A

Project Report
On
“A STUDY ON SAVING HABITS OF YOUTH IN NAVSARI CITY”
Submitted to
DEPARTMENT OF BUSINESS AND INDUSTRIAL MANAGEMENT
Affiliated to
VEER NARMAD SOUTH GUJARAT UNIVERSITY, SURAT
In partial fulfilment of the
Requirement for the degree of
MASTER OF BUSINESS ADMINISTRATION (MBA)
MBA (Finance) (SEM: IV)

DEPARTMENT OF BUSINESS AND INDUSTRIAL MANAGEMENT

April-2019

1
 DECLARATION

I, Miss, Devyanikumari Jagdishbhai Patel, student of Department Of Business And Industrial

Management, VNSGU, Surat, hereby declare that the project report on “A Study On Saving
Habits Of Youth In Navsari City” has been undertaken as a part of winter Project in the
syllabus of Master of Business Administration (MBA), Veer Narmad South Gujarat university,
Surat. This report is a result of my own work and I declare that this report has not been submitted
to any other university or institute for any other purposes. I have properly acknowledged the
material collected from secondary sources wherever required.

Place:

Date:

2
Certificate of Department

3
 ACKNOWLEDGEMENT

It would not be possible for me to prepare and shape this report without the kind of co-operation
and help of person who guided me in a proper direction and providing essential information
regarding report. It is great occasion for me to thanks and express my deepest sense of gratitude
to all those who have guided, advised, inspired and supported me during my project work.

I would like to thanks our institute head as my internal guide, who gave me this opportunity to
carry out my project work and the support and guidance which she has provided to me as and
when required during my project work.

I also acknowledge our debt of gratitude to all the author and publishers whose books and
websites I have learned or used.

I would like to thanks my family, they have always protective, supportive and motivate me.
Lastly I want to thanks everyone who have directly or indirectly helped me to make my research
report more fruitful.

4
 EXECUTIVE SUMMARY
The Indian economy has been growing at a healthy rate of over 8 per cent for the last four
financial years. But has the economy growth made India more financially secure? Are the young
population now earning, spending and saving more? And do they undertake financial planning
for secure their future? This study has been initiated to seek answers these very vital questions.

The study is divided into six chapters. The first chapter is about the introduction to the study.
This chapter explains the concept of saving, saving rate in India, structure of savings, objectives
of savings, different investment avenues preferred to invest savings, different factors considered
while investing and saving habits of young population.

The second chapter is about literature review. Certain previous research which was held in
related field was taken into consideration before formulating the research. Literature review from
books, journals, research papers, etc. were taken on the matter of importance of savings,
determinants to savings, saving motives, saving patterns, etc.

The third chapter contains Research methodology. The three objectives are formulated, to study
saving habits of youth in Navsari, their preference towards different investment avenues for
savings and to determine the relationship of different demographic variables to influence their
savings. Descriptive research design has been used in this study. The sampling unit consisted of
155respondents. Those, whose age is between 21 to 40 years. The sample unit is taken from
Navsari. The sampling method followed is non-probability, convenience sampling.

The fourth chapter consists of data analysis and interpretation. The data was coded and tabulated.
Frequency analysis, cross tabulation and factor analysis is used.

The fifth chapter contains findings. Major finding is that 100% youth save money.

The sixth chapter contains conclusion of the report. The youth preferred regular saving; most of
them want save on monthly basis indicating they save regularly. They save 11%-20% of their
income. It is seen based on the survey that most of them preferred to invest their saving in
mutual funds, insurance and bank deposits, they are saving for their children education, life
expectancy and retirement. Consideration of youth while making investment is high with respect
to safety, maturity and return.

5
 TABLE OF CONTENTS

Particulars Page No.

Declaration 2
Certificate of department 3
Acknowledgement 4
Executive summary 5
List of tables 7
List of figures 8
1. Introduction 9
1.1. Introduction of study 10
1.2. Structure of savings in India 12
1.3. India’s gross saving rate 13
1.4. Determinants of savings rate 14
1.5. Objectives for savings 16
1.6. Factors considered while investing 18
1.7. Different investment avenues for savings 20
2. Literature review 22
3. Research methodology 26
3.1. Research statement 27
3.2. Objective of the study 27
3.3. Variables 27
3.4. Research design 27
3.5. Data collection method 28
3.6. Sampling design 28
3.7. Data analysis tool and methods 29
3.8. Benefits of the study 29
3.9. Limitations of the study 30
4. Data analysis 31
5. Findings 69
6. Conclusion 72
Bibliography 73
Annexure 74

6
 LIST OF TABLES
Particulars Page No.
1. Table of age 32
2. Table of gender 33
3. Table of Occupation 34
4. Table of educational qualification 35
5. Table of marital status 36
6. Table of income 37
7. Table of Preferred method of savings 38
8. Table of Annual savings out of income 39
9. Table of Marital Status and Number of children (If any) of respondents 40
10. Table of monthly income and annual savings of respondents 41
11. Table of Instruments for investing savings 42
12. Table of Objectives of respondents for saving money 43
13. Table of Factors considered by respondents while investing 44
14. Table of Advice taken while investing 45
15. Table of occupation and annual savings out of income 46
16. Table of Educational qualification and Monthly income of respondents 47
17. Table of Preferable time horizon for financial planning and return in investments of 48
respondents
18. Table of Age and annual saving out of income 49
19. Table representing monthly income and preferable time horizon for return in 50
investments
20. Table of monthly income and preferable time horizon of financial planning 51
21. Table of investments avenues and marital status 52
22. Table of investments and monthly income 53
23. Table of factors consider while saving and annual savings out of income of 55
respondents
24. Table representing different investment avenues and different factors regarding to the 56
particular investment avenue

25. Table of KMO and Bartlett’s Test 59

26. Table of communalities 60
27. Table of total variance explained 62
28. Table of component matrix 64
29. Table of rotated component matrix 66

7
 LIST OF FIGURES
Particulars Page No.
1. Figure of gross saving rate 13
2. Figure of age 32
3. Figure of gender 33
4. Figure of occupation 34
5. Figure of educational qualification 35
6. Figure of marital status 36
7. Figure of income 37
8. Figure of Preferred method of savings 38
9. Figure of Annual savings out of income 39
10. Figure of Marital Status and Number of children (If any) of respondents 40
11. Figure of monthly income and annual savings of respondents 41
12. Figure of Instruments for investing savings 42
13. Figure of Objectives of respondents for saving money 43
14. Figure of Factors considered by respondents while investing 44
15. Figure of Advice taken while investing 45
16. Figure of occupation and annual savings out of income 46
17. Figure of Educational qualification and Monthly income of respondents 47
18. Figure of Preferable time horizon for financial planning and return in 48
investments of respondents
19. Figure of Age and annual saving out of income 49
20. Figure of monthly income and preferable time horizon for return in investments 50
21. Figure of monthly income and preferable time horizon of financial planning 51
22. Figure of investments avenues and marital status 52
23. Figure of investments and monthly income 54
24. Figure of factors consider while saving and annual savings out of income of 55
respondents
25. Figure representing different investment avenues and different factors regarding 57
to the particular investment avenue
26. Figure of scree plot 63

8
 CHAPTER 1

INTRODUCTION

1.1 INTRODUCTION OF STUDY

9
Financing socio- economic activities in a country requires large amount of resources, which is
not possible to secure from taxation alone. It can be carried only through a rise in the capital
formation. In the opinion of L.G Whyte,’ the future welfare of any country depends, to a great
extent upon a high level of investment. This is possible only by generation of an adequate
volume of savings. Developing economies lay great emphasis on the importance of domestic
savings as they are the source of investments to break the vicious circle of poverty and under
development.

The saving habits differ for people in different sections of society. India’s present population
comprises of 1.31 billion people in which almost 50% of population is youth. The people in the
middle class consider basic necessities, education of their children as their top priorities,
followed by lifestyle goods. The rich class spends huge on luxury goods and on international
brands. The super-rich class spends on ultra-luxury goods.

Youth savings accounts are one tool with the potential to encourage both youth development and
financial inclusion possibly even in a financially sustainable way. For individuals, a financial
cushion such as savings is clearly useful in mitigating the impact of economic shocks. Research
has shown that making formal sector savings accounts available can boost this financial cushion
among both youth and adults. Research and experience to date suggest that savings accounts for
low-income youth may be a high-leverage tool to achieve both youth development and financial
inclusion objectives.

A very old Chinese proverb says, ‘If you are planning for a year, grow rice; if you are planning
for a decade, plant trees; if you are planning for a lifetime, educate people’. There could not be a
statement truer than this... and it’s truer when it comes to financial education or financial
literacy. This financial literacy comes through how money could be earned? Spend? Save? In a
country like India where income standard is almost uncertain and leads to more consumption
than saving which has now been a central problem. If the saving is low, then the investment will
also be low leading to low capital formation. In this study we shall go through one of the aspect
of it which is saving. Saving motive is a desire to reserve certain portion of income for future
needs.

10
Saving is an important determinant of economic growth. Saving components can be based on an
individual or on household basis which proves to be the well being. As for an individual savings
becomes the cushion for the future’s intercourse of the unforeseen and upcoming as well as the
uncertain circumstances of life. Saving is the part of the income earned by the individuals.

