. The sample

frame chosen for the study was the investors who had invested

regularly. Data was collected using a four-page questionnaire

containing questions related to demographic details and their

investments. A total of 196 completed questionnaires, found

complete in all respects were used for data analysis. The

consistency of the questionnaire was tested by calculating the

Cronbach Alpha. The statistical test used were standard deviation,

percentage, Kaiser-Meyer-Olkin measure, factor analysis and

regression. A total of 18 statements were identified to understand

the investment pattern of individuals. Using factor analysis six

component factors were identified. The factors were security,

opinion, awareness, hedging, duration and benefits. It was found

that there were no significant differences of opinion, security and

hedging among different age groups. There was significant

difference in the awareness level, benefit and duration among

different age groups. Women preferred investment product

carrying higher level of security in comparison to men. This is in

contrast to the findings of P. Parmashivivaiah, Puttaswamy and

46

Ramya (2013) where women did not consider security as a main

factor.

8. Sunita Bishnoi (2013) carried out a study consisting of 200

respondents from Faridabad, part of national capital region. It was

found that most preferred source of saving was life insurance

followed by deposits with banks, PPF and postal savings. This is in

contrast to Nupur Gupta and Vijay Agarwal (2013), who found

Bank deposits to be the most preferred investment avenue.

Occupational group and gender did not have impact on investment

objective. This is in similar to the findings of P. Parmashivivaiah ,

Puttaswamy and Ramya (2013).

Newspapers and magazines were the most preferred source of

information. Most of the investors preferred the investment horizon

of five years and more. Main investment objectives were safety of

capital followed by tax savings. Age, income and education were

found to have association with the investment objectives.

Respondents for the study were picked using convenience

sampling. A structured questionnaire containing questions related

to demographic details and the investment objective along with

investment preference was administered to the respondents.

Simple percentage calculations along with Chi square test was

47

used to analyse the data. This study reconfirms the association

between

9. Pandian L and Aranganathan T (2012) carried out a study in the

district of Cuddalore, to assess the attitude of the salaried people

towards savings and investments. To collect the data, a structured

questionnaire was used. Sample size for the study was 520

respondents. The respondents covered different age groups of

salaried class. The sampling technique followed was multi stage

sampling. To measure the attitude of investor towards savings and

investments, a five-point rating scale was used. To identify the

major aspects of savings and investments, factor analysis was

used. ANOVA was used to find the relationship among variables.

Major aspects of savings and investments were found to be to

have a secured life and good future. There is lack of push from

government to create savings habit. Past wrong investments also

had influence over investments and savings decisions.

10. Parimal Kanthi and Ashok Kumar (2013) carried out a study

in order tounderstand the investment holding behaviour of

investors from the city of Coimbatore. The sample size for the

study was 600, and the sampling plan used was convenience

sampling. A structured questionnaire was used to collect the data

48

from the respondents. Cluster analysis, and chi square test was

used for classification of the investors and to find the association

between the personality type and the investments held. Based on

the personality profile of respondents, they wereclassified as

Innovative, moderate and conservative investors. Most of the

investors were in the category of innovative and moderate. Most

preferred investment avenue for moderate investors was Post

office saving schemes followed by bank deposits and pension

schemes. This is in contrast to the findings Nupur Gupta and Vijay

Agarwal (2013) and P. Parmashivivaiah , Puttaswamy and Ramya

(2013) ofConservative investors preferred National Savings

Schemes (NSS) and were averse to chit funds. Innovative

investors were willing to invest in mutual funds and endowment

policies, bank deposits, postal savings,life insurance policies and

mutual funds. It was found that mutual fund and endowment policy

were independent of the personality type, whereas other

investment avenues under study were dependent on the

personality of the investors.

11. Buchaiah M. (2014) carried out a study to in order to

understand the perception of individual investors from the city of

Hyderabad, towards mutual fund investment. Sample size of the

49

study was 300. Data was collected from the respondents using a

questionnaire. Convenience sampling was used for picking up the

respondents for the study. Questionnaire contained questions

related to the demographic details and their perception about

mutual funds. Weighted mean value and percentage calculation

were used to analyse the data. The study found that investors

below the age of 40 years were more conscious about savings and

investments. Growth fund was the most preferred mutual fund

scheme followed by balance fund and income fund.

12. Karthikeyan K, Bharta S and Ranjit Kumar K (2012) carried

out a study to understand the perception of those investors who

were sold the mutual fund products by banks. The survey was

conducted in the city of Tiruchirappalli city in Tamil Nadu. The

sample size for this study was 108 and the method of sampling

used was convenience sampling. A five-point rating scale was

used to capture the response of the respondents. In the rating

scale, one stood for strongly disagree and five for strongly agree.

Questionnaires were distributed to only those respondents who

had prior experience in mutual fund investments. The statistical

tool used for the analysis were, factoranalysis, multiple regression,

correlation and reliability statistics. It was found that, before taking

50

investment decision investors take into account competitive

product offerings, quality of service offered, past return on

investment,safety, communication from fund house and

emergency need fulfilment.

13.Rajarajan (2000), conducted a study on investor demographics

and risk bearing capacity, using a sample size of 405 investors

from the city of Chennai. The variables used for the study were

age, occupation, family size, income and the current investments

made. The respondents were classified into four risk bearing

capacity categories R-I, R-II, R-III andR-IV based on the

percentageof investments in high risk assets to total financial

investments made by the respondent. High risk assets included

equity shares, mutual funds and convertible debentures. R-I had

no investments in risky assets, R-II and R-III had high risk

investment below 40 % and R-IV had more than 40% investment

in high risk assets. To analyse the association between the risk

bearing capacity and the independent variables viz. age,

occupation, family size and income, Chi square test was used. The

study found a strong relationship between the four independent

variables namely age, occupation, family size and income and the

risk bearing capacity of the investor. It also supported the earlier

51

studies carried out confirming the relationship between age and

income and investment pattern.

14. Tirupathi.T (2012) in his study to understand the tax planning

by individuals from Vellore district of Tamil Nadu found that, there

was lack of association between the age, marital status and

gender of the respondents as far as tax planning is concerned. A

Sample size of 750respondents was used for the study.

Convenience sampling was used for the selection of the

respondents. A structured questionnaire was used for collecting

the data. The study period was from July to December 2010. The

data collected were analysedusing, mean and standard deviation

along with simple percentage analysis, ANOVA and Chi square

test was used to find the association and relationship between the

variables under study. To measure the attitude a five point Likert

scale was used.

15. Aparna Samudra and Bhurghate (2012) carried out a study to

understand the investment behaviour among the middle class

investors from Nagpur. The study was carried out to examinethe

preference of the investment instruments and investment pattern

of the middle class households along with the objective of

52

investment. The investment options considered for the study were

Bank deposits,shares, mutual funds, real estate, Kisan Vikas

Patrika and post office deposits. A sample size of 300 households

was used for the study. Statistical tools like percentage and mean

were used for carrying out the analysis.

The study found that bank deposit was the most preferred

investment option followed by life insurance Investment in

provident fund and post office deposit were at the third and fourth

place.This is similar to the findings of Nupur Gupta and Vijay

Agarwal (2013).Real estate was found to be the least preferred

investment avenue. Investment in equity was not figuring in the

preferred investment avenue across all age categories.

16. Ramanujam.V and Chitra Devi K (2012) conducted a study to

analyse the impact of socio economic variables on the attitude of

investors towards investments. The sample size for the study was

100 respondents from the city of Coimbatore. The sample

consisted of respondents from different age group, educational

back ground income level and with varied level of awareness

about the financial products. A structured questionnaire was

administered for collecting the responses of the respondent.

Convenient sampling method was used for picking up the

53

respondents. To analyse the data,ANOVA, mean and Chi square

tests were used. It was found that the occupation of the

respondent and the frequency of making investment were not

significantly associated. The study did not find any relation

between annual savings of respondent and purpose of investment.

It was also found that, there was no difference in the investment

patterns of respondent‟s form government, public and private class

of investors.The findings of this study were different from most of

the other studies that found association between the nature of jobs

and income levels with the investment pattern.

17. Suyam Prabha R, (2011) carried out a study to understand the

Decision making process and pattern of investments by investors

from the city of Coimbatore. The sample size for the study was 109

respondents. Data was collected using a well-

designedquestionnaire. Data was collected during September –

October 2009. Respondents were selected among those who were

working in Bank,Non-Banking Financial Company (NBFC) in an

Information Technology (IT) company. Statistical tools used were

simple percentage analysis, weighted average score and Chi

square test. It was found that the selection process of a suitable

financial product depended on the,age,gender, marital status and

54

educational background, annual income and quantum of amount

saved annually.The main purpose of saving by married

respondents were towards child education. Employees of NBFC

firms were moderate risk takers and were investing in mutual fund

schemes. Bank deposit was the most preferred investment

avenue.

18.Kathrivel. N and Mekala.A (2009) carried out a study in

Coimbatore district to understand the women investors perception

towards on line trading. The sample size for the study was 150.

Convenience sampling was used for the selection of the

respondents. A well-structured questionnaire was used to collect

data from the respondents.Chi square test was used to find if there

is association between the desired variables and women investors

perception. Investment related variables included age,income,

educational qualification, occupation and number of dependents. It

was found that there was a significant association between age,

education qualification and time taken for investment

decisions.This similar to the findings of Umamaheshwari.S, Ashok

Kumar (2011). No significant association was found between

marital status and investment decision. This is similar to the

55

findings of Tirupathi.T (2012) but in contrast to the findings of

Suyam Prabha R ,(2011)

19. Vrushali Shah, Priyanka Zanwar and Pratibha Deshmukh

(2011) carried out a study to find, if there is any association

between the investment pattern and life cycle of rural investors.

The sample size for the study was 403 respondents from 13

villages from two taluka regions of Satara district from the state of

Maharashtra. Convenience sampling was used for the selection of

respondents. Classified data was processed using weighted

average, percentages and the hypothesis testing was done using

the Chi square test. Life stage of a respondent was divided into

eight stages of life and were classified as Bachelor stage, Newly

Married Couples, FN1, FN2, FN3, EN1, EN2 and Solitary.Where

FN means full nest and EN means empty nest. Classification was

based on the age, marital status and number of children. The data

was collected using a questionnaire during May to July 2008. The

questionnaire had questions regarding demographic

details,avenues of investment, objectives behind investments,

guiding factors to investment and source of information. It was

found that there was association between life cycle stage and

investment avenues and guiding factors. No significant association

was found between the life cycle stage and tax savings, safety and

56

future personal obligations. Post office savings and bank deposits

were the most preferred avenues of investments. Mutual funds,

equity were the most neglected financial instruments. Real estate

was of interest only in the early stages of life and weaned away

with age.

20. Patti Fischer (2010), used the Survey of Consumer Finance

(SCF), 2007 data to understand the gender differences in personal

saving behaviour. Sample size was 1171. Sampling frame for the

study were persons who were single and not married. This

criterion wasset to have clear understanding about the investment

decision maker. Statistical tools used were Likelihood ratio test

and Logistic regression analysis. The independent variables

included age,income, risk tolerance, preferences and consumption

needs. The respondents were classified as low risk tolerance and

average risk tolerance. Men and women differed significantly as far

as risk tolerance distribution was concerned. Over half of the

women were not willing to take financial risk. Difference between

men and women was found in short term and regular saving

behaviour. Women with poor health were likely to save less in

short term, whereas poor health condition did not play any role in

short term saving of men. Women had low risk tolerance.

57

Education level had positive relationship with the savings habit of

men.

21. Syed Tabaasum Sultana (2010) in her research work, studied

the Indian investors behaviour to understand the relationship

between the risk tolerance level, age and gender of an

individual.Researcherfound that investors were well educated and

earned well, but were poor risk takers. A negative correlation was

found between risk tolerance level and age. This supports the

findings of Srinivasan , Sakyhi K and Lakshmidevi S (2006).

Among all the sources of information, television was found to be

the most influencing source of information to make investment

decision for an investor. Over all investors have low level of risk

tolerance.

58

22.Lewlllen, W.G, Leas, R.C and Schlarbaum G.G (1972)

conducted a study to understand the investment strategy and

behaviour of American investors. The sample for the study was

collected from the client base of large retail brokerage houses. The

sample size was 972. Data was collected using a questionnaire

which solicited information on demographic characteristics, market

attitudes, investment objectives, portfolio strategies and asset

holdings. The dominant elements of the study were age, income

level, gender, marital status, family size and educational back

ground. Statistical tools used was regression analysis. It was

found that age influences investment behaviour. Older people

relied less on advice compared to younger respondents. Females

were more broker reliant. Higher income people are pre occupied

with professionals.

23. Clark and Strauss, (2008) found that women were more risk

averse in comparison to men. Based on age as a factor, the young

are willing to take a higher risk in comparison to the old.

Wealthier individuals were willing to invest in equity market in

comparison to poor who preferred risk averse securities.

59

24. Daniela Beckmann and Lukas Menkhoff (2008) conducted a

survey among the professional fundmanagers from USA,Germany,

Italy and Thailand. Questionnaires were sent to fund managers

through the respective investment associations. The questionnaire

contained questions related to the respondent‟s version of risk

behaviour, overconfidence along with demographic data. A total of

649 respondents filled the questionnaires and among them 125

were women. Mann-Whitney U test,mean,percentage were used

for analysis of data. It was found that women fund managers

showed risk averse behaviour. Women fund managers were found

to be overconfident and shied away from competition.

25. Srinivasan, Sakyhi K and Lakshmi Devi S (2006) in their

studies covering 13 villages with a sample size of 291 rural

investors, found significant relationship between percentage of

income saved and the gender. Study found no significant

association between the percentage of saving and age. It was also

found that, majority of rural investors invest in post office savings

followed by insurance and bank savings. Rural investor looks for

the safety of the capital.

60

26. Gnana Desigan C, Kaliselvi. S and Anusuya L., (2006) studied

the perception of women towards investment. The study focused

on the investment pattern of women investors. Their empirical

study found no association between age and level of investment

awareness. They did find significant association between

education level and level of awareness. The study found no

association between marital status and awareness.

27. Bajtelsmit, V.L, V.L, V.L and Jianakoplos.N.A. A (2001) carried

out a study to investigate the stock investing propensities of US

households. They used the data as reported in Survey of

consumer Finance, 1998 released by Federalreserve. The sample

size was 4305 households. For their analysis, the allocation by

household in financial assets only were considered. This brought

down the sample size to 3070 households.Investment in stock in

their study meant holding the stocks directly or indirectly through

mutual funds. Linear regression, and probity model were used for

analysing the data. Majority of the households holding defined

contribution plan held investments in stocks.On anaverage, those

households with stock holding are likely to be older, more

educated and more affluent.

61

28. Sundden and Surette (1998) with the help of data collected

from 1992 and 1995 Surveys of Consumer Finances, tried to study

whether demographic variables influence investments. The survey

sample size was 3906 in 1992 and 4299 in 1995. The

demographic variables used for the study were age, gender,

marital status, education level and the defined contribution plan

towards retirement savings plan of the respondent. The defined

contribution of the respondents was classified into three categories

1) Invested mostly in stocks 2) invested mostly in interest bearing

assets(bonds)and 3) invested with a split between stocks and

bonds(diversified). Descriptive statistics and multinomial logit

model were used to analyse the investment behaviour. The results

demonstrated that it is not gender alone that determines

investment choice, rather investment decision in asset classes

seems to be drawn more by a combination of gender and marital

status.

29. Somasundaram (1998) in his studies found Bank deposits to

be the most preferred investment choice followed by the chit funds.

Even though mutual funds gained popularity, Unit trust of India

schemes were out of favour with investors.Primary concern of

most of the respondents was about their children. Most of the

62

investors had invested in gold and silver. The main features

investors were looking in an investment product was safety and

regular income.

30. William Warren (1990) used demographics and life style

attributes to segment individual investors. The sample size for the

study was 152 respondents. Data was collected using

questionnaires which were mailed to households located in

southern metropolitan area in USA. The questionnaire captured

the details about the types of investments held, and the proportion

of investments between stocks and bonds. Other data gathered

were gender, marital status, education, number of children. Life

style measures were gathered by asking 29 life style statements.

