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“INVESTOR’S BEHAVIOR TOWARDS INVESTMENT AVENUES”
IN PARTIAL FULFILLMENT OF THE REQUIREMENTS

FOR
MASTER IN MANAGEMENT STUDIES (MMS)
2013-2015
STUDENT NAME: MANGESH SHANKAR SONAWANE

ROLL NO : C22
SUBMITTED TO
DR. V. N. BEDEKAR INSTITUTE OF MANAGEMENT STUDIES, THANE
STATEMENT BY THE CANDIDATE
I wish to state that the work embodied in this Project titled “INVESTOR’S
BEHAVIOR TOWARDS INVESTMENT AVENUES” forms my own
contribution to management. Wherever references have been made to intellectual
properties of any individual / Institution / Government / Private / Public Bodies /
Universities, research paper, text books, reference books, research
monographs, archives of newspapers, corporate, individuals, business /
Government and any other source of intellectual properties viz., speeches,
quotations, conference proceedings, extracts from the website, working paper,
seminal work et al, they have been clearly indicated, duly acknowledged and
included in the Bibliography.
Date Signature of Student

ACKNOWLEDGEMENT
I would like to take this opportunity to express my deep and sincere

gratitude to “DR.V.N.BRIMS” Who gave me a chance to show my capability and
allowed me to carry out a project guide under Prof. Sukhada Tambe.
I present my heartfelt gratitude towards Prof. Sukhada Tambe for giving
me this opportunity to wide my horizons of understanding by giving me in the
project on “INVESTOR’S BEHAVIOR TOWARDS INVESTMENT AVENUES”.
By working on this project, I got an opportunity to learn many aspects of
banking sector. The credit also goes to the timely guidance and support given by
the others who has helped me in enhancing my interest and understanding of the
intricacies involved with the subject.
Last, but not the least, I would like to thank everybody who has helped me
in the successful completion of the project. The whole experience was gratifying,
especially in terms of knowledge and information .
TABLE OF CONTENTS
EXECUTIVE SUMMARY
OBJECTIVE OF THE PROJECT
CHAPTER 1: INDUSTRY PROFILE..........................................................................................5
1.1 Safe/Low Risk Avenues:...............................................................................................6
1.2 Moderate Risk Avenues:...............................................................................................6
1.4 Traditional Avenues:.....................................................................................................7
1.5 Emerging Avenues:.......................................................................................................7
CHAPTER 2: LITERATURE REVIEW.......................................................................................8
3.1 Sample Technique:.....................................................................................................10
3.2 Sample Unit:...............................................................................................................10
3.3 Sample Size:...............................................................................................................10
3.4 Primary Data:.............................................................................................................11
3.5 Secondary Data:.........................................................................................................11
CHAPTER 4: DATA ANALYSIS & INTERPRETATION.............................................................12
4.1 Analysis in this report:................................................................................................12
4.2 Analysis of the Survey:................................................................................................13
CHAPTER 5: FINDINGS & SUGGESTIONS...........................................................................30
5.1 Findings:....................................................................................................................30
CHAPTER 6: SUMMARY & CONCLUSION............................................................................32
6.1 Summary:...................................................................................................................32
6.2 Conclusion:................................................................................................................32
ANNEXURE 1 QUESTIONNAIRE..........................................................................................33
BIBILIOGRAPHY......................................................................................................................................................36
EXECUTIVE SUMMARY
Each investment alternative has its own strengths and weaknesses. Some
options seek to achieve superior returns but with corresponding higher risk. Other
provide safety but at the expense of liquidity and growth. Other options such as FDs
offer safety and liquidity, but at the cost of return. Mutual funds seek to combine the
advantages of investing in arch of these alternatives while dispensing with the
shortcomings. Indian stock market is semi-efficient by nature and, is considered as
one of the most respected stock markets, where information is quickly and widely
disseminated, thereby allowing each security's price to adjust rapidly in an unbiased
manner to new information so that, it reflects the nearest investment value.
Savings form an important part of the economy of any nation. With the savings
invested in various options available to the people, the money acts as the driver for
growth of the country. Indian financial scene too presents a plethora of avenues to
the investors. Though certainly not the best or deepest of markets in the world, it has
reasonable options for an ordinary man to invest his savings.
One needs to invest and earn return on their idle resources and generate a
specified Sum of money for a specific goal in life and make a provision for an
uncertain future. One of the important reasons why one needs to invest wisely is to
meet the cost of inflation. Inflation is the rate at which the cost of living increases.
The cost of living is simply what it cost to buy the goods and services you need
to live. Inflation causes money to lose value because it will not buy the same amount
of a good or service in the future as it does now or did in the past. The sooner one
starts investing the better. By investing early you allow your investments more time
to grow, whereby the concept of compounding increases your income, by
accumulating the principal and the interest or dividend earned on it, year after year.
The three golden rules for all investors are:
• Invest early • Invest regularly • Invest for long term and not for short term
OBJECTIVE OF THE PROJECT
The purpose of the analysis is to determine the investment behavior of