Saving is income not spent, or deferred consumption. Methods of saving include putting money

aside in, for example, a deposit account, a pension account, an investment fund, or as cash.
Saving also involves reducing expenditures, such as recurring costs. In terms of personal finance,
saving generally specifies low-risk preservation of money, as in a deposit account,
versus investment, wherein risk is a lot higher; in economics more broadly, it refers to any
income not used for immediate consumption. Saving differs from savings. The former refers to
the act of increasing one's assets, whereas the latter refers to one part of one's assets, usually
deposits in savings accounts, or to all of one's assets. Saving refers to an activity occurring over
time, a flow variable, whereas savings refers to something that exists at any one time,
a stock variable. 

Savings habits were defined as frequently practiced behaviors, done without a particular sense of
awareness, with the goal of freeing up funds for saving or debt reduction. Saving is all about the
future, about anticipating and preparing for possible risks and emergencies, preparing for
upcoming events and expenditures, or starting a new business, or expanding an existing one.
Savings in these times has become all the more important. Inflation, volatility in the equity and
the commodities markets, and economic turmoil has been so dramatic and quick that keeping
pace with them could be a nightmare.
Broadly speaking, there are three main reasons why an individual might wish to save and invest.
The first reason is to protect their hard-earned money and ensure its safety. The second reason is
to generate current income with which to meet expenses and the third is a desire to grow their
principal and achieve capital gains. 

In a developing economy in which there will be always surplus money available with some
sectors to the extent that the savings are tapped, the money available for circulation is taken
away and to that extent pressure on prices and inflationary trend is reduced. So therefore savings
have got a very important role to play in the sphere of economy.

11
1.2 STRUCTURE OF SAVINGS IN INDIA

The types of saving are mainly based on the income available to the household, firm and
corporate bodies. The saving type can be classified on the basis of the sectors accounting for the
saving distribution. It can be broadly classified under three headings namely, (a) household
sector saving, (b) private sector saving and (c) public sector saving. The categories of savings are
discussed below:

1. Household Sector Saving:-

The savings done or accrued by the individual members in a household consists of household
sector saving. The household saving contributes to a larger share in the Indian economy which
comprises of the individuals saving behaviour at a larger scale including the financial as well as
the financial assets. The individuals at the household level make a share to the national income
computation of a country.

2. Private Corporate Sector saving:-

The savings made in the private owned corporations are called as the private sector corporations.
The private corporate sector comprises of (i) non-government non-financial companies, (ii)
commercial banks and insurance companies working in private sector, (iii) co-operative banks,
credit societies and non-credit societies and (iv) non-banking financial companies in the private
sector.

3. Public Sector Saving:-

The public sector’s savings are constituted into (i) government savings, and (ii) savings
generated by the public sector undertakings in the form of internal resources. One process of
estimating public sector saving is to scrutinize the relationship between public savings and the
consolidated returns shortage of government which is an alternative measure of government
savings.

The saving can be held in the form of increases in (a) Liquid assets like currency bank deposits
and gold (b) Financial assets like shares, securities and insurance policies and physical assets.
The corporate sector includes joint stock companies in the private business sector, industrial

12
credit and Investment Corporation etc., and cooperative institutions. Saving of the corporate
sector is represented by the retained earnings of this sector. Government sector consists of the
central and state government, the local authorities and various government and department
undertakings; hence the saving of this sector relates to the budgetary surplus on current account
of the central government, state government, local authorities, the current surplus of various
government departments and retained projects of government undertakings.

1.3 INDIA’S GROSS SAVING RATE

Gross national saving is derived by deducting final consumption expenditure from Gross national
disposable income, and consists of personal saving, plus business saving, plus government
saving, but excludes foreign saving. The figures are presented as a percent of GDP. A negative
number indicates that the economy as a whole is spending more income than it produces, thus
drawing down national wealth (dissaving).

India's Gross Savings Rate was measured at 30.5 % in Mar 2018, compared with 30.3 % in the
year 2017. India Gross Savings Rate is updated yearly, from Mar 1951 to Mar 2018, with an
average rate of 19.0 %. The data reached an all-time high of 37.8 % in Mar 2008 and a record

13
low of 8.0 % in Mar 1954.

Gross saving Rate

40
37.82
36.02
36.91 34.65
35 36.02
34.93
33.88 32.12 Gross saving Rate
31.09
32.24 30.51
30
30.26

25
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

[Figure 1]

1.4 DETERMINANTS OF SAVINGS RATE

The household’s decision to consume present or in the future is influenced by the current or
permanent income. The significance of ‘incentives’ as a determinant of savings is that although
there has been a long footing fright about the effects of the level of per family income upon
proportion of income that is saved, there has been no comparable concern about the effect of
variation in the relative prices of new income streams upon savings and investment. There are
number of factors which determine the saving rate in an economy. Some of the important
determinants are discussed below:

1. Real Per Capita Income:-

14
The real per capita income of the individuals proves to be a foremost determinant of saving rate.
When the income of an individual increases the consumption pattern improves which in the
sense some part is left out which goes to saving as to secure one’s unforeseen future. As rightly
pointed out by the neoclassical growth model that higher savings rate will lead to higher steady
situation levels of income (or output) per capita, while the endogenous growth theory models
imply that higher savings rates would lead to higher levels of growth of income per capita. Thus
in common, both the variables should be well thought-out. The real (in stable domestic prices)
Gross Domestic Product (GDP) per capita is used as an estimation of real income. These two
indicators rightly give an outlay to the saving pattern.

2. Demographic Features:-

The saving can be most often determined by the demographic features like the sex ratio, the age
distribution, and the rate of dependant population. Saving is highly determined by whether the
female’s contribution towards saving is more or the male is contributing to its highest level and
again if the problem of the age distribution in the family contributing to the saving is optimum
then the saving rate is determined in a different perspective. Aggregate savings is exaggerated
by the age distribution of the population if the carve up of dependent population is high than the
income earning groups, the savings ratio will be low. According to the life-cycle hypothesis a
larger working population next of kin to the older population contributes to raise the savings
rate. In an instance if the income earning population is comparably high to that of the dependant
population then the saving rate will experience a hike which is in some way will lead to income
propagation in a country in a long term basis.

3. Share of Agriculture to GDP:-

India is an agriculture dominant country where most of the people are engaged in agricultural
activity in which the concentration of the rural population is more. As because of some way or
the other the production level decides the fate of the individual farmers which sometimes
experiences a high production level will have more income and will automatically encourage the
people to save more and if the production is less than the income will have a fall resulting in a
sharp fall in the saving rate. The rural or agricultural sector of the economy can display different
savings behaviour than the urban/industrial sector, especially in the case of developing

15
countries, with large agricultural sectors. The agricultural sector could have a different savings
rate due to a lower access to the banking system and because of lower and unbalanced incomes
in the agricultural sector and sometimes due to lack of access to other financial institutions
nearby also determines the saving rate.

4. Real Interest Rates:-

Every banking institution including other financial institutions encourages people to save with
an expectation of giving a considerable amount of rate of interest on the saving amount. This
rate of interest determines the saving rate of the individuals on a view to encourage people
towards saving. When the rate of interest is high people are more interested to save rather than
invest and when the rate of interest is less people are less inclined towards saving rather than
they are likely to invest more in an expectation of getting more rate of return. There is a negative
and an inverse relationship between savings and rate of interest. Critically, an increase in
interest rates will have an indefinite effect on savings because of a positive substitution effect
towards future consumption and a negative income effect due to increased real proceeds on
saved wealth.

5. Social Barriers:-

The society we live in is full of constrains likely due to variations and distinctness in the age,
sex, culture, tradition, social taboos, and many more which by playing an important role
determines the saving behaviour of any region, state or country. Income plays a major role in
identifying the saving distinctness among different groups but income cannot always remove all
the barriers for availing the opportunities because of the variations offered in the context of
culture, gender, class etc. People belonging to diverse ethnic groups can have a refutation to the
equal admittance to education, employment, and other basic services by the social and financial
institutions as well as the investment opportunities available.

1.5 OBJECTIVES FOR SAVINGS

The following objectives of savings were considered while studying the saving habits of young
parents:

16
 1. Emergency

An emergency is a situation that poses an immediate risk to health, life, property,

or environment. Most emergencies require urgent intervention to prevent a worsening of the
situation, although in some situations, mitigation may not be possible and agencies may only be
able to offer palliative care for the aftermath. While some emergencies are self-evident (such as
a natural disaster that threatens many lives), many smaller incidents require that an observer (or
affected party) decide whether it qualifies as an emergency. The precise definition of an
emergency, the agencies involved and the procedures used, vary by jurisdiction, and this is
usually set by the government, whose agencies (emergency services) are responsible for
emergency planning and management. Life is unpredictable; one second might be perfect while
the next may be a catastrophe. While you cannot predict an emergency, you can definitely make
preparations for one. Early investments will come to your aid is such contingencies.

2. Retirement

When a person chooses to leave the workforce, the concept of full retirement – being able to
permanently leave the workforce in old age – is relatively new, and for the most part only
culturally-widespread in first-world countries. Many developed countries have some type of
national pension or benefits system (i.e. the United States' Social Security system) to help
supplement retirees' incomes.

3. Children’s education

Investing in our children’s future is the cornerstone in preparing them to become successful and
prominent members in their society or community. Education planning is one such activity to
equip our children with main success pillar. An education savings plan is designed to help you
plan for the cost of higher education by guaranteeing the growth of your contributions over the
years.  Contributions can be made regularly on a monthly, quarterly, semi annually or annual
basis as well as in the form of single payment. It is imperative to note that the earlier you start
saving toward your future goal the lesser the contribution amount that you are required to make.

