A Study on Investment Pattern

8/2/2019 A Study on Investment Pattern

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CHAPTER 1

INTRODUCTION

1.1INTRODUCTION TO THE STUDY:

Investment is parting with ones fund, to be used by another party,

user of fund, for productive activity. It can mean giving an advance or loan or

contributing to the equity (ownership capital) or debt capital of a corporate or

non-corporate business unit.

Generalized, investment means conversion of cash or money into

a monetary asset or a claim on future money for a return. This return is for

saving, parting with saving or liquidity and lastly for taking a risk involving the

uncertainty about the actual return, time of waiting and cost of getting back

funds, safety of funds, and risk of the variability of the return.

The cornerstone of any investment strategy is to maximize the

return while maintaining a tolerable risk. The process of allocating assets

among several investment categories is a way of achieving the goal. Younger

people can assume greater risk than one who is retired; a highly paid

executive will be less dependent on current portfolio income than will a

disabled person on workmens compensation and so forth.

The goal of an individual may be current income, capital

appreciation or an acceptable balance. If the investor decides on capital

appreciation, the investors should have the personality to ride out major


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decline in the market . These are decisions that only the investor can make

after careful consideration.

1.1.1 CHARACTERISTICS OF INVESTMENT:

1. Risk:

The risk depends of maturity, creditworthiness, nature of

instrument, tax liability, variability of returns, etc

2. Return:

A major factor influencing the pattern of investment is its return,

which is the yield plus capital appreciation.

3. Safety:

The safety of capital is the certainty of return of capital without

loss of money or time involved.

4. Liquidity:

If a capital asset is easily realizable, saleable or marketable,

then it is said to be liquid.

An investor generally prefers liquidity for his investments, safety

of his funds, a good return with a minimum risk and maximization of return.


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1.1.2 CLASSIFICATION OF INVESTORS

Investors can be classified into different groups depending on

their attitude towards risk, expectation etc., Each investor also has an

indifference point at which his own expectation of return matches with the risk

that he can take.

The investor should also be able to assess his own behavior

pattern before he aims at a particular goal, which he wishes to attain. In

some cases, most of the investors are willing to sacrifice some expected

income or return if the income is certain. The higher the income group of an

investor the greater will be his desire for purchasing assets which will give

him a favorable tax treatment.

TABLE 1.1

Classification of Investors

TYPERISK

ACCEPTABLETYPE OF INVESTMENT BEHAVIOR

RISKAVERTERS

LOW RISKLIFE INSURANCE ,UNITCERTIFICATES, GOVT

CERTIFICATES.

WILL PAY LESS FORAN UNCERTAIN

RETURN

RISKNEUTRALS

MEDIUM RISKLIFE POLICIES, FIXED

DEPOSITS ,MUTUAL FUNDSWILL PAY EQUAL TOEXPECTED RETURN

RISKTAKERS HIGH RISK

COMMON STOCKS, BONDS,CONVERTIBLE SECURITIES

WILL PAY MORETHAN EXPECTED

RETURN.


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1.1.3 PSYCHOLOGICAL ASPECTS OF INVESTING:

It is relatively easy to gain a theoretical understanding of market

movements up and down. Beating the market on paper is not that difficult,

but actually putting that knowledge to work in the market place on a day-to-

day basis is a more difficult task.

Common sense dictates that periodic monitoring of portfolio

performance is a necessary part of the investment process, but if we get too

close to the market, the tendency is to respond to the events and prices

instead of carefully laid criteria. The asset allocation approach as described

here makes a valuable contribution to this on going psychological battles that

investors have to face. First, the very adoption of the principles of allocation

implies that establishment of reasonable investment goals and the

employment of a plan. If the investor can make a plan and stick to it, he is far

less likely be side tracked by the latest news and investment fashion.

INVESTMENT AVENUES

1.2.1 FIXED DEPOSIT

The term "fixed" in fixed deposits denotes the period of maturity

or tenor. Fixed Deposits, therefore, presupposes a certain length of time for

which the depositor decides to keep the money with the bank and the rate of

interest payable to the depositor is decided by this tenor. The rate of interest

differs from bank to bank and is generally higher for private sector and

foreign banks. This, however, does not mean that the depositor loses all his

rights over the money for the duration of the tenor decided. The deposits can

be withdrawn before the period is over. However, the amount of interest

payable to the depositor, in such cases goes down (usually 1% to 2% less

than the original rate).


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BENEFITS OF FIXED DEPOSIT:

Fixed deposits remain the most popular instrument for financial

savings in India. They are the middle path investments with adequate returns

and sufficient liquidity. There are basically three avenues for parking savings

in the form of fixed deposits. The most common are bank deposits for

nationalized banks, the yield is generally low with a maximum interest of 8 to

8.5% per annum for a period of three years or more.

As opposed to that, NBFCs and company deposits are more

attractive. The idea is to select the right company to minimize the risk.

Company deposits as a saving instrument have declined in popularity over

the last three years.

1.2.2 POST OFFICE SAVING SCHEMES:

Post office is a very safe and secure investment avenue. The

money is used in the development of the society as a whole, while it provides

steady returns. The biggest advantage of investing in post office schemes is

the tax benefit that they provide. Thus a lot of savings go through this

channel to dual advantage- tax benefits and steady returns.

There are many schemes available in post office savings

schemes. The schemes are

1. National saving schemes.

2. Kisan vikas patra.

3. Monthly income schemes.

4. Recurring deposit.

5. Post office savings deposit.


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1.2.3 LIFE INSURANCE:

A contract of insurance can be defined as a co-operative device to

spread the loss caused by a particular risk over a number of persons who are

exposed to it and who agree to ensure themselves against that risk, Risk is

uncertainty of a financial loss. Every risk involves of the loss of one kind or

other. The object of the insurance is to spread the loss over a large number

of the insurance is to spread the losses over a large number of persons who

are agreed to co-operative each other at the time of loss. Though the risk

cannot be averted yet the loss occurring due to a certain risk can beDistributed among the agreed persons. Such persons agree to share the

loss because the chances of loss i.e., The time and amount to a persons are

not known.