investors and investment preferences for the same. Investors perception will provide
a way to accurately measure how the investors think about the products and services
provided by the company. Today’s trying economic conditions has forced difficult
decisions for companies. Most are making conservative decisions that reflect a
survival mode in the business operations. During these difficult times, understanding
what investors on an ongoing basis is critical for survival.
Executives need a third party understanding on where investor’s loyalties

stand. More than ever management needs ongoing feedback from the investors,
partners and employees in order to continue to innovate and grow.
The main objective of the project is to find out the needs of the current and
future investors. For this analysis, customer perception and awareness level will be
measured in important areas such as:
1. To understand in depth about different investment avenues available in India.
2. To find out how investors get information about the various financial instruments.
3. The type of financial instruments, they would prefer to invest.
4. The duration for which they would prefer to keep their money invested.
5. What are the factors that they consider before investing?
6. To give a recommendations to the investors that where they should invest.
7. To know the risk tolerance level of the individual investor and suggest a suitable
portfolio.
8. To develop a profile of sample Indian individual investor in terms of their

demographics and demographics based on occupation of the sample investor.
9. To identify the objective of savings of an investor.

10. To study the dependence/independences of the demographic factors (Age) of the

investor and his/her risk tolerance level.
Stock market has been subjected to speculations and inefficiencies, which are
beached to the rationality of the investor. Traditional finance theory is based on the
two assumptions. Firstly, investors make rational decisions; and secondly investors
are unbiased in their predictions about future returns of the stock. However financial
economist have now realized that the long held assumptions of traditional finance
theory are wrong and found that investors can be irrational and make predictable
errors about the return on investment on their investments.
This analysis on Individual Investors Behavior is an attempt to know the profile

of the investor and also know the characteristics of the investors so as to know their
preference with respect to their investments. The study also tries to unravel the
influence of demographic actors like age on risk tolerance level of the investor.
CHAPTER 1: INDUSTRY PROFILE
Indian financial industry is considered as one of the strongest financial sectors

among the world markets. Many industry experts may give various reasons for such
Indian financial industry reputation, but there is only one answer which no one can
deny, is the effective control and governance of the country s supreme monetary
authority the RESERVE BANK OF INDIA (RBI). Financial sector in India has
experienced a better environment to grow with the presence of higher competition.
The financial system in India is regulated by independent regulators in the field of
banking, insurance, and mortgage and capital market. Government of India plays a
significant role in controlling the financial market in India. Ministry of Finance,
Government of India controls the financial sector in India. Every year the finance
ministry presents the annual budget on 28th February. The Reserve Bank of India is
an apex institution in controlling banking system in the country. Its monetary policy
acts as a major weapon in India's financial market.
Various governing bodies in financial sector:
1. RBI - Reserve Bank of India is the supreme authority and regulatory body
for all the monetary transactions in India. RBI is the regulatory body for various
Banking and Non Banking financial institutions in India.
2. SEBI - Securities and Exchange Board of India is one of the regulatory

authorities for India's capital market.
3. IRDA Insurance regulatory and development authority in India regulates all

the insurance companies in India.
4. AMFI Association of mutual funds in India regulates all the mutual fund
companies in India.
5. FIPB Foreign investments promotion board regulates all the foreign direct
investments made in India.
5
Investments in gold is governed by the world gold council, in India we do not

have any regulatory authority for investments in gold. Ministry of Finance,
Government of India has a control over all the financial bodies in India. Government
securities, Public Provident Fund (PPF), National Savings Certificate NSC), Post Office
Savings are all under the control of the central government. Investment are normally
categorized using the risk involved in it, risk is dependent on various factors like the
past performance, its governing body, involvement of the government etc., in this
scenario Indian investments are classified in to 3 categories based on risk. They are
1. Low Risk/ No Risk Investments.
2. Medium Risk Investments.
3. High Risk Investments.
Apart from these, there are traditional investment avenues and emerging investment
avenues.
Various Investment avenues available in India
1.1 Safe/Low Risk Avenues:

 Savings Account
 Bank Fixed Deposits.
 Public Provident fund.
 National savings certificates.
 Post office savings.
 Government Securities.
1.2 Moderate Risk Avenues:

 Mutual Funds.
 Life Insurance.
 Debentures.
 Bonds.
6
1.3 High Risk Avenues:
 Equity Share Market.

 Commodity Market.
 FOREX Market.
1.4 Traditional Avenues:

 Real Estate (property).
 Gold/Silver.
 Chit Funds.
1.5 Emerging Avenues:

 Virtual Real Estate.
 Hedge Funds/Private Equity Investments.
 Art and Passion.
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CHAPTER 2: LITERATURE REVIEW
Behavioral finance is a new emerging science that studies the irrational