Life style questions were based on agreement level on a scale of

one to five. Based on the amount invested, respondents were

classified as light (investment of $30,000 and less) and heavy

(investment above $30,000) investors. Statistical tool used was

Multiple Discriminant Analysis (MDA) to determine the relationship

between investment pattern and demographic and lifestyle

dimensions. His analysis showed that there was a strong

relationship between the marital status, number of children, age

and education level. He additionally found a relationship between

63

the life style characteristics of the respondents and the investment

pattern.

31. Suriya Murithi S, Narayanan B and Arivazhagan B (2012)

carried out a study to understand the investors preference towards

different investment alternatives available in the Indian market.

Sample size was 100 respondents. Sampling method used was

convenience sampling. Questionnaire was used to collect the data

from respondents belonging to the city of Trichy. Simple

percentage calculation, correlation andchi square test was used to

analyse the data. The two main reasons for saving was for

purchasing house and children‟s education. Bank deposits was

the most preferred investment avenue followed by mutualfunds,

gold and post office savings. Equity was the most avoided avenue

of investment. Safety of the principal was the top most priority for

most of the investors followed by low risk. Women investors were

found to prefer low risk products irrespective of their educational

background. Before taking an investment decision, investors

invariably consulted their family and friends.

32. Reshma Arora (2003), Gallop poll among male and female

investor in 2001, found that based on the UBS/Gallup index of

64

investor optimism, there was no difference in aggressiveness

between Male and female investors as far as future return on their

overall investment is concerned. Her findings are different from

many research studies which suggest that women are more risk

averse in comparison to men. In the UBS/Gallup

survey,respondents were asked to give details of the actual return

they earned on their investments in the past one year. In 2001, on

an average, female investors did better than their male

counterparts. The sample size for the survey was 1000 investors

from US and the age of respondents was above 18 years and the

survey was conducted during January 2000 to September 2003.

33. TamilKodi (1983) in her study found that small savings was

preferred by investors as it provided an opportunity for not only

men and women but for children to accumulate their savings.

During her study period the geographical reach for other savings

product was limited. With the current trends the small savings may

not find the appeal it had earlier.

65

2.1 Conclusion of Literature survey

Past research works reviewed were in the area of investments by

individuals. Barring few, majority of the research work taken up for

review were carried out in the south Indian cities and towns.

Literature review helped in understanding the investment pattern of

individuals, financial products preferred, risk tolerance capability of

individuals and the variables used for the study. It also helped in

identifying the sampling techniques used for collecting data and

the statistical tests used for testing the hypotheses. It was

illuminating to know findings of past researchers.

Influence of demographic variable on investment decision,

investment pattern, financial product preference, risk tolerance

was the focus area of researchers. Barring four researchers,

Majority of the researchers considered both women and men in

their studies.

It was observed that, studies related to women were focussed on

finding the Association between demographic attributes and risk

tolerance, liquidity,safety, product awareness along with the

identification of the most preferred investment avenue. Majority of

the Indian studies carried out used primarydata. Use of a

structured questionnaire was the most common method for

66

collecting data. Convenience sampling was used by most of the

researchers as far as Indian studies are concerned whereas

studies carried out in USA used the data of Survey of Consumer

Finance (SCF), released by Federal reserve periodically.

Demographic details collected by most of the researchers were

gender, age, marital status, educational background, income level

and family size.

Data was collected about the Sector of employment, nature of

employment, frequency of investment, savings percentage.

The investment avenues covered in the questionnaires in most of

the studies included Bank deposits, Postal schemes, Life

Insurance, Gold, Mutual funds, Equity and Real estate. Studies

conducted prior to 1995 had National savings schemes and Unit

trust of India Units as investment options. Chit fund as a savings

instrument was there only in two studies. Questionnaire used in

the current study covers all the above mentioned avenues of

investments. There were different ways in which investors were

classified by researchers based on the focus of their research

study. This knowledge was used in creating a method of

classifying investment pattern into three broad categories in the

current study.

67

Chi square and ANOVA were the statistical tests used by most of

the Indian researchers in testing hypotheses followed by

correlation,percentage and regression. Based on the above

findings and considering the type data collected , Chi Square test

and ANOVA test were found to be the most suitable tests to be

used for testing of hypothesis as far as the current study is

concerned.

For measuring the risk tolerance of individuals Likert scale was

used by most of the researchers. For the current study, to capture

the response of the respondentsfive point Likert is used to

measure the risk associated with different financial products.

Weighted average mean score is used to arrive at the overall risk

score by researchers . To measure the overall risk tolerance of

individuals, Weighted average mean score was found appropriate

for the current study.

Percentage calculation is usedfor identifying the most popular

avenues of investments in the current study.

Some common findings of the studies covered under literature

review are:

Investors preferred bank deposits in comparison to other mode of

savings.

68

In rural areas, investment in postal savings was common.

Gold and property were the most preferred physical assets.

The major purpose of saving is Children‟s education.

Investors were risk averse and were not willing to take risk.

Investor although being educated were not preferring to invest in

equities.

Mutual fund investment was popular only in major cities and

awareness level was poor in semi urban and rural areas.

Newspapers and Magazines were the main source of information.

Investors consulted their family and friends before taking

investment decisions.

It was found that most of the studies covered both male and

female respondents as well as households in general.

There was significant association between few demographic

attributes like age, marital status, educational back ground and

income level and investment pattern.

Findings of many studies were comparable where as some studies

contradicted the findings of earlier studies.

69

Literature review helped in identifying the popular financial

products to be used in the questionnaire along with the use of

different risk measurement techniques and statistical tests.

2.2 Research Gap

On the basis of the literature survey carried out, appropriate gaps

were identified which are discussed below.

There is lack of study related to investments held by employed

women and their classification based on risk tolerance.

Earlier studies missed out internet as source of information.

There was no clear demarcation between Jewellery and alternate

form of gold investment. Identifying the form in which gold

investment is made will help in identifying if Gold purchase is for

consumption or investment.

No attempt was made in earlier studies to capture the financial

literacy level of women investors.

The appropriate gaps identified based on the literature review are

taken up in the current research study. Appropriate questionnaire

was created to capture additional parameters not covered in earlier

studies.

70

Necessary changes if required were made in the research

methodology in comparison to the past studies, so as to meet the

objectives of the study.

71

Chapter – III

INVESTMENT AVENUES

Everywhere people talk about money. Every individual, corporate

or government will be earning and spending money. It is difficult for

these entities to match their earning and spending that is earning

and spending will not be equalalways. The difference between

earning and spending creates imbalance, which leads to either

saving or borrowing. Spending more than earning will lead to

borrowing and spending less than the earning will lead to saving.

What someone does with the savings could differ from person to

person. Someone may keep the excess money at home,

whilesomeone may invest the savings. The main purpose of

saving is to meet the need of money in future. Some needs could

be anticipated like buying a vehicle,house, education needs of self

or children, whereas medical emergencies are unpredictable. This

trade off of between present use of money against a future

anticipated or unanticipated requirement of money is the reason

for savings. Every individual expects the savings to grow to a

higher value in future in comparison to the present value of the

savings. To attain this objective, savers look for avenues where

72

their savings could be parked or invested. This process of

committing the money currently available, for a certain period of

time to derive higher future value is called investments. There

could be difference in the way an individual handles his savings in

comparison to how it is handled by a corporates or a government.

How an individual handlesmoney, could depend on multiple

factors, including his or her demographicprofile? There are many

avenues available for investment for an investor. Chapter one

contained details about different asset classes and their features.

Here a brief description of common investment products available

under different asset classes are given. This will help in

understanding the features available in each product which could

influence the investment decision of investors. Financial world

offers a very wide range of products. Brief on products identified

as per literature survey and the surveys by government

agenciesnamely:NCAER,IRDA,SEBI, PFRDA andRBI are given in

the sections below. These products are used for classification of

investment holding of the respondents.Additional sub classification

of products is also done in the research questionnaire for better

understanding.

73

Various products under different Asset Classes

3.1 Banking Products

Banks offer multiple products for their customers. In the present

market scenario, banks not only offer their own products, but also

distribute third party products. The most common banks own

products offered to anindividuals are:

3.1.1 Savings Bank Account

Most employed individuals receive their salary through bank

accounts maintained by them. The most common type of account

held by individuals with banks is savings bank (SB) account. The

account holder can deposit and withdraw money from his or her

account at any time. The balance remaining in the savings bank

account earns a nominal interest. Majority of the banks offered

around four percent per annum interest during the period of the

study. The surplus money of an employed person gets

accumulated in the savings bank account. In general people prefer

to have account with a Government owned public sector bank

assuming that they are highly secured. Private banks are also

popular due to the quality of service offered and the variety of

services offered by them. Cooperative banks are popular in semi

urban and rural areas.Due to the interlinking of the branch

74

networks, it is easy for an individual to operate the account without

geographical restrictions.

3.1.2 Bank Fixed Deposits

Banks offer individuals to open fixed deposits (F D) also called as

term deposit. This is one of the popular form of investment, by

individuals. Fixed deposits can be opened by any person by

depositing the minimum amount specified by the bank. The deposit

holders have to specify the time period of the deposit, with the

minimum period of deposit being 15 days by most of the banks.

Bank fixed deposits offer a higher interest rate than the savings

bank account. Banks offer different interest payment options

starting from monthly,quarterly, semi-annually or annually. There is

an option for cumulative deposits, where in, at the time of maturity

of the deposit the principle and the accrued interest is paid. Fixed

deposits with the bank are popular among investors due to the

flexibility of choosing the amount and the term period of the

deposit. The amount of interest earned in a fixed deposit is taxable

in the hands of the deposit holder. Government allows certain tax

benefits for the notified five year deposits with the banks. To

compare the returns across different asset classes and to evaluate

the risk premium in comparison to bank deposits and the influence

75

of interest rates on the investment decision the State Bank of India

(SBI) fixed deposit rates for the period 2010 to 2014is provided in

table below.

Table 3.1

Fixed Deposit rates

Year 2010 2011 2012 2013 2014

Rate in % 6.0 7.8 9.3 8.5 9.0

Banks alter the fixed deposit rates based on therepo rate

announced by Reserve bank of India (RBI).

3.1.3 Recurring Deposits

Banks offer to its customer, an option to deposit a pre specified

sum of money periodically for a specific time period under

recurring deposit (RD) schemes. The most popular period of

regular deposit is monthly. At the end of the recurring deposit

period the amount accumulated along with the interest earned is

paid to the depositor. Recurring deposit account is very popular

among small investors who want to accumulate a large amount

after a specific time period to meet their financial goals. Many

customers open the recurring deposit in the name of their children

76

to meet their educational needs.Recurring deposit is one of the

methods to inculcate the saving habit in children.

Banking products are not negotiable. They do offer nomination

facility. Interest rate offered for fixed deposit is announced in

advance and changes from time to time based, on the monetary

policy announced by Reserve Bank of India. For many investor,

the investment activity starts with banking products.

3.2 Company Deposits

Indian companies raise money from public through term deposits

to meet their financial needs. Term deposits are offered by

companies for various term periods starting from one to three

years with an option to pay the interest on semi-annual basis,

annual basis or on cumulative basis. The interest rate offered for

such term deposits are higher than the interest rate offered by

banks. These deposits carry a higher risk than bank deposits as

there is always a possibility of the companies defaulting in the

payment of interest on time as well as if the companies financial

deteriorate, then, there is a risk of losing even the principal

amount.

77

3.3 Postal Department products

Postal department has a very large presence in India across all

cities and villages. Postal department in addition to postal

collection and delivery of post offers a wide range of services. To

cater to the needs of the individuals, post offices offer savings

accounts in a restricted way, like a regular bank account holder.

Interest is paid to the postal savings account holder at a pre

specified rate.

.

3.3.1 Postal Deposits

Like a bank, post offices offer fixed and recurring deposit facility.

These are very popular among young and elderly investors. With

the increase in the internet penetration and limited investment

products offered by postal department, there is gradual decline in

their business as far as savings products are concerned.

3.3.2 National Savings Certificate

Popularly known as NSC. Investor has an option to buy National

Savings Certificate (NSC) from post offices, which allows an

investor the tax benefit under section 80C. Encashment of the

savings certificate before the due date is not allowed.

78

The two important form of investment that attracts the interest of

employed persons due to the tax benefits are contribution to

provident fund and Life Insurance policies. These are long term

investment products. National pension scheme (NPS) offered by

government is also available for individuals, NPS has not seen the

desired level of participation by individuals due to lack of

awareness and knowledge about the product.

3.4 Provident Fund

There are two ways to participate in the provident fund schemesfor

an individual.

3.4.1 Employee Provident Fund (EPF)

Contributions to provident fund of an employee by the employer

arecompulsory, if the number of employees in a firm are 20 or

more. Employers come under the Employees Provident Funds &

Miscellaneous Provision Act, 1952. As per the Act, the

employer‟sstatutory rate of contribution is 12% of emoluments

(basic wages, dearness allowance, cash value of food concession

and retaining allowances if any,) of the employee. A matching

contribution from the employee is mandatory. In case the member

wants to contribute more the minimum prescribed amount, then

he can do so at any rate he desires. i.e. up to 100% of basic and

79

D.A. But the employer is not bound to contribute at the enhanced

rate. At present the different schemes available are Employees

Provident Fund Scheme, 1952, Employee Deposit Linked

Insurance Scheme,1976 and Employee Pension Scheme, 1995.

The rate of interest for such contributions are fixed by

government. This rate of interest applicable for provident fund is

announced every year and changes based on the prevailing

economic conditions. The prevailing interest rate (2013 – 14) is

8.75 %

3.4.2 Public Provident Fund

Individuals who are not eligible to open EPF account can open a

public provident fund account (PPF). Every year, an individual can

deposit a maximum of Rupees one lakh fifty thousand in this

account. The public provident fund is one of the top choices for

many to save tax. The interest offered under PPF are monitored

and maintained by the Government. The interest rate is linked to

the bond yield in the secondary market. Currently savings in PPF

earn 8.75 percent interest. The PPF offers investors a lot of

flexibility regarding the amount of investments, it can be as low as

Rs. 500 and can be as high as rupees one lakh fifty thousand.

This is a long term product.The account can be closed only at the

80

end of fifteen years from the date of the deposit made into the

account.

Interest earned under provident fund schemes are not taxable and

can be opened in the name of spouse and minors, but the total

contribution cannot exceed the limit set by the government.

Table 3.2 provides a comparison among the PPF, EPF and 5-year

deposit with banks qualifying for tax benefits.

Table 3.2

Tax saving products returns

Financial

year

SBI 5 year

deposit

PPF EPF

2005 – 06 6.50 % 8.0 % 8.50 %

2006 – 07 7.21 % 8.0 % 8.50 %

2007 – 08 8.33 % 8.0 % 8.50 %

2008 – 09 8.80 % 8.0 % 8.50 %

2009 – 10 7.67 % 8.0 % 8.50 %

2010 – 11 7.87 % 8.0 % 9.50 %

2011 – 12 9.11 % 8.6 % 8.25 %

2012 – 13 8.65 % 8.8 % 8.50 %

2013 – 14 8.83 % 8.7 % 8.75 % Source: Bloomberg, RBI,EPFO, Economic Survey 2013 – 14

3.5 National Pension Scheme

Every individual is in need of financial stability and security during

old age. Not all citizens are covered under pension schemes. To

meet the needs of citizens, Government of India launched the

National Pension System (NPS) on 1st January, 2004 with the

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objective of providing retirement income to all the citizens. NPS

was initially launched for government employees not eligible for

pension. From May 2009, it is open for subscription to all. Main

aim of the NPS isto inculcate the habit of saving for retirement

amongst the citizens. The fund collected under NPS is managed

by pension fund managers shortlisted by the government.

The return on investment under NPS is based on the performance

of the pension fund managers. This product is still not very popular

among individuals due to lack of awareness and being a new

product has its own challenges of acceptability.

3.6 Bonds

A bond is an instrument of debt and resembles a promissory note.

The issuer of the bond pays a specified amount to the holder of the

bond at specified future dates as mentioned in the bond indenture

at the time of issue. The payments which are made to the bond

holder are the periodic interest payments and the redemption of

the principal amount at the time of maturity. Interest is payable half

yearly once or annually once, depending on the terms specified.

Payment once in six months is the most common periodicity of

payment of interest followed by the bond issuers. Bonds are

issued by central or state Government, financial Institutions, utility

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companies (like electricity boards, railways etc.) and by private

sector companies.

