A Study on Attitude and Awareness of Rural People Towards Savings and Investments

LIST OF CONTENTS

LIST OF TABLES

LIST OF CHARTS

CHAPTER 1 INTRODUCTION AND DESIGN OF THE STUDY

CHAPTER 2 REVIEW OF LITERATURE AND THEORETICAL FRAMEWORK OF THE STUDY

CHAPTER 3 INDUSTRY PROFILE OF THE STUDY

CHAPTER 4 ANALYSIS AND INTERPRETATION

CHAPTER 5 SUMMARY, FINDINGS, SUGGESTIONS AND CONCLUSION

BIBLIOGRAPHY

APPENDIX

ACKNOWLEDGEMENT

I am grateful to Almighty for his sustained blessing and my Teachers for their support throughout this project. This project report bears impact of many persons and I owe a great deal to all for their encouragement, support and helpful guidance and I wish to express them all a deep felt gratitude.

I am greatly obliged to Dr. PK BABU, Principal. MES Mampad college. I am also greatly obliged to Dr. KP VINOD KUMAR, H.O.D of Department of Commerce and Management Studies, MES Mampad College (Autonomous).

I proudly utilize this privilege to express my thanks and sincere gratitude to my inspiring guide Mr. MUJEEBU RAHMAN P, Assistant Professor, Department of Commerce and Management Studies, MES Mampad college(Autonomous) for his kind supervision, valuable guidance and constant encouragement in bringing out this report in time with a deep sense of involvement and confident.

Besides, I would like to shower my sincere gratitude to the respondents for spending their valuable time to cooperate with my project work. I am also thankful to my beloved parents and friends for their sincere assistance and encouragement during my project work

JAHANA SHERIN O

LIST OF TABLES

Abbildung in dieser Leseprobe nicht enthalten

LIST OF FIGURES

Abbildung in dieser Leseprobe nicht enthalten

CHAPTER I

INTRODUCTION AND DESIGN OF THE STUDY

A STUDY ON ATTITUDE AND AWARENESS OF RURAL PEOPLE TOWARDS SAVINGS AND INVESTMENTS: WITH SPECIAL REFERENCE TO KALIKAVU VILLAGE

1.1 INTRODUCTION

Investment or investing is a word of many interpretations. Generally the term investment means the employment of financial assets or funds with an expectation of achieving additional income. Even though there are substantial differences between savings and investments, these two words are often used as synonyms. The savings is simply a process of putting aside a part of our earnings, but the investment is much different from it, that it not only preserves the money, but also facilitates capital appreciations.

The history of investments starts in Europe in 16th century and later the code of ‘Hammurabi’ created a general frame work for investment. In India the word investment was firstly attached with ‘east indies trade’ in 1610s. After getting independence in 1947, the government also made various policies with a view to promote savings and investment of people. Thus now a day the role of savings and investments in economic analysis is very crucial. In the present scenario, our Government takes a footstep for converting our economy into cashless economy by the way of informing the digital awareness and its position impact towards the society and to promote digital transactions instead of physical supply of money. As the result, Indian economy slowly shifted to digital economy by the way of creating various new investment avenues.

The study is an attempt to analyse the investment attitude of rural people of Kalikavu village and to determine various investment avenues used by them. Investment avenues are the various types of investment alternatives through which people can channelize their money to earn additional profit. There are many investment avenues like bank deposits, post office savings, provident funds, shares and debentures etc are available for public. However many people are unaware about many of those alternatives especially in rural areas. Thus this study is an attempt to know the awareness of various investment avenues by rural people.

1.2 STATEMENT OF THE PROBLEM

India is basically regarded as a rural based country because of 68.84 percent of its population is living in rural areas. Likewise, in Kerala state around 52.3 percent of population is also living on rural villages. Thus it is very clear that in order to make India as a developed nation there should be an upliftment of the lives of rural people especially in their economic conditions through proper enhancement of savings and investment levels of people in rural areas.

Thus investment is an important subject matter that can make major impacts on individual and economic developments. As societies investment increases the capacity to produce goods and services at lowest costs also increasing which leads to greater productivity and efficiency. This efficiency will also leads to economic growth. Thus savings and investments are important for supporting the rural industries. For this purpose their savings and investments should be mobilized and invested properly. But the fact is that many of the investors in rural area have no proper awareness on various investment avenues. Thus due to their lack of knowledge they are not ready to come forward to invest in various portfolios.

