1.

1 INTRODUCTION

As we know that oxygen is necessary for human life in the same way Savings are
necessary for uncertain future in context to meet the various need of life. Savings
means sacrificing the current consumption in order to increase the living standard
and fulfilling the daily requirements in future. The saving can be done in different
ways by making bank deposits, or invests the saving in different ways. One of the
best ways of saving is to create an automatic saving plan. Savings plays very
important role in making of the household and the national economy. Saving also
provides the financial protection to meet the requirement or emergencies in future.
It is necessary to have saving plan because it will help in meeting financial goals
like secure future, children’s education, meeting the demands of the family etc.
Today investment is an economic activity. Basically, investment is efficiently use
of funds with the expectation of receiving good return or benefits in the future.
Investment is mainly done with the objective like wanting a home, creating a
regular income after retirement, and possessing money for the child’s education.

In present scenario, everyone wants to save for oneself as well as the family
against unpredictable future. Investors have to decide where they put their saving
so that the return will be profitable to them. Various investment avenues are
available in the market, which provide more security and safety of the investor
fund. The investors have to decide and & set their investment portfolio from
available opportunities by selecting the best investment options. It is not an easy
task as it requires knowledge & awareness about investment concept & its
features. Demographics characteristics also affect the investment preferences of
the investors. Investment can be made in mutual funds, shares, bonds, fixed
deposits, real estates, art work & jewellery etc. Increase in income has resulted in
growth of investment. Ups and down in stock market, rise in Inflation rates affect
the decision of investment of the investors. Most of the Indian people invest their
saving/income in the investment option for their needs and necessities after
retirement. They depend upon their relatives & friends who give them the advice
about investment options. Every investor has to set off its own objectives and
goals whether for short, medium, long term after considering the risk and return
measures on adopted investment pattern. Investments are always interesting,
challenging and rewarding. Future is uncertain; thus, investor has to determine
before how much risk he is willing to bear. Even a small amount of investing in
investment options can gives more profitable rewards and returns over a long
term. But to achieve a good profit the investors have full knowledge of investment
decision i.e. where to invest, when to invest and how much to invest. Investors
have to use his skill, knowledge, and experience while selecting /investing money.
Investors cannot avoid the risk but they can minimize the risk by investing their
money in various forms of investment, which are considered as the safe forms of
Investment. Many options are available for the investors to invest their savings.
Each investment avenues have its own risk and return features. Investment
avenues are available from bank deposit, post office schemes, government
securities, provident funds, insurance policies, corporate deposits, pension’s plans,
real estates, gold & silver etc.

Many individuals find investments to be fascinating because they can participate

in the decision-making process. One expects to earn a positive return on a
diversified portfolio. Investing is not a game but a serious subject matter that can
have a major impact on investor’s future wellbeing. Virtually, everyone makes
investments. Each of the investment has common characteristics like, potential
return, capital appreciation and the risk one must bear. The future is uncertain, and
one must determine how much risk one is willing to bear since higher return is
associated with accepting more risk. The capital market plays an important role in
the development of the country for mobilizing and allocation of domestic and
foreign savings. It plays crucial role to channelize the savings from household
sector of the country, which in turn enhance the capacity of the economy to
product goods and services to society. Therefore, capital market plays a very
crucial role in stimulating industrial growth as well as economic growth and
development. Indian financial system’s formal part is consisting of an existence of
stock exchange and an active new issue market. This market is consisting of
primary and secondary segments, which deal with new issues of securities and
trade the existing securities, respectively. Securities in both the market comprise
of debt and equity instruments. Both are open for individual retail investment to
park their saving.
Money Attitude of the people towards money in today’s world is that everybody
wants to enjoy the benefits of money because they have earned by hard work and
efforts made on it. That's great but spending all your money is not the smartest
thing to do. Saving of money help people in the long run. There could be the
uncertainties of future which resist people to save for future. What happens if you
lose your job tomorrow? Or the car breaks down? If somebody have savings for
future than the uncertainties can be faced by people and stress will be less.
Without money put away in savings and or investments, people may open
themselves up to other risks as well. There are many ways through people can
save money one is controlling the extra expenses. For this make a list of the things
which shows necessity and purchase things according to it and don’t buy extra
things that exceeds people’s expanses and also stop going to shopping complexes
and malls that also reduces the cost and improves saving structure. Secondly
reduce the telephone expenses. Thirdly, reduce electricity expenses. Electricity
one can save lot if one remains alert and switch off lights and fans and other
electronic item immediately after their use. Similarly in case of telephone you can
save by buying an affordable model and talking less on phone. Thus, you’re
saving not only benefits you but also helps in preserving the environment by
preventing wastage and contributes to the economic growth of country. Thinking
before doing about the few reasons why saving has great importance for people.
Firstly, for emergency, this could be a new roof for the house, out-of-pocket
medical expenses, or a job layoff and sudden loss of income. One needs money set
aside for these emergencies Secondly, Retirement is the second stage on thinking,
one intends to retire someday, so needs money kept as savings and investments to
take the place of the income when one is no longer get from your job. Thirdly,
Average Life Expectancy plays a great role, with more advances in medicine and
public health; people are now living longer and therefore needing more money.
Fourthly, security of money for future intends one to think upon it. Fifthly,
Education - The costs for private and public education are rising every year, and
it's getting tougher to meet these demands. So, saving is the necessary. Sixthly, to
make a house for residential purpose is the reason and to save money is for a down
payment on a house. One’s negotiating power goes a lot farther when one has a
significant down payment towards home. One will receive better interest rates,
and be able to afford a bigger home. One can determine how much you save
towards this each month depending on his circumstances. Seventhly, Save for
Vacations and Other Luxury Items- A Seventh reason to save money is to have
fun. One can save up for tour of Europe. Additionally, one can be saving for fun
One’s negotiating power is stronger if you have cash in hand on bigger purchases.
Day by day trends are changing so there is the need for change in luxury items
according to status, job and business. Eighthly, save for a New Car, an eight
reason is to purchase a car with cash. Ninthly, Save for Sinking Funds is to set up
your sinking funds. A sinking fund is money one can set aside for future repairs or
improvements on one’s car, home or other possessions.
Investment involves making of a sacrifice in the present with the hope of getting
future benefits. Investment has many facets. The two important elements of
investments are current sacrifice and future benefits. There can be the
identification of various activities which displays the two features of investment.
For example, a portfolio manager buys 1000 shares of reliance industries Ltd.,
One could acquire the fixed deposit scheme of oriental bank of commerce for
years or more and a corporate firm expanding Rs. 40 lakhs for expansion
programme, a father purchase jewellery for daughter’s marriage and so on. All
these constitute investment because they involve current sacrifice of consumption
and hope of future gain.
In other words, investment, investment refers to a commitment of funds to one or
more assets that will be held over some future time period. Anything not
consumed for today saved for future use can be termed as Investment. The act of
committing money or capital to an endeavour with the expectation of obtaining an
additional income or profit. It's actually pretty simple: investing means putting
your money to work for you. Essentially, it's a different way to think about how to
make money.

Investing is not gambling. Gambling is putting money at risk by betting on an

uncertain outcome with the hope that you might win money. At this point ,it is
necessary to distinguish between certain activities which are in the nature of
gambling and those which are genuine investments .For example, if one purchase
in Rs. 500 lottery ticket, one may be sacrificing current consumption in the hope
of winning high rate of returns, but one may not investing there. In gambling
everything is uncertain and a purchaser of lottery knows that one losses money if
he doesn’t win in any situation because to win it is not in his hands. However, the
Investor, not being a speculator, does not proceed with the assumption that he
would lose his money because the act of investment decision making process is
there. The genuine investors would always have appropriate information, which is
well analysed in relation to risk- return profile of the investor, and therefore the
investment options/avenues are selected. However, in real life it is very difficult to
draw a conclusion to separate gambling or speculative motives from genuine
investment motives and the difference is purely a matter of opinion. Obviously,
everybody wants more money. It's pretty easy to understand that people invest
because they want to increase their personal freedom, sense of security and ability
to afford the things they want in life. However, regardless of why one invests, one
should seek to manage one selves wealth effectively, obtaining most from it. This
includes protecting the assets from inflation, taxes, and other factors. Investment is
important Because of financial interdependence, increases wealth, fulfilling
personal goals and reduces future risk.

The developing countries in world, like India face as seen the enormous task of
finding sufficient capital to utilize in their development efforts. Most of countries
find it difficult at at stage to get out of the vicious circle of poverty that is
prevailing of low income, low saving, low investment, low employment etc and
the list goes on. With high capital output ratio, that is observed India needs very
high rates of investments that would take and make leap forward in her efforts
continues of attaining high levels of growth.

The major features that is seen in an investment are safety of principal amount,
liquidity, income and its stability, appreciation and lastly easy transferability. A
different variety of investment avenues in abundance and types are available such
as shares, bank, companies, gold and silver, real estate, life insurance, postal
savings. All the investors invest who wish to invest, invest their surplus money in
the above-mentioned avenues that are available based on their risk-taking attitude
and capacity bearing.
Investment is not a mere game but a rather crucial subject that can have a major
impact on investor’s wellbeing. Virtually everyone makes investments at some
point of time, in their lives. Even when an individual isn’t making investments on
certain assets example, stock market assets such as shares, debentures, etc.;
investments are made through other means such as participation in pension plan,
employee savings schemes, and purchase of life insurance products or even a
home.

Many individuals find investments to be fascinating because they get an

opportunity to participate in decision making process and thereby assess the
outcomes of their investment choices. Not all investments are profitable. One can
make proper investment decisions through the knowledge and experience that one
has gained over the years. However, most investments earn positive returns on a
diversified portfolio.

1.2 SAVING

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 does not automatically include interest.

Saving differs from savings. The former refers to the act of not consuming one's
assets, whereas the latter refers to either multiple opportunities to reduce costs; or
one's assets in the form of cash. 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. This distinction is often misunderstood, and even professional
economists and investment professionals will often refer to "saving" as "savings".

In different contexts there can be subtle differences in what counts as saving. For
example, the part of a person's income that is spent on mortgage loan principal
repayments is not spent on present consumption and is therefore saving by the
above definition, even though people do not always think of repaying a loan as
saving. However, in the U.S. measurement of the numbers behind its gross
national product (i.e., the National Income and Product Accounts), personal
interest payments are not treated as "saving" unless the institutions and people
who receive them save them.
Saving is closely related to physical investment, in that the former provides a
source of funds for the latter. By not using income to buy consumer goods and
services, it is possible for resources to instead be invested by being used to
produce fixed capital, such as factories and machinery. Saving can therefore be
vital to increase the amount of fixed capital available, which contributes to
economic growth.

However, increased saving does not always correspond to increased investment. If

savings are not deposited into a financial intermediary such as a bank, there is no
chance for those savings to be recycled as investment by business. This means that
saving may increase without increasing investment, possibly causing a short-fall
of demand (a pile-up of inventories, a cut-back of production, employment, and
income, and thus a recession) rather than to economic growth. In the short term, if
saving falls below investment, it can lead to a growth of aggregate demand and an
economic boom. In the long term if saving falls below investment it eventually
reduces investment and detracts from future growth. Future growth is made
possible by foregoing present consumption to increase investment. However,
savings not deposited into a financial intermediary amount to an (interest-free)
loan to the government or central bank, who can recycle this loan.

Savings is the money a person has left over when they subtract their consumer
spending from their disposable income over a given time period. Savings can be
used to increase income through investing.
Savings comprise the amount of money left over after spending. For example,
Sasha’s monthly pay check is $5,000. Her expenses include a $1,300 rent
payment, a $450 car payment, a $500 student loan payment, a $300 credit card
payment, $250 for groceries, $75 for utilities, $75 for her cell phone and $100 for
gas. Since her monthly income is $5,000 and her monthly expenses are $3,050,
Sasha has $1,950 left over. If Sasha saves her excess income and faces an
emergency, she has money to live on while resolving the issue. If Sasha does not
save her extra money and her expenses exceed her income, she is living pay check
to pay check. If she has an emergency, she does not have money to live on and
must secure payments for her bills.
Savings refers to any income that we do not spend and put aside – we put the
money away. It is the portion of our disposable income that we do not spend on
consumer goods, but accumulate or invest.
According to Keynesian economics, the term refers to the amount of money left
over when the cost of an individual’s consumer expenditure is subtracted from his
or her total disposable income earned over a specified period. Put simply, total
disposable income minus how much of that disposable income is spent.
Savings does not mean the absence of spending – a definition that many people
will give you if you ask them what the term means. Instead, it is the result of the
intentional act of setting money aside, building it up, usually for a specific purpose
or goal.
If savings are invested in different investment vehicles, they can be turned into
additional income.
According to Finance in the Classroom: “Savings is the portion of income not
spent on current expenditures. Because a person does not know what will happen
in the future, money should be saved to pay for unexpected events or emergencies.
An individual’s car may breakdown, their dishwasher could begin to leak, or a
medical emergency could occur. Without savings, unexpected events can become
large financial burdens. Therefore, savings helps an individual or family become
financially secure.”

1.3 Importance of Saving Money:

The importance of saving money cannot be understated. In fact, with so many
proven benefits, saving money is one of the best financial habits you can adopt.
But, if saving money doesn’t come easy to you, or you just don’t see the point, it’s
natural to ask yourself, why is saving money important?

