ABSTRACT market plays an important role in the decision

ABSTRACT

 

This paper aims to study the behavior of individual investors of Anand
district towards investments preferences. There are many investment instruments
are available such as investment in Bank deposit, Equity share, Post office
saving, Bonds, Mutual funds, Life insurance policy etc. All the investors
invest their excess money in the above mentioned avenues depending on their
risk taking opinion. In this research paper
at attempt has been made to study on investors preference’s in investment: a
study of investors of Anand district. The concluded that investors have
awareness about the investments instruments available in market and they prefer
to investing in growing fund and high return investment instruments. 

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Key words: Behavior Finance,
Anand District, Investors Preferences

 

 

 

INTRODUCTION

Behavioral finance is a famous field of the finance that suggests
the theories based on psychology (psychology finance or behavioral economics)
in order to explain the concept of stock market anomalies which includes
extreme rise and fall in the prices of stock market. The behavioral finance
suggests that the structure of the information and characteristics of
participants of the market plays an important role in the decision making of
the investors as we as the overall outcome of the market.

 

BEHAVIORAL FINANCE
AND INVESTORS

Behavioral finance is more inclined towards the investors and their
decision making for the following reasons:

v  An individual who
is capable of identifying the flaws in his behavior is capable of optimizing
his decision and is wise enough to learn from his mistakes.

 

v  Anomalies are extremely important part of the active management.
Individuals, who believe in the fact that the markets are rational and the
prices are inclusive of all type of information available, are capable of
relying on the passive management.

 

REVIEW OF
LITERATURE

 

K. Parimalakanthi
and Dr.M. Ashok Kumar(2015) This paper aims to find the behavior of
individual investors of Coimbatore city vis-a-vis available investment avenues
in the Indian financial markets. The major factors behind an investment are the
safety of principal amount, liquidity, income stability, and appreciation. A
variety of investment avenues are available such as Savings a/c, FD a/c,
Government Securities, Corporate Bonds, Insurance policies, Real estates,
Commodities, Shares and MFs, Chit Funds and Gold and Silver. All the investors
invest their surplus money in the above mentioned avenues depending on their
risk taking attitude. “No pain, no gain” it is the golden principle of
investment management. In the developing economic one can earn more and more
money. „More risks? lead to more profits. Investors cannot avoid risks but they
can minimize the risk by investing their money in various forms of safe
investments so that they can get a moderate profit. This study has led the
researcher to conclude that most of the investors of Coimbatore city prefer
bank deposits followed by investments in gold and silver.

Dr. Kaushal A. Bhatt (2013) Investors tend
to look at the Return – the potential return possible from investment; Risk-
the variability in returns from an investment in avenues due to value going up
and down or market fluctuations; Liquidity – the ease with which the investment
can be converted into cash. Based on the preferred risk, return and liquidity
each individual selects investment avenues that match with his investment
objectives. An individual investor has to confront his/her demographics,
lifestyle and investment psychology whether the investor’s age or occupation or
annual income plays a significant role while making preference for investment
avenues. This Study tried to explore the Investment and Trading Pattern of
Individual Investor who resides in Jamnagar City. The Primary objective of the
study is to check the investment pattern of people those who are dealing in
stock market. Other objectives may include checking the tendency viz.,
Intraday, Positional, Long Term etc of investors regarding investment; identify
the segment in which people are investing more, etc. The scope of this study is
geographically limited to Jamnagar city, it include all class of people those
who are dealing in stock market. Here, two variables are tested i.e. occupation
and investment patter, age and risk taking ability, etc. So, ANOVA is the
proper tool to test the hypothesis. It is found during the study that,
occupation, age, education does affect the investment decision of individuals
dealing in stock market. It was also found that new generation investors (whose
age is less than 35) prefer online trading rather than off line.

Suman and Warne.D.P. (2012) the market
movements affect the investment pattern of investors in the stock market.
Though various authors have made several attempts on the above areas
considering some are all the observed parameters, still it needs to be
frequently studied. This necessity various from time to time as well as the
role of the money has also increased tremendously.

M. Gurusamy. (Aug 2011) Mutual Funds are
financial intermediaries concerned with mobilizing savings of those who have
surplus income and channelization of these savings in those avenues where there
is demand of funds. Objectives of the study are to study the risk appetite of
the investors; to identify the reasons for investments in Mutual fund; to
estimate the investors’ satisfaction with investment in mutual fund; to study
the choice of investment for tax benefits. The simple random sampling technique
was employed in the selection of the sample. The study covers the customers in
Salem City. Weighted average, simple percentage analyses are used for analyzing
the data collected. Findings of the study are maximum of the respondents are
belong to 21-30 years; maximum of the investors are earned Rs.1 lakh to 2 lakh
per annum; maximum of the investors are invested their money through mutual
funds between 1-3 years; The study revealed that mutual fund ranks as the most
popular avenue for investment followed by life insurance and fixed deposits
with regard to the risk appetite of the investors; it is found that the
investors perceive that investments in mutual funds carry moderate risk. The
study also reveals that a better and steady return is the main reason for
investment in mutual fund.