In India we use the word „Debentures‟ for the long term debt

instruments issued by non-government corporates and use the

word „Bond‟ for these securities if it is issued by government or

government assisted entities. Basic features of a bond are

Par value or the face value

A bond has a par value that is given on the face of the bond.

This is the amount the firm promises to pay at the termination of

the bond. It is similar to the face value of an equity. Generally,

bonds traded on the exchanges are of face value of Rs.100 or

Rs. 1000. For private placements, the bonds could be of higher par

value.

Coupon Rate

Coupon rate means the interest rate that the bond carries. The

bond holder gets this interest on the pre specified dates at the time

of the issue. The most common being the semiannual coupon

payment.

Tenor

Tenor or the maturity period as it is called popularly, is the time

period till when the bond holder receives the interest. At the end of

the tenor, the par value with or without premium is paid back by

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the issuer of such bonds to the bond holders. Tenor of the bond is

one of the important criteria while taking a decision to make

investment in bonds.

Bonds are classified into different categories based on the term to

maturity.

1. Long term Bonds: When the maturity period of the bond is more

than 10 years.

2. Medium term Bonds: When the maturity period is 5 to 10 years.

3. Short term Bonds:When the maturity period is less than 5 years.

Bonds are also classified based on the embedded options if any,

available for the bond holder. Various types of bonds available in

the market are:

Straight Bond (Plain vanilla bond) that pays a fixed periodic

coupon over its life and is not convertible. Popularly called as Non-

Convertible Debentures (NCDs), if issued by Corporates.

Zero Coupon Bond: These bonds do not pay any interest till the

maturity date. They redeem the bond on face value at the end of

the term. To compensate for the nonpayment of interest, these

bonds are issued at a deep discount to their face value.

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Floating Rate Bond: These bond do not offer a fixed rate of

interest but the coupon rate is linked to the prevailing market rate

of interest. The benchmark interest rate is specified at the time of

the issue.

Convertible bonds: These are special types of bondsthat convert

part or total face value of the bond into equity after a certain period

of time as mentioned at the time of issue. Interest is paid till the

date of conversion. Based on the proportion of the face value

converted into equity shares, they are classified as partly

convertible debentures (PCDs) or Fully ConvertibleDebentures

(FCD).

3.6.1 Infrastructure bonds

To give boost to the infrastructure of the country, Government

allowed infrastructure companies to issue long term bonds with tax

benefits for a limited period. These bonds were launched in 2009

and were discontinued in 2012. These bonds are regular bonds

and have all the features of any conventional bond except that up

to an investment of Rs. 20000 tax benefit was available, over and

above the 80 C benefit of Rs. 1 lakh.

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3.6.2 Inflation Index Bonds

To encourage the retail investors into the bond market,

Government launched the inflation adjusted bonds that paid

interest to the bond holders based on the inflation level. Market for

inflation index bonds in India is in a nascent stage as far as India is

concerned.

Bonds are exposed to interest rate risk that is, interest rate

variationduring the life time of the bond. Credit risk is another

source that is important in determining the expected returns for

bonds as there is a possibility of failure of payment of interest and

the face value, if the financials of the companies become weak

before the maturity of the bonds.

Due to the lack of product knowledge and awareness level about

the functioning of the bond market. It is not very popular among

retail investors in India. This market is dominated by banks and

financial institutions including, Foreign Institutional Investors (FIIs).

Table 3.3 gives details about the 10-year government bond returns

for the last five years. As of now not much data is available about

inflation index bonds as it‟s a new product launched recently.

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Table 3.3

Return on government bonds

Year 2010 2011 2012 2013 2014

Return 7.6% 7.9% 8.6% 8.1% 8.8% Source; RBI bulletin and Bloomberg

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3.7 Insurance

Insurance offers protection against pure risk. Pure risks are

accidental and unintentional. All pure risk is considered by

insurance companies for providing insurance cover. It is possible

to estimate the loss in case of pure risk, and the original status of

the asset could be restored in case of non-life covers. Speculative

risk that has chance of either gain or loss cannot be insured. There

are different types of insurance products available in the market.

To provide the insurance cover, individuals have to pay premium

to the insurance company.

All types of pure risk Insurance covers are classified broadly into

two categories:

i) Non-Life or General Insurance products

ii) Life Insurance products

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3.7.1 Non-Life Insurance products

This type of insurance covers all assets other than the human life.

Non-life insurance covers are annual contracts that have to be

renewed every year by paying the requisite insurance premium.

The most popular insurance covers for assets owned by

individuals are:

Motor Vehicle Insurance

This type of insurance covers the motor vehicles owned by an

individual against theft and accidental damages. The motor vehicle

owned could be two wheelers, cars or any other vehicles eligible

for cover including trucks and busses. In case of accidents, if the

vehicle is in a repairable condition then the cost of restoring the

vehicle to its pre accident condition is borne by the Insurance

company. In case of total damage or theft of the vehicle, the

Insured declared value is paid to the owner of the vehicle. In India

motor vehicle insurance is mandatory for all vehicles plying on the

road.

Home Insurance

In this type of Insurance, the contents of the house and if required

the building itself can be insured against damage caused by third

party or due to the fury of the nature. The contents in the house

are covered for accidental damages and theft.

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There are insurance policies available to cover housing loans

which are of great importance for individuals, if there is an

outstanding loan against the residential property and in the

eventually of the death of the borrower, insurance company pays

to the bank the outstanding amount and the dependents have the

secure ownership of the residential property.

Health Insurance

This types of policy covers the medical expenses incurred by

insured person in case of hospitalization due to medical problems.

This is one of the most important cover an individual should

consider during financial planning. Most of the employers provide

health insurance to the employees under group health insurance

cover. As long the individual is employed with the company, the

cover is in force, but once a person leaves the job the insurance

cover lapses. Any expense above the insurance cover amount

has to be borne by the insured person.

3.7.2 Life Insurance

Life Insurance is a protection product which forms an integral part

of an individual‟s financial plan. Life insurance provides monetary

cover against the life of the insured. Since the value of the human

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life cannot be assessed, Insurance companies provide the

monetary cover is in terms of sum assured by the insured at the

time of taking the policy. Life insurance substitutes for the loss of

income in the event of the death of the wage earner. In case of the

death of the insured person, the sum assured is paid to the

dependent of the deceased.

The sum assured depends on many parameters like age of the

insured, current earnings, health condition of the persons and

many other parameters as specified by the insurance companies.

Based on the information provided by the individual, insurance

companies will calculate the premium payable by the insured. Life

insurance contract are a long term contract and the contract period

depend on the age of the insured. Regular payment of the

premium till the contract period is mandatory. In case of the default

in payment of the premium by due date, the insurance cover

ceases to exist. The person defaulting in the payment of premium

will get only the surrender value as per the terms and conditions of

the policy.

There are many types of life insurance products which are offered

by the insurancecompanies. They all provide life cover, but have

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different conditions and maturity benefits. The types of polices

which are popular are

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Term Insurance

Term Insurance provides protection against death in monetary

terms for a specific period of time, also called as policy period. It

has no maturity value in case the insured person survives after the

term period of the insurance. The sum assured is payable only in

case of the death of the insured during the period covered by the

policy. The premiums charged by the insurance companies are the

least for term insurancepolicies.The premium amount remains

same throughout the policy period. It is appropriate for young

people who need large amount of insurance and those who are

need of only life protection and whose insurance needs will

decrease over time.Many housing loan providers insist the

borrower, to take term insurance matching the housing loan term

and the sum assured is equivalent to the housing loan amount.

Being the cheapest form of life insurance, the premium also is less

for the borrower. The only disadvantage of term insurance is that

at the end of the policy period the insured does not get anything.

Whole Life Insurance

This kind of insurance policy not only provides life cover but also

has some savings element inbuilt, wherein at the end of the policy

period some cash payment the insured person in case of

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survival.The premium charged is higher than the term insurance

policies. The Insurance premium amount remains same

throughout the policy period. The amount received at the end of

the policy period is not taxable. The policy period generally ends

when the insured is close to retirement age. This amount received

at the end of the term period helps at the time of retirement.

Money back policies

Another important type of policy available in the market is the

money back policy. This policy provides life cover as well as cash

payment during the term period of the insurance. A fixed amount of

premium is paid every year to enjoy the life protection and at

specified intervals as mentioned in the insurance policy, a certain

percentage of the sum assured is paid.For example, if some on

takes a rupees one lakh cover for a period of 15 years, then under

money back policy, the policy holder mayreceive 25% of sum

assures at the end of 5 years, 25% at the end of 10 years and at

the end of the period receives the balance of 50% (Rs. 50,000).

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3.7.3 Unit Linked Insurance Plans

There is always a debate from individuals about the poor return

they get from traditional insurance plans, forgetting that it is a

protection product rather than an income generating product. To

meet the market demand for an investment product, insurance

companies came out with a unique plan which combined the life

cover along with the market return. Such a product offering dual

benefit is known as Unit Linked Insurance Plans (ULIPs). ULIP is

actually a bundled product, that not only provides life insurance

cover, but also allows the policy holder to participate in the capital

market. They put insurance and investments together.Like any

other insurance product, you have to pay insurance premium. The

premium collected is split into twoparts, one part going for

providing the term insurance cover and the second part is invested

in the units of debt, equity or liquid funds. The choice of funds

where investment has to made is given to the policy holder.

The amount going towards the term insurance cover depends on

the sum assured. Generally,only a small portion of the premium

goes towards the term insurance coverage as it is the cheapest

policy,whereas the major part of the premium is invested in the

investment schemes participating in the capital market. Since the

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major part is invested in capital market products, the return on

investment for this amount could be higher than the return on

traditional insurance products depending on the market conditions.

The Net Asset Value (NAV) ofunits of each fund is made available

to the investor periodically. The value of investments in each fund

is calculated by multiplying the NAV of the scheme by the number

of units held by the policy holder. ULIPs come with a lock in period

of 5 years, which means that for the first five years you cannot

withdraw your money. Insurance companies allows the policy

holder to switch between funds as and when required. In case of

the demise of the policy holder during the policy term, the sum

assured under term insurance is payable along with the fund value

as on the date of the claim.

3.7.4 InsurancePension Plans

With the demand for new products, many insurance companies

are offering pension plans. This product is created to meet the

retirement plans of people. Like any other whole life policy, regular

premium has to be paid till the policy term ends. During the policy

term, life cover is provided by the insurance company. The

insurance cover ceases at the end of the policy term and the

amount due to the policy holder is invested that gives regular

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income by way of dividends, and the income generated from such

investment is paid to the policy holder periodically. The periodic

sum paid amount acts like a pension a for the policy holder. This

product does face competition from other non-insurancepension

schemes available in the market.

All insurance products get the income tax benefit under section

80 C. The amount received on maturity is not taken into account

while calculating the taxable income of an individual.

Insurance companies do provide riders where in by paying

additional premium on top of the regular premium, the sum

assured under specific situation increases and added benefits are

provided to the dependents. The popular riders in the market are

double accident cover, premium waivers cover, family pension

cover and critical illness cover.

Insurance companies provide a variety of options like monthly

payment, quarterly payment, semi-annual payment, annual

payment and for some product onetime payment is also allowed.

In onetime payment or a single premium policy, the amount

involved is high. Most of the single premium products start with

rupees fifty thousand onwards and is a very useful product for

individuals whose earnings are high for a shorter duration, like film

actors and sports persons.

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3.8 Mutual Funds

In India, the Mutual Fund industry started with the setting up of

Unit Trust of India in 1964. Public sector banks and financial

institutions began to establish Mutual Funds in 1987. The private

sector and foreign institutions were allowed to set up Mutual Funds

in 1993.

Mutual funds are collective investment schemes, where a large

number of investors having a common investment objective pool

their money for investments. Mutual funds are sponsored by

investment institutions which act as investment conduit. The

sponsoring company appoints an Asset Management company

(AMC) to invest the money collected from the investors. The

amount pooled in by the investors is invested in asset classes as

per the investment objective of the mutual fund scheme under

which the money iscollected.The amount is handled by a fund

manager designated by the asset management company. The

fund manager invests this pool of money in securities, ranging

from shares and debentures to money market instruments or in a

mix of equity and debt, depending upon the objectives of the

scheme to ensure good returns from the fund for the investors

There are many reasons why people invest in mutual funds.

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The common reason cited are

Professional expertise

Diversification

Cost

Liquidity

Transparency

Flexibility:

Tax-saving.

Well regulated market

3.8.1 Mutual funds Classification

Based on the structure, mutual funds are classified as:

a) Open - Ended Schemes

An open-end fund is one that allows for subscription and

redemption all through the year. There is fixed maturity period.

Investors can buy and sell units at Net Asset Value announced on

daily basis. Liquidity is a key feature of open-end schemes.

b) Close - Ended Schemes:

A closed-end fund has a pre specified maturity period which

ranges form from 3 years onwards. Investors can subscribe for the

units at the time of New Fund Offer (NFO). Subsequently the

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buying selling of units take place through the stock exchanges

where they are traded. At the end of the maturity period, the units

are redeemed based on the net asset value. These kind of

schemes are prescribed for long term investors. Many fund hoses

convert the close ended schemes to open ended schemes after

the lock in period to provide liquidity for the investors.

c) Interval Schemes:

These are a combination of open ended and close ended

schemes. After the initial issue of units during the public offer, the

units are traded on the exchanges like a close ended fund and are

open for issue and redemption at pre specified intervals. Liquidity

is a major concern for such schemes.

Mutual funds are also classified based on the investment objective

of the schemes as:

Equity Funds

In this kind of funds, a major corpus of the amount collected from

investors is invested in equity shares. The type of companies in

which investment is made is very important, as based on their

market capitalization (Cap), equity funds are classified as

Large Cap Fund

Mid Cap Fund

Small Cap Funds

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Debt Funds

The major part of the corpus under these schemes are invested in

fixed income securities like debentures and bonds issued by

corporates and government. The major objective is to have

regular income by way of interest from these investments. These

funds carry a lower risk in comparison to equity oriented risk.

There is some amount of risk as corporates could default in

payment of interest or repayment of principal. These funds offer a

lower rate of return due to reduced risk. Schemes that invest only

in government securities are also called as gilt funds. The amount

received as interest from their investments by fund houses is

distributed as dividends to the unit holders. This feature of regular

income by way of dividend attracts many investors towards debt

funds. Debt funds are taxed differently in comparison to equity

funds.

Liquid Funds

These funds invest in money market instruments which have a

shorter term of maturity and are highly liquid. The fund charges

are very low in comparison to other mutual fund schemes. The

major portion of investment goes into treasury bills, commercial

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papers, certificate of deposits and short term debt instruments.

The interest received from these investments are distributed as

dividend on monthly basis by most of the schemes. This scheme

is very popular among banks and corporates for temporary

parking of funds. These are low yielding funds carrying the least

risk among all mutual fund schemes. Retail participation is poor

due to lower returns.

Balanced funds

To capture the return of equity funds and the lower risk of debt

funds, fund houses offer balanced funds. These funds invest in

both equity and debt market instruments. The investment in debt

goes upto 40 -60% depending upon the market conditions. Tax

treatment of these funds depends on the percentage of corpus

invested in equity. if the amount of investment is 65 % and above

in equity, then all tax laws applicable to equity schemes is

applicable. These schemes are suitable for investors who do not

want to take excessive risk and are looking for moderate returns.

Index funds

The investment objective of such funds is to replicate the

performance of bench mark indices available in the market. The

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corpus collected under the scheme is invested in the equities of

companies constituting the index. The investment in each

constituent stock is in proportion to its weight in the index. The

most popular benchmark index replicated is Bombay stock

exchange index,Sensex, consisting of 30 companiesshares and

National stock exchange index,Nifty, consisting of 50 shares.

These funds have low operating expenses and charge a lower

management fees for running the scheme. These schemes offer

returns closer to the index or market returns. This carries the

market risk and is found suitable for those who would like to

generate the market return for any given year. These funds are

still not very popular due to the lack of awareness and the

knowledge about the product.

3.8.2 Exchange Traded Funds (ETF)

Popularly known as ETF, these funds are traded on the

exchanges like any other share.

The basic objective of an ETF is to track a specific asset class. If it

is equity then, it tracks the performance of the specified index,

exactly like an index fund. If it is gold, then it tracks the price

movement of gold. The most popular ETF‟s are that of

Nifty,Sensex and gold.

