A Study on Investors Behavior towards the Investment Alternatives with Special Reference to Coimbatore City


By

Prof. M. Kothai Nayaki
Asst. Professor
Department of Management Studies
Hindusthan College of Engineering & Technology
Coimbatore-32
 


ABSTRACT:

The study discusses about the behavior of investors towards the various investment alternatives with special reference to Coimbatore city. The sampling method used was the convenient sampling method with sample size as 100. The tool used for data collection is questionnaire. The tools used for the purpose of analysis are simple percentage analysis & ranking method.

It is concluded from the study that the investors are monitoring their investments on a weekly basis. The prime most important objective of the sample investors is return factor.  The investors are making their investments on a medium term basis. The sample investors are considering liquidity as the important factor before making their investments. The front runner for the investors to make their investment is friends.

The respondents had chosen negotiable securities as their first preference The second place is occupied by non negotiable securities followed by real assets. The fourth, fifth & sixth places are occupied by Mutual funds, tax sheltered schemes & life insurance respectively.

In case of ranking for the objectives the respondents had chosen hedging against inflation as their first preference. The second place is occupied by safety of principal followed by liquidity .The fourth, fifth & sixth places are occupied by return, retirement benefits and risk respectively.

Keywords: Investor behavior, investment alternatives, Coimbatore city, sampling method, questionnaire method

INTRODUCTION:

India is a developing country stuffed with various credits. It is interesting to note that the savings rate is relatively higher when compared with that of other countries. Personal Savings in India increased to 20037.20 INR Billion in 2012 from 18329.01 INR Billion in 2011. (Personal Savings in India is reported by the Central Statistical Organisation, India.).

Investment behavior refers to the attitudes, perception and willingness of the individuals and institutions in placing their savings in various types of financial assets, more commonly known as securities.

An investor is a person who sacrifices the present in order to reap the benefits for the future. The benefits may be in the form of capital appreciation, income in the form of dividends, bonus, retirement benefits & many other benefits. Generally an investor's objectives would be one among the following

1. To minimize the risk

2. To maximize the returns

3. To hedge against inflation

4. Liquidity

TYPES OF INVESTMENTS:


Equity shares                    Deposits
Preference shares
Debentures
Bonds
IVP & KVP
Government securities
Money market securities
Treasury Bills
Commercial Papers
Certificate of Deposits

OBJECTIVES OF THE STUDY:

1. To study the investors behavior towards the various investment alternatives with special reference to Coimbatore city

2. To study the investors objectives

3. To study the factors influencing the investors to invest in various investment alternatives

4. To identify the time horizon with which they make their investment

5. To identify the front runners for investment in various sources

SCOPE OF THE STUDY:

The study provides an insight to understand the behavior of investors towards the various investment alternatives in Coimbatore city.

LIMITATIONS OF THE STUDY:

1. The sample size taken for analysis is only 100

2. The sampling is restricted to Coimbatore city alone.

LITERATURE REVIEW:

A study of investor behavior on investment avenues in Mumbai Fenil was undertaken by Brahmabhatt, P.S Raghu Kumari, and Dr. Shamira Malekar. In this study they analyzed the investor behavior and their preferences. The objectives for their study were to understand about various investment avenues available in the market, to understand the pattern of investors while making the investments, & to find out the factors that investors consider before investing. Through their study it was revealed that people like to invest in stock market. The percentage of income they make as investment depend on their annual income.

A study on people's preference in investment behavior was made by N.Geetha & Dr M.Ramesh. The objectives were to analyse the factor that influence investment behavior of the people & to study the attitude of the respondents towards different investment choices. In this study they concluded that the respondents were medium aware of the available investment choices, but they were not aware of the stock market, equity & debentures. The study has been concluded that the income level of the respondents affects the portfolio of the respondents.

A study on Investment behavior of working women of Punjab was conducted by
Dr. Sarita bahl. The purpose of the analysis was to study the investor behavior & investor preference. The objectives of the study were to study the investment behavior among the working women in Punjab & to know the level of agreement of working women of Punjab on various aspects of investment planning. The study reveals that 33 % of the women have a well developed plan for investment. It also infer that 48 % of the working women think that one should start to invest whenever they find a new job or occupation. 18 % of the working women have invested in shares & stocks.

A study on saving pattern and investment preferences of individual household in India was conducted by Meenakshi Chaturvedi And Shruti Khare. The objectives of the study were to study the saving pattern of the individual household in India, to analyze the Investment preferences of individual household in India, to study relation of saving pattern and investment preferences to social, economic, educational and occupational background of the individual household & to give suggestions for evolving better investor awareness and educational programs. It is concluded from the study that Majority of the respondent (79.6%) stated that they had a high degree of awareness about bank deposits as investment avenues. It is found from the study that level and extent of awareness varies with the level of income

RESEARCH METHODOLOGY

The study is descriptive in nature. The methodology of the present study is outlined hereunder.