4. Standard of Living

17
Standard of living refers to the necessaries, comforts and luxuries which a person is accustomed
to enjoy. In other words, standard of living of the people means the quantity and quality of their
consumption. A person may want to raise his standard of living which can be achieved only
through savings from his present income. We know that if a person satisfies some wants in a
particular manner long enough, they recur and become habits. He must have those commodities
and services; over and over again otherwise he would not feel happy. Such things become his
daily requirements and constitute what has been called his standard of living. They include his
food, dress, house, entertainments, etc. Standard of living is, in short, his mode of living.

The standard of living of a person is not determined only by himself or according to his own
whims and desires. He has also to consider what society expects of him. It is thus a compromise
between what he himself likes and what the society expects.

5. Volatility of life expectancy

Life expectancy is a statistical measure of the average time an organism is expected to live,
based on the year of its birth, its current age and other demographic factors including gender.
With higher life expectancy, individual need wealth for living and for their expenses.

6. Social Status

Only wealthy persons are respected in the present society. Everybody wants to enjoy a higher
social status. Many believes that for higher social status wealth is very important. Thus, people
believes in increase in wealth for getting social recognition.

7. Financially Independence

We all crave for financial independence; none of us would like to be dependent on someone else
for our next meal. Investments help you to achieve financial independence; they get you into the
habit of saving money regularly and help you to differentiate between what you want and what
you need.

18
1.6 FACTORS CONSIDERED WHILE INVESTING

1. Liquidity:-

Liquidity means how quickly you can get your hands on your cash. In simpler terms, liquidity is
to get your money whenever you need it. Liquidity might be your emergency savings account or
the cash lying with you that you can access in case of any unforeseen happening or any financial
setback. Liquidity also plays an important role as it allows you to seize opportunities. If you have
cash and easy access to fund and a great deal comes along, then it's easier for you to cease that
opportunity.

2. Maturity:-

Maturity is the date on which the life of a transaction or financial instrument ends, after which it
must either be renewed, or it will cease to exist. The term is commonly used for fixed
income instruments such as bonds. Some financial instruments, such as deposits and loans,
require repayment of principal and interest at maturity; others, such as foreign
exchange transactions, provide for the delivery of a commodity. Still others, such as interest rate
swaps, consist of a series of cash flows with the final one occurring at maturity. While investing
in a particular investment avenue, it is important to decide maturity period.

3. Return:-

A return, also known as a financial return, in its simplest terms, is the money made or lost on an
investment. A return can be expressed nominally as the change in dollar value of an investment
over time. A return can be expressed as a percentage derived from the ratio of profit to
investment. Prudent investors know that a precise definition of 'return' is situational and
dependent on the financial data input to measure it. An omnibus term like 'profit' could mean
gross, operating or net, before tax or after tax revenues or income. An omnibus term like
'investment' could mean selected, average or total assets, debt or equity.

4. Marketability:-

19
A marketable security is any equity or debt instrument readily salable and can be converted into
cash or exchanged with ease. Stocks, bonds, short-term commercial paper and certificates of
deposit (CDs) are all considered marketable securities because there is a public demand for them
and they can be readily converted into cash. While shares in private corporations are illiquid,
marketable securities can be converted to cash with great ease.. Marketable securities provide
investors with the liquidity of cash and the ability to earn a return when the assets are not being
used.

5. Safety:-

Safety of the investment can be define as the value of investment will not decreased, or at the
end of the particular period, investor get the value of investment without any loss. Investment
risk can be defined as the probability or likelihood of occurrence of losses relative to the
expected return on any particular investment. Stating simply, it is a measure of the level of
certainty of achieving the returns as per the expectations of the investor.

6. Tax benefits:-

Tax benefit refers to any type of investment, account, or plan that is either exempt from taxation,
tax-deferred, or offers other types of tax benefits. Examples of such investments are tax free
bonds, unit linked insurance plan, public provident funds, employee provident funds, national
security bonds, equity linked saving schemes, sukanya samriddhi yojana etc. These types of
investments are used by a wide variety of investors and employees in various financial situations.
There is now a need to look at better  investments, that offer tax free interest income in India.

1.7 DIFFERENT INVESTMENT AVENUES FOR SAVINGS :-

1. Direct equity
Investing in stocks may not be everyone's cup of tea as it's a volatile asset class and there is no
guarantee of returns. Further, not only is it difficult to pick the right stock, timing your entry and
exit is also not easy. The only silver lining is that over long periods, equity has been able to
deliver higher than inflation-adjusted returns compared to all other asset classes.  At the same
time, the risk of losing a considerable portion of capital is high unless one opts for stop-loss
method to curtail losses. In stop-loss, one places an advance order to sell a stock at a specific

20
price. To reduce the risk to certain extent, you could diversify across sectors and market
capitalization. Currently, the 1-, 3-, 5 year market returns are around 13 percent, 8 percent and
12.5 percent, respectively. To invest in direct equities, one needs to open a demat account. 

2. Mutual funds
Mutual funds are an easy and tension free way of investment and it automatically diversifies the
investments. A mutual fund is an investment only in debt or only in equity or mix of debts and
equity and ratio depending on the scheme. They provide with benefits such as professional
approach, benefits of scale and convenience. Further investing in mutual fund will have
advantage of getting professional management services, at a lower cost, which otherwise was not
possible at all. In case of open ended mutual fund scheme, mutual fund is giving an assurance to
investor that mutual fund will give support of secondary market. There is an absolute
transparency about investment performance to investors. On real time basis, investors are
informed about performance of investment.

3. Public Provident Fund (PPF)

The Public Provident Fund (PPF) is one product a lot of people turn to. Since the PPF has a long
tenure of 15 years, the impact of compounding of tax-free interest is huge, especially in the later
years. Further, since the interest earned and the principal invested is backed by sovereign
guarantee, it makes it a safe investment. Read more about PPF. 

4. Bank fixed deposit (FD)

A bank fixed deposit (FD) is a safe choice for investing in India. Under the deposit insurance and
credit guarantee corporation (DICGC) rules, each depositor in a bank is insured up to a
maximum of Rs 1 lakh for both principal and interest amount. As per the need, one may opt for
monthly, quarterly, half-yearly, yearly or cumulative interest option in them. The interest rate
earned is added to one's income and is taxed as per one's income slab.

5. Real Estate

21
The house that you live in is for self-consumption and should never be considered as an
investment. If you do not intend to live in it, the second property you buy can be your
investment. The location of the property is the single most important factor that will determine
the value of your property and also the rental that it can earn. Investments in real estate deliver
returns in two ways - capital appreciation and rentals. However, unlike other asset classes, real
estate is highly illiquid. The other big risk is with getting the necessary regulatory approvals,
which has largely been addressed after coming of the real estate regulator. Read more about real
estate. 

6. Gold 

Possessing gold in the form of jewellery has its own concerns like safety and high cost. Then
there's the 'making charges', which typically range between 6-14 per cent of the cost of gold (and
may go as high as 25 percent in case of special designs). For those who would want to buy gold
coins, there's still an option. One can also buy ingeniously minted coins. An alternate way of
owning paper gold in a more cost-effective manner is through gold ETFs. Such investment
(buying and selling) happens on a stock exchange (NSE or BSE) with gold as the underlying
asset. Investing in Sovereign Gold Bonds is another option to own paper-gold. 

22
 CHAPTER 2

LITERATURE REVIEW

The present chapter discusses the earlier theoretical and empirical literature relating to saving
habits. Saving is considered as an important determinates of investment and growth of an
economy. The determinants and the pattern of saving behaviour have been significantly changing
due to the globalization, introduction of technology in financial sector in last few decades.
Various studies on these issues were conducted. Some noteworthy studies are as follows:

Securities and Exchange Board of India (SEBI) and NCAER (2000) 'Survey of Indian
Investors' has reported that safety and liquidity were the primary considerations which
determined the choice of an asset. Ranked by an ascending order of risk perception fixed deposit
accounts in bank were considered very safe, followed by gold, units of UTI-US64, fixed deposits
of non-government companies, mutual funds, equity shares, and debentures. Households'

23
preference for instruments in which they commonly invested matched the risk perception. Bank
deposits, which had an appeal across all income classes and tax-saving schemes, were preferred
by middle-income and higher-income groups. There was a correlation between the income levels
and investments of households in market-related securities.

The financial security and well-being of Indian households by Dr. Rajesh Shukla, team
leader and principal author, from NCAER and Max New York Life (2007) examined the
financial security and well-being of Indian households and generated a risk profile of Indians
across socioeconomic groups. It concluded that in India, where social security is virtually non-
existent, there is an urgent need to create awareness about financial protection, amongst both the
masses and the classes. The survey brings to fore stark disparities in the earning, saving and
spending patterns of rural and urban India. There is an urgent need to work towards making
households financially more literate.

