SAVINGS AND INVESTMENT BEHAVIOUR OF HIGHER SECONDARY SCHOOL TEACHERS IN PALAKKAD TALUK PROJECT REPORT

Transcription

1 SAVINGS AND INVESTMENT BEHAVIOUR OF HIGHER SECONDARY SCHOOL TEACHERS IN PALAKKAD TALUK PROJECT REPORT Submitted to the University of Calicut in partial fulfillment of the requirements for the award of the Master Degree of Commerce Submitted by ANILKUMAR C Reg.no. : CHAOMCM002 Batch : Under the supervision and guidance of Dr. LAKSHMANAN M.P Assistant Professor Department of Commerce Government College Chittur MAY

2 DECLARATION I, ANILKUMAR C hereby declare that this project report titled SAVINGS AND INVESTMENT BEHAVIOUR OF HIGHER SECONDARY SCHOOL TEACHERS IN PALAKKAD TALUK is a bonafide project work carried out by me under the supervision of SRI Dr.LAKSHMANAN M.P, Department of Commerce, Government College Chittur, in partial fulfilment of the requirements for the award of Master Degree of Commerce in Calicut university. I also declare that this project report has not been submitted earlier anywhere for the award of any degree, diploma or other similar title. Place :Chittur Name : ANILKUMAR C (CHAOMCM002) Date : Signature: 2

3 GOVERNMENT COLLEGE CHITTUR, PALAKKAD, KERALA POST GRADUATE DEPARTMENT OF COMMERCE (Affiliated to university of Calicut) CERTIFICATE Certificate that is bonafide work carried out by ANILKUMAR C is submitted to the University of Calicut in partial fulfilment of the requirements for the award of the Master Degree of Commerce. Place: chittur Date: Signature: Name & designation of supervising teacher: Counter signed by Place: Chittur Date: Signature: Head of the Department: 3

4 GOVERNMENT COLLEGE CHITTUR POST GRADUATE DEPARTMENT OF COMMERCE CERTIFICATE Certify that the project report entitled SAVINGS AND INVESTMENT BEHAVIOUR OF HIGHER SECONDARY SCHOOL TEACHERS IN PALAKKAD TALUK submitted by ANILKUMAR C is a bonafide work carried out by her in partial fulfilment of the requirement for the award of Master Degree of Commerce at Government College Chittur under the University of Calicut during the year , for a period of 21 days from 3 rd week of January Place: Chittur Date: Signature: Name & designation of supervising teacher: 4

5 ACKNOWLEDGEMENT Every study is to learn more. But there cannot be any action yielding results without the help of others. Thus, I take this opportunity to express my sincere gratitude to all whose contribution in this project can never be forgotten in the successful completion of this project. First and foremost, I thank almighty god for the blessings that have been showered upon me to complete this project. I convey my sincere and profound gratitude to Smt.VISHALAKSHI C AHead of the department, and Government College Chittur for his advice and inspiration. I am extremely grateful to my guide, Dr. LAKSHMANAN M.P Assistant professor of department of commerce, Government College Chittur for the valuable guidance, expert advice, supervision and encouragement which enabled me to complete this project. I also convey my thanks to all the teachers of commerce, department of commerce, Government College Chittur for their guidance. I would like to thank all those people who co-operated with me in doing this study by giving their valuable suggestions and information. I would like to convey my sincere thanks to my family and my friends for all their helps, support and encouragement. Place: Chittur Date: (CHAOMCM002) ANILKUMAR C 5

6 TABLE OF CONTENTS SL.NO. PARTICULARS PAGE NO. 1 CHAPTER 1 2 CHAPTER 2 INTRODUCTION REVIEW OF LITERATURE CHAPTER 3 THEORITICAL FRAMEWORK CHAPTER 4 ANALYSIS AND INTERPRETATION CHAPTER 5 FINDINGS,SUGGESTIONS AND CONCLUSION 6 REFERENCE 7 APPENDIX

7 LIST OF TABLES Tables Title Page no. 4.1 Demographic profile of respondents Sector of teaching and nature of job Descriptive statistics ONE-WAY ANOVA investment habits of respondents Investment avenues Investment preference period Descriptive statistics Mean rank obtained for factors based on age category Kruskal Wallis test Expected rate of return Frequency of investment Mean rank obtained for the investment goals Kruskal Wallis test Responses for redemption of investment Reasons for the redemption of investment Sources of information Persons who influence for investment MANOVA-General Linear Model Tests of Between-Subjects Effects Estimated marginal means Estimated marginal mean of Age Estimated marginal mean by gender Estimated marginal mean education qualification Interest of teachers for investment Reasons for not making investment 37 7