behavior of the people. Avinash Kumar Singh (2006) The study entitled "Investment
Pattern of People" has been undertaken with the objective, to analyze the investment
pattern of people in diversified city analysis of the study was undertaken with the
help of survey conducted .After analysis and interpretation of data it is concluded
that investors are more aware about various investment avenues & the risk
associated with that. All the age groups give more important to invest in equity &
except people those who are above 50 give important to insurance, fixed deposits and
tax saving benefits. Generally those investors who are invested in equity, are
personally follow the stock market frequently i.e. in daily basis. But those who are
invested in mutual funds are watch stock market weekly or fortnightly. Major
investors are more aware about various investment avenues and the risk associated
with that. But many investors are more conservative in nature and they prefer to
invest in those avenues where risk is less like bank deposits, small savings, post
office savings etc.
Sudalaimuthu and senthil kumar (2008) Mutual fund is the one of investment
avenues the researcher research in this area about investors perception towards
mutual fund investments has been analyzed effectively taking into account the
investors reference towards the mutual fund sector, scheme type, purchase of mutual
fund units, level of risks undertaken by investors, source of information about the
market value of the units, investors opinion on factors influenced to invest in mutual
funds, the investors satisfaction level towards various motivating factors, source of
awareness of mutual fund schemes, types of plan held by the investors, awareness of
risk category by investors, problems faced by mutual fund investors. Running a
successful mutual fund requires complete understanding of the peculiarities of the
Indian Stock Market and also the awareness of the small investor. The study has
made an attempt to understand the financial behavior of mutual fund investors in
connection with the scheme preference and selection. An important element in the
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success of a marketing strategy is the ability to fulfill investor expectation. The result
of these studies through satisfactory on the investor’s perception about the mutual
funds and the factors determining their investment decisions and preferences. The
study will be useful to the mutual fund industry to understand the investor’s
perception towards mutual funds investments and the study would also be
informative to the investors.
Sunil Gupta (2008) the investment pattern among different groups in city had
revealed a clear as well as a complex picture. The complex picture means that the
people are not aware about the different investment avenues and they did not
respond positively, probably it was difficult for them to understand the different
avenues. The study showed that the more investors in the city prefer to deposit their
surplus in banks, post offices, fixed deposits, saving accounts and different UTI
schemes, etc. The attitude of the investors towards the securities in general was
bleak, though service and professional class is going in for investment in shares,
debentures and in different mutual fund schemes. As far as the investments are
concerned, people put their surplus in banks, past offices and other government
agencies. Most of the cities though being rich have a tendency of investing then
surpluses in fixed deposits of banks, provident funds, Post Office savings, real
estates, etc. for want of safety and suitability of returns.
Manish Mittal and Vyas (2008) Investors have certain cognitive and emotional
weaknesses which come in the way of their investment decisions. Over the past few
years, behavioral finance researchers have scientifically shown that investors do not
always act rationally. They have behavioral biases that lead to systematic errors in
the way they process information for investment decision. Many researchers have
tried to classify the investors on the basis of their relative risk taking capacity and
the type of investment they make. Empirical evidence also suggests that factors such
as age, income, education and marital status affect an individual's investment
decision. This paper classifies Indian investors into different personality types and
explores the relationship between various demographic factors and the investment
personality exhibited by the investors.
9
CHAPTER 3: RESEARCH METHODOLOGY
3.1 Sample Technique:
Initially, a rough draft was prepared by keeping in mind the objective of the
research. A pilot study was undertaken in order to know the accuracy of the
questionnaire. The final questionnaire was arrived at only after certain important
changes are incorporated. Convenience sampling technique has used for collecting
the data from different investors. The investors are selected by the convenience
sampling method. The selection of units from the population based on their easy
availability and accessibility to the researcher is known as convenience sampling.
Convenience sampling is at its best in surveys dealing with an exploratory purpose
for generating ideas and hypothesis.
3.2 Sample Unit:
The respondents who asked to fill out the questionnaires are the sampling
units. These comprise of employees of MNC s, government employees, housewives,
self employed, professionals and other investors.
3.3 Sample Size:
The sample size was around more than 100, which comprised of people from
different regions. But around 102 respondents (Investors) filled up the form.
10
3.4 Primary Data:
Information is collected by conducting a survey by distributing a questionnaire

to more than 100 investors in diversified area. These investors are of different age
group, different occupation, different income levels, and different qualifications. (A
copy of the questionnaire is given in the last as ANNEXURE 1).
3.5 Secondary Data:
This data is collected by using the following means.
1. Investment Magazines, Business Magazines, Financial chronicles.

2. Expert’s opinion published in various print media.
3. Data available on internet through various websites
11
CHAPTER 4: DATA ANALYSIS & INTERPRETATION
4.1 Analysis in this report:
An analysis is made on the responses received from 102 sample investors. The
objective of the report is to find out the investor’s behavior on various investment
avenues, to find out the needs of the current and future investors.
The questionnaire contains various questions on the investors’ financial

experience, based on these experiences an analysis is made to find out a pattern in
their investments.
Based on these investment experiences of the 102 sample investors an analysis

is made and interpretations are drawn. Interpretations are made on a rational basis,
these interpretations may be correct or may not be correct but care is taken to draw
a valid and approvable interpretation.
Analysis is made only from the information collected through questionnaires no

other data or information is taken in to consideration for purpose of the analysis.
12
4.2 Analysis of the Survey:

Table: 1 Demographics of the Sample Investor
PARAMETER NO. OF. INVESTOR PERCENTAGE