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The biggest advantage of ETF over the regular mutual funds is

that traders can go long and short on these ETFs during the

market trading hours. Investors cannot go short on Mutual funds.

Gold ETF is one of the most popular form of investment in gold

world over as it has many advantages over buying physical gold.

Some benefits are that it can be held in electronic form, while

selling you pay only the brokerage and no wastage is charged as

in the case of physical gold and are highly liquid.

3.8.3 Equity Linked Saving Schemes

To give an alternative choice to the tax payers, Government of

India has given tax benefit under section 80C to certain types of

mutual funds schemes,that are called as Equity linked savings

scheme (ELSS).

There are many schemes which are created to meet the growing

demands of investors and are named based on the objective of the

schemes like thematic funds, international funds, hybrid funds,

multi asset funds.

3.9 Equities

Equity investment also known as investments in shares, which

means investing one‟s money in a companyshare to become its

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shareholder. Since running a business involves risk, investing in

equity shares carries a higher level of risk with a potential of higher

returns when compared to investment in debt instruments. Shares

of listed companies are traded on stock exchanges.

Some of the benefits of owning shares are

Possibility of increase in market price (Capitalappreciation)

Entitlement for any corporate action announced by the company

Tax benefit under long term capital tax

Historically stocks have given better inflation adjusted returns

compared to other asset class

Transparency in the information about the stock price

Highly regulated by Securities Exchange Board of India

The return from equities could be in form of appreciation in the

share price,dividends orboth. In spite of all the benefits of stock

investing, there are some drawbacks of stock investing like

Possible decline in stock prices

Manipulation in stock prices

Company going into liquidation

Poor liquidity in the stock market

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Investments in equity is very poor in India due to lack of

awareness about the equity market and its functioning. Mutual

funds do provide an opportunity for participating in the equity

market in an indirect way. Many investors first invest in mutual

fund before investing in the equity market directly. Stock

investment is popular among the investors from major cities in

India.As the current study covers major cities of south, it will be

useful to look at the stock returns over last few years. Proxy to the

stockor return on equity investment is the return on stock index.

CAPM model discussed earlier uses NSE Niftyor BSE Sensex

returns as RM. Mutual funds use benchmark index set during the

launch of various schemes for performance evaluation. Return on

popular stock indices used by investors is given below.

Table 3. 4

Stock Indicesreturns (in %)

Index 2010 2011 2012 2013 2014

BSE Sensex 17.4 -24.6 25.7 9.0 28.7

BSE 100 15.7 -25.7 30.0 5.9 30.7

BSE 200 16.2 -27.0 31.0 4.4 33.6

BSE 500 16.4 -27.4 31.2 3.3 34.9

NSE Nifty 17.9 -24.6 27.7 6.8 30.1

BSE mid cap 16.1 -34.2 38.5 -5.7 50.9

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BSE Small cap 15.7 -42.6 33.0 -11.2 66.3

Source: Business standard 29/12/14, BSE and NSE websites

3.10 Derivatives Market

India was a late starter in offering derivative products. Instruments

traded on this market are basically leveraged. These instruments

derive their value from the underlying assets. The main

participants in this market are hedgers, speculators and

arbitragers. There is a tremendous growth in the volume of trade

in the derivative segment of NSE and BSE, but Speculative trading

in derivative markets is very risky as the deals are highly

leveraged. Various derivatives available on NSE and BSE are

Futures for single stocks and Index

Call and Put Options for single stocks and Index

This market is popularly called as F&O market standing for Futures

and Options market

3.11 Chit Funds

Chit funds are an avenue of saving for many individuals.

Individuals keen on investing in chit funds have to become

member of a group formed by the chit fund company. Group

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members pool in their money with through the chit fund companies

who conduct an auction once the contributions are collected from

members of the specified group. Bids are called from the members

for taking the chit amount, which is the collected pool of money.

Whoever makes the most attractive bid is handed over the pooled

money after deducting the commission payable to the participating

members. For example, if there are ten members in a chit group of

1 lakh, and if in the auction, the best bid is at Rs. 85,000, then the

bidder gets tis amount and the remaining amount of Rs. 15,000 is

divided among the members, that is Rs. 1000 per member. There

may be slight variations in the way chit auctions are conducted run

by registered and unregistered chit fund companies. Most of the

chit fund companies are small and medium enterprises. Despite

scores of scandals and bad publicity, chit fund continues to be well

accepted by investors. According to some investors, chit funds

provide better returnsthan many other instruments available for

investments. The biggest advantage of this product is the it

provides a lump sum whenever needed, and the amount received

could be paid back in smaller contributions to the chit group The

funds are available at better interest rate in case of chit funds

when compared to micro financial institutions. The unorganised

chit fund market is large and growing. In many rural and semi

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urban areas, chit fund is the most popular mode of saving as well

as borrowing. Small traders and businessmen participate

extensively in chit funds. It is very popular among the southern

states of Tamil Nadu, Andhra and Kerala. In Karnataka, one of the

state organisation itself runs chit fund schemes.

3.12 Gold

Gold and Indian savings habit go hand in hand. Importance and

significance of gold in India starts from the birth of child, where

gifting of gold jewellery is a must for most of the families. Indian

are obsessed with gold. Irrespective of the financial and social

status, gold is held by most of the Indian families. Investment in

gold is considered to be a safe haven world over. Physical gold

canhave purchasedin variousforms, starting from gold coins,bars,

jewellery. Today investors have the option to buy gold either in

paper form or in electronic form.

E-Gold can be purchased from National spot exchange, that allows

you to purchase gold in smaller denominations such as 1, 2 or 3

grams. The purchases can he held in electronic form in an

individual‟s D‟Mataccount.

Gold can be purchased in electronic form as gold ETF‟s either

through the fund houses that creates these ETF‟s or from the stock

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exchanges where they are traded like any other ordinary share.

ETF‟s require you to hold a D‟Mat account as the ETFs are

credited always into your D‟Mataccount.

Gold if purchased could be considered for consumption purpose or

could be considered for investment. Return on gold investment is

only in form of appreciation in the price. Return on gold

investments is given in table 3.5

Table 3.5

Return on Physical gold(10grams’ coin)

Year 2010 2011 2012 2013 2014

Return (in%) 23.3 32.1 12.1 -4.1 -7.3 Source: Business standard 29/12/14, MCX website

3.13 Real estate

Every one dreams of owning a house.A house where one lives is

considered a personal asset. When there is purchase of second

house or any other form of real estate, then it could be considered

as an investment. From the view point of an investor, real estate is

broadly classified as

Residential Property

Commercial Property

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Agricultural land

Time share in a holiday resort

Residential property and Commercial property are investments

that provide returns in form of rent and capital appreciation

because of the price change.

Ticket size of Real estate investments is on a higher side when

compared to other forms of investment. Legal process involving

the authentication of the title of the property and the cost of

registering it are the two major issues which sometimes makes it a

poor choice among the middle class investors. Liquidity is a

challenge, which can deter an investor from going ahead with real

estate investment.

Real Estate Investment Trusts (REITs) is a concept that is

prevalent in other countries and is likely to be launched in the

Indian market to allow investors to make investments in the real

estate sector with nominal amount. Securities Exchange Board of

India has come out with the guidelines for the launch of REITS in

India. Purchase of REITS is always considered as investment.

table 3. 6 gives details of the real estate index created by National

Housing Board (NHB) for major cities since 2013.

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Table 3.6

Return on residential property index(in %)

Cities 2013 2014

Mumbai 2.3 5

Delhi 0.5 -1.5

Bengaluru 4.7 -2.7

Kolkata -6.2 7.7

Chennai 5.1 7.6

Pune 14.6 2.6

Hyderabad 3.3 2.2 Source: NHB Data,Bloomberg, Business standard

3.14 Commodity market

With the opening of commodity exchanges in India, investors are

in a position to in commodities. Commodities are classified as

i) Agricultural commodities

ii)Non-agricultural commodities

Products traded under agricultural commodities are primary

products and not manufactured and finished goods. Some of the

important agricultural commodities traded are spices like

cardamom,jeer,turmeric,coriander,soybean,castor seed,mustard

seed,Chana,sugar,cotton, wheat,maize and menthe oil.

In India commodity market is regulated by Forward Market

Commission (FMC)

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Non-agricultural commodities traded are classified under two

categories

i) Crude oil, Natural gas, Heating oil

ii) Precious metals consisting of Gold, Silver and Platinum

Lack of knowledge about commodities and the functioning of the

commodities market keeps investors away from the market. It is

perceived to be a high risk investment

3.15 Operational Definitions of Concepts

Employed women

For this study, employed women comprised those women, who

were employed outside their residence and were drawing salary

from their employees. Practicing professionals, business women

and self-employed women were considered as employed women

for this study.

Savings

The amount remaining with an individual after meeting all

expenses from the income earned.

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Current Investments

The portfolio of financial and Physical assets held by an individual

at the time of survey.

Financial Assets

Assets held by individuals which are not tangible in nature.

Common financial assets held by investors are equity

shares,bonds,debentures, fixed deposits, mutual funds and other

similar products.

Physical Assets

Assets held by individuals which are tangible in nature like real

estate, motor vehicles, gold silver and other precious metals.

Investment pattern

Classification of the investment portfolio held by an individual is

based on the type and the riskiness of the assets constituting the

portfolio.

Risk Level

Relative measure of risk associated with an asset. This was

measured on a five-point rating scale.

114

Financial literacy level

A relative measure of one‟s knowledge about financial markets

and the financial products available in the market along with basics

of finance like return calculation and tracking of market.

Tax saving Product

All those investments qualifying for 80 C tax benefit under the

Indian Income tax act.

115

Chapter – IV

RESEARCH METHODOLOGY

4.1 Introduction

Any discussion on financial Investments attracts attention of

individuals. The discussion can be between individuals or it can be

an expert‟s advice on the television channel or internet or any

other media of interest. It has been assumed that investment is an

area of men. Historically due to the culture prevalent in India and

most of the wage earners being the male members of the family,

women were not involved in investment related discussions and

were not participating in the investment decision making process.

Every government coming to power in India is promoting girl child

education. With the increase in the education level of women and

job opportunities available, women are finding more job

opportunities in different sectors. Women by nature are savers and

with a continuous increase in the number of working women, the

number of women investors is on a rise. A study on the investment

behaviour and savings pattern of employed women will of great

interest to all those who are involved in research, financial

intermediaries and product creators. Findings of the research

116

could help product developers to create products meeting the

needs of women especially the employed women.

4.2 Statement of the Problem

This study aims at understanding the current investment pattern of

employed women based on the types of investment products held

by them currently. Classification of the investment pattern is based

on the portfolio risk associated with the current investments.

Further the study will make an attempt to identify the association

between demographic attributes and the investment pattern of

employed women. Additionally, attempt will be made to understand

the risk return perception of different investment products and the

financial literacy level of employed women.

4.3 Need for the Study

Many research studies have been conducted in the area of

investments and savings habits of individuals and their preference

for investment products based on the risk, return and demographic

attributes. A large body of literature is available on investment

pattern of individuals and comparisons have been made between

the investment pattern and preferences of men and women. In

most of the studies, the major respondents were male and the

117

participation by women was low. Most of the studies concentrated

on men dominated world of investments. However, there is dearth

of research studies on the investment pattern of women especially

those who are employed and have their own source of income. An

attempt is made to fill this research gap and an attempt is made to

fulfil the need for a study on the investment pattern of employed

women. As an extension of research, attempt will be made to

understand the nature of gold purchase and to ascertain if gold

purchase is for consumption or is for investment purpose. It will be

interesting to know what women do with their saving and where

they invest the amount saved. Job opportunities for women are on

rise in the knowledge driven sectors. Women find better

opportunities in urban areas, especially in the metropolitan cities.

There is a gradual rise in the number of women who take

investment seriously and if required engage professional money

managers. It will be of interest to studythe investment pattern of

employed women based on the current investments held by them.

4.4 Scope of the study

With the increase in the number of women investors and

governments plan to push savings for girl children, there is going

to be a substantial increase in investments by women.

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Government has opened all women banks to bring more women

into the banking network, indicating the importance of savings by

women. The study will be helpful to find out the ideal investment

options for women. These findings could be useful to the financial

product creators like banks, mutual fund houses, insurance

companies, portfolio managers and other market intermediaries, to

understand what an employed woman may be looking for, in a

financial productwhile taking investment decisions. Further

research can be carried out to compare the investment pattern of

rural women, as well as a comparison could be made between the

investment pattern of women from urban and rural areas.

4.5 Objectives of the study

This research study tries to cover the following objectives

1. To study the investment pattern of employed women.

2. To identify attributes that influence the investment pattern.

3. To study the financial literacy level and risk profiling of financial

products.

4. To identify the type of financial products preferred by employed

women.

119

4.6Hypotheses

This research study will test thefollowing hypotheses given below

using the suitable statistical tests.

H1: There is a significant association between the investment

pattern and the city of residence of the respondent.


pattern and the age of the respondent.


pattern and the educational background of the respondent.

H4: Investment pattern is dependent on the annual income of

the respondent.


pattern and the sector of employment of the respondent.

H6: There is an association between the Investment pattern and

nature of job


themarital status

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the family size


thefinancial literacy level.

H10:There is an association between the investment pattern and

investment consultant.

H11: There is an association between the investment pattern and thereview period.

H12: There is an association between the investment pattern and

theinvestment purpose.

4.7 Research Methodology

The study carried out is a descriptive research study. Descriptive

research studies (Kothari ,2000) are concerned with describing the

characteristics of a particular individual or of a group or

phenomena. The source of data for the study is the primary data

collected from the respondents using a structured questionnaire.

4.7.1 Sampling plan

Considering the time factor and the cost involved in going for

random sampling, convenience sampling was used for selecting

121

the respondents for the study. Due to a large population of working

women in the cities of Bangalore, Chennai and Cochin,

respondents were chosen from these cities. The sample

framework for the study included all employed women and

practicing professional and self-employed women from the cities

chosen for drawing the samples. Convenience sampling was used

for drawing samples from the three cities chosen for the study.

In order to have a wider group of respondents suitable for the

study, the respondents were chosen from those employed in

different sectors and belonging to different age groups and

educational back ground. The investment options provided for the

respondents to choose were Bank deposits, Postal savings,

bonds, mutual funds, insurance, Gold, real estate, equity

shares,commodities.

4.7.2 Tools of Data collection

Personal survey method with the help of a self-constructed

questionnaire was administered to collect primary data from the

respondents. The questionnaire composed of two sections.

Section A dealt with questions related to the demographic profile of

the respondents, while section Bcontained questions related to the

122

product awareness and the current investments held by the

respondent, risk assessment of various financial products and all

other questions related to the study.

The questionnaire was prepared after the review of literature using

online and off line resources. Researcher held discussions with

subject matter experts and other researchers and academicians

before finalizing the questionnaire. The questionnaire was so

structured that, factual questions were asked before the opinion

questions.

Dichotomous questions were used to capture the product

awareness related questions as well as those related to tax

savings.Multiple response questions were used to collect

information about the current investments held by the respondents

and their awareness about the commonly available financial

products. To ascertain the risk perception of respondents with

respect to a financial product, a five-point rating scale was used.

Most of the questions were close ended.

To evaluate the effectiveness of the questionnaire, a pilot study

was carried out. The pilot study consisted of administering the

questionnaire to 32 employed women. During the pilot study it was

found that many terminologies used in the initial questionnaire

123

were not understood and interpreted correctly by many

respondents. It was observed that respondents were restraining

from disclosing monthly income, but were comfortable to indicate

the range in which their annual income fell. Among the government

employees, there was hesitancy to disclose their investment

details as they felt it was too confidential. Based on the feedback

received and queries raised by the respondents during the pilot

study, few questions and phrases used were restructured, so that

the respondents interpreted the questions in totality. Questionnaire

was modified three times before finalizing the questionnaire for the

commencement of the main study. The final questionnaire

contained 24 questions.

4.7.3 Methodsof Data Collection

Respondents of various age groups with different educational

background and employed in various sectors with varied

experience level were approached to fill up the questionnaire. The

respondents were primarily employed in private, public and

government ownedcompanies. Some business women and

professionals were also approached for the survey. Questionnaire

was electronically mailed to those who could not be personally

124

reached and those who preferred the questionnaire in electronic

form.

IT industry respondents were fine with electronic form but other

category respondents were not comfortable with the electronic

form. It was found during the data collection that respondents were

not comfortable disclosing details about their investments, which to

some extent increased the number of incompletequestionnaires.