Max New York Life and National Council for Applied Research (NCAER) India‟s
Financial Protection Survey (2007) gives an unparalleled view of the financial behaviour of
Indian households that is how they earn, how they spend and how they save. The survey
discovered several challenges in the Indian market that are enumerated below. As per the
findings of the study 96 percent of households feel that they cannot survive for more than a year
on their current savings in case of loss of major source of household income. Second, there is
widespread misplaced financial optimism amongst Indians, 54 per cent Indians are confident
about their current and future financial stability. Thirdly, while Indians are great savers, they do
not save wisely. Around 81 per cent of Indian households save. But the money they save is either
lying in their homes, or in banks. Majority of Indian does not save for the long term. And lastly,
while awareness on life insurance is high (78 per cent of Indian households are aware of life
insurance), ownership of policies is low. Only one – fourth of the Indian households own a life
insurance policy.

24
Relationship between expectation of returns and saving by Clifford Paul S and Joseph
Anbarasu a lecturer, Department of Management Studies, Tiruchirappalli, Tamil Nadu
(June, 2008) studied the saving pattern of the people under observation, to determine the
relationship between expectation of returns and saving, to determine the factors influencing the
reason for saving, to study the purpose for saving along with income distribution, to study the
contribution of insurance to savings. Certain findings in the study are educational qualification
plays an important role in influencing the saving pattern. Even though the people expect return
on their investment, they are not very precise on their expectation. Whatever their avenue of
investment the awareness of the returns is very poor. People are not aware that insurance can be
considered as a saving avenue. People feel that insurance is only for the purpose of risk and tax.

The shift in the savings and investment patterns of the households sector by Ch. Krishnudu
and G. Ramakrishna Reddy, Nandyal (June, 2009) examined, over the last few years, the shift
in the savings and investment patterns of the households sector. This article aimed to find the
awareness and preferences of investors for different investment options available to them and to
analyze the factors influencing their perception and preferences. Conclusion drawn from the
study was that the objectives for making investment are many and varied and differ from person
to person. These may be either to get a regular, uniform, safe and continuous return in the future
with moderate risk or to enjoy the benefits of capital appreciation with attached risk.

YOUNG PEOPLE AND SAVINGS, A ROUTE TO IMPROVED FINANCIAL

RESILIENCE by Issahaku (2011) identified the age composition and assets do not have a
major effect on saving. The factors that make household investment are occupation, expenditure,
assets and saving. Any assessment or policy pertaining to finance and development by
government, the private sector or financial institutions geared towards improving saving and
investment in Nadowli must integrate these factors. Primary data were collected from the
households of Nadowli. Interviews and discussions were vigorously pursued with sample
households and this was mainly geared towards resulting appropriate responses to some of the

25
frequently asked questions about saving and investment. This paper studied on a microeconomic
approach of estimating the determinants of financial saving and investment in one of the most
underprivileged district capitals in Ghana, the Nadowli in the Nadowli District of the Upper
West Region. Two separate compound linear regression models were fixed for saving and
investment. The variables used saving, investment, household income, dependents, assets,
educational status as the determinants of saving. The paper found that age composition and
assets do not have a significant effect on saving. The factors that constrain household investment
are occupation, expenditure, assets and saving. In view of the untold of saving and investment
potentials in Nadowli, the government, financial and non-financial institutions and other
corporate bodies have a part to play to obtain advantage of these potentials and opportunities.

The research undertaken by Indian Market Research Bureau (IMRB) on behalf of Aviva
found that 67 per cent of the respondents prioritized planning for their child’s future over
retirement, health and other contingencies. It found that parents regarded education as an
investment or a key input to secure the child’s future. Conclusion from the study have pointed
out increasing cost of education and the need to do proper planning to give quality education.

CHAPTER 3

26
 RESEARCH METHODOLOGY

3.1 Research problem Statement

“A study on saving habits of youth in Navsari city”

3.2 Objectives

 To study the saving habits of youth

 To study their preference towards different investment avenues for savings
 To study the demographic variables influencing saving habits of youth

3.3 Variables

The research has identified variables for the present study which are listed as below:

 Independent variables -
1. Age
2. Gender

27
 3. Educational qualification
4. Occupation
5. Marital status
 Dependent variables -
1. Monthly income
2. Annual saving (in percentage)
3. Instruments for savings
4. Factors considered while saving
5. Objectives for savings

3.4 Research Design:

A research design is the specification of the method and procedure for acquiring the information
needed, or we can say it is the plan or framework for a study i.e. use as guide in collecting and
analysing data. Research design provides the glue that holds the research project together. A
design is used to structure the research, to show how all of the major part of the research project
work together to try to address the central research questions. The present study is a research
design consisting of descriptive research.

Descriptive research design:

Descriptive studies are undertaken in many circumstances. When the research is interested in
knowing the characteristics of certain groups such as age, gender, educational level, occupation
or income, a descriptive study may be necessary. Descriptive research utilizes data collection and
analysis techniques that yield reports concerning the measure of central tendency, variation. The
combination of its characteristics summary. Along with its focus on specific types of research
questions, methods, and outcomes is what distinguishes descriptive research from other research
types.
Descriptive research design has been used in this study. This study will enable me to describe the
characteristics of youth in Navsari. Such characteristics includes their saving out of income, their
preference towards different investment avenues, their objectives for saving, the factors which
they considered while investing, impact of their demographic variables on their saving habits,
etc.

28
3.5 Data collection method

Primary data collection- The present study is based on primary data. The relevant data has been
collected from a sample of 155 respondents using structured questionnaire. The data was
collected from 21-40 years (youth) respondents of Navsari city.

Instrument: Structured questionnaires

Secondary data

For the secondary data, use of the available literature, websites and other relevant publications
has been made to find out the theoretical framework and also to know what early research
mentioned regarding the given topic.

3.6 Sample design:-

Target Population

Target population for the study is youth of Navsari city.

Operational definition of youth for study – Here youth is considered as the age group between
21 - 40 years.

Sampling unit

Youth of Navsari city who are saving from their income are the sampling unit for this study.

Sample size
155 young people of age group between 21 – 40 years

Sampling method

The sampling method used in research is Convenience Sampling Method (non probability
technique)

3.7 Data analysis tools/method

Data interpretation and analysis have been conducted by using SPSS 20 and & MS Excel 2007.

29
  Frequency analysis is used for data description.
 In order to examine significant relationship between variable cross tabulation is applied.
 In order to identify key factors affecting the concern of the savings of the youth factor
analysis carried out.

3.8 Benefits of the study:-

1. This study provides information regarding saving habits of youth.

2. It gives details regarding some investment avenues which are preferred by youth for
investment of their savings, their objectives for investing their savings, their preferred
time horizons for financial planning as well as for return on investments.
3. It also provides information regarding different factors which are considered by youth for
their investments.
4. This study also provides information regarding different investment avenues and most
preferred factor for that avenue by respondents.
5. This study will be beneficial for financial advisors to get details about youth’s saving
habits.

3.9 Limitation of the study

1. Non-availability of secondary data: There was non-availability of sufficient literature on

saving habits of youth. If some more published research study would have been available
on particular topic, it may perhaps have helped in making the study still better.

2. Possibility of bias in respondents answers: There is possibility that the answer given by
respondents may be biased, which was a future constraints within which a study of this
nature had to operate. Some of respondents might not have answered the questionnaire
with complete seriousness and might have done discrimination in answers.

3. Non-generalization of the results: The study was confined to Navsari city and its finding
may not be applicable to other areas. Since secondary data have been collected from

30
 more than one source, there may be slight discrepancies between one source and another
on the same variable.

4. Limited respondents : As this study considers 155 respondents, who save money from
their income, and comes in the age group of 21-40 years, so that this study can’t apply on
other age group people.

31
 CHAPTER 4

DATA ANALYSIS

32
 1. Age of respondents

Frequency Percent Cumulative

Percent
21 –
53 34.2 34.2
25
26 –
70 45.2 79.4
30
Valid
31 –
25 16.1 95.5
35
[Table 1] 36-40 7 4.5 100.0
Total 155 100.0

[Figure 2]

Interpretation :- Out of 155 respondents, 70 are from age group of 26 – 30 years (45.2%), 53
are from 21 – 25 years (34.2%), 25 are from 31- 35 years (16.1% ) and remaining 7 are from the
age group of 36-40 years (4.5%).

33
 1. Gender of the respondents
Frequency Percent Cumulative
Percent
Male 86 55.5 55.5

Valid Female 69 44.5 100.0

Total 155 100.0

[Table 2]

[Figure 3]

Interpretation:- Out of 155 respondents, 86 are male (55.5% ) and 69 are female (44.5% )
respondents.

34
 2. Educational qualification
Frequency Percent Cumulative
Percent
S.S.C. 21 13.5 13.5

H.S.C. 15 9.7 23.2

Graduation 58 37.4 60.6

Valid Post
57 36.8 97.4
graduation
Other 4 2.6 100.0

Total 155 100.0

[Table 3]

[Figure 4]

Interpretation:- Out of 155 respondents, 58 have completed graduation (37.4%), 57 have

completed post graduation (36.8%), 21 are S.S.C. pass (13.5%), 15 are H.S.C. pass (9.7%) and 4
have qualification in other degree (2.6%).

35
 3. Occupation
Frequency Percent Cumulative
Percent
Business 22 14.2 14.2

Service 94 60.6 74.8

Valid Professional 29 18.7 93.5

Others 10 6.5 100.0

Total 155 100.0

[Table 4]

[Figure 5]
Interpretation:- Out of 155 respondents, 94 are doing service (60.6%) as their occupation, 29
are professional (18.7%), 22 are doing business (14.2%) and 10 are in other occupation (6.5%).