GENDER
Male 60 59%
Female 42 41%
TOTAL 102 100%
AGE GROUP
Below 20 0 0
Between 20-30 37 36%
Between 31-40 35 34%
Above 41 30 30%
TOTAL 102 100%
QUALIFICATION
Under Graduate 9 9%
Graduate 46 45%
Post Graduate 39 38%
Others 8 8%
TOTAL 102 100%
OCCUPATION
Salaried 54 53%
Business 22 21%
Professional 14 14%
House Wife 11 11%
Retired 1 1%
TOTAL 102 100%
ANNUAL INCOME
Below Rs.2,00,000 37 36%

Rs.2,00,000-4,00,000 33 32%
Rs.4,00,000-6,00,000 18 18%
Above Rs.6,00,000 14 14%
TOTAL 102 100%
13
Interpretation:
Table 1 above shows, that 60 (59%) of the investors are men and the rest
42(41%) are females. Generally males bear the financial responsibility in Indian
society, and therefore they have to make investment (and other) decisions to fulfill the
financial obligations.
When it comes to age, it was found that 36% are young and significant number
under the age group of 20-30. 34% of them are in the age group of 31-40. 30% of
them are above 40 years of age. There are no investors below 20 years of age.
Nearly 53% of the investors belong to the salaried class, 21% were business
class, 14% were professionals, 11% were housewives and the rest were retired.
It was found that irrespective of annual income they earn all the investors
interested in investments since today’s inflated cost of living is forcing everyone to
save for their future needs, and invest those saved resources efficiently.
39(38%) of the individual investors covered in the study are postgraduates;

46(45%) investors are graduates and 9(9%) of the investors are under-graduates, and
8(8%) investors are categorized as others who are either illiterates, had less education
than under graduation or who are more qualified than post graduates. It is
interesting to note that most investors (covered in the study) can be said to possess
higher education (Bachelor Degree and above), and this factor will increase the
reliability of conclusions drawn about the matters under investigation.
37(36%) of the investors are earning less than 2 lakhs per annum, 33(32%)
investors are earning between 2 lakhs and 4 lakhs, 18(18%) investors are earning
between 4 lakhs and 6 lakhs, 14(14%) investors are earning more than 6 Lakhs P.a.
Since most of investors are below 4 lakhs annual earnings, many of them are non
risk takers.
14
Table 2 Other Characteristics of Sample Investors
Table 2.1 INVESTORS WILLING TO LOSE PRINCIPAL AMOUNT

PARAMETER NO OF INVESTOR PERCENTAGE
YES 7 7%
NO 95 93%
TOTAL 102 100%
NO OF INVESTORS
7%
YES
No
93%
Interpretation:
Since many of the investors annual earnings are below 2 lakhs and 4 lakhs,
many of them do not take the risk of losing their principal investment amount. 93%
of the sample investors are not ready to lose their principal investment amount. 7%
are ready to take risk of losing their principal up to certain extent.
Table 2.2 TIME PERIOD PEREFERED TO INVEST

PARAMETER NO OF INVESTOR PERCENTAGE
SHORT TERM 12 12%
MEDIUM 60 59%
LONG TERM 30 29%
TOTAL 102% 100%
No of Investors
12%
29% SHORT TERM
MEDIUM
LONG TERM
59%
15
Interpretation:
It is interesting to know that many investors prefer to invest their money for
medium term i.e. from 1 - 5 years, instead of short term and long term.12%
preferred short term, 59% preferred medium term and 29% preferred long term.
Table 2.3 FREQUENCY OF MONITORING THE INVESTMENT

PARAMETER No of Investors Percentage
DAILY 17 17%
MONTHLY 35 34%
OCCATIONALLY 41 40%
OTHER 9 9%
TOTAL 102 100%
Sales
9%
17% DAILY
MONTHLY
40% OCCATIONALLY
34%
OTHER
Interpretation:
Due to the busy life schedule, many of the investors are not able to spend time
in monitoring their investments, only 17% of the investors are monitoring their
investments daily,34% are monitoring on a monthly basis, 40% , the majority
investors are monitoring their Investments occasionally. Many of them who have
invested in safe investment avenues do not bother about their investments, some of
them forget about the investments for many years.
16
Table 2.4 INVESTMENT IN EQUITY MARET

YES 32 31%
NO 70 69%
TOTAL 100 100%
Interpretation:
Out of the total sample investors only 31% of the investors invest in equity share
market through their DEMAT A/C, 69% of the investors never invested in equity
shares. The investors who invest in equity share market are asked another question,
what would they do if the stock market falls immediately after their investment, many
of them replied that they would wait till the market increases instead of selling them
at a loss, very few answered that they would average the investment by buying some
more shares.
Table 2.5 FAMILY BUDGET

PARAMETER No of Inventors Percentage
YES 73 72%
NO 29 28%
TOTAL 102 100%
Sales
28%
YES
NO
72%
17
Interpretation:
72% of the sample investors had a monthly family budget for their daily
expenditure.28% of the investors replied they never thought of having a budget
calculation, and few think of having a budget but never implemented so far. Many
people with excess money never cared to make any family budgets.
Table 2.6 INVESTMENT TARGET