First and foremost, saving money is important because it helps protect you in the
event of a financial emergency. Additionally, saving money can help you pay for
large purchases, avoid debt, reduce your financial stress, leave a financial legacy,
and provide you with a greater sense of financial freedom. Truthfully, there are
countless reasons to save money.
 I. Freedom to Pursue Your Dream Career
Have you ever known somebody that was stuck in a job they hate, because they
didn’t have the financial freedom to quit and pursue something they enjoy? Well,
if they had enough savings, I’m willing to bet that wouldn’t be the case. One of
the most important reasons to save is to provide yourself with the freedom to
pursue a career you love.
When you have ample cash sitting in your savings account, and a pile of
investments earning interest, there’s absolutely no reason to endure a situation you
hate.
In other words, a big pile of savings gives you the freedom to quit a job you hate
and pursue your dream career.

II. Long-Term Security

No matter how hard I try, I can’t predict the future; and neither can you. And for
that reason, saving up a safety net is a really good idea.
Think about it — without savings, how will you weather any financial storms?
Without investments, how do you plan to make money when you’re too old to
work? If you lose your job, will you be able to pay your bills?
Saving money is important because it provides you with financial security. And
the more you save, the more secure you will be.

III. Emergencies
It’s inevitable that throughout life, there will be some emergencies. From a family
emergency that requires you to fly across the country, to less emotional
emergencies like a broken down car, having a decent amount of money saved up
keeps you from adding financial stress to the pile.
Seriously, money is the last thing you need to be worrying about in an emergency.
So do your future-self a favor and save up an emergency fund. Hopefully you’ll
never need to use it, but if you do, you’ll be beyond grateful it’s there.

IV. Helping Others

Do you know what happens when you save money wisely and invest intelligently?
Your money grows. And when your money grows, your opportunity to help others
financially grows with it.
 Consider this: if you give 10% of every dollar you earn to charity or your local
church, and you don’t have any savings or investments, your ability to give is
limited by your annual salary. In contrast, if you save and invest your money, your
ability to give will grow exponentially with compound interest. Remember, money
is just a tool you can use to accomplish your goals. And if your goal is to help
others as much as possible, you need to be saving and investing your money
consistently.

V. Your Marriage
I don’t think it’s a big secret that money problems are one of the leading causes of
divorce. And if you’re married, you’ve probably experienced a money fight or
two. And let me tell you, they are no fun. But I can also tell you from experience
that the more money you save, the less frequent those arguments occur.

VI. Leaving A Financial Legacy

If you died tomorrow, what kind of financial legacy would you be leaving behind?
Would your story be one of debt and financial burden for your family?
Or, would you leave a legacy of financial fortitude, wisdom and honour. Your
financial legacy is important to the people around you. Whether you’re 20 years
old, or 90 years old, the way you handle your money will leave lasting effects
positive or negative on your loved ones.

VII. Education
Do you know what’s expensive? College. (Though, to be honest, elementary,
middle, and high school are pricey little endeavours these days as well) I mean,
my wife is pregnant with our first baby, and we’re already discussing 529 plans
and funding our child’s college education.
And short of growing a money tree–you know, the kind dads always talk about–
the only way we will be able to afford it, is if we start saving now. Education is
important–whether it’s your own, or your children’s. Ipso facto, saving money so
you can pay for education is important.
VIII. Home Ownership
If you own a home, you’ve undoubtedly experienced the many expenses that come
with it. Whether they’re big expenses like kitchen remodels, or small expenses,
like buying filters for your furnace, they add up. And while you might be able to
cash flow the majority of them, it’s in your best interest to prepare for them in
advance.
In fact, I recommend setting up a specific savings account just for your home
expenses. That way, you don’t have to feel guilty pulling money from savings
when you need to fix or update something.

IX. Major Life Events

Life is full of events, but there are a few big ones that can get particularly
expensive. For instance, the two that instantly come to mind are newborn babies
and weddings. So, it’s important to save for them.
Here are a couple of guidelines to get you started.
When that little pee stick reads positive, start a baby savings fund, and throw every
last penny you can squeeze out of your budget into it. Then, when your daughter
first starts dreaming about her wedding day, start saving for it. Weddings aren’t
cheap.
X. Minimizing Financial Risk
The more money you have, the less risky your financial situation will become. For
instance, if you have $10,000 to your name, and you invest $6,000 to start your
own business, you just risked 60% of your net worth. Whereas, if you save and
invest until your net worth crests one-million dollars, then spend $60,000 to start a
company, you only risked 6% of your net worth.
Plus, when you only invest 6% of your net worth, it’s pretty likely you will make
up for that in interest, alone, over the next year.

XI. Financial Independence

One of the best parts of being an adult is the independence and freedom to do what
you want when you want. (Within the confines of the law, of course) But the less
you save, and the more debt you accrue, the less independence you will have. So,
if you want to be financially independent and unshackled, you need to beef up
your savings.
The Importance of Saving Money – Final Thoughts

Saving money is important because it provides security, stress relief, and freedom.
And while there are countless reasons to save, you just need to find a reason that
resonates with you. Whether it’s helping others, improving your marital finances,
leaving a positive financial legacy, or just having a little more fun, you owe it to
yourself to prioritize saving.

1.4 Investment

An investment is an asset or item acquired with the goal of generating income or

appreciation. Appreciation refers to an increase in the value of an asset over time.
When an individual purchases a good as an investment, the intent is not to
consume the good but rather to use it in the future to create wealth. An investment
always concerns the outlay of some asset today—time, money, or effort—in hopes
of a greater payoff in the future than what was originally put in.

For example, an investor may purchase a monetary asset now with the idea that
the asset will provide income in the future or will later be sold at a higher price for
a profit.

To invest is to allocate money in the expectation of some benefit/return in the

future. In other words, to invest means owning an asset or an item with the goal of
generating income from the investment or the appreciation of your investment
which is an increase in the value of the asset over a period of time. When you
invest it always requires a sacrifice of some present asset that you own today such
as time, money, or effort.
In finance, the benefit from an investing is when you receive a return on your
investment. The return may consist of a gain or a loss realized from the sale of a
property or an investment, unrealized capital appreciation (or depreciation), or
investment income such as dividends, interest, rental income etc., or a
combination of capital gain and income. The return may also include currency
gains or losses due to changes in the foreign currency exchange rates.
Investors generally expect higher returns from riskier investments. When a low-
risk investment is made, the return is also generally low. Similarly, high risk
comes with high returns.

Investors, particularly novices, are often advised to adopt a particular investment

strategy and diversify their portfolio. Diversification has the statistical effect of
reducing overall risk.

An investor may bear a risk of loss of some or all of their capital invested.
Investment differs from arbitrage, in which profit is generated without investing
capital or bearing risk.
Savings bear the (normally remote) risk that the financial provider may default.

Foreign currency savings also bear foreign exchange risk: if the currency of a
savings account differs from the account holder's home currency, then there is the
risk that the exchange rate between the two currencies will move unfavorably so
that the value of the savings account decreases, measured in the account holder's
home currency.

In contrast with savings, investments tend to carry more risk, in the form of both a
wider variety of risk factors and a greater level of uncertainty.

Industry to industry volatility is more or less of a risk depending. In biotechnology

for example, investors look for big profits on companies that have small market
capitalizations but can be worth hundreds of millions quite quickly.

An investment is essentially an asset that is created with the intention of allowing

money to grow. The wealth created can be used for a variety of objectives such as
meeting shortages in income, saving up for retirement, or fulfilling certain specific
obligations such as repayment of loan, payment of tuition fees, or purpose of other
assets.

Investment may generate income for you in two ways. One, if you invest in a
saleable assets, you may earn income by way of profit. Second, if investment is
made in a return generation plan, then you will earn an income via accumulation
of gains. In this sense, ‘what is investment’ can be understood by saying that
investments are all about putting your savings into assets or objects that become
 worth more than their initial worth or those that will help produce an income with
time.
Investment can be studied under two main categories:

• Economic Investment.

• Financial Investment.

Economic investments are, by definition, additions to the capital stock of a

company. These can range from equipment or machinery to a new production
facility or even higher-quality materials to be used in manufacturing products to
yield higher profit margins. The notion of capital stock just refers to something
that is used in the production of other goods. Generally speaking, economic
investments refer to a financial outlay in the areas of buildings, equipment and
inventory.
Human capital is also included in the notion of economic investments. If your
company brings on a new director of sales to help grow some of your accounts,
you are investing in that individual, banking on their ability to bring extra profits
to the business. As is the case with any investment, this effort might or might not
prove fruitful, depending on how successful the director of sales is at her job.

Along similar lines, hiring 10 new employees to work on the production floor so
that your company can begin to manufacture products on a night shift would be
considered an economic investment. While initially the business will be forced to
spend additional funds, you are moving forward under the assumption that the
night shift employees will produce enough additional inventories to help you gain
a bigger portion of the available profits in your industry.

Economic investments can, of course, be much more linear. If you purchase a

second machine to shrink wrap your products, it will enable you to package twice
as many in the same amount of time. This can help your business get more product
out on trucks and into stores each day. Theoretically, this investment in the new
shrink-wrapping machine will help you produce more and increase your profits.
Even more direct is the relationship between the purchase of capital stock like
inventory or machines that directly produce what you sell. With more ingredients
on hand, your factory might be able to bake more cookies that you can then sell.
With another industrial oven on the production floor, you should similarly be able
to bake more cookies and thus see an increase in sales.

When considering economic investments that some capital stock necessitates an

increase in other areas before profits can increase. Take, for instance, the example
of purchasing more cookie ingredients. While this theoretically could lead to a
spike in sales, you will also need to scale up your labor and sales channels to
enjoy the profits you anticipate. Without additional staff to bake the cookies or
stores in which to sell them, you could end up with extra inventory and nowhere to
sell it.

Financial investments are a bit different from economic investments. Whereas

economic investments are tied to a tangible increase in capital stock, financial
investments refer to an allocation of resources to assets that you expect to yield
some sort of dividend over a period. Instead of being tangible objects or the means
of production, financial investments are things like stocks, bonds or real estate
ventures. Investments into the market, purchases of certificates of deposit or
bonds, ownership of rental properties and even things like life insurance policies
would fall under the category of financial investments. These investments merely
transfer the existing ownership of an asset from one person or institution to
another. Anything that you expect will yield financial gain in the future but is
traded as a purely financial resource in the short term could be considered this
type of investment.

Generally speaking, the more developed an economy or a company, the more

likely it is to deal in financial investments rather than merely economic ones.
Financial investments tend to come about when an entity has enough capital to
spare that they can maintain the status quo and stay profitable, plus some. Without
adequate financial stability to keep your company running, you likely won’t be
looking to make as many financial investments. A bit of extra funding usually
goes towards economic investments, to grow profits. Only once the company has
managed to develop a stable system for maintaining the growth of economic
investments do they tend to move on to financial investments.
Businesses often choose to invest in real estate as they grow. Successful retail
chains, in particular, often make the bulk of their income from their real estate
interests. This is a way to grow profits at a more rapid rate than other sorts of
financial investments.

1.5 Investing & Speculating

Investors and traders take on calculated risk as they attempt to profit from
transactions they make in the markets. The level of risk undertaken in the
transactions is the main difference between investing and speculating.

Whenever a person spends money with the expectation that the endeavour will
return a profit, they are investing. In this scenario, the undertaking bases the
decision on a reasonable judgment made after a thorough investigation of the
soundness that the endeavour has a good probability of success.

But what if the same person spends money on an undertaking that shows a high
probability of failure? In this case, they are speculating. The success or failure
depends primarily on chance, or on uncontrollable (external) forces or events.

The primary difference between investing and speculating is the amount of risk
undertaken. High-risk speculation is typically akin to gambling, whereas lower-
risk investing uses a basis of fundamentals and analysis.
Investing
Investing can come in many different forms—through monetary, time, or energy
based methods. In the financial sense of the term, investing means the buying and
selling of securities such as stocks, bonds, exchange traded funds (ETFs), mutual
funds, and a variety of other financial products.

Investors hope to generate income or profit through a satisfactory return on their

capital by taking on an average or below-average amount of risk. Income can be in
the form of the underlying asset appreciating in value, in periodic dividends or
interest payments, or in the full return of their spent capital.
Most often, investing is the act of buying and holding an asset for the long-term.
To classify as a long-term holding, the investor must own the asset for at least one
year.

Let's consider a large stable multinational company as an example of investing.

This company may pay a consistent dividend that increases annually, and it may
have a low business risk. An investor may choose to invest in this company over
the long-term to make a satisfactory return on their capital while taking on
relatively low risk. Additionally, the investor may add several similar companies
across different industries to their portfolio to diversify and further lower their
risk.

Analysis and research is a key part of the investment process. It involves

evaluating different assets, sectors, and patterns or trends that occur in the market.
Investors can use tools like fundamental or technical analysis to choose their
investment strategies or design their portfolios. By using fundamental analysis,
investors can determine what factors affect the value of securities, from
microeconomic to macroeconomic factors. Technical analysis, on the other hand,
uses statistical trends such as security prices and volumes to find opportunities in
the market.