Benefits of Insurance:

1. Risk is covered.

2. Capital Appreciation of funds.

3. Guaranteed benefits, etc

1.2.4 MUTUAL FUNDS

A Mutual Fund is a trust that pools the savings of a number of

investors who share a common financial goal. The money thus collected is

then invested in capital market instruments such as shares, debentures and

other securities

The income earned through these investments and the capital appreciations

realized are shared by its unit holders in proportion to the number of units owned by

them.

1.2.5 SHARES/DEBENTURES (NEW ISSUE MARKET):


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New issue market deals with new Securities, i.e., securities which

where not previously available and are offered to the investing public for the

first time. The market, therefore, derives its name from the fact that it makes

available a new block of securities for the public subscription. The stock

market on the other hand, is a market for old securities i.e., those, which

have already been issued and have been granted stock exchange listing.

Secondary Market

Stock Exchange is an organized market place where securities are

traded. These securities are issued by the Government, semi-Government

Bodies, Public sector undertakings and companies for borrowing funds and

raising resources. Securities are defined as any monetary claims (promissory

notes or I.E.) and include stock, shares, debentures, bonds etc. if these

securities are marketable as in the case of Government stock; they are

transferable by endorsement and are like movable property. They are

tradable on the stock Exchange.

Benefits of Investment in Shares

1. Investors may be entitled to bonus issue that may be made by the

company out of the free reserves accumulated through retained

earnings over years.

2. Rights: The equity shareholders may be entitled to any further issue of

Capital, either as debentures, fully or partly convertible debentures orequity shares, as may be made by the company, depending on its

requirements.

3. The equity shareholders being the owners of the company have the

right to get the interim dividend within a period of 42 days from the

date of declaration of dividends.

4. Any investment in shares is wealth of the investor, which is free from

wealth tax.


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5. In addition to all the above benefits, the investor in equities enjoys

some unique advantages of safety, liquidity and marketability. The

investor can readily find a market for selling the equity shares in the

Stock Market and encasing the investments at short notice.

1.2.6 GOLD

There are a number of ways of buying gold for investment purposes.

Jewellery is not dealt with in this section, although in many countries it is

purchased with the dual purposes of adornment and saving.

The distinction between the purchase of physical gold and gaining an

exposure to movements in the gold price is not always clear, especially since

physical gold can be purchased in some forms without the owner needing to

take delivery.

1.2.7 REAL ESTATE

Land and house property is called real estate. This investment is taken

by a large number of people for hedging against inflation rate. The investment

in the real estate is also very risky. Although the average rate of return is high

a cautious investor should not think of property because it has very low

liquidity and subject to wide fluctuations in valuation .

1.3. COMPANY PROFILE:

Way2Wealth is a premier Investment Consultancy Firm that has

been launched with the aim of making investing simpler, more

understandable and profitable for the investors.


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Way2Wealth brings a wide range of product offerings from Fixed

Income Securities, Life Insurance and Mutual Funds to Equity and

Derivatives (on the National Stock Exchange) for the convenience and

benefit of it customers. Way2Wealth has over 40 easily accessible

Investment Outlets spread across 20 major towns and cities in the country.

Sivan Securities started in 1984, has a long and illustrious track

record of being amongst the premier Financial Intermediaries in the country

as well as being an incubator for IT start-up firms. The Venture Capital

division came to be known as Global Technology Ventures and the Financial

Intermediary Division was spun off as Way2Wealth in the year 2000.

Way2Wealth is promoted by Sivan Securities and Global

Technology Ventures Ltd. Prudential ICICI provides further strength to

Way2Wealth as strategic equity partner. Way2Wealth has a very credible

management team, who has well over 100 man-years of experience amongst

themselves. Way2Wealth has inherited these same values in addition to a

base of 75,000 individual customers, over 300 corporate/institutional clients.

Other companies in the group include Amalgamated Bean CoffeeTrading Company Ltd. (one of the largest Coffee Exporters in India) and Caf

Coffee Day, a chain of youth hangout coffee parlors.

Mission:


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To be the pre-eminent destination for personalized financial

solutions helping individuals create wealth.

Philosophy:

Our knowledge combined with our investors trust and

involvement will lead to the growth of wealth and make it an exciting

experience.

Way2wealth Research Desk:

The research cell focuses on providing data and analysis to help

customers make sound investment decisions. The Research cell is managed

by a highly qualified team that is handpicked and trained extensively in the

proprietary Way2Wealth Investment Philosophy centered on finding the best

investment solutions for the customers. Based in the commercial capital

enables the team to have a pulse of the trends allowing dissemination of the

most up-to-date and latest information. The Way2Wealth research cell

measures up to international standards of technology and on-site resources.


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CHAPTER 2

2.1 OBJECTIVES

2.1.1 PRIMARY OBJECTIVES

To study the investors perception and attitude towards different

investment products

To assess the awareness of investors with regard to small and

medium capitalization companies.

SECONDARY OBJECTIVES

To analyze the investing habits of the investor.

To analyze the factors influencing the investor in choosing the types

of investments.

To understand the profile of the investors.

To analyze investors risk and return preferences of the investment.


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2.2 SCOPE OF THE STUDY

India is now one of the fastest economically growing nations. With its

vast economy, Indians have a lot of options to invest their savings.

This study undertaken for Way2wealth Securities Pvt Ltd aims to study

the investors attitude towards various investment alternatives and to study

the customers perception on investing in small and medium capitalization

companies. The study would also analyze the awareness level of investors in

small and medium capitalization companies

The study has been done by preparing a questionnaire which contains

prospective questions put forth to the investors .The responses help in

analyzing the profile and investing habits of the investor and factorsinfluencing the investor in investing in small and medium capitalization

companies.

All this would help in giving suggestions to Way2wealth Securities (P)

Ltd, in strengthening their marketing efforts and in determining the market

potential for investments in small and medium capitalization companies.


