Investment Behavior of Women Investors

Investment behavior of Women Investors

Investment Behaviour of Women Investors

A dissertation submitted in partial fulfillment of the requirement of Post Graduate Degree in Master of Business Administration Administration of Bangalore University

Submitted by: KIRTANA N KAULIGE

Register no. : 03XQCM6048

UNDER THE GUIDANCE OF

Dr Nagesh S Mallavalli

2004 – 2005

MP Birla Institute of Management Associate Bharatiya Vidya Bhavan

BANGALORE – 560 001.

M. P.Birla Institute of Management, Associate Bhartiya Vidya Bhavan

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DECLARATION I hereby declare that this research work embodied in this entitled dissertation “Investment Behavior of Women Investors” has been carried out by me, under the guidance of Dr.Nagesh .S. Mallavalli, Principal, MPBIM, Bangalore

I also declare that this dissertation has not been submitted to any University or Institution for the award of any Degree or diploma.

PLACE: Bangalore DATE:

(Kirtana N Kaulige)


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ACKNOWLEDGEMENT

I am grateful to many people whose timely help and guidance has helped me to conduct this research successfully. s uccessfully.

I hereby wish to express my heart felt gratitude to Dr. Nagesh S Mallavalli, Principal for his guidance and supervision.

Finally I would like to extend my grateful thanks to all my friends and faculty members of MPBIM, Bangalore whose assistance has a lot to me personally for the completion of this research.

PLACE: Bangalore DATE:

(Kirtana N Kaulige)


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RESEARCH EXTRACT

Women’s position in society has been changing over the last few decades. Today women are better educated and earn more money than before, which has increased women’s influence on financial decision in families. The interest in investing has been increasing while the households have become more prosperous. The results showed that the investor’s age, financial situation, attitude towards risks and the phase of life affect investment behavior.

This research is carried out primarily to find out the attitude of women investors towards the risk and return and the process of financial planning process undertaken by these investors. This research also provides an insight into the needs and wants of women investors with respect to the kind of portfolio of investment they are looking for and understand their financial requirements in life.

As this research is also provides the information about the financial planning process of women investors it becomes extremely essential to understand the process as a whole. Financial planning is the process of meeting goals of life through proper management of finances of an individual. Financial planning provides direction and meaning to financial decisions. It helps in understanding how each financial decision one makes affects other areas of finances. By viewing each financial decision as part of a whole, short and long-term effects on the life goals can be evaluated.


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Topic “Investment Behavior and Financial Planning Process of Women Investors.”

Statement of the Problem This research is carried out primarily to find out the various options available to the women investors whole doing their financial planning and to find their attitude towards risk and return.

Objectives of the study This study focuses on investment behavior of women investors and the factors that influence their investment decisions. An in depth analysis is made in terms of their financial goals and their investment patterns. It also focuses on the various investment options women invest in and how aggressive they are in terms of investing.

Methodology and Data Collection The Primary Data was collected by administering a detailed questionnaire and also by conducting in-depth personal interviews. Secondary data was collected through various sources such as magazines, internet, business journals etc.

Findings

70% of the women have invested 10% to 20% of their income followed by women. Most of the women consisting of 60% of them take their own investment decision. 90% of the women don’t don’t have a formal financial plan.


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38% of the women have ranked liquidity as the most important consideration while taking investment decisions. 70% of the women had the basic understanding about investing and have made some investments. 78% of the women prefer to invest in safer investments.

54% of the women would transfer their money into more secure sectors if their investments decrease in value.

46% of the women base their decisions on the advice of their family members. 38% of the women base their decisions on the advice of their friends.

58% of the women have a average tolerance level.

Conclusion

It can be concluded that generally, women are conservative investors and they feel that safeguarding what they have is top priority. These investors want to avoid risk — particularly the risk of losing any principal that is their original investment — even if that means they’ll they’ll have to sett le for very modest returns.


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INTRODUCTION BACKGROUND

As a woman, and an investor, shaping of financial future is as important as the many other roles they play in in life. That' s why taking control today is essentialni realizing their dreams for tomorrow. Whether women are just beginning to develop their investment strategy or are refining a current current one, it' s important to keep in mind that they they should build a financial financial legacy for long term. term. At various stages of your your life, you are are faced with important important investment and financial decisions. Your success in making these decisions with the help of a sound investment strategy can have a major impact on your income, net worth and, ultimately, quality of life in retirement. Women today have more earning potential and more influence over financial decisions than ever before. Women represent almost half of the workforce and many businesses are owned or managed by women. Many women influence or control the majority of all consumer purchase decisions and many of the investment decisions. As a result, it is important for women to focus on finances now more than ever. Throughout their lives, as a woman, they will be faced with different financial challenges than their male counterparts. If women are going to take control of their financial future, it’s important that they recognize those differences and empower themselves.

Earning money is only half the equation for achieving financial independence. Effectively putting your money to work for you is equally important. Though the size of household


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Investment behavior of Women Investors income matters, how to manage the money women have — to meet short-term obligations as well as long-term goals — determines how they live today and in the future. That' s why taking control of their finances is so important. The challenges of investing are unique for each individual. In addition, circumstances are frequently different for women — and whatever choices you make will be better as a result of greater knowledge of the underlying issues and your options.

Women are more likely to live longer As a woman; the life expectancy is at an all time high. In fact, 90% of women eventually end up living on their own. To help ensure that women will be able to maintain their lifestyle, they should stay involved in investment decisions and consider planning for the unexpected early on.

Women are more likely to have dependents to care for With a growing divorce rate, the number of o f single mothers is on the rise. Providing for and raising a family, while also saving for college and retirement, can be a daunting task. One way to help ensure that you have enough savings is to invest a small amount regularly through a systematic investment plan.

Women are less likely to take investment risks For whatever reason; many women are less willing than men to take risks. Yet, a certain degree of risk is necessary to build a well-diversified portfolio. By learning all about investing, women can become more comfortable making investment decisions that involve different levels of risk.

Financial Planning Process For this purpose a thorough understanding of financial planning is important for all investors. Financial planning is the process of meeting one ’s life goals through the proper


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Investment behavior of Women Investors management of his/her finances. Life goals can include buying a home, saving for your child' s education or planning for retirement. The financial planning process consists of six steps that help people to take a "big picture" look at where they are financially. Using these six steps, women can work out where they are now, what they may need in the future and what they must do to reach their goals. The process involves gathering relevant financial information, setting life goals, examining current financial status by women and coming up with a strategy or plan for how they can meet their goals given their current situation and future plans. Financial and personal satisfaction is the result of an organized process that is commonly referred to as personal money management or personal financial planning. investor’s money to achieve Personal financial planning is the process of managing investor’s personal economic satisfaction. This planning process allows him/her to control their financial situation. Every person, family, or household has a unique financial position, and any financial activity therefore must also be carefully planned to meet specific needs and goals. A comprehensive financial plan can enhance the quality of life and increase investor’s investor’s satisfaction by reducing uncertainty about your future needs and resources. The specific advantages of personal financial planning include •

Increased effectiveness in obtaining, using, and protecting your financial resources throughout the lifetime.

