"INVESTMENT PREFERENCE AMONG NRI'S WITH

SPECIAL REFERENCE TO KAIPARAMBU

PANCHAYATH"

SUBMITTED TO THE CALICUT UNIVERSITY

In partial fulfilment of the requirement for the award of degree of

BACHELOR OF COMMERCE

BY
SONY P S
(LFAQBCM051)

UNDER THE GUIDANCE OF

Miss. RESHMY N S
ASSISTANT PROFESSOR

DEPARTMENT OF COMMERCE

LITTLE FLOWER COLLEGE, GURUVAYOOR

(AFFILIATED TO CALICUT UNIVERSITY)

Nationally accredited with A Grade
2016-2019

1
 DEPARTMENT OF COMMERCE

LITTLE FLOWER COLLEGE, GURUVAYOOR

(AFFLIATED TO THE UNIVERSITY OF CALICUT)
Nationally accredited with A Grade

CERTIFICATE

This is to certify that

SONY P S
Is a bonafide student of department of commerce and that the project
report entitled
"INVESTMENT PREFERENCE AMONG NRI'S WITH SPECIAL
REFERENCE TO KAIPARAMBU PANCHAYATH"
Has been prepared by her in partial fulfilment of the requirement for the
award of [Link] Degree of University of Calicut

Guruvayoor Miss. JANICE MARIA JOSE

Date Assistant Professor
Head of the Department of Commerce

2
 CERTIFICATE

This is to certify that the project report entitled "INVESTMENT

PREFERENCE AMONG NRI'S WITH SPECIAL REFERENCE
TO KAIPARAMBU PANCHAYATH" is a bonafide record of project
work done independently by SONY P S under by guidance and
supervision and that it has not previously formed basis for the award of
any Degree, Diploma, Fellowship or Associate ship to her. This report is
worth submitting for the award of the Bachelor Degree in Commerce.

Place : Guruvayoor MISS. RESHMY N S

Date : Assistant Professor
Department of Commerce
External Examiner: Little Flower College,
Guruvayoor

3
 DECLARATION

I, SONY P S., do here by declare that this project report entitled

"INVESTMENT PREFERENCE AMONG NRI'S WITH SPECIAL
REFERENCE TO KAIPARAMBU PANCHAYATH" is prepared by
me under the guidance and supervision of Miss. RESHMY N S,
Assistant Professor, Department of Commerce, LITTLE FLOWER
COLLEGE, GURUVAYOOR. I further declare that this project report
has been submitted by me for the award of my Bachelor Degree of
Commerce. I also declare that this project report has not previously
formed the basis for the award of any Degree, Diploma, and fellowship,
associate ship or other similar title of recognition.

Place: Guruvayoor SONY P S

Date :

4
 ACKNOWLEDGEMENT

I am indeed happy to bring out this project report title

"INVESTMENT PREFERENCE AMONG NRI'S WITH SPECIAL
REFERENCE TO KAIPARAMBU PANCHAYATH" after due
consideration to the suggestions made by my esteemed well wishers.

FIRST, and foremost, I thank God for his mercy drop of blessings
upon me to complete my project successfully within the stipulated time.

I would like to take this opportunity to express my profound thanks

and gratitude to all the people who helped me.

I acknowledge to my principal REV DR. SR. MOLY CLARE, for

her blessings throughout our study in this institution.

I owe my sincere gratitude to all the staff members of department

of commerce, Little Flower College, Guruvayoor, for their
encouragement and advise in preparation of this report.

I express my sincere gratitude to Miss. JANICE MARIA JOSE,

Head of Department of Commerce Little Flower College Guruvayoor.
Who was making for the successful completion of the project.

I express my sincere gratitude to Miss. RESHMY N S Assistant

Professor, Department of Commerce, for her able guidance and support
from time to time. Her loving and encouragement and blessings have
always been a source of inspiration to me. She found time read through
the whole work leisurely and offered her valuable comments for its
improvement my indebtedness to her is beyond words.

I also extent my thanks to beloved parents, relatives and friends for

all their support encouragement in bringing up this project

SONY P S

5
 CONTENTS

CHAPTERS PARTICULARS PAGE

NO.
CHAPTER 1 INTRODUCTION
[Link] 1-2
[Link] OF THE PROBLEM 2
[Link] OF THE STUDY 2
1.4.0BJECTIVES OF THE STUDY 2
[Link] METHODOLOGY 3
1.6. LIMITATIONS OF THE STUDY 5
CHAPTER 2 REVIEW OF LITERATURE 6-9
CHAPTER 3 THEORETICAL FRAMEWORK 10-21
CHAPTER 4 DATA ANALYSIS 22-38
AND
INTERPRETATION
CHAPTER 5 FINDINGS, SUGGESTIONS AND
CONCLUSIONS
5.1 FINDINGS 39
5.2 SUGGESTIONS 40
5.3 CONCLUSION 41
BIBLIOGRAPHY
APPENDIX

6
 LIST OF TABLES

TABLE TITLE PAGE

NO. NO.
4.2 The educational qualification of respondents 22
4.3 Respondents nature of job 23
4.4 The income of respondents 24
4.5 The purpose of savings of respondents 25
4.6 The factors influencing investment decision 26
4.7 The information on investment avenue 27
4.8 Frequency in investing in India 28
4.9 Risk wise classification 29
4.10 Role of Government institution and agencies in 30
promoting NRI investment
4.11 The discouraging factors in investment 31
4.12 The experience & knowledge in investment 32
avenue
4.13 About Government polices regarding NRI 33
investment
4.14 The opinion of friend and family influencing 34
the investment
4.15 The negative experience with investment 35
avenue
4.16 Preference in selecting sectors of investment 36
4.17 The better investment avenue 37
4.18 The influence of income on investment decision 38

7
 LIST OF CHART

CHART TITLE PAGE

NO. NO.
4.2 The educational qualification of respondents 22
4.3 Respondents nature of job 23
4.4 The income of respondents 24
4.5 The purpose of savings of respondents 25
4.6 The factors influencing investment decision 26
4.7 The information on investment avenue 27
4.8 Frequency in investing in India 28
4.9 Risk wise classification 29
4.10 Role of Government institution and agencies in 30
promoting NRI investment
4.11 The discouraging factors in investment 31
4.12 The experience & knowledge in investment 32
avenue
4.13 About Government polices regarding NRI 33
investment
4.14 The opinion of friend and family influencing 34
the investment
4.15 The negative experience with investment 35
avenue
4.16 Preference in selecting sectors of investment 36
4.17 The better investment avenue 37
4.18 The influence of income on investment decision 38

8
 CHAPTER -1

INTRODUCTION

9
1.1 INTRODUCTION

Investment is the employment of funds on assets with the aim of

earning Income or capital appreciation .Investment has two attributes
namely Time And Risk. Present consumption is sacrificed to get a return
in the future. Investment is the process of. "Sacrificing something now for
the prospect of Gaining something later". The sacrifice that has to be
become is certain but. The return in the future may be uncertain
.Investing is a wide spread practice and many have made their fortunes in
the process. The starting point in this process is to determine the
characteristics of the various investments and matching them with the
individual need and preferences. Three golden rule of investment are
Invest early, Invest regularly, Invest in short-term and long-term. Among
NRI investorsthey are unwilling to take risk with their money. The most
common reason for being averse to taking risks included the
responsibility of raising a family and taking on large financial
commitments such as mortgage .However some of the investors were
willing to take higher risk with their money to give themselves the chance
of making higher returns.

The main investment objective are increasing the Rate of Return

and Reducing Risk .Other objectives like safety, liquidity, and hedge
against Inflation are subsidiary objectives. There are many investments
available in the economy such as Bank deposits, Shares, Bonds, Gold and
Silver, Mutual Funds, Life Insurance, Real Estate Etc .all the investments
risky, as the invest or parts with his money. For most of the investors
throughout their life, they will be earning and spending money. As
investors who would have diverse investment strategies with the primary

10
aim to achieve superior performance, which would also some and a
higher rate of return on our investments.