Investors have many options available for them to invest their money. Brokerage
accounts give investors access to a variety of securities. By opening an account, an
investor agrees to make deposits and then places orders through the firm. The
assets and income belong to the investors, while the brokerage takes a commission
for facilitating the trades. With new technology, investors can now invest with rob
advisers, too. These are automated investment companies that use an algorithm to
come up with an investment strategy based on investors' goals and risk tolerance.
Speculating
Speculating is the act of putting money into financial endeavours with a high
probability of failure. Speculating seeks abnormally high returns from bets that
can go one way or the other. While speculating is likened to gambling, it is not
exactly the same, as speculators try to make an educated decision on the direction
of their trades. However, the inherent speculative risk involved in the transaction
tends to be significantly above average.
These traders buy securities with the understanding that they will be held for only
a short period before selling. They may frequently move into and out of a position.

As an example of a speculative trade, consider a volatile junior gold mining

company with an equal chance over the near-term of skyrocketing from a new
gold mine discovery or going bankrupt. With no news from the company,
investors would tend to shy away from such a risky trade. However, some
speculators may believe the junior gold mining company will strike gold and may
buy its stock on a hunch. This hunch and the subsequent activity by investors is
called speculation.

Speculative trading does have its downfalls. When there are inflated expectations
of growth or price action for a particular asset class or sector, values will rise.
When this happens, trading volume increases, eventually leading to a bubble. This
happened with the dotcom bubble. Investment in Internet companies grew
exponentially in the late 1990s, with valuations rising rapidly. The market crashed
after 2001, causing major tech companies to lose a big chunk of their value, with
many others being wiped out.

Types of Speculative Traders

Day trading is a form of speculation. Day traders don't necessarily have any
specific qualifications, rather, they are labelled as such because they trade often.
They generally hold their positions for a day, closing once the trading session is
complete.

A swing trader, on the other hand, holds their position up to about several weeks
hoping to capitalize on gains during that time. This is accomplished by trying to
determine where a stock's price will move, taking a position, and then making a
profit.
1.6 Difference between Investment and Speculation

In financial jargon, the terms investment and speculation are overlapping and used
synonymously. In investment, the time horizon is relatively longer, generally
spanning at least one year while in speculation, the term may extend up to a half
year only.
As per Benjamin Graham, an American economist, and professional investor,
investment is an activity, which upon complete analysis assures the safety of the
amount invested and adequate return. Conversely, speculation is an activity which
does not satisfy these requirements.

Comparison Chart
BASIS FOR
COMPARISO
N INVESTMENT SPECULATION

The purchase of an asset Speculation is an act of conducting

Meaning with the hope of getting a risky financial transaction, in
returns is called investment the hope of substantial profit.
Basis for Fundamental factors, i.e. Hearsay, technical charts and
decision performance of the company. market psychology.
Time horizon Longer term Short term
Risk involved Moderate risk High risk
Intent to profit Changes in value Changes in prices
Expected rate
Modest rate of return High rate of return
of return
An investor uses his own
Funds A speculator uses borrowed funds.
funds.
Income Stable Uncertain and Erratic
Behavior of
Conservative and Cautious Daring and Careless
participants

The basic distinguishing point amidst these two is that income in the investment is
consistent, but in the case of speculation is inconsistent.

Conclusion

At the end of this discussion, it can be said that both are different and should not
be used interchangeably. Investors play a very crucial role in maintaining liquidity
in the market but speculators too, play a major character in absorbing excessive
risk and providing required liquidity, at the time when investors do not participate
 1.7TYPES OF INVESTMENTS

Autonomous

Net Induced

Investment
t

Unplanned Financial

Planned Real

1. Autonomous Investment:
Investment may be autonomous and induced. Usually, investment decision is
governed by output and/or the rate of interest. If investment does not depend either
on income/output or the rate of interest, then such investment is called
autonomous investment. Thus, autonomous investment is independent of the level
of income.
• Autonomous investment is the portion of the total investment made by a
government or other institution independent of economic considerations.
• These can include government investments, funds allocated to public goods or
infrastructure, and any other type of investment that is not dependent on changes
in GDP.
• In contrast to induced investment, which seeks to take advantage of economic
opportunities, autonomous investment is made for necessities or purposes of
stability or security.
 Autonomous investments are made because they are deemed as basic necessities
to individual, organizational, or national well-being, health, and safety, and are
executed even when levels of disposable income for investment are zero or close
to zero.

Autonomous investments include inventory replenishment, government

investments in infrastructure projects such as roads and highways, and other
investments that maintain or enhance a country's economic potential. They do not
increase in response to higher gross domestic product (GDP) growth, or shrink in
response to economic contractions, indicating that they are not motivated by
profit, but rather by the goal of improving societal welfare.

2. Induced Investment:

Investment that is dependent on the level of income or on the rate of interest is

called induced investment. Investment that would respond to a change in national
income or in the rate of interest is called induced investment. Fig. 3.10 shows that,
as national income rises from OY0 to 0Y1, (induced) investment increases from
OI0 to OI1. Thus, investment that is income-elastic is called induced investment.
You can also say induced investment is that investment which is governed by
income and amount of profit. The inducing factors are changes in income and
profit. Where there is a possibility of increase in income and profit, the induced
investment increases and when there is a decreased possibility of income and
 profit, the induced investment decreases. This implies that the induced investment
is profit and income elastic. In simple language, when increase in investment is
due to the increase in current level of income and production, it is known as
induced investment.

3. Financial Investment:

Financial investment is a process by which funds are invested towards purchase of

financial instruments like securities, real estate, bonds and currencies. A term
closely related to economics and financial disciplines, investment refers to
‘savings’ used for acquisition of assets or making bank deposits towards future
income, instead of consuming them today. Financial Investment Management is
the process of managing money invested in assets and securities. Financial
Investment Management involves the redirection of funds towards high-gain
potential financial instruments through carefully designed investment plans.

4. Real Investment:

Real investment is the investment which is related with the purchase of tools,
plant, machinery and technology which leads to increase in employment level and
overall growth of the economic status of the country.

5. Planned Investment:
 Planned investment is the type of investment in which investor make a concrete
plan while making the investment in this type of investment the investor studies
all the avenues properly and after that makes investment.

6. Unplanned Investment:

This is a type of investment in which investor does not make any concrete plan
before making any investment. This type of investment is the random investment
which is made by the investor.

7. Net Investment:

It is another type of investment which is used for the depreciation of the capital
assets and even for replacement of exhausted capital assets. Hence it must not be
included in the investment.

1.8 TYPES OF INVESTORS

A risk profile is an evaluation of an individual or organization’s willingness to

take risks, as well as the threats to which an organization is exposed. A risk profile
is important for determining a proper investment asset allocation for a portfolio.
Organizations use a risk profile as a way to mitigate potential risk and threats.

 Type A Investor – Conservative:

i. This typed of investors seeks to protect your capital and is somewhat concerned
when this does not occur.
ii. They have a very basic understanding of the investment markets and their
operations.
iii. The term risk means ‘danger’. iv. When they make a financial decisions, they
usually focus on the possible losses.
v. They seek moderate returns and do not wish to take on more than a low level of
risk.
vi. They are willing to take very low risks and are not very comfortable with the
concept of risk.

 Type B Investors – Moderately Conservative

i. This type of investors is prepared to establish a diversified portfolio to partially
protect you from inflation and tax.
ii. They have a general understanding of the investment markets, but would like to
have a broader understanding in order to explore the possibilities.
iii. The term risk means ‘uncertainty’.

iv. When they make a financial decision, they are more focused on the possible
losses, but also keep in the mind the possible gains.
v. They are prepared to accept a moderate level of risk in the overall capital value of
your investments. vi. They are generally a low risk taker and are somewhere
comfortable with the concept of risk.

 Type C Investors – Balanced:

i. This type of investors wishes to adopt a diversified portfolio to somewhat protect

them from inflation and tax.
ii. They have a reasonable understanding of the investment markets and their
operation.
iii. The term risk means ‘possibilities.

iv. When they make a financial decision, they are more focused on the possible gains,
but also keep in mind the possible losses.
v. They can accept that there will be some level of volatility in the value of your
investments. vi. They are a moderate risk taker and can accept some
moderate levels of investment risk.

 Type D Investor – Moderate Growth

i. This type of investors wants to invest in a broad spread of quality
investments, but predominantly in growth assets to achieve higher growth.
ii. They understand that investment markets can and will fluctuate and that
different market sectors offer different levels of risks, income and growth.
iii. Their investment time horizon is for the long – term, 7 years or more.
iv. The term risk means ‘opportunity’. When they make a financial decision,
they usually focus on the possible gains.
v. They are a high-risk taker and can accept higher levels of investment risks.
vi. They are seeking to achieve a reasonably high rate of growth on the capital
invested.

1.9 Objectives of Investment

The options for investing your savings are continually increasing, but every one of
them can still be categorized according to three fundamental characteristics:
safety, income, and growth.
Those options also encompass the objectives of any investor. While the investor
may have more than one of these objectives, and may well have all three, the
success of one comes at the expense of the others.
The first task of any successful individual investor is to find the correct balance
among these three worthy goals
Before you decide to invest your earning in any of the many investment plans
available in India, it’s essential to understand the reasons behind investing. While
the individual objectives of investment may vary from one investor to another, the
overall goals of investing money may be any one of the following reasons.

Reasons to Start Investing Today

1. To keep Money Safe

Capital preservation is one of the primary reasons people invest their money.
Some Investments help keep hard-earned money safe from being eroded with
time. By parking your funds in these instruments or schemes,ong you can ensure
that you don’t outlive your savings. Fixed deposits, government bonds, and even
an ordinary savings account can help keep your money safe. Although the return
on investment may be lower here, the objective of capital preservation is easily
met.
2. To Help Money Grow
Another common objective of investing money is to ensure that it grows into a
sizable corpus over time. Capital appreciation is generally a long term goal that
helps people secure their financial future. To make the money you earn grow into
wealth, you need to consider investment options that offer a significant return on
the initial amount invested. Some of the best investments to achieve growth
include real estate, mutual fund, commodities, and equity. The risk associated with
these options may be high, but the return is also generally significant.

3. To Earn a Steady Stream of Income

Investments can also help you earn a steady source of secondary (or primary)
income. Examples of such investments includes fixed deposits that pay out regular
interest or stock of companies that pay investors dividends consistently. Income –
generating investments can help you pay for your everyday expenses after you
have retired. Alternatively, they can also act as excellent sources of supplementary
income during your working years by providing you with additional money to
meet outlays like college expenses or EMIs.

4. To Minimize the Burden of Tax

Aside from capital growth or preservation, investors also have another compelling
incentive to consider certain investments. This motivation comes in the form of
tax benefits offered by the Income Tax Act,1961. Investing in options such as Unit
Linked Insurance Plans, Public Provident Fund, and Equality Linked Savings
Schemes can be deducted from your total income. This has the effect of reducing
your taxable income, thereby bringing down your tax liability.

5. To Save up for Retirement

Saving up for retirement is a necessity. It’s essential to have a retirement fund you
can fall back on in your golden years, because you may not be able to continue
working forever. Additionally, it would be unfair to depend on your children to
support you later in life, particularly if they have children of their own to raise. By
investing the money, you earn during your working years in the right investment
options, you can allow your funds to grow enough to sustain you after you’ve
retired

6. To Meet Your Financial Goals

Investing can also help you achieve your short-term and long-term financial goals
without too much stress or trouble. Some investment options, for instance, come
with short lock-in periods and high liquidity. These investments are ideal
instruments to park your funds in if you wish to save up for short-term targets like
funding home improvements or creating an emergency fund. Other investment
options that come with a longer lock-in period are perfect for saving up for long-
term goals.

7. Wealth Creation
Investing your money will allow it to grow. Many financial instruments give
returns on the money for the long run, such as securities, savings certificates,
mutual funds, or shares. This return allows your money to compound, earning
money on the money already earned, and creating wealth over time.

8. Beat Inflation
Your hard-earned money is slowly losing its value over time. For example, if you
save 100,000 this year and put it under your mattress for the next 30 years, it
won’t be 100,000 when you take it back out… I mean, yes, it will still be 100,000.
But it won’t be worth what it was worth when you first earned it.
So if your 100,000 today could buy you an incredible trip around the world, in 30
years when you take it out from under your mattress it may only be able to buy
you two nights in a nearby hotel. Inflation can vary over time and I’m not going to
get into too much detail here. But just remember this: When your money is
sitting in cash it is steadily eroding in value. How fast does it erode? That
depends on the current rate of inflation. Since the year 2000, the annual inflation
rate has mostly been between 1% — 4%. That means every year your money’s
buying power erodes by 1% — 4%. If you buy treasury bonds or put your money
in a Certificate of Deposit (CD) at your local bank, you’ll probably earn just
enough to avoid inflation. But even that’s not a great deal, because in the stock
market you could earn so much more. For example, the 2018 average inflation rate
in India was 2.4% per year. The best CD rate I could find online was a six-year
CD from RBI offering 2.7% per year. While that’s better than the current rate of
inflation, it’s not by much. So the value of your money is just staying the same.
Think of it this way: If you have enough money saved up to buy a new Honda
today, and you put that money under your mattress, in 30 years you’ll be able to
buy a bicycle. Into a certificate of deposit (CD), in 30 years you’ll be able to buy a
nicer Honda.