A. POPULATION

Population for selecting sampling units of the study includes the investors of the Coimbatore district.

B. SAMPLING TECHNIQUE

Coimbatore district is the geographical region selected for conducting the research work.  The sampling technique used by the researcher is "convenient sampling method". The sample size is 100.

C. SOURCE AND TOOL OF DATA COLLECTION

The source of data collection is primary in nature. For collecting data from the sample respondents,  the questionnaire was used.

ANALYSIS & INTERPRETATION:

The tools used for analyzing are as follows

1. Percentage analysis

2. Ranking method

1. PERCENTAGE ANALYSIS:

Percentage method refers to a specified kind which is used in making comparison between two or more series of data. Percentages are based on descriptive relationship. It compares the relative items. Since the percentage reduces everything to a common base and thereby allow meaning comparison.

Percentage =   Number of respondents
                     -----------------------  x 100
                     Total no of respondents

2. RANKING METHOD:

The ranking method was conducted to find out preference of investors regarding the various investment alternatives and
to find their prime objective for making investment.

FINDINGS:

1. The majority of the respondents belong to 41-50 age groups & the majority of the population are male.

2. The majority of the respondents belong to PG category & their income level lies between Rs 1,00,001 to Rs 2,00,000

3. The majority of the respondents are married

4. The majority of the respondents save
Rs 21,000 to Rs 30,000 per year

5. The majority of the respondents use borrowed fund

6. The majority of the respondents have an experience of 2-5 years

7. The majority of the respondents save 46% of their income

8. The front runners for most of the respondents are friends

9. The majority of the respondents are medium term investors

10. The majority of the respondents consider liquidity as the important factor before investing.

11. The majority of the respondents consider return as the important investment objective

12. The majority of the respondents monitor their investments weekly

13. The majority of the respondents take the advice of the brokers

14. The respondents had chosen negotiable securities as their first preference The second place is occupied by non negotiable securities followed by real assets .The fourth, fifth & sixth places are occupied by Mutual funds, tax sheltered schemes & life insurance respectively.

15. The respondents had chosen hedging against inflation as their first preference. The second place is occupied by safety of principal followed by liquidity .The fourth fifth & sixth places are occupied by return, retirement benefits and risk respectively

RECOMMENDATION:

1. From the findings it is inferred that the investors are monitoring their investments on a weekly basis. It is recommended that the investors can monitor their investments within small intervals.

2. The majority of the investors consider return as the major investment objectives. Rather they can concentrate on other investment objectives like safety of principal, retirement benefits & to hedge against inflation

3. It is inferred from the study that the majority of the investors are medium term investors. They can even watch the market movements for a longer period of time to reap more benefits.

4. Rather than considering liquidity as the most important factor before investing, they can concentrate other factors also.

5. The majority of the respondents use borrowed funds. Instead they can use their own fund to get more benefits.

CONCLUSION:

It is concluded from the study that the investors are monitoring their investments on a weekly basis. The prime most important objective of the sample investors is return factor.

The investors are making their investments on a medium term basis. The sample investors are considering liquidity as the important factor before making their investments. The front runner for the investors to make their investment is friends. The investors are investing their amount for medium time period only.

The respondents had chosen negotiable securities as their first preference The second place is occupied by non negotiable securities followed by real assets The fourth fifth & sixth places are occupied by Mutual funds, tax sheltered schemes & life insurance respectively.

The respondents had chosen hedging against inflation as their first preference. The second place is occupied by safety of principal followed by liquidity .The fourth fifth & sixth places are occupied by return, retirement benefits and risk respectively

BIBLIOGRAPHY:

1. Punithavathy Pandian, Security Analysis and Portfolio Management, Vikas Publishing House, New Delhi, 2011

2. Brahmabhatt, P.S Raghu Kumari & Dr. Shamira Malekar,  "A Study Of Investor Behavior On Investment Avenues in Mumbai Fenil", TRANS Asian Journal of Marketing & Management Research Vol.1 Issue 1, September 2012, ISSN (online)

3. N. Geetha & Dr. M. Ramesh,"A Study on People's Preferences in Investment Behaviour ", IJEMR November 2011-Vol 1 Issue 6 - Online - ISSN 2249 2585 - Print - ISSN 2249 8672

4. Dr. Sarita Bahl, "Investment Behaviour Of Working Women Of Punjab", APJEM Arth Prabhand: A Journal of Economics and Management, Vol.1 Issue 6, September 2012, ISSN 2278 - 0629

5. Meenakshi Chaturvedi & Shruti Khare , "Study Of Saving Pattern And Investment Preferences Of Individual Household In India", International Journal of Research in Commerce & Management, volume no. 3 (2012), issue no. 5 (MAY) ISSN 0976-2183

6. Central Statistical Organisation, India
 


Prof. M. Kothai Nayaki
Asst. Professor
Department of Management Studies
Hindusthan College of Engineering & Technology
Coimbatore-32
 

Source: E-mail August 20, 2013

          

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