CHAPTER 6 FINDINGS, SUGGESTINS AND CONCLUSION The research aims at studying the techniques and strategies of investors in Chennai city. The objectives of the study were to know the socio-economic profile and investment avenues of investors, to examine the techniques of investors and its influence on awareness and satisfaction, to analyse the strategies adopted by investors towards capital market instruments and the satisfaction level of the investors, and to find out the relationship between techniques and strategies of investors. For the purpose of the study a questionnaire was framed and a preliminary investigation was conducted by surveying 100 investors to test the feasibility of the questionnaire. The main study was conducted with a sample size of 500 respondents. Statistical tools like parametric t-test, one way analysis of variance, factor analysis, K-means cluster analysis; multiple discriminant analysis and non-parametric chi-square analysis were applied to analyse the data collected and to test the hypothesis. After analyzing and interpreting the data collected through questionnaire from 500 respondents on random sampling basis, the researcher has come across the following findings: Findings pertaining to socio- economic profile and investment portfolio of investors It is found that majority of investors i.e. 27.4% fall in the age bracket of 31 and 35 years of age closely followed by 26.4%
who are above 45 years of age. 63.4% of investors are men and the percentage is considerably more as compared to female investors which accounts to only 36.6%. 51.2% are graduates as against the investors in other educational levels who are less than 20%. Of these investors, 29.8% of respondents are employed in private sector and are the most interested group in having a portfolio. Among the respondents, 39.4% reside in non-metro closely followed by 37.8% of investors who reside in metro. The gross household income range of 40.8% of investors who are the maximum to indulge in the investment game is between 60001 to 80000. 66% of investors save 21% to 25% of their gross household income which is significantly high. FINDINGS ON TECHNIQUES ADOPTED FOR PORTFOLIO MANGEMENT BY INVESTORS BASED ON ANALYSIS: The investment objective of 60.2% of investors is modest income and no risk of capital. This indicates that investors are keener about protecting their income. 60.2% of investors have stated that fixed deposit is the most preferred investment product. This response justifies their investment objective of having safe investment with no risk. 47.6% of investors have quoted risk consideration as the major threat in investment decision. As investment are made to earn returns, 57.8% of investors have stated that high return in the primary factors in investment decision followed by liquidity which has been opted by 26.4% of respondents.
No risk and low return portfolio is preferred by 51% of the respondents whereas high risk and greater reward portfolio is preferred by 47.4% of respondents. Most High Risk Investment portfolio is preferred by 54% of investors where as Most Low Risk Investment portfolio is preferred by 51.6% which indicated contradiction in preferences Time factor in reviewing investments plays a major role on risk tolerance nature. It is found that Investor's regularly review their portfolios for effective maintenance of their financial assets. Tracking investments at different time periods help investors to manage risk effectively. E-mail alert is much preferred by investors for its high reliability and speed which helps investors to achieve their investment goals. These investors have high risk tolerance. Investors are moderately aware of Online premium payments, Submission of application online, Online tools and Tax exemption technicality with regards to LIC. They are highly aware of Maturity benefits and again Moderately Aware of Insurance policies, Transparency of policies via assignment route and Availing of Insurance Ombudsmen. As regards PPF investors hold Moderate Awareness on Loan interest rate if principal is not paid promptly, Offices where Public Provident Fund can be opened, Interest percentage compounded annually, Tax exemptions under 80C and Interest earned exemptions. They do not have any awareness - eligibility to
open a PPF ac lock-in period, Extending tenure of the account, Option of availing Loan facility and Principal amount of loan repayment. Investors have high awareness about NSCs with respect to interest taxable but no TDS allowed but have moderate awareness about Interest rates compounded half-yearly. Awareness is also moderated with respect to Minimum and maximum investment limits, the lock-in period, NSC used as a security for mortgage, Annual interest earned qualifies for tax rebate and NSC as a tax saving instrument. Mutual fund investors are moderately aware about Liquidating the holdings at any time, Fees and expenses associated with it, No entry load, Portfolio Tracker Online, Knowledge of different classes of Mutual funds, Shifting the investment from one scheme to another, lock-in period of 3 years. They are also moderately aware about the performance of the stock market, Termination of the AMC of the fund, passing resolution to wind-up the scheme, and SEBI acting as Grievance Redressal Forum. But they have high awareness about NAV calculations. Moderate awareness on all the aspects of fixed deposits viz., Tax deduction eligibility, Interest taxability, Loan facility up to 90% and usage of deposits as collateral security prevails among investors. not associated with one another.