9. Tax Minimization:

Some investors pursue tax minimization as a factor in their choices. A highlypaid

executive, for example, may seek investments with favorable tax treatment to
lessen the overall income tax burden. Contributing to an individual retirement
account or any other tax-advantaged retirement plan is a highly effective tax
minimization strategy for all of us.

10. Liquidity:

Investments such as bonds or bond funds are relatively liquid, meaning they can in
many cases be converted into cash quickly and with little risk of loss. Stocks are
less liquid since they can be sold easily but selling at the wrong time can cause a
serious loss. Many other investments are illiquid. Real estate or art can be
excellent investments unless you are forced to sell them at the wrong time.

11. Secondary Objectives

Safety, income, and capital gains are the big three objectives of investing. But
there are others that should be kept in mind when they choose investments.

12. Minimize Risk:

Investing in different types of securities help to minimize risk. To minimize the

risks associated with investment, you should always diversify your portfolio over
well researched asset class. It is also important to diversify within each asset class.
13. Money Making Objectives:

Investors put their surplus money in these kinds of investment. Their objective is
to maximize wealth. Usually, the investors invest in shares of companies which
provide capital appreciation apart from regular income from dividend.

1.10 INVESTMENT DECISIONS

Decision-making can be defined as the process of choosing a particular alternative

from many available alternatives. It is a complicated multi-step process involving
analysis of various personal, technical and situational factors. There are no
exceptions in the case of making decisions in the stock markets either. Taking
investment decisions is the most crucial challenge faced by investors. Some
personal factors are age, education, income etc. On the technical side, investment
decisions can be derived from various models of finance, for e.g. the capital asset
pricing model (CAPM). Decisions should not be reached without considering
situational factors that take into an account the environment, the market
psychology in other words. Investors can educate themselves about the various
biases they are likely to exhibit and then take steps towards avoiding it thus
improving their effectiveness. Some common mistakes made by investors are
selling too soon while booking profits, holding too long while facing losses,
buying overpriced stocks based on market sentiments and positive evaluation by
all and sundry.

The Investment Decision relates to the decision made by the investors with
respect to the amount of funds to be deployed in the investment opportunities. It is
assumed that individual investors while making an investment decision which
could be investing money into different investment avenues like shares, mutual
funds, debt funds, bank deposits, gold, real estate etc makes a rational decision.
They consider all the factors that might affect the risk and return attached to that
investment option. But in reality, there are different investment biases that affect
their investment decisions too. The existing literature on behavioural finance
literature supports that rationality is not a natural thought process and that biases
and heuristics lead to predictably irrational choices. Behavioural finance as an area
 focuses on explaining these irrational behaviour and predictable errors made by
investors while making their investment decisions.

1. Herding Behaviour:

In Herding Behaviour, we make our investment choices based on the choices

made by other people (investors). For instance, we buy the shares of those
companies or sector that other investors have already purchased or if we see other
investing in
real estate, we also follow the crowd. This bias arises out of human instinct to
achieve social conformity and also the lack of confidence in one’s own judgment.
As individuals, we might believe that a large group of investors could not be
wrong and thus following what others are doing is a safe choice. This bias leads to
a bubble in an investment class leading to losses for the late entrants as they
purchase them at the peak prices and thus suffer the most when the bubble busts.

2. Conservatism or Loss Aversion:

In this, our investment choices are based on inherent fear of not losing money.
Due to this, we would avoid certain investment classes where there is some
probability of losses though they have good return prospects as well. Thus,
individuals with this inherent bias choose only stable investment options though
they offer lower returns.

3. Momentum Effect:

In this, individuals believe that the current trend in terms of movement (return) of
the investment class will continue for the coming period as well. This means that
if the prices of that shares or any other investment class is increasing, it will
continue to increase and thus a good option to invest in and on contrary if it is
falling it will continue to fall so it is better to exit that investment class even if it
means incurring losses. This bias arises out of our human psychology that applies
in our daily life also that during good times we are optimistic that this good time is
there to stay forever and during tough times we get depressed and surrounded with
negative thoughts that circumstances will never improve. This momentum effect
 bias amongst investors will lead to sharp rise and fall in prices of various
investment classes.

4. Snake Bite Effect:

In this, the investors are unwilling to invest money into those shares or other
investment classes where they have suffered losses in the past. As investors if we
have burnt our fingers in an investment, due to the snake bite effect, we would
avoid that investment in the future also even though the scenario and the
investment proposition have completely changed.

1.11 INVESTMENT AVENUES

A number of investment avenues in India depend on the size of investment and

financial objectives. These avenues of investments should be wisely selected by an
investor as we all know that saving and investing are the sole pillars of financial
stability.
Mr. Warren Buffet who is the world’s most successful investor says never depend
on a single income, invest to create the second source. Creating multiple sources
of investment avenues is very essential to achieve your financial goals. So,
broadly, saving is done to meet your emergency expenses or unplanned expenses
while investment is all about making your money earn for you and give you the
rewards through future returns.

There are multiple investment options to choose from:

1. Fixed Deposits
Fixed deposits are regarded as one of the most popular investments in India. They
provide a fixed rate of return for a specific period and considered as a low-risk
option.
Banks offer FDs. The interest rate varies from one deposit to another and changes
from time to time. Although FDs have a lock-in period, most financial institutions
permit loans and overdraft facilities against them.

2. Public Provident Fund

Public Provident Fund (PPF) scheme is a long-term investment option that offers
an attractive rate of interest and returns on the amount invested. This is one of the
most favourite avenues of most of the Indians. The interest earned and the returns
are not taxable under Income Tax. One has to open a PPF account under this
scheme and the amount deposited during a year will be claimed under section 80C
deductions.
PPF has a lock-in of 15 years which enables you to earn compound interest on
your investments. If you want to extend your investment time frame, you can
extend it for the next five years. The minimum period of investments is 6 years
after which you can withdraw your investments. In case of financial emergencies,
you can take a loan on the balance of your PPF account.

3. Gold Investment
Investment in Gold is one of the most sought out investment options exercised
since older times. The value of gold bears an inverse relation with the value of
equity. You can plan your investment in gold through a Gold deposit scheme,
Gold ETF (exchange-traded fund), Gold mutual funds, Gold bar, etc. Gold mutual
funds and ETFs allow you to hold the gold in a paperless form and sell them in
stock exchanges making them a highly liquid investment. However, at an
individual or the level of entire economies, gold is a dead investment that does not
produce anything. In fact, for India, as has often been pointed out, our huge
appetite for gold is especially harmful.

4. Post Office Savings Scheme

Post Office savings scheme offers a safer investment option, offering monthly
income plans which are apt for the retired person meeting their medical and other
requirements. However, it is a traditional way of investment which should be now
considered as saving avenue rather than an investment option.
 5. Equity Shares
Equity investments represent ownership in a running company. By ownership, we
mean share in the profits and assets of the company but generally, there are no
fixed returns. It is considered as a risky investment but at the same time,
depending upon situation, it is liquid investments due to the presence of stock
markets. There are equity shares for which there is a regular trading, for those
investments liquidity is more otherwise for stocks have less movement, liquidity is
not highly attractive. Equity shares of companies can be classified as follows:
• Blue chip scrip

• Growth scrip

• Income scrip

• Cyclical scrip

• Speculative scrip

6. Debentures or Bonds
Debentures or bonds are long-term investment options with a fixed stream of cash
flows depending on the quoted rate of interest. They are considered relatively less
risky. An amount of risk involved in debentures or bonds is dependent upon who
the issuer is. For example, if the issue is made by a government, the risk is
assumed to be zero. However, investment in long term debentures or bonds, there
are risk in terms of interest rate risk and price risk. Suppose, a person requires an
amount to fund his child’s education after 5 years. He is investing in a debenture
having maturity period of 8 years, with coupon payment annually. In that case
there is a risk of reinvesting coupon at a lower interest rate from end of year 1 to
end of year 5 and there is a price risk for increase in rate of interest at the end of
fifth year, in which price of security falls. In order to immunize risk, investment
can be made as per duration concept. Following alternatives are available under
debentures or bonds:
• Government securities

• Savings bonds

• Public Sector Units bonds

• Debentures of private sector companies

• Preference shares

7. Money Market Instruments

Money market instruments are just like the debentures but the time period is very
less. It is generally less than 1 year. Corporate entities can utilize their idle
working capital by investing in money market instruments. Some of the money
market instruments are
• Treasury Bills

• Commercial Paper

• Certificate of Deposits

8. 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. In mutual
funds also, we can select among the following types of portfolios:
• Equity Schemes

• Debt Schemes

• Balanced Schemes

• Sector Specific Schemes etc

9. Life Insurance and General Insurance

They are one of the important parts of good investment portfolios. Life insurance
is an investment for the security of life. The main objective of other investment
 avenues is to earn a return but the primary objective of life insurance is to secure
our families against unfortunate event of our death. It is popular in individuals.
Other kinds of general insurances are useful for corporates. There are different
types of insurances which are as follows:
• Endowment Insurance Policy

• Money Back Policy

• Whole Life Policy

• Term Insurance Policy

• General Insurance for any kind of assets.

10. Real Estate

Every investor has some part of their portfolio invested in real assets.Almost every
individual and corporate investor invest in residential and office buildings
respectively. Apart from these, others include:
• Agricultural Land

• Semi-Urban Land
• Commercial Property

• Raw House

• Farm House etc.

11. Precious Objects

Precious objects include gold, silver and other precious stones like the diamond.

Some artistic people invest in art objects like paintings, ancient coins etc.

12. Derivatives
Derivatives means indirect investments in the assets. The derivatives market is
growing at a tremendous speed. The important benefit of investing in derivatives
is that it leverages the investment, manages the risk and helps in doing
speculation. Derivatives include:
• Forwards
• Futures

• Options

• Swaps etc.

13. Non-Marketable Securities

Non-marketable securities are those securities which cannot be liquidated in the
financial markets. Such securities include:
• Bank Deposits

• Post Office Deposits

• Company Deposits

• Provident Fund Deposits

14. Exchange Traded Funds (ETF):

ETFs are many in number. However, the preferred investment is in Index ETFs.
These are just like mutual funds, but the returns are based on performance of an
index. For example: Nifty Bees are ETFs where the return on investment is based
on performance of Nifty50 index. Similarly, Gold Bees are investments where the
return is as per price movement on Gold.
a) ETFs are cost-efficient. Mutual funds are embedded with cost which we do
not see in our statements. Most of the funds charge 2.5 to 3% on your investments
to manage your funds. However, in ETFs the cost is minimal, as little as 0.5% or
less.
b) ETFs are managed digitally and most of them can be invested through
DMAT account. There is no need to deposit a cheque or fill a form or visit a
branch. It is easily manageable.
c) All investment details are available online. These are more transparent and
less risk.
d) With the ease of management, this is the most liquid investment option just
like Equity. In case of emergency, one can withdraw cash within minutes.
e) Index funds like Nifty Bees have given a return of 15 % to 20% in past 3
years, which are far superior than fixed deposits. Gold ETF has given returns of
9% to 10% in the past 3 years.
 15. National Pension Scheme
NPS is a retirement pension scheme introduced by the Government of India.
Through regular investments, you can build a corpus that can provide you with a
regular pension after retirement. Investors can also withdraw from the fund
partially after retirement.

16. Stocks
Stocks refer to purchasing shares in a company, giving the investor ownership
stake. It can be profitable when the company grows in future. Investing in stocks
for the long-term aids in capital appreciation. Short-term trading, however, can be
riskier.

17. Life Insurance

Insurance plans sold as life insurance shall not be considered as investment
options as they provide risk coverage in case of any mishap. However, many
Indians consider insurance as an investment. Life insurance is an instrument for
the security of life. The main objective of other investment avenues is to earn a
return but the primary objective of life insurance is to secure our families against
unfortunate events.

18. Certificates of Deposit

A certificate of deposit (CD) is a very low-risk investment. You give a bank a
certain amount of money for a predetermined amount of time. When that time
period is over, you get your principal back, plus a predetermined amount of
interest. The longer the loan period, the higher your interest rate.
There are no major risks to CDs. They are FDIC-insured up to $250,000, which
would cover your money even if your bank were to collapse. That said, you have
to make sure you won’t need the money during the term of the CD, as there are
major penalties for early withdrawals.
 19. Retirement Plans
There are a number of types of retirement plans. Workplace retirement plans,
sponsored by your employer, include 401(k) plans and 403(b) plans. If you don’t
have access to a retirement plan, you could get an individual retirement plan
(IRA), of either the traditional or Roth variety.
Retirement plans aren’t a separate category of investment, per se, but a vehicle for
making investments, including purchasing stocks, bonds and funds, that exempt
you from taxes in one of two ways: either letting you invest pretax dollars (as with
a tradition IRA) or allowing you to withdraw money without paying taxes on that
money. The risks for the investments are the same as if you were buying the
investments outside of a retirement plan.

20. Options
An option is a somewhat more complicated way to buy a stock. When you buy an
option, you’re purchasing the ability to buy or sell an asset at a certain price at a
given time. There are two types of options: call options, for buying assets, and put
options, for selling options.
The risk of an option is that the stock will decrease in value. If the stock decreases
from its initial price, you lose your money. Options are an advanced investing
technique, and retail should exercise caution before using them.