36
 4. Marital Status
Frequency Percent Cumulative
Percent
Unmarried 76 49.03 49.03

Married 76 49.03 98.06

Valid
Divorcee 3 1.935 100.0

Total 155 100.0

[Table 5]

[Figure 6]

Interpretation:- Out of 155 respondents, 76 are unmarried (49.03%), 76 are married (49.03%)
and 3 are divorcee (1.935%).

37
 5. Monthly income
Frequency Percent Cumulative
Percent
Less than 10,000 4 2.6 2.6

10,000 - 25,000 62 40.0 42.6

25,000 - 50,000 63 40.6 83.2

Valid
50,000 - 1,00,000 18 11.6 94.8
More than
8 5.2 100.0
1,00,000
Total 155 100.0

[Table 6]

38
 [Figure 7]

Interpretation:- Out of 155 respondents, 63 are having monthly income of 25000-50000

(40.6%), 62 are having monthly income of 10000-25000 (40%), 18 are having monthly income
of 50000-100000 (11.6%), 8 are having monthly income of more than 100000 (5.2%) and 4 are
having monthly income of less than 10000 (2.6%).
6. Preferred method for saving
If yes, then Total
Regularly Irregularly
(Monthly)
Do you save
Yes 114 41 155
money?
Total 114 41 155
[Table 7]

39
 [Figure 8]

Interpretation:- Out of 115 respondents, all are saving money, out of which, 73% are saving on
regular basis that is monthly, while 27% are saving irregularly.

7. Annual savings out of income

Frequency Percent Cumulative
Percent
Valid 1% - 10% 22 14.2 14.2

11% - 20% 93 60.0 74.2

21% - 30% 35 22.6 96.8

31% - 40% 5 3.2 100.0

40
 Total 155 100.0

[Table 8]

[Figure 9]
Interpretation:- Out of 155 respondents, 60% are saving 11%-20% of their annual income,
22.6% are saving 21%-30% of their annual income, 14.2% are saving 1%-10% of their annual
income and 3.2% are saving 31%-40% of their annual income, not a single respondent is saving
more than 41% of their annual income.
8. Marital Status and Number of children (If any) of respondents
Number of children If any Total
No 1 More than
children 1
Unmarried 76 0 0 76
Marital
Married 14 33 29 76
Status
Divorcee 0 3 0 3

41
 Total 90 36 29 155
[Table 9]

[Figure 10]

Interpretation:- Out of 155 respondents, 76 are unmarried, so they are not having child, Out of
remaining 79, 76 are married, out of them 14 are not having any child, 33 are having one child,
while 29 are having more than one children. Remaining 3 respondents are divorcee, having 1
child each.
9. Monthly income and annual savings of respondents
[Table 10]
Monthly income Total
Less than 10,000 - 25,000 - 50,000 - More than
10,000 25,000 50,000 1,00,000 1,00,000
Annually 1% - 10% 1 12 9 0 0 22
savings 11% - 20% 3 43 37 7 3 93

42
 21% - 30% 0 6 16 9 4 35
out of 31% - 40% 0 1 1 2 1 5
Total 4 62 63 18 8 155

[Figure 11]

Interpretation:- Out of 155 respondents, 60% respondents are saving 11%-20% of their annual
income, out of which 43 are having income of 10000-20000. There are only 3.22% respondents
who are saving 31%-40% out of their income annually, there are only 8 respondents whose
income is more than 100000, out of them 4 are saving 20%-30% of their annual income.

43
 2. Instruments for investing savings
saving instruments Responses Percent of
N Percent Cases
Postal savings 23 4.2% 14.8%
Bank deposits 81 14.8% 52.3%
Insurance 101 18.5% 65.2%
Mutual funds 115 21.0% 74.2%
Real estate 38 6.9% 24.5%
Equity 44 8.0% 28.4%
Employee provident fund 35 6.4% 22.6%
Public provident fund 26 4.8% 16.8%
Gold 58 10.6% 37.4%
Silver 13 2.4% 8.4%
Other 13 2.4% 8.4%
Total 547 100.0% 352.9%
[Table 11]

[Figure 12]

Interpretation:- Out of 155 respondents, 115 respondents, which is 74.2% are investing their
savings in mutual funds, and 101 respondents, which is 65.2% are investing their savings in
Insurance, followed by Bank deposits, which is 52.3%, then gold, which is 37.4%, then equity
28.4%, real estate 24.5%, Employee provident fund 22.6%, public provident fund 16.8%, postal
savings 14.8%, silver 8.4% and other 8.4% respectively.

44
 10. Objectives of respondents for saving money
Responses Percent of
N Percent Cases
Medical emergency 50 9.9% 32.3%
Retirement 75 14.9% 48.4%
Children’s education 84 16.7% 54.2%
Life expectancy 80 15.9% 51.6%
Financially
72 14.3% 46.5%
Independence
Buying house 65 12.9% 41.9%
Uplifting standard of
33 6.6% 21.3%
living
Buying vehicle 26 5.2% 16.8%
Any other 18 3.6% 11.6%
Total 503 100.0% 324.5%

[Table 12]

[Figure 13]

Interpretation:- Out of 155 respondents, 54.2% are saving for their children’s education, 51.6%
are saving for their life expectancy, 48.4% are for retirement, 46.5% are for financially
independence, followed by 41.9% for buying house, 32.3% for medical emergency, 21.3% for
uplifting standard of living, 16.8% for buying vehicle, and 11.6% are saving for other objectives.

45
 3. Factors considered by respondents while investing
Responses Percent of
N Percent Cases
Liquidity 41 8.9% 26.5%
Safety 121 26.1% 78.1%
Maturity 116 25.1% 74.8%
Tax banafits 63 13.6% 40.6%
Marketability 53 11.4% 34.2%
Returns 69 14.9% 44.5%
Total 463 100.0% 298.7%

[Table 13]

[Figure 14]

Interpretation:- Out of 155 respondents, 78.1% respondents consider safety of their

investments, 74.8% are considering maturity period, then 44.5% consider return on their
investment, 40.6% considers tax benefits, 34.2% considers marketability and 26.5% considers
liquidity respectively.

46
 11. Advice taken while investing
Frequency Percent Cumulative
Percent
Family members 21 13.5 13.5
Friends &
38 24.5 38.1
colleagues
Self decision 39 25.2 63.2
Valid Company agents 11 7.1 70.3

Financial advisors 44 28.4 98.7

Others 2 1.3 100.0

Total 155 100.0

[Table 14]

[Figure 15]
Interpretation:- Out of 155 respondents, 28.4% take advice of financial advisors, 25.2% take self
decision, 24.5% take advice of friends and colleagues, 13.5 take advice of family members, 7.1%
take advice of company agent and 1.3% take advice of others.

47
 Annual savings in percentage of income Total
1% - 10% 11% - 20% 21% - 30% 31% - 40%
Occupation Business 2 11 6 3 22
Service 14 61 18 1 94
Professional 5 16 7 1 29
Others 1 5 4 0 10
Total 22 93 35 5 155
12. Occupation and annual savings out of income

[Table 15]

[Figure 16]

Interpretation:- From the above table and bar chart, we can see that out of 155 respondents,
60% are in the occupation of service, and 59% of respondents are annually save 11%-20% of

48
 their income, here 40% of respondents are from service, who are saving 11%-20% annually out
of their income.
13. Educational qualification and Monthly income of respondents
Monthly income Total
Less than 10,000 - 25,000 - 50,000 - More than
10,000 25,000 50,000 1,00,000 1,00,000
S.S.C. 0 9 11 1 0 21
H.S.C. 0 8 5 1 1 15
Educational
Graduation 3 29 19 5 2 58
qualification
Post graduation 1 15 26 10 5 57
Other 0 1 2 1 0 4
Total 4 62 63 18 8 155
[Table 16]

[Figure 17]

Interpretation:- Above table and bar chart shows data regarding respondents educational
qualification and their income, out of them most of the respondents are having income between

49
 25000 – 50000 and 10000 – 25000, which is 80% of total and most of the respondents are
having qualification of graduation and post graduation, which is 74% of total.

14. Preferable time horizon for financial planning and return in investments of respondents
Preferable time horizon for return in Total
investments
Short term Medium term Long term
[less than 1 [1 – 5 years] [more than 5
year] years]
Less than 5 years 2 3 1 6
5 – 10 years 3 79 9 91
Time horizon of
11 – 15 years 0 18 14 32
financial planning
More than 15
1 1 24 26
years
Total 6 101 48 155
[Table 17]

[Figure 18]
Interpretation :- Above graph shows cross tabulation between preferable time horizon for
return in investment and financial planning time horizon of respondents, which shows that
majority of respondents, which is 79 (68.7%)are having financial planning horizon of 5-10 years,
and preferable time horizon for return is medium term (1-5 years). 24 respondents (20.86%) are

50
having financial planning for more than 15 years, and their preferable time horizon for return on
investment is long term (more than 5 years).
15. Age and annual saving out of income

Annual saving out of income Total

1% - 10% 11% - 20% 21% - 30% 31% - 40%

21 - 25 8 33 11 1 53

26 - 30 9 40 18 3 70
Age
31 - 35 4 16 4 1 25

36-40 1 4 2 0 7
Total 22 93 35 5 155

[Table 18]

[Figure 19]

Interpretation:- Out of 155 respondents, 21.29% respondents are between age of 21-25 years
and 25% respondents are between age of 26-30 years, 10.32% respondents are between age of

51
31-35 years, 2.5% respondents are between 36-40 years and they save 11%-20% of their annual
income.
[Table 19]

16. Monthly income and preferable time horizon for return in investments
Preferable time horizon for return in investments Total
Short term Medium term Long term
[less than 1 year] [1 – 5 years] [more than 5 years]
Less than 10,000 1 3 0 4
10,000 - 25,000 3 44 15 62
Monthly
income 25,000 - 50,000 2 39 22 63
50,000 - 1,00,000 0 9 9 18
More than 1,00,000 0 6 2 8
Total 6 101 48 155

[Figure 20]

Interpretation:- Above graph shows that 44 respondents are having monthly income of 10,000
– 25,000, and 39 respondents having monthly income of 25,000 – 50,000, having preferable time
horizon of medium term (1 – 5 years) for return. 22 respondents are having income of 25,000 –

52
50,000 and 15 respondents having income of 10,000 – 25,000, having preferable time horizon of
long term (more than 5 year) for return.