YES 48 47%
NO 54 53%
Total 102 100%
Interpretation:
Its interesting to know that almost same proportion of investors have different
thoughts, 47% of the investors have an investment target every year, and 53% of the
investors do not go for any targets for investment. On personal questioning many of
the investors who had an investment target every year are not able to reach their
targets due to contingent expenses. Few investors invest regularly but never thought
of having a target every year.
Table 2.7 FINANCIAL ADVISOR

YES 25 25%
NO 77 75%
TOTAL 102 100%
No of Investors
80%
60%
40% No of Investors
20%
0%
YES NO
18
Interpretation:
75% of the investors never had a financial advisor, they never approached an
advisor for their financial needs, the reason may be inadequate income and excess
expenditure, and there wouldn’t be surplus money to worry about. 25% of the
investors have financial advisors, who manage their investments.
Table 3 Objectives of Investment
Table 3.1 SAVING OBJECTIVE

PARAMETER VOTES WEIGHTS RANKING
CHILDREN’S EDUCATION 71 29 1
RETIREMENT 47 19 3
HOME PURCHASE 38 15 4
CHILDREN’S MARRIAGE 30 12 5
HEALTHCARE 57 23 2
OTHERS 05 02 6
TOTAL 248 100
Votes
OTHERS
HEALTHCARE
CHILDREN’S MARRIAGE
HOME PURCHASE Votes
RETIREMENT
CHILDREN’S EDUCATION
0 20 40 60 80
Interpretation:
Table 3.1 shows the savings objectives of the sample investors, investors are
given option to select one or more savings objectives, since there may be one or more
answers, weights are given for each parameter bases on the votes given by the
investors, the maximum weightage represents many investors have that as main
objective. Based on the weights calculated ranks are given in the order of maximum
weightage given by investors. First rank is given to children’s education, many
19
investors feel that, investing money for the future of the Child’s education is very
important than any other need. Many of the investors are in the age group of 20-30
and 31- 40 as of now they are thinking of saving for their children’s marriage. So
children s marriage is given last rank. After children s education investors are saving
for their own health care. There is a greater need for Indians to save for their health
care who are living a mechanical life. Retirement and home purchase are given
subsequent ranks after health care.
Table 3.2 PURPOSE BEHIND INVESTMENT

PARAMETER VOTES WEIGHTS RANK
WEALTH CREATION 37 22 4
TAX SAVING 43 25 3
EARN RETURNS 45 27 1
FUTURE 44 26 2
TOTAL 169 100
Votes
50
40
30
20
Votes
10
0
WEALTH TAX SAVING EARN FUTURE
CREATION RETURNS
Interpretation:
All the investors have very common purposes for investing; they have more than
one purpose for investing their money. Salaried people invest for tax savings, and for
future expenditure, business people invest for the purpose of earning returns. Almost
all the investors have all the 4 purposes behind investing their money.
20
Table 3.3 FACTORS CONSIDERING BEFORE INVESTIING

PARAMETER VOTES WEIGHTS RANKING
SAFETY OF PRINCIPAL 60 43 1
LOW RISK 35 25 2
HIGH RETURNS 27 19 3
MATURITY PERIOD 16 11 4
TOTAL 138 100
Votes
80
60
40
20 Votes
0
SAFETY OF LOW RISK HIGH RETURNS MATURITY
PRINCIPAL PERIOD
Interpretation:
When the investors are asked about the factors considering before investment
many of them have voted for safety of principal and low risk. First rank is given to
safety of principal and 2nd to low risk. Here there are some contradicting results,
some investors expect high returns at a very low risk, and this is not possible in
practical Indian investment avenues. Investment believes in a proved principle,
higher the risk higher the returns, lower the risk lowers the returns. Investors need
to know about this principle before investing.
21
Below are the demographics of the sample investors based on the category
occupation.
Table 4 Demographics Based On Occupation
Parameter No of Salaried Percentage

Age Group
Below 20 0 0%
Between 21-30 24 44%
Between 31-40 18 33%
Above 40 12 23%
Total 54 100%
Qualification
Under Graduate 0 0%
Graduates 23 43%
Post Graduate 25 46%
Others 06 11%
Total 54 100%
Annual Income
Below Rs.2,00,000 15 28%
Rs.2,00,000-4,00,000 17 31%
Rs.4,00,000-6,00,000 17 31%
Above Rs.6,00,000 5 10%
Total 54 100%
Parameter No of Business Percentage

Age Group
Below 20 0 0%
Between 21-30 2 9%
Between 31-40 10 45%
Above 40 10 45%
Total 22 100%
Qualification
Under Graduate 5 23%
Graduates 11 50%
Post Graduate 6 27%
Others 0 0%
Total 22 100%
Annual Income
Below Rs.2,00,000 11 50%
Rs.2,00,000-4,00,000 5 23%
Rs.4,00,000-6,00,000 1 5%
Above Rs.6,00,000 5 23%
Total 22 100%
22
Parameter No of Professional Percentage

Age Group
Below 20 0 0%
Between 21-30 8 57%
Between 31-40 2 14%
Above 40 4 29%
Total 14 100%
Qualification
Under Graduate 0 0%
Graduates 6 43%
Post Graduate 6 43%
Others 2 14%
Total 14 100%
Annual Income
Below Rs.2,00,000 2 14%
Rs.2,00,000-4,00,000 8 57%
Rs.4,00,000-6,00,000 1 7%
Above Rs.6,00,000 3 21%
Total 14 100%
Parameter No of House Wife Percentage

