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ENTREPRENEURSHIP (IAMEE) HYDERABAD Investor Behavior Analysis Abstract Investor behavior analysis is a study made on the demographics and psychographics of the investor considering the parameters like age, gender and income groups and also some psychological parameters that will attract the investor towards that particular investment. This analysis describes why an investor will opt a particular investment and the motive behind the investment and other objectives of investment. Demographic and psychographic factors Demographic: Statistical socio-economic characteristics or variables of a population, such as age, sex, education level, income level, marital status, occupation, religion, birth rate, death rate, average size of a family, average age at marriage. A census is a collection of the demographic factors associated with every member of a population. Psychographic: This includes Activity, Interest, Opinion (AIO) Attitudes Values of an investor when he looks at a particular investing option. Introduction There are several parameters that an investor will think before investing like return, flexibility and etc but the markets will face a question mark in knowing the pulse of an investor. So a study must be made on the demographics and psychographics of the investor such that the market can know the pulse of an investor and can act upon it. These are the results of such a survey that was made on the investor. Investor behavior analysis deals with analyzing the behavior of an investor based on his demographic and psychographic factors like age, gender and income groups. This states what would be a preferred portfolio of an investor at an age. This will be helpful to the stock brokers and portfolio managers so that they can offer better portfolios to their investors. This analysis will show the mentality of an investor and his preferences clearly and concisely. Relevance of the study The investor behavior has changed tremendously after the recession effect. Though India was not directly affected with the Sub-prime crisis effects. Fear has struck the minds of the investor heavily and spending lavishly has lost its energy as software people have started investing more

than spending. They are now looking for safety rather than a luxurious life. This was never guessed, the business must always be proactive to match up the changes that are taking place in the minds of the customer but at times it must also be reactive. So it s the time to study the behavior of an investor and to understand his feelings, his anticipations and perceptions that are related to an investment that he is making. This can help the financing firms in not just growing the business and also in developing the customer value. Empirical Study on Investor Behavior If a financing firm understands the logic behind the survey on investor behavior it can easily frame up its strategies for a nearby future and can even encourage the investor to invest in such an investment which is close to his mindset and ideology where it can cut the costs on promoting him to grab a product of the company which is away from his view. This empirical study is much helpful to those financing firms which are into the operations of portfolio management. If a portfolio that is being offered by the firm matches with the ideology of a customer then he easily agrees to invest in that portfolio without any hesitation. Any operation that is done by the company looses its credibility if it is not customer friendly or if it is rejected by the customer. So, this study helps the companies tobuild such products to its investors which are in reach of his/her mindset and thinking. The study was made by collecting data from the sample of 80 investors where, an average is made out of the results that are drawn out of the data. Here I m disclosing the results and the interpretations that are made out of the study. Major Findings of the Study It is found that the men in all the age groups are not interested in investing when their income was very less (Ranging between 10-15 thousands). Men are interested in saving more and are not having faith in fewer investments and fewer savings where they do not value a saving of 10 rupees for the future. It is observed in the study that a man who is having an income ranging between 10-15 thousand is much worried about the inflationary effects, price rises and several other financial issues but he is not making any changes in the way he is living. He is ready to get accustomed to the current scenario that is taking place. He is just worried about the changes that are happening around him and he keeps thinking about his pocket which is not going to permit him an extra pack of cigarette or a glass of wine. He is just bothered about not effectively matching his regular needs. He is not thinking about the other side of the coin that is cost cutting.

Where he can increase his savings by reducing smoking by an additional cigarette and by decreasing his days of visit to a bar where he can spend a week off with his children and family happily. If he thinks in this perspective he can really understand the value of small savings. He can really value a saving or investment of one rupee if he changes his small attitude towards looking things. When we said the same to a person he accepted the same. So a man generally thinks an investment = Income - Expenses 5 We all know that a coin always have two sides. One side of the coin was found to be an interested human being who likes to invest when he has ample money to spend and still some money is left in his pocket without any use. Here is the other side of the coin that looks at an investment from another perspective who values small investments also matters. Who s perspective of investment is Income- investment = Expenses. It is none other than the effective personality, An entrepreneur by birth. As said by Nobel Prize winner Dr.Mohammed Yunus Women. Women are found to be saving oriented by nature. They know the value of the money as they look from the perspective of their family, children economical necessity and thus they are able to save more when compared to the men. They are found to have an investment or saving even if their income is less than 15 thousand. Their principle of saving changes when compared to men. They are also worried about the price rise of commodities rise in inflation and several other economical problems but they remain unshackled with the situations because they know the formula right from their younger days called cost cutting. So they spend less and invest/save more where the future is stable for them and are not worried much about their future. So women are found to have the knowledge on savings and are having conservative mentality when compared to men and are comparatively economical too. So they spend very limitedly and also in a better way. So a portfolio that is offered to a woman should also look at the perspective called smaller investments or else many times they don t match with her ideology. If a portfolio is prepared with this perspective undoubtedly it ll be a success as majority of the women force in India accepts it.

(i)Motive Behind Investment Motive 20-30

30-40
Male 20% Female 12.50%

40-50
Male 17% Female

50 >
Male 50% Female 42.80%

28.50 %

75% 75%

66.66 66.66%62.50 62.50% 66.66 66.66% 100.00 100.00% 40% % % % %

25% 40%

25%

14.25%

6.66%

6.66% 6.66% 25%

25% 16.66% 25% 16.66% 16.66% 10%

10% 25% 25%

25% 6.66%

To Beat 14.25% 14.25% Inflation

6.66% 6.66%

Interpretations 42.8% of the men at 20-30 age are choosing high yield returns and it is their motive because at this age his ideas will be running around luxurious life. So he will be ready to take higher amount of risk to get good returns. Where 66.66% of men in 30-50years of age are preferring security because they will have a family at this age and their ideology will look at safeguarding the future of their children and to make them look happy, generally being a parent he will be planning for the education of his child and in saving some amount for matching the needs of his children, so he will step into the shoes of secured future and will put a comma to his aggressive behavior and will become conservative and also starts investing in those options which are much safer when compared to his previous investments. Majority of the men who cross the age group of 50 prefer high yield return (50%) and 40% of them prefer security. Women are good at planning and are conservative in nature and they are focusing for secured future. This can be seen in women of 20-50 age groups. Because generally a woman gets married at the age of 23 so her thinking will always be about her family and their future. Even if she is

not married she has a firm idea of securing her future because she being a good planner always thinks about the future and will always prefer investing in such options which are less risky. Where as women who have crossed 50years of age are focusing at high yield returns because they are not having any burdens on them and their prime ideology is to give something to her next generation so she is now ready to take risks for the sake of getting higher returns. Here we can see a sea change in her mentality where she is becoming aggressive from a conservative personality. Majority of the women are found to be conservative where her prime ideology is to have secured return and women are found to be aggressive once they cross the age of 50 where they are free from several economical burdens and family pressures as their children start working somewhere and are done with their education and the family has good source of income, so she is turning into an aggressive investor. Where the mindset of a man keeps changing according to the situations that he ll face and as per the changes in his age. This is because of the changes in his marital status and also because of several other reasons. Preferred Options This table will guide you on the preferred options of the investor

Preferred Options Real Estate Post Office Schemes

20-30 Male 28.5

Female 13.33

30-40 Male 16.66 6.66

Female 16.66

40-50 Male 43 16.66 16.66 16.66 16.66

Female 50 33.33

50 > Male Real Estate 29 28

Female 28.5 25

Mutual Funds 14.25 Insurance(ULIPS) 14.25 Shares 28.5

50 25

6.66 33.33

25 12.5

33.33

12.5