21. Annuities
Many people use annuities as part of their retirement savings plan. When you buy
an annuity, you purchase an insurance policy and, in return, you get periodic
payments.
Annuities come in numerous varieties. They may last until death or only for a
predetermined period of time. The may require periodic premium payments or just
one up-front payment. They may be linked partially to the stock market or they
may simply be an insurance policy with no direct link to the markets. Payments
may be immediate or deferred to a specified date. They may be fixed or variable.
While annuities are fairly low risk, they aren’t high-growth. They make a good
supplement to retirement savings, rather than an integral source of funding.
 22. Commodities
Commodities are physical products that you can invest in. They are common in
futures markets where producers and commercial buyers – in other words,
professionals – seek to hedge their financial stake in the commodities. Retail
investors should make sure they thoroughly understand futures before investing in
them. Partly, that’s because commodities investing runs the risk that the price of a
commodity will move sharply and abruptly in either direction due to sudden
events. For instance, political actions can greatly change the value of something
like oil, while weather can impact the value of agricultural products.

23. ULIP

A ULIP is an insurance plan where the premium paid is invested in equity, debt, or
money market instruments Subject to certain conditions, the premium paid
towards this policy is allowed as a deduction u/s 80C of the Income Tax Act. So,
ULIP premiums can be deducted from your taxable income up to the permissible
limit u/s 80C, which is currently at Rs. 1.5 lacs.

Summary

Investment is made with the objective of wealth creation and all above mentioned
instruments fulfil their objectives, in accordance to the risk associated with it. An
investor must understand the risk appetite, time horizon and tax treatment on
different investment avenues to make a judicious and sagacious investment call.

1.12 FEATURES OF GOOD INVESTMENT

A good investment plan is one which is consistent with the objectives of the
investor, i.e., it should have all the advantages of fruitful investment. The
following are the essential ingredients of a good investment plan.

1. Safety of principal
Safety of funds invested is one of the essential ingredients of a good investment
programme. Safety of principal signifies protection against any possible loss under
the changing conditions. Safety of principal can be achieved through a careful
 review of economic and industrial trends before choosing the type of investment.
It is clear that no one can make a forecast of future economic conditions with
utmost precision. To safeguard against certain errors that may creep in while
making an investment decision, extensive diversification is suggested.
The main objective of diversification is the reduction of risk in the loss of capital
and income. A diversified portfolio is less risky than holding a single portfolio.
Diversification refers to an assorted approach to investment commitments.

Diversification may be of two types, namely,

i. Vertical diversification; and

ii. Horizontal diversification.

Under vertical diversification, securities of various companies engaged in

different stages of production (from raw material to finished products) are chosen
for investment.
On the contrary, horizontal diversification means making investment in those
securities of the companies that are engaged in the same stage of production.
Apart from the above classification, securities may be classified into bonds
andshares which may in turn be reclassified according to their types. Further,
securities can also be classified according to due date of interest, etc. However, the
simplest diversification is holding different types of securities with reasonable
concentration in each.

2. Liquidity and Collateral value

A liquid investment is one which can be converted into cash immediately without
monetary loss. Liquid investments help investors meet emergencies. Stocks are
easily marketable only when they provide adequate return through dividends and
capital appreciation. Portfolio of liquid investments enables the investors to raise
funds through the sale of liquid securities or borrowing by offering them as
collateral security. The investor invests in high grade and readily saleable
investments in order to ensure their liquidity and collateral value.
 3. Stable income
Investors invest their funds in such assets that provide stable income. Regularity of
income is consistent with a good investment programme. The income should not
only be stable but also adequate as well.
4. Capital growth
One of the important principles of investment is capital appreciation. A company
flourishes when the industry to which it belongs is sound. So, the investors, by
recognizing the connection between industry growth and capital appreciation
should invest in growth stocks. In short, right issue in the right industry should be
bought at the right time.

5. Tax implications
While planning an investment programme, the tax implications related to it must
be seriously considered. In particular, the amount of income an investment
provides and the burden of income tax on that income should be given a serious
thought. Investors in small income brackets intend to maximize the cash returns
on their investments and hence they are hesitant to take excessive risks. On the
contrary, investors who are not particular about cash income do not consider tax
implications seriously.

6. Stability of Purchasing Power

Investment is the employment of funds with the objective of earning income or
capital appreciation. In other words, current funds are sacrificed with the aim of
receiving larger amounts of future funds. So, the investor should consider the
purchasing power of future funds. In order to maintain the stability of purchasing
power, the investor should analyze the expected price level inflation and the
possibilities of gains and losses in the investment available to them.

7. Legality
The investor should invest only in such assets which are approved by law. Illegal
securities will land the investor in trouble. Apart from being satisfied with the
legality of investment, the investor should be free from management of securities.
In case of investments in Unit Trust of India and mutual funds of Life Insurance
Corporation, the management of funds is left to the care of a competent body. It
will diversify the pooled funds according to the principles of safety, liquidity and
stability.

Research Methodology
CHAPTER 2
2.1 Research Methodology

Research methodology is the specific procedures or techniques used to identify,

select, process, and analyse information about a topic. In a research paper, the
methodology section allows the reader to critically evaluate a study’s overall
validity and reliability.

Research methodology is the path through which researchers need to conduct their
research. It shows the path through which these researchers formulate their
problem and objective and present their result from the data obtained during the
study period. This research design and methodology chapter also shows how the
research outcome at the end will be obtained in line with meeting the objective of
the study. This chapter hence discusses the research methods that were used
during the research process. It includes the research methodology of the study
from the research strategy to the result dissemination. For emphasis, in this
chapter, the author outlines the research strategy, research design, research
methodology, the study area, data sources such as primary data sources and
secondary data, population consideration and sample size determination such as
questionnaires sample size determination and workplace site exposure
measurement sample determination, data collection methods like primary data
collection methods including workplace site observation data collection and data
collection through desk review, data collection through questionnaires, data
obtained from experts opinion, workplace site exposure measurement, data
collection tools pretest, secondary data collection methods, methods of data
analysis used such as quantitative data analysis and qualitative data analysis, data
analysis software, the reliability and validity analysis of the quantitative data,
reliability of data, reliability analysis, validity, data quality management, inclusion
criteria, ethical consideration and dissemination of result and its utilization
approaches. In order to satisfy the objectives of the study, a qualitative and
quantitative research method is apprehended in general.
The study used these mixed strategies because the data were obtained from all
aspects of the data source during the study time. Therefore, the purpose of this
methodology is to satisfy the research plan and target devised by the researcher.
2.2 Research Process
 2.3 Objectives of the study

1. To analyse the profile of the respondents

2. To study the consumption, saving and investment habits of salaried person in

Mumbai and Thane city.
3. To study the consumption, saving and investment habits of salaried earring person
in different income brackets in Mumbai and Thane city.
4. To study the determinants of consumption, saving and investment.

5. To study the impact of age of the person on the consumption, saving habits of the
individual.
6. To study the impact of sector of employment on consumption and saving habits of
the sample group.
7. To study the growth and development of various investment opportunities.

8. To study the awareness and pattern of investment among people in Mumbai and
Thane city.
9. To analyse factors influencing investment decisions.

10. To evaluate the risk and return on investment.

11. To examine the various problems faced by the investors.

12. To suggest suitable measures for improving profitable and safe investments.

13. To determine the preference of salaried individuals regarding saving and

investment avenues and sectors on the basis of their gender.
14. To study the impact of various investment objectives on the level of satisfaction
derived by salaried individuals.
15. To summarize the key findings and offer suggestions and conclusion.

2.4 Limitations to the study

1) The primary data were collected from samples in Mumbai and Thane city. The
results arrived in the study may or may not be applicable to other districts.

2) Convenient sampling technique was used to select sample. The samples may not
represent the true population.
3) The study has been limited to college salaried people in Mumbai and Thane city.

4) The analysis was on the basis of information/opinion of the respondents which

may change with change of time, trend, lifestyle changes, etc.

5) Scope of the study is limited to the selected saving and investment avenues.

6) The data given by respondents may have been biased and it would affect the
findings of the study.

2.5 Significance of the study

The study of salary earners with reference to Consumption, Saving and Investment
habits is a vast subject. The study limits its scope to the thane city only in view of
the limitations of the individual researcher. As consumption, saving and
investment covers many more factors so, the present study limits its scope to the
selected factors. The study concentrates on the analysis of consumption, saving
and investment habits of salary earning person.

With the entry of various new financial products in the Indian Market, the avenue
for parking the funds in the form of savings & investment have been increased.
The decision of making an investment is emerging as a new challenge not only for
the various investors in the market. When the range of investors present in the
market is majorly composed of significant number of salaried class individuals
than it becomes important to talk about it. For retaining this group of investors
who had just gotten the essence of return than it is of essential to understand that
what all are the possible factors that are flagging them towards investment and
vice versa. It is essential to understand that why a salaried class individual is so
keen in investing and with which level of knowledge.

The study will further help to understand the various factors affecting the various
saving & investment decisions of the salaried class investors towards various
investment avenues available in the market with regard to their level of knowledge
and level of satisfaction. It would additionally help to understand the analogy of
investment decision and investment patterns that would in turn help the
investment and financial marketers to have better understanding the mind set of
various Indian salaried class investors and in turn would also help in attracting
more and more investors.

2.6 Hypothesis

Hypothesis literally means an idea or theory that the researcher sets as the goal of
the study and examines it and is replaced as a theory when the hypothesis is true in
the study's conclusion. Hypothesis is a material thinking based on scientific
process.

In research methods, hypothesis is a proposition which the researcher wants to

verify. Hypothesis is a certainly useful but it is not necessary at times the
researcher interested in collecting and analysing data indicating the main features
without a hypothesis excepting which may suggest during the course of his study.
In case of problem-oriented research, it is necessary to formulate hypothesis. In
this type of research, hypothesis is concerned with the cause of a certain
phenomenon or a relationship between two or more variable.

Hypothesis is impossible to generate in the absence of human thought.

Formulation of hypotheses in scientific study of social problems is an important
and strong aspect of research, utility of their use etc. It gives researcher a new
direction in research study.

In the absence of hypothesis, the researcher cannot move even a step further in his
study because on the basis of this thinking he tries to know what the reason behind
this research is. It is the definitive and fully planned path of research study.

Hypothesis is helpful and useful in giving a definite direction to any research

study. It has an important place in the study of social phenomena. Hypothesis
controls and directs social research and scientific method.

Thus, hypothesis is a statement which should be a clear, specific, testable and

predictable statement. It must be guided by some available information or
evidence. The hypothesis may also has theoretical guidance. It can be formulated
in various research designs. Hypothesis, therefore, requires a research question.
Research question can be answered by both qualitative and quantitative research
methodologies but hypothesis is mostly used for quantitative research methods
approach. Therefore, hypothesis provides direction for data collection and their
interpretation

In these, research study the hypothesis are as follows:

H0: There is significant relationship between the investment experience of the

respondents and their investment objectives.

H1: There is no significant relationship between the investment experience of the

respondents and their investment objectives.

H0: There is significant relationship between various factors affecting saving &
investment pattern of salaried individuals.

H1: There is no significant relationship between various factors affecting saving

& investment pattern of salaried individuals.

H0: There is significant impact of the various investment’s objectives on the level
of satisfaction derived by salaried Individuals

H1: There is no significant impact of the various investment’s objectives on the

level of satisfaction derived by salaried Individuals.

H0: There is significant difference between risk, return and level of satisfaction
derived by salaried individuals on the basis of sectors they are working in.

H1: There is no significant difference between risk, return and level of

satisfaction derived by salaried individuals on the basis of sectors they are
working in.

2.6.1 Types of hypotheses

A hypothesis (plural hypotheses) is a precise, testable statement of what the

researcher(s) predict will be the outcome of the study.
This usually involves proposing a possible relationship between two variables: the
independent variable (what the researcher changes) and the dependent variable
(what the research measures).

In research, there is a convention that the hypothesis is written in two forms, the
null hypothesis, and the alternative hypothesis (called the experimental hypothesis
when the method of investigation is an experiment).

Alternative Hypothesis

The alternative hypothesis states that there is a relationship between the two
variables being studied (one variable has an effect on the other).

It states that the results are not due to chance and that they are significant in terms
of supporting the theory being investigated.

Some hypothesis is connected with relation of analytic variables Such hypothesis

take place at a level of abstraction. Analytic variable requires the formulation of a
relationship between change in one the property and changes in another.
Abstraction is the highest level. Before this there are empirical uniformities which
indicates simple differences and ideal types which indicates specific coincides of
observation
e.g. high mortality rate among children is high in Asian countries. This is an
empirical study. An ideal type study would reveal that high mortality rate is
prevalent among the economically poor class of families. At the abstraction level
mortality among children of economically well - off families is going down.

Null Hypothesis

The null hypothesis states that there is no relationship between the two variables
being studied (one variable does not affect the other).

It states results are due to chance and are not significant in terms of supporting the
idea being investigated.