Here the study focuses on the investment attitude and awareness of rural people of Kalikavu village towards various investment avenues. It is because here, in this area there is no enough systematic studies and reports available. Hence there is a vast scope for studying in this area to measure the investment habits of people. The present study also focuses on the guiding factors, considering while choosing various investment portfolios and the levels of satisfaction on these investment avenues.

1.3 OBJECTIVES OF THE STUDY

- To identify the sources of income and expenditures of rural people.
- To study the awareness and attitude of rural people towards savings and investment.
- To determine the factors influencing investment decisions of rural people.
- To identify the problems faced by rural people while making investment decisions.

1.4 HYPOTHESIS

- H0: There is no relationship between annual income and average annual investment made by respondents.
- H0: Investment made by male and female respondents is identical.
- H0: Awareness level of rural people towards various investment avenues are identical in terms of gender.
- H0: Awareness level of rural people towards various financial and non financial investment avenues are identical in terms of educational qualifications.
- H0: There is no significant difference between attitude of investors and their average annual investment.
- H0: The factors influencing investment decisions of rural people are identical in terms of gender
- H0: There is no significant difference in the levels of importance on various factors effecting investment decisions among different income groups.
- H0: The distribution of problems faced by investors while making investment decisions are same across the categories of gender.
- H0: The distribution of problems faced by investors while making investment decisions are same across different age groups.
- H0: There is no association between difficulties faced while making investment decision and gender.
- H0: The distribution of levels of satisfaction on the availability of investment products & services are same across different age groups.

1.5 SIGNIFICANCE OF THE STUDY

An effective selection of an appropriate investment alternative scheme is an imperative consideration for every investor who is looking to enhance their satisfactory income levels. The study provides a clear vision about the awareness level of rural people towards these investment alternatives.

In today’s competitive world, a lot of investment alternatives are being provided by both public sector and private sector financial institutions. But we have no idea about how much people are aware of these opportunities and able to access those services especially in rural villages. This study also facilitates to analyse various guiding factors for making a sound investment decision.

1.6 SCOPE OF THE STUDY

Capital formation in various sectors of the economy is one of the imperative factors influencing the process of economic growth of a country. The level of capital formation varies according to the variations in the amount of savings and investments. As we have a majority of rural based population, it is very essential to develop an investment culture among the rural people for capital formation and thereby the faster growth of economy.

This study is conducted to know the level of awareness towards various investment avenues by rural people of Kalikavu village and also to identify various factors influencing their investment decisions. So analyzing and evaluating various guiding factors that influences investment pattern and other criteria of investors provides valuable insights and helping hands for further studies too.

1.7 METHODOLOGY OF THE STUDY

The research methodology adopted for carried out the study is mainly designed as a descriptive work based on both primary and secondary data.

1.7.1 SECONDARY DATA

To get insight into the research area and to develop the theoretical framework and hypothesis, the information was collected from various sources. The major sources are used to avail secondary data in the study are the journals, investment related websites and books

1.7.2 PRIMARY DATA

This study is mainly based on primary data. The primary data is collected from 80 people from Kalikavu area through personal visiting using the structured questionnaire.

1.7.3 SAMPLE SIZE WITH AREA OF STUDY

The research is designed to collect 80 samples from the rural peoples of Kalikavu village through questionnaire and personal interview.

1.7.4 SAMPLING METHOD

Non random sampling is used to collect data from 80 respondents according to the convenience. The all samples are collected on best judgment sampling basis, because the number of people making at least one investment in the area are unknown.