•

Increased control of the financial affairs by avoiding excessive debt, bankruptcy, and dependence on others for economic security.

•

Improved personal relationships resulting from well-planned and effectively communicated financial decisions.

•

A sense of freedom from financial worries obtained by looking to the future, anticipating expenses, and achieving the personal economic goals.


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We all make hundreds of decisions each day. Most of these decisions are quite simple and have few consequences. Some are complex and have long-term effects on our personal and financial situations. The financial planning process is a logical, six-step procedure: •

Determining of current financial situation

•

Development of financial goals

•

Identifying alternative courses of action

•

Evaluating alternatives

•

Creating and implementing a financial action plan, and

•

Evaluating and revising the plan.

Step 1: Determination of Current Financial Situation •

In this first step of the financial planning process, investors will determine their current financial situation with regard to income, savings, living expenses, and debts. Preparing a list of current asset and debt balances and amounts spent for various items which give a foundation for financial planning activities.

Step 2: Development of Financial Goals •

Investors should periodically analyze their financial values and goals. This involves identifying how they feel about money and why they feel that way. The purpose of this analysis is to differentiate their needs from their wants.

•

Specific financial goals are vital to financial planning. Others can suggest financial goals for investors; however, they must decide which goals to pursue. Their financial goals can range from spending all of their current income to developing an extensive savings and investment program for their future financial security.

Step 3: Identify Alternative Courses of Action •

Developing alternatives is crucial for making good decisions. Although many factors will influence the available alternatives, possible courses of action usually fall into these categories:


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•

Continue the same course of action.

•

Expand the current situation.

•

Change the current situation.

•

Take a new course of action.

•

Not all of these categories will apply to every decision situation; however, they do represent possible courses of action.

•

Creativity in decision making is vital to effective choices. Considering all of the possible alternatives will help the investor make more effective and satisfying decisions.

Step 4: Evaluate Alternatives •

Investors need to evaluate possible courses of action, taking into consideration life situation, personal values, and current economic conditions.

•

Consequences of Choices. Every decision closes off alternatives. For example, a decision to invest in stock may mean an investor cannot take a vacation. Opportunity cost is what investor gives up by making a choice. This cost, commonly referred to as the trade-off of a decision, cannot always be measured.

•

Decision making will be an ongoing part of personal and financial situation. Thus, investor needs to consider the lost opportunities that will result from their decisions.

Evaluating Risk •

Uncertainty is a part of every decision. Selecting a college major and choosing a career field involve risk.

•

Other decisions involve a very low degree of risk, such as putting money in a savings account or purchasing items that cost very less. The chances of losing something of great value are low in these situations.

•

In many financial decisions, identifying and evaluating risk is difficult. The best way to consider risk is to gather information based on investor’s investor’s experience and the experiences of others and to use financial planning information sources.


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Investment behavior of Women Investors Financial Planning Information Sources •

Relevant information is required at each stage of the decision-making process. Changing personal, social, and economic conditions will require that investor continually supplement and update your knowledge.

Step 5: Create and Implement a Financial Action Plan •

In this step of the financial planning process, investor will develop an action plan. This requires choosing ways to achieve your goals. As he/she achieves their immediate or short-term goals, the goals next nex t in priority will come into focus.

•

To implement the financial action plan, investors may need assistance from others. For example, investor may use the services of an insurance agent to purchase property insurance or the services of an investment broker to purchase stocks, bonds, or mutual funds.

Step 6: Reevaluate and Revise the Plan •

Financial planning is a dynamic process that does not end when investor takes a particular action. They need to regularly assess their financial decisions. Changing personal, social, and economic factors may require more frequent assessments.

•

When life events affect investor’s investor’s financial needs, this financial planning process will provide a vehicle for adapting to those changes. Regularly reviewing this decision-making process will help them to make priority adjustments that will bring their financial goals and activities in line with their current life situation.

To achieve the best results from financial planning engagement the following becomes necessary for women investors: Set measurable financial goals Set specific targets of what women want to achieve and when they want to achieve results. For example, instead of saying you want to be "comfortable" when you retire or that you


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Investment behavior of Women Investors want your children to attend "good" schools, you need to quantify what "comfortable" and "good" mean so that you' you' ll know know when when you' ve reached reached your goals. Understand the effect of each financial decision Each financial decision women make can affect several other areas of their life. For example a decision about a woman’s woman’s child' s education may affect when and how she meets her retirement goals. All the financial decisions are interrelated. in terrelated. Re-evaluation of financial situation periodically Financial planning is a dynamic process. Financial goals may change over the years due to changes in your lifestyle or circumstances, such as an inheritance, marriage, birth, house purchase or change of job status. Revision of the financial plan to reflect these changes becomes necessary to stay on track with the long-term goals. Start planning as early as possible People who save or invest small amounts of money early, and often, tend to do better than those who wait until later in life. By developing good financial planning habits such as saving, budgeting, investing and regularly reviewing finances by women early in their life will help them to meet life changes and handle emergencies. Be realistic in your expectations. Financial planning is a common sense approach to managing finances to reach your life goals. Events beyond a person’s person’s control such as inflation or changes in the stock market or interest rates will affect your financial planning results. The various factors which will influence a women investor are: Start early The most important step in any long-term investment plan is to start early. Even if women are only able to set aside a small amount of money monthly, or even quarterly, that money should

still

grow

and

generate

earnings

over

time.

One highly effective way to make investing a habit is by paying yourself first. Setting aside


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Investment behavior of Women Investors a portion of income before paying other expenses can ensure that women have the money they need to stick to an investment plan. Stay Ahead of Inflation Day-to-day inflationary price increases are often barely noticeable. Yet, over the long term, a small increase in average yearly inflation can add up to a serious drain on investor’s buying power. Women should focus on educated investment choices which may offset inflation' inflation' s daily daily climb. climb.

Invest Routinely The widely heard mantra of "buy low, sell high" is something many investors strive for — but few achieve. Since no one can really predict the markets' ups and downs, even extensive research and analysis can' t guarantee you a "low" price when you you decide to invest.

Risk Tolerance Risk is not something many people seek in their daily lives, but when it comes to investing, some degree of risk can be potentially rewarding. The investments usually involve some

degree of risk. As a general rule of thumb, the higher the risk associated with an investment, the higher the potential return. What is the best saving and investing products should be ascertained. This depends on when women will need the money, their goals For instance, if women are saving for retirement, and they have 35 years before they retire, they may want to consider riskier investment products, knowing that if you stick to only the "savings" products or to less risky investment products, their money will grow too slowly— or given inflation or taxes, they may lose the purchasing power of their money. A frequent mistake people make is putting money they will not need for a very long time in investments that pay a low amount of interest. On the other hand, hand, if women are saving for a short-term short-term goal, goal, five years or less, they don' t want to choose risky investments, investments, because because when it' s time to sell,they sell,they may have to take a


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Investment behavior of Women Investors loss. Since investments often move up and down in value rapidly, they want to make sure that they can wait and sell at the best possible time. The primary risks in fund investing include the following: Systematic Risk - A risk that influences a large number of assets. An example is political events. It is virtually impossible to protect yourself against this type of risk.

referred to as "specific risk". risk". It' s risk that affects Unsystematic Risk - Sometimes referred very small number of assets. An example is news that affects a specific stock such as a sudden strike by employees.