8 CHAPTER 1 INTRODUCTION 8

9 INTRODUCTION Teaching is the one the most popular profession across the globe. Teachers are an important force in our society, not only because of their sheer numbers but much more because they are guarantors of the education of future generations, especially in the developing countries like India. A teacher enjoys the privileged position of unleashing the human potential of students (learners) within the formal education system and thereby transforming the individuals, families, communities and society-at-large. The competency of the teacher is a major determinant of the quality of the education. Teacher s professional advancement is decided by many factors. One of the main factors which strongly influence the efficiency of teacher is his quality of life. The quality of one s life is closely tied to the level or standard of living maintained by that person. The presence or absence of certain material items, such as home, cars, jewellery is commonly associated with standard of life. The ability to spend money for entertainment, health, education, variety in life, art, music and travel also contribute to the standard of life. Large expensive or fancy items are viewed as evidence of high standard of living (Lowarence J Gitman, 1981). Thus management of personal finance i.e. income, consumption saving and investment has a great impact on standard of living. So attitude of teachers towards consumption, savings and investment would reflect their economic behaviour, which would influence quality of life and in turn influence their profession and the education system. Research in this aspect of important stakeholder in education system assumes significance in the field of educational reform. Although a few research studies are available which have examined this phenomenon, most of them are conceptual, descriptive, prescriptive, disintegrated and theoretical in nature. Moreover, most of the research articles appearing in the popular press are based on anecdotal evidences rather than rigorous empirical research with diagnostic evaluation. From this analysis, it follows that the domain of savings and investment behaviour of teaching community belongs to the under researched area, and as such, it calls for a comprehensive, authoritative and well integrated empirical examination of the attitude and behaviour of teachers towards their savings and investment activities. In this context the present research study titled Saving & Investment Behaviour of teachers an empirical study is undertaken. This research paper is focused on saving & investment patterns of higher secondary school teachers in PalakkadTaluk 9

10 RESEARCH PROBLEM Problem formulation is the first step in the research process. Problem formulation identified that for which research is to be carried out. In order to avoid waste in time and money, it is necessary to define the problem in specific terms through this we can arrive at a hypothesis or presumption and a refinement of the problem definition. A problem should neither be defined too broadly nor too narrowly. So the research problem is to identify the saving & investment pattern of higher secondary school teacher in Palakkad Taluk. OBJECTIVES (1) To identify the major savings and investment avenues currently used by the teaching community (2) To examine the perception of the teaching community in respect of their current savings and investment behavioural patterns (3) To identify factors responsible for varying savings and investment patterns across different categories of teachers in the study region (4) To identify the level of awareness of teachers on investment avenues NEED OF THE STUDY The competency of a teacher is a major determinant of the quality of the education. Teacher s professional advancement is decided by many factors. One of the main factors which strongly influence the efficiency of teacher is his quality of life. The quality of one s life is closely related to the level consumption, savings and investment. The attitude of teachers toward consumption, saving and investment would reflect their economic behaviour, which would influence quality of life and in turn influence their profession and the education system.today, the living standard of the people increasing day by day so teacher community has started realizing the importance of savings and proper investment of their savings. They avoid spending money on heavy luxurious life style and preferring the normal living standard. The study is conducted to know the saving & investment patterns of higher secondary school teacher& to know whether the higher secondary school teachers are making use of modern and attractive investment schemes available to them. RESEARCH METHODOLOGY 10

11 Research methodology refers to the theoretical analysis of the methods appropriate to a field of study or to the body of the methods and principles particular to a branch of knowledge DATA SOURCE The study makes use of primary data. The primary data collected through the questionnaire from the higher secondary school teachers. PERIOD OF STUDY The study is conducted for a period for a period of 21 days From 3 rd week of January. RESEARCH INSTRUMENT A well structured Questionnaire is used to collect data from the higher secondary school teachers. POPULATION OF THE STUDY Population comprises of all the higher secondary school teachers of Government, Aided and private/self financing in Palakkad Taluk SAMPLE SIZE. The study is conducted on the basis of the selected sample and findings are drawn based on their response. HIGHER SECONDARY SCHOOLS IN PALAKKAD TALUK GOVERNMENT (5) AIDED (5) PRIVATE/ SELF FINANACING (3) COMMERCE (3) HUMANITIE (3) COMMERCE (3) HUMANITIE (3) COMMERCE (3) HUMANITIES (3) SCIENCE (4) SCIENCE (4) SCIENCE (4) METHOD OF SAMPLING Simple Random Sampling Method is used for selecting the sampling unit.. TYPE OF ANALYSIS 11