Theseincomplete questionnaires could not be used for data

processing.

A total of 720 questionnaires were used to collect the data. but at

the end of the survey period only 377 questionnaires were found

suitable for analysis, resulting in a response rate of 52.53%. One

of the deterrent for getting a better response rate was the

hesitation on part of the respondents to fill in details related to

current investments held, which respondents felt were confidential.

There was less response from business women, as the researcher

could not get positive response from them, in spite of repeated

attempts for a meeting. Among the professional women, getting

response from medical professionals was a daunting task due to

their busy schedule and lack of awareness about investment

products. Many were investing with the help of investment

consultants and were not keen to participate in the survey.

126

Period of Study

The period of study was from April 2012 to June2013, and the

cities covered for the study were Bangalore, Chennai and Cochin.

Respondents from Chennai were contacted from April 2012 till

August 2012. During this period a total of 111 completed

questionnaires were collected. Respondents from Cochin were

contacted from September 2012 till November 2012. During this

period a total of83 completed questionnaires were collected.

Respondents from Bangalore were contacted from December

2012 till June 2013. During this period a total of 183 completed

questionnaires were received. Over the study period, repeated

reminders made to respondents over telephone and by email.

Pilot study was carried out during February and March 2012.

Investment pattern of the respondents were classified into three

distinct categories based on the response to the question

regarding the existing investments held them and their perception

towards the risk associated with financial products.

The three distinct investment pattern classification are:

1. Non Risky Portfolio Pattern (NRPP): If the current

investments held by the respondents consistedof bank fixed

127

deposits, provident fund or any other asset carrying low level of

risk according to the respondent, then it was classified as a NRPP.

2. Moderately Risky Portfolio Pattern (MRPP): If the current

investments held by the respondent consistedof a combination of

low risk assets and mutual funds, then it was classified as MRPP.

3. Risky Portfolio Pattern (RPP): If the current investments held

by the respondent consisted low risk assets along with equity

shares or commodities or any asset perceived to carry high risk by

the respondent, then it was classified as RPP.

4.7.4 Plan of Analysis

The data collected was coded and enteredinto Microsoft excel and

was checked for the accurateness of the data entry. The final data

from Microsoft excel was imported into SPSS, version 19 for

processing and analysis.

The data was processed and analysed keeping in mind the

objectives of the study. Weighted means were used to quantify the

qualitative data.

To measure the perception of risk five-point rating scale was used.

128

To test the association between variables, chi square test was

carried out.

Standard deviation is used to analyse and understand the

variability of the data and coefficient of correlation is used to find

the strength of the relationship between variables

4.8 Limitation of the Study

In personal survey, chances of respondent‟s bias are there.

Chances of researcher‟s bias might have crept in during

collection of data and while handling incomplete questionnaires.

Thestudy wasrestrictedtotheemployed women from the

southerncitiesof Bangalore, Chennai and Cochin. The findings

ofthe study may not be generalized to the entire population

ofemployed women.

The study is restricted to only employed women.

Enough care has been taken while processing,cleaning, editing

and analysing the data, to minimize the impact of these limitations

on the findings of the study.

129

4.09 Chapter Scheme

The research work carried out has been presented in the following

chapters.

Chapter – I Introduction

This chapter givesdetails about investments and

the various theories of investments along with past

and prevailing Indian investment scenario.

Chapter – II Review of Literature

Thischapterdeals with the past research studies

carried out by other researchersand their findings

in the area related to the area of study

Chapter – III Investment avenues

Thischapter gives a briefonthe varioustypes of

financial products available for investments in the

Indianmarket along with their features.

Chapter – IV Research Methodology

Thischaptergives abriefon the methods and

procedures of data collection. It givesa brief on

the tools used for analysis of data.

Chapter – V Analysis of Data

The data is analysed according to the research

objectives and is presented in this chapter. This

130

chapter consists offour sub chapters each for

every objective taken up for the study.

Chapter – VI Findings and Conclusion

Thischapterprovides the findings of the study

along with conclusion and suggestions.

Bibliography

Annexure Survey Questionnaire

131

CHAPTER – V

ANALYSIS OF DATA

5.1 Profile of respondents

Any research is authenticated by the nature of its

sample.Respondents profile gives a micro view of sample

distribution for the study. It also acts as a basis of linking variables

for the study. The analysis given below gives a detailed profile of

the respondents both demographic and economic.

Respondents are categorized based on the demographic

attributes and other variables which could help in understanding

and identifying patterns and relationships as per the objectives of

the study.

One of the main objectives of the study is to classify the

investment pattern of the respondents from the cities of Bangalore,

Chennai and Cochin.

132

Table 5.1.1

Citi wise distribution of respondents

City No. of Respondents Percent

Bangalore 183 48.5

Chennai 111 29.4

Cochin 83 22.0

Total 377 100.0

The above table gives a brief on the composition of the

respondents and it can be observed that majority of the

respondents (48.5%) were from Bangalore(48.5%) followed by

Chennai (29.4%) and Cochin (22.0%). Women from Bangalore

were more forthcoming in participating in the study comparedto

women from Chennai and Cochin.Bangalore being the IT capital of

India, provides better job opportunities for qualified women

resulting in higher number of respondents from the city for the

study.

133

Table 5.1.2

Age wise distribution of respondents

Age ( in Years) No. of Respondents Percent

Below 25 79 21.0

26 – 35 160 42.4

36 – 45 79 21.0

46 – 55 42 11.1

Above 55 years 17 4.5

Total 377 100.0

Investment preference and decision making process could change

as an individual grows older. Respondents were classified in terms

of age, which is presented in table 5.1.2.Majority of the

respondents (42.4%) were form the age group of 26 – 35 years,

followed by those who were below 25 years. Respondents of 55

years and above were less in number. Respondents from the

lower age groups were more willing to participate in the survey in

comparison to women aged above 45 years.

134

Table 5.1.3

Marital status of respondents

Marital Status No. of Respondents Percent

Single 110 29.2

Married 252 66.8

Widow 11 2.9

Others 4 1.1

Total 377 100.0

Aftera woman is married there is a change in the decision making

process. Post marriage unilateral decisions become syncretic with

the present system of nuclear family. Marital status of respondents

is tabulated in table 5.1.3 for better understanding. It can be

observed from the above table that; majority of the respondents

were married (66.8%).

135

Table 5.1.4

Education profile of respondents

Highest Education No. of Respondents Percent

Below Graduation 3 00.8

Graduates 130 34.5

Professionals 122 32.4

Post-Graduation and Above 121 32.1

Others 1 00.2

Total 377 100.0

As an individual acquires higher educational qualification, the

ability to understand various aspects associated with investments

could change and may show preference towards specific financial

products. Higher education leads to better rationality while taking

decisions. Table 5.1.4 provides the classification of the

respondents based on their educational background.

Most of the respondents are well qualified. Majority of the

respondents completed their graduation (34.5%) followed by

professionals(32.4%). A substantial number among the

respondents have completed theirpost-graduation studies (32.1%).

136

Table 5.1.5

Sector wise distribution of respondents

Sector of Employment No. of Respondents Percent

Education 71 18.8

BFSI 128 34.0

IT/KPO/BPO 131 34.7

Medical 6 1.6

Others 41 10.9

Total 377 100.0

It will be interesting to know about the sector and nature of

employment of the respondents. The above table gives the

distribution of the respondents based on their sector of

employment.It can be observed that majority of the respondents

are from IT / KPO / BPO sector (34.7%) followed by the BFSI

sector (34.0%) and Education sector (18%).

IT,BPO, KPO and BFSI sectors provide job opportunities in large

numbers for educated women. The growth of the above mentioned

sectors is likely to continue and in future it will provide more job

opportunities for women Response from women carrying out their

own business and those having their own professional practice

were less.

137

Table 5.1.6

Nature of the job of respondents

Occupation No. of Respondents Percent

Salaried Government 64 17.0

Salaried Private 302 80.1

Self Employed (Business) 4 1.1

Self Employed (Professionals) 4 1.1

Others 3 0.8

Total 377 100.0

It can be observed from the above table that most ofthe

respondentswere fromIT,KPO, BPO and BFSI sectorbelonging to

theprivate firms(80.1%) followedby governmentemployees

(17.0%). The percentage of self-employed and practicing

professions was miniscule.

138

Table 5.1.7

Sector and Nature of employment

Sector Nature of employment Total

Government Private Self employed

Education 23 (35.9%) 46 (15.2%) 2 (18.2%) 71

BFSI 28 (43.8%) 97 (32.1%) 3 (27.2%) 128

IT/BPO/KPO 1 (1.6%) 128 (42.4%) 2 (18.2%) 131

Medical 2 (3.1%) 2 (0.70%) 2 (18.2%) 6

Others 10 (15.6%) 29 (9.6 %) 2 (18.2%) 41

Total 64 (100 %) 302 (100 %) 11 (100%) 377

It can be observed from the above table that majority of the

respondents working in government offices, are from BFSI (43.8%)

sector followed by Education (35.9%) department employees.

Whereas among those employed in the private sector, majority

were from IT / BPO / KPO (42.4%) sector followed by BFSI

(32.1%) sector and educational sector (15.2%). As Private sector

has a major share of the IT business in India, the respondents

were also on a higher side from privately owned IT companies.

139

Table 5.1.8

Family size of respondents

Family Size No. of Respondents Percent

1 2 0.6

2 22 5.8

3 138 36.6

4 188 49.9

5 27 7.2

Total 377 100.0

Most of the time it is possible that the family size could alter the

investment pattern. Table 5.1.8 gives details about the family size

of the respondents.

The mean family size was found to be four, which reflects the

spread of nuclear families in cities. It is observed that, majority of

the respondents had a family size of four (49.9%) followed by a

family size of three (36.6%). A small number of respondents had a

family size of five (7.2%).

140

Respondents were classified based on their work experience

which is shown in table below.

Table 5.1.9

Work experience of respondents

Work Experience No. of Respondents Percent

Less than 5 years 134 35.5

5 to 10 years 137 36.3

11 to 15 years 45 11.9

16 – 20 years 34 9.0

Above 20 years 27 7.2

Total 377 100.0

It can be observed from the above table that;majority of the

respondents are with 5 to 10 years (36.3%) of work experience

followed by less than 5 years (35.5%) of work experience.

141

Table 5.1.10

Income profile of respondents

Annual Income (in Rs) No. of Respondents Percent

Less than 5 lakhs 131 34.7

5 – 10 Lakhs 197 52.3

10 – 15 Lakhs 43 11.4

Above 15 Lakhs 6 1.6

Total 377 100.0

Respondents are classified based on their income level in the

above table. Income plays an important role in studies related to

Investments.

Majority of the respondents were earning an annual salary in the

range of Rupees 5 to 10 lakhs (52.3%), followed by those who

were earning less than rupees 5 lakhs (34.7%) of annual salary.

142

5.2 Analysis of Investment Pattern of Respondents

5.2.1Analysis of investment pattern based on the city of

residence.

The investment pattern based on the investments held by the

respondents from the three cities taken up for the study is provided

in tablebelowand figure 5.2.1 whichprovides the investment pattern

across cities graphicallyfor easy understanding and comparison.

Table 5.2.1

City wise investment Pattern

NRPP MRPP RPP Total

Bangalore 60

(32.8%)

100

(54.6%)

23 (12.6%) 183

(100%) Chennai 26

(23.4%)

58

(52.3%)

27 (24.3%) 111

(100%) Cochin 32

(38.5%)

39

(47.0%)

12 (14.5%) 83

(100%)

Figure 5.2.1

City wise investment pattern

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Bangalore Chennai Cochin

NRP MRP RP

143

Majority among respondents hold moderately risky (52.3%)

portfolio followed by non-risky portfolio. It can be observed from

the above figure that, higher percentage of women from Chennai

(24.3%) were holding investments carrying higher risk in

comparison to women from Bangalore (12.6%) and Cochin

(14.5%). Higher percentage of women from Cochin (38.6%)

preferred holding non risky portfolio of investments in comparison

to women from Chennai (23.4%). Percentage of women holding

moderately risky portfolio was closer across all the three cities.

This shows that women from Cochin prefer low risk products

where as women from Chennai were willing to invest in financial

products carrying higher risk. This indicates that the city of

residence could influence the investment pattern. To test this

inference, researcher tested the following hypothesis to ascertain

the association between city of residence and investment pattern.

144

5.2.1.1 Testing of Association between Investment pattern and

City of residence

H0: There is no significant association between the investment pattern and city of residence. H1: There is a significant association between the investment

pattern and city of residence.

Table 5.2.1.1 Chi Square test for Association between investment pattern and city of residence

Inference

It is observed from the abovethat, there is significant difference in

the investment pattern of employed women from different cities

with chi square value of 10.428, p=0.034 (<0.05), hence at 5%

significance level, alternate hypothesis is accepted, i.e. there is an

association between the city of residence and the investment

pattern.

Value do Asp. Sig (2 –sided)

Pearson Chi-Square 10.428 4 .034

Likelihood Ratio 10.168 4 .038

Linear –by-Linear association 0.042 1 .837

N of Valid Cases 377

145

City of residence alone need not be the only reason for difference

in the investment pattern across cities. There could be other

variable like age, marital status, qualification, income level,

availability of the product and other attributes which also could

influence the investment pattern. May be Equity and Mutual fund

investments were better marketed by the financial intermediaries in

Chennai and Bangalore in comparison to Cochin. Marital status of

the respondent‟s city wise could be looked into, asspouse‟s advice

regarding investments also could have a bearing on the

investment pattern.

146

5.2.2Analysis of investment pattern based on the age of the

respondent

Table 5.2.2

Age wise investment Pattern

Age (in years) NRPP MRPP RPP Total

Less than 25 53 (67.1%) 21

(26.2%)

5 (6.30%) 79

(100%) 26 – 35 31 (19.4%) 103 (64.4%) 26 (16.2%) 160

(100%) 36 – 45 25 (31.6%) 37 (46.8%) 17 (21.6%) 79

(100%) 46 - 55 5 (11.9%) 23 (54.8%) 14 (33.3%) 42

(100%) More than 55 4 (23.5%) 13 (76.5%) 0 17

(100%)

Figure 5.2.2

Age wise investment pattern(in %)

The investment pattern based on the age of the respondents is

provided in the above table and for ease of understanding and

147

comparison Figure 5.2.2 provides the investment pattern across

different age groups graphically.

It can be observed from the above figure that a higher percentage

of women who are aged below 25 years (67.1%) were holding a

portfolio of low risk investments in comparison to women from the

age group of 26 to 35 years (19.4%) and 36 to 45 years (31.6%). It

can be observed that percentage of women holding risky portfolio

is increasing with increase in age till the age of 55 years. This

observation is in contrast to the general investment philosophy that

as you age you should reduce your exposure to risky assets held.

One possible reason could be that majority of women above 25

years were married and their investment decision could be

influenced by spouse. Also there is a possibility that with the

increase in age, the work experience increase resulting in higher

income and savings, which could be influencing the investment

pattern.

148

To test this inference following hypothesis was tested:

H0: There is no significant association between the investment

pattern andthe age of the employed women.


pattern and the age of the employed women.

Table 5.2.2.1

Chi Square test for Association between investment

pattern and age

Value df Asymp. Sig

( 2 sided)



Linear – by – Linear Association 22.188 1 .000

N of Valid cases 377

Inference

It can be observed from the above table, that the chi square value

is 78.076, p <0.05, which implies that there is an association

between age and investment pattern. Hence, the hypothesis that

investment pattern is dependent of the age of the respondent is

accepted at 5% significance level.

Variable like marital status also could influence the investment

pattern.

149

5.2.3Analysis of investment pattern based on the education

level of the respondent

Table 5.2.3

Investment Pattern and Education

Qualification NRPP MRPP RPP Total

Below

Graduation

1 (33.3%) 2 (66.7%) 0 3

(100%) Graduates 43 (33.1%) 67 (51.5%) 20 (15.4%)

((((((15.4%)

130 (100%)

Professionals 30 (24.6%) 70 (57.4%) 22 (18.0%) 122 (100%)

Post Graduates 43 (35.5%) 58 (47.9%) 20 (16.5%) 121 (100%)

Others 1 (100%) 0 0 1 (100%)

Figure 5.2.3

Education wise investment pattern

Data related to the investment pattern of respondents with their

educational background is provided in theabove tableand the

150

graphical representation is made in figure 5.2.3.

