IJRFM Volume 6, Issue 4 (April, 2016) (ISSN 2231-5985)

International Journal of Research in Finance and Marketing (IMPACT FACTOR – 5.861)

A Study on Investors Perception towards Investment Avenues

Dr. K. Sowmya1,
Assistant professor,
Department of SMS, CBIT, Hyderabad.

J. Mounika Reddy2
Assistant professor, Department of SMS,
CBIT, Hyderabad.

ABSTRCT: This paper exploresinvestor’s perception towards investments in various investment

avenues. Investment is the current commitment of funds towards any financial or non-financial
instruments in order to gain profitable returns at any future date. When a person has more money
than he requires for current consumption, he would be coined as potential investor. Knowledge
about the different avenues enables the investors to choose investment intelligently. The required
level of return and the risk tolerance decide the choice of the investor.Generally investment process
starts with an understanding of the investment objectives and then framing out the investment
policy. This will depend upon the investor’s perception. But the perception of investors differs
around on the basis of different factors like age, gender, occupation, qualification and income levels.
The present studyinvestigates the perceptions towards various investment avenues in Hyderabad
city of Telangana. The study employs both primary and secondary data and the size of the sample is
200.The study finding implicates that investor preferring to investing in bank deposit shows higher
likelihood to make their investment avenues than higher risk.

Key words: Investment, Investment avenues, and investment objectives.

I. INTRODUCTION

The economic development of any country depends upon the well-organized financial system.
The financial system is a broader term which brings under two fold the financial markets and the
financial institutions which support the system. The system main objective is to mobilized the
savings in the form of money and monetary assets and invest them effectively to productive
ventures. It promotes investments and savings which help faster economic development of any
country.

Investment meaning:
Investment involves making of a sacrifice in the present with the hope of deriving future
benefits. Two most important features of an investment are current sacrifice and future benefit.
Investment is the sacrifice of certain present values for the uncertain future reward. Investment
may be defined as an activity that commits funds in any financial/physical form in the present with

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 IJRFM Volume 6, Issue 4 (April, 2016) (ISSN 2231-5985)
International Journal of Research in Finance and Marketing (IMPACT FACTOR – 5.861)

an expectation of receiving additional return in the future. The expectation brings with it a
probability that the quantum of return may vary from a minimum to a maximum. This possibility of
variation in the actual return is known as investment risk. Thus every investment involves a return
and risk.

Investors’ perception:
Investor’s perception refers to the choosing, purchasing and consumption of goods
andservices for the satisfaction of their wants. There are different processes involved inthe investor
perception. Basicallythe investor attempts to find what kind of investments he/she would liketo
consume, after thatinvestors selects only those investments that promise greater utility.
Afterselecting the investment, the investor makes an estimate of the available money which
he/shecan spend. Lastly, the investor analyzes the prevailing prices of investment and takes
thedecision about the investment he/she should consume.

Investment avenues:
Fixed deposits: These are such financial assets which gives moderately high return but cannot be
traded in market. They are Bank Deposits, post Office schemes, Company FDs and PPF.
Shares: These are shares of company and can be traded in secondary market. Investors get benefit
by change in price of share and dividend given by companies.

Bonds/Debentures: Bonds are the instruments that are considered as a relatively safer
investment avenues.

Mutual Funds:A mutual fund is a trust that pools together the savings of a number of investors
who share a common financial goal. The fund manager invests this pool of money in securities,
ranging from shares, debentures to money market instruments or in a mixture of equity and debt,
depending upon the objective of the scheme. Thedifferent types of schemes are Balanced Funds,
Sector Fund etc.
Gold/Silver: Investors can also invest in the things which have value. These comprises Gold, Silver,
Precious stones and Art objects.

Objective of the study:

1. To study the perceptions of the Investors towards various Investment Avenus.
2. To know about the Investors knowledge and preference of investing in investments.

II. REVIEW OF LITERATURE:

Murty.T.N and Sastry.P.V.S.H (2013) has stated in their research that investors invest in the stock
market with the sole aim of return optimization. Variations in the returns from the expectations of
the investors lead for the risk and the subjective analysis of various attributes helps for the
minimization or the avoidance of the risk.

Ravichandran.K(2008) in his research has stated that younger generation investors are willing to
invest in capital market instruments and that too very highly in derivatives segment. Even though
the knowledge to the investors in the derivative segment is not adequate, they tend to take
decisions with the help of brokers or through their friends and were trying to invest in the market.

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 IJRFM Volume 6, Issue 4 (April, 2016) (ISSN 2231-5985)
International Journal of Research in Finance and Marketing (IMPACT FACTOR – 5.861)

He concludes that most of the investors are of age 31-40 and are mostly entrepreneurs and working
executives. He also says that friends and relatives followed by brokers are the most influential
persons to pull the investors into the capital market.