1.7.5 TOOLS FOR DATA COLLECTION

- Structured questionnaire
- Personal interview

1.7.6 TOOLS FOR DATA PRESENTATION

- Tables
- Charts
- Diagram

1.7.7 TOOLS USED FOR DATA ANALYSIS

- Percentage analysis
- Weighted average method
- Henry Garret ranking method
- Chi-square test
- Correlation analysis
- Mann- Whitney U test
- Kruskal Wallis test

1.7.8 PERIOD OF THE STUDY

The project has been conducted during the period September 2018 to January 2019. The primary data for this study has been collected through survey during the period from 3rd December 2018 to 9th December 2018

1.8 LIMITATIONS OF THE STUDY

- The analysis is purely based on the primary data collected and secondary data available, these data will have its own limitations.
- Due to time constraints, the study is limited to the people in Kalikavu area only; therefore the findings of the study cannot be extended to other areas
- In this study, all the respondents were from the rural areas of Kalikavu, It may be possible that the views of respondents from rural area turn out to be different from the respondents belonging from urban areas.
- The study is purely based on samples, so there is a possibility of occurring sample errors.
- Respondents may not have expressed their strong feelings, Therefore collection of data was a tedious process.

1.8 CHAPTER SCHEME

The study contains 5 chapters, which are follows…

The first chapter deals with introduction, statement of the problem, objectives, scope, methodology, limitations etc.

The second chapter explains the past studies relating to this study and conceptual framework on investment

The third chapter provides industry profile of the study.

The fourth chapter contains the analysis and interpretation of data collected from 80 respondents of Kalikavu area.

The fifth chapter includes summary, findings, suggestion and conclusion.

CHAPTER II

PART 1 - REVIEW OF LITERATURE

PART 2 - THEORETICAL FRAMEWORK OF THE STUDY

PART 1

REVIEW OF LITERATURE

BANDGAR.P.K (2000)¹ in his article entitled “A Study of Middle Class Investors Preference for Financial Instruments in Greater Bombay” studied the existing pattern of financial instruments in India and the preference of middle class investors, their behaviour and problems. A questionnaire was administered to collect data. Average, skewness, chi-square test, Fisher Irving tests were used to analyse the data. The study revealed that only 16 per cent of the investors were facing difficulties in buying and selling securities. Middle class investors were highly educated but they were lacking skill and knowledge to invest. Female investors preferred to invest in risky securities as compared to male investors. The study also revealed that there was a moderate and continuing shift from bank deposits to shares and debentures and a massive shift towards traditional financial instruments namely LIC policies and Government
securities.

MADHUSHDHAN KARMAKAR (2001)² made an attempt to analyze the investment behaviour of house hold sector. 50 respondents were selected randomly as sample for the purpose of the study and data were collected through questionnaire from these sample respondents. The study found that people in general are risk averse and they want to invest in safe assets and they considered stock market as risky.

CHAUDHARY A (2003)³, conducted a study on saving and investment pattern of urban families of Haryana in two cities namely Hisar and Rohtak of Haryana to analyse the factors affecting saving and investment pattern of families and to identify the benefits and constraints of saving and investment in the families. The results revealed that as the income increased, the percentage spent on food decreased though the actual amount spent on food increased. It was also observed that majority of the families made monthly budget, which was prepared occasionally, was mental, vague and flexible in nature. It was found that among the compulsory saving schemes, 52 per cent of the respondents had adopted the voluntary saving scheme offered by the banks, post office, insurance companies and bonds, 28.6 per cent had adopted fixed deposit account and 62.3 per cent had taken NSC. Plot and jewellery were adopted as investment options by 56.6 per cent and 29 per cent of the respondents respectively. Stage of the family life cycle 13 was the main factor which affected both saving pattern (78%) of the families as well as investment pattern (70%) of the families.

GNANA DESIGAN C (2006)⁴ made a study titled “Investors Perception towards Equity Share Investment-An empirical study” has examined the investment pattern of the equity investors and the problems of equity share investors in primary and secondary market. The analysis revealed the attitude and perception of the investors towards equity share investment and demographic profile of the investors. It shows that majority of the equity share investors use up to 10 percent of their earnings to invest in equity shares. Most of them are prefer balanced risk and prefer to monitor their investment daily. It is clear that speculative value is the main factor of them to make investment in equity shares. The main problems faced by the equity share investors are non- receipt of share certificates and delay in payment.

V L SHOBHANA AND J JAYALAKSHMI (2006)⁵ Conducted a study titled “Investors Awareness and Preferences – A Study” have examined the level of investor awareness towards investment options and investment risks. The analysis revealed that the investment in real estate is preferred by a majority of the respondents. The second most preferred investment is bank deposits. Awareness about investment options and risks are high among aged, highly educated and those who are professionals by occupation. Demographic variables such as age and education do not have significant influence over investor‘s awareness whereas difference in occupational status leads to difference in the awareness level of Investors. Thus, it has been found that the majority of the investors invest in Real Estate.