It can be observed that, most of the respondents were well

qualified. Irrespective of the education, moderately risky portfolio

was held by the respondents. This inference is after taking out

those respondents who did not complete their graduation or did

other courses like diplomas. It is inferred that other things being

equal, educational qualification of the respondents alonemay not

significantly influence the investment pattern. To test this

inference, researcher tested the following hypothesis to ascertain

the association between the education level and investment

pattern.

151

H0: There is no significant association between the investment

patternand the educational background of the respondent.

H3:There is a significant association between the investment

pattern and theeducational background of the respondent.

Table 5.2.3.1

Chi Square test for Association between investment pattern and educational background

Value df Asymp. Sig

( 2 sided)





Inference Chi square value calculated was found to be 6.726,p >0.05, which

was not significant at 5% significance level, indicating that there is

no significant association between the investment pattern and the

educational background of the respondent.

152

5.2.4 Analysis of investment pattern based on the income of

the respondent

Table 5.2.4

Investment Pattern and Income

Income

(in Lakhs)

NRPP MRPP RPP Total

Less than

5

73 (55.7%) 47 (35.9%) 11 ( 8.4%) 131 (100%)

5 – 10 41 (20.8%) 128 (65.0%) 28 (14.2%) 197 (100%)

10 – 15 4 (9.3%) 21 (48.8%) 18 (41.9%) 43 (100%)

Above 15 0 1 (16.7%) 5 (83.3%) 6 (100%)

Figure 5.2.4

Investment Pattern and Annual Income (in Rs.Lakhs)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Less than 5 5 -1 10 L 11 - 15 l Above 15

NRPP MRPP RPP

153

Earnings of an individual affects many aspects of life, including the

way investments are made. Table 5.2.4 gives details about the

investment pattern against the annual income earned by the

respondent. Graphic representation of the same is shown in figure

5.2.4. It can be observed that among woman earning a salary of

less than Rs. 5 lakhs, majority were holding a low risk portfolio of

investments (55.7%) compared to other income group

respondents. Women earning salary above 5 lakhs preferred

moderately risky portfolio.

With the increase in income, there is always a possibility of the

saving percentage going up, which results in investing a small part

of the savings into risky assets with an expectation to generate

higher returns. To test this inference, researcher tested the

following hypothesis to ascertain the dependence between annual

income and investment pattern.

154

H0: Investment pattern is independent of the annual income.

H4: Investment pattern is dependent on the annual income.

Table 5.2.4.1

ANOVA for investment pattern and annual income

Sum of Squares

df Mean Square

F Sig.

Between Groups Within Groups Total

30.608

141.074

171.682

3

373

376

10.203

.378

26.976 .000

Inference

The results are depicted in the above table which and it is

observed that the F value is 10.203, which is significant at 5%

level of significance. Hence alternate hypothesis is accepted and it

can be concluded that the investment pattern is dependent on the

income level of the respondent.

155

5.2.5Analysis of investment pattern based on the sector

and nature of the job of the respondent

Table 5.2.5.1

Investment Pattern and Sector of employment

Sector of

employment

NRPP MRPP RPP Total

Education 23 (32.4%) 43 (60.6%) 5 (7.0%) 71

(100%) BFSI 34 (26.6%) 68 (53.1%) 26 (20.3%) 128 (100%)

IT / BPO / KPO 33 (25.2%) 70 (53.4%) 28 (21.4%) 131 (100%)

Medical 6 (100%) 0 0 6 (100%)

Others 22 (53.7%) 16 (39.0%) 3 (7.3%) 41 (100%)

The distribution of data based on the sector of employment and

the investment patter is displayed in the above table. To gain more

insight, the nature of the job of the respondent and investment

pattern is displayed in table below.

Table 5.2.5.2

Investment Pattern and nature of Job

Nature of

Job

NRPP MRPP RPP Total

Government 22 (34.4%) 38 (59.4%) 4 (6.3%) 64 (100%)

(100(100%)((

(100(((100%)

Private 92 (30.5%) 153(50.7%) 57(18.9%) 302 (100%)

Business 1 (25%) 3 (75%) 0 4 (100%)

Professional 2 (50%) 2 (50%) 0 4 (100%)

Others 1 (33.3%) 1 (33.3%) 1 (33.3%) 3 (100%)

Total 118 197 62 377

156

Figure 5.2.5.1

Sector wise investment pattern

For ease of understanding, data pertaining to the sector of

employment and investment pattern is graphically represented in

the above figure.

It can be observed that education sector (32.4%) employees were

holding investments carrying less risk in comparison to women

from the IT/BPO/KPO (25.2%) sector and the BFSI (26.6%) sector.

Majority of women from various sectors were holding investments

portfolios having moderate or low risk.

To test if there is any association between the sector of

employment and investment, following hypothesis was tested.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Education BFSI IT / BPO/KPO Medical Others

NRPP MRPP RPP

157

H0: There is no association between the Investment pattern and Sector of employment. H5: There is an association between the Investment pattern and Sector of employment.

Table 5.2.5.3


pattern and sector of employment

Value df Asymp. Sig

( 2 sided)





Inference

It is observedfrom the above table, that the chi square value

calculated was found to be 33.583, p <0.05, which was significant

at 5% significance level. Hence H5 is accepted, i.e. there is an

association between the sector of employment and investment

pattern.

158

Figure 5.2.5.2

Investment pattern and nature of job

It can be observed from the above figure that majority of the

respondents were employed in the private (80.1%) firms or with

the government (17.1%). It is observed that percentage of women

employed with private companies were holding higher risk

portfolios (18.9%) when compared to the government employees

(6.3%). Government employees by nature are very cautious while

dealing with official work and the same is reflected in their

investment pattern. They prefer to invest in low risk category

financial products in comparison to women employed with private

sector, who are willing to take higher risk. To confirm this inference

following hypothesis was tested

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Salaried (Govt) Salaried(Pvt) Business Professional Others

NRPP MRPP RPP

159

H0: There is noassociation between the Investment pattern and

the nature of job.


the nature of job

Table 5.2.5.4


pattern and nature of job

Value df Asymp. Sig

( 2 sided)



Linear – by – Linear Association .903 1 .342


Inference

The chi square test result reveals that the chi square value

calculated was found to be 9.100, p <0.05, which was not

significant at 5% significance level. Hence H0 is accepted, i.e.

there is no association between the nature of the job and the

investment pattern.

160

5.2.6Analysis of investment pattern based on the marital

status of the respondent

Table 5.2.6

Marital status and investment Pattern

Marital

Status

NRPP MRPP RPP Total

Single 52 (47.3%) 49 (44.5%) 9

(8.2%)

110

(100%) Married 58 (23.0%) 141 (56.0%) 53 (21%) 252

(100%) Widow 6 (54.5%) 5 (45.5%) 0 11

(100%) Others 2 (50.0%) 2 (50.0%) 0 4

(100%)

Figure 5.2.6

Marital status and Investment pattern

The above table provides the information regarding the

investment

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Single Married Widows Others

NRPP MRPP RPP

161

pattern of respondents based on their marital status and figure

5.2.6 gives a graphical view about the of investment pattern for

ease of understanding. It can be observed that married women

(77%) hold investment portfolios which are riskier in comparison to

the ones held by other marital status women. One of the reason for

married women holding higher risk portfolio could be due to higher

savings and influence of their spouse in taking investment

decisions. To test if there is any association between the marital

status and the investment pattern, the following hypothesis was

tested

H0: There is no association between the Investment pattern and the Marital status. H7: There is an association between the Investment pattern and TheMarital status

Table 5.2.6.1


pattern and marital status

Value df Asymp. Sig

( 2 sided)


162




Inference

Chi square value calculated was found to be 29.107, p <0.05,

which was significant at 5% significance level. Hence H7 is

accepted, i.e. there is association between the marital status of

the respondent and investment pattern.

163

5.2.7Analysis of investment pattern based on family size

Table 5.2.7

Investment Pattern and family size

Family

Size

NRPP MRPP RPP Total

1 2 (66.7%) 0 1 (33.3%) 3 (100%)

2 4 (18.2%) 17 (77.3%) 1 (4.5%) 22 (100%)

3 43 (31.2%) 72 (52.2%) 23 (16.7%) 138 (100%)

4 56 (29.8%) 95 (50.5%) 37 (19.7%) 188 ( 100%)

5 13 (50.0%) 13 (50.0%) 0 26 (100%)

It is believed that family size could impact the way investment is

made. Respondents investment pattern with respect to the family

size is shown in the table above and the investment pattern of

women with different family size is displayed in the figure below for

ease of understanding.

Fig 5.2.7

Investment pattern and family size

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1 2 3 4 5

NRPP MRPP RPP

164

It can be observed that women who are married and do not have

children, hold a higher percentage of moderately risky portfolio

(77.3%) in comparison to other family sizes. As the family size

increases, women moved towards less risky portfolio. That is there

seems to be an inverse relationship between size of family and

riskiness of the portfolio of investments. To confirm this inference,

the following hypothesis was tested

H0: There is no association between the Investment pattern and the family size. H8: There is an association between the Investment pattern and the family size. Table 5.2.7.1


pattern and family size

Value df Asymp. Sig

( 2 sided)





It is observed that the chi square value calculated was found to be

16.776, p <0.05, which was notsignificant at 5% significance level.

Hence H8 is accepted, i.e. there is no association between the

family size and investment pattern.

165

5.2.8Analysis of investment pattern based on work

experience of the respondent

Table 5.2.8

Investment Pattern and Work Experience

Work

Experience

(in years)

NRPP MRPP RPP Total

Less than

5

68 (50.7%) 55 (41.0%) 11 (8.3%) 134 (100%)

5 – 10 30 (21.9%) 80 (58.4%) 27 (19.7%) 137

(100%) 11 – 15 12 (26.7%) 27 (60%) 6 (13.2%) 45 (100%)

16 – 20 6 (17.6%) 16 (47.1%) 12 (35.3%) 34 (100%)

Above 20 2 (7.4%)

19 (70.4%) 6 (22.4%) 27 (100%)

Figure 5.2.8

Investment Pattern and Work Experience

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Less than 5 5 - 10 yrs 11 - 15 yrs 16 - 20 yrs more than 20 yrs

NRPP MRPP RPP

166

Investment decision of an individual can change, as the

experience level changes. Table 5.2.8 gives details of the

investment pattern among respondents with work experience.

Graphically it is shown in figure 5.2.8 for ease of understanding.

It is observed from figure 5.2.8 that among women having a work

experience of less than 5 years, majority were holding were

holding non risky portfolio (50.7%), indicating that women are risk

averse in the initial stages of their career. Women having a work

experience of 5 to 15 years were holding investments, which were

moderately risky.

As the work experience level goes up, it is associated with higher

income and the individual gains some investment experience,

which leads to investment of a portion of their savings into risky

products.

167

5.3Analysis of Financial Literacy level and investment

pattern of Respondents

Investments by individuals depends on the basic understanding

about various financial products available in the market. Further

knowledge about basic financial calculations is likely to help an

individual take informed investment decisions. Financial literacy

level could be self-estimated or could be based on product

awareness. In this research study, the respondents were asked to

rate their financial literacy level on a scale of 1 to 5, with one being

very low level of financial literacy and 5 being very high level of

financial literacy level. None of the respondents rated themselves

to have a very high financial literacy level and a negligible (0.03%)

number indicated their financial literacy level to be very low.

Frequency of very low financial literacy level were added along

with low financial literacy level respondents for analysis.

168

Table 5.3.1

Financial literacy level of respondents

Financial literacy Low Moderate High Total

No. of respondents 155 211 11 377

Percentage 41.1 56.0 2.9 100

The above table gives the detail about the overall financial literacy

level of the respondents

It can be observed that Majority of the respondents considered

themselves to have a moderate level (56%) of financial literacy

followed by low level (41.1%) of financial literacy.

169

Table 5.3.2

Financial literacy and investment pattern

Financial

Literacy

NRPP MRPP RPP Total

Low 79 (51.0%) 71 (45.8%) 5 (3.2%) 155 (100%)

Moderate 39 (18.5%) 121 (57.3%) 51 (24.2%) 211 (100%)

High 0 5 (45.5%) 6 (54.5%) 11 (100%)

Total 118 (

31.3%)

197 (52.3%) 62 ( 16.4%) 377 (100%)

Fig 5.3.1

Financial literacy and investment pattern

Distribution of investment pattern in percentage within each level

of financial literacy is shown in the above. Graphical representation

of the same is shown in figure 5.3.1 for ease of interpretation.

It is observed from the above tableand figure that among those

with low financial literacylevel, majority were holding non risky

portfolio (51%). While respondents with moderate level of financial

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Very Low Low Moderate High Very High

Financial Literacy wise investment Patern

NRPP MRPP RPP

170

literacy, majority were holding investments with moderate Risk

(57.3%). Those with high level of financial literacy were found to

hold investments which are considered risky or moderately risky.

The above analysis shows that financial literacy could impact the

investment pattern and this association was verified by testing the

following hypothesis.

H0: There is no association between the Investment pattern and the financial literacy level. H9: There is an association between the Investment pattern and the financial literacy level.

Table 5.3.2.1


pattern and financial literacy level

Value df Asymp. Sig

( 2 sided)



Linear - by - Linear association 60.910 1 .000


Inference

It is observed that the chi square value calculated was found to be

70.719, p <0.05, which was significant at 5% significance

171

level.Hence H5 is accepted, i.e. there is an association between

financial literacy level and investment pattern.

Increase in financial literacy level brings in knowledge about a

wider range of products and the investor is in a better position to

understand and analyse the risk and return features of the product.

172

5.3.3Analysisof financial literacy level and risk perception of

Respondents

It will be interesting to know if financial literacy level could impact

the respondent‟s perception of risk towards financial products. The

top five products which were perceived to have a moderate to high

level of risk in this study are shown in the tablebelow.

Table 5.3.3

Top five risky products

Product Risk level WMS

Commodities 4.81

Equity 4.55

Chits 2.97

Mutual Funds 2.87

Bonds/ Debentures 2.75

It is observed that commodity and equity shares investments are

considered to be highly risky products. The number of respondents

holding commodities werenegligible, it will be of interest to analyse

the equity risk perception among respondents with different

financial literacy levels.

173

Table 5.3.4

Equity risk perception and financial literacy level

Financial Literacy

Risk perception Total

Low Moderate High Very High

Low 2 (1.3%) 0 ( 0 % ) 41(26.5%) 112 (72.3%) 155

Moderate 1(0.04%) 4 (1.8%) 99(46.9%) 107 (50.7%) 211

High 0 ( 0 %) 1(9.1%) 6(54.5%) 4(36.4%) 11

Total 3(0.8%) 5(1.3%) 146(38.7%) 223(59.2%) 377

Above table gives details about equity risk perception and financial

literacy level. It is observed that, majority (72.3%) among those

with low financial literacy level considered equity to be very highly

risky product. Whereas a lower percentage (50.7%), among those

with moderate financial literacy level considered equity to be very

high risk product.

The above analysis indicates that as the financial literacy level

goes up, risk perception about equity investment changes.

To find the association between financial literacy level and risk

perception of top five risky products chi square test was conducted

and the summary of the results is given below along with the

inference.

174

Table 5.3.4.1

Chi Square test for Association between financial literacy

level and risk perception of financial products

Association between Financial literacy and

Chi Square Value

df Asymp. Sig (2 –sided)

Inference

Commodities 5.663 6 .462 No association

Equity 27.113 9 .001 Association

Chit fund 25.444 6 .003 Association

Mutual Fund 11.537 9 .241 No Association

Bond / Debenture 26.350 9 .002 Association

It can be observed from the above table, financial literacy and risk

perception of equity, chit fund and bonds were found to be

associated where, that is financial literacy level could influence

investment in equity, chit fund and bonds. Whereas no such

association was found for commodities and mutual funds.

175

5.4Analysis of preferred financial products of the

respondents

There could be various reasons for an investor to invest in a

particular type of financialproduct. A study of the current

investments held by the respondents will provide insight on the

various financial products preferred by women investors.