Age Group
Below 20 0 0%
Between 21-30 4 36%
Between 31-40 3 27%
Above 40 4 36%
Total 11 100%
Qualification
Under Graduate 1 9%
Graduates 6 55%
Post Graduate 2 18%
Others 2 18%
Total 11 100%
Annual Income
Below Rs.2,00,000 9 82%
Rs.2,00,000-4,00,000 1 9%
Rs.4,00,000-6,00,000 0 0%
Above Rs.6,00,000 1 9%
Total 11 100%
23
Assumption:
As a part of the analysis I assumed that preference for investment avenues is

dependent on the occupation of the investor. Hence preferred investment avenue are
derived from the demographics of the sample investor based on occupation.
Table: 5 Investment Preference Based On Occupation
Table 5.1 Preferred investment avenues for salaried
Investment Avenues Votes Weights Rank

Life Insurance 35 16 1
Gold 25 12 2
Bank Fixed Deposits 24 11 3
Mutual Funds 23 11 4
Real Estate 23 11 5
Post Office Saving 20 9 6
PPF 18 8 7
NSC 17 8 8
Equity Shares 16 7 9
Saving Account 14 7 10
Total 215 100
Since the investor has an option to invest in more than one Investment Avenue,
weights are given on the basis of preference to investment avenues. The avenue
which is given maximum weightage by the investors is ranked first. First Ten ranks
are given to the first ten preferred investment avenues. First preference is given to life
insurance, second to investing in gold, third to bank fixed deposits. Tenth preference
is given to bank savings account.
24
Table 5.2 Preferred investment avenues for Business people

Real Estate 11 14 3
Gold 8 10 5
Equity Shares 7 9 6
Chit Funds 6 7 7
NSC 4 5 10
Total 81 100
Thinking of the business people is almost same to that of salaried people, both
is similar in preferring insurance and bank fixed deposits, but given third preference
to real estate. Gold is given 5th place here. Last place is given to national savings
certificates.
Table 5.3 Preferred investment avenues for Professional

Gold 6 11 3
Real Estate 6 11 4
Mutual Funds 4 7 7
PPF 3 6 8
Bonds 3 6 9
Govt Securities 3 6 10
Total 54 100
There is no much difference in the preferences of professionals when compared

to salaried and business people. A professional does not prefer mutual funds where
salaried and business people prefer at 4th place. Professionals are more interested in
post office savings rather than mutual funds. As business people professionals also
prefer bank fixed deposits in the first place, then life insurance. Professionals does
not prefer national saving certificates at all, eliminated it from the top 10.
25
Table 5.4 Preferred investment avenues for House Wife

Gold 9 18 1
Real Estate 5 10 4
Chit Funds 4 8 6
Equity 4 8 7
NSC 2 4 9
Mutual Funds 1 2 10
Total 50 100
Indian housewives love gold as much as themselves. Housewives have given

first rank to gold pushing insurance and bank fixed deposits to second and third
place. House wives gave least preference to mutual funds. They are more attracted to
traditional investment avenues like gold, real estate, post office savings and chit
funds.
Table 5.5 Preferred investment avenues for – Overall

Gold 50 13 3
Real Estate 45 12 4
Equity Shares 29 8 7
NSC 25 6 9
PPF 22 5 10
Total 391 100
26
HYPOTHESIS - Increase in Age decreases the Risk tolerance level.
 Relation between Age and risk tolerance

 Level of risk tolerance dependent on the age of the investor.
 Risk tolerance of an investor shows a negative relation to the age of
that investor
 Lower the age higher the risk capabilities, higher the age lower the risk
capabilities.
LEVEL OF RISK TOLERANCE WITH RESPECT TO AGE GROUP
For the purpose of analysis investors are placed under three

categories.
1. Low risk category
2. Medium risk
3. High risk
Classification is done based on three factors

1. Past investments of the investor.
2. Investor experience in investing (level of experience).
3. Investor preference for investments.
First the total sample of 102 is divided in to 3 age groups.

Investors in each age group are classified in to 3 risk categories based on the above
factors.
27
Table 6: Finding Relationship between Age Group and Level of Risk Tolerance
Table 6.1 Risk tolerance of age group 20-30
Parameters No of Investors Percentage

Level of Risk
Low Risk 13 35%

Medium Risk 19 51%
High Risk 5 14%
Total 37 100%
Table 6.2 Risk tolerance of age group 30-40

Level of Risk
Low Risk 20 57%

Medium Risk 11 32%
High Risk 4 11%
Total 35 100%
Table 6.3 Risk tolerance of age group above 40