NARAYANA D L (2007)⁶ in his major research work titled “Income, Saving and Investment of Household Sector in Chittor District” has attempted to review the economy of a selected district. He examined the asset structure of household classifying the entire range of assets into physical and financial assets. He found that the average investment in case of self employed, farmer households was greater than that of business people. The Investment in farm assets decreased when the education level increased, at the same time the investment in consumer durables increased. Rural household gave importance to precious metals followed by bank deposits and chit funds. He pointed out that more than 35 per cent of the rural households were practicing negative savings and 65 per cent were doing positive savings.

N YESODHA DEVI AND V S KANCHANA (2008)⁷ in their article titled “A Study on Investment Behaviour of Salaried Persons in Coimbatore City” stated that the response of the salaried income group towards various savings schemes and investment is poor. Their intention is tax savings and for this, their preferences are provident fund and life insurance policies. Steps should be taken to create awareness among the investors about other savings schemes and investment avenues. The advertisements for various investment schemes are not adequate as a majority of the respondents aware of the various schemes only through friends and relatives. Therefore it is recommended to various financial institutions to adopt a broad advertising strategy in order to enable the investors to know the details of the various investment schemes. Majority of the respondents have not preferred to invest their savings in UT1 and Mutual funds which are the latest investment schemes and hence the government should take appropriate steps to persuade the investors to invest in the above schemes.

SETHUPATHI M (2011)⁸, made an empirical research to analyze the financial service awareness and investment pattern of rural people of Coimbatore district in Tamil Nadu. The study reveals that the rural people from the selected area have enough knowledge about various financial services, but the irony is that their knowledge is only limited to the traditional savings and investment instruments like land, gold and fixed deposit schemes. The knowledge on modern investment avenues is very less on rural people. They give primary importance to safety for selecting a particular investment avenue.

A SARANGAPANI AND T MAMATHA (2011) ⁹ conducted a research on the topic ” investment pattern of Indian investors” . The investment pattern of sample investors indicates that the majority investors prefer to invest in equity shares than in other instruments. It is also revealed in analysis of the portfolio of investors that 72% investors prefer to invest in different types of instruments and the rest only in equity shares. The portfolio size of convertible debentures is comparatively more than nonconvertible debentures in Hyderabad city.

P NEELAKANTAN (2011)¹⁰ in their article entitled “Impact of Risk analysis in selection of investment avenues-A study on Debt Market Investors” suggested that investment in Debt Market instruments as become an imperative choice of the investors with the objectives of return optimization. Uncertainty of expected returns is a vital part of the investment option in debt market. Variations in the anticipated returns and actual returns lead to the possible consequences of the decision related to selection of debt market investment vehicle. Risks in debt market instruments are poised of the demands that bring variations in the return of income. Market price and interests play a significant role on the risk associated with the debt markets which are being influenced by the various internal and external considerations. Uncontrollable external risks have a greater impact of the volatility of returns on the investment vehicles and they are of systematic in nature.

JAIN D & MANDOT N (2012)¹¹, Conducted a study on “Impact of demographic factors on investment decisions of investors in Rajasthan”. The study analyzes the relationship between level of risk and various demographic factors of investors. The study used a sample size of 200 investors from Rajasthan state between the periods from April 2011 to January 2012. For making these analyzes correlation analysis and chi-square test were used in the study. The study shows that there is a negative relationship between age, gender, marital status, educational qualification and occupation of various investors. It also reveals that there is a positive correlation between cities, knowledge and income level of various investors. The study finally concludes that there is a significant influence of various demographic variables on taking the investment decisions by an investor.

APARNA SAMUDRA & M A BURGHATE (2012)¹², Conducted a study focused on the investment behavior of middle class households in Nagpur. The study categorizes the households into three categories namely aspires, middle class and upper class families. The study used 300 samples from different parts of Nagpur. The study shows that the most popular investment avenue used by the households is bank deposit. Insurance schemes are the second largest instrument used by people. Under insurance schemes life insurance is the most preferred investment option of 30% of households. The third most used investment option by households is marked as post office saving schemes and public provident funds. The study also realizes that the majority of middle class households are taking their own investment decisions.