Credit or Default Risk - This is the risk that a company or individual will be unable to pay the contractual interest or principal on its debt obligations. This type of risk is of particular concern to investors who hold bond' s within their portfolio. Governme bonds, especially those issued by the Federal government, have the least amount of default risk and least amount of returns while corporate bonds tend to have the highest amount of default risk but also the higher interest rates. Bonds with lower chances of default are considered to be “investment grade,” and bonds with higher chances are considered to be junk bonds. Bond rating services, such as Moody' allows investors to determine which bonds are investment-grade, and which bonds are “junk”. country won' t be able to honor i Country Risk – This refers to the risk that a country financial commitments. When a country defaults it can harm the performance of all other financial instruments in that country as well as other countries it has relations with. Country risk applies to stocks, bonds, mutual funds, options and futures that are issued within a particular country. This type of risk is most often seen in emerging


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Investment behavior of Women Investors markets or countries that have a severe deficit. Foreign Exchange Risk – When investing in foreign countries you must consider the fact that currency exchange rates can change the price of the asset as well. Foreign exchange risk applies to all financial instruments that are in a currency other than your domestic currency. As an example, if you are a resident of America and invest in some Canadian stock in Canadian dollars, even if the share value appreciates, you may lose money if the Canadian dollar depreciates in relation to the American dollar. Interest Rate Risk - A rise in interest rates during the term of your debt securities hurts the performance of stocks and bonds. Political Risk - This represents the financial risk that a country' s government wi suddenly change its policies. This is a major reason that second and third world countries lack foreign investment. familiar of all risks. It' s the day to day fluctuations fluctuations i Market Risk - This is the most familiar a stocks price. Also referred to as volatility. Market risk applies mainly to stocks and options. As a whole, stocks tend to perform well during a bull market and poorly during a bear market—volatility is not so much a cause but an effect of certain market forces. Volatility is a measure of risk because it refers to the behavior, or “temperament,” of your investment rather than the reason for this behavior. Because market movement is the reason why people can make money from stocks, volatility is essential for returns, and the more unstable the investment the more chance it can go dramatically either way.

The risk/return tradeoff is the balance an investor must decide on between the desires for the lowest possible risk for the highest possible returns. Remember to keep in mind that low levels of uncertainty (low risk) are associated with low potential returns and high levels of uncertainty (high risk) are associated with high h igh potential returns.


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Investment behavior of Women Investors Diversification of the Assets

Limiting the investments to a single type or style can be a potentially dangerous situation. The success of investment strategy depends more on the combination of asset classes chosen,

and

less

on

the

individual

securities

themselves.

Diversifying the assets, or spreading them across a variety of investment types and styles, is a more effective way to manage portfolio' s risk level. Because different different investments respond differently to changing market conditions, diversification may provide protection in the event

that

one

or

more

investments

experience

a

downturn.

Applying the concept of asset allocation helps ensure that you adequately diversify your assets. Asset allocation means spreading your money across different asset classes, such as stocks, bonds and cash. Asset classes usually do not move in tandem. Therefore, at any given risk level, there is an allocation of stock; bond and cash investments that may help you realize your return potential while minimizing your risk ex posure. Alleviate Tax Burdens

It sounds easy enough identify investments with strong fundamentals and good growth prospects, purchase the most promising, and sit back and wait. This strategy, known as "buy and hold" investing, is known to be a highly effective effective way of riding out the markets' markets' short term fluctuations. In contrast, some investors try tr y to time the market by anticipating the markets' markets' movements movements and investing investingaccordingly. accordingly. While this may seem like a proactive way of investing, pinpointing the exact highs and lows is a difficult thing to do even for investment professionals. Investment Alternatives

Today' s investor is faced with with an overwhelming number of choices when it comes to implementing an investment strategy. Since the right combination of investments in the right types of accounts can mean reaching your goals sooner rather than later, it is important to know your alternatives. Below is a list of the major building blocks of any successful strategy.

Stocks


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Investment behavior of Women Investors A share of stock represents partial ownership in a company. Initially sold by the company itself to raise money, the shares are then bought and sold by investors in the secondary market. Shareholders can vote on the company' s major decisions, and receive dividends as their share of profits. As a company' s stock price rises or falls, so does the shareholder s' investment.

Bonds Like stocks, bonds are issued by companies and governments to raise money to fund a variety of projects and operations. Unlike stocks, a bond is a loan that the issuer promises to pay back, usually at a set interest rate. Bonds are then bought and sold by investors in the secondary market. Mutual Funds One of the most convenient investment options available, mutual funds offer investors the benefits of professional management and diversification. By pooling the assets of many investors, and pursuing a set investment objective, mutual fund managers are able to provide investors with buying power unavailable to individual investors. Insurance and Annuities Insurance and annuities can help help you work towards life' s goals and plan for for the une xpected. Offering tax-deferred growth, the option of income for life and a guaranteed death benefit, bene fit, annuities can be a way to supplement your 401(k) or IRA retirement savings plan. An annuity requires you to make one or a series of payments and, if you choose, the insurance company will pay you a regular stream of income in the future in return. With life insurance, you pay premiums to the insurance company which entitle your beneficiaries to a specified benefit payment should something happen to you unexpectedly. This is all subject to the paying ability of the issuing insurance company. Cash and Cash Equivalents Treasury bills, money market mutual funds, certificates of deposit, even passbook savings accounts are all considered cash. Returns on these types of savings and investments are usually low because they often involve little or no loss of principal. But as a relatively safe place to keep funds that you may need to access readily, they play an important role in any investment plan. M. P.Birla Institute of Management, Associate Bhartiya Vidya Bhavan

23

Investment behavior of Women Investors But women investors have to restrict their choice of investment assets. These restrictions arise from their specific circumstances. Identifying these restrictions will affect their investment policy. The investment decisions are mainly affected by: Liquidity Liquidity is the ease with which an asset can be sold and still fetch a fair price. Women investors must consider how likely they are to dispose of the assets at short notice. From this likelihood, they establish the minimum level of liquid assets they want in the investment portfolio. Investment Horizon This is the planned liquidation date of the investment or part of it. It could be the time to fund a child’s education or marriage for women. Horizon needs to be considered as the women investors have to choose between assets of various maturities. Tax Considerations Tax consequences are central to investment decisions. The performance of any investment strategy is measured by how much it yields after taxes. For women investors who face significant tax rates, tax sheltering and deferral of tax obligations may be pivotal in their investment strategy.

Unique needs Virtually every investor faces special circumstances. Primary investment of an individual and the unique risk profile that results from employment can play a big role in determining a suitable investment portfolio for women. These unique needs often center on a woman’s stage in the life cycle. Retirement, housing and children’s education and many other factors demand for funds and investment policy will depend in part on the proximity of this expenditure.