12 The statistical package for social scientists (SPSS-XX1) was used to process the data. Relevant statistical tools and techniques such as percentages, chi-square statistics, one-way ANOVA and MANOVA were used for analyzing and interpreting the collected data. KRUSKAL WALLIS TEST Kruskal Wallis (one way ANOVA by ranks) (named after William Kruskal and W. Allen Wallis) is a non-parametric method for testing whether the samples originates from the same distribution. It is used for comparing two or more samples that are independent, and that may have different sample sizes and extends the Mann-Whitney test or more than two groups. The parametric equivalents of the Kruskal Wallis test are the one way ANOVA. One way ANOVA The one way ANOVA is used to determine there are any significant differences among the means of one independent group. It is a way to test the equality of means at one time by using variances, her it is used to test the variation in the means score in the level of awareness on various investment avenues of the higher secondary school teachers. MANOVA The MANOVA (Multivariate Analysis of Variance) is type of multivariate analysis used to analyse the data that involves more than one dependent variable at a time. MANOVA allows us to test the hypothesis regarding the effect of one or more independent variable on two or more dependent variable. It may be noted that some variable may not be significantly different among group when considered individually, but become significant when considered along with other variable. In this study, the MANOVA model is used to test the variation of the means scores of the responses of the teachers on the attitudes towards the investment. LIMITATIONS OF THE STUDY The study suffers from certain limitations There are many investment opportunities are available in the financial market. But the study incorporates the only limited number of investment avenues in market. The data for the purpose of the study is collected from respondents in Palakkad Taluk only. The study concentrates only on selected factors relating to teachers savings and investment Behavior. There may be other influencing factors too, which have not been considered due to time and data constraints. The primary data for the study is collected through questionnaires and the results of the study may suffer from the inherent drawbacks of such instrument. 12

13 The study compares the perceptions and expectations of the teachers attitude and Perceptions towards investment are subjective in nature and are likely to Change with the changing times and market conditions. CHAPTER 2 REVIEW OF LITERATURE 13

14 Richard A. Duschl, Emmett Wright (1989) investigated the manner and the degree to which science teachers considered the nature of the subject matter in their decision making addressing the planning and the delivery of instructional tasks. The goal of the study was the development of grounded hypotheses about science teacher s pedagogical decision making. R. Goymda& Y. Josephine (2005) provided an overview of para teachers in India. It traced its origins of para-teacher schemes in the country and analyses the changing policy context where-in poorly paid and trained para-teachers on contract were increasingly being recruited in place of regular teachers in government schools. Drawing upon available research studies, the authors drew attention to the detrimental implications that para-teacher programed had for professionalization of teachers, the quality of schooling and equity concerns in education. Archna v. Hegde, Deborah j. Cassidy (2009) interviewed twelve kindergarten teachers in their study, and a constant comparative method was used to analyze the interviews. This study included a focus on academics vs. play, the importance of worksheets, the importance of groups for socialization, and the difficulties of implementing a play-based curriculum. Bhardwaj Rajesh, RahejaRekh and Priyanka (2011), examine Analysis of Income and Savings Pattern of Government and Private Senior Secondary School Teachers. The study concluded that the major source of income of Government teachers is salary while tuition fee for private teachers. Mostly Government & Private teachers both used Bank Deposits and Life Insurance for investing their savings. Government school teachers received more perks in comparison to private teachers. The main objective of savings of Government teachers is an emergency and security while for private teachers is children education and purchase of consumer durable. Dr. S. Mathivannan and Dr. M. Selvakumar (2011) studied on saving and investment pattern of school teaches A study with reference to SivakasiTaluk, Tamil Nadu. The study concludes that today, the teaching community has stated realizing the importance of money and money s worth. They are initiated to prepare a budget for the proposed expenses and compare it with the actual expenses met by them, so that they are not influence by other tempting and fashionable expenses. Dr. Dhiraj Jain and Parul Jain (2012) examine savings and investment pattern of school teachers -a study with reference to Udaipur District, Rajasthan. The study concluded that in today s 14

15 world money play vital role in one s life and that the importance of money has been started being recognized by the school teacher s community. They know the importance of money so they are initiated themselves to prepare the budget and lessen down their expenses to meet the future consequences. It has been evident from the study that most of the school teachers are saving their money for the purpose of their children s education, marriage and as security after retirement. Dr. AnanthapadhmanabhaAchar (2012) studied on Saving and Investment Behaviour of Teachers - An empirical study. In the ultimate analysis individual characteristics of teachers such as age, gender, marital status, and lifestyle determined the savings and investment behaviour of teaching community in the study region. In a more or less similar manner, their family characteristics such as monthly family income, stage of family life cycle, and upbringing status emerged as determinants of their savings and investment behaviour. Mooij (2005) studied that since the early 1990s, significant progress was made with regard to education in India. This positive development stands, however, in sharp contrast with the way in which government teachers themselves think and talk about education. Instead of feeling pride and satisfaction, many teachers were unhappy, and often self-critical. Based on focused group discussions and interviews with teachers in Andhra Pradesh, south India, the study analyses the reasons behind motivations and demotivations of government schoolteachers and concludes that there was a need for a new professional ethos and culture. Dr. AnanthapadhmanabhaAchar (2012) studied on Saving and Investment Behaviour of Teachers - An empirical study. In the ultimate analysis individual characteristics of teachers such as age, gender, marital status, and lifestyle determined the savings and investment behaviour of teaching community in the study region. In a more or less similar manner, their family characteristics such as monthly family income, stage of family life cycle, and upbringing status emerged as determinants of their savings and investment behaviour. Archna v. Hegde, Deborah j. Cassidy (2009) interviewed twelve kindergarten teachers in their study, and a constant comparative method was used to analyze the interviews. This study included a focus on academics vs. play, the importance of worksheets, the importance of groups for socialization, and the difficulties of implementing a play-based curriculum 15