17. Monthly income and preferable time horizon of financial planning

Preferable time horizon of financial planning Tota
Less than 5 5 – 10 11 – 15 More than 15 l
years years years years
Monthly Less than 10,000 1 3 0 0 4
income 10,000 - 25,000 2 41 9 10 62
25,000 - 50,000 2 37 14 10 63
50,000 - 1,00,000 1 8 3 6 18
More than 1,00,000 0 2 6 0 8
Total 6 91 32 26 155
[Table 20]

[Figure 21]

Interpretation:- Above graph shows that out of 155 respondents, 41 are having monthly
income of 10,000 – 25,000 and 37 are having monthly income of 25,000 – 50,000, having
financial planning time horizon of 5-10 years. 6 respondents having income of 50,000 – 1,00,000

53
are having financial planning time horizon of more than 15 years and 6 respondents having
income of more than 1,00,000 are having financial planning time horizon of 11- 15 years.

18. Investments avenues and marital status

Marital Status Total
Unmarried Married Divorcee
Investments Postal savings 11 12 0 23
Bank deposits 34 44 3 81
Insurance 46 52 3 101
Mutual funds 59 54 2 115
Real estate 19 18 1 38
Equity 21 22 1 44
Employee provident fund 14 20 1 35
Public provident fund 15 11 0 26
Gold 24 32 2 58
Silver 7 6 0 13
Other 5 8 0 13
Total 76 76 3 155
[Table 21]

70

60

50

40

30

20 Unmarried
Married
10 Divorcee

0
gs its ce ds te
ui
ty
un
d
un
d ld er he
r
vin pos r an fun esta Eq t f t f Go Sil
v
Ot
l sa e su al al en en
sta nkd In u tu Re v id v id
Po Ba M pr
o
pr
o
e ic
oy
e bl
pl Pu
Em

54
 [Figure 22]

Interpretation:- Above graph shows that mostly unmarried and married respondents are
investing money in mutual funds that is 59 and 54 respectively. Then insurance that is 46 and 52
respectively. After that bank deposits that is 34 and 44 respectively. Then gold, that is 24 and 32
respectively. While there are 3 divorcee, are investing in bank deposits and fixed deposits, and 2
are investing in mutual funds and gold.
Investment avenues selected by unmarried and married respondents are same in order with
different number of respondents, while for divorcee it is totally different.

19. Investments and monthly income

Monthly income Total
Less than 10,000 - 25,000 - 50,000 - More than
10,000 25,000 50,000 1,00,000 1,00,000
Postal savings 0 8 5 2 8 23
Bank deposits 2 29 31 13 6 81
Insurance 3 33 49 13 3 101
Mutual funds 3 41 52 12 7 115
Real estate 0 15 13 5 5 38
Investments Equity 1 17 11 13 2 44
Employee provident fund 1 16 12 5 1 35
Public provident fund 0 7 7 4 8 26
Gold 2 17 24 7 8 58
Silver 1 2 7 1 2 13
Other 2 4 4 3 0 13
Total 4 62 63 18 8 155

[Table 23]

55
 60

50

40

30
Less than 10,000
10,000 - 25,000
20
25,000 - 50,000
50,000 - 1,00,000
10 More than 1,00,000

0
gs sit
s
nc
e
nd
s te
ui
ty d d ld er he
r
in ta un un Go Sil
v
av po r a fu es Eq t f t f Ot
ls e su al al en en
sta n kd In utu Re v id v id
Po Ba M pr
o
pr
o
e ic
oy
e bl
pl Pu
Em

[Figure 22]

Interpretation:- Above graph shows that with the income of less than 10,000, out of 4
respondents, 3 are investing in insurance and mutual funds. With the income of 10,000 – 25,000,
out of 62 respondents 41 are investing in mutual funds, 33 are in insurance and 29 are in bank
deposits. With the income of 25,000 - 50,000, out of 63 respondents 52 are investing in mutual
funds, 49 are in insurance and 31 are in bank deposits. With the income of 50,000 – 1,00,000, out
of 18 respondents 13 are investing in bank deposits, insurance and equity separately. With the
income of more than 1,00,000 out of 8 respondents, all are investing in postal savings, public
provident fund and gold separately.

56
 20. Factors consider while saving and annual savings out of income of respondents
Factors Liquidity Safety Maturity Tax benefits Marketability Returns Total

1% - 10% 6 18 14 9 8 11 22
Annual
11% - 20% 18 70 74 34 31 33 93
savings out
of income 21% - 30% 14 29 26 16 11 20 35
31% - 40% 3 4 2 4 3 5 5
Total 41 121 116 63 53 69 155
[Table 23]

80

70

60

50 Liquidity
Safety
40 Maturity
Tax benefits
Marketability
30
Returns

20

10

0
1% - 10% 11% - 20% 21% - 30% 31% - 40%

[Figure 24]

Interpretation :- Above graph shows that, out of 22 respondents, having annual savings of 1% -
10% of income 18 considers safety and 14 considers maturity while saving. Out of 93
respondents, who are annually saving 11% - 20% of their income, 74 considers maturity and 70
considers safety. Out of 35 respondents, having annual saving of 21% - 30% out income, 29
considers safety, 26 considers maturity and 20 considers return. Out of 5 respondents, having
annual saving of 31% - 40% out of income, all 5 considers return, 4 considers safety and tax
benefits.

57
 Liquidity Safety Maturit Tax Marketability Returns
y benefits
Postal savings Frequency 7 113 21 4 2 8
percentag 4.5% 72.9% 13.5% 2.6% 1.3% 5.2%
e
Bank deposits Frequency 42 90 18 2 0 3
percentag 27.1% 58.1% 11.6% 1.3% 0.0% 1.9%
e
Insurance Frequency 16 99 32 4 1 3
percentag 10.3% 63.9% 20.6% 2.6% 0.6% 1.9%
e
Mutual funds Frequency 49 38 41 7 0 20
percentag 31.6% 24.5% 26.5% 4.5% 0.0% 12.9%
e
Real estate Frequency 26 55 37 8 6 23
percentag 16.8% 35.5% 23.9% 5.2% 3.9% 14.8%
e
Equity Frequency 38 44 39 7 7 20
percentag 24.5% 28.4% 25.2% 4.5% 4.5% 12.9%
e
Employee Frequency 23 64 15 36 6 11
provident fund percentag 14.8% 41.3% 9.7% 23.2% 3.9% 7.1%
e
Public Frequency 40 35 28 38 2 12
provident fund percentag 25.8% 22.6% 18.1% 24.5% 1.3% 7.7%
e
Gold Frequency 67 49 20 7 9 3
percentag 43.2% 31.6% 12.9% 4.5% 5.8% 1.9%
e
Silver Frequency 79 40 14 6 13 3
percentag 51.0% 25.8% 9.0% 3.9% 8.4% 1.9%
e
Other Frequency 74 41 22 5 10 3
percentag 47.7% 26.5% 14.2% 3.2% 6.5% 1.9%
e
21. Table representing different investment avenues and different factors regarding to
the particular investment avenue

[Table 24]

58
80.00%

70.00%

60.00%

50.00%

40.00%

30.00%

20.00%

10.00%

0.00%
Postal savings Bank deposits Insurance Mutual funds Real estate Equity

Liquidity Safety Maturity Tax benefits Marketability Returns

[Figure 25 (i)]

59
 60.00%

50.00%

40.00%

30.00%

20.00%

10.00%

0.00%
nd d ld er he
r
fu un Go iS lv t
t tf O
en en
vid ov id
p ro pr
ee lic
y b
pl
o Pu
Em

Liquidity Safety Maturity Tax benefits Marketability Returns

[Figure 25 (ii)]

Interpretation:- As above both the graphs shows same information, regarding different
investment avenues and particular feature related to that investment avenue. As we can see in the
table, for postal savings 72.9% respondents thinks that it is safe for their investment, while for
bank deposits around 58.1% respondents thinks that it is safe to investment avenue. For
insurance also around 63% respondents thinks that it is safe. While for mutual funds around
31.6% respondents thinks that it provides liquidity. For investment in real estate 35.5%
respondents thinks that it provides safety to their investment. For equity also 28.4% respondents
thinks that it provide safety.