24


Since this research has been conducted on the women investors and a study of their investment behavior, it becomes important to divide them into different types. Women Investors have their own investing styles: some are risk takers by nature, willing to gamble large amounts of money on highly speculative investments. Others prefer the safety and security of cash in the bank even if it means that the actual buying power of their money is slowly dwindling because of inflation. Most people fall somewhere in between these extremes, and are willing to assume some risk, with the expectation that they’ll be rewarded with higher returns. The amount of risk you’re willing to take is your investing style. The investing style stems from a variety of things: age, personality, personal experience, and financial circumstances to name a few. For instance, if women are approaching retirement, have many financial responsibilities, or have lived through major recession, chances are they may be a more risk-averse, or conservative investor. On the other hand, if you’re young, earning a high income, have few financial responsibilities, and have seen little in the way of economic hardship, you might be inclined to take more risk.

Categories of Investors While there are as many investing styles as there are investors, most people fall more or less into one of three broad categories: conservative, moderate, aggressive. Conservative investors

Generally, conservative investors feel that safeguarding what they have is their top priority. These investors want to avoid risk — particularly the risk of losing any principal (their original investment) — even if that means they’ll have to settle for very modest returns. Conservative investors allocate most of their portfolios to bonds, such as Treasury notes or high-rated municipal bonds, and cash equivalents, such as CDs and money market accounts. They’re generally reluctant to invest in stocks, which may lose value, especially over the


25


short term. When conservative investors do venture into stocks they‘re often inclined to choose blue chips or other large-cap stocks with well-known brands because they tend to change value more slowly than other types of stock and often pay dividend income. Moderate investors

Moderate investors want to increase the value of their portfolios while protecting their assets from the risk of major losses. For example, a moderate investor might use an allocation model that has 60% in stock, 30% in bonds, and 10% in cash equivalents . While they will tend to favor blue chip and other large-cap stocks, they may be willing to invest a modest portion of their principal in higher risk securities — such as international stock, small-caps, and volatile sector funds — in order to increase their potential for higher returns. Even if women are not risk takers by nature, a moderate investing style may be suitable in any circumstance or financial situation. Aggressive investors

Aggressive investors concentrate on investments that have the potential for significant growth. They are willing to take the risk of losing some of their principal, with the expectation that they will realize greater returns. Aggressive investors might allocate from 75 to 95% of their portfolios to individual stocks and stock mutual funds. While large- and small-cap stocks and funds may make up the core of their portfolios, many aggressive investors will have significant holdings in more speculative stocks and funds, such as emerging market and sector mutual funds. Since aggressive investors focus on growth, they are usually less inclined to hold incomeproducing securities, such as bonds. An aggressive investing style is definitely not for the faint of heart. It’s best suited for investors with a long-term investing horizon of 15 years or more, who are willing to make a


26

Investment behavior of Women Investors long-term commitment to the stocks they buy. But history has shown that an aggressive investing approach, combined with a well diversified portfolio, and the patience to stick to a long-term buy-and-hold investing strategy through inevitable market downturns, can be the most profitable in the long run.

Problem Statement This research is carried out primarily p rimarily to find out the various options available to the women investors whole doing their financial planning and to find their attitude towards risk and return .To find out the type of o f investment option which are desirable to different kinds of women investors.

Purpose of the Study This research is conducted with a focus on the investment behavior of the women investors and factors they consider while taking investment decisions. It also highlights the various purposes for which the funds from the investments done by the women will be used by them.

Scope of the Study The scope of the study is restricted to the market survey conducted on women investors with respect to the preference of various investment options while doing their financial planning .

Research Question What are the traits of women’s women’s investment behavior?


27


Objectives of the Study Primary Objectives To find out risk appetite of women investors. To find out whether the women investors are looking for long term growth or risk or return or liquidity. To know their long term financial goals.

Secondary Objectives To understand the needs and wants of the respondents with respect to their financial requirements in their life. To have an understanding of the respondents’ saving pattern.


28


5(9,( : 2) 2) /,7(5$785(


29


REVIEW OF LITERATURE Financial investment is the purchase of a financial security, such as a stock, bond, or mortgage. Investment in human capital is spending on education, training, health services, and other activities that increase the productivity of the workforce. It is the use of money for the purpose of making more money, to gain income, increase capital, or both. The purchasing of stocks, bonds, mutual funds, options, real estate, etc., made with the expectation of future income or capital gains is investment. An article entitled “When “When It Comes to Investing, Is Gender a Strong Influence on Behavior” and a report given by Robert C. Doll was reviewed to know the purpose, objective and also the methodology used in their report and the conclusions that he has drawn. This process has helped in devising a broad framework for the study and in identifying those areas of study that the researcher has not touched upon. When It Comes to Investing, Is Gender a Strong Influence on Behavior


30

Investment behavior of Women Investors Background

In April 2004, Merrill Lynch Investment Managers undertook a study of investors and examined their related attitudes, beliefs and knowledge levels. In gender terms, the survey found that a little self-knowledge can go a long way. Participants had to be solely or jointly responsible for financial and investment decisions for their household, and have at least $75,000 in investable assets and an annual household income of at least $75,000.

Objective of the Study

This survey brings a new perspective on the attitudes, knowledge and emotions that inform investor mistakes. Male or female, the point is this: Understand the motivations and emotions that inform their decision making and that can make better, more profitable investment decisions." Purpose of the Study

According to a groundbreaking survey of investors despite the fact that, on average, they tend to know less about investing and enjoy investing less than men. The purpose was to understand the investment styles of both men and women and the effect of money as an emotional instrument which can get in the way w ay of making the right investment decisions. Methodology

The nationwide telephone poll examined the investment mistakes of 1,000 investors — 500 men and 500 women — and their related attitudes, beliefs and knowledge levels. Overall findings were analyzed looking specifically at results b y gender.


31

Investment behavior of Women Investors The survey was done and random selection of sample was collected. The data was presented and summarized to get the pattern of relationships between various characteristics such as respondent’s respondent’s attitude, emotions etc. Findings While all investors make mistakes, the survey found that women make fewer mistakes than men. Women are far less likely than men to hold a losing investment too long or wait too long to sell a winning investment. A significantly greater percentage of women (47%) than men (30%) report not being knowledgeable about investing. Women take a very deliberate approach to their finances. They are eager to identify goals and look to build a partnership with their financial advisor and want to be actively involved in the process of building and executing a financial plan. Both men and women cite the desire to have a comfortable retirement as their primary motivator, however, more women than men cite this. More women also cite wanting to be financially independent and having money to spend on the things they as "very important" motivators. Women are more likely than men to fall into the reluctant or unprepared categories Investors in these categories tend to not enjoying investing and are generally less knowledgeable about investing. Conclusion Women' s lesser knowledge and interest interest in investing may explain why this category skews slightly female. Unprepared investors are not happy with their current financial situation. They are the most likely to lack confidence and be fearful or anxious about investing. They are the least likely to rebalance their th eir portfolios. It' s critical for investors to understand their psychological makeup . Money is an emotional instrument, but emotions can get in the way of making the right investment decisions. Behavioral scientists have tended to look at investors as a whole, but both — men and


32

Investment behavior of Women Investors women alike — are influenced by different emotions. If we can fathom our individual emotional tendencies, then we can take steps to anticipate and correct them." Recommendations

Women should be encouraged to participate in the investment avenues. They should try to invest in securities which have higher risks. Women investors should achieve their success by starting early investment in life and invest and rebalance regularly. These women investors should not over-allocate to a single investment.