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2.3 LIMITATIONS OF THE STUDY

The area of the study is limited to Thyagaraya Nagar, a part

of Chennai only. Hence the results may not be true for other

geographical locations.

Validity and Reliability of the data depends on the

truthfulness of the responses from the public.

Time at the disposal of the researcher is limited.

The size of the sample compared to the population is very

small and hence it may not represent the whole population.

A structured questionnaire was the basis for collecting the

data, so it has the usual deficiencies attached to this

technique of data collection.


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CHAPTER 3

RESEARCH METHODOLOGY

Business research is a systematic inquiry that provides information

to guide business decisions and aimed to solve managerial problems.

Business research is of recent origin and is largely supported by business

organizations that hope to achieve competitive advantages.

Research methodology is a way to systematically solve the

research problems. It may be understood as a science of studying how

research is done scientifically. It includes the overall research design, the

sampling procedure, data collection method and analysis procedure.

3.1 RESEARCH DESIGN

Research design stands for advance planning of the methods to

be adopted for collecting the relevant data and the techniques to be used in

analysis, keeping in view the objectives of the research and availability of

time.

Descriptive research includes surveys and fact-finding enquiries

of different kinds. The major purpose of this research is description of state of

affairs as it exits at present.

In this survey the design used is descriptive in nature. The

information is collected from the individuals and analyzed with the help of


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different statistical tools, for describing the relationship between various types

of variables, pertaining to different investment options. Moreover Cross table

Analysis has been done for processing the data and information is derived to

meet the objectives of the study.

3.2 DATA

3.2.1 Nature of Data

Under the study Primary data was collected by using

Questionnaire.

3.2.2 Source of Data

The Primary data was collected from the individuals residing in

Chennai City, with the help of the questionnaire, which was prepared after

getting inputs from the experts and executives in Way 2 wealth .Secondary

data are sourced from Magazines, Books, Pamphlets, Periodical Surveys,

and Websites etc.

3.3 METHOD OF DATA COLLECTION

Structured Questionnaire method is used as an instrument for

collecting information from the individuals. A Pilot study was conducted

based on which a few changes were made in the Questionnaire.

3.4 SAMPLING

Since the populations of consumers of Investments are large in

number, researcher was unable to collect information from all individuals due

to limitation of time. So part of the population is taken for analyzing and

generating the findings, which may be applicable for total market.


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3.4.1 Sampling Unit

The number of items selected from the population constitutes the

sample size. The respondents of the study are present and future investors.

3.4.2 Sample Size

The sample size is calculated at 95% confidence level with

+5% error level

N = (z2* p*q )/e2 (4.1)

Where N =Sample size, p= population proportion, q=1-p, e= error

rate, z= confidence level at 95%(2)

The sample size for the study is 410.

3.4.3 Sampling Method

Sampling design is to clearly define set of objects, technicallycalled the universe to be studied. This research has finite set of universe and

the sampling design used in the study is probability sampling.

Cluster Simple Random sampling method is used for the collection

of data.

3.5 TOOLS USED

The data has been mainly analyzed by using the following

methods and tests. Cross Tabulation and Percentage method supplemented

by appropriate charts.

1. Percentage Analysis

2. Ranking Method

3. Chi Square Test


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CHAPTER 4

ANALYSIS AND INTERPRETATION

Analysis is the process of placing the data in the ordered form,

combining them with the existing information and extracting the meaning

from them. In other words, analysis is an answer to the question what

message is conveyed by each group of data . Data, which are otherwise raw

facts and are unable to give a meaningful information. The raw data become

information only when they are analyzed and when put in a meaningful form.

Interpretation is the process of relating various bits of information to

other existing information. Interpretation attempts to answer what

relationship exists between the findings to the research objectives and

hypothesis framed for the study in the beginning.

STATISTICAL TOOLS

4.1 PERCENTAGE ANALYSIS

Percentage refers to a special kind of ratio in making comparison

between two or more data and to describe relationships. Percentage can also

be used to compare the relation terms the distribution of two or more sources

of data.

Percentage of Respondents = Number of Respondents *100 (5.1)

Total Respondents

Column chart is used in showing the comparison diagrammatically.

Column charts shows the number of respondents in Y-axis and their

feedback in X-axis.


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TABLE 4.1

Age Group of the Respondents

S.No.Age Group No. of Respondents Percentage

1 Below 25 Years 70 17.1

2 26-32 years 160 39.0

3 33-39 years 92 22.4

4 40-46 years 26 6.3

5 Above 46 years 62 15.1

Total 410 100.0

INFERENCE:

From the above table, it can be inferred that,

17.1% of the respondents are in the age group less than 25 years.

39.0 % of the respondents are in the age group between 26 to 32

years.

22.4% of the respondents are between 33 to 39 years.

6.3% of the respondents are between 40 to 46 years.

15.1% of the respondents are above 46 years.


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FIGURE - 4.1

Age Group of the Respondents

0

20

40

60

80

100

120

140

160

180

Below 25 Years 26-32 years 33-39 years 40-46 years Above 46 years

AGE IN YEARS

No.ofRespondents


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TABLE 4.2

Education Profile of the Respondents

INFERENCE:

From the above table, it can be viewed that among the 410 respondents,

9.8% of the respondents have completed their HSC.

59.5% of the respondents have completed their Under

Graduation.

27.6% of the respondents have completed their Post

Graduation.

3.2% of the respondents are in the category others which

include CA, ICWA, Doctors, etc.