Sometimes investors may have more money than they want to

spend; at the other times, they want to purchase more than they can
afford. These imbalances will lead investors either to borrow or to save to
maximize the long run benefits from their income. What investors do
with savings to make them increase overtime is investment. An efficient
investor with proper training can reduce the risk maximize return on
investment. He can avoid pitfalls and protect this interest. The act of
investing has the goal of generating income and increasing value
overtime. An investment can refer to any mechanism used for generating
future income. This includes the purchase of bonds. Stocks or real estate
property, among other examples. Additionally, purchasing a property that
can be used to produce goods can be considered an investment in general
any action that is taken in the hopes of raising future revenue can also be
considered an investment. Because investing is oriented towards the
potential for future growth or income, there is always a certain level of
risk associated with an investment. An investment may not generate any
income, or may actually lose value over time. For example, its also a
possibility that or project that fails to materialize. This is the primary way
that saving can be differentiated from investing saving whereas
investment is the act of leveraging money for a potential future going and
entails some risk. Investment is done keeping a financial goals in mind.
The investment objectives help generate income and grow over a certain
period of time. Investment includes bonds, stocks, PPF amongst other,
which helps in growing money and providing an additional source of
income. As investment helps us in growing our money over a certain
period of time, there is a certain risk accompanying the investment.

11
1.2 STATEMENT OF THE PROBLEM

The Government and our Financial Institutions are very keen on

designing Suitable investment schemes for attracting NRI investments.
Here comes the relevance of the study, "Investment Decision-making
among NRIs with special reference to Kaiparambu panchayath of
Thrissur district.". Also to identify the major investment problems faced
by the NRI'S in the locality. It helps to analyse the better and safe
investment avenues.

1.3 OBJECTIVE OF THE STUDY

 To analyse the effect of the income on investment decisions of

the NRI's of Kaiparambu.
 To study the influence of the educational background of the
NRI's on their Investment decisions
 To know about various investment avenue preferred by NRI

1.4 SIGNIFICANCE OF THE STUDY

Every aspect of Kerala economy is influenced by the actions and

reactions of the NRIs of Kerala. Their educational levels, place of
employment, place of residence etc. have an influence on investment
decisions. The universe of the present study is the NRIs of this study is
exploratory in nature. Therefore the study has been conducted mainly to
explore the investment preference indifferent portfolio influence of
education, the place of Employment and the place of residence on
investment decisions of the NRIs of Kaiparambu panchayath and to
identify the major investment problems encountered by the NRI'S in the
locality. To study theinfluence of the educational background of the
NRI'S ontheir investment decisions. To know about various investment

12
avenues . To study about the driving force in the selection of investment
avenues. To find out the better and safe investment avenue.

1.5 RESEARCH METHODOLOGY

The study is exploration in nature and is meant for discovering new

insights In to the investment decision-making among the NRIs of
Kaiparambu village. Several issues related to the main aspects of the
study were discussed in detail with experts, researchers and other eminent
personalities in the field of Finance, banking and investment to have an
idea about the subject before the collection of data. The information and
ideas obtained from the discussions were well utilized for the formulation
of a framework for this study. The data were collected using the survey
method with the help of a questionnaire.

1.5.1 DATA COLLECTION METHOD

Both primary and secondary sources of data were collected for this
study.

Primary data

The primary data have been collected through survey method from
30 respondents with the help of a 'structured questionnaire. Survey started
on December and continued till February 2022.

Secondary data

At the exploratory stage of this study , a detailed survey of

literature was . undertaken in order to the various aspects of investment
decisions of NRI'S. The secondary data were very helpful in evolving in
appropriate methodology For the study and in formulating a conceptual
framework for the study

13
 For these purposes, various secondary sources like books and
periodicals, research articles, seminar reports, working papers, news
papers, study reports of expert committees, plan documents, websites,
journals etc. were surveyed. A careful survey of literature helped the
researcher to collect and synthesize prior studies and to discover the
important variables relevant to the problem.

1.5.2 POPULATION SIZE

It is the aggregate of all the units to be studied in any field of

enquiry. Here the population size selected for the study is the NRI's who
resides in Kaiparambu panchayath.

1.5.3. SAMPLING TECHNIQUE

The NRI's of Kaiparambu panchayath have been selected as the

universe of this study. The respondents were selected on the basis of
random sampling. From these 100 respondents each were selected and the
necessary information was collected at random through survey method.

1.5.4. SAMPLING SIZE

Sampling size refers to the number of items to be selected from the

universe to constitute a sample. Sample size for the study is 100.

1.5.5. TOOLS USED IN THE STUDY

Following are the tools applied for analysis of the data

 Percentage Analysis
 Pie chart
 Bar chart
 Tables

14
[Link] Percentage analysis

It is applied to create a contingency table from the frequency

distribution and represent the collected data for better understanding.

[Link] Pie chart

A pie chart is a circular statistical graphic, which is divided in two

sectors to illustrate numerical proportion.

[Link] Bar chart

A bar chart is a chart with rectangular bars with length proportional

to the values that they represent. The bars can be plotted vertically or
horizontally.

1.5.6. PERIOD OF THE STUDY

Period of the study is 21 days

1.5.7. AREA OF STUDY

Area of the study is Kaiparambu panchayath of Thrissur district

1.6 LIMITATIONS OF THE STUDY

1. Time was the main constraint undertaking this study.

2. The size of the sample compared to the population is very small
and hence it may not represent the whole population.
3. A structured questionnaire was the basis for collecting the data, so
it has the usual deficiencies attached to this technique of data
collection.
4. Validity and reliability of the data depends on the truthfulness of
the responses from the public there is a chance for bias.

15
 CHAPTER -2

REVIEW OF LITERATURE

16
2.1 REVIEW OF LITERATURE

A literature review is the summary of an evaluation of previous

published and unpublished research made by various scholars and
researchers. The sources of literature review may be newspaper, articles,
journals, books, report etc. It may also include discussions,
methodological issues and suggestions for future research.

Sunil Gupta (2008) the investment pattern 12among different groups in

city had revealed a clear as well as a complex picture. The complex
picture means that the people are not aware about the different investment
avenues and they did not respond positively, probably it was difficult for
them to understand the different avenues. The study showed that the more
investors in the city prefer to deposit their surplus in banks, post offices,
fixed deposits, saving accounts different UTI schemes,etc.

Manish Mittal and Vyas (2008) Investors have certain cognitive and
Investors have certain cognitive and Emotional weaknesses which come
in the way of their investment decisions . Over the past few years,
behavioural finance researchers have scientifically shown that investors
do not always act rationally. They have behavioural biases that lead to
systematic error in the way they process information for investment
decision. This paper classifies Indian investors into different personality
types and the investment personality exhibited by the investors.

Kumar Singh (2006) the study entitled "Investment Pattern of People

"has been undertaken with the objective, to analyze the investment
pattern of People in diversified city. Analysis of the study was undertaken
with the help of survey conducted. After analysis and interpretation of
data it is concluded that investors are more aware about various

17
investment avenues & the risk associated with that. All the age groups
give more important to investing equity & except people those who are
above 30 give important to insurance, fixed deposits and tax saving
benefits. Generally those investors who are invested in equity, are
personally following the stock market frequently i.e. in daily basis. But
those who are invested in mutual funds are watching stock market weekly
or fortnightly. Major investors are more aware about various investment
avenues and the risk associated with that. But many investors are more
conservative in nature and they prefer to invest in those avenues where
risk is less like bank deposit, small savings, post office savings etc..
Prakash(1999) has to his study pointed out that inflow of remittances
have helped emigrant households attain higher levels of
income,consumption and acquisition of assets. The impact of migration
on consumption ,savings and investments largely determined by the
amount of remittances set by migrants and the utilization pattern of
remittances.