16 Michael Kremer, NazmulChaudhury, F. Halsey Rogers, KarthikMuralidharan, Jeffrey Hammer (2005) found that twenty-five percent of teachers were absent from school, and only about half were teaching, during unannounced visits to a nationally representative sample of government primary schools in India. The researchers found little evidence that attempting to strengthen local community ties reduced absence. Teachers from the local area had similar absence rates as teachers from outside the community. Locally controlled non-formal schools have slightly higher absence rates than schools run by the state government. The existence of a PTA was not correlated with lower absence. Private-school teachers were only slightly less likely to be absent than public-school teachers in general, but were 8 percentage points less likely to be absent than public-school teachers in the same village.. Bhardwaj Rajesh, RahejaRekh and Priyanka (2011), examine Analysis of Income and Savings Pattern of Government and Private Senior Secondary School Teachers. The study concluded that the major source of income of Government teachers is salary while tuition fee for private teachers. Mostly Government & Private teachers both used Bank Deposits and Life Insurance for investing their savings. Government school teachers received more perks in comparison to private teachers. The main objective of savings of Government teachers is an emergency and security while for private teachers is children education and purchase of consumer durable. Dr. S. Mathivannan and Dr. M. Selvakumar (2011) studied onsaving and investment pattern of school teaches A study with reference to SivakasiTaluk, Tamil Nadu. The study concludes that today, the teaching community has stated realizing the importance of money and money s worth. They are initiated to prepare a budget for the proposed expenses and compare it with the actual expenses met by them, so that they are not influence by other tempting and fashionable expenses. Dr. Dhiraj Jain and Parul Jain (2012) examine savings and investment pattern of school teachers -a study with reference to Udaipur District, Rajasthan. The study concluded that in today s world money play vital role in one s life and that the importance of money has been started being recognized by the school teacher s community. They know the importance of money so they are initiated themselves to prepare the budget and lessen down their expenses to meet the future consequences. It has been evident from the study that most of the school teachers are saving their money for the purpose of their children s education, marriage and as security after retirement. 16

17 CHAPTER 3 THEORETICAL FRAMEWORK 17

18 Saving Behaviour Savings means the act of refraining from spending one s income on consumption. The part of the income, which is unspent, is called savings. From the economist s perspective people allocate disposable income between consumption and savings and at various levels of income, there will be corresponding level of consumption and savings. According to classical definition, saving is income minus consumption and is residual in character. Savings can also be defined as stock, wherein savings stands for change in wealth over a period of time. In this sense it is regarded as the sacrifice in the present consumption for the future As an accounting concept, saving may be defined as the residual that is left from income after the consumption choice has been made as part of the household's utility maximization process. Substantially, saving is future consumption, and it is an important example of an inter-temporal decision. Division of income between consumption and savings is driven by preferences between present and future consumption and the utilityderived from consumption. Every individual has a psychological preference for present consumption to equally certain future consumption. Saving means going against this preference and hence involves sacrifices of the preference. Thus, saving is an activity that involves both pain of foregoing consumption and pleasure at a particular moment in time for an anticipated future. Variables Influencing Saving Behaviour Saving behaviour is influenced by several factors, important among them are: income, wealth, education, employment status, stages in life cycle, dependency ratio, fiscal policy, pension, insurance and banking infrastructure. Income is considered as the most important explanatory variable of the household savings. The influence of various concepts of income such as absolute income, permanent income, relative income, transitory income (life cycle income), on saving behaviour have been explained variously. Wealth: When a household experiences an increase in wealth, it is expected to consume both the added interest income and some portion of the increase in principal. If attractive rates of return encourage savings, then those with greater wealth have stronger incentives to defer consumption. Education: Several studies indicate that saving rates increase with education, even after considering a variety of control variables. Solmon also found that motives for saving varied with education. Less educated individuals were more likely to save providing for emergencies as their 18