S.No. Education No. of Respondents Percentage

1 HSC 40 9.8

2 UG 244 59.5

3 PG 113 27.6

4 Others 13 3.2

Total 410 100.0


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FIGURE 4.2

Education Profile of the Respondents

0

5 0

1 0 0

1 5 0

2 0 0

2 5 0

3 0 0

H S C U G P G O t h e r

E D U C A

NOO

FR

ESPONDENTS

No.ofRespondents


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TABLE 4.3

Occupation of the Respondents

INFERENCE:

From the above table, it is inferred that,

About 73.4% of the respondents belong to salaried class,

S.NO OCCUPATIONNO. OF

RESPONDENTSPERCENTAGE

1 Salaried 301 73.4

2 Self-Employed 30 7.3

3 Business 44 10.7

4 Retired 29 7.1

5 Others 6 1.5

Total 410 100.0


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7.3% of the respondents are self-employed.

10.7% of the respondents are doing business.

7.1% of the respondents are retired peoples and

1.5% of the respondents belong to other categories.

FIGURE - 4.3

Occupation of the Respondents


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0

5 0

1 0 0

1 5 0

2 0 0

2 5 0

3 0 0

3 5 0

S a l a r i e d S e l f - E m p l o y e d B u s i n e s s R e t i r e d O t h e r s

O C C U P

NOO

FRESPONDENTS

TABLE 4.4

Income Level of the Respondents

No.ofRespo

ndents


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INFERENCE:

From the above table, it is viewed that

23.4% of the respondents belong to the

income level of below 1 lakh.

34.4% of the respondents are in the income

level between 1 lakh to 2lakhs.

21% of the respondents are between 2 lakhs to 3lakhs.

12.4% of the respondents are between 3lakhs to 4 lakhs.

8.8% of the respondents are above 4 lakhs.

S.No Income/Annum No. of Respondents Percentage

1 Below 1 lakh 96 23.4

2 1lakh - 2 lakhs 141 34.4

3 2 lakhs - 3 lakhs 86 21.0

4 3 lakhs - 4 lakhs 51 12.4

5 Above 4 lakhs 36 8.8

Total 410 100.0


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FIGURE 4.4

Income Level of the Respondents

0

2 0

4 0

6 0

8 0

1 0 0

1 2 0

1 4 0

1 6 0

B e l o w 1 l a k h1 l a k h - 2 l a k h s2 l a k h s - 3

l a k h s

3 l a k h s - 4

l a k h s

A b o v e 4 l a k h s

NO.

0F

RESPONDENTS

Income Per Annum

No.ofRespondents


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TABLE 4.5

Tax Percentage of the Respondents

S.No. Tax Percentage No. of Respondents Percentage

1 0 PERCENT 108 26.3

2 10 PERCENT 134 32.7

3 20 PERCENT 94 22.9

4 30 PERCENT 74 18.0

Total 410 100.0

INFERENCE:


26.3% of the respondents are in the tax level of 0%.

32.7% of the respondents are in the tax slab of 10%.

22.9% of the respondents are in the tax level of 20%.

18% of the respondents are in the tax level of 30%.


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TABLE 4.6

Frequency of Investment of the Respondents

S.No Frequency of Investment No. of Respondents Percentage

1 Every Month 154 37.6

2 Once in Three Months 109 26.6

3 Once in Six Months 29 7.1

4 Only in the Last Quarter of the Year 118 28.8

Total 410 100.0

INFERENCE:

From the above table, It is inferred that,

37.6% of the respondents do their investments every month.

26.6% of the respondents invest every 3 months.

7.1% of the respondents invest once in six months

28.8% of the respondents invest only in the last quarter of the

financial year.


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TABLE 4.7

Investment Portfolio of the Respondents

S.NOINVESTMENT

PORTFOLIO

INVESTE

D

NOT

INVESTED

PERCENTAG

E OF

INVESTED

PEOPLE

1 Bank Deposits 302 108 73.7

2 Company Deposits 8 402 2.03 Small Savings 310 100 75.6

4 Shares 138 272 33.7

5 Mutual Funds 179 231 43.7

6Life Insurance

(For Self)331 79 80.7

7Life Insurance

(For others)87 323 21.2

8 Real Estate 10 400 2.4

9 Jewellery 14 396 96.6

INFERENCE:

From the above table, it is inferred that among 410 respondents,

73.7% of the respondents have invested in Bank Deposits.

Only 2.0% of the respondents have invested in Company deposits.

75.6% of the respondents have invested in Small Savings. 33.7% of the respondents have invested in Shares.

43.7% of the respondents have invested in Mutual funds.

21.2% of the respondents have invested in Life Insurance i.e., forthemselves.

21.2% of the respondents have invested in Life Insurance i.e., for theirfamily members.

Only 2.4% of the respondents have invested in Real Estate.

Only 3.4% 0f the respondents have invested in Gold.

TABLE 4.8


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Risk Profile of the Respondents

S.No. Risk Profile No. of Respondents Percentage

1 Low Risk Takers 140 34.1

2 Medium Risk Takers 175 42.7

3 High Risk Takers 95 23.2

Total 410 100.0

INFERENCE:

From the above table, it is inferred that

34.1% of the respondents are low risk takersi.e., they need low returns withminimum risk.

42.7% of the respondents are medium risk takersi.e., they need mediumreturns withmedium risk.

23.7% of the respondents are high risk takersi.e., they need high returns withhighrisk.


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FIGURE 4.5

Risk Profile of the Respondents

0

2 0

4 0

6 0

8 0

1 0 0

1 2 0

1 4 0

1 6 0

1 8 0

2 0 0

L o w R i s k t a k e r s M e d i u m R i s k t a k e r s H i g h R i s k t a k e r s

R I S K P R O

No.ofRespondents


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TABLE 4.9

Awareness about Small and Medium CapitalizationCompanies

S.No

Awareness

about Mid &

Small

Capitalization

Companies

No. of

RespondentsPercentage

1 Not Aware 247 60.2

2 Aware 163 39.8

Total 410 100.0

INFERENCE:


60.2% of the respondents didnt know about the small and mediumcapitalization companies.

Only 39.8% of the respondents know about this small and medium

capitalization companies.