5(6($5& +

0(7+2'2/2*< M. P.Birla Institute of Management, Associate Bhartiya Vidya Bhavan

33


RESEARCH METHODOLOGY Type of research: Descriptive Research The type of research used in this study is descriptive. This has been used this research centers around the typically structured investigative questions. In this case descriptions of characteristics associated with population of women investors are formulated. Estimates of the proportions of women who possess particular investment behavior is evaluated. And after this process association was made to different aspects of the investment habits of women and their appetite of risk and investment styles of women is discovered.

Method of Data Collection


34

Investment behavior of Women Investors a) Primary data

Primary data has been used in this study. Primary data was collected by administering a detailed questionnaire and also by conducting in depth personal interviews. b) Secondary Data

For this study secondary data was collected through various sources such as magazines, internet and business journals.

Survey The communication approach involved surveying women investors and recording their responses for analysis. Questionnaires were given to various women who are working to evaluate their investment patterns and to know their financial goals in life.

Sampling Design Population

The population chosen for this study is women who stay in Bangalore as the research revolves around the investment habits and the financial requirements of women investors.

Sample Size

For the purpose of this study, I have collected data from 50 women respondents. This is the true representative of the universe.

Sample Unit

In this research is conducted only for women.

Sampling Techniques

For the purpose of the study, judgment sampling has been used. In judgment sampling technique, on the basis of the researcher’s judgment, sample is selected which is considered as representative of the population. So in this case on the basis of my judgment sample has been selected.

Instrumentation Technique M. P.Birla Institute of Management, Associate Bhartiya Vidya Bhavan

35


Most of the questions are close ended questions in the questionnaire administered to the respondents. The simple category scale and multiple response scale have been used. Ranking scale has been used wherever appropriate.

Data Analysis This involved reducing the accumulated data to a manageable size, developing summaries, looking for patterns which will help the objectives of the study and applying of statistical techniques. After the collection of data, coding sheet was prepared to classify the data. The various tools which were used to for presentation and testing of hypothesis are: Bar graphs. Pie charts. Column graphs.

Limitations of the Study This is an academic effort and it is limited to cost, time and geographical area. As the data is collected from 50 respondents only, generalization to other women investors is inevitable. An interpretation of this study is based on the assumption that the respondents have given correct information.


36



37


$1$/<6,6$1' ,17(535(7$7,21 2)'$7$

PRESENTATION PRESENTATION AND ANALYSIS OF DATA AND INTERPRETATION

TABLE 1 Occupation of the Women Investors PARTICULARS

NUMBER

PERCENTAGE


38


Govt sector Employee

10

20

Private Sector employee

25

50

Self Employed

5

10

House Wives

10

20

TOTAL

50

100

Findings: Majority of the women are private sector employees. This accounts for 50% of the respondents. Next 20% of the respondents were house wives and the percentages of respondents were govt employees. Only 10% of the women were self employed.

CHART 1 Occupation of the Women Investors


39


60 50 s t n 40 e d n 30 o p s e 20 R

10 0

Govt em plo yee

P rivate

Self Em plo y ed

Ho use W ives

e m p lo lo y e e

Occupation

Interpretation: Most of the women respondents who were interviewed were working in private sector and had the majority. Next equal percentage of respondents was govt employees and house wives. The least number of women are self employed. There is a trend of the women becoming independent financially which can be highlighted.

TABLE 2 Age of Women Investors


40


PARTICULARS

NUMBER

PERCENTAGE

Between 20 and 30

10

20

Between 30 and 40

22

44

Between 40 and 50

13

26

Above 50

5

10

TOTAL

50

100

Findings: Majority of the women respondents are in the age group which lies between 30tears to 40 years. This percentage is 44%. The next highest percentage of the women is in the age group which is between 40 years and 50 years which has a percentage of 26%. The next highest percentage of 20% of women respondents are in the age which lies between 20 years ans 30 years. The least percentage of women respondents in terms of age are in age group of 50 years and above.

CHART 2 Age of Women Investors


41


s t 50 n e d n 40 o p s e 30 R f o e g a t

20

n 10 e c r e 0 P

Betw een 20 and Betw een 30 and Betw een 40 and 30

40

50 and above

50

Ag e

Interpretation: Most of the women are in the age group which is between 30 years and 40 years. And the next highest percentage of women aged between 40 years and 50 years. This is closely followed by women in the age group of 2o to 30 years. Least percentage of the respondents is above 50 years. Most of the women are in the middle age and above.

TABLE 3 Marital status of Women Investors


42


PARTICULARS

NUMBER

PERCENTAGE

Yes

30

60

No

20

40

TOTAL

50

100

Findings: Most of the respondents are married with a percentage of 60%.The rest of the respondents with a percentage of 40% are single.

CHART 3 Marital status of Women Investors


43


Married Single

Interpretation: Most of the women respondents respondents who were surveyed were married married to understand the relation between marital status and investing habits this consideration is taken. Most of the women who are married have a tendency to invest in much secure investments and assets which give benefit in the long term.the rest of the respondents who are single have mainly invested in the avenues irrespective of their long term growth.

TABLE 4 Annual Income of Women Investors PARTICULARS

NUMBER

PERCENTAGE


44


Less than Rs100000

1

2.5

Between Rs100000 and Rs250000

20

50

Between Rs250000 and Rs500000

18

45

Above 500000

1

2.5

TOTAL

50

100

Findings: 50% of the respondents had an income level which was between Rs1 lakh and Rs2.5 lakh. That is half the number of the respondents. 45% of the respondents consisted of women who had a income between Rs2.5 lakh and Rs 5 lakh and the least of 2.5% each by women who earn less than Rs 1 lakh and above Rs 5 lakh.

GRAPH 4 Annual Income of Women Investors


45


60 s t n e d n o p s e R f o e g a t n e c r e P

50 40 30 20 10 0 Less than

Betw een 1 lakh

Betw een 2.5

Rs100000

and 2.5 Lakh

lakh lakh and 5 Lakh

A b o v e 5 l a kh kh

Annual Income

Interpretation: Majority of the women are earning an income which lies between Rs 1 lakh and Rs2.5 lakh and accordingly plan their investment. Very closely it is followed by women earning between Rs2.5 lakh and Rs5 lakh and the least number by women who earn less than Rs1 lakh and above Rs5 lakh.