AMU MANASSEH EDISON KOMLA (2012)¹³ had studied demographic influences of saving and investment of rural households through “A Study of Rural Households in the Ho Municipality of Ghana”. The main objective of the study was to explore the demographic characteristics of household heads in rural Ho Municipality and to find out how these demographic characteristics affect the savings and investment behaviour of the said household. It is concluded that demographic characteristics of rural families in the study area in one way or the other, have some influence on the households’ saving and investment behaviour.

SMITA SRIVASTAVA AND GUNJAN SAXENA (2013)¹⁴ had studied on “Investment trends Now and Then: A survey based study of Moradabad (UP). The paper attempts to know the awareness level of various investment alternatives available amongst the investors and compares the investment trends now from 20 years back. The area of study was Moradabad, a city in Uttar Pradesh with a sample size of 150. The data used in the study comprises of both primary and secondary data. Most of the investors are risk averse and thus ignore risky investments like derivatives and equities. They prefer safe heavens like bank deposit, post office deposits, gold etc. there is very little enhancements in the awareness level foe newer financial instruments amongst investors over the years.

SUNIL KUMAR (2013)¹⁵ on investment attitude of rural investors states that all of the rural investors considering only the risk and return on investment. He also realized that most of them are depends on financial advisor’s opinion due to lack of knowledge on investment and money markets. But generalization of the study is subject to its limitations like unwillingness of respondents, limited period of time, lack of literacy of rural investors etc. it is concluded that psychological theory of planned behavior reflects in rural people’s investment decisions along with a finance theory concepts i.e. risk and return equilibrium or trade off.

K JOTHILINGAM AND KV KANNAN (2013)¹⁶, made a study on “Investors Attitude Towards Investment Avenues-A Study in Namakkal district”. The study used a survey method for the collection of data from the respondents and the data so obtained have been put through the statistical analysis for drawing valid conclusion. The study found that the gold and mutual funds have been the most preferred investment avenues of the majority of the investors while shares and pension funds have been the least preferred investment avenues. It is also understood that there is no significant relationship between gender and the objective of investment. However, the relationship between age of the investors and their objective of making investment is statistically significant.

RAMPRASATH S AND B KARTHIKEYAN (2013)¹⁷, made a study on “Individual investor’s behaviour towards selected investments”. The study states that the majority of the investors are giving much importance for the factor “safety”. Similarly investment avenues preferred by the individual investors mostly are Bank deposits, LIC polices and Bullion. It also analyzed that the majority of the investors are periodically evaluating the performance of their investment avenues.

KOTHARI AND HEENA (2014)¹⁸, conducted a study named “Investor’s behaviour towards Investment Avenues: A study with reference to Indore City”. The study highlighted that the savings of the people invested in assets depending on their risk and return demands, safety of money, liquidity, the available avenues for investment, various financial institutions etc. Descriptive research design is carried out to describe the phenomena with a sample size of 100. It was collected from the respondents through convenient judgmental sampling method. The author concluded that if the younger generation starts investing at such an early stage on regular basis, they will able to save more for their future.

SAM JEYACHANDRAN (2016)¹⁹, Published a report on “Savings habit of rural people” with an aim to determining factors influenced for savings of rural people and to evaluate the choice and preference of their savings. The sample size of 30 rural people has been taken using convenient sampling method. The study used chi-square test for analyzing the data and to find out the relationship between the age and savings habits as well as family size and savings habits. The study reveals that the middle aged people are tends to save more and the saving habits is decreasing on the basis of increases in family size.

MADHUMALA PATHY (2017)²⁰, conducted a study on “Savings and Investment habits of rural households in Cuttack district of Odisha” with a main objective to determine the factors which influences the savings and to evaluate the saving preferences of rural people. The study used 50 responses collected from Cuttack district. Percentage method is used for the analysis of the gathered data. The study reveals that the majority of rural people have only limited knowledge about the investment in various avenues than the bank deposits. The people are also focused on two factors namely stable return and safety for selecting a particular investment avenue.