Level of Risk
Low Risk 21 70%

Medium Risk 6 20%
High Risk 3 10%
Total 30 100%
28
Observations:
Observations from table 6.1, 6.2, 6.3
From the table 6.1 we find that 51% of Investors between the age group of 20-
30 came under medium risk category, where as the percentage of investors who
came under medium risk in the age group of 30-40 has decreased to 32%. It still
came down in the case of investors in the age group of 40 above, which is only 20%.
We can see a decreasing trend in the behavior of investors towards medium risk
when their age increased.
35% of the investors in the age group of 20-30 are in the low risk category,
where as Investors under the age group 30-40, 57% came under the low risk
category, there is a large increase in the investors who came under low risk category
in this age group. It has further increased, 70% of the investors in the age group
above 40 came under the low risk category. We can see an increasing trend with
respect to low risk category as the age increases.
Same observations are arrived at, when comparing the high risk category with
respect to the age groups. As the age increases the level of risk tolerance is coming
down. 14% came under the high risk category under the age group 20 - 30, when it
came to age group above 40 above only 10% came under the high risk category.
From the above observations we can conclude that there is a strong inverse or
negative relationship between risk tolerance and age group.
Attributes Risk Tolerance Level
Age -0.74
When Karl Pearson’s correlation coefficient is calculated, it is found to be -0.74
by which we can conclude that there is a strong negative correlation between Age
and Risk tolerance. Age accounts for the major differences in risk taking decisions by
the investors. The older an investor, the better seemed his/her performance in
comparison to the younger ones. Over-confidence in their own investment ability
among the youngsters largely accounts for the excessive trading among younger
investors leading to lower returns and this direct to decline in the risk tolerance
level.
29
CHAPTER 5: FINDINGS & SUGGESTIONS
5.1 Findings:
1. The study reveals that male investors dominate the investment market in
India.
2. Most of the investor’s possess higher education like graduation and above.
3. Majority of the active and regular Investors belong to accountancy and

relate employment, non-financial management and some other occupations are
very few.
4. Most investors opt for two or more sources of information to make

investment decisions.
5. Most of the investors discuss with their family and friends before making an
investment decision.
6. Percentage of income that they invest depend on their annual income, more
the income more percentage of income they invest.
7. The investor’s decisions are based on their own initiative.
8. The investment habit was noted in a majority of the people who participated
in the study.
9. Most Investors prefer to park their funds in avenues like Life insurance, FD,
Gold and Real Estate.
30
10. Most of the investors get their information related to investment through
electronic media (TV) next to print media (News paper/ Business news paper/
Magazines)
11. Most of the investors are financial illiterates.
12. Increase in age decrease the risk tolerance level.
13. Women are attracted towards investing gold than any other investment
avenue.
31
CHAPTER 6: SUMMARY & CONCLUSION
6.1 Summary:
This report is a reflection of the behavior of various categories of investors.

Selection of a perfect investment avenue is a difficult task to any investor. An effort is
made to identify the tastes and preferences of a sample of investors selected
randomly out of a large population. Despite of many limitations to the study I was
successful in identifying some investment patterns, there is some commonness in
these investors and many of them responded positively to the study.
This report concentrated in identifying the needs of current and future

investors, investor s preference towards various investment avenues are identified
based on their occupation. Investors risk in selecting a particular avenue is
dependent on the age of that investor.
6.2 Conclusion:
This study confirms the earlier findings with regard to the relationship between
Age and risk tolerance level of individual investors. The Present study has important
implications for investment managers as it has come out with certain interesting
facts of an individual investor.
The individual investor still prefers to invest in financial products which give
risk free returns. This confirms that Indian investors even if they are of high income,
well educated, salaried, independent are conservative investors prefer to play safe.
The investment product designers can design products which can cater to the
investors who are low risk tolerant and use TV as a marketing media as they seem to
spend long time watching TVs.
32
ANNEXURE 1 QUESTIONNAIRE
1. Are you aware of the following investment avenues? (Tick which ever applicable in
the boxes).
A) Safe/Low Risk Investment Avenues:

Savings Account. Bank Fixed Deposits, Public Provident Fund, National Savings Certificates.
Post Office Savings. Government Securities.
B) Moderate Risk Investment Avenues:

Mutual Funds, Life Insurance. Debentures. Bonds.
C) High Risk Investment Avenues:

Equity Share Market. Commodity Market. FOREX Market.
D) Traditional Investment Avenues:

Real Estate (property), Gold/Silver. Chit Funds.
E) Emerging Investment Avenues:

Virtual Real Estate. Hedge Funds. Private Equity Investments. Art and Passion.
2. What do you think are the best options for investing your money? (Choose from above list,
Rank in the order of preference)
1. 3.
2. 4.
3. Reasons for selecting these options
1.
2.
4. In the past, you have invested mostly in (write as many as applicable)
5. In which sector do you prefer to invest your money?
1. Private Sector 2.Public Sector 3.Foreign Sector
33
6. What are the important factors guiding your investment decisions?(Return, safety of
principal, Diversification, progressive values, etc.)?
7. What are your savings objectives?
Children’s Education Retirement Plan Home Purchase Children Marriage
Health Care Others (Specify)

8. What is your investment objective?
Income and Capital Preservation Long-term Growth
Growth and Income Short-term Growth
9. What is the purpose behind investment?
Wealth Creation Tax Saving Earn Returns Future Expenses
10. Have you set aside funds specifically for the education and marriage of
your children? If yes, please give amounts and how the funds are held
Education: Amount Rs.__________________________________ invested in: ____________
Marriage: Amount Rs.__________________________________ invested in: _____________
11. Do you have a formal budget for family expenditure?
Yes No
12. Do you have a savings and investment target amount you aim for each year?
Yes No (if YES Specify Amount) :____________
13. At which rate do you want your investment to grow?