Table 5.4.1

Investments held by respondents

Product Number of respondents

Percent

Bank Deposits 359 95.2

Insurance 354 93.9

Gold Jewellery 343 91.0

Provident Fund 289 76.7

Mutual Fund 255 67.6

Postal Savings 98 26

Equity Shares 62 16.4

Bonds/Debentures 50 13.3

Real Estate 47 12.5

Chit Funds 43 11.4

Gold Funds/ETF 14 3.7

Commodities 2 0.5

176

Figure 5.4.1


It can be observed from table that, majority of the respondents

hold bank deposits (95.2%) followed by Insurance (93.9%), Gold

Jewellery (91.0%), Provident fund (76.7%),Mutual funds (67.6%)

and Postal savings (26.0%). All other financial product holding was

on lower side. Figure 5.4.1 displays the above findings graphically.

The top five investments preferred by the respondents were:

1. Bank Deposits

2. Life Insurance

3. Gold Jewellery

4. Provident Fund

5. Mutual Funds

0 20 40 60 80 100

Bank Deposits

Insurance

Gold Jewellery

Provident Fund

Mutual Fund

Postal Savings

Equity Shares

Bonds/ Debentures

Real Estate

Chit Funds

Gold Funds / ETF

Commodities

Number of respondents

177

There could be many reasons for women to prefer the above

products Awareness level of women about different financial

products against the current investments made is shown in table

below.

Table 5.4.2


Product Awareness Investments held

Number of respondents

Percent Number of respondents

Percent

Bank Deposits 375 99.5 359 95.2

Insurance 371 98.4 354 93.9

Gold Jewellery 377 100.0 343 91.0

Provident Fund 360 95.5 289 76.7

Mutual Fund 355 94.2 255 67.6

Postal Savings 341 90.5 98 26.0

Equity Shares 226 59.9 62 16.4

Bonds/Debentures 205 54.4 50 13.3

Real Estate 285 75.6 47 12.5

Chit Funds 198 52.5 43 11.4

Gold Funds/ETF 84 22.3 14 3.7

Commodities 6 1.6 2 0.5

For ease of understanding the investments held against the

awareness about the product in percentage terms is shown in the

figure below.

178

Figure 5.4.2 Awareness level and actual investments held (in%)

It can be observed from the above figure that, majority of the

respondents were having a high level of awareness about bank

deposits (99.5%), Insurance (98.4%), provident fund (95.5%),

mutual funds (94.2%) and postal savings ((90.5%). Awareness

level for equity shares, bonds and chit funds were moderate

(between 50 to 60%). Awareness level about other products and

schemes was negligible.

Awareness about products alone did not lead to actual

investments. Most of the respondents were aware about postal

savings (90.54%), but actual investment was low (26%). Equity

shares investments (16.4%), chit funds (11.4%) and bonds and

debentures (11%) holding by respondents were low in spite of

awareness level being moderate.

0

20

40

60

80

100

120P

erc

en

tage

Awareness Investment

179

Table 5.4.3

Respondents Awareness, investment and risk

perception of financial products

Product Awareness WMS

Investment WMS

Risk Level WMS

Bank Deposits 1.01 1.05 1

Postal Savings 1.10 1.74 1.03

Insurance 1.02 1.06 2.03

Bonds/Debentures 1.46 1.87 2.75

Mutual Fund 1.06 1.32 2.87

Equity Shares 1.40 1.84 4.55

Gold Funds/ETF 1.78 1.86 3.11

Chit Funds 1.47 1.89 2.97

Real Estate 1.24 1.87 2.21

Commodities 1.98 1.99 4.81

Gold 1.01 1.04 1.48

Provident Fund 1.08 1.04 1.01

WMS: Weighted Mean Score

The above table gives details about the investments held by

respondents along with awareness level and risk perception about

the respective financial products.

It is observed that for top four products in which investment is

currently made by the respondents (bankdeposits, life insurance,

gold jewellery and provident fund), the perceived risk level was

found to be low, with a weighted mean score of less than 2.1.

Mutual fund investment, which figured among the top five preferred

product was perceived to carry moderate level of risk with a

180

weighted mean score of 2.87. Equity with weighted mean score of

4.55 and commodity investment with a weighted mean score of

4.81 were perceived to highly risky and respondents avoided these

two products. This indicates that the products carrying a low to

moderate risk were preferred by the respondents.

181

5.5 Attributes influencing investment decisions

There are many features and attributes based on which investment

decisions are taken by individuals. It will be interesting to know the

attributes which could influence investment decisions.

5.5.1 Criterion for investment

Individuals take investment decision taking into account certain

features of the product. Table below gives details about the top

most feature desirable in a financial product by the respondents.

Table 5.5.1

Criterion for Investment

Criteria No. of respondents

Percent

Liquidity 9 2.4

Safety 255 67.6

High Return 112 29.7

Tax benefit 1 0.3

Total 377 100.0

For majority of the respondents, the main criteria while taking

investment decision are safety (67.6%) of capital invested,

followed by the expectation of high return (29.7%).

182

5.5.2 Purpose of Investment

The ultimate aim of investment by individuals could differ. It will be

of interest, to know the purposes for which respondents made

investments. Table given below gives details about the common

purposes of investment

Table 5.5.2

Purpose of Investment

Women generally keep their children‟s welfare in mind while taking

any decision. This is evident from the above table, which indicates

that for majority of respondents, the main purpose of saving was

Children‟s education and marriage (42.2%) followed by the

expectation of high return (24.7%). Many respondents ticked other

purposes (28.4%) and on compiling the statements made by the

respondent, it was found that the other purpose stated was one‟s

own marriage, purchase of house, purchase of jewellery and for

Purpose No. of respondents

Percent

High Return 93 24.7

Children Education / Marriage 159 42.2

Tax Benefit 2 0.5

Post retirement 16 4.2

Others 107 28.4

Total 377 100.0

183

further studies. It is possible that those respondents who are

single and are earning good salary would like to assist their

parents financially during their marriage. It was observed form the

data collected, that many respondents stayed in rented house and

would like to own a place of dwelling for themselves. Purposes

like, future purchase of gold jewellery shows affinity for physical

assets especiallygold bywomen. It is also possible that young

women would like to pursue further studies with their own savings.

184

5.5.3 Source of information

Individuals rely on different sources of information for investment

analysis and enhancement of knowledge about various financial

products, which helps them in taking informed investment

decisions.

Table given below gives details about the various information

sources referred by the respondents.

Table 5.5.3

Source of Information

Source No. of

respondents

Percent

Internet 116 30.8

Newspaper& Magazines 76 20.2

TV / Radio 1 0.3

Friends & Relatives 128 34.0

Consultants 54 14.3

Others 2 0.5

Total 377 100.0

For Majority of the respondents, the main source of investment

related information are friends and relatives(34.0%) followed by

internet (30.8%),newspapers and Magazines (20.2%). As the

majority of the respondents are employed by IT KPO, BPO and

BFSI sector which uses computers and internet for daily use, the

respondents were comfortable using internet for getting

information on investments through internet.

186

5.5.4 Tax implication Every individual earning beyond a certain amount, as specified by

the government, has to pay income tax. Taxable income can be

reduced by investing in certain investment products enjoying tax

breaks, as per the notification by the central government. Popular

tax saving instruments by respondents is given below

Table 5.5.4

Tax saving product preference

Type of Investment No. of respondents

Percent

Tax saving bonds 14 3.7

Life Insurance 173 45.9

Provident Fund 122 32.4

Tax saving mutual Funds 37 9.8

Medical insurance 2 0.5

Others 29 7.7

Total 377 100

It can have observed from table 5.5.4 that majority of the

respondents preferred life insurance (45.9%) as a preferred tax

saving instrument, followed by contribution towards provident fund

(32.4%). Investments in tax saving mutual funds (9.8%) was on

lowers side. This again reiterates the importance of safety of

investments, as provident fund is handled by Government

providing safety of capital along with insurance companies who are

well regulated by the regulator and Life Insurance Corporation

187

(LIC), a government organization is a major participant in the life

insurance business.

The analysis of data indicates that the major attributes influencing

the investment pattern are

Safety

Return Expectation

Children‟s education and marriage

Tax Savings

Friends and relative‟s advice

These are in addition to the product awareness and the perception

about risk attached with a financial instrument.

188

5.6 Hypotheses Testing

Based on the objective of the study, the following additional

hypotheses were tested.

H0:There is no association between the Investment pattern and theInvestment consultant. H10:There is an association between the Investmentpattern and Investment Consultant Table 5.6.1

Type of advisor and investment Pattern

Type of Investment advisor

Type of Investment Pattern Total

NRPP MRPP RPP

Own Analysis 6 24 12 42

Spouse 39 84 20 143

Parents 38 20 6 64

Friends & Relatives 32 47 4 83

Financial Consultants 2 21 20 43

Others 1 1 0 2

Total 118 197 62 377

Table 5.6.1.1

Chi Square test for Association between investment pattern and investment consultant

Value Df Asymp. Sig

( 2 sided)





189

Inference

The investment pattern of respondents and the person whom the

respondent consults while taking investment decision is tabulated

in the table5.6.1. Chi square test was conducted to test, if there is

any association between the nature of the consultant and

investment pattern. The results are depicted in the table

5.6.1.1and it is observed that the chi square value calculated was

found to be 76.280, p <0.05, which was significant at 5%

significance level. Hence H10 is accepted, i.e. there is a

association between the person consulted for investment decision

and theinvestment pattern of the respondent.

If the respondent discussed with Spouse or financial consultant

regarding investments, then the investment pattern is likely to be of

higher risk in comparison to the investment pattern, where parents

are consulted while taking investment decisions

190

H0:There is no association between the Investment pattern and the review period. H11: There is an association between the Investment pattern and thereview period Table 5.6.2

Review period and investment Pattern

Review Period of investment


NRPP MRPP RPP

Once a Year 5 (4.2% ) 1(0.5%) 3(4.8%) 9( 2.4%)

1 – 3 years 40 (33.9%) 68(34.5%) 33(53.2%) 141 (37.4%)

More than 3 years

1 (0.8% ) 0 (0 %) 0 (0 %) 1 (0.3% )

No fixed time period

68 (57.6%) 124(62.9%) 25(40.3%) 217 (57.6%)

Never 4 (3.4% ) 4(2.0%) 1(1.6%) 9 (2.4 %)

Total 118(100%) 197(100%) 62 (100%) 377 (100%)

191

Table 5.6.2.1

Chi Square test for Association between investment pattern and review period

Value df Asymp. Sig

( 2 sided)



Linear – by – Linear association 3.768 1 .052


Inference

The investment pattern of respondents with different investment

review period is shown inthe table above. Chi square test was

conducted to test, if there is any association between the

investment review period of the respondent and the investment

pattern. The results are depicted in the table 5.6.2.1and it is

observed that the chi square value calculated was found to be

18.290(table value 15.507), p <0.05, which was significant at 5%

significance level. Hence H11 is accepted, i.e. there is association

between the investment review period and the type of investment

pattern held by the respondent.

192

H0:There is no association between the Investment pattern and the purpose of investment. H12: There is an association between the Investment pattern and thepurpose of investment.

Table 5.6.3

Purpose of investment and Investment Pattern

Investment Purpose


NRPP MRPP RPP

High Return 30 46 17 93 (24.7%)

Children Education and Marriage

41 93 25 159 (42.2%)

Tax Benefit 1 1 0 2 ( 0.5%)

Post Retirement 2 7 7 16 ( 4.2%)

Others 44 50 13 107 (28.4%)

Total 118 197 62 377 (100 %)

The investment pattern of respondents with different purposes of

investment is shown in table above.

Table 5.6.3.1

Chi Square test for Association between investment pattern and purpose of investment

Value df Asymp. Sig

( 2 sided)



Linear – by – Linear association 7.613 1 .006


193

Chi square test was conducted to test, if there is any association

between purpose of investment and investment pattern. The

results are depicted in the table 5.6.3.1 and it is observed that the

chi square value calculated was found to be 36.697, p <0.05,

which was significant at 5% significance level. Hence H12 is

accepted, i.e. there is association between the purpose of

investment and the type of investment pattern of the respondent.

Respondents with a purpose of earning higher return were holding

riskier portfolios compared to those with other investment

purposes.

194

Table 5.6.4

Summary of Hypotheses test results to find association

betweenidentifiedvariable and investment pattern

No. Hypothesis HA df Calculated Value

Table value

Inference

H1 There is an association between the investment pattern and city of residence.

4 10.428 11.143 HA Accepted

H2 There is an association between the investment pattern and age.

8 78.076 18.475 H0 Accepted

H3 There is an association between the investment pattern and theeducational background of the respondent .

8 6.726 18.475 HA Accepted

H4 Investment pattern is dependent on the annual income. ( ANOVA) F value

3 26.976 9.348 HA Accepted

H5 There is association between the Investment pattern and sector of employment

8 33.583 18.475 HA Accepted

H6 There is association between the Investment pattern and nature of job

8 9.100 18.475 H0 Accepted

H7 There is association between the Investment pattern and the marital status

6 29.107 14.449 HA Accepted

195

Table 5.6.4

Summary of Hypotheses test results to find association

betweenidentifiedvariable and investment pattern

No. Hypothesis HA df Calculated Value

Table value

Inference

H8 There is association between the Investment pattern and the family size.

6 29.107 14.449 HA Accepted

H9 There is association between the Investment pattern and the financial literacy level

6 70.719 14.449 HA Accepted

H10 There is association between the Investment pattern and Investment Consultant

10 76.280 20.483 HA Accepted

H11 There is association between the Investment pattern and the review period

8 18.290 18.475 HA Accepted

H12 There is association between the Investment pattern and the investment purpose

14 36.697 26.119 HA Accepted

196

Table 5.6.5 Identifying relationship between select

variables using correlation coefficient

Investment Pattern

Saving percentage

Annual income

Financial Literacy

Investment criteria

Investment Pattern

1 0.228** 0.422**

0.402** 0.457**

Saving percentage

0.228** 1 0.443**

0.066 0.154**

Annual income

0.422** 0.443** 1 0.168** 0.281**

Financial Literacy

0.402** 0.066 0.168**

1 0.379**

Investment criteria

0.457** 0.154** 0.281**

0.379** 1

** Correlation is significant at the 0.01 level (2 – tailed)

Above table reveals relationship between variables related to the

study carried out.Some of the significant correlations observed are

1. Investment Pattern and Annual Income, this reaffirms the

association between investment pattern and Annual income as

inferred from the chi square test.

2. Saving percentage has a strong correlation with the annual

income, as some individual earnings goup, then he or she ends

up making higher savings, as savings percentage go up, the

investments also go up.

197

3. Significant relationship is observed between investment pattern

And financialliteracy, reaffirming the inference made by the chi

square test results.

4. Significant relationship exists between the investment pattern

and

the investment criteria.

198

CHAPTER - VI

FINDINGS AND CONCLUSION

Introduction

Individuals at some stage of their life get involved in investing their

savings. There is a continuous increase in the number of

educatedemployed women. There is increase in the job

opportunities for qualified women in many sectors led by the

software, banking and financial services and the education sector.

Count of employed women having independent source of income

is increasing year on year, leading to increase in savings by

women. Women by nature are savers and invest their savings into

wide range of financial products and physical assets. Market

participants are also realizing the importance of the rapid increase

in the number of women investors and are gearing up to meet their

demands related to investments and allied services.

It will useful to know about the financial and physical assets held

by employed women in order to assess their needs and

preferences. The present study „A study on investment pattern of

women „is carried out with an aim to find and study the investment

pattern of employed women, based on the current investment held

by them. The study also makes an attempt to know the financial

199

literacy level of employed women and its influence on their

investmentpattern. Further attempt is made to find the financial

products preferred by women and the attributes which influence

their investment decisions. This concluding chapter attempts to

present the important findings and conclusion of the study.

6.1 Profile of respondents

Respondents were chosen from the cities of Bangalore, Chennai

and Cochin. Bangalore being the IT capital of India provides job

opportunities for qualified women in large numbers. Chennai is not

only the manufacturing hub, but also is an emerging IT destination.

Cochin has made rapid progress in promoting IT and financial

sector, who are traditionally providing job opportunities for women.

majority of the respondents (48.5%) were from Bangalore (48.5%)

followed by Chennai (29.4%) and Cochin (22.0%). Women from

Bangalore were more forthcoming in participating in the study in

comparison to the women from Chennai and Cochin. The other

demographic details are presented in the table below.