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TABLE 4.10

Investor Attitude towards Small and Medium Capitalization

Companies

INTEREST IN

INVESTMENT IN SMALL

AND MEDIUM

CAPITALIZATION

COMPANIES

INTERESTED

(88.7%)

NOT

INTERESTED

(11.3%)

Interest in Mutual Funds

specializing in Small and

Medium Capitalization

companies

Interested

(86.6%)

Not Interested

(13.4%)

PREFERENCE OFSECTOR

PUBLICSECTORCOMPANIES(35.6%)

PRIVATESECTORCOMPANIES(64.4%)

INFERENCE:

From the above table, it is inferred that among the 151 respondents

who knows about small and medium capitalization companies,

About 88.7% of the respondents are interested in small and medium


Regarding the investors interest in Mutual Funds specializing in small

and medium capitalization companies, about 86.6% of the

respondents are interested to invest and only 13.4 % are not

interested.

In preference of sectors, about 35.6% of the respondents are

interested to invest in Public Sector Companies and 64.4% of the

respondents are interested to invest in Private sector companies


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TABLE 4.11

Interest in Learning about Small and Medium CapitalizationCompanies

S.No.

Need knowledge

about small and mid

cap capitalization

companies

No. of Respondents Percentage

1 Not at all 156 38.0

2 To some extent 191 46.6

3 Very much 63 15.4

Total 410 100.0

INFERENCE:

From the above table, it is inferred that, among the 410

respondents,

38.0% did not have an interest to learn about small and


46.6% have some interest to learn about small and


15.4% have very much interest to learn about small and



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TABLE 4.12

Financial Advisors of the Respondents

S.No. Financial Advisors No. of Respondents Percentage

1 Self 157 38.3

2 Friends 121 29.5

3 Relatives 77 18.8

4 Financial consultants 55 13.4

Total 410 100.0

INFERENCE:


38.3% of the respondents are self financial

advisors.

For 29.5% of the respondents, their friends arethe financial advisors.

For 18.8% of the respondents, their relativesare the financial advisors.

For 13.4% of the respondents, financialconsultants are financial advisors.


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4.2 RANKING ANALYSIS

TABLE: 4.13

Ranking Of Factors Influencing Investments

S.No factor WEIGHTAGE

SCORE

WEIGHTED

AVERAGERANK

1 SAFETY 1915 4.67 1

2 LIQUIDITY 1174 2.86 4

3REGULAR

INCOME1224 2.98 3

4CAPITALAPPRECIATION

1307 3.18 2

5EASE OF

INVESTMENT530 1.29 5

INFERENCE:


The Respondents have ranked SAFETY as First among the factors

influencing Investments.

The Respondents have ranked CAPITAL APPRECIATION as

Second among the factors influencing Investments.

The Respondents have ranked REGULAR INCOME as Third among

the factors influencing Investments.

The Respondents have ranked LIQUIDITY as Fourth among the

factors influencing Investments.

The Respondents have ranked EASE OF INVESTMENT as Fifth

among the factors influencing Investments.


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TABLE 4.14

Ranking among Investments

S.NO INVESTMENTWEIGHTAGE

SCORE

WEIGHTED

AVERAGERANK

1BANK

DEPOSITS3326 8.11 2

2COMPANY

DEPOSITS1513 3.7 7

3 BONDS 1866 4.55 6

4SMALL

SAVINGS3321 8.1 3

5 SHARES 2624 6.4 5

6MUTUAL

FUNDS3015 7.35 4

7

LIFE

INSURANCE 3404 8.3 1

8GENERAL

INSURANCE1218 2.97 9

9 REAL ESTATE 976 2.38 10

10 JEWELLERY 1287 3.13 8


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INFERENCE:

From the above table,

The Respondents have ranked Life Insurance as First in respect to

the best investment avenue,

The Respondents have ranked Bank Deposits as Second in respect

to the best investment avenue,

The Respondents have ranked Small savings as Third in respect to


The Respondents have ranked Mutual Funds as Fourth in respect

to the best investment avenue,

The Respondents have ranked Shares as Fifth in respect to the best

investment avenue

The Respondents have ranked Bonds asSixth in respect to the best

investment avenue.

The Respondents have ranked Company Deposits as Seventh in

respect to the best investment avenue,

The Respondents have ranked Jewellery as Eighth in respect to the

best investment avenue,

The Respondents have ranked General Insurance as Ninth in

respect to the best investment avenue and ,

The Respondents have ranked Real Estate as Tenth in respect to the

best investment avenue.


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TABLE 4.15

Ranking among factors influencing investment in small andmedium capitalization companies.

s.no factor weightage

score

weighted

averagerank

1 Higher returns 478 3.3 3

2Strong

Fundamental424 2.9 4

3Capital

Appreciation492 3.41 2

4Growth

Prospects272 1.9 5

5 Safety 494 3.43 1

INFERENCE:

From the above table, it is viewed that

The Respondents have ranked SAFETY as First among the factors

influencing Investments.

The Respondents have ranked CAPITAL APPRECIATION as

Second among the factors influencing Investments.

The Respondents have ranked HIGHER RETURNS as Third among

the factors influencing Investments.

The Respondents have ranked STRONG FUNDAMENTAL as

Fourth among the factors influencing Investments.

The Respondents have ranked GROWTH PROSPECTS as Fifth

among the factors influencing Investments.


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TABLE 4.16

Ranking among Sectors for Investing.

S.NO SECTORWEIGHTAGE

SCORE

WEIGHTED

AVERAGERANK

1 IT SECTOR 1232 8.9 1

2TEXTILE

SECTOR784 5.68 4

3ENGINEERING

SECTOR

706 5.1 6

4

AUTO

ANCILLARIES

SECTOR

564 4.0 9

5 AUTO SECTOR 750 5.43 5

6 FMCG SECTOR 572 4.14 8

7CHEMICAL

SECTOR368 2.67 10

8PHARMA

SECTOR646 4.68 7

9 BANKINGSECTOR 1024 7.42 2

10 OIL SECTOR 944 6.84 3

INFERENCE:

From the above table,

The Respondents have ranked IT sectoras First in respect to the


The Respondents have ranked BANKING sector as Second in


The Respondents have ranked OIL sectoras Third in respect to the


The Respondents have ranked TEXTILE sector as Fourth in



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The Respondents have ranked AUTO sectoras Fifth in respect to the

best investment avenue

The Respondents have ranked ENGINEERING sector as Sixth in

respect to the best investment avenue.