GunjanTripathi(2014) has found in his research that education, profession and gender do not affect
the derivative investing behavior. However income is found to have a significant role on derivatives.
He also added that investors are using these securities for different purposes namely risk
management, profit enhancement, speculation and arbitrage.

ManasaVipparthi and Ashwin Margam (2012) revealed that the investors’ perception is dependent
on the demographic profile and assesses that the investors age, marital status and occupation has
direct impact on the investor’s choice of investment. The study further revealed that female
segment are not fully tapped and even there is low target on higher income people. It reveals that
Liquidity, Flexibility, Tax savings, Service Quality and Transparency are the factors which have a
higher impact on perception of investors.

Shailendra Kumar Chaturvedi, Aravind Kumar Singh and Karanveer Singh (2014) in their research
found out that mutual fund is a tax saving instrument and to a certain extent a return oriented
investment. It was also found that the investors were more prone to public companies rather than
private companies.

Neel Kamal Purohit (2013) in his research has found out that income has significant impact on
frequency of trading in stock market, selection of mode of trading and selection of market
segments. Age and income has significant impact on taking exposure.

Sukhwinder Kaur, Batra .G.S and BimalAnjum(2014) has suggested that investors should consider
long historical data, size and age of the fund, fund charges and some measure to analyze the funds
for investments in mutual funds. It revealed that investor consider mutual funds as flexible
investment option as mutual fund companies efficiently manage assets and they think investment
in stock market is risky and complete.

III. RESEARCH METHODOLOGY:

The study is based on both primary and secondary data. The primary data is collected
through structured questionnaires. The questionnaire is designed keeping in view the objectives of
present research work. The secondary data is also made use of at some places of the study
wherever it became necessary. The secondary data which is related to the study gathered from the
reports, books, journals, periodicals, dailies, magazines, and websites. The researcher selected
various market investors in Hyderabad. For this purpose visited all the stock broking agencies in
Hyderabad. The researcher selected a minimum of 10 investors from 21 stock broking agencies in
Hyderabad and collected information through structured questionnaire. Simple random sampling
technique is used for the study. The total sample size is200.

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 IJRFM Volume 6, Issue 4 (April, 2016) (ISSN 2231-5985)
International Journal of Research in Finance and Marketing (IMPACT FACTOR – 5.861)

IV. DATA ANALYSIS AND INTERPRETATION:

Table 1: Demographic variables of the respondents:

Demographic variables. Frequency Percent Cumulative
Percent
Age Below 20 years 20 10 10
20 - 30 years 80 40 50
30 - 40 years 60 30 80
Above 40 years 40 20 100
Total 200 100 100
Gender Male 120 60 60
Female 80 40 100
Total 200 100 100
Occupation Govt. Employee 40 20 20
Self Employed 60 30 50
Private Employee 90 45 95
Others 10 5 100
Total 200 100 100
Qualification Degree 60 30 30
Post-Graduation 70 35 65
Professional 50 25 90
Others 20 10 100
Total 200 100 100
Income Below 2Lakhs 30 15 15
2L - 5 L 60 30 45
5 L - 10 L 80 40 85
Above 10 lakhs 30 15 100
Total 200 100 100
The above table explains that the age of the respondents is 40% are in the age group of 20-30. 30%
are in the age group of 30-40, 20% are above 40 years and 10% are below 20 years. It can be seen
that 60% of the respondent are male and 40% are female, 45% of the respondent are working in
private sector, 30% are Self-Employed and 20% are Govt. Employed and 5% are others. It can also
be seen that 35% of the respondents are Post-Graduate, 30% are Degree, 25% are Professional and
10% are others. The 40% of the respondents are 5L-10L income level, 30% are 2L- 5L income level,
15% are above 10L and 15% are below 2L.

Table 2: Duration of the investments preferred by the respondents:

Sl. no. Options No. of Respondents Percentage (%)
1 Under 2 yrs. 8 8
2 2 – 5 yrs. 32 32
3 6 – 10 yrs. 40 40
4 Above 10 yrs. 20 20
Total 100 100
The above table portrays that 40% of the respondent are investing their money for the period of 6 –
10 years, 32% are investing their money for the period of 2 – 5 years. 20% are investing their

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 IJRFM Volume 6, Issue 4 (April, 2016) (ISSN 2231-5985)
International Journal of Research in Finance and Marketing (IMPACT FACTOR – 5.861)

money for the period of above 10years and 8% are investing their money for the period of less than
2years.