Steadily At an Average Rate Fast
14. Which factor do you consider before investing?

Safety of Principal Low Risk High Returns Maturity Period
15. Do you invest your money in share market? (Through a DEMAT A/C)
Yes No
If yes: Imagine that stock market drops after you invest in it then what will you do?
Withdraw your money Wait to increase Invest more in it
16. How often do you monitor your investment?

Daily Monthly Occasionally
34
17. What percentage of your income do you invest?

0-15% 15-30% 30-50%
18. What is the time period you prefer to invest?
Short-term (0-1yrs) Medium-term (1-5yrs) Long-term (>5yrs)
19. Can you take the risk of losing your principal investment amount?
Yes No If yes: What percentage
20. What is your source of investment advice?
Newspapers News Channels Family or Friends Internet

Books Magazines Certified Market
Advisors Professional/Financial Planners
Personal Details:
Name:
Gender:
Designation:
Organization:
Age: Below 20 Between 20-30 Between 30-40 Above 40
Qualification: Under Graduate Graduate Post Graduate Other_____
Occupation: Salaried Business Student Housewife Retired
Annual Income: Below Rs.2,00,000 Rs.2,00,000-4,00,000

Rs.4,00,000-6,00,000 Above Rs.6,00,000
Financial Advisor: Yes No
35
BIBILIOGRAPHY
Books:
 Investment Analysis and Portfolio Management, by Prasanna Chandra.
Research Paper
 An Empirical study on Indian individual investor’s behavior, by Syed Tabassum
Sultana.
Web Sites
www.economictimes.Indiatimes.com
www.business-standard.com
www.Indiamoney.com
www.moneymanagementideas.com
http://www.ijbarr.com/downloads/3001201511.pdf
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“INVESTOR’S BEHAVIOR TOWARDS INVESTMENT AVENUES”

IN PARTIAL FULFILLMENT OF THE REQUIREMENTS

STUDENT NAME: MANGESH SHANKAR SONAWANE

Date Signature of Student

I would like to take this opportunity to express my deep and sincere

The three golden rules for all investors are:

OBJECTIVE OF THE PROJECT

The purpose of the analysis is to determine the investment behavior of

Executives need a third party understanding on where investor’s loyalties

1. To understand in depth about different investment avenues available in India.

3. The type of financial instruments, they would prefer to invest.

5. What are the factors that they consider before investing?

6. To give a recommendations to the investors that where they should invest.

8. To develop a profile of sample Indian individual investor in terms of their

9. To identify the objective of savings of an investor.

10. To study the dependence/independences of the demographic factors (Age) of the

This analysis on Individual Investors Behavior is an attempt to know the profile

CHAPTER 1: INDUSTRY PROFILE

Indian financial industry is considered as one of the strongest financial sectors

Various governing bodies in financial sector:

2. SEBI - Securities and Exchange Board of India is one of the regulatory

3. IRDA Insurance regulatory and development authority in India regulates all

Investments in gold is governed by the world gold council, in India we do not

1. Low Risk/ No Risk Investments.

2. Medium Risk Investments.

3. High Risk Investments.

Various Investment avenues available in India

1.1 Safe/Low Risk Avenues:

1.2 Moderate Risk Avenues:

1.3 High Risk Avenues:

 Equity Share Market.

1.4 Traditional Avenues:

1.5 Emerging Avenues:

CHAPTER 2: LITERATURE REVIEW

Behavioral finance is a new emerging science that studies the irrational

CHAPTER 3: RESEARCH METHODOLOGY

3.1 Sample Technique:

3.2 Sample Unit:

3.3 Sample Size:

3.4 Primary Data:

Information is collected by conducting a survey by distributing a questionnaire

3.5 Secondary Data:

This data is collected by using the following means.

1. Investment Magazines, Business Magazines, Financial chronicles.

CHAPTER 4: DATA ANALYSIS & INTERPRETATION

4.1 Analysis in this report:

The questionnaire contains various questions on the investors’ financial

Based on these investment experiences of the 102 sample investors an analysis

Analysis is made only from the information collected through questionnaires no

4.2 Analysis of the Survey:

PARAMETER NO. OF. INVESTOR PERCENTAGE

TOTAL 102 100%

Below Rs.2,00,000 37 36%

TOTAL 102 100%

39(38%) of the individual investors covered in the study are postgraduates;

Table 2 Other Characteristics of Sample Investors

Table 2.1 INVESTORS WILLING TO LOSE PRINCIPAL AMOUNT

Table 2.2 TIME PERIOD PEREFERED TO INVEST

Table 2.3 FREQUENCY OF MONITORING THE INVESTMENT

Table 2.4 INVESTMENT IN EQUITY MARET

Table 2.5 FAMILY BUDGET

Table 2.6 INVESTMENT TARGET

Table 2.7 FINANCIAL ADVISOR

Education: Amount Rs.______________________ invested in:

Marriage: Amount Rs.______________________ invested in: _