The Respondents have ranked PHARMA sector as Seventh in


The Respondents have ranked FMCG sectoras Eighth in respect to


The Respondents have ranked AUTO Ancillaries sectoras Ninth in

respect to the best investment avenue and ,

The Respondents have ranked CHEMICAL sector as Tenth in

respect to the best investment avenue.


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4.3 CHI-SQUARE ANALYSIS

Chi-square is a non-parametric test of statistical significance for

bivariate tabular analysis. A non-parametric test, like chi square, is a rough

estimate of confidence.

Chi-square is used most frequently to test the statistical significance of

results reported in bivariate tables and interpreting bivariate tables is integral

to interpreting the results of a chi-square test.

CHI SQUARE TEST METHOD

The Chi square method is the application of testing the significant

difference between observed and expected values.

1. Null Hypothesis (H0):

The hypothesis, or assumption, about a population parameter we

wish to test, usually an assumption of the status quo.

2. Alternative Hypothesis (H1):

The conclusion we accept when the data fail to support the null

hypothesis.

3. Statistical Test:

(Oi Ei )2

Chi Square (2) =Ei

Where,

Oi = Observed frequency, Ei = Expected Frequency


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4. Expected Frequency:

RT * CT

Ei =

N

Where,

RT = Row Total, CT = Column Total

N = Number of Respondents

5. Critical Value:

The value of the standard statistic beyond which we reject the

null hypothesis; the boundary the between the acceptance region and

rejection region.

6. Degrees Of Freedom (df) :

df = (No of Rows 1 ) * ( No of columns 1)

7. Level of Significance():

A value indicating the percentage of sample values that is

outside certain limits, assuming the null hypothesis is correct, that is, the

probability of rejecting the null hypothesis when it is true.

4.3.1 TEST OF INDEPENDENCE:

A statistical testof proportion of frequencies to determine

whether membership in categories of one variable is different as a

function of membership in the categories of a second variable.


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1. AGE AND RISK PROFILE

Null Hypothesis ( H0 ) : There is no significant relationship

between Age and Risk profile

Alternate Hypothesis ( H1 ) : There is significant relationship between

Age and risk profile.

TABLE 4.17

Relationship between Age Group and Risk Profile.

Chi- Square (2) Value = 6.017

Level Of Significance = 0.05

Degrees Of Freedom = 6

Table Value = 12.59

Interpretation:

Calculated 2 Value is less than the Table Value. So Null Hypothesis

(H0) is accepted. Therefore, there is no significant relationship between Age

group and Risk Profile.

AGE

RISK PROFILETOTALOBSERVED FREQUENCY

LOW RISK MEDIUM RISK HIGH RISK

Below 25 Years 20 36 14 70

26-32 years 63 60 37 160

33-39 years 26 43 23 92

Above 39 years 31 36 21 88

Total 140 175 95 410

EXPECTED FREQUENCYBelow 25 Years 24 30 16 70

26-32 years 55 68 37 160

33-39 years 31 39 21 92

Above 39 years 30 38 20 88

Total 140 175 95 410


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2. INCOME AND FREQUENCY OF INVESTMENT

Null Hypothesis ( H0 ) : There is no significant association

between Income and Frequency Of Investment

Alternate Hypothesis ( H1 ) : There is significant association between

Income and Frequency Of Investment

TABLE 4.18

Relationship between Income and Frequency of Investment

INCOME

FREQUENCY OF INVESTMENT

TOTAL

OBSERVED FREQUENCY

Every Month Once in Three MonthsOnly in the Last Quarter

of the Year

Below 1 lakh 18 23 55 96

1lakh - 2 lakhs 47 40 54 141

2 lakhs - 3 lakhs 48 16 22 86

3 lakhs - 4 lakhs 25 18 8 51

Above 4 lakhs 16 12 8 36

Total 154 109 147 410

EXPECTED FREQUENCY

Below1 lakh 36 26 34 96

1lakh - 2 lakhs 53 37 51 141

2 lakhs - 3 lakhs 32 23 31 86

3 lakhs - 4 lakhs 19 14 18 51


Total 154 109 147 410




Table Value = 15.51

Interpretation:

Calculated 2 Value is greater than the Table Value. So Null

Hypothesis ( H0 ) is Rejected. Therefore, there is significant relationship

between Income and Frequency of Investment.


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3. INCOME AND RISK PROFILE

Null Hypothesis ( H0 ) : There is no relationship between

Income and Risk Profile


Income and Risk Profile

TABLE 4.19

Relationship between Income and Risk profile

INCOME

RISK PROFILE

TOTALOBSERVED FREQUENCYLOW RISK MEDIUM RISK HIGH RISK

Below1 lakh 49 33 14 96

1lakh - 2 lakhs 38 66 37 141

2 lakhs - 3 lakhs 27 38 21 86

3 lakhs - 4 lakhs 18 20 13 51


Total 140 176 94 410

EXPECTED FREQUENCY

Below1 lakh 33 41 22 96

1lakh - 2 lakhs 48 61 32 141

2 lakhs - 3 lakhs 29 37 20 86

3 lakhs - 4 lakhs 17 22 12 51Above 4 lakhs 12 15 8 36

Total 140 176 94 410




Table Value @ 5% = 15.50

Table Value @ 1% = 18.09Interpretation:

Calculated 2 Value is greater than the Table Value @ 5% level of

significance. So Null Hypothesis ( H0 ) is Rejected. Therefore, there is close

relationship between Income and Risk Profile. At 1% level of significance,

null hypothesis is accepted. There is no relationship between income and risk

profile.