Zachariah, Mathew and Rajan (1999) have stated that the most
significant aspect of migration from kerala has been the very high annual
cash remittances. The estimate for 1998 was about Rs.35304 million, or
about 9 percent of the state domestic product.

Raju (1993) as reported in his doctoral dissertation that households with

and without foreign remittances have almost the same saving behaviour
with educational [Link] most significant aspect of migration from the
State has been the large annual cash remittances which households in
Kerala have been receiving.

Siddhique (1992) has attempted to find out of Gulf remittances on the

Economy of Malappuram district in kerala. Most of the consequences,

18
Especially those taking place in the households of migrants are brought
About through remittances and their utilization. Remittances cause social
and economic changes. The major use of remittances is reported to be
household consumption.

Antony (1988) has stated that 70 percent of the savings of the non-
resident Keralites is used for the acquisition of land and construction or
repair of buildings, and only 19 percent of the savings is invested in any
sort of income generating assets. The other important uses were
education, repayment of debt and bank deposits.

The Department of Economics and Statistics, Government of Kerala

(1988) Has concluded that, about 6.82 lakh people have migrated from
Kerala of whom 48.3 percent to foreign countries. The number of Gulf is
estimated as 3.01 lakhs. It is also estimated that Muslim households
account for 50percent of the Gulf remittances where as scheduled caste
and scheduled tribe households account for only one percent. One of the
important items of expenditure in emigrant households is there payment
of debts incurred in getting a job in Gulf countries. It could be seen that
expenditure on socially productive purposes like improvement to land,
investment in business deposit in banks etc. accounted for only 10 percent
of the total utilization of remittances. It may be noted that expenditure for
the purchase of land, building and ornaments together accounted for
63.3per cent during the five year under reference and 67.7percent
duringl986.

Gopinathan Nair (1986) has in his study stated that the majority of the
emigrants from Kerala to the Arab world were "net savers" and they used
to remit the bulk of their savings in regular instalments to their house
holds, a major portion of which was spent for routine consumption and

19
the acquisition of assets .In his 1987 study Gopinathan Nair revealed that
the inflow of large amounts by way of remittances from the Gulf to the
households in Kerala has not led to increase in production activities
except in building construction The Agro-Economic Research Centre
(1982)has recognized the wide differences that exist in income and asset
status and level of consumption expenditure between emigrant
households and non-emigrant households in Kerala.

Mathew and Gopinathan Nair (1978) have shown that substantial

amounts were being received by emigrant households in Kerala by way
of remittances and the major part of the income from remittances was
spent for socially unproductive purposes. Major portion of the
remittances was spending for purchasing or improving land and
buildings.

Prakash (1978) has estimated that nearly Rs.822 thousand were received
by 95 households in Kerala during the year 1977 by way of remittances.
Due to higher income the monthly expenditure was also higher in the case
of Migrant households. Conspicuous consumption is a hallmark of gulf
migrants. Consumption constitutes the major application of the
remittances. The migrant households had higher income, and better
consumption levels. Their investment in business is small and in
productive activities almost nil. The Reserve Bank of India(1975) has
assessed the potential increase in inward remittances through banking
channels consequent on "MISA measures in Malappuram district, Kerala
State, and revealed that 70 to 85 percent of the remittances received were
from the Arabian Gulf countries, The Commerce Research Bureau (1978)
estimated the average remittance per emigrant at Rs.11,7001-per annum
and observed that investment in land, buildings and jewellery from the

20
major chunk of the total investments made by emigrant house hold in
Kerala.

The Department of Economics and Statistics, Kerala(1977) revealed that

there were 4.32 lakh out-migrant from Kerala out of which 1.35lakh were
working outside India.

Malik, et al. (2013) have made a study on portfolio management. The

major objective of the paper was to help the investor in investing in
various securities. The researcher explained the approaches of portfolio
construction such as Markowitz efficient frontier approach and
Traditional approach. In these approaches the constraints like income
needs, liquidity, safety etc. were analyzed. At last it was concluded that
by making a portfolio the investor must judge the risk taking capability
and return desired

Ramanujam & Chitra (2012) investigated the investment pattern of

salaried and business people. For this purpose 100 investors had been
taken as a sample from Coimbatore city and data was collected by
questionnaire method. Descriptive statistics, ANOVA, chi- square test
and cross tabulation had been used for data analysis. This study revealed
that education level, awareness, age, gender etc. influenced the
investment pattern of individuals. Further it was also disclosed that
income level also influenced the decisions of investment.

21
 CHAPTER – 3

THEORETICAL FRAMEWORK

22
3.1 MEANING OF INVESTMENT

Investment is the employment of funds with the aim of getting

return on it. In General terms, investment means the use of money in the
hope of making more money. In Finance, investment means the purchase
of a financial product or other item of Value with An expectation of
favourable future returns. Investment of hard earned money is a crucial
activity of every human being. Investment is the commitment of funds
which have been saved from current consumption with the hope that
some Benefits will be received in future. Thus, it is reward for waiting for
money. Savings of the people are invested in assets depending on their
risk and return Demands. Investment refers to the concept of deferred
consumption, which involves purchasing an asset, giving a loan or
keeping funds in a bank account with the aim of generating future returns.
Various investment options available, offering differing risk-reward
trade-offs. An understanding of the core concepts and a thorough analysis
of the options can help an investor create a portfolio that maximizes
returns while minimizing risk exposure.

For layman investment means some monetary commitment to buy

a flat or house for his personal use may be an investment from his point
of view. To the Economist, investment is the addition made to the
nation's capital stock that consist of goods and services that are used in
the production process. Financial investment is the allocation of money to
assets that that are expected to yield some gain over a period of time. The
financial and economic meanings are related to each other, we are
concerned only about the financial investment made on securities.

23
 An investment is essentially an asset that is created with the
intention of allowing money to grow. The wealth created can be used for
a variety of objectives such as meeting shortages in income, saving up for
retirement, or fulfilling certain specific obligations such as repayment of
loans, payment of tuition fees, or purchase of other assets.

Understanding the investment definition is crucial as sometimes, it

can be difficult to choose the right instruments to fulfill your financial
goals. Knowing the investment meaning in your particular financial
situation will allow you to make the right choices. Investment may
generate income for you in two ways. One, if you invest in a saleable
asset, you may earn income by way of profit. Second, if Investment is
made in a return generating plan, then you will earn an income via
accumulation of gains. In this sense, ‗what is investment‘ can be
understood by saying that investments are all about putting your savings
into assets or objects that become worth more than their initial worth or
those that will help produce an income with time.

Financially speaking, an investment definition is an asset that is

obtained with the intention of allowing it to appreciate in value over time.
In an economic outlook, an investment is the purchase of goods that are
not consumed today but are used in the future to create wealth. In finance,
an investment is a monetary asset purchased with the idea that the asset
will provide income in the future or will later be sold at a higher price for
a profit.

Investment is thus defined as an addition to the stockpile of

physical capital such as Machinery, Buildings, Roads, etc.,i.e. anything
that sums up the future productive ability of the economy and changes the
catalogue (or the stock of finished commodities) of an manufacturer.

24
Investment definition is an asset acquired or invested in to build wealth
and save money from the hard earned income or appreciation. Investment
meaning is primarily to obtain an additional source of income or gain
profit from the investment over a specific period of time.

3.2 DEFINITIONS

Different authors have defined investment differently. Some of the

views are as follows.

SHARPE/ALEXANDER "Sacrifice of certain present value for some

uncertain future valued‖.

Mrs. JOAN ROBINSON ―By investment is meant an addition to

capital, such as Occurs when a new house is built or a new factory is
built. Investment means Making an addition to the stock of good in
Existence." The term investment is understood by different persons
indifferent senses. Basically there are three concepts of investment:-

3.2.1. Economic Investment

Economic investment is an economist's definition of investment.