In the second graph, in employee provident fund 41.3% respondents had related safety feature
with it, in public provident fund 25.8% thinks that it provides liquidity, while for gold 43.2%
respondents thinks that it provides liquidity, for silver also 50% respondents thinks that it
provides liquidity and for others avenues of investment 47.7% thinks that it provides liquidity.

60
 KMO and Bartlett's Test
Kaiser-Meyer-Olkin Measure of Sampling
.837
Adequacy.
Approx. Chi-Square 1018.211
Bartlett's Test of
df 153
Sphericity
Sig. .000

[Table 25]

Interpretation:

The KMO measures the sampling adequacy (which determines if the responses given with the
sample are adequate or not) which should be close than 0.5 for a satisfactory factor analysis to
proceed. Kaiser (1974) recommend 0.5 (value for KMO) as minimum (barely accepted) values
between 0.7-0.8 acceptable, and values above 0.9 are superb. Looking at the table above, the
KMO measure is 0.837, which is higher of 0.5 and therefore accepted. Bartlett’s test is another
indication of the strength of the relationship among variables. This tests the null hypothesis that
the correlation matrix is an identity matrix. An identity matrix is matrix in which all of the

61
diagonal elements are 1 and all off diagonal elements are close to 0. You want to reject this null
hypothesis. From the same table, we can see that the Bartlett’s Test of Sphericity is significant.
That is significance is less than 0.05. In fact, it is actually 0.000. I.e.

Communalities
Initial Extraction
It increases my family
1.000 .626
income.
It helps to maintain
1.000 .662
high standard of living.
It strengthens my
ability to use money 1.000 .574
properly.
It improves my capacity
to acquire financial and 1.000 .494
physical assets.
It encourages me to
plan well in advance to
provide
1.000 .486
higher/professional
education to my
children.
It helps me to plan
luxurious holiday trips 1.000 .479
with my family.

62
 It enables me to enjoy a
sense of independence 1.000 .547
in future.
It creates a sense of
confidence about 1.000 .544
future.
It helps to uplifting
1.000 .630
standard of living.
It encourages me to
participate in social
1.000 .570
welfare and charitable
activities.
It increases my ability
to support my family in
1.000 .600
providing timely health
care facilities.
It increases my ability
to meet unexpected 1.000 .553
medical expenditure
It enables me to
purchase gold and 1.000 .423
precious ornaments.
It enables me to
decorate and furnish my 1.000 .541
house.
It helps me to take care
of my elders family 1.000 .578
members.
It gives me financial
1.000 .694
security after retirement
It helps me in financial
1.000 .669
crisis.
It helps me to be
1.000 .498
financially independent.

[Table 26]

Interpretation:

63
 The next item from the output is a table of communalities which shows how much of the
variance (i.e. the communality value which should be more than 0.5 to be considered for further
analysis. Else these variables are to be removed from further steps factor analysis) in the
variables has been accounted for by the extracted factors. For instance over 69.4% of the
variance in “It gives me financial security after retirement” is accounted for, while 42.3% of the
variance in “It enables me to purchase gold and precious ornaments.” is accounted for.

Total Variance Explained

Compone Initial Eigenvalues Extraction Sums of Squared Rotation Sums of Squared
nt Loadings Loadings
Total % of Cumulati Total % of Cumulati Total % of Cumulativ
Variance ve % Variance ve % Variance e%
1 6.212 34.511 34.511 6.212 34.511 34.511 3.324 18.468 18.468
2 1.587 8.817 43.328 1.587 8.817 43.328 2.765 15.363 33.831
3 1.323 7.351 50.679 1.323 7.351 50.679 2.476 13.753 47.584
4 1.047 5.818 56.497 1.047 5.818 56.497 1.604 8.914 56.497
5 .987 5.483 61.980
6 .887 4.929 66.909
7 .832 4.620 71.530
8 .724 4.024 75.554
9 .699 3.883 79.437
10 .669 3.718 83.155
11 .539 2.996 86.151
12 .497 2.761 88.913
13 .450 2.498 91.411
14 .429 2.384 93.795
15 .347 1.929 95.724
16 .309 1.714 97.438
17 .246 1.365 98.803
18 .216 1.197 100.000

64
 [Table 27]

Interpretation:
Eigenvalue actually reflects the number of extracted factors whose sum should be equal to
number of items which are subjected to factor analysis. The next item shows all the factors
extractable from the analysis along with their eigenvalues.
The Eigenvalue table has been divided into three sub-sections, i.e. Initial Eigen Values,
Extracted Sums of Squared Loadings and Rotation of Sums of Squared Loadings. For analysis
and interpretation purpose we are only concerned with Extracted Sums of Squared Loadings.
Here one should note that the first factor accounts for 34.511% of the variance, the second
8.817%, the third 8.817% and the fourth 5.818%. All the remaining factors are not significant.

[Figure 26]

65
Interpretation:
The scree plot is a graph of the eigenvalues against all the factors. The graph is useful for
determining how many factors to retain. The point of interest is where the curve starts to flatten.
It can be seen that the curve begins to flatten between factors 4 and 5. Note also that factor 5
onwards have an eigenvalue of less than 1, so only 4 factors have been retained.

Component Matrix
Component
1 2 3 4
It gives me financial
.780
security after retirement
It helps me in financial
.761
crisis.
It creates a sense of
confidence about .650
future.
It helps me to take care
of my elders family .643
members.
It encourages me to
participate in social
.641
welfare and charitable
activities.
It helps to maintain
.619
high standard of living.
It improves my capacity
to acquire financial and .617
physical assets.

66
 It increases my ability
to support my family in
.611
providing timely health
care facilities.
It strengthens my
ability to use money .589
properly.
It helps to uplifting
.585 -.502
standard of living.
It enables me to enjoy a
sense of independence .580
in future.
It enables me to
decorate and furnish my .566
house.
It helps me to plan
luxurious holiday trips .547
with my family.
It enables me to
purchase gold and .534
precious ornaments.
It encourages me to
plan well in advance to
provide
.532
higher/professional
education to my
children.
It increases my family
.523
income.
It helps me to be
.622
financially independent.
It increases my ability
to meet unexpected
medical expenditure

[Table 28]
Interpretation:

67
The table above shows the loadings (extracted values of each item under 4 variables) of the 18
variables on the four factors extracted. The higher the absolute value of the loading, the more the
factor contributes to the variable (We have extracted three variables wherein the 18 items are
divided into 4 variables according to most important items which similar responses in component
1, simultaneously in component 2, component 3 and component 4). The gap (empty spaces) on
the table represent loadings that are less than 0.5, this makes reading the table easier. We
suppressed all loadings less than 0.5

Rotated Component Matrix

Component
1 2 3 4
It helps to uplifting
.777
standard of living.
It strengthens my
ability to use money .739
properly.
It encourages me to
participate in social
.701
welfare and charitable
activities.
It improves my capacity
to acquire financial and .642
physical assets.
It gives me financial
.588 .561
security after retirement
It enables me to
decorate and furnish my .676
house.
It helps me to take care
of my elders family .672
members.

68
 It enables me to
purchase gold and .569
precious ornaments.
It helps me in financial
.544 .547
crisis.
It creates a sense of
confidence about
future.
It increases my family
.743
income.
It encourages me to
plan well in advance to
provide
.605
higher/professional
education to my
children.
It increases my ability
to support my family in
.603
providing timely health
care facilities.
It increases my ability
to meet unexpected .555
medical expenditure
It helps me to plan
luxurious holiday trips .542
with my family.
It helps me to be
-.704
financially independent.
It helps to maintain
.519 .551
high standard of living.
It enables me to enjoy a
sense of independence .533
in future.
[Table 29]

Interpretation:

The idea of rotation is to reduce the number factors on which the variables under investigation
have high loadings. Rotation does not actually change anything but makes the interpretation of
the analysis easier. Looking at the table above, we can see that financially independence,
69
maintaining high standard of living and enjoying sense of independence in future are loaded on
factor (component) 4.

Increase family income, plan well in advance to provide higher/professional education to

children, increase ability to support family in providing timely health care facilities, increase
ability to meet unexpected medical expenditure, plan luxurious holidays, maintaining high
standard of living are loaded on factor 3.

Gives financial security after retirement, enable to decorate and furnish house, helps to take care
of elder family members, enables to purchase gold and precious ornaments, helps in financial
crisis are loaded on factor 2.

All the remaining variables are substantially loaded on Factor 1. These factors can be used as
variables for further analysis.

70
 CHAPTER 5

FINDINGS

 100% respondents are saving money, 73% are saving regularly (monthly) and 23% are
saving irregularly.
 60% are saving 11%-20% of their annual income, 22.6% are saving 21%-30% of their
annual income, 14.2% are saving 1%-10% of their annual income and 3.2% are saving
31%-40% of their annual income, not a single respondent is saving more than 41% of
their annual income.
 With the comparison of monthly income and annual savings out of the income,
respondents having monthly income of less than 10000, are not saving more than 20%.
With 10000-25000 monthly income most of the respondents are not saving more than
30% and the situation is same with respondents having monthly income of 50000-100000
and more than 100000. There are only 3.5% respondents (5) who are saving 31%-40%.
 Most of the respondents, that is 74.2% are investing their savings in mutual funds, and
65.2% are investing their savings in Insurance, 52.3% in Bank deposits, 37.4% in gold,
28.4% in equity, 24.5% in real estate, 22.6% in Employee provident fund, 16.8% in
public provident fund, 14.8% in postal savings, 8.4% in silver and 8.4% in other
investment avenues.
 Most of the respondent’s, that is 54.2% are saving for their children’s education, 51.6%
are saving for their life expectancy, 48.4% are for retirement, 46.5% are for their
financial independence, 41.9% are for buying house, 32.3% for medical emergency,

71
 21.3% for uplifting standard of living, 16.8% for buying vehicle, and 11.6% are saving
for other objectives.
 Most of the respondents, that is 78.1% consider safety of their investments as main
factor, 74.8% are considers maturity period, 44.5% considers return on their investment,
13.6% considers tax benefits, 11.4% considers marketability and 8.9% considers
liquidity.