Manish Sitlani,
Geeta Sharma & Bhoomi Sitlani (2011) observed that there is no association between demographic variables and
investment choice of occupants of financial services industry. They also
highlight that the level of investment awareness that an individual carries
also stands as an important factor. This changing economic paradigm has
affected the occupants of financial services industry in a better way, as they
are additionally equipped with financial knowledge.

 

OBJECTIVE OF THE
STUDY

v  To study on
investors’ preference towards various investment instrument of Anand district

 

RESEARCH
METHODOLOGY 

The
study is analytical in nature undertaken to investor’s preferences in
investment: a study of investors of Anand district. This study based on primary
data collected through structured questionnaire. For this study data collected
from 100 respondents of different categories like students, salaried employee,
business man and professional on the basis of purposive sampling.

DEMOGRAPHIC
INFORMATION OF RESPONDENTS

This study is devoted to the work done on the
research problem about the demographic information that
are Age group, Qualification and Profession.

 

 

 

 

 

 

 

Table- 1: Demographic Descriptive
Statistics

Category

Variable

Frequency

(%)

 
 
Age Group
 

Up
to 20 Years

1

1.0

Between
20 to 30

57

57.0

Between
30 to 40

22

22.0

40
above

20

20.0

Total

100

100.0

 
Education
Qualification

Under
Graduate

4

4.0

Graduate

20

20.0

Post
Graduate

68

68.0

Other
Specify

8

8.0

Total

100

100.0

Profession

Student

13

13.0

Salaried

46

46.0

Business

26

26.0

Professional

14

14.0

Other Specify

1

1.0

Total

100

100.0

 

From the above table we find that most
of the respondents belong to the age group of above 20 to 30 and  30 to 40 years (79%). In case of education
qualification 68% respondents were Post Graduate, whereas 4% only Under Graduate means majority of respondents are
educated and give proper respondents to this study. By profession of
respondents 46% respondents were Salaried, 26% were Business whereas only 1% respondent
from  other profession.

TABLE NO: 2 DO YOU KNOW ABOUT INVESTMENT INSTRUMENT

Particular

Frequency

Percent( %)

Yes

79

79.0

No

21

21.0

Total

100

100.0

The
above table shows that respondents awareness about investment instrument. It is
finding that 79% respondents have awareness about instruments. While only 21%
respondents don’t have awareness about investment instrument.

 

 

TABLE:
3 PREFERENCES IN INVESTMENT AVENUES 

Terms

 

Yes

No

Total

Invest in Bank
Deposit

Frequency

66

34

100

Percent (%)

66.0

34.0

100.0

Invest in  Equity Shares

Frequency

35

65

100

Percent (%)

35.0

65.0

100.0

Invest in Post
office

Frequency

38

62

100

Percent (%)

38.0

62.0

100.0

Invest in
Bonds

Frequency

10

90

100

Percent (%)

10.0

90.0

100.0

Investment in
Mutual funds

Frequency

29

71

100

Percent (%)

29.0

71.0

100.0

Investment In
LIC

Frequency

65

35

100

Percent (%)

65.0

35.0

100.0

Percent (%)

51.0

49.0

100.0

                                                                                                                  

The above table indicates that different investing preference
of respondents. Majority of the respondents are invest their excess money in
bank deposit and life insurance, where only few respondents investing their
money in other instruments like shares, mutual fund and bonds.

TABLE:
4 SOURCE OF INFORMATION FOR INVESTMENT

Source of Information

 

Yes

No

Total

News Paper

Frequency

20

80

100

Percent (%)

20.0

80.0

100.0

News Channel

Frequency

7

93

100

Percent (%)

7.0

93.0

100.0

Adviser

Frequency

37

63

100

Percent (%)

37.0

63.0

100.0

Internet

Frequency

30

70

100

Percent (%)

30.0

70.0

100.0

Friend or
relative

Frequency

54

46

100

Percent (%)

54.0

46.0

100.0

 

From
the above table we can say that most of the respondents are getting information
about the investments instruments from friend or relative. Where 37 %
respondents get information from adviser and other respondents sources of
information are media.

 

 

 

 

 

TABLE: 5 MOTIVES
BEHIND INVESTING IN VARIOUS INSTRUMENTS

 
Motives of investing

 

Rank

 

1

2

3

4

5

Total

Motives
Dividends

Frequency

21

20

25

18

16

100

%

21.0

20.0

25.0

18.0

16.0

100.0

Motives
Safety

Frequency

57

30

8

3

2

100

%

57.0

30.0

8.0

3.0

2.0

100.0

Motives
Liquidity

Frequency

6

19

37

32

6

100

%

6.0

19.0

37.0

32.0

6.0

100.0

Motives
Capital
appreciation

Frequency

6

10

9

22

53

100

%

6.0

10.0

9.0

22.0

53.0

100.0

Motives Tax Benefits

Frequency

11

21

20

25

23

100

%

11.0

21.0

20.0

25.0

23.0

100.0

 

Table
5 indicates motives behind investing
in various instruments, 57% respondents give first rank of their motives of
safety. 21% respondents give priority receives dividend second rank. When 11%
respondents motive get tax benefits third rank and other respondents are motives
capital appreciation and liquidity.