To the Economist investment means "the net additions to the economy's
capital stock Which consist of goods and services that are used in the
production of other Goods and services". In this context, thus investment
means capital formation in The form of new construction , new product
durables inventories and human capital.

3.2.2. Business Investment

Business investment refers to the money put in a private business.

It is the Amount with which a person starts his business or the additional

25
amount which He puts in later on. If a business unit is setup and an
amount of Rs.10 lakhs is Spent on it, this will be a business investment

3.2.3. Financial Investment

The financial sense of investment differs from its economic sense.

Investment In safe or risky assets with a view to earn some gain over a
given period of time is called Financial Investment" and such assets are
called Financial Assets". The gain maybe in the form of interest,
dividend, rent, premium, pension benefits or the appreciation in the value
of the principal capital. To the financial investors, it Is not important
whether money is invested for a productive use or for the Purchase of
second hand instruments such as existing shares and stocks listed On the
stock exchange.

3.3 INVESTMENT OBJECTIVES

The major Objectives of investment are as follows:-

a) Income : the major objective of every investment is to earn income

inthe form of dividend ,yield or interest.
b) Capital Appreciation: the other important objective of investment
is Appreciation in the capital invested over a period of time.
c) Safety and security of funds: Another important consideration in
making Investments is that the funds so invested should be safe and
secure.
d) Risk: the level of risk depends on the object of investment. An
investors who expects greater return should be prepared to take
greater risk. By Careful planning an periodical review of the
market situation, the investor Can minimize his risk on the
investments.

26
 e) Liquidity : The liquidity of the investment is another consideration
to be kept in mind by the investors. Before making the investment,
the investor should consider the degree of liquidity required.
f) Tax considerations: Before making the investments the investor
should also take the provisions of income tax, capital gain tax,
wealth tax etc.

3.4 INVESTMENT PROCESS

1. Investment policy

It involves:

a) Identification of investors objectives, constraints and preferences

b) Formulation of Investment policy and strategy
c) Execution of strategy
d) Monitoring of investment portfolios.

2. Security analysis

When an individual has arranged a logical order of type of investment

that He require, on his portfolio, the next step is to analyze the securities
Available for investment. He must make comparative analysis of type of
industries, kind of security, fixed or variable securities. The primary
concern at this stage would be to form beliefs regarding future behavior
of prices and stocks, the expected return and associated risk.

3. Security valuation

Investment value, in general, is taken to be the present worth to the

Owners of future benefits from investments. The investor has to bear in
Mind the value of these investments.

27
4 .Portfolio construction

Portfolio is a combination of securities which is designed and selected by

The investors in order to maximize return and minimize risk. Portfolio
Construction require different knowledge of the different aspects of
securities. These aspects consist of safety, growth of principal, liquidity
of assets after taking in to account the stage involving investment timing,
selection of investment, allocation of savings. [Link] evaluation and
revision

The process of investment is not complete after the construction of Port

folio. The portfolio needs to be evaluated and revised at periodical
intervals.

3.5. CLASSIFICATON OF INVESTMENT

Different methods of the classification of the investment avenues are

available. Some of the methods arc as follows:-

1. Physical investments

Physical investments are tangible assets like motorcars, aero planes,

ships, buildings, machinery etc. some of the physical assets like
machinery, equipment etc. are useful for further production where as
some like gold, silver etc. are not useful for further production. A
physical investment consist in buying a machine tool, a loom, a truck, or
a plant etc to put it to work. A tangible investment is something physical
that you can touch. It is an investment in tangible hard or real asset or
personal property. Some asses are held purely for their ability to
appreciate, such a collectibles, while others are held for the income they
generate while they depreciate such as equipment held for lease.

28
2. Financial investment

Financial assets are those which are used for the consumption or for
Production of goods and services or for further creation of assets.
Examples Are shares, NSS certificates, bonds etc. Financial investment
refers to putting aside a fixed amount of money and expecting some kind
of gain out of it within a stipulated time frame. Financial investment
controls an individual‘s spending pattern. It decides how and what
amount one should spend so that he has sufficient money for future.

3. Marketable and Non Marketable investments

Some investments are listed on the stock exchanges are easily marketable
and can be converted in to cash in a short time. Example: shares, bonds
and other instruments issues by government or companies. Non
Marketable investments like bank deposits, provident funds, insurance
schemes etc. cannot be bought or sold in the open market in the stock
exchanges and thus are difficult to be converted in to cash immediately.
A marketable item is positioned to be bought or sold easily through a
marketplace. Features of marketable securities include ownership that is
easily transferred and values that are subject to market pricing.
Marketable securities represent the amount of capital that the issuer can
access. These securities are considered to be liquid because they mature
quickly and are easily converted into cash. Marketable securities carry a
higher risk than non-marketable securities. A non-marketable security is
not exposed to the influences of market fluctuations, which makes it less
prone to volatility due to market conditions. Some non-marketable
securities may be restricted, and they are regarded as long-term
investments.

29
4. Transferable and Non Transferable

Instruments like shares, bond can be transferred in the name of others or

can be sold or exchanged for cash or kind, where as some instruments
like Insurance certificates, NSC's cannot be transferred

3.6 FACTORS AFFECTING INVESTMENT DECISIONS

1. Amount of Investment

The amount of funds available for investment will influence the form of
investment. In case of an individual investor the amount may be small.
There are avenues for making such investments lie bank deposits, mutual
funds etc. If the investible funds are more than transferable financial
securities like shares, debentures etc. may be purchased.

2. Purpose of Investment

The purpose of investment must be very clear before making it. The
Purpose makes one think in the same way. The object of an individual
Investor may be to save tax, fixed return, and appreciation in the value of
Securities etc. The purpose of industrial investor will be different than
that of An individual investor. They may lie to employ idle funds for
short period to Earn some income. If the management wants to earn
higher return then Speculative securities will be preferred.

3. Type of Investment

Another important factor is the selection of securities. A decision about

Where to invest is very important. A number of securities are available in
the Market and which one suits the investor objective should be taken up.
Varied Securities may be taken up to suit different needs. Investment may
be long Term or short term.

30
4. Timing of Purchase

A Proper timing of purchase and sale of securities can bring profits to

securities the investors. The securities should be purchased when their
prices are low and should be sold when prices have arisen. A careful
analysis of price changes may help investor to decide the proper timing of
purchase and sale of shares.

3.7 INVESTMENT ALTERNATIVES

Wide varieties of investment avenues are now available in India. An

investor Can himself select the best avenue after studying the merits and
demerits of Different avenues. Even financial advertisements, newspaper
supplements on financial matters and investment journals offer guidance
to investors in the Selection of suitable investment avenues.

3.7.1. EQUITY SHARES

The holders of the equity shares are the real owners of the company. They
have the voting rights in the meetings of the company. They have a
control over the working of the company. Equity shareholders get
dividend after paying it to the preference shareholders. The rate of
dividend depends upon the profits of the company. They may get a higher
Rate of dividend or may not gel anything. On liquidation of the company,
these shareholders get refund of capital only after satisfying claims of
creditors and preference shareholders. The investors in these shares have
the risk of income as well as of their share money. The stock market
classifies shares on the basis of their strength and likely appreciation in
value. Equity shares are a popular investment strategy amongst investors.
The very reason behind this popularity is the huge returns offered by the
equity shares. Equity shares are issued to public investors to earn capital
for the expansion of business. When you invest in equity shares, you

31
become a fractional owner of the company. Equity shares are also known
as ordinary shares and comprise the bulk of the shares being issued by a
particular company. Equity shares are transferable and are traded actively
by investors in stock market.