When hypotheses are stated negatively. They are called null hypotheses, to avoid
personal bias of the researcher in the collection of data. Null hypothesis is used to
gathered additional support for the known hypothesis e.g. there is no significant
difference between the preferences shown towards the banking facilities by
business class customers. There are many occasions when salaried - class of
customers. There are many occasions when null hypothesis is formulated with the
main objective of rejection. The null hypothesis id symbolized as H1. Assuming
there are two sets of people X and Y and they are compared for efficiency.
Further, if we assume that both sets of persons are same on their efficiency then
this assumption is called null hypothesis.

2.7 RESEARCH DESIGN

Research Design is a framework or can be referred as an outline which helps in

determining the appropriate technique and is also selected for collecting,
summarizing and testing the data collected.

According to David J.L and Ronald S.R “A research design is the determination
and statement of the general research approach or strategy adopted for the
particular project. It is the heart of planning. If the design adheres to the research
objectives, it will ensure that the client needs will be severed.”

In this research the descriptive study and empirical analysis of the various factors
affecting the saving & investment decisions of salaried individuals. This research
is based upon quantitative and descriptive research. The quantitative methods in
knowing the observed facts by collection of numerical data which are further
analysed using statistical methods. This research design is adopted so as to match
the empirical analysis which is based on primary data collected through
questionnaire.

Methodology of the study

The methodology used for the study can be summarized as under. It describes the
logic behind the selection of city, sample households, period etc.
2.8 Sample

The sample size denotes the number of elements selected for the study. For this
study individuals responded. Sample means small part of portion of the population
taken up for the intensive s study purpose. It is a small part of the entire
population having similar characteristic of the population for example, few gains
from a rice or wheat bag or small quantity of blood taken from human body for
testing. Sample selected acts as a representative of the whole universe of the
whole universe. For example, a glad is full of rice grains. One the grain is selected
for study such grain acts as representative or sample of rice grains in the glass.
Similarly, one fruit is taken from a basket full of mangoes or apples. Such sample
can also be selected from group of workers, students, players and so on. Sample is
related to total population or universe.

2.8.1 Features / characteristic of sample and sampling:

1. Sampling is a small representative of the whole. It is an effective

alternative to the census surveys. It is, in fact, an effective alternative to census
survey. Sampling is the only valid alternative when it would be impracticable for
you (researcher) to survey the entire population.

2. Sampling reduces the time, efforts and money of the researcher on data
collection without any adverse effect on its quality. Sampling is needed as it saves
time and money.

3. The sampling technique is based on the assumption that random selection

of the sample from the universe do possesses the same features and characteristics
as that of the universe.

4. The findings of sample survey are accurate and reliable. The larger sample
is better as the results available are more accurate.

5. Sampling is used in data collection as well as for different purposes in our

daily life.
6. Sampling design is a plan designed to select the appropriate sample so as
to collect the right data for drawing conclusions. A researcher has to select sample
design which is reliable and also appropriate for his research project.
2.8.2 ESSENTIALS OF GOOD SAMPLE

• Goal - oriented: An ideal sample design should be goal oriented. it is a

means and should be oriented to the research objectives and fitted to the survey
conditions.

• Accurate representative: A good sample should be an accurate

representative of the universe from which it is taken. It should have all the features
of the population from a representative sample are reliable and acceptable.

• Proportional: An ideal sample should be proportional. It should be large

enough to represent the universe properly. If the total population is large, the
sample unit selected should also be larger. The sample size should be efficiently
large to provide statistical stability and reliability. Random selection: An ideal
sample should be selected at random. This means that any item in the group has a
full and equal chance of being selected and included in the sample.

• Economically: A good sample should be economical. The objective of the

survey should be achieved with minimum cost effort. The sample should be viable
in terms of funds available for research study.

• Practical: An ideal sample design should be practical. The sample design

should be simple i.e., it should be capable of being understood and followed in the
field work. Actual information: An ideal sample should be designed so ad to
provide actual information required for the study and also provide an adequate
basis for the measurement of its own reliability. For this research work researcher
selected Indian companies’ 100 employees taken as a sample for the research
work.

2.9 DATA COLLECTION:

Data collection means collecting required data from different sources Such source
include field survey, observation method, statistical data published by government
department / agencies and so on. Data collection needs for planning and expert
staff. It is a costly and time-consuming process and needs to be completely
properly. Data collection moves the research process from planning stage to
implementation stage. In the case of primary data, communication between the
researcher and the sample begins at the data collection. If mail survey method is
selected, questionnaire will send to the respondents by post. if interview method is
selected, interview s is arranged through trained interviewers.

2.9.1 TYPES OF DATA:

a) Primary data b) Secondary data

A researcher has to explore first the secondary data available from the different
sources. of such data are in completed, outdated or unreliable, he has to
supplement it by collecting primary data. A researcher has to prepare his plan for
data collection and collect data accordingly. Normally, secondary as well as
primary are used in research as they are supplementary and supportive,
collectively, they are preparing sound foundation for the entire research project.

Example of primary data: Data collected through observation, experimentation,

interviews, survey and questionnaire Example of secondary data: Data collected
from census report, report of committee and published information through print
media.

A) PRIMARY DATA:

Primary data constitute first-hand information which is collected for the first time
in order to solve research problem It is the data collected from primary sources the
researcher himself collects primary data or collects it through trained assistants.
Such data are not collected earlier by anybody for any other purpose. it is fresh
data collected for the first time directly from the respondents. Primary data is
important as it gives reliable factual first-hand information for research purpose.
Researcher collects primary data as per the need of his research project and from
the source or sources which he considers appropriately.

ADVANTAGES OF PRIMARY DATA:

• Provides first-hand information

• Availability of detailed information

• Accurate and reliable data available

• Availability of specific data

• Acts as supplement to secondary data

• Additional information from respondents

• Improve the quality of research work

B) SECONDARY DATA:

Along with primary data, secondary data are also useful in making research. such
data are collected by some other agency for some other purpose. Secondary data
are easily and readily available in the published form and are used for the conduct
of research activity. This data is not collected by the researcher through survey,
etc. but are actually borrowed by the researcher for his research purpose. Initially,
such data may be primary data but when used for research purpose, they are
treated as secondary data. such data are used extensively in academic research.
However, in marketing and business research they are used in a limited way.

2.9.2 Selection of The Study

Selection of city wherein the study would be conducted was an important step in
research process. In Maharashtra Mumbai and Thane are the cities with municipal
corporation where changes are taking place in the consumption, Saving and
Investment habits due to NEP and trend of females going out of house for
participating in economic activities with the main intension to increase the
earnings of the family and change in social attitude. Mumbai, being the residential
and working place of the researcher and other cities as far away from it, the city of
Mumbai is selected on account of convenient part of researcher.
The population in Mumbai consists of government employees as well people
working under private sector, professionals, and businessmen. These people are
most likely to set trends in fashions and tastes of daily life. Mumbai being a
modem city with more literate and cultured people. The literacy ratio in Mumbai
is 77.01% at urban level and 88.69% at rural level according to Human
Development Report of Maharashtra 2020. Its respondents are expected to be ideal
respondents for in-depth study which is proposed to be undertaken here. Hence the
study consists of the salary earning families in the Mumbai city.

Chapter 3

Review Of Literature
 3.1 REVIEW OF LITERATURE

A literature review identifies, evaluates and synthesizes the relevant literature

within a particular field of research. It illuminates how knowledge has evolved
within the field, highlighting what has already been done, what is generally
accepted, what is emerging and what is the current state of thinking on the topic.
In addition, within research-based texts such as a Doctoral thesis, a literature
review identifies a research gap

A review of literature presents much more than a summary of relevant sources.

The act of reviewing involves evaluating individual sources as well as
synthesizing these sources in order to gain a broad view of the field. At this ‘field
level’, a literature review discusses common and emerging approaches, notable
patterns and trends, areas of conflict and controversies, and gaps within the
relevant literature. When you can clearly observe these things, you will be able to
situate your own research and contribute to ongoing debates within the field.

3.1.1 Objectives of the review of literature:

• It surveys the literature in the chosen area of study.

• It judgmentally analyses the information collected by identifying the various gaps

in current knowledge and by showcasing the limitations of various, studies, points
of view and researches and also by framing areas for further study and by studying
the areas of arguments.
• It represents the concerned literature in a very structured manner.

• To know the factors that influence investment behaviour of the salaried people.
• To analyse awareness level regarding different investment avenues of salaried
people.
• To study the perception of people related to various investment alternatives.

• To study the awareness levels among the employees regarding the available
various investment avenues.

3.1.2 Empirical studies

An empirical study of “Indian Individual Investors Behaviour” by Syed

Tabassum Sultana (2010) was an attempt to know the profile of the investors and
also to know their characteristics so as to know their preference with respect to
their investments. The study also tried to unravel the influence of demographic
factors like gender and age on risk tolerance level of the investors.

Bhardwaj Rajesh, Raheja Rekha and Priyanka (2011), propounded in their

study that saving and investment pattern of salaried class school teachers of govt.
and private schools has depended upon income and they both get salary but the
scale of the salaries are different and saving patterns that’s why is so different.
Govt. teachers prefer to invest the money for emergency purposes and private
teacher’s emphasis on children marriage and education.

Dr. S. Mathivannan and Dr. M. Selvakumar (2011) examined the saving and
investment patterns of salaried teachers of Sivakasi Taluk, Tamil Nadu and they
found that there is great importance of money and money’s worth for them and
They are regularly preparing budgets for Expenditures and compare it with the
actual expenditure and take necessary actions if there are any deviations has
arrived so far and they are influenced by fashionable and costly items.

Dr. Ananthapadhmanabha Achar (2012) studied “Saving and Investment

Behaviour of Teachers - An empirical study”. In the analysis individual
characteristics of teachers such as age, gender, marital status, and lifestyle
determined the savings and investment behaviour of teaching community in the
study region. They considered monthly family income, stage of family life cycle,
and upbringing status emerged as determinants of their savings and investment
behaviour
Dr. Varsha Virani (2012) propounded in her study that In spite of low income the
teachers have been saving for future needs. The major impact on savings is due to
the level of income of the school teachers. The research shows that majority of the
respondents are saving money as Bank deposits for the safety of an unpredictable
future. The main avenues of investment are Bank deposits and the main purpose of
investment is for children education, marriage, and security after retirement.

3.1.3 Research Articles

Over the years several researchers have been conducted to analyse the savings and
investment of salaried people.

Neha S Shukla (2016) focused on the analysis of investment preference of

working women of North Gujarat region. It was concluded that the majority of the
women preferred traditional mode of investment practices.

A study by B. Thulasipriya (2014), shows that majority of the respondents are

saving money as Bank Deposits for the safety of an unpredictable future. The
main avenues of investment are Bank Deposits and the main purpose of
investment is for children education, marriage and security after retirement.

The researchers, Sonali Patil &Dr. Kalpana Nandawa (2014) has analysed that
salaried human resources consider the security as well as good return on savings
on normal basis. Respondents are conscious about the investment avenues offered
in India excluding female investors.

Vasagadekar Priya (2014) examined that woman working in various industrial

sector in Pune. The investment habits, the role in investment decision making,
preferable investment avenues and risk bearing capacity are studied. It is clear
from this study; women generally prefer to invest in safe investment avenues like
Post Office savings scheme and fixed deposits in banks.

V.R. Palanivelu & K. Chandrakumar (2013) studied the investment preferences

of salaried class in Namakkal Taluk, Tamil Nadu. Its highlight’s that certain
factors like age, educational level, knowledge about financial system affect the
decision regarding the choice of investment avenues.
Dr. Anathapadhmanabha Achar (2012) research focused on the savings and
investment patterns of primary, high school, college and university teachers in
Udupi district of Karnataka State. The savings and investment act of teaching
population is determined by the distinctiveness such as age, gender, life style and
marital status.
Dr. VarshaVirani (2012) propounded in her study on savings and investment
model of school teachers in Gujarat in which data is collected from 100 school
teachers and conducted that a large amount of the school teachers are saving funds
as bank deposits and government securities as their investment preference.

Dr. S. Mathivannan and Dr. M. Selvakumar (2011) studied the investment and
savings pattern of school teachers in Siva Kashi Taluk, Tamil Nadu. The study
concluded those now days, teaching community has started preparing budgets and
compare with actual expense met by them.

Syed Tabassum Sultana (2010) the study confirms on Indian individual investors
behavior and it also made an effort to understand about the depositor’s profile and
characteristics in order to know about the performance regarding the investment.

Somasundaram (1998) had conducted the research to evaluate the saving and
investment pattern of salaried people in Coimbatore District. He found that chit
funds and bank deposits were the most excellent known modes of saving amidst
investors.
At the same time, UTI schemes and plantation schemes are least branded modes.
Investor’s attitudes were highly positive and depicted their objective to save for
their potential requirements.

(C. Sathiyamoorthy & K. Krishnamurthy, 2015) This study talks about the
various traditional investment avenues like bank deposits which still remain the
most preferred and secured investment avenue of the various households and the
main objective of this type investment is to use these funds for the children’s
marriage, education or even for the sake of financial security after retirement.

(Sood& Kaur, 2015) In this research it was advocated that the most preferred
investment avenues are bank deposits and LIC and out of them the most of the
factors which influences the various investment decisions were, tax benefit, safety
and high returns.
(Cvrlje, 2015) In this research the researcher has studied about the change to be
made about the perspective instead of simply pushing individuals towards the
investment and financial products by the noncompliance government and they
should also try to provide the individuals with some motivation to actively try and
participate in taxation area.