Table 3: Percentage of income invested in investments:

Sl. no. Options No. of Respondents Percentage (%)
1 Less than 10% 44 22
2 10% -20% 70 35
3 20% - 30% 54 27
4 More than 30% 32 16
Total 200 100
The above table tells that 35% of the investor are investing 10%-20% of their income, 27% of the
investor are investing in 20%-30% of their income and 22% of the investor are investing in less
than 10% of their income and 16% are investing in more than 30% of their investment.

Table 4: Investors knowledge regarding investments:

Sl. no. Options No. of Respondents Percentage (%)

1 Very limited 36 18
2 Basic knowledge 56 28
3 Fair knowledge 60 30
4 Considerable 28 14
5 Extensive knowledge 20 10
Total 200 100
The above table reveals that 30% of the investors have Fair knowledge about the investments, 28%
has basic knowledge, 18% of investors have very limited knowledge, 14% has considerable
knowledge and 10% has extensive knowledge.

Table 5: Primary objectives of the investments of the respondents:

Sl. no. Objectives No. of Respondents Percentage (%)

1 Savings for old age 24 12

2 More income/profit 56 28
3 Regular income 90 45
4 Tax savings 14 7
5 Capital appreciation 16 8
Total 200 100
It is observed from the table that regular income has been the most desirable objective with 45% of
investment in stock markets. The majority of the respondents expressed their opinion that regular
income is their main investment objective. Constant flow of returns expected by the investors will

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 IJRFM Volume 6, Issue 4 (April, 2016) (ISSN 2231-5985)
International Journal of Research in Finance and Marketing (IMPACT FACTOR – 5.861)

be the reason to give first priority to regular income. From other objectives, it is observed that more
income, savings for old age, capital appreciation and tax savings in investments are also well
considered.

Table 6: Investorspreference of various Investment Avenues:

Sl. no. Options No. of Respondents Percentage (%) Mean

1 Bank FD 65 32.5 4.44

2 Mutual Funds 30 15 3.17
3 Bonds/ Debentures 25 12.5 3.15
4 Stock Markets 45 22.5 3.90
5 Gold and Silver 35 17.5 3.65
Total 200 100 3.66
It is clearly seen that the respondents prefer bank fixed deposits. The risk-averse nature of the
respondents is depicted as they are more favorable towards cash and bank savings when compared
to investing the same cash in instruments like insurance funds, shares and debentures and mutual
funds. Here it may also be inferred that the investors/ respondents exhibits a clear personality type
of external locus of control where an individual places importance on external environment on his
life. This may also refer to the contingency orientation of the investor where the investor would like
to have easy access to liquid cash to face an unforeseen contingency and therefore would not like to
tie up the cash in not-so-easily retrievable instruments.

V. FINDINGS AND CONCLUSION:

The study found that majority of respondents aware of all the savings schemes like national mutual
funds, insurance schemes, bank fixed deposits, shares, bonds and debentures, government
securities etc.As per the respondents opinion many of them are showing interest in the fixed
deposits savings and it was followed by stock markets, mutual funds, gold/silver and
bonds/debentures respectively. Regarding savings avenues the majority of respondents were
opined that fixed deposits in bank was a preferred savings avenue. Whereas the least preferred
option was meant to bonds and debentures 12.25 per cent. The same finding was also reflected the
mean scores, because of 4.44 mean score was opted by fixed deposits in bank and the least mean
score was 3.15 for bonds and debentures. The study distinctly comes out with the regular income
was prime objective for investment and it was followed by more income/ profit, capital
appreciation and safety return of capital and interest respectively.

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International Journal of Research in Finance and Marketing (IMPACT FACTOR – 5.861)

The analysis and interpretations very clearly shows that the investors have different
views like investment pattern by market movement, factors influencing their decision, frequency of
investment, alternatives available and investment preferences truly influence their perception
towards different investments in market. Thus study concludes that the Indian investment
community have shown much interest in investing in safer investment like bank deposits and also
other different financial products available in the markets developing due to the spiraling growth
of Indian GDP, better performance by the companies, liberal rules and regulations by the authority
like SEBI to protect the investors’ interest and this process will grow much quicker in the future.

REFERENCES:

1. Murty.T.N and Sastry.P.V.S.H, Investment Perception of small investors- A scientific analysis,

2013, www.abhinavjournal.com.
2. Sukhwinder Kaur, Batra.G.S and BimalAnjum, Investor’s Perception towards selection of
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3. Shailendra Kumar Chaturvedi, Aravind Kumar Singh and Karanveer Singh, A Roadmap of
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Lucknow city, International J ourna l o f S c ientifi c Re s e a r ch and Management, Vol. 2,
Issue 11, 2014, pp. 1724- 1730, ISSN(e): 2321-3418.
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0975-6477.
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