3.7.2 PREFERENCE SHARES

These shares have two preferences as compare to other shares. There is a

Preference for payment of dividend when the company has distributable
profits. The second preference is regarding repayment of capital at the
time of liquidation of the company. Preference shareholders do not have
voting right but they are paid a fixed rate of dividend. The investors who
want regular income even though the rate may be less will prefer such
shares.

Preference shares also commonly known as preferred stock, is a special

type of share where dividends are paid to shareholders prior to the
issuance of common stock dividends. Preference share holders hold
preferential rights over common shareholders when it comes to sharing
profits. Investors who have been in the stock market for longer than most
go after preference share types. The dividends earned on these shares are
significantly higher than ordinary shares.

3.7.3 DEBENTURES AND BONDS

A company can raise long-term loan by issuing debentures. A debenture

is an acknowledgement of a debt. In the words of Thomas Evelyn, "A
debenture is a document under the company's seal which provides for the
payment of a Principle sum and interest there on at regular intervals,
which usually secure by a Fixed or floating charge on the company's
property or undertaking an which Acknowledges a loan to the company."
The debenture is regularly traded at Stock exchanges so the investor can

32
raise money any time by selling securities. There is no appreciation in
value of debenture as is the case with shares. Organizations may borrow
funds by issuing debt securities named bonds, having A fixed maturity
period(more than one year) and pay a specified rate of interest (coupon
rate)on the principal amount to the holders

3.7.4. MONEY MARKET SECURITIES

These are debt instruments of short period duration. In Indian money

market Treasury bills, Certificate of deposits and Commercial paper,
Repos are issued. Money market securities are essentially IOUs issued by
governments, financial institutions, and large corporations. These
instruments are very liquid and considered extraordinarily safe. Because
they are extremely conservative, money market securities offer
significantly lower return than most other securities. Money market
securities are often considered a good place to invest funds that are
needed in a shorter time period—usually one year or less.

a) Treasury Bills: these are short term money instruments issued by

the government. These are sold at a discount and redeemed at par.
No interest is paid on treasury bills but the difference between
purchase price and Face value is the income of the investor. The
treasury bills are bearer instruments. They are primarily short-term
borrowing tools, having a maximum tenure of 364 days, available
at zero coupons (interest) rate. They are issued at a discount to the
published nominal value of government security (G-sec). A short
term treasury bill helps the government raise funds to meet its
current obligations, which are in excess of its annual revenue
generation. Its issue is aimed at reducing total fiscal deficit in an

33
 economy, and also in regulating the total currency in circulation at
any given point of time.
b) Certificate of Deposits: it is a marketable deposit for funds that
have been deposited in a bank for a fixed period of time. A
certificate of deposit (CD) is a savings account that holds a fixed
amount of money for a fixed period of time, such as six months,
one year, or five years, and in exchange, the issuing bank pays
interest. When you cash in or redeem your CD, you receive the
money you originally invested plus any interest. It is a time
deposit, a financial product commonly sold by banks, thrift
institutions and credit unions.
c) Commercial paper: it is a short term unsecured promissory notes
sold by large business firms to raise funds. These papers are of
high denominations with varying maturity period. These are sold at
a discount and paid at par on maturity. CP was introduced in India
in 1990 with a view to enabling highly rated corporate borrowers to
diversify their sources of short-term borrowings and to provide an
additional instrument to investors it is a unsecured short period
debt tool issued by a company usually for the finance and
inventories and temporary liabilities.
d) Repos: Under a repos transaction, a holder of securities sells them
to an investor with an agreement to repurchase at a pre-determined
date. A repurchase agreement (repo) is a form of short-term
borrowing for dealers in government securities. In the case of a
repo, a dealer sells government securities to investors, usually on
an overnight basis, and buys them back the following day at a
slightly higher price. They are also a common tool of central bank
open market operations.

34
3.7.5 MUTUAL FUNDS

A mutual fund is an institutional device through which the investors pool

their Funds to invest in a diversified portfolio of securities, thus spreading
and reducing risk. A large number of small and large investors pool their
Resources to create mutual fund which, in turn, contract with an
investment Management firm to manage the assets. The investor in
mutual fund gets a tax rebate under section 80 C of Income Tax Act.
Mutual funds are operated by professional money managers, who allocate
the fund's assets and attempt to produce capital gains or income for the
fund's investors. A mutual fund's portfolio is structured and maintained to
match the investment objectives stated in its prospectus. Mutual funds
give small or individual investors access to professionally managed
portfolios of equities, bonds, and other securities. Each shareholder,
therefore, participates proportionally in the gains or losses of the fund.
Mutual funds charge annual fees (called expense ratios) and, in some
cases, commissions, which can affect their overall returns.

3.7.6. BANK DEPOSITS

Investment of surplus money in bank deposits is quite popular among the

investors (Particularly among salaried people). Banks collect working
capital for their business through deposits called bank deposits. The
deposits are given by the customers for specific period and the bank pays
interest on them. For depositing money in the bank, an investor/depositor
has to open an account in a bank. Bank deposits consist of money placed
into banking institutions for safekeeping. These deposits are made to
deposit accounts such as savings accounts, checking accounts, and money
market accounts. The account holder has the right to withdraw deposited

35
funds, as set forth in the terms and conditions governing the account
agreement.

Different types of deposit accounts are:

1. Current Account
2. Savings Bank Account
3. Fixed Deposit Account,
4. Recurring Deposit Account

3.7.7. PUBLIC PROVIDENT FUND (PPF)

PPF is one attractive tax sheltered investment scheme for middle class
and salaried persons. It is even useful to business men and higher income
earning people. The PPF scheme is very popular among the marginal
income tax payers. The scheme was introduced in 1968. The Public
Provident Fund (PPF) is a savings-cum-tax-saving instrument in India,
introduced by the National Savings Institute of the Ministry of Finance in
1968. The main objective of the scheme is to mobilize small savings by
offering an investment with reasonable returns combined with income tax
benefits. It is a long-term investment scheme popular among individuals
who want to earn high but stable returns. Proper safekeeping of the
principal amount is the prime target of individuals opening a PPF
account. This scheme is ideal for individuals with a low risk appetite.
Since this plan is mandated by the government, it is backed up with
guaranteed returns to protect the financial needs of the masses in India.

3.7.8. REAL ESTATE

Investment in real estate includes properties like building, industrial land,

plantations, and farm houses, agricultural and near cities and flats or
houses. A residential building represents the most attractive real estate

36
property for majority of investors. The prices of real estate are increasing
day by day. It gives reasonable return on investment. There is a low risk
but there is no liquidity. There are chances of capital appreciation also.

3.7.9 GOLD AND SILVER

Gold and silver are the precious objects. Everybody likes gold and hence
requires Gold or silver. These two precious metals are used for making
ornaments and Also for investment of surplus funds over a long period of
time. The prices of gold And silver are also increasing continuously. Gold
and silver are useful as a store of wealth. They act as secret assets. The
investment is highly liquid, which can be sold at any time.

3.7.10 POST OFFICE SAVINGS

Post office operates as a financial institution. It collects small savings of

the people through savings bank accounts facility. Investment in postal
Schemes is as good as giving money to the government for economic
Development along with reasonable return and tax benefits.

3.7.11 LIFE INSURANCE

Life insurance in India is provided by Life Insurance Corporation of India

as well as some private insurance companies; this scheme encourages
savings among people because premium payment is compulsory. Life
insurance is a popular investment scheme among middle and lower
income group people because it provides financial security to the family
on the death of a bread earner. LIC has introduced various schemes to suit
the requirement of different people. Life Insurance can be defined as a
contract between an insurance policy holder and an insurance company,
where the insurer promises to pay a sum of money in exchange for a
premium, upon the death of an insured person. Life insurance is a legally

37
binding contract that pays a death benefit to the policy owner when the
insured dies.