(Shivakumar& Thimmaiah, 2015) In this research the majority of the

respondents of the research said that the risk coverage of their funds and their
children education are the major objective of their saving & investment decisions.

(Kothari, 2014) In this study it was found out that most of the younger and
millennium people are more interested in making different types of investment in
comparison to the most of middle and elder age people as they have different
concept of investment and relay on most of the traditional options available. So it
was concluded that the different age group have different perception towards the
concept of investment.

(Bhushan, 2014) The higher financial literate groups have high level of awareness
for all the financial assets apart from the post office savings as this preferred by
most of the public sector employees.

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.

Archana Kanungo (2014), In his research paper the title has “Investment
strategies of the investor”. International Journal of Research and Development.
There use direct relationship between investors decision on investment and saving
the strategic position of the LICO’S for the insurance customer service and
satisfaction has become a key to the success. The Archana Kanungo concludes on
her study the better Investment strategies always help us to making strong
investment portfolio.
S Umamaheswari, M Ashok Kumar (2014) In his research project title has
“awareness, attitude, expectation and satisfaction over their investments”
Impact:
International Journal of Research in Business Management 2 (2), 99-108, and
2014. Investment aspiration of the salaried middle class is actually a commitment
to secure the consumption of all regular financial in-flow with a futuristic
perspective for several reasons. The 30% (Ref Table 1) fixed deposit choice of this
salaried class of the society makes it essential to study their attitude for
investments, level of investment awareness and their expectation of returns based
on the factors which have an upper hand on their investment choices. In this paper
author finally concluded the fact an effort to outline the relationship between the
dominant societal and demographic factors of the salaried middle class that affects
the investment criteria namely, investment awareness, investment attitude and
investment returns. Precisely, this study pursued on the salaried middle class of
Coimbatore District, Tamil Nadu, India is executed with a focus to comprehend
the utilities of financial policies favouring public.

Bindu. T (2017) investment plays a very significant role in the lives of salaried
class employees. Before making any investment return, risk, liquidity, tax benefits
must be considered by the investors. In today’s scenario many new instruments
avenues are available for the salaried employees who provide tax benefits along
with high return and less risk. They studied the behaviour of salaried employees
towards investment in the district of Palakkad. Most of the employees under study
are well aware about the different investment and saving avenues. Today’s annual
income of investors is closely related to the percentage of making investment.

Varsha Virani (2014) analysed the various avenues of investment & concluded
during the study that teachers have been saving for the future in spite of them
having a low level of income. They save and make investment in most profit
options in which low risk is involved. Most of the respondents prefer to invest in
bank deposits as it involves low risk and provide regular return. High rate of
return & tax benefit has influenced the investment decision of the respondents.

Investment is an activity that follows after proper evaluation of all the alternatives.
The value associated with analysis of the consumer decision making process is
widely recognized by various researchers. People’s decision regarding how much
to save and invest for future depends upon the trade-off between immediate and
future consumption. This trade-off was modelled as a problem of optimizing
utility or happiness over life span. Within this framework, optimal saving and
consumption path depends on how much people value the consumption at
different times in the future (Modigliani and Brumberg, 1954; Friedman, 1957).
Risky asset fraction of the portfolio are positively correlated with income and age
and negatively correlated with marital status (Cohn, et. al., 1975). Several studies
have brought out the relationship between the demographics such as gender, age
and risk tolerance level of individuals.
The relationship between age and risk tolerance level has attracted much attention.
Biological, demographic and socioeconomic characteristics; together with
investors psychological makeup affects one’s risk tolerance level (Horvath and
Zuckerman, 1993).

It was found that social considerations, tax benefits, and provision for old age
were the reasons cited for saving in urban areas, whereas to provide for old age,
etc. was the main reason in rural areas (Gavini and Athma, 1999). Research
identified the factors considered by institutional investors as economic, industry
and company related. These factors influenced the supply and demand of
investments and thus their prices (Mugo, 1999). Investments are made with an
avowed objective of maximizing the wealth. Investors need to make rational
decisions for maximizing their returns based on the information available by
taking judgments free from emotions (Brabazon, 2000). India being second largest
populated country. Most of the Indian population earn their livelihood through
salary so scattered researches have been carried out in this regard. It was revealed
that there is an association between the lifestyle clusters and investment-related
characteristics (Rajarajan, 2000). There was an existence of strong association
between demographic characteristics and the risk bearing capacity of Indian
investors. The relationship between age, income and risk bearing capacity of the
investors were very high. The salaried members constituted the largest part of all
categories (Rajarajan, 2003).

CHAPTER 4
Data Analysis and
Interpretation
4.1 Meaning
4.1.1 Data Analysis
Data analysis is defined as a process of cleaning, transforming, and modelling data
to discover useful information for business decision-making. The purpose of Data
Analysis is to extract useful information from data and taking the decision based
upon the data analysis.
A simple example of Data analysis is whenever we take any decision in our day
to-day life is by thinking about what happened last time or what will happen by
choosing that particular decision. This is nothing but analysing our past or future
and making decisions based on it. For that, we gather memories of our past or
dreams of our future. So that is nothing but data analysis. Now same thing analyst
does for business purposes, is called Data Analysis.

4.1.2 DATA INTEPRETATION:

Interpretation refers to the task of drawing inferences from the collected facts,
after an analytical and/or experimental study. In fact, it is search for broader
meaning of research findings.
The task has 2 major aspects viz.,

i. The efforts to establish continuity in research through linking the results of

a given study with those of another, and
ii. The establishment of explanatory concepts. “In one sense, interpretation is
concerned with relationship within the collected data, partially
overlapping
analysis. Interpretation also extends beyond the data of the study to
include
the results of other research, theory and hypotheses.”

4.2 Importance:

4.2.1 Importance of Data Analysis:

Among the many benefits of data analysis, the more important ones are:
• Data scrutiny helps in the structuring the findings from different sources of data.
• Data analysis is very helpful in breaking a macro problem into micro parts.
• Data analysis acts like a filter when it comes to acquiring meaningful insights out
of vast data set.
• Data analysis helps into custody human bias away from the research conclusion
with the help of good statistical treatment.
When discussing data analysis, it is essential to state that a methodology to
analysis it is significant to mention that a methodology to analyses data needs to
be chosen. If a specific methodology is not selected data can neither be collected
nor analysed. The methodology must be present in the study as it enables to the
reader to know which methods have been used during the research and what type
of data has been collected and analysis of various methods and techniques that
were measured but ultimately not used for the data analysis. An effective research
methodology leads to better data collection and analysis and leads the researcher
to arrive at valid and rational conclusions in the research.

4.2.2 Importance of Data Interpretation:

Data interpretation refers to the implementation of processes through which data is

reviewed for the purpose of arriving at an informed conclusion. The interpretation
of data assigns a meaning to the information analysed and determines its
signification and implication. The purpose of collection and interpretation is to
acquires useful and usable information and make the most informed decision
possible. From businesses, to newlyweds researching their first home, data
collection and interpretation provides limitless benefits for a wide range of
institutions and individuals.

Data analysis and interpretation, regardless of method and qualitative /

quantitative status, may include the following characteristics:

• Data identification and explanation.

• Comparing and contrasting of data.

• Identification of data outlier.

• Future predictions.
Data analysis and interpretation, in the end, helps improve processes and classify
troubles. It is hard to grow and create dependable improvements lacking, at the
very least, minimal data gathering and interpretation.

Following are few of the business benefits of digital age data analysis and
interpretation:

1. Informed decision making: A decision is only as the knowledge that

formed it. Informed data decision making had the possible to set industry selected
apart from the rest of the market pack. Studies have shown that companies in the
top third of industries are on an average 5% more productive and 6% more gainful
when implementing educated data decision making processes. Most decisive
action will arise only after a problem has been identified or a goal defined. Data
analysis should include classification thesis improvement and data collection
follow by data communication.

2. Anticipating needs with the trend’s identification: Data insights

provide information, and information is power. The insights obtained from market
and consumer data analyses have the capability to set trend for peers within
similar market section. An ideal example of how data analysis can impact trend
forecast can be evidenced in the music identification application. allows users to
upload an audio clip of song they like, but can’t seem to identify. User makes 50
million songs identification a day. When industry wants to identified, they can
then provide a greater industry purpose. Data meeting and interpretation processes
can permit for industry wide climate forecast and result in better revenue streams
across the market. For this cause, all institution must follow the basic data cycle of
collection, interpretation, decision making and monitoring.

3. Cost efficiency: Proper implementation of data analysis processes can

make available businesses with profound cost reward within their industries. The
recent data study performed by the Deloitte vividly demonstrates this in finding
that data analysis ROL is drive by efficient cost reductions. Often this benefit is
overlooked because money making is typically viewed as sexier than saving
money yet, sound data analyses have the capacity to alert management to cost
reduction opportunities without any significant extortion of effort on the part of
human capital.
4. Clear foresights: Companies that collects and analyse their data gain
better knowledge about themselves, their processes and performance. They can
identify performance challenges when they arise and take action to beat them.
Data interpretation through visual representation lets them process their answer
faster and make improved informed decision on the expectations of the company.

4.3 What is QUESTIONNAIRE?

A tool for collecting information to describe, compare, or clarify an event and

situation, as well as, knowledge, attitude, behaviour, and/or feature on a particular
mark group. A questionnaire can be helpful tools for gathering information. It can
be used for survey research meeting data or testing hypothesis. For a questionnaire
to be effective and give you the information you are for, you will need to design a
survey that is easy to understand and easy to complete. A questionnaire is a
research instrument consisting of series of questions and other prompts for the
purpose of from meeting information from respondance. A questionnaire refers to
a device for securing answers to question by using a form which the respondent
fills in by himself. it consists of a number of questions printed or typed in a
definite order. This form is actually mailed to the respondent who was expected to
read and understand the questions and reply to them by writing the relevant
answer by in the spaces provided ideally speaking respondent have to answer to a
verbal incentive and give a written or verbal response. It is totally devoid of any
table. Its purpose is to collects information from the respondent who are scattered
over a vast area. In descriptive studies where the sources are varied and widely
scattered, the questionnaire is measuring instrument for gathering information. It
is very handy in cases where one cannot easily see personally all the people from
whom the responses are required. This technique helps, to find Favor in
determination of present status in certain aspects of education - current practice in
schools, financial aspects service conditions of teachers, etc. It can be used over
extensive range of territory – national and international. As research technique are
attractive more and more refined day after day, it is hoped that this wayward child
of the science of education will soon curb its unruly disposition and also fix its
rude ways.
4.4 Data Presentation/Analysis and Interpretation:

The following is the presentation of data which has been collected by the survey
method with 104 responded. The analysis and interpretation of data is been done
through the following chart and diagram:

Q.1

Interpretation:
According to the survey the majority of people who participated in survey are
from age group of 20 – 30 which 65.4% of the total. While there are 14.4% each
from age group of 30 – 40 and 40 – 50. And there were only 5.8% from above 50
age group.
Q.5

Interpretation:

From the analysis it is

concluded that the majority part of respondents i.e., 90.9% knows about their
savings and expenditure of each year. But there are 9.1% of respondents who
don’t know about their savings and expenditure of each year.
According to me everyone should have a check on their savings and expenditures.
Q.8

Interpretation:

In today’s world everyone should a proper amount in emergency funds to

overcome future accidents, losses, etc. According to the survey, it is concluded
that 52.3% of respondents have proper amount in emergency fund. While 15.9%
of respondents do not have proper emergency fund. And there are 31.8% of
respondent who don’t know exactly but think so they have adequate amount of
emergency fund.

Q.12

Interpretation:
63.5% of respondent get investment information from family & Friends. 22.1% of
respondent get information from CA. 19.2% of respondent get information from
local brokers. 15.4 % of respondent get information from magazines &
newspapers. 1.9% from bank. Rest 1% each from self, financial planner,
YouTube, etc.
Q.13

Interpretation:

In accordance to the survey majority of respondents (48.1%) investment horizon is

15 years. And 28.8% have investment horizon of less than 1 year. 14.45 Invest for
a period of 5 to 10 years. And a very less respondents (8.7%) invest for a period
more than 10 years.

Q.14
Interpretation:

The rate of return is essential part of investment. Everyone wants to have a greater
rate of return. But in today’s world the rate of return has reduced tremendously.
45.5% of respondents have rate of return of 1-3% which is very less. 36.4% have
rate of return of 3-6%. And very less people (13.6%) earn a rate of interest of 6-
9%. And very less people (4.5%) earn a rate of interest of 9-12%. And according
to my respondents there were no one who earned more than 12% rate of interest.
Q.15

Interpretation:

A large number of respondents i.e., 45.5% thinks that their investment is

competitive to the respective benchmark but only 38.6% people can say
confidently that their investment is competitive to respective benchmark. And
15.9% of respondents says that their investment is not competitive to the
respective benchmark.
 Q.16

Interpretation:

According to the survey the following % of respondents have their long term goal
of investment :
• 49% each of the respondents have the goal to by dream house & for health care
purpose.
• 38.5% of respondents invest their money for Retirement Corpus.

• 35.6% save their money for Children’s Future.

• 30.8% respondents have the goal of health creation.

• And lastly 13.5% have the goal of tax Saving.