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4. EDUCATION AND RISK PROFILE

Null Hypothesis ( H0 ) : There is no association between

Education and Risk Profile

Alternate Hypothesis ( H1 ) : There is significant association between

Education and Risk Profile

TABLE - 4.20

Relationship between Education and Risk profile

EDUCATION

RISK PROFILE

Total

OBSERVED FREQUENCY


HSC 27 6 7 40

UG 85 96 63 244

PG 28 74 24 126

Total 140 176 94 410

EXPECTED FREQUENCY

HSC 14 17 9 40

UG 83 105 56 244

PG 43 54 29 126

Total 140 176 94 410




Table Value = 9.488

Interpretation:



between Education and Risk Profile


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5. OCCUPATION AND FREQUENCY OF INVESTMENT


between Occupation and Frequency Of Investment


Occupation and Frequency Of Investment

TABLE 4.21

Relationship between Occupation and Frequency of Investment

OCCUPATION

FREQUENCY OF INVESTMENT

Total

OBSERVED FREQUENCY

EveryMonth

Once in SixMonths

Only in the LastQuarter of the year

Salaried 125 94 82 301

Business 6 22 16 44

Self-Employed 8 6 12 36

Retired 15 6 8 29

Total 154 128 118 410

EXPECTED FREQUENCY

Salaried 113 94 87 301

Business 17 14 13 44Self-Employed 14 11 10 36

Retired 11 9 8 29

Total 154 128 118 410




Table Value = 12.59

Interpretation:



between Occupation and Frequency of Investment.


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6. OCCUPATION AND RISK PROFILE


between Occupation and Risk Profile


Occupation and Risk Profile

TABLE 4.22

Relationship between Occupation and Risk profile

OCCUPATION

RISK PROFILE

TotalOBSERVED FREQUENCY


Salaried 108 128 65 301

Business 12 20 12 44


Retired 12 10 7 29

Total 140 176 94 410

EXPECTED FREQUENCY

Salaried 103 129 69 301

Business 15 19 10 44


Retired 10 12 7 29

Total 140 176 94 410




Table Value = 12.59

Interpretation:

Calculated 2 Value is less than the Table Value. So Null Hypothesis

( H0 ) is Accepted. Therefore, there is no association between Occupation

and Risk Profile


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7. INVESTMENT IN SHARES AND MUTUAL FUNDS


between those who invested in shares and mutual funds.


those who invested in shares and mutual funds.

TABLE 4.23

Relationship betweenInvestment in Shares and Mutual Funds

Investment in Shares

Investment in Mutual Funds

OBSERVED FREQUENCY

Not Invested Invested Total

Not Invested 206 66 272

Invested 25 113 138

Total 231 179 410

EXPECTED FREQUENCY


Invested 78 60 138

Total 231 179 410




Table Value = 3.84

Interpretation:



between those who invested in shares and mutual funds.


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8. EDUCATION AND AWARENESS ABOUT SMALL ANDMEDIUM CAPITALIZATION COMPANIES

Null Hypothesis ( H0 ) : There is no association between

Education and Awareness about Small and medium Capitalization

Companies.


Education and Awareness about Small and medium Capitalization

Companies.

TABLE 4.24

Relationship betweenEducation and Awareness about Small and

Medium Capitalization Companies

EDUCATION

AWARENESS LEVEL

TOTAL

OBSERVED FREQUENCY

NOT AWARE AWARE

HSC 26 14 40

UG 166 78 244

PG 55 71 126

Total 247 163 410

EXPECTED FREQUENCY

HSC 24 16 40UG 147 97 244

PG 76 50 126

Total 247 163 410




Table Value = 5.99

Interpretation:



between Education and Awareness about Small and medium Capitalization

Companies.


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9. INVESTMENT IN SHARES AND AWARENESS ABOUTSMALL AND MEDIUM CAPITALIZATION COMPANIES


between those who invested in shares and awareness about small and



those who invested in shares and awareness about small and medium


TABLE 4.25

Relationship betweenInvestment in Shares andAwareness aboutSmall and Medium Capitalization Companies

INVESTMENT IN SHARES

AWARENESS LEVEL

Total

OBSERVED FREQUENCY

Not aware Aware


Invested 24 114 138

Total 247 163 410

EXPECTED FREQUENCYNot Invested 164 108 272

Invested 83 55 138

Total 247 163 410




Table Value = 3.04

Interpretation:



between those who have invested in shares and awareness about small and



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10. INTEREST IN SMALL AND MEDIUM CAPITALIZATION COMPANIESAND MUTUAL FUNDS SPECIALIZING IN SMALL AND MEDIUMCAPITALIZATION COMPANIES.

Null Hypothesis ( H0 ) : There is no close relationship

between those who are interested in investing in small and medium

capitalization companies and those who interested in investing in mutual

funds specializing in small and medium capitalization companies.


those who are interested in investing in small and medium capitalization

companies and those who interested in investing in mutual funds specializingin small and medium capitalization companies.

TABLE 4.26

Relationship between.Interest in small and medium capitalization

companies and mutual funds specializing in small and medium

capitalization companies

Interest in small and mid cap

INTEREST IN MUTUAL FUNDS

OBSERVED FREQUENCY

TotalNot Interested InterestedNot Interested 8 7 15

Interested 12 120 132

Total 20 127 147

EXPECTED FREQUENCY

Not Interested 2 13 15

Interested 18 114 132

Total 20 127 147



Degrees Of Freedom = 1Table Value = 3.84

Interpretation:



between those who are interested in investing in small and medium

capitalization companies and those who interested in investing in mutual

funds specializing in small and medium capitalization companies.


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11. FACTORS OF INVESTMENT

In Ranking Analysis, Safety got the first rank and Ease of

investment got the least preference. Besides these two, remaining factors

like Capital Appreciation. Liquidity and Regular Income.