3.8 NON-RESIDENT INDIAN (NRI)

NRI refers to a person of Indian origin staying in a different glob

allocation for employment/carrying on business or vocation. NRIs can
make investments in all the investments options, which are available to
Resident Indians. However, Persons of Indian Origin can only make
investments in non-agricultural businesses in the country.

To encourage this initiation of NRIs to resettle and return back to India,

they are granted the following facilities:

 Maintenance of bank accounts in India

 Investments in securities/shares of, and deposits with Indian
firms/companies.
 Investments in immovable properties in India.

3.9. Difference Tax Benefit Available to NRIs

 Bank deposits, investment in share, unit of mutual funds etc are

exempt from wealth tax in India
 Interest earned on NRE and FCNR amount is completely tax free
 In 1997, gift tax was abolished. So both the donor as well as the
recipient did not have to pay any tax on the gift received
consequently people started misusing the vacuum left behind by
scrapping of gift box. There was a wider spread transfer of
insurance gift from the non-relative. In order to fill up this void,
section 56(2) (V) of income tax Act was passed in 2004. As per
section 56(2) (V)of income tax Act, any amount exceeding
RS25,000 obtained by a person or Hindu undivided family (HUF)

38
without any consideration from non-relative would be taxed. The
only cases exempted were the gift given during marriage,
inheritance left behind in a will or if the payer has decided.

39
 CHAPTER- 4

DATA ANALYSIS AND INTERPRETATION

40
 Table 4.1

The educational qualification of respondents

Educational No of Percentage
Qualification Respondents
Secondary 27 27
Higher Secondary 23 23
Degree and above 50 50
Total 100 100
Source: Primary data

Chart 4.1. The educational qualification of respondents

60

50
50

40

30 27
23
20

10

0
Secondary Higher Secondary Degree and above

Source: Primary data

INTERPRETATION

From the above data 27% of respondents educational qualification is

secondary. And 23% of respondents educational qualification is higher
secondary. And remain 50% are degree and above qualified.

41
 Table 4.2
Respondents nature of job
Nature of Job Percentage
No of
Respondents
Professionals 40 40
Skilled 17 17
Semi skilled 3 3
Office staff 23 23
Total 100 100
Source: Primary data

Chart 4.2. Respondents nature of job

45
40
40

35

30

25 23

20 17
15

10

5 3

0
Professionals Skilled Semi skilled Office staff

Source: Primary data

INTERPRETATION

From the table 40% of respondents are professionals and 17% are skilled,
3% are semiskilled and 23% are office staff and remain others are 17%.

42
 Table :4.3
The income of respondents

Income Percentage
No of

Respondents
10000-25000 20 20
25000-50000 24 24
50000-100000 30 30
Above100000 26 26
Total 100 100
Source: Primary data

Chart 4.3. The income of respondents

20%
26%
10000-25000
25000-50000
50000-100000

24% Above100000

30%

Source: Primary data

INTERPRETATION

From the above table 20% of respondents have income in between

10000-25000 and 24% have income in between 25000-50000 and 30% of
respondents Have income in between 50000-100000 and remain 26%
have income above 100000.

43
 Table 4.4
The purpose of savings of respondents
Purpose of No of Percentage
savings Respondents
Growth plan 50 50
Retirement plan 7 7
Healthcare expense 3 3
Children's education 10 10
plan
Home purchase 20 20
Others 10 10
Total 100 100
Source: Primary data

Chart 4.4. The purpose of savings of respondents

10%

Growth plan
Retirement plan
20%
Healthcare expense
50%
Children's education plan
Home purchase
10% Others

7%
3%

Source: Primary data

INTERPRETATION:

From the above table 50% of respondents have growth plan and 7% have
retirement plan and 3% have Healthcare expenses, 10% respondents have
children‘s education plan, 20% have home purchase and 10% have other
plans.

44
 Table 4.5
The factor influencing investment decision
Factors Respondents Percentage
Safety 33 33
Liquidity 10 10
Capital appreciation 3 3
Uncertainty about future 47 47
Others 7 7
Total 100 100
Source: Primary data

Chart 4.5. The factor influencing investment decision

7%

33% Safety
Liquidity
Capital appreciation
Uncertainty about future
47%
Others
10%

3%

Source: Primary data

INTERPRETATION

From the above table 33% of respondents are influenced in safety and
10% influenced in liquidity and 3% capital appreciation and 47%
influence in uncertainty about future and remain are 7% .

45
 Table 4.6
The information on Investment Avenue
Factors Respondents Percentage
Friends & Relatives 63 63
Investment magazines 20 20
Brokers 7 7
Internet 10 10
Total 100 100
Source: Primary data

Chart 4.6 The information on Investment Avenue

70
63
60

50

40

30
20
20
10
10 7

0
Friends & Relatives Investment Brokers Internet
magazines

Source: Primary data

INTERPRETATION:

From the above table 63% get information from friend"s %relatives and
20% from investment magazine and 7% from brokers and remain 10%
from internet.

46
 Table 4.7
Frequency in investing in India
Frequency in investing Percentage
No of
Respondents
Monthly 43 43
Quarterly 20 20
Half 20 20
Annually 17 17
Total 100 100
Source: Primary data

Chart 4.7. Frequency in investing in India

50
45 43

40
35
30
25
20 20
20 17
15
10
5
0
Monthly Quarterly Half Annually

Source: Primary data

INTERPRETATION:

From the above data 43% make investment in monthly and 20% in
quarterly 20% in half yearly and 17% in annually

47
 Table: 4.8
Risk wise classification
Risk preference Percentage
No of
Respondents
Low risk 33 33
Medium Risk 50 50
High Risk 17 17
Total 100 100
Source: Primary data

Chart 4.8. Risk wise classification

60

50
50

40
33
30

20 17

10

0
Low risk Medium Risk High Risk

Source: Primary data

INTERPRETATION:

From the above table 33% of respondents prefer low risk and 50% prefer
medium risk, and remain 17% prefer High risk

48
 Table 4.9
Role of Government institution and agencies in promoting
NRI Investment
Factors Percentage
No of
Respondents
Excellent 3 3
Very good 27 27
Good 57 57
Moderate 10 10
Poor 3 3
Total 100 100
Source: Primary data

Chart 4.10 Role of Government institution and agencies in promoting

NRI Investment

3% 3%
10%

27% Excellent
Very good
Good
Moderate
Poor

57%

Source: Primary data

INTERPRETATION:

From the above table 3% of respondents have excellent opinion and 27%
have very good opinion. 57% good and 10% moderate and remain 3%
poor.

49
 Table : 4.10
The discouraging factors in investment
No. of. Respondents Percentage
Discouraging factor in

investment
20 20
Depreciation of currency
High cost of land 10 10
High tax 30 30
Others 40 40
Total 100 100
Source: Primary data

Chart 4.10 The discouraging factors in investment

45
40
40
35
30
30
25
20
20
15
10
10
5
0
Depreciation of High cost of land High tax Others
currency

Source: Primary data

INTERPRETATION:

From the above table 20% of respondents discouraging in depreciation of

currency and 10% in High cost of land and 30% in high tax 40% in other
factors.

50
 Table 4.11
The experience & knowledge in Investment Avenue
Experience & No of Percentage
knowledge in Respondents
investment avenue
Excellent 10 10
Very good 23 23
Good 57 57
Moderate 3 3
Poor 7 7
Total 100 100
Source: Primary data

Chart 4.11 The experience & knowledge in Investment Avenue

60 57

50

40

30
23
20

10
10 7
3
0
Excellent Very good Good Moderate Poor

Source: Primary data

INTERPRETATION:

Above table reveals that 10% respondents have excellent knowledge &
experience in Investment Avenue and 23% have very good and 57% have
good, 3% have moderate remain 7% have poor knowledge.