REFERENCES

1. Bandgar PK (2000). A Study of Middle Class Investors Preference for Financial Instruments in Greater Bombay. Finance India. 16(2).

2. Madusudhan Karnakaran (2001). Investment Behavior of Household Sector. The Indian Journal of Commerce. 54(12).

3. Chaudhary A (2003). A Study on saving and investment pattern of urban families of Haryana. M.Sc thesis submitted to Haryana Agricultural University, Haryana.

4. Gnana Design C, Kalaiselvi S and Anusya L (2006). Women Investors Perception towards Investment -An Empirical Study. Indian Journal of Marketing. 36(4). 14-37.

5. V L.Shobhaba and J Jayalakshmi (2006). Investors Awareness and Preferences -A Study. Journal of Organizational Management. 19(3). 16-18.

6. Narayana D L (2007). Income, Saving and Investment of Household Sector in Chittor District. PhD Thesis submitted to Sri Venkateswara University, Tirupathi.

7. N Yesodha Devi and V S Kanchana (2008). A Study on Investment Behaviours of Salaried Persons in Coimbatore City. SMART Journal of Business Management Studies. 4(1). 47-58.

8. Sethupathi M (2011). Financial service awareness and investment pattern of rural people with special reference to Coimbatore district in Tamil Nadu. A Thesis submitted to Bharathiar University, Coimbatore.

9. A Sarangapani and T. Mamatha (2011). Investment pattern of Indian investors: An analytical study of Hyderabad city investors. The journal of Venture Capital & Financial Services. 5(2).

10. P Neelakantan (2011). Impact of Risk analysis in selection of investment avenues-A study on Debt Market Investors. International Journal of Management and Commerce Innovations. 3(1).

11. Jain D and Mandot N (2012). Impact of demographic factors on investment decisions of investors in Rajasthan. Research world-A journal art, science and commerce. 3(2). 81-92.

12. Aparna samudra & M A Burghate (2012). A study on Investment behavior of middle class households in Nagpur. International journal of social science and interdisciplinary research. 1(5).

13. Amu M E K, Savings behavior in Ghana (2012). A study of rural households in the Ho Municipality of Volta Region. Online Journal of Social Sciences Research. 1(2).

14. Smita Srivastava and Gunjan Saxena (2012). Investment Trends Now and Then: A Survey based study of Moradabad (UP). The International journal of Business & Management. 1(2).

15. Sunil kumar (2013). Investment attitude of rural investors. Anveshanam-A National Journal of Management. 1(1).

16. K Jothilingam and KV Kannan (2013). Investors Attitude Towards Investment Avenues-A Study in Namakkal district. International journal of innovative research and development. 2(2).

17. Ramprasath .S and Dr. B. Karthikeyan(2013). Individual investors’ behavior towards selected investments: A study with special reference to Kattumannar. The International journal of Business & Management. 1(6).

18. Kothari and Heena (2014). Investors Behaviour Towards Investment Avenues: A study with reference to Indore City. Altius Shodh Journal of Management and Commerce. 1(2).

19. Sam Jeyachandran (2016). Savings habit of rural people. International conference by SNGC, Coimbatore. 1(3).

20. Madhumala Pathy (2017). Savings and Investment habits of rural households in Cuttack district of Odisha. International journal of commerce and management research.

PART 2

THEORETICAL FRAMEWORK OF THE STUDY

2.1 - MEANING AND DEFINITION OF INVESTMENT

2.1.1 - MEANING OF INVESTMENT

Most of the people keep aside a part of their income as savings. On the other end, Investment is the act of investing the saved money in to financial products with a view to generate income from future. In short, when a person has more money than he requires for current consumption, he would be coined as a potential investor.

Investment is the employment of funds on assets with the aim of earning income or capital appreciation. In other words, Investment is the commitment of funds which have been saved from current consumption with the hope that some benefits will be received in the future. Thus it is a reward for waiting for money. Saving of the individuals are invested in assets depending on their risk and return demands, safety money, liquidity, the available avenue for investment, various financial institutions, etc. For the achievement of above goals appropriate decisions have to be taken.

2.1.2 – DEFINITION OF INVESTMENT

Different thinkers interpret the word ‘Investment’ in their own ways in different periods. However, the ideology or concept of investment is same in between them.