Null Hypothesis ( H0 ) = Capital Appreciation, Liquidity and Regular

Income are equally preferred

Alternate Hypothesis ( H1 ) = There is particular preference between

the factors of Capital Appreciation, Liquidity and Regular Income

TABLE 4.27

Factors of Investment

FACTOROBSERVED

FREQUENCY(fo)

EXPECTED

FREQUENCY(f1)

LIQUIDITY 1174 1235

CAPITAL

APPRECIATION1307 1235

REGULAR INCOME 1224 1235

Calculated 2 value = 7.308

Degree of freedom = 2

Table value = 5.99

Level of Significance = 0.05

Interpretation:

From the above analysis we find that calculated 2 value greater

than the table value, i.e., Null hypothesis rejected. So, there is particular

preference between the factors of Capital Appreciation, Liquidity and Regular

Income .


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12. PREFERENCE OF INVESTMENTS

Null Hypothesis ( H0 ) = The investors have no preference among various

investment alternatives.

Alternate Hypothesis ( H1 ) = The investors have particular preference

among investment alternatives.

TABLE - 4.28

PREFERENCE OF INVESTMENTS

investment observed frequency expected frequency

Bank Deposits 3326 2255

Company Deposits 1513 2255

Bonds 1866 2255

Small Saving 3321 2255

Shares 2624 2255

Mutual Funds 3015 2255

Life Insurance 3404 2255

General Insurance 1218 2255

Real Estate 976 2255

Jewellery 1287 2255

Calculated 2 value = 3843


Table value = 16


Interpretation:

From the above analysis we find that calculated 2 value is greater than the

table value, i.e., Null hypothesis rejected. So, the investors have particular

preference among investment alternatives.


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13. INVESTMENT AVENUE WHEN SAFETY IS TOP PRIORITY

Null Hypothesis ( H0 ) = All Investments are equally preferred by

Investors.

Alternate Hypothesis ( H1 ) = There is particular preference among

investments by investors

TABLE 4.29

Investment Avenue When Safety Is Top Priority

investment observed frequency expected frequency

Bank Deposits 298 247

Small Savings 307 247

Shares 132 247

Mutual Funds 174 247

Life Insurance 323 247

Calculated 2 value = 123.8



Table value = 9.48

Interpretation:

From the above analysis we find that calculated 2 values greater than

the table value, i.e., Null hypothesis rejected. So, there is particular

preference among investments by investors.

CHAPTER 5


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FINDINGS

Respondent Profile:

About 90% of the Respondents are Graduates, PG, etc.

About 73% of the Respondents are Salaried People.

About 57.80 % of the Respondents have Annual Income of below

Rs.2 lakhs.

About 59% of the respondents come under the tax slab of 10%.

About 36% of the Respondents invest Monthly, 26% invest

Quarterly and 28% invest in the last quarter of the financial year.

38.3% of the Respondents are their own financial advisors and

48% of the respondents have friends and relatives as their financial

advisors

Investment preferences of Respondents:

The Respondents choose Safety as First and Capital Appreciation

as their second among factors influencing investment.

Most of the respondents ranked Life Insurance as first and small

savings and Bank Deposits as next choice.

Most of the respondents are medium risk takers i.e., they need

medium returns with average risk

Investment Portfolio of Investors:

About 80% of the respondents have invested in Insurance


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About 75.6% of the respondents have invested in Small savings

73.7% of the respondents have invested in Bank Deposits.

Only 2% of the respondents have invested in company deposits

33.7% of the respondents have invested in shares

43.7% of the respondents have invested in mutual funds

Only 21% of the respondents have invested in Life Insurance for

other family members

Awareness about small and medium capitalizationcompanies:

.Only 39% of the respondents are aware about small and medium

capitalization companies

In that 39%, 88% of the respondents are interested to invest in

small and medium capitalization companies

64% of the respondents preferred private sector companies to

invest

In this also most of the respondents preferred safety as their first

choice

IT sector and Banking sector are the top priorities for the

respondents

About 86% of the respondents who know about small and medium

capitalization companies are interested to invest in mutual funds

specializing in small and medium capitalization companies

Inter-relationship between Investor profile and Investment

Preferences:


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From the chi-square analysis,

It is found that there is no relationship between

Income and Frequency of Investment

Occupation and risk profile.

It is found that there is significant relationship between

Age and Risk Profile.

Income and Risk Profile.

Occupation and Frequency of Investment.

Age and Safety in Investment.

Those who have invested in shares and mutual funds.

Education and awareness about small and medium capitalization

companies.

Those who are interested to invest in small and medium

capitalization companies and those who interested to invest in

Mutual funds specializing in small and medium capitalization

companies.

There is specific preference of factors among capital appreciation,

liquidity and regular income for investments by investors.

There is particular preference among investment alternatives by

investors.

Based on safety, the investors have specific preference for

investments.

CHAPTER 6


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SUGGESTIONS

As majority of the respondents are salaried, this is the core market

segment, which should be concentrated on.

.Majority of the respondents showed interest in knowing about small

and medium capitalization companies, seminars for investors may be

organized to create awareness and interest.

Majority of the respondents are salaried people. So, the company

should promote schemes like Systematic Investment Plan.

Since most of the people showed interest in bank deposits< small

savings the company may promote these products.

Nearly three-fourth of the respondents are tax payers, tax savings

schemes can be preferred by the company

Since company deposits are not popular, the company should not

enter the distribution of company deposits

Majority of the respondents may not seek the advices of Financial

consultants, this provides the great opportunity for the company to

increase their market penetration through promotional activities.

CHAPTER 7


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CONCLUSION

The study was conducted in T.Nagar for Way2Wealth securities,

an investment consultancy company.

The study revealed that the investors have greatest preference for

safety. Most of the respondents have invested in life insurance, bank

deposits and small savings.

The level of awareness about small and medium capitalization

companies can be enhanced through the efforts of the company. Since many

investors expressed their interesting learning more about such companies.

The statistical analysis of data has given insight into investor

demographics and their investment preferences.

Based on the investor profile and investor preferences ,

suggestions have been made for the company to increase its market

penetration.

Documents

A Study on Investment Pattern