TABLE 5 Percentage of Income invested by Women PARTICULARS

NUMBER

PERCENTAGE


46


Less than 10%

4

8

10% to 20%

35

70

20% to 30%

10

20

More than 30%

1

2

TOTAL

50

100

Findings: 70% of the women have invested 10% to 20% of their income followed by women who have invested 20% to 30% of their income constituting 20% of the respondents and 8% of the women have invested less than 10% of their income and least percentage of 2% of women have invested more than 30% of their income.

GRAPH 5 Percentage of Income invested by Women


47


80 s t n d n o p s e r f o e g a t n e c r e P

70 60 50 40 30 20 10 0

Less t ha han 10 10 t o 20 20 t o 30 Above 30 P e r c e n t a g e o f I n co co m e I n ve ve s t e d

Interpretation: Most of the women have invested 10% to 20% of their income making them conservative investors. Then few of them have invested 20% to 30% of their income which is not a big percentage and few of them have invested less than 10% of their income as many women don’t don’t have a thorough knowledge of all the investment avenues and the least percentage of women have invested more than 30% as they don’t don’t want to take risks.

TABLE 6 Investment Decision taken by Women themselves


48


PARTICULARS

NUMBER

PERCENTAGE

Yes

30

60

No

20

40

TOTAL

50

100

Findings: Most of the women consisting of 60% of them take their own investment decision and the rest 40% of the women don’t don’t take their own investment decision independently. ind ependently.

GRAPH 6 Investment Decision taken by Women themselves


49


Yes No

Interpretation: With financial independence most of the women have increased their knowledge and increased their awareness levels about various investment avenues and have taken their own investment decision. But still there are a big percentage of women who have not been able to take independent decisions and rely on others for their own investment decisions.

TABLE 7 Formulation of a Financial Plan


50


PARTICULARS

NUMBER

PERCENTAGE

Yes

5

10

No

45

90

TOTAL

50

100

Findings: 90% of the women don’t don’t have a formal financial plan and the rest 10% of the women have formally formulated a financial plan.

GRAPH 7 Formulation of a Financial Plan


51


Yes No

Interpretation: Most of the women have not made any formal plans regarding various financial requirements and goals. So a majority of women have not planned for their finances and other investment avenues and have invested as opportunities have come. With an absence of financial plan they may lack focus on financial goals.

TABLE 8 Agreement on Financial Goals by Women and their Spouse


52


PARTICULARS

NUMBER

PERCENTAGE

Yes

25

83.33

No

5

16.67

TOTAL

30

100

Findings: 83.33% of the women have agreement with their spouse on the financial goals they have in their lives. Rest percentage of 16.67% of the women has disagreement with their spouse on their financial goals.

GRAPH 8 Agreement on Financial Goals by Women and their Spouse


53


yes No

Interpretation: Most of the women have a tendency to take guidance with their spouse if they are married. So there will be a consensus on the financial goals and the various investment decisions they take. A very less percentage of women don’t don’t have an agreement with their spouse over various investment decisions as some of them may not have consensus with their spouse.

TABLE 9 Ranking of Factors considered while taking Investment Decisions


54


OPTIONS/ RANKS Long term growth Percentage Risk Percentage Return Percentage Retirement income Percentage Liquidity Percentage

NUMBER OF RESPONDENTS/PERCENTAGE

TOTAL

1

2

3

4

5

4 8 8 16 5 10 5

6 12 25 50 6 12 23

18 36 10 20 17 34 9

20 40 3 6 19 38 5

2 4 4 8 3 6 8

50 100 50 100 50 100 50

10 19 38

46 46 16 32

18 6 12

10 5 10

16 4 8

100 50 100

Findings: 38% of the women have ranked liquidity as the most important consideration. The next consideration according to them is risk with 50% of the respondents having that as a consideration. 30% of the respondents have given long term growth as the next important factor and the next important factor is return with 40% of the respondents choosing it. The least important factor is retirement income with 16% ranking it as 5.

GRAPH 9 Ranking of Factors considered while taking Investment Decisions


55



50

L o n g t e rm rm growth Risk

40 30

Return

20

Ret irem ent inco m e Liquidity

10 0 R a nk nk 1

R a nk nk 2

R a nk nk 3

R a nk nk 4

R a nk nk 5

Ranks

Interpretation: Majority of the women are of the opinion that liquidity is the most important factor to be considered while taking investment decisions. Risk is the next important factor to be considered as women avoid taking high risk. As women take the decision regarding the education and marriage of children, long term growth is the next important factor to be considered. Their main concern is not return; it has been ranked 4 as they are happy with moderate returns and low risk. As most of the respondents were in the age group of 30years to 40 years, it is evident that retirement income is at the end of the priority list

TABLE 10 Knowledge about investing and various options available


56


PARTICULARS

NUMBER

PERCENTAGE

No investment experience

-

0

Basic understanding about investing

35

70

Investing for long time

10

20

Experienced investor

5

10

TOTAL

50

100

Findings: 70% of the women had the basic understanding about investing and have made some investments. 20% of the women have been investing for several years in different types of assets and 10% of the women are experienced investors. Respondents having no investment experience are none.

GRAPH 10 Knowledge about investing and various options available


57



70 60 50 40 30 20 10 0 No expei peience

Basic sic Understanding

Some Some Expeience Expeience

Experienc Experienced ed

Experience in Investing Investing

Interpretation: Most of the women have a basic understanding about investing which is a good trend to encourage more participation in investments. A lesser percentage has been investing in different types of assets for some years so there is a slow increase in participation of women in investment portfolio. But a very low percentage of women who are experienced as many women don’t don’t take active participation in investment avenues. But there are no respondents who have no investment experience at all. Therefore all the women have invested one or the other of the investment avenues.

TABLE 11 Description of Investment Objectives


58


PARTICULARS

NUMBER

PERCENTAGE

Investing in safer investments

39

78

Overall high returns

7

14

High returns without concern for decrease in investments

4

8

TOTAL

50

100

Findings: 78% of the women prefer to invest in safer investments. 14% of the women are willing to tolerate some ups and downs in the value of investments to achieve higher returns in the long run. The least percentage of 8% of the women has main interest in the high long term returns.

GRAPH 11 Description of Investment Objectives


59


Investment Objectives f o e g a t n e c r e P

100 s t n 80 e d 60 n o 40 p s 20 e R 0 safer Investments nvestments

Moderate oderate risk investments

High Return investments

Investment Objectives

Interpretation: As the majority of the women prefer investing in safer investments, they are conservative investors. Next few of the women are willing to take some risk risk for long term return so they are moderate investors. Very less percentage of women are aggressive investors who are not concerned about short term decreases in their investment for high, long term returns. So it can be inferred that most of the women are conservative investors

TABLE 12 Stand on the planning of various Financial Requirements


60


OPTIONS Basic Savings Household Expenses Retirement Planning Buying of Assets Tax Planning Life Protection Medical Expenses Children’s Education Children’s Children’s Marriage Basic Savings

PLANNED Number Percentage 38 76

NOT PLANNED Number Percentage 12 24

28

56

22

44

19 25 39 40 22

38 50 78 80 44

31 25 11 10 28

62 50 22 20 56

17 29 38

66 58 76

33 21 12

34 42 24

Findings: 76% of the women have planned for basic savings plan and 24% of women have not planned for it. 56% of the women have planned foe household expenses and 44% of the women have not planned for it. 38% of the women have planned for retirement and 62% of them have not planned for their retirement. 50% of the women have planned for buying of assets whereas 50% have not planned. 78% of women have done tax planning and 22% of the women have not done tax planning. 80% of the women have undertaken life protection policies and the remaining 20% of the women have not planned for life protection. 44% of the women have planned for medical expenses and the rest 66% of the women have not planned for it. 58% of the respondents have planned for their children’s marriage and 42% have not planned for it. 76% of the women have planned for basic savings and 24% of the women have not planned for it.