19 primary savings goal, while those with more education cited the desire to provide for children s education and to help them set up households. Since educated individuals appear to have longer time horizons, Solmon suggests that education may alter individual preferences. Although it is likely that education affects willingness to save, more research is needed to confirm this hypothesis and to identify the mechanisms through which this process occurs. Age distribution: age and stage of the population will also affect the fraction of aggregate income spent. Both ends of the age distribution, the old and the young tend to spend a higher proportion of their incomes than those in the middle do. The savings-income ratio is small for younger groups, high for middle age groups, and again low among old age groups. Employment status is likely to have important indirect effects on saving rates. Full-time, year round employees are more likely to have access to institutionalized saving mechanisms (e.g., employer-sponsored pension plans); financial information and education; saving subsidies (e.g., employer contributions to pension plans); and payroll deduction. Employment status may help explain saving in low-income households). Fiscal policies also would influence savings behaviour. Governments generally provide tax shelters for private savings. Willingness to save is influenced by taxation. In order to avoid or reduce the tax burden, people may prefer to save their money in various forms of financial assets. However, it is not clear, whether the tax incentives really rise the aggregate savings Availability of public pensions and social security benefits reduces the saving rate by reducing the need of saving for retirement and contingencies.. The presence of wide spread banking infrastructure also has a positive impact on savings Inflation: It has been argued that inflation has negative impact on savings particularly in a country like India, with low consumption levels where consumers are likely to resist cuts into real consumption. Empirical evidence on the impact of savings has been mixed. Rate of interest exerts influence on the way in which any given level of aggregate disposable income is allocated between consumption and savings. People save money and try to get good profit in future. This is because they prefer a larger real consumption at a later date than a smaller immediate consumption. Size of the family: Propensity to save and propensity to consume are also influenced by the size of the family. With an increase in family size, the propensity to consume increases due to increased demand for food, clothing and other necessaries of life. Every aspect of household economic 19

20 behaviour is significantly correlated with the presence of children in the household. Children affect the allocation of a given family budget; they affect the household demand patterns in a well-defined way. The saving behaviour and propensity to consume differ between government employee households and private employee households. It is well known that self-employed people generally save more than others probably because of their definite interest in expanding their business or profession The various studies reviewed above reveal that dividing household income between consumption and saving is a complex process. Several factors influencing them vary over region, time and community. In this context, it would be interesting to analyse the consumption and saving behaviour among teachers and to diagnose the economic and socio- cultural dimensions of such behavioural patterns. Investment behaviour Personal disposable income of the household is divided between consumption and savings. Savings may be idle or active. Savings becomes active, when it is canalized into return bearing avenues. The act of canalizing savings into return bearing avenues is investment. In this sense, investment refers to the increase in real capital, which leads to the generation of income. It is the addition to the existing stock of capital assets and leads to capital formation. Investment is a wider concept, and household investment reflects the microform of it. Household investment mainly, refers to channelizing household savings into return giving options. Here, decisions are very much based on risks involved and risk- bearing capacity of the investors. Every investment is exposed to one or another type of risk. There are five major risks in investment, which may be present in varying degrees, in different sorts of investment: non- payment risk, business risk, inflation risk, political risk, and social risk. Therefore, an investor, while investing money would try to satisfy the three objectives- safety, profitability, and liquidity. The skill in management of investment does not lie in generating high returns alone. It lies in achieving a sound balance between the three objectives viz profitability liquidity safety. Investment planning is not a game of maximizing returns, but a game of delicate balancing. Every investment is a trade- off between risk and returns. 20

21 Apart from risk and return other factors that influence investment decision are: marketability, initial investment, tax benefit, loan facility, institution, past experience, age and needs, social conditions, and liquidity. House hold investment may be in the form financial investment and physical or real investment. Financial investment comprises deposits in banks, shares, debentures, securities in companies, contributions to provident fund/public provident fund, contributions to chit funds, and insurance. While physical investments include land, buildings, vehicles and stock of raw materials Determinants of Investment Behaviour Investment avenues for an individual or family or household are many, generally known as instruments. The preference shown by an investor in choosing a particular instrument is called Investment behaviour. The process of investment commences with surplus income, which includes operating and non- operating earnings. The prime determinants of investment behaviour of an individual are: sociological factors, such as culture or sub culture, social classes, reference group; and psychological factors like personality, attitude, beliefs, values and perceived investment- related benefits. Cultural surroundings and the various groups of people with whom an individual inter relates, greatly influences his perception, thinking and belief about different forms of investment). People s investment behaviour is strongly influenced by the class to which they belong. Research studies have shown that a class membership is a significant determinant of investment behaviour. Investor behaviour is also influenced by the small group to which investors belong or aspire to belong. These group may include family, fraternal organisation, labour unions church or religious groups or circle of close friends or neighbours (William D wells, 1975). Attitudes and beliefs have strong and direct impact on the investor s perceptions in household investment behaviour. Household investment attitudes are formed, generally speaking, by the information investors acquire through their past learning experiences with the investment opportunity, or through their relations with their reference groups such as family, social and work groups, etc. The perception of this information is influenced by personality traits. It is generally agreed that investor personality traits influence their perceptions and investment behaviour Studies have shown that informal personal advice in face- to- face groups is much more effective as a behavioural determinant than advertising in newspapers, magazines, journals, Television or other 21

