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Name: Saunak Parmar

MBA Sem-2
Topic: preference of salaried class on investment
options
Literature review
Gupta et al. (2001) studied the Indian household investors’ preferences, future intentions and
experiences and found that bonds were regarded as an investment for the retired people but that
did not have much appeal for young people. The market penetration achieved by mutual funds was
found to be much lower than equity shares for all age classes.

Karthikeyan (2001) has conducted research on Small Investors Perception on Post office Saving
Schemes and found that there was significant difference among the four age groups, in the level
of awareness for kisan vikas patra (KVP), National Savings Scheme (NSS), and deposit Scheme
for Retired Employees (DSRE), and the Overall Score Confirmed that the level of awareness
among investors in the old age group was higher than in those of young age group.

Sandhu and Singh (2004) the study was based on structured primary data. The sample of 50
adopters and 50 non-adopters from the universe comprising the city of Amritsar was selected. The
study analyzed in case of adopters that transparency, safety, convenience and economy judged as
an important feature of net trading followed by market quality and liquidity whereas in case of
non-adopters economy and convenience were the important features followed by the other factors
like market quality, safety and liquidity.

Avinash Kumar Singh (2006) the study analyzed the investment pattern of people in Bangalore
city and Bhubaneswar & analysis of the study was undertaken with the help of survey method.
After analysis and interpretation of data it is concluded that in Bangalore investors are more there
are a large number of investment instruments available today. The people has to choose Proper
Avenue among those available, depending upon their specific need, risk preference, and return that
are expected. Different Investment avenues can be broadly categories under the following heads.

Investment Option Available:

1. Equity
2. Debt
3. Mutual Funds
4. Corporate
5. Debentures
6. Company Fixed Deposits
7. Fixed Deposits
8. Post office Savings
9. Public Provident Fund
10. Real Estate
11. Life Insurance
12. Gold/Silver/Others

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.

Gupta and Jain (2008) on the basis of an all-India survey of 1463 households found the
preferences of investors among the major categories of financial assets, such as investment in
shares, indirect investment through various types of mutual fund schemes, other investment types
such as exchange-traded gold fund, bank fixed deposits and government savings schemes. The
study provides interesting information about how the investors’ attitude towards various
investment types are related to their income and age, their portfolio diversification practices, and
the over-all quality of market regulation as viewed by the investors themselves.

Verma (2008) studied the effect of demographics and personality on investment choice among
Indian investors and found that mutual funds were popular amongst professionals, students and
the self-employed. Retirees displayed their risk aversion by not investing in mutual funds and
equity shares. It was also found that higher the education, higher was the level of understanding
of investment complexities. Graduates and above in qualification preferred to invest in equity
shares as well as mutual funds.

Nagpal and Bodla (2009) studied the lifestyle characteristics of the respondents and their
influence on investment preferences. The study concludes that investors’ lifestyle predominantly
decides the risk taking capacity of investors. The study found that in spite of the phenomenal
growth in the security market, the individual investors prefer less risky investments, viz., life
insurance policies, fixed deposits with banks and post office, PPF and NSC.

Davar and Gill (2009) investigated the underlying dimensions in the selection of different
investment avenues for the households. The results of the study revealed emphasis on familiarity,
satisfaction, opinion and demographic dimensions for all investment avenues.

Chitra and Sreedevi (2011) analyzed the influence of seven personality traits—emotional
stability, extraversion, risk, return, agreeability, conscientiousness and reasoning—on the choice
of the investment pattern. The results of the study show that these personality traits of the investors
have an impact on the individuals while taking decisions and also have a strong influence on
determining the method of investment. The study found that the influence of personality traits on
the investment decision is more compared to that of demographic variables.

V.R.Palanivelu & K.Chandrakumar (2013) examined the Investment choices of salaried class
in Namakwa Taluk, Tamilnadu, India with the help of 100 respondents as a sample size & it reveals
that as per Income level of employees, invest in different avenues. Age factor is also important
while doing investments.

Sonali Patil (2014) studied preferred investment avenues among salaried people with reference to
Pune City, India. A sample size of 40 investors has been taken from the Pune City, India. The
result of finding showed 60% investors were aware about the investment avenues whereas 40%
were unaware.

RESEARCH OBJECTIVES

The objectives of the study are:

• To study the investment preferences of salaried individuals towards various financial


instruments.
• To study the association between demographic variables and investment preference of salaried
Individuals towards financial instruments.
Hypothesis 1
H0: Investment preference for various financial instruments is independent of age group.
H1: Investment preference for various financial instruments is not independent of age group.
Hypothesis 2
H0: Investment preference for various financial instruments is independent of gender.
H1: Investment preference for various financial instruments is not independent of gender.
Hypothesis 3
H0: Investment preference for various financial instruments is independent of income.
H1: Investment preference for various financial instruments is not independent of income.
Hypothesis 4
H0: Investment preference for various financial instruments is independent of marital status.
H1: Investment preference for various financial instruments is not independent of marital status.
Hypothesis 5
H0: Investment preference for various financial instruments is independent of employment status.
H1: Investment preference for various financial instruments is not independent of employment
status.

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