 

TABLE: 6 PREFERRED KINDS OF SECURITY

Preferred   Kinds Of Security

 

Yes

No

Total

High risk/high
return

Frequency

45

55

100

Percent (%)

45.0

55.0

100.0

Low risk/low
return

Frequency

19

81

100

Percent (%)

19.0

81.0

100.0

Traditional
investment

Frequency

25

75

100

Percent (%)

25.0

75.0

100.0

Growing
investment

Frequency

47

53

100

Percent (%)

47.0

53.0

100.0

Other specify

Frequency

4

96

100

Percent (%)

4.0

96.0

100.0

 

The
above mention table discloses the data of preferred kinds of security. Most of
the respondents prefer to invest in growing funds and high return instrument.
Where other respondents prefer to low risk and Traditional investment.

 

 

TABLE: 7 PREFERRED
SECTOR OF INVESTMENT

Preferred

 

Yes

No

Total

Public sector

Frequency

28

72

100

Percent (%)

28.0

72.0

100.0

Private sector

Frequency

18

82

100

Percent (%)

18.0

82.0

100.0

Government

Frequency

65

35

100

Percent (%)

65.0

35.0

100.0

Foreign sector

Frequency

2

98

100

Percent (%)

2.0

98.0

100.0

Mixed

Frequency

22

78

100

Percent (%)

22.0

78.0

100.0

 

 It is clear from
the table that 65% respondents preferred to invest their saving in government
sector. 28% investment in public sector and where only 22% and 2% investment
preferred in mixed and foreign sector respectively. We can conclude that
majority of investor wish to government sector because of safety and secured
return.

TABLE: 8 AWARENES ABOUT INVESTMENT RIGHTS

Particular

Frequency

Percent (%)

Yes

78

78.0

No

22

22.0

Total

100

100.0

 

The above mention table discloses the data of awareness investment
rights.78% respondents are aware about the investment rights whereas only 22%
respondents are against the statement. So we can conclude that majority of
respondents are awareness about the above statement.

TABLE: 9 OPINION ON INDIA SEBI AND OTHER ACTS
ARE PROTECTING THE INTEREST OF INVESTORS

Particular

Frequency

Percent (%)

Yes

67

67.0

No

17

17.0

Not Aware

16

16.0

Total

100

100.0

From
the above table we can find that 67% respondents view on opinion on India SEBI
and other acts are protecting the interest of investors about it. Where 17%
respondents are opinion are not protecting the interest investors. So we can
say that majority of respondents are opinion on India SEBI and other acts are
protecting the interest of investors about it.

TABLE: 10 OBSERVED ANY FRAUD FOR THEIR MONEY

Particular

Frequency

Percent (%)

Yes

17

17.0

No

83

83.0

Total

100

100.0

 

 The above table
indicates possibilities of any
fraud for their money. It  was found that out of 100 respondents, 83%
respondents said that there is not any possibility for any fraud for their
money and only 17% respondents said that there is chance of fraud for their
money. So we can conclude.

MAJOR FINDINGS
AND SUGGESTIONS

v  It was found that most of the respondents belong to the age group of
above 20 to 30 and  30 to 40 years (79%).
That means majority of respondents are young investor.

v  It was found majority of the respondents education qualification 68%
respondents were Post Graduate.

v  It was found that majority of the respondents in case of profession
46% respondents were Salaried employees invest saving money various instrument.

v  It was found  that 79%
respondents have awareness about investment instruments.

v  It was found that Majority of the respondents are invest their
surplus money in bank deposit and life insurance policy.

v  It was found that most of the respondents are getting information about
the investments instruments from friend or relative.

v  It was found that majority of the respondents prefer to invest in
growing funds and high return instrument.

v  It was found that majority of investor wish to government sector
because of safety and secured return.

v  It was found that 78% respondents are aware about the investment
rights.

v  It was found 67% respondents are opinion on India SEBI and other
acts are protecting the interest of investors about it.

v  It was found 83% respondents said that there is not any possibility
for any fraud for their money.

SUGGESTIONS

v  It is suggested to investors to invest their saving money in primary
market like equity share and Bonds.

v  It is suggest that in capital appreciation and liquidity of funds

v  It is also suggested investors have to invest their money in the
private and public sectors.

 

CONCLUSION

It
is concluded that from this study the respondents are aware with financial
instrument available and investment right. They prefer to put money in
government organisation because they wants safety first for that they depends
on financial adviser and friend and relatives. Respondents are believing that
SEBI protecting them.