22 mass media. That is, when it comes to selecting investment avenues or changing investment patterns, a prospective investor is more likely to be influenced by word of mouth advertising from the satisfied investors in his or her reference group. This is true especially when the speaker is considered to be knowledgeable regarding the particular investment opportunity. IMPORTANCE OF INVESTMENT Investments are both important and useful in the context of present day conditions. Some factors that made investment decisions increasingly important are: INCOME: The growth and development of country leading to greater economic activity has lead to introduction of a vast array of investment outlets. The investor in his choice of investment will have to try and achieve a proper mix between high rate of return and stability of return to reap the benefit of both. INTEREST RATES: Another aspect which is necessary for a sound investment plan is the level of interest rates. It may vary between one investment and another. These may vary between risky and safe investments; they may also differ due to different benefits schemes offered by the investments. INFLATION: Since the last decade inflation has become continue as problem. In these yearsofrising prices, several problems are associated coupled with a falling standard of living.the investor will try and search an outlet which will give him a high rate of returns inthe form of interest to cover any decrease due to inflation. INCREASING RATE OF TAXATION: Taxation is one of the crucial factors in any country which introduced an element of compulsion in individual s savings. There are various forms of savings outlet in our country in the form of investment which helps in bringing down the tax level by offering the deductions in personal income. And also some factors like 22

23 PAST MARKET TRENDS Sometimes history repeats itself; sometimes markets learn from their mistakes. The investor needs to understand how various asset classes have performed in the past before planning your finances. RISK APPETITE The ability to tolerate risk differs from person to person. It depends on factors such as investor s financial responsibilities, environment, basic personality, etc. Therefore, understanding an investor s capacity to take on risk becomes a crucial factor in investment decision making. INVESTMENT HORIZON How long an investor can keep the money invested? The longer the time-horizon, the greater are the returns that you should expect. Further, the risk element reduces with time. INVESTIBLE SURPLUS How much money an investor able to keep aside for investments? The investible surplus plays a vital role in selecting from various asset classes as the minimum investment amounts differ and so do the risks and returns. INVESTMENT NEED How much money an investor need at the time of maturity? This helps the investor determine the amount of money need to invest every month or year to reach the magic figure. EXPECTED RETURNS The expected rate of returns is a crucial factor as it will guide the investor s choice of investment. Based on investor s expectations, he can decide whether you want to invest heavily into equities or debt or balance his portfolio. INVESTMENT ATTRIBUTES For evaluating an investment avenue the following attributes are relevant. RATE OF RETURN The rate of returns of an investment for a period is defined as follows: Rate of return = Annual income + (Ending price- Beginning price) RISK Beginning price The risk of an investment refers to the possibility of losing part or full of the invested amount. The rate of return from investment likes equity share, real estate and gold can vary rather widely. Rate of return from different investment options vary a lot. Remember the famous quote, More the risk 23

24 and more the profits. It is a general phenomenon that more return is expected out of a high risk investment. Risk means uncertainty of returns. Statistically, the risk is judged based on parameters like variance, standard deviation and beta. More a security deviate from its expected outcomes, risk is considered to be high. Challenge for a finance manager while investing funds is to achieve high returns on investments while keeping the risk at lowest possible levels. MARKETABILITY An investment is highly marketable or liquid if, it can be transacted quickly, The transaction cost is low and the price change between two successive transactions is negligible. LIQUIDITY Liquidity means marketability of an investment. For example, equity shares of a big company can be easily liquidated in the stock markets. On the other hand, money invested in an asset (machinery) cannot be liquidated as easily as the equity share. An investment is considered highly marketable or liquid it can be easily transacted with low transaction cost and low price variation. A finance manager looks for more liquid investments when the funds are available for short period. Liquidity is always given a preference because it helps the managers remain flexible. CONVENIENCE The selected investment avenue should be under the legal and regularity framework. If it is not under the framework, it is difficult to represent grievances, if any approval of the law itself adds a flavor of safety. INVESTMENT AVENUES Investment refers to the sacrificing of certain present value for some uncertain future value. It also means the conversion of money into claims on money and use of funds for productive and income earned assets. The investment options available to an investor fall in to 3 broad categories viz financial investment, real investment and non-securitized investment. Financial investment are contracts written on pieces of paper like equity shares, govt. securities etc. Real investments are represent by tangible assets like residential house, agricultural farm, gold, precious stones and art objects. Non securitized investments include deposits in banks. The investment avenues available are described here. 24