FINDINGS ON STRATEGIES ADOPTED BY INVESTORS FOR PORTFOLIO MANAGEMENT BASED ON ANALYSIS: 58.4% of investors review their investment portfolio to check the validity of their investment decision. It comes as a surprise that 26.6% of investors do not review their decision. 56.6% of investors have stated e-channel as the most preferred channel of distribution due to its convenience and ease. 43.2% of investors get the investment alerts through e-mails and is preferred so due to security reasons. It is found that E-channel is the most preferred source of information by 25.2% of investors to get information about investment products. 56.8% investors indicate to have an ability to undertake significant risk to earn high return which defines them as aggressive investors. It is observed that 58.8% of investors were willing to take risk by making investment where they could possibly lose more than they invested. Interestingly, it is found that almost equal number of investors category which is two extremes of the investment spectrum. The risk tolerance of investors differs significantly with respect to their different investment portfolios. LIC investors risk tolerance varies from No risk to Low risk tolerance. The from High risk to Very High risk tolerance. Risk tolerance of investors on LIC and PPF is the same and it ranges from No
identical and varies from No risk to Low risk tolerance. Risk tolerance of mutual funds varies from Medium risk to High risk. most desirable factor to invest. Further, Investors who seek the help of Agents or advisors are highly risk tolerant. The reason being that the agents are able to provide the recent knowledge which is a main backlog in case of e-channels. 36.2% of LIC investors are dynamic investors. These investors have knowledge about the formal procedures related to Life Insurance and also on the value added services associated with the various insurance policies. 45.6% of public provident fund investors are categorised as opportunistic investors who desire to have safe investment and are highly competent with investment techniques. Investors in National Saving Certificates are categorised into three groups namely Tax-oriented investors (24.6%), participative investors (52.8%) and analytical investors (22.6%). Majority being participative investors, they show expertise in all the areas of investment products and services. 47.4% mutual fund investors are speculative investors who show the tendency to hold the investments for a certain time period and watch the returns to decide about making a shift to other schemes. 64.6% of fixed deposit investors are disciplined investors otherwise called as consistent investors. Investors in this category prefer to invest in what they know best about.
It is found that there is a significant difference among the investors with respect to their awareness levels on their investment portfolio. It is found that 17.2% of investors, who have dynamic approach towards Life Insurance investment, have Opportunistic approach towards Public Provident Fund. 23% of LIC investors who are dynamic are participative in NSC investment. 20.4% of investors who have dynamic approach towards LIC investments are speculative in mutual fund investments. It is observed that there is no association between LIC investors and FD investors as dynamic approach and consistency approach do not match. An investor in fixed deposit can hold the investment for a longer duration whereas a dynamic investor would shift from one scheme to another often. 28.6% of investors, who have opportunistic approach toward PPF investments, have participative approach in NSC investment. This indicates that they are highly competent in investment techniques and have intimate knowledge in all investment proceedings. 26.8% of investors with opportunistic approach in PPF investment have speculative approach toward mutual fund investments. 33.8% of investors, who are opportunistic in PPF investment, are consistent in fixed deposit investment. They invest with
confidence of always having an opportunity in hand and take calculative risk. Investors who have participative approach towards NSC and average up to 28% have speculative approach towards mutual funds. 35.2% of investors with a participative approach in NSC have passive attitude towards fixed deposit. 34.8%. Investors who are Speculative in their investment in Mutual Funds are Consistent in Fixed deposit investment. Investors employed in government services have very low risk tolerance as they prefer secured instruments as compared to those employed in other occupations. Risk tolerance is influenced by the level of income. There is negative relationship. Investors who fall in the lower income bracket are willing to take high risk compared those who earn more. the techniques and strategies adopted by them: It is observed that there is high level of satisfaction among investors as fund providers and financial agents are constantly taking steps improve the services provided to their customers. The various factors which influence the satisfaction of perception.
Gender influences the risk tolerance considerably. It is observed that females are highly risk tolerant as compared their male counterparts. Investors between the age group of 25 to 30 are highly satisfied and prefer to invest in mutual funds considering it to be less risky. Study reveals that less educated investors are willing to play safe and prefer to invest in safe investment as compared to highly educated investors who prefer to take risk. investment satisfaction. Those hailing from metros have high propensity to take risk when compared to those from nonmetro and towns. The level of satisfaction among the investors from non- metros and towns is high as they invest in secured instrument especially in post office deposit schemes. Demographic variables always have considerable influence on the risk attitude, awareness and satisfaction of investors. SUGGESTIONS In order to invest in a most rational manner, the following recommendations are placed: To have a balanced portfolio it is necessary to have a review of portfolio at periodic intervals. Since majority of investors prefer investment alerts through e- channels, it is essential to know the authenticity of the information.
It is observed that investors prefer to invest in fixed deposit but it should also be realized that this decision locks up the funds in one avenue for a longer period. Since the investors have only moderate awareness about the various aspects of investment avenues, by way of updating themselves, it would help them to reap better returns and also avail other facilities related to those investment avenues like availing of loans, tax deduction etc. Since less than 50% of investors are highly competent in all the investment avenues, it shows lack of risk taking attitude. In the investment game risk is the major factor that determines the returns. Therefore it is advisable that investors equip themselves with all the information that would make them more risk tolerant. High satisfaction among investors is due to the information provided by financial agents which makes it essential to keep track of their reputation. The younger age group (25yrs to 30yrs) prefers mutual fund considering it to be less risky but it is recommended to remember that mutual funds are highly prone to market risks. Though the level of satisfaction among investors from nonmetro and town is high by investing in secured investment, they still have chances to earn little more income by taking risk. This would be easy as gathering information about the various investment prospects is possible through internets and sms.
Investors are opportunistic and participative with regards to NSC and PPF but their dynamic approach in LIC indicates lack of investment techniques in LIC schemes. This can be made as more profitable avenue of investment by getting information about the value added services offered by LIC. Investors should have knowledge of SEBI regulations as this would help them to play the investment game safe. CONCLUSION After extensive research it is found that though many are interested in playing the investment game, there is hesitance to do so with confidence because of lack of information and risk taking attitude. Based on this, further research can be undertaken to find out the extent of impact created by knowledge of information relating to stock exchange regulations and its role on the investment decisions.