Q.17
 Interpretation:

According to the survey the following respondents invest their money depending
upon respective analysis :
• The majority of respondents invest according to Past Performance.

63 respondents decide to invest by seeing the past performance.

• 48 respondents study the Economic Scenario and decides where to invest.

• Total 28 respondents do the Company analysis to invest.

• 23 respondents decides to invest according to the Credit Ratings.

• And very less respondents i.e.,28 respondents do Industry Analysis to decide

where to invest
• Doing Analysis is necessary for individual to know where you should invest to
earn great results.

Q.18

Interpretation:

Most of the respondent i.e. 51.9% consider Returns before investing. 45.2% of
respondent each consider maturity period & Safety of Principle. 33.7% of
respondent considers Tax Saving. 20.2% of respondent consider Risk. 17.3% of
respondent consider Liquidity. Whereas, 1% considers goals.
 Q.19

Interpretation:

My Statement was “I would enjoy exploring investment opportunities for my

money” and the following has been extracted :
• 50% of the respondent tends to agree with this statement.

• 38.6% of the respondents selected the option “in between”

• 11.4% of the respondents tends to disagree with this statement.

Q.20

Interpretation:

My Statement was “I would go for the best possible return even if there were risk
involved” and the following has been extracted :
• 18.2% of the respondent answered as Always.
• 11.4% of the respondent answered as Usually.

• 65.9% of the respondent answered as Sometime.

• 18.2% of the respondent answered as Always.

• 4.5% of the respondent answered as Rarely.

• And there was no one who answered Never.

Q.21

Interpretation:

61.4% described their typical attitude while making financial decision as Average.

18.2% have Fairly adventurous attitude & 11.4% have Very adventurous attitude.

While 6.8% have Fairly Cautious Attitude & 2.2% have Very Cautious Attitude.

Q.22
 Interpretation:

My Statement was “To reach my financial goal I prefer an investment which is

safe and grow Slowly but steadily, even if it means lower growth overall” and the
following has been extracted :
• 36.4% of the respondent tends to agree with this statement.

• 31.8% of the respondents selected the option “in between”

• 31.8% of the respondents tends to disagree with this statement.

Q.23

Interpretation:

My Statement was “When I consider investments that have an element of risk I

feel quite anxious” and the following has been extracted :
• 36.4% of the respondent tends to agree with this statement.

• 31.8% of the respondents selected the option “in between”

• 31.8% of the respondents tends to disagree with this statement.

 Q.24

Interpretation:

My Statement was “I am looking for high investment growth I am willing to

accept the possibility of greater losses to achieve this” and the following has been
extracted :
• 45.5% of the respondent tends to agree with this statement.

• 34.1% of the respondents selected the option “in between”

• 20.5% of the respondents tends to disagree with this statement.

Q.25

52.3% of respondents will invest

less than half Money and it is the
major part. Next comes 25% they will invest More Than Half Money. 13.6% will
invest half of the money. And only 6.8% will invest all money. And the rest will
not invest any money.
Q.26

Interpretation:

If the respondents had picked an investment with potential for large gins but also
the risk of large losses then 59.1% of the respondents will be quite uneasy and
18.2% will be little concerned & 9.1% each will be Panicked and very
uncomfortable and Accepting of the possible high and lows and very less will be
excited by the potential for gain.

Q.27

The maximum respondents i.e.,55.8 will undertake moderate risk whereas 37.5%
will undertake less risk and a very less amount of respondents will dare to take
High Risk.
Q.28

Interpretation:

More than 50% i.e., 53.8% of respondent want to grow their investment at an
average rate, 28.8% of respondent want their investment to grow at steadily.
Whereas, 17.3% of respondent wants their investment to grow fast.

Q.29

Only 10.6% of respondent can take the risk of losing their invested principal
amount.

Whereas, 54.8% of people cannot afford losing their invested principal amount.
And
34.6% of respondents are not sure about their decision.

Q.30

Interpretation:

If there are money to invest then also only 15.4% will invest in a product with a
higher average annual return but some risk of losing part of initial income. And
26% will invest in a product with a low average annual return but almost no risk
of losing part of initial income. And the large portion i.e., 58.7% will invest in
product which is a mixture of above two.

Q.31
Only 37.5% of respondent will not invest in share market. Whereas, 62.5% of
respondent invest in share market.

Q.32

Interpretation:

Only 20% will withdraw

money to reduce the risk of future losses. While 36.7% will invest more to take
advantage of lower price expecting future growth. And the rest 43.3% which is a
large portion will monitor the investment & wait to see if it improves.

Q.33 According to you, in which avenues to invest to get the best return with
moderate risk?

The Following result has been obtained :

 Chapter 5
Conclusion and
Suggestions

5.1Findings

In the study the researcher has investigated that out of 100%, 90.9% knows how
much they spend each year and the rest has no idea about it.
Most of the people i.e., 49% saves 20-30% of their income, then 32% saves below
20% and then 12.5% saves 30-40% of their income and very less people saves
above 40% of their income.
Nearly about 82.7% of the people has invested the saving so far and the rest has not
invested till now.
Almost 52.3% have a proper amount in their emergency fund, but 15.9% do not
have proper amount in their emergency fund, while 31.8% thinks that they have
proper amount in their emergency fund but are not sure.
According to research the most opted avenue are bank and mutual fund, then next
comes insurance, post office, gold, stock market, real estate and PPF.
The above avenue were opted according to safety purpose, diversified portfolio,
best returns, heath security, future benefits, appreciation of money, etc.
In the study the researcher has investigated that 53.8% which is almost more than
half who monitor their investment monthly, and 37.5% monitor occasionally and
very less people i.e., 8.7% monitor their investment daily.
Majority of people seek advice from friends and family then they gets advice
from Chartered Accountants, Local brokers, Magazines & Newspapers, Banks.
And there are some peoples who gets advice from YouTube.

Almost half of the respondents have investment horizon of 1- 5 years, 28.8% invest
for less than 1 year, 14.4% invest for 5 to 10 years and very less people invest for
more than 10 years.
The Major long term goal of investment are dream house, Health care followed by
retirement corpus, children’s future, wealth creation and lastly tax saving.
Past performance & Economic scenario are the major factor while making decision
of investment followed by company analysis, credit rating & Industry analysis.
Returns, Safety of principle, Maturity Period are the major factors influencing
investment decision as almost half of the investor has invested their money
because of these factors & Tax saving, Risk and Goals are also factors influencing
investment decision.
Very less percent of investors are ready to take maximum risk of losing their
principle amount. They will be satisfied even if their investment grow at a average
rate but they don’t want any type. But there are also some person who are ready to
bear risk so that they can get higher returns but this type of peoples are
comparatively less.
Almost half of the investors want their investment to grow at an average rate, 28.8%
want their investment to grow steadily, whereas only 17.3% wants their
investment to grow fast.
Mutual fund is the first preference given by the investor for investment followed by
bank, share market, gold, insurance, government bonds, SIP, FDs, Real estate, etc.

5.2Conclusion and Suggestion

Investment has different meaning for different investors. Some invest for high
return, some for wealth creation, and some for their future expenditure. The study
on Investment pattern of Salaried Individuals in Mumbai and Thane city has been
undertaken with the objective, to find and analyze the investment preferences of
salaried individuals of Thane. Human beings are rational. One invests according to
owns’ financial needs through planning and well-structured investment plan with
capital growth orientation. Government should provide tax benefits to ensure
higher investment rate in the country. Investment is a tool against risk coverage
and emergency needs. One can live safe and secured life if he continues to invest
for medium term. Long term investments may yield profitability. A caution is to
be taken that investments sometimes are not able to satisfy entire future family
needs. Investments are a tool against fighting or hedge against inflation. Salaried
persons today are aware of what is happening around them and are intelligent
enough to decide what is best for them. Every option is considered and the pros
and cons of each weighed carefully before the decision to invest the hard-earned
money is taken. They are able change their investment preferences according to
the other changes that happens are likely to happen in future. There are most of
respondent who are afraid of losing their capital because they don’t understand the
complexity of the invsetment instrument. Thus, they usually avoid modern
invsetment avenues and goes for the traditional investment instrument. In India,
most of the investors goes for either Gold when they have a little sum of money
and when they have a lump sum amount they usually goes for Real-estate. It is
been an tradition in India most of people avoid share market, as they see it as bet
and they are afraid of market risk as it is very much volatile. The boost to invest in
share market must be done. After pandemic hit now most of the people have
started investing in share market and saving for health care security. The
respondent in the research are mostly have heard the many investment but when
it’s actually comes to invest they usually goes for gold, real-estate, insurance and
some of the share market and mutual funds. The main reason respondent are not
aware because they are not familiar with the investment avenues. In order to stay
financial sound one must invest as much as they can but keeping the amount of
risk they can appetite easily.
Bibliography

Websites:

www.investopedia.comwww.britannica.comwww.wikipedia.comwww.bizfluent.c
omwww.grin.comwww.manavrachna.edu.inwww.gktoday.inwww.investmentman
agementuk.co.ukwww.accountlearning.comwww.monash.edu/rlo/
graduatewww.shodhganga

Book:

Vipul’s BMS Series Investment Analysis and Portfolio Management by P.K.

Bandgar and Farhat Fatma Shaikh.

Research Journal:

Research journal of Dr. P. Shunmugathangam – A study with special reference to

tiruneveli district.

Annexure

Questionnaire

Survey on Saving & Investment Pattern of Salaried Person.

1. Profile

Name : *

Your answer
 Age group : *o20 - 30 o30 - 40 o40 - 50 oabove 50

Qualification : *

o Graduate oPost Graduate oOther:

Type of Organization :*oPrivate oGovernment

Monthly Income : *o10,000 - 20,000 o20,000 - 30,000 o30,000 - 40,000 o40,000 -

50,000 above 50,000

2. Saving & Investment Attributes :

Do you know how much you save or spend each year? *oyes ono

What percentage of your income do you save? *below 20% o20 - 30% o30 - 40%
o40 - 50% o50 - 60% oabove 60%

Have you invested your saving so far? *

o YesoNo

Do you have the proper amount in an emergency fund? *

o YesoNo oMaybe

Which of the following avenues have you opted for? *oInsurance oBank
o Post office oMutual fund oGoldoReal Estate oStock Market oOther:

Reason for selecting these options ?

Your answer

How often do you monitor your investment ? *

o Daily oMonthly oOccasionally

Whose advice do you seek on your investment decisions? *oLocal brokers

oMagazines & Newspapers oChartered Accountants oFamily & Friends oOther:

What is your investment horizon? *o< 1 year o1 - 5 years o5 - 10 years o> 10

years

What has been your rate of return over the years? *

o 1% - 3% o3% - 6% o6% - 9% o9% - 12%

More than 12%

Is it competitive to the respective benchmarks? *

o YesoNo oMaybe

What is your long term goal of investment? *oRetirement corpus oChildren’s

future oDream House oHealth Care oWealth creation oTax Saving oOther:

Your decision to invest depends upon? *oPast performance oEconomic scenario

oIndustry analysis oCompany analysis oCredit rating oOther:

What factors influences your investment decision? *oLiquidity oReturns oTax

Savings oSafety of principle oMaturity Period oRisk oOther:

o
I would enjoy exploring investment opportunities for my money. *oI tend to agree
with this statement oIn between oI tend to disagree with this statement.

I would go for the best possible return even if there were risk involved. *

o Always oUsually oSometimes oRarely oNever

 How would you describe your typical attitude when making important financial
decisions? *oVery adventurous oFairly adventurous oAverage oFairly cautious
oVery cautious

To reach my financial goal I prefer an investment which is safe and grows slowly
but steadily, even if it means lower growth overall. *oI tend to agree with this
statement.
o In between. oI tend to disagree with this statement.

When I consider investments that have an element of risk I feel quite anxious. *oI
tend to agree with this statement.
o In between. oI tend to disagree with this statement.

I am looking for high investment growth. I am willing to accept the possibility of

greater losses to achieve this. *oI tend to agree with this statement.
o In between. oI tend to disagree with this statement.
If you had money to invest, how much would you be willing to place in an
investment with possible high returns but a similar chance of losing some of your
money? *
o All of it oMore than half oHalf oLess than half oVery little, if any

If you had picked an investment with potential for large gains but also the risk of
large losses how would you feel: *oPanicked and very uncomfortable oQuite
uneasy oA little concerned
o Accepting of the possible highs and lows oExcited by the potential for gain

What level of risk are you ready to undertake for your investment avenue? *oLess
Risk oModerate Risk oHigh Risk

At which rate do you expect your investment to grow? *oSteadily oAverage rate
oFast

Can you take risk of loosing your principle amount? *

o YesoNo oMaybe Imagine that you have some money to invest & a choice of two
investment product, which option do you choose? *
o A product with a low average annual return but almost no risk of loss of initial
investment
o A product with a higher average annual return but some risk of losing part of
initial investment
o A mixture of two products

Do you invest your money in Stock Market? *

o YesoNo

If, yes then Imagine that stock market drops after you invest in it, then what will
you do ?
o withdraw your money to reduce the risk of further losses oMonitor the investment
& wait to see if it improves
o Invest more to take advantage of lower price, expecting future growth

According to you, in which avenue to invest to get the best return with moderate
risk? *

Your answer