200

Table 6.1

Demographic profile of Respondents

Measure Value Frequency Percentage

City of residence

Bangalore 183 48.54

Chennai 111 29.44

Cochin 83 22.0

Age below 25 years 79 21.0

26 – 35 160 42.4

36 – 45 79 21.0

46 – 55 42 11.1

Above 55 17 4.5

Educational Qualification

below graduation 3 0.8

Graduate 130 34.5

Professionals 122 32.4

Post-Graduation and above 121 32.1

Others ( Diploma ) 1 00.002

Annual Income

below 5 lakhs 131 34.7

5 – 10 lakhs 197 52.3

Above 10 – 15 lakhs 43 11.4

Above 15 lakhs 6 1.6

Financial Literacy

Very Low 12 3.2

Low 143 37.9

Moderate 211 56.0

High 11 2.9

As an individual grows older, hisInvestment portfolio could get

altered due to change in his maritalstatus,commitments, family

size, work experience, product preference and decision making

process.

It was found that majority of the respondents (42.4%) were form

the age group of 26 – 35 years, followed by those who were below

201

25 years. Lower age group respondents were more willing to

participate in the survey in comparison to women aged above 45

years.

It was found that there was near equal proportion of women who

were graduates, professionals and post graduates, indicating that

the participants were well qualified.

It was found that in spite of being highly qualified, women

considered themselves to be having a low level of financial

literacy. This could be due to the dominance of men in decisions

related to finance. In younger age it is father and brothers who

take investment decisions on their behalf and this leads to lack of

participation by women in financial matters. Post marriage the

spouse dominates or influences the investment decisions. This

domination of male members reduces the enthusiasm of women to

get educated about investment related matters.

Once a woman is married there is change in the decision making

process. It was found that majority of the respondents were

married (66.8%). Majority of the respondents were from the age

group of 26 to 35 years and Indian women in this age group are

generally married. Historically investment decisions are taken by

the male members in spite of women having independent income.

202

Study found that married women consulted their spouse while

taking investment decisions.

It was found that majority of the respondents had an annual

income between rupees five to ten lakhs followed by those earning

less than five lakhs. On further analysis it was found that majority

of those earning an income between 5 to 10 lakhs were belonging

to the age group of 26 to 35 years. Respondents in this age group

were having higher work experience leading to better salaries.

It was found that majority of the respondents were from IT / KPO /

BPO sectors followed by the BFSI and Education sector. Demand

for women work force is higher in the IT and BPO sector which

results in more women working in these sectors to earn a better

salary compared to those from other sector employees.

It was found that majority of the respondents were employed in

private firms followed by government owned companies or

departments.

The Mean family size was found to be close four, which reflects

the spread of nuclear families in cities. It is found that, majority of

the respondents had a family size of four, followed by a family size

of three. This indicates that employed women prefer to have

smaller family size so as to focus on less number of children and

grow in their career as well.

203

6.2 Investment Pattern of employed women Every individual having surplus money invests in different types of

assets including financial and physical assets. Each individual has

his own method of shortlisting financial avenues to invest in. Any

individual‟s investment pattern reflects the type of assets held and

the perceived risk of the portfolio of assets held. Majority of the

respondents considered bank deposits, provident fund, postal

savings, insurance and investment in gold to be low risk products.

Respondents holding a portfolio of investments considered to be

having low risk is considered to have a non-risky portfolio pattern

(NRPP). Mutual fund investment was considered as a moderately

risky financial product. If the respondent‟s portfolio had mutual

fund along with other assets, then such a portfolio was considered

to have a moderately risky portfolio pattern (MRPP). Most of the

respondents considered investment in equity shares and

commodity to be highly risky. If equity or commodity investment

were foundin the portfolio of the respondent, then such a portfolio

was considered to have a risky portfolio pattern. The type of

financial products held by the respondent, reflects the portfolio

pattern of the respondent. Survey results indicate that women

were preferring to invest in financial products perceived to a low

risk, like bank deposits, Insurance and provident fund.

204

Investment pattern could depend on many demographic attributes.

It was found that majority of employed women had moderately

risky investment pattern followed by Non risky portfolio pattern and

risky portfolio pattern.

6.2.1 Influenceof demographic variables on investment pattern Investment pattern of employed women could be influenced by

many independent variables like city of residence,age,educational

background, marital status, family size, annualincome, financial

literacy level, product awareness and risk perception, source of

information and many other variables which were taken up for the

study.

This study made an attempt to find out and verify the impact of the

independent variables on the investment pattern. Findings are

based on the analysis of data and the result of hypothesis testing.

The data reveals that majority of the respondents were holding

moderately risky portfolio followed by low risk portfolio. Investment

pattern was more towards moderately risky portfolio pattern and no

risk portfolio pattern.

205

Result of chi-square test reveals that there is association between

the city of residence and the investment pattern. Indicating that the

investment pattern could be influence by the city where women

work.

Analysis of data revealed that women from Chennai were holding

investments carrying higher risk in comparison to women from

Bangalore and Cochin. Women from Cochin preferred holding non

risky portfolio of investments in comparison to women from

Chennai.

Majority of the respondents held moderately risky portfolio

consisted of investment in a mutual fund or equity along with bank

deposits,insurance, provident fund and jewellery.

Data further reveals that the portfolio of assets was considered

moderately risky as respondents perceived mutual funds to have

moderate risk and majority of the respondents held mutual funds in

their portfolio.

As percentage wise distribution of assets as percentage of total

assets was not collected from respondents, it was not possible to

206

know the weightage of mutual funds in the overall portfolio. Even a

small percentage of investment in mutual fund turned the portfolio

into moderately risky portfolio.

Data revealed that majority of the respondents had a work

experience of 10 years and less, split equally between five to ten

years and less than five years. Participation by women with more

than 20 years‟ work experience was less.

Based on the hypothesis testing result, it was inferred that there is

an association between age and investment pattern. Employed

women in the age group of 26 to 35 years held a moderately risky

portfolio which was much higher in comparison to women in the

age groupof 46 to 55 years, indicating that younger women were

willing to take higher risk in comparison to elder women. As

women grow older, they prefer low risk investments.

To find out, if the educational back ground of the respondent could

influence the investment pattern, Hypothesis testing was carried

out and based on the result it was inferred that there is no

association between the educational qualification and the nature of

207

investment pattern. Women avoided high risk investments

irrespective their educational back ground.

It was found that respondents earning a salary of less than Rupees

five lakhs were holding low risk portfolio of investments compared

to other income group respondents and those earning salary

above 5 lakhs were holding moderately risky portfolio compared to

other income groups. Hypothesis test result indicates an

association between income and investment pattern. Correlation of

coefficient value also reaffirms this dependence investment

patternon income.

6.3 Financial literacy level Majority of the respondents considered themselves to be

financially illiterate. This could be due to lack of interest in

managing money by themselves. From childhood girls, were not

taught to handle money themselves, rather, money was handled

on their behalf by parents and post marriage by their spouse. This

leads to women not giving a serious thought towards learning

about financial investments. They restrict themselves towards

buying of gold for self-consumption and at most are involved in

consumer durable purchases and residential properties.

208

It was found that, majority of the respondents with low financial

literacy level held a low risk portfolio. Majority of the respondents

with moderate level of financial literacy held a portfolio of

moderately risky portfolio. Those with high level of financial literacy

were not averse in making investment in risky assets. Hypothesis

test results also indicates that investment pattern has an

association with the financial literacy level of the respondent.

It was found that the risk perception about financial products varied

based on the financial literacy level. Those with higher financial

literacy level made investment in equities as the considered equity

to carry a lower level of risk in comparison to respondents with

lower level of financial literacy.

209

6.4 Types of assets held by employed women Women are familiar with traditional investment products like bank

deposits, insurance and postal savings products.

Awareness about Postal schemes was high but investment by

respondents is low, indicating that urban employed women have

lost interest in postal savings. As most of the women are tech

savvy and use internet for transactions, the lack of such facility by

postal department could be one of the reasons for lack of interest

in postal savings schemes by urban women.

It was found thatawareness level about Bank deposits, Insurance

and postal savings was very high and awareness about

commodities market awareness was verypoor.

Study revealed that the most popular investments held by the

respondents was bankdeposits, insurance, provident fund, gold

jewellery and mutual funds. Employed women avoided

investments in commodities and equities as they considered them

to be highly risky. Women prefer to avoid high risk investments

210

It was found that for majority of the employed women, the main

purpose of investment was for their children‟s education and

Marriage.

This indicates the importance of education among the educated

employed and with the cost of education going up, they prefer to

start savings at the earliest to meet their children‟s future

education cost.

Marriage is an important event in life, and in India, quite a lot of

expenses is incurred during marriages. To meet this future need,

employed women prefer to start saving from the time the children

are young. Some of the respondents who were not married also

indicated that one of the purposes of saving was meeting the

expenses of their own marriage.

Majority of the respondents had invested in gold in form of

jewellery

Investment in alternate form of gold was low. This indicates that

Women purchase gold for consumption purpose rather than for

Investment. One of the reasons could be the usage of gold in

ceremonies starting from the birth of a child till the death of a

person as per Indian customs and rituals. There seems to be no

211

decrease in consumption of physical gold, in spite of government

increasing the import duty on gold.

It was found that Awareness level about alternate form of gold

investment was poor and not much investment is made into these

schemes.

It was found that Internet has replaced newspapers and

magazines as preferred source of investment information. This

indicates that women today are tech savvy and are well versed

with technology. With the increased level of the usage of smart

phone, mobile apps may become preferred source of information

in future.

It was found that friends and relatives continue to be an

importance source for investment information. This trend is likely to

continue till women raise their financial literacy level. Women

would like to use the past experience of their friends and relatives,

before taking an investment decision.

212

It was found that among the married women, husband was the

most preferred investment advisor and for single women it was

their parents

With the increased use of social platforms like Facebook,LinkedIn,

there is a possibility of social website, where people share their

product experience, may play an important role in the world of

investments.

It was found that respondents were aware about the tax benefits

available for certain investment products. Majority preferred to

invest in provident fund and life insurance product to claim the tax

benefit.

Women prefer low risk products about which they are aware of,

and are simple to understand. This makes provident fund and life

insurance to their natural choice. There is added benefit of

employer‟s contribution as far as provident is concerned, which

contributes to its popularity among investors. There is not much

push from the government in promoting alternate schemes. Lack

of product availability with tax benefits also leaves employed

women with limited choice.

There was lack of interest in health insurance among employed

213

women. Possibly the health insurance cover is provided by the

employer. Most of the large sized firms provide health insurance

cover for their employees.

Government has stopped the pension option for state and central

government employees. There is no post retirement support from

private employers.

Study revealed that there is lack of retirement planning among

employed women. This could be due to the traditional, mind-set

that children will take care of them or it is the job of spouse to take

care of post retirement life.

Based on the above findings it can be concluded that employed

women prefer to hold low risk portfolio and are supports earlier

research findings that women are risk averse

Financial literacy of employed women is poor in spite of being

highly educated.

214

Employed women prefer to invest in simple and easy to

understand products like bank deposits,insurance, provident fund,

jewellery and there is interest in mutual fund investing

Purchase of jewellery is for consumption purpose and not with an

investment angle.

Main purpose of investment for employed women is children‟s

education and marriage

Employed women do not take investment decision alone, but

prefer to seek help of parents, friends and relatives or their

spouse.

There is lack of retirement planning among employed women.

Financial product creators can look into the above findings based

on which they can create products meeting the features expected

by employed women.

Financial product marketers can use the above findings to market

their products through the right channel and through right

intermediaries.

Mutual fund industry can use the above findings to create schemes

with objectives in alignment with the above findings about the

purpose with which employed women take investment decisions.

215

6.5 Suggestions

1. Investment decisions of individuals are driven by multiple

factors

Andit was found that the financialliteracy level of employed

Women was low. It is suggested thatthe financialproduct

creators, marketers and regulators should try to increase the

financial literacy level of women by conducting training programs

and workshops on regular basis either independently or through

their employers.

2. Government should make available more tax savings products

in order toreduce concentration of savings in LifeInsurance and

Provident fund.

3. PFRDA should create more awareness about NPS so that more

people will bemotivated to think about retirement planning

among employed women.

4. Mutual fund houses should create products keeping in mind the

investment objectives of employed women through financial

intermediaries who are willing to educate women about financial

216

investments.

6.6 Scope for further research

1. A study on the details related to the type of mutual funds held

by the employed women could further improve the classification

of the portfolio held.

2. Study could be conducted on the retirement planning among

women.

3. A comparative study between semi urban and urban women

Investment pattern could be carried out.

4. A study can be carried to compare the investment pattern of

male

and female mutual fund managers based out of India.

5. A study can be carried out to find out the type of mutual fund

schemes held by employed women .

6. A study can be carried out on the life stage investment pattern

among women.

i

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ANNEXURE

Research Survey Questionnaire

No question in the survey asks for your identification . You can write down details in places where ever space is provided . This survey is conducted for academic research . All details given will be kept confidential and will be used only for academic purpose by the researcher . Part A 1. City of residence Bangalore Chennai Cochin 2. Age (in years)Below 25 years 26 – 35 36 – 45 46 – 55 above 55 3. Marital Status Single Married Widow Others , Please Specify………… 4. Highest Education Below Graduation Graduate (Non Professional) Graduate (Professional) Post Graduation and above Others ( please specify) ..…… 5. Occupation Salaried ( Govt.) Salaried ( Private) Self Employed( Business) Self Employed ( professional)

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Others ……………… 6.Sector/ Industry of your employment Education BFSI IT / KPO/BPO Medical Others ( please specify) ………… 7. Years of work / professional experience less than 5 years 5 – 10 years 11 – 15 years 16 – 20 more than 20years 8. The current place where you live is Own Rented others 9. How many people live in your house hold including yourself Less than 3 Less than 4 Less than 5 5 and above Answer Q11 only if married and applicable 10. Number of dependent children _____Kindly give the break up Number of daughter(s) _____ Number of Son(s) ____

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Part B 11. Mark the products about which you are aware of ( not necessarily that you have invested ) Bank deposits Postal savings Insurance Bonds/Debentures Mutual funds Share market Gold funds / ETF Chit funds Real estate Pension Schemes Commodities Others …. 12. Rate the risk level of each of the investments on a scale from 1 to 5 ( put a √ mark in appropriate box )

No Risk

1

Low Risk

2

Moderate Risk

3

High Risk

4

Very High Risk

5

Bank Deposits

Insurance

Postal Savings

Life Insurance

Bonds / Debentures

Gold

Provident fund

Equity shares

Commodities

Chit funds

Real Estate

Mutual funds

Others ( if filled)

13. Your current investments are in ( tick the appropriate ones)

Bank Deposits Equity (Shares) Mutual Funds

Postal Savings Commodities Others ( specify )

Life Insurance Chit funds

Bonds/Debentures Real Estate

Gold

Provident fund

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14.Answer if you have invested in Gold , Your investment in gold is in form of Jewellery Coins Gold Mutual Fund / ETF Other form ( please specify) _____ 15. Investment feature you look into while taking investment decision,in order of importance (1 to 5 ). 1 being the most important aspectand 5 being the least in the order of importance Liquidity Safety of capital High return Tax benefit Any Other feature ( please specify) ____ 16. Main purpose of your investments High Return Children‟s education / marriage Tax benefit For post retirement expenses Other reason ( please specify) ______________________ 17. Planned investment period (Tenure) is Less than 1 year 1-3 years more than 3 years no specific time frame

18. Whom do you consult for taking investment decisions

Own Analysis/ research Spouse Parents Friends & Colleagues Financial consultants

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Others ( please specify) ………………

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19. Your sources of information for investments is Internet News paper & Magazines Television Family, Friends & Colleagues Financial Consultants Others ( please specify) ……………… 20. How often do you review your investments Once a year between 2 – 3 years above 3 years Rarely 21. Do you invest in tax saving investments Yes No 22.If yes for Q 21 , then the most preferred tax saving investment ( tick any one) Tax saving Bonds Life Insurance PPF Tax saving Mutual funds Others (please specify) __

23. Your level of financial literacy according to you ( your knowledge about financial terms , calculations of return

and other simple aspects of investments) Very Low Low Moderate High 24. Your Annual income is in the range of Less than Rs 5 Lakhs 5 – 10 Lakhs 10 – 15 Lakhs above 15 Lakhs Thank you for your patience and time in answering the questions

a study on investment pattern among employed … · whose works have been quoted in my thesis. ......

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