GRAPH 12 Stand on the planning of various Financial Requirements


61


s t n e d n o p s e R f o e g a t n e c r e P

planned

90 80 70 60 50 40 30 20 10 0

not planned

s n s e g ts s g n ing ns e nnin sse nnin ectio nse atio rriag v c e a la ot A u p Sa pe Pla is c d Ex ent g of ax P e Pr l Ex s Ed ns M l T Lif ic a ren ldre Ba eho rem uyin d i i e B M Child Ch us Ret o H Various financial financial requirem ents

Interpretation: Most of the women have planned for basic savings, household expenses, tax planning, life protection, children’s children’s education and children’s children’s marriage. Many of them have not planned for retirement and for medical expenses as they are secondary to them. For them most important considerations will be basic savings, education and marriage of children etc.

TABLE 13 Reaction of Women Investors due to decrease in portfolio value


62


PARTICULARS

NUMBER

PERCENTAGE

Transfer of money immediately

27

54

Concerned but wait for improvement

18

36

Leave the investments investments with expectation of improvement

5

10

Invest more funds

-

-

TOTAL

50

100

Findings: 54% of the women would transfer their money into more secure sectors if their investments decrease in value. Next 36% of the women will be concerned but will wait and only 10% of the women would leave the investment and wait for improvement. None of them would invest more funds to lower their average investment price.

GRAPH 13 Reaction of Women Investors due to decrease in portfolio value M. P.Birla Institute of Management, Associate Bhartiya Vidya Bhavan

63


60 s t n 50 e d n o p 40 s e R f 30 o e g a t 20 n e c r e 10 P

0

Transfer Money

Conce oncerned rned

Wai Wait for for improvement

Invest more funds

Reaction on decrease in portfolio value

Interpretation: Most of the women cannot take risk and so they cannot wait for improvement as they are not very high risk takers with decrease in portfolio value. Few of them will be concerned and very few will wait for improvement by leaving them. So it can be inferred that they cannot afford to take risk. As they don’t don’t invest often, they have less experience.

TABLE 14 Investment Avenues already invested in


64


OPTIONS Govt securities Equity Bonds Mutual funds Company deposits Bank deposits Post office deposits Insurance Provident fund Real estate

Yes 15

NUMBER No 35

PERCENTAGE Yes No Total 30 70 100

Total 50

10 5 6

40 45 44

50 50 50

20 10 12

80 90 88

100 100 100

-

50

50

-

100

100

39

11

50

78

22

100

37

13

50

74

26

100

32 43

18 7

50 50

64 86

36 14

100 100

9

41

50

18

82

100

Findings: 30% of the women have invested in govt securities and 70% have not invested. 20% of the women have invested in shares and 80% have not invested in shares. 10% of the women invested in bonds and 90% have not done so. 12% of the women have invested in mutual funds and 88% have not. None of the respondents have invested in company deposits. 78% of the women have invested in bank deposits and 22% of the women have not invested in bank deposits. 74% of the women have invested in post office deposits and 26% of the women have not invested. 64% of the women have invested in insurance and 36% of the women have not done so. 86% of the women have invested in Provident fund and 14% have not done so. 18% of the women have invested in real estate and 82% of the women have not.

GRAPH 14 Investment Avenues already invested in


65


120 100 80 s t n e d n o p s e R f o e g a t n e c r e P

Yes

60 40

No

20 0

vt Go

se

r it cu

ies

d e y ts ts ts ds ds te uit Bon fun po si p osi po si ran c Fun st a q E e e e su al lE nt ut u n y D n k D ice D In v ide Rea M pa Ba o ff Pr m tO o s C Po Investm Investm ent Avenues Avenues

Interpretation: Most of the women have invested in low risk investments as they are low risk takers. They have invested in bank deposits, post office deposits, insurance, provident fund which have low risk and low returns. But they have avoided investing in shares, bonds, company deposits which could be due to their high risk involvement and less knowledge of women regarding various instruments.

TABLE 15


66


Basis of Investment Decision on the advice of

PARTICULARS

NUMBER

PERCENTAGE

Themselves

6

12

Friends

19

38

Family Members

23

46

Investment Advisor

2

4

TOTAL

50

100

Findings: 46% of the women base their decisions on the advice of their family members. 38% of the women base their decisions on the advice of their friends. 14% of the women base their decisions on their own. The least percentage of 45 of the women based their decision on the advice of the investment advisor.

GRAPH 15 Basis of Investment Decision on the advice of M. P.Birla Institute of Management, Associate Bhartiya Vidya Bhavan

67


50

s t n e d 40 n o p s e 30 R f o e 20 g a t n e c 10 r e P

0

Yours Yoursel elff

Your Your Frie Friend nd

Famil Family y members

Investment advisor

Advice Advice Of

Interpretation: Most of the women take decisions by taking the advice of their family members. Many of the women also take their friends advice. A very less percentage of women take their decisions themselves without any advice. Very few of the women go to the investment advisor. This could be due to the fact fact that they don’t don’t have a formal financial financial plan and which in turn results in absence of a fixed financial goal.

TABLE 16


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Tolerance of Risk of Women Investors

PARTICULARS

NUMBER

PERCENTAGE

Very high

3

6

Moderately high

14

28

Average

29

58

Moderately low

2

4

Very low

2

4

TOTAL

50

100

Findings: 58% of the women have an average tolerance level and 28% of the women have moderately high risk tolerance level. 6% of the women have very high risk tolerance level. 45% of the women have moderately low and very low risk tolerance level.

GRAPH 16 Tolerance of Risk of Women Investors M. P.Birla Institute of Management, Associate Bhartiya Vidya Bhavan

69


s t n e 70 d n 60 o p 50 s e R 40 f o 30 e g 20 a t n 10 e c 0 r e P

r Ve

ig h h y M

er od

ig h H ly at e

A

e rag e v M

era od

Lo y l te

w

Lo

w

Risk tolerance

Interpretation: It can be inferred that most of the women are moderate risk takers as can be seen above. They don’t take high levels of risk even if it gives high returns. Many of them are moderately high risk takers. Very few of them take high risk and are aggressive investors. Very less number of women has low risk tolerance. Most of the women don’t don’t want to take high levels of risks even if it yields high returns on the investments.