25 EQUITY SHARES Equity capital represents ownership capital. Equity share holder collectively owned the company. They bear the risk and enjoy the rewards of ownership. Potential rewards and penalties associated with the equity shares make them interesting, even exiting proposition. The shareholders get voting right. PREFERENCE SHARES Preference shares represent a hybrid security that takes some characteristics of equity shares and some attributes of debentures. Preference shares carry a fixed rate of dividend and it is redeemable. Preference share holders enjoys restricted voting right also. COMMERCIAL BANKS/BANK DEPOSITS Bank deposit is the simple investment avenue open for the investors. Commercial banks provide to the investor both deposits which are liquid in nature, which has stability and which also given an element of security. The following kind of deposits is provided by the bank. 1. Savings bank deposit The most liquid form of investment is the maintenance of a saving bank account. The deposits may be made at any time through the introduction of a person already having a bank account or through the manager of the bank on completion of the formalities of filling a form and having it certified, the investor can begin to operate association. 2. Current account An investigator is also given the option of having a current account in the bank for maintaining liquidity. A current account is usually open a business house of this current account, the account holder is permitted to draw according to a fixed limited provided by the bankers in agreement with the account opening association. 3. Recurring deposit Recurring deposit is a made by which an investor may at regular intervals deposit a fixed sum of money in bank. 4. Fixed deposit schemes Each bank has certain special schemes. These schemes vary from bank to bank but the maturity value is normally the same and the interest at a fixed deposit is specified from time to time by the RBI. 25

26 5. Mutual fund schemes Commercial banks in India have also started mutual fund schemes. The first bank take this step was in POST OFFICE SCHEMES Post office schemes are generally like the commercial bank schemes. They have a saving account, a recurring account, and a ten-year Cumulative Time Deposit (CTD) account which are also recurring in nature. The savings account operates in the same way as commercial banks through Cheques and there is no restriction on withdrawals. National Saving Schemes; National saving schemes have been started by the government of India mainly to finance its economic development plans through the mobilization of savings of smaller income groups this scheme is operated mainly through the post offices. Because of the tax free nature of the scheme, its main purpose is to attract higher income group of people also. The investor has an exact picture of the amount that he will receive at the time of encashment of security. The rate of interest on NSS is usually higher than the commercial banks. The certificates have an advantage that they can be used as collateral at the time of taking a loan from the bank. There are other schemes like: Savings Deposits Fixed Deposits Recurring Deposits Monthly Income with Fixed Investment National Savings Certificate Indira VikasPatra KisanVikasPatra LAND AND HOUSE PROPERTY/ REAL ESTATE Land and house property is also called real estate. This investment is taken by a large number of people for hedging the inflation rates. The real estate market offers a high return to investors. People invest in real estate because of the following reasons. High capital appreciation particularly in the urban area. Availability of loans for the constructions of houses 26

27 GOLD & SILVER For ages, gold and silver have been considered as a form of investment. They are considered as best hedge against inflation. GOLD Gold is one of the most valuable assert in the economy. It has been used in India primarily as the form of saving by the house vice although it is said to appreciate many times yet in India it is more of a sense of security and fixed assets rather than for the use of sale or for the purchase of making profit or income on this investment. Gold may be invested into either in the form of gold shares, gold coins, gold bars and gold jewelries. SILVER Silver is sold in the form of weight by kilograms in India. Silver may be owned in the form of coin, utensils, glasses, bowels, plates, trays and jewellery. This like gold has been a hedge during inflation. The price of silver although less than gold, also keeps on rising in the same way as gold. 27

28 CHAPTER 4 DATA ANALYSIS ANDINTERPRETATION 28

29 Savings and investment behaviouramong higher secondary school teachers The result of the survey conducted as a part of the research study has been presented and analyzed in this chapter. Analysis of data is most skilled task in the research process. Analysis of data means studying the tabulated material in order to determine inherent facts or meanings. In other words analysis means the computation of certain indices or measure or coefficient alone with searching for pattern of relationship that exists among data group. The analysis is presented in 5 parts as Demographic profile. The level of awareness of teachers on investment avenues Major savings and investment avenues currently used The key views and perceptions of the teaching community in respect of their current savings and investment behavioural patterns Factors are responsible for varying savings and investment patterns The statistical package for social scientists (SPSS-XX1) was used to process the data. Relevant statistical tools and techniques such as percentages, one way ANOVA, and MANOVA were used for analyzing and interpreting the collected data. 29

30 4.1 Demographic profile of respondents The profile of respondents explaining the demographic and occupational features are shown below. Table 4.1 Demographic profile of respondents Age Gender Education Annual income Job experience Source: Primary data Category No. of respondents Percent Less than to to to Above Male Female PG with B.ED PG with B.ED and others Below Below to to to Above Table 4.1 exhibits the profile of the sample respondents selected for the study. As per the table, 38.9 per cent respondents are under the age group of 30. And the majority are youngsters. Gender-wise classification shows that majority of the respondents were female (85 per cent). Educational status shows that 60.2 per cent teachers hold PG with B.Ed. Most of the teachers have job experience below 8 years, say 55.7 per cent. Only 7.1 per cent teachers having the job experience of 18 or more years. The annual income reveals that per cent of teachers have annual income below Rs Only 8.8 per cent of the teachers have income between Rs and