Some famous definitions of Investment are;

- “Sacrifice of certain present value for some uncertain future value”

-WILLIAM F. SHARPE

- “Purchase of a financial asset that produce a yield that is proportional to the risk assumed over some future investment period”

-F. AMLING

2.2 - CONCEPT OF INVESTMENT

There are two concept relating to Investment.viz, Economic concept and financial concept of Investment. The economic and financial concepts of investment are related to each other because investment is a part of the savings of individuals which flow into the capital market either directly or through institutions. Thus, investment decisions and financial decisions interact with each other.

2.2.1 – ECONOMIC CONCEPT OF INVESTMENT

The concept of economic investment means net addition to the capital stock of the society. The capital stock of the society is the goods which are used in the production of other goods. The term investment implies the formation of new and productive capital in the form of new construction and produces durable instrument such as plant and machinery. Inventories and human capital are also included in this concept. Thus, an investment, in economic terms, means an increase in building, equipment, and inventory.

2.2.2 – FINANCIAL CONCEPT OF INVESTMENT

This is an allocation of monetary resources to assets that are expected to yield some gain or return over a given period of time. It means an exchange of financial claims such as shares and bonds, real estate, etc. Financial investment involves contrasts written on pieces of paper such as shares and debentures. People invest their funds in shares, debentures, fixed deposits, national saving certificates, life insurance policies, provident funds etc. in their view investment is a commitment of funds to derive future income in the form of interest, dividends, rent, premiums, pension benefits and the appreciation of the value of their principal capital.

2.3- NEED AND OBJECTIVES OF INVESTMENT

Investing is a wide spread practice whose starting point is to determine the characteristics of the various investments and matching them with the individual’s needs and objectives. Thus all investments are designed to achieve certain objectives which may include:

- Reduction of risk
- Higher rate of return
- Liquidity and marketability
- Tax benefits
- Hedge against inflation
- Capital growth
- Planning for retirement
- Financial independence

2.4 - INVESTMENT AVENUES

Investment avenues are the different ways that a person can invest his money. It also called investment alternatives or investment schemes. We can classify the major investment avenues as follows:

2.4.1 - NON FINANCIAL INVESTMENTS

Non financial investments are also called as Physical investments which is the investment in physical or capital goods such as plant and machinery, motor cars, ships, buildings, etc. The major physical investments are as follows:

- Real estate:

Real estate is basically defined as immovable property such as land and everything permanently attached to it like buildings. Real property is characterized by the right to transfer the title to the land whereas title to personal property can be retained. The investment in real estate essentially depends on the risks associated with it, and the alternative investment opportunities.

- Gold and silver:

For ages, gold and silver have been considered as a form of investment. This is a form of investment is very popular amongst the rural and semi-urban population. Gold has been used throughout history as money and has been a relative standard for currency equivalents specific to economic regions or countries, until recent times.

- Art:

Paintings are the most sought after form of art. The prices in the art market are rise is expected to continue. The trend in the art market today is to invest in young upcoming painters whose prices will soar over the years.

There are also some physical investment options which are also useful for further productions such as:

- Vehicles
- Commodities
- Furniture and fittings etc

2.4.2 - FINANCIAL INVESTMENTS

It means employment of funds in the form of assets with the object of earning additional income or appreciation in the value of investment in the future. There are different methods are available to classify the financial investment avenues. Some of them are as follows:

2.4.2.1 - Marketable Investments

These are the financial securities that are easily marketable and can be converted into cash in short time. These investments are also known as transferable or negotiable investments.

2.4.2.2 - Non Marketable Investments

These are the financial securities which can’t easily marketable and converted into cash in short time. These investments are also known as non transferable or non negotiable investments.

Following are some of the major financial investment avenues:

1) Shares

A share is an indivisible unit of capital expressing the ownership relationship between the company and the share holders. We can make investment in shares to get dividends and capital appreciation or yields through various ways like stock exchanges, mutual funds etc. It includes:

- Equity shares
- Preference shares

2) Debentures

It is a document issued by the company under its common seal for acknowledgment of debt. There are so many types of debenture such as registered debenture, unsecured debenture, convertible debenture, redeemable debenture etc. An investment in debentures fetches a fixed and regular rate of interest.

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