 For making investment most of the respondents, that is 28.4% take advice of financial
advisors, 25.2% make investments on self decision, 24.5% take advice of friends and
colleagues, 13.5 take advice of family members, 7.1% take advice of company agent and
1.3% take advice of others.
 With the comparison of preferable time horizon for return on investment and financial
planning, 101 (65.16%) respondents are preferring medium term (1-5 year) time horizon
for their return on investment, out of which, 44 respondents are having monthly income
of 10,000-25,000, 39 are having monthly income of 25,000 – 50,000, 9 are having
monthly income of 50,000 – 1,00,000, 6 are having monthly income of more than
1,00,000 and 3 are having monthly income of less than 10,000. There are 48 (30.96% )
respondents, who are preferring long term (more than 5 year) time horizon for their return
on investment and 6 (3.87%) respondents are preferring short term (less than 1 year) time
for their return on investment.
 Out of 155 respondents, 91 (58.70%) respondents are having preferable time horizon of
5-10 years for their financial planning. From which 41 (26.45%) respondents are having
monthly income of 10,000 – 25,000, and 37 (23.87%) respondents are having monthly
income of 25,000-50,000. 32 (20.64%) respondents are preferring 10-15 years financial
planning, 26 (16.77%) respondents are preferring more than 15 years for their financial
planning and 6 (3.87%) respondents are preferring less than 5 years for their financial
planning.
 Mostly unmarried and married respondents are investing money in mutual funds that is
59 and 54 respectively. Then insurance that is 46 and 52 respectively. After that bank
deposits that is 34 and 44 respectively. Then gold, that is 24 and 32 respectively. While

72
 there are 3 divorcee, are investing in bank deposits and fixed deposits, and 2 are investing
in mutual funds and gold.
 Most of the respondents, having annual savings of 1% - 10% of income considers safety
and maturity while saving. Out those respondents, who are annually saving 11% - 20% of
their income, considers maturity and safety respectively. Most of the respondents, having
annual saving of 21% - 30% out income, considers safety, maturity and return. Most of
the respondents, having annual saving of 31% - 40% out of income, considers return,
safety and tax benefits.

73
 Most of the respondents prefer postal savings, bank deposits, insurance, real estate, equity
and employee provident fund because of the safety of such instruments. And prefer other
instruments because of the liquidity of such instruments
 The factor analysis was carried out on eighteen variables attributed to offered by savings.
The names of these factors are social recognition, personal need satisfaction, family need
satisfaction and financial independence.

74
 CHAPTER 6
CONCLUSION

This research is undertaken to study the saving habits of youth, here youth is considered as an
individual who is having own source of income and age between 21-40 years. This study
includes saving habits of youth in terms of regularly and irregularly.

Saving habits of youth changes according to various demographic factors such as age, gender,
occupation, income, marital status, number of dependent family member on ones income etc.
These demographic variables affect the saving habits of youth.

Among 155 respondents, all are saving money, which is very positive result. The youth preferred
regular saving; most of them want save on monthly basis indicating they save regularly. They
save 11%-20% of their income. India’s gross saving rate for the year 2018 was 30.5%. It is seen
based on the survey that most of them preferred to invest their saving in mutual funds, insurance
and bank deposits, they are saving for their children education, life expectancy and retirement.
Consideration of youth while making investment is high with respect to safety, maturity and
return.

From the study it can be concluded that youth is positive about savings, but when it comes to
investing their saving, they are not having proper information related to the investment and
factors which should be considered at the time of investment.

75
 BIBLIOGRAPHY

Research Papers

Dr. Rajesh Shukla, ‘How India Earns, Spends and Save’, - MNYL & NCAER, 2007,
www.maxnewyorklife.com
Cliford Paul S. & Dr. Joseph Anbarasu, ‘Saving Pattern of People and the Impact of Insurance
on Savings with special reference to Tiruchirappalli’, College of Science in India, June 2008

https://www.prosperitynow.org/blog/new-study-savings-habits
https://economictimes.indiatimes.com/wealth/tax/how-to-save-income-tax-here-are-6-
investments-with-tax-free-income/articleshow/62567377.cms
https://www.scribd.com/document/322037813/A-Study-on-Saving-and-Spending-Habit-of-
Youth
https://www.researchgate.net
www.financialexpress.com
https://economictmes.indiatimes.com
https://www.investopedia.com
https://www.ceicdata.com/en/indicator/india/gross-savings-rate

76
 ANNEXURE

I, Devyani Patel, student of department of business and Industrial management, VNSGU Surat as
part of MBA curriculum and conducting a research on “A study on saving habits of youth in
Navsari city”. I request you to kindly spare few minutes to fill up this questionnaire. I assure you
that your information will be kept confidential and used only for educational purpose.

1. Name – ______________________________________
2. Age –

a) 21 – 25 b)26 – 30

c) 31 – 35 d)36 – 40

3. Gender –
a) Male b) Female

4. Education qualification –
a) S.S.C b) H.S.C
c) Graduation d) Post graduation
e) Other

5. Occupation –
a)Business b)Service
c)Professional e)Others

6. Marital Status -
a) Unmarried b) Married
c) Widow d) Divorcee
I. Number of children (if any) –
a) 1 b) More than 1

77
 7. Your monthly Income –
a) Less than 10000 b) 10000 to 25000
c) 25000 to 50000 d)50000 to 100000
e) More than 100000

8. Number of family members –

a) 1 b) 2
c) 3 d) More than 3

If more than one family member -

I. Number of earning members in family-

a) 1 b) 2
c) 3 d) More than 3
II. Number of dependent family members on your income -
a) 1 b) 2
c) 3 d) More than 3
9. Do you save money?
a) Yes b)No
I. If yes,
a) Regularly (Monthly) b) Irregularly

II. If yes, How much do you save annually out of your income?
a) 1 – 10% b) 11% – 20%
c) 21% - 30% d) 31% – 40%
e) More than 41%

III. If no savings, what is the reason?

a) Lack of trust in financial intermediaries b) No scope due to low income
c) Lack of knowledge about saving instruments d) No need for savings in future
e) Any other reason

78
10. Do you save money for getting tax benefits?

a) Yes b) No

If yes Do you invest over and above 1,50,000?

a) Yes b) No
10. In which of the following instruments you invest in the form of savings? (multiple tick)
a) Postal savings b) Bank deposits
c) Insurance d) Mutual fund
e) Real estate f) Equity
g) Employee Provident Fund h) Public Provident Fund
i) Gold j) Silver
k) Other

11. What is your preferable time horizon for return in investments?

a) Short term [less than 1 year]
b) Medium term [1 – 5 years]
c) Long term [more than 5 years]

12. Whose advice do you take while investing?

a) Family members
b) Friends & colleagues
c) Self decision
d) Company agents
e) Financial advisors
f) Others

13. Which factors do you consider while savings? (multiple tick)

a) Liquidity
b) Safety
c) Maturity
d) Tax benefits

79
 e) Marketability
f) Returns

14. What is the time horizon of your financial planning?

a) Less than 5 years
b) 5 – 10 years
c) 11 – 15 years
d) More than 15 years

15. What are your objectives for savings? (Multiple tick)

a) Medical emergency
b) Retirement
c) Children’s education
d) Life expectancy
e) Financially Independence
f) Buying house
g) Uplifting standard of living
h) Buying vehicle
i) Any other

16. What is your preference about features related to financial instruments? (Pls. tick one
feature which you associate the most with the instrument)

Liquidity Safety Maturity Tax Marketability Returns

benefits

Postal savings
Bank deposits
Insurance
Mutual fund

Real estate

80
 Equity
Employee
Provident Fund
Public
Provident Fund
Gold
Silver
Other

17. Rank the following statements in reference to your savings.

Particulars Strongly Agree Neutral Disagree Strongly

agree disagree
1 It increases my family income.
2 It helps to maintain high standard
of living.
3 It strengthens my ability to use
money properly.
4 It improves my capacity to acquire
financial and physical assets.
5 It encourages me to plan well in
advance to provide higher /
professional education to my
children.
6 It helps me to plan luxurious
holiday trips with my family.
7 It enables me to enjoy a sense of
independence in future.
8 It creates a sense of confidence
about future.
9 It helps to uplifting standard of

81
living.
10 It encourages me to participate in
social welfare and charitable
activities.
11 It increases my ability to support
my family in providing timely health
care facilities.
12 It increases my ability to meet
unexpected medical expenditure
13 It enables me to purchase gold
and precious ornaments.
14 It enables me to decorate and
furnish my house.
15 It helps me to take care of my
elders family members.
16 It gives me financial security
after retirement.
17 It helps me in financial crisis.
18 It helps me to be financially
independent.

82