51
 Table 4.12
About Government policies regarding NRI investment
Awareness Percentage
No of
Respondents
Excellent 3 3
Very good 20 20
Moderate 67 67
Poor 7 7
Total 100 100
Source: Primary data

Chart 4.12 About Government policies regarding NRI investment

80

70 67

60

50

40

30
20
20

10 7
3
0
Excellent Very good Moderate Poor

Source: Primary data

INTERPRETATION

From the above table 3% of respondents have excellent awareness about

Government policies and 20% have very good, 3% have moderate and
remain have poor awareness.

52
 Table 4.13
The opinion of friends & Family influencing the investment
Opinions Percentage
No of
Respondents
Always 13 13
Mostly 37 37
Sometimes 47 47
Less often 3 3
Never 0 0
Total 100 100
Source: Primary data

Chart 4.13 The opinion of friends & Family influencing the

investment

50 47
45
40 37
35
30
25
20
15 13

10
5 3
0
0
Always Mostly Sometimes Less often Never

Source: Primary data

INTERPRETATION

From the above table nobody have always negative experience. 10% have
mostly 47% have sometimes and 23% have less often and remain 20%
have never negative experience.

53
 Table 4.14
The negative experience with Investment Avenue
Factors No of Percentage
Respondents
Always 0 0
Mostly 10 10
Sometimes 47 47
Less often 23 23
Never 20 20
Total 100 100
Source: Primary data

Chart 4.14 The negative experience with Investment Avenue

50 47
45
40
35
30
25 23
20
20
15
10
10
5
0
0
Always Mostly Sometimes Less often Never

Source: Primary data

INTERPRETATION

From the above table nobody have always negative experience. 10% have
mostly 47% have sometimes and 23% have less often and remain 20%
have never negative experience.

54
 Table : 4.15
Preference in selecting sectors of investment
Percentage
Preference in selecting No of
sectors of investment Respondents
IT Sector 10 10
Banking 80 80
Others 10 10
Total 100 100
Source: Primary data

Chart 4.15 Preference in selecting sectors of investment

90
80
80

70

60

50

40

30

20
10 10
10

0
IT Sector Banking Others

Source: Primary data

INTERPRETATION

From the above table 10% prefer IT Sector for investment and 80% in
banking and remain 10% on other sector.

55
 Table: 4.16
The better investment avenue
Percentage
Better investment No of
avenue Respondents
Gold 23 23
Real estate 30 30
Shares 17 17
Insurance 20 20
Mutual Funds 10 10
Total 100 100
Source: Primary data

Chart 4.16 The better investment avenue

35
30
30

25 23
20
20
17

15
10
10

0
Gold Real estate Shares Insurance Mutual Funds

Source: Primary data

INTERPRETATION

From the above data 23% prefer Gold for investment and 30% in real
estate, 17% shares 20% in insurance and remain 10% in Mutual funds.

56
 Table: 4.17
The influence of income on investment decision
Opinion No of Respondents Percentage
Yes 65 65
No 35 35
Total 100 100
Source: Primary data

Chart 4.17 The influence of income on investment decision

35%

Yes
No

65%

Source: Primary data

INTERPRETATION:

From the above data showing that income on investment decision has
huge influence. Because 65% of respondents depending on income for
their investment decision.

57
 Table : 4.18
Investment Growth rate
Investment Percentage
No of
growth rate
Respondents
Steadily 50 50
At an average rate 40 40
Fast 10 10
Total 100 100
Source: Primary data

Chart : 4.18 Investment Growth rate

60
50
50

40
40

30

20

10
10

0
Steadily At an average rate Fast

Source : Primary data

INTERPRETATION

From the above data 50% prefer steady investment growth rate ,40%
prefer average rate of growth in investment and 10% prefer fast
investment growth rate.

58
 Table : 4.19
Monitoring of Investment
Monitoring of No of Percentage
Investment Respondents
Daily 20 20
Monthly 70 70
Occasionally 10 10
Total 100 100
Source: primary data

Chart : 4.19 Monitoring of Investment

80
70
70

60

50

40

30
20
20
10
10

0
Daily Monthly Occasionally

Source : Primary data

INTERPRETATION

From the above data 20% prefer to monitor investment daily, 70% prefer
monthly and 10% prefer monitoring occasionally.

59
 Table : 4.20
Percentage of income to invest
Percentage of No of Percentage
income to Invest Respondents
0-15% 30 30
15-30% 50 50
30-50% 20 20
Total 100 100
Source: primary data

Chart : 4.20 Percentage of income to invest

60

50
50

40

30
30

20
20

10

0
0-15% 15-30% 30-50%

Source : Primary data

INTERPRETATION

From the above table 30% of respondents prefer to invest their income
between 0-15% , 50% prefer to invest between 15-30% and 20% prefer to
invest their income between 30-50%.

60
 Table : 4.21
Preference of time period to invest
Preference of time No of Percentage
period to invest Respondents
Short term (0-1yrs) 5 5
Medium term (1-5yrs) 25 25
Long term (greater than 5yrs) 70 70
Total 100 100
Source : Primary data

Chart : 4.21 Preference of time period to invest

80
70
70

60

50

40

30 25

20

10 5

0
Short term (0-1yrs) Medium term (1-5yrs) Long term (greater than
5yrs)

Source : Primary data

INTERPRETATION

From the above table , 5% prefer short term investment , 25% prefer
medium-term and 70% prefer long – term investment.

61
 Table : 4.22
Accounts on financial institutions
Financial institutions No of Percentage
accounts currently Respondents
have
Bank /thrift 30 30
Credit union 20 20
Brokerage account 10 10
Mutual fund 5 5
Retirement account 20 20
Other 15 15
Total 100 100
Source : Primary data

Chart : 4.22 Accounts on financial institutions

35
30
30

25
20 20
20
15
15
10
10
5
5

0
Bank /thrift Credit union Brokerage Mutual fund Retirement Other
account account

Source : Primary data

INTERPRETATION

From the above table , 30% currently have account on Bank / thrift ,
20% on credit union , 10% on brokerage account , 5% on mutual fund ,
20% on retirement account and 15% on other financial institutions.

62
 Table : 4.23
Risk preference on portfolio

Protecting my portfolio No of Percentage

is more important to Respondents
me than high returns
Strongly agree 25 25
Agree 30 30
Neutral 20 20
Disagree 15 15
Strongly disagree 10 10
Total 100 100
Source : Primary data

Chart : 4.23 Risk preference on portfolio

35
30
30
25
25
20
20
15
15
10
10

0
Strongly agree Agree Neutral Disagree Strongly
disagree

Source : Primary data

INTERPRETATION
From the above table , 25% of respondents strongly agree that protecting
portfolio is important than higher returns , 30% Agree on the fact , 20%
has neutral attitude , 15% and 10% and strongly disagree respectively.

63
 Table : 4. 24
Next major expenditure
Next major No of Percentage
expenditure Respondents
Buying a house 40 40
Capitalizing a new business 10 30
venture
Providing for my retirement 50 30
Total 100 100
Source : Primary data

Chart : 4. 24 Next major expenditure

80
70
70

60

50

40

30 25

20

10 5

0
Short term (0-1yrs) Medium term (1-5yrs) Long term (greater than
5yrs)

Source : Primary data

INTERPRETATION

From the above table 40% respondents next major expenditure Is buying
a house , 10% prefers in capitalizing a new business venture , and 50%
prefers in providing for retirement.

64
 Table 4.25
Concerned about possible losses or possible gains
Concerned about No of Percentage
possible losses or Respondents
possible gains
Always the possible losses 5 5
Usually the possible 5 5
Usually the possible gains 30 30
Always the possible 60 60
gains
Total 100 100
Source : Primary data

Chart : 4. 25 Concerned about possible losses or possible gains

35
30
30
25
25
20
20
15
15
10
10

0
Strongly agree Agree Neutral Disagree Strongly
disagree

Source : Primary data

INTERPRETATION

From the above table , when faced with a major financial decision 5% of
respondents are always concerned about possible losses , 5% usually
concerned about possible loses , 30% usually concerned about possible
gains and 60% of respondents always concerned about possible gains.