31 4.2Sector of teaching and nature of job The sector of teaching and nature of job of teachers predominantly influence the savings and investment habits. The output of cross tabulation showing interrelation between sector of teaching and nature of job of respondents is presented below. Table 4.2 Sector of teaching and nature of job Sector of teaching Nature of job No. of responses obtained. Percent Public permanent temporary 6 20 Aided permanent Temporary Pvt./self-financing permanent Temporary Source: Primary data The table shows that there is almost equal proportion between public sector teachers and Aided sector teachers. And the most of teachers working in Public sectors are permanent and temporary in Aided and Pvt. /self-financing. 4.3 Level of awareness on various investment avenues The section presents the level of awareness of respondents on various investment avenues. The investment may be of saving bank account, fixed deposit, investment in gold/silver, shares or bonds, treasury bills, mutual fund, real estate, insurance, post office deposits, chitties and kuris. It reveals that how much they are aware of the features and benefits of various investments One- way ANOVA of level of awareness by gender wise classification The variations of the level of awareness of various investments with regard to gender wise classification of respondents are analyzed with one-way ANOVA and the output is presented in the following tables. Table 4.3.1Descriptive statistics Investment Mean Male (28) Female(85) Saving Bank Account Fixed Deposit Gold/silver Real estate Insurance Post office deposits Pension Fund Shares or debentures Mutual Fund Treasury Bill Chitties and kurries Source: Primary data 31

32 The hypotheses can be stated as follows: H0: There is no significant variation in the mean scores obtained for the level of awareness towards the various investment avenues as to gender of respondents. H1:There is significant variation in the mean scores obtained for the level of awareness towards the various investment avenues as to gender of respondents. Table ONE-WAY ANOVA Investment avenues Sum of Mean Squares Df Square F Sig. Savings Bank Account Between Groups * Within Groups Total Fixed deposit Between Groups Within Groups Total Gold/silver Between Groups * Within Groups Total Real Estate Between Groups * Within Groups Total Life Insurance Between Groups Within Groups Total Post Office Deposits Between Groups Within Groups Total Provident Fund Between Groups Within Groups Total Shares or Debentures Between Groups <.001* Within Groups Total Mutual fund Between Groups * Within Groups Total Treasury Bills Between Groups Within Groups Total Chitties and kurries Between Groups * Within Groups Total Source: Primary Data *significant at 5 per cent level of significance 32

33 The result of one way ANOVA for the variable level of awareness towards the various investment avenues among the gender wise classification of respondents give f values5.313, 4.271,7.236,21.961,7.171,4.005,with P=0.023,0.041,0.008,0.000,0.009,0.048which is found to be significant at 5 percent level(p >0.05) hence the null hypothesis is rejected. This implies that there is difference in the mean scores obtained for SB A/c, gold /silver, real estate, investment in shares or debentures, mutual funds and chitties and kurries among the gender wise classification of respondents. 4.4 Investment habit The table below shows that the whether the teachers were invested in anywhere or not. Table 4.4 investment habits of respondents Response No. of responses obtained. Percent Yes No Total Source: Primary data The above table shows that per cent teachers have investment. And the remaining per cent of teachers were not invested in anywhere yet. Note: only applicable to invested teachers 4.5 Areas of investment The table below represents the various types/areas of investment made by the teachers. Table 4.5 Investment avenues No of responses obtained. Investment avenues Yes No Savings Bank Account Fixed Deposit Gold/silver Real estate 7 78 Life Insurance Post office deposits Pension Fund Shares/ Debentures Mutual Fund Treasury Bill 2 83 Chities and kurries Source: primary data The above table shows that more than 50per cent of the teachers prefer to invest in savings bank and insurance. Only limited numbers of teachers are invested in mutual funds, treasurybills, real estate etc. 33

34 4.6 Investment preference period Everyone make investment for some period, they opt most favored period for their investment. The table below shows the investment preference period of teachers. Table4.6 Investment preference period Years No. of responses obtained Percent Below Above Total Source: primary data The above table shows that more than 50 per cent of the teachers invested for a period of 4 to 10 years. Teachers who invested for a period of below 3 years is20 per cent only. 4.7 Factorsaffecting investment choice Every investor makes investment by giving importance to various factors. Factors may be risk, tax benefits, professional management of the scheme, high returns etc.. Kruskal Wallis test is used to find the factors that prioritize the investment choices and to test the following hypothesis. H0: There is no difference in the median responses of the investors of various age groupregarding the factors affecting investment choice. H1: There is difference in the median responses of the investors of various age group regarding the factors affecting investment choice. Table Descriptive statistics Factors Mean Std. Deviation Safety High return Liquidity Less risk Good customer service Tax benefits Regular return Convenience Cost of investment Availability of income Prof. Mgt of service provider Source: Primary data 34