TABLE 17 Overall Investment Objective


70


PARTICULARS

NUMBER

PERCENTAGE

Growing assets

9

18

Growing assets with current income

30

60

Income and preserving capital

11

22

TOTAL

50

100

Findings: 60% of the women have the investment objective which is growing assets while generating current income. 22% of the respondents want to generate income and preserve capital. Least percentage of 18% of women wants growing assets without concern for current income.

GRAPH 17


71


Overall Investment Objective

s t n 70 e d 60 n o p 50 s e R 40 f o 30 e g 20 a t n e 10 c r e 0 P

Growing rowing asse assets ts

Income and

Income and

generating

preserving

income

capital

Investme Investme nt objectives objectives

Interpretation: Most of the women have financial goals of generating assets which grow along with generation of income. So they want financial security with long term growing assets with income. A lesser percentage of women want growing assets even if doesn’t doesn’t generate curr ent income as it involves risk. Women in this category have a very low percentage.

TABLE 18


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Use of funds in the portfolio in years

PARTICULARS

NUMBER

PERCENTAGE 12

Above 10 years

6

6 to 10 years

33

66

0 to 5 years

11

22

TOTAL

50

100

Findings: 66% of the women will use the funds in the portfolio in 6years to 10 years. 22% of the women will use it in 0years to 5 years and 12% of the women will use the funds in time period more than 10 years.

GRAPH 18


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Use of funds in the portfolio in years

70 f o e g a t n e c r e P

60 s t 50 n e d 40 n o p 30 s e 20 R

10 0

Abo ve ve 1 0 y ea ear s

6 t o 1 0 y ea ea rs rs

0 t o 5 y ea ea rs rs

Use of Funds

Interpretation: Most of the women don’t have a very long term use of funds as a goal. They want to use it in 6 years to 10 years which is not a long period. Very few of the women use them in less than 5 years. A lesser percentage uses the funds in their portfolio in more than 10 years. As women generally invest in funds which generate incomes in long term but invest in avenues which are medium and short term current income generation.


74


&21&/86,216

CONCLUSIONS


75


¾Women

have invested a very less percentage of their income as many women don’t

have a thorough knowledge of all the investment avenues they don’t want to take risks. ¾There

are a big percentage of women who have not been able to take independent

decisions and rely on others for their own investment decisions. ¾A

majority of women have not planned for their finances and other investment

avenues and have invested as opportunities have come. ¾Majority

of the women are of the opinion that liquidity is the most important factor

to be considered while taking investment decisions. ¾Most

of the women have a basic understanding about investing which is a good trend

to encourage more participation in investments. ¾Most

of the women prefer investing in safer investments, they are conservative

investors. ¾Most

of the women have planned for basic savings, household expenses, tax

planning, life protection, children’s children’s education edu cation and children’s children’s marriage. ¾Most

of the women cannot take risk and so they cannot wait for improvement as they

are not very high risk takers with decrease in portfolio value. ¾Most

of the women have invested in low risk investments as they are low risk takers.

They have invested in bank deposits, post office deposits, insurance, provident fund which have low risk and low returns. ¾Most

of the women take decisions by taking the advice of their family members as

they need guidance by the experienced people. ¾Most

of the women have financial goals of generating assets which grow along with

generation of income. So they want financial security with long term growing assets with income. ¾As

women generally invest in funds which generate incomes in long term but invest

in avenues which are medium and short term current income generation.


76

Investment behavior of Women Investors It can be concluded that generally, women are conservative investors and they feel that safeguarding what they have is top priority. These investors want to avoid risk — particularly the risk of losing any principal that is their original investment — even if that means they’ll they’ll have to settle for very modest mod est returns.


77


6&+(0(2) 5(&200(1'$7,216


78


SCHEME OF RECOMMENDATIONS Women should be encouraged to invest in more avenues and participate in the investment avenues which involve high risks and also high returns. Women should focus on making a formal financial plan to have a focus on the financial goals. Women should increase their awareness level of the portfolio diversification to spread their risk. Women should recognize their financial independence and plan for the future to make it better.


79


%,%/,2*5$3+<


80


BIBLIOGRAPHY www.merilllynch.com www.financialplanning.com www.investorhome.com India Today Business Line


81


$11(;85(6


82


QUESIONNAIRE 1. Occupation  Govt employee Private sector employee Self employed Others ( Please specify )

2. Age Between 20 and 30 Between 30 and 40 Between 40 and 50 50 and above 3. Marital status Married Single

4. What is your annual income? Less than Rs. 100000 Between Rs. 100000 and Rs. 250000 Between Rs. 250000 and Rs. 500000 Above Rs. 500000 5. What percentage of your income is invested? Less than 10% 10% to 20% 20% to 30% More than 30% 6. Do you take your own investment decisions? Yes No

7. Do you have a formal financial plan? Yes No 8. Do you and your your spouse generally agree on your financial goals? Yes No


83


9. What factors do you consider while taking an investment decision? Rank the following on the scale of 1 to 5 (1 – most important and 5 – least important)

a) b) c) d) e)

FACTORS Long term growth Risk Return Retirement income Liquidity

RANK

10. How knowledgeable are you about investing and the various options available? I have no investment experience. I have a basic understanding about investing and have made some investments. I have been investing for several years in different types of assets. I am an experienced investor. 11. Which of the following statements would you feel most correctly describes your investment philosophy? I prefer to invest in safer investments. I am willing to tolerate some ups and downs in the value of my investments to achieve overall higher returns in the long run. My main interest is high, long term returns and I am not concerned about short term decreases in my investments. 12. Indicate your stand on the following:

a) b) c) d) e) f) g) h) i)

PARTICULARS Basic savings plan Household expenses Retirement planning Buying of assets Tax planning Life protection Medical expenses Children’s Children’s education Children’s Children’s marriage

PLANNED ----------------------------------------------

NEEDS PLANNING -------------------------------------

13. What would your reaction be, if in 6 months after placing your investments, your portfolio decreases in value? Transfer your money into more secure investment sectors. You would be concerned, but would wait to see if the investments improve. You would leave the investments in place expecting the investments to improve. You would invest more funds to lower your average investment price.


84


14. What are the various investment avenues you have already invested in? PARTICULARS YES NO a) Govt securities ----------b) Equity ----------c) Bonds/debentures ----------d) Mutual funds ----------e) Company Deposits ----------f) Bank Deposits ----------g) Post Office Deposits ----------h) Insurance ----------i) Provident Fund ----------j) Real Estate ---------15. You base your investment decisions on the advice of : Yourself Your friend Your family members Investment advisor 16. Risk tolerance is the relative ability to accept measurable losses in the short term in exchange for expected higher returns long term. Your tolerance for risk is: Very high Moderately high Average Moderately low Very low 17. My overall investment objectives are: Growing assets without concern for current income. Growing assets while generating current income. Generating income and preserving capital. 18. I plan to use the funds in this portfolio in Above 10 years 6 to 10 years 0 to 5 years. 19. What in your your opinion will help women in building better portfolio


85

Investment Behavior of Women Investors

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