65
 CHAPTER – 5

FINDINGS, SUGGESTIONS & CONCLUSION

66
5.1 FINDINGS

 Most of respondents are degree and above qualified

 Majority of respondents have professional job.
 More than half of the respondents have the growth plan.
 Most respondents are influenced in uncertainty about future for
their investment decision.
 Majority of investors gathered the information□ about the
investment avenue from their friends and relatives.
 Major part of the respondents are making investment monthly.
 Majority of the respondents select medium risk for their
investment.
 According to the respondents opinion the role of government
institution and agencies in promoting NRI investment is good.
 Majority of respondents are discouraging to invest because of
many other factors.
 About 57% of respondents has good knowledge and experience in
investment avenue.
 Most of the respondents have good awareness about government
policies regarding NRI investment.
 Majority of the respondents are influenced by their friends and
families sometimes.
 The negative experience with the investment avenue are less often
to the NRI investor of Kaiparambu panchayath ,it says that the
investors are paying more attention in selecting the investment
avenues.

67
 80% of the respondents prefer banking sector for investment,
because it is the safe sector for investment. It guaranties security.
 The better investment avenue of the NRI investor of Kaiparambu
panchayath is real estate, because it has high return and less risk.
 Most respondents are influenced by income in taking investment
decisions.
 Most of the respondents want their investment to grow steadily.
 Majority of the respondents monitor their investment monthly.
 50% of respondents prefer to invest between 15-30% percentage
of their income.
 More than half of the respondents , prefer long- term investment.
 Financial institution accounts most of the respondents currently
have is on bank / thrift.
 Most of the respondents agree that protecting their portfolio is
more important than high returns.
 Majority of the respondents expect their next major expenditure
will be providing for retirement.
 More than half of the respondents when faced with a major
financial decision , are always concerned about the possible gains.

68
5.2 SUGGESTIONS

 The study reveals that mutual funds are not popular among the
NRI's of Kaiparambu panchayath .Public and private mutual funds
operating in our country should popularize the benefits of mutual
fund schemes among the NRI's.
 The contributions of the NRI's towards Kerala economy should be
properly recognized by the State Government. Awards should be
instituted yearly, for the NRI's of Kerala who have created most
employment opportunities in our state. Such recognition programs
should be popularized among the NRI's and the general public.
 Most NRIs still disproportionately invest in traditional fixed.
Return assets such as real estate bank FDs and gold. However ,it
makes little financial sense in term of diversification and income
generation. Rental yields of 2-3% from residential properties are
very low . Moreover ,maintenance costs of property are quite high.
 If NRIs are much intrested in real estate , they can invest in
commercial real estate (CRE). For attractive returns.
 NRIs can invest in equities without an upper cap on their
investment amount . They can also opt for mutual funds for long
term investment.

69
5.3 CONCLUSION

Investment may be defined as" a commitment of funds made in the

Expectation of some positive rate of return. "Investment media are
numerous and they are growing in number and variety, in the developed
as well as the developing countries, serving the needs of various types of
investors, individual and institutions. They reflect changes in the cultural
patterns of people, the growth of a variety of financial intermediaries and
instruments with common as well as special features, changes in tax
system, and finally increasing freedom for funds to move across national
frontiers, as part of the economic and financial globalization process.

From this study it was able to conclude that the NRI's Kaiparambu
panchayath mostly prefer real estate as an investment avenue. Because
investing in real estate is the safest investment avenue which gives a
profit in future. Here the investor can earn more profit with less risk
because the price of the real estate is not decreased; it only gets increased
in future. So the investor feels more safety about his future. The NRI
investors are not much interested in mutual funds because it poses high
risk when compared to real estate, and by investing in mutual funds they
have to take routine enquiries in share market. For a busy NRI if's not
possible to have a routine enquiries in share market. The encouraging
factor in the investments in property is that if once they made an
investment they don‘t want to look back this, makes the property as an
interesting investment avenue in the busy life of an NRI.

70
BIBLIOGRAPHY

71
BIBLIOGRAPHY

Books:

 Investment management -Preethi Sing -10th edition -Himalaya

Publications 2002
 Investment analysis and portfolio Management - Prasanna
Chandata -2'ld edition - Tata Mc Grawhill publication Company,
2005
 Financial Market and Service - Dr. C.K Francis - Excel
Publications First Edition

Journals

 Nair, P.R. Gopinathan, (1986): Asian Migration To Arab World:

Migration from Kerala (India), Working Paper No. 181, Centre for
Development Studies, Trivandrum,p.7
 Raju, G., (1993),Household Sector Savings and Deposit
Mobilization in Kerala, Unpublished PhD thesis, Kerala
university,Pp 131-176.

WEBSITES:

 [Link]
 [Link]

72
APPENDIX

73
 QUESTIONNAIRE

INVESTMENT PREFERENCE AMONG NRI's

at Kaiparambu Panchayath

Name:
Gender: Male □ Female □
Age:
1. Educational Qualification?
Secondary □ Higher Secondary □ Degree & above □
2. Nature of Job?
Professionals □ Skilled □ Semiskilled □ Office Staff □
Others □
3. Income : 10000 - 25000 □ 25000 - 50000 □
50000 - 100000 □ Above 100000 □
4. What is your purpose for saving?
Growth Plan □ Retirement plan □ Healthcare □
expense □ Children's Education Plan □ Home Purchase □
Others □
5. What are the factors influencing your investment decision?
Safety □ Liquidity □ Capital Appreciation □
Uncertainty about Future □ Others □
6. How could you get information on Investment Avenue?
Friends & relatives □ Investment Magazine □ Brokers □
Internet
7. Frequency in investing in India?
Monthly □ Quarterly □ Half Yearly □ Annually □

74
8. What would be the extend of the risk composition you would like
to have in your investment
Low Risk □ Medium risk □ High risk □
9. Role of Government institution and agencies in promoting NRI
investment?
Excellent □ Very Good □ Good □ Moderate□ Poor□
[Link] factors in Investment?
Depreciation of Currency □ High cost of land □
High Tax □ Others □
[Link] & Knowledge in Investment Avenue?
Excellent □ Good □ Very good □ Moderate □
Poor □
12. Awareness about Government policies regarding NRI investment
Excellent □ Good □ Very good □ Moderate □
Poor □
[Link] of friends & family influencing the investment
Always □ Mostly □ Sometimes □ less often □ Never □
[Link] experience with investment avenue Mostly
[Link] □ Mostly □ Sometimes □ less often □ Never □
[Link] in selecting sectors of investment
IT Sector □ Banking □ Others □
17. Better investment Avenue
Gold □ Real estate □ Shares Insurance □
Mutual funds□
[Link] your income influences your investment decision?
Yes □ No □
[Link] which rate do you want your investment to grow?
Steadily □ At an average □ Rate fast □

75
[Link] often do you monitor your investment
Daily □ Monthly □ Occasionally □
21. What percentage of your income do you invest?
0-15% 15-30% 30-50%
[Link] is the time period you prefer to invest ?
Short –term (0-1yrs) □ Mediyum - term (1-5) yrs □
Long –term (greater than 5 yrs) □
[Link] type of financial institution accounts do you currently have?
Bank / Thrift □ Credit union □ Brokerage account □
Mutual fund □ Retirement □ Other □
[Link] my portfolio is more important to me than high returns.
Strongly Agree □ Agree □ Neutral □ Disagree Strongly □
Disagree □
[Link] do you expect to be your next major expenditure ?
Buying a house □ Capitalizing a new business venture □
Providing for my retirement □
[Link] you are faced with a major financial decisions , are you more
concerned about the Possible gains?
Always the possible losses □ Usually the possible losses □
Usually the possible gains □ Always the possible gains □

76