brm final project

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Business Research Methodology

Proposal-

Comparative Study of Investing Patterns of Different

Age Groups

Under the Guidance of –

Dr. VSR VIJAYAKUMAR

Submitted by-

Group 4 Section-B

Members-

Drishya Krishnan (2014090)

Garrima Parekh(2014091) Gaurav Agarwal(2014092) Gaurav Garewal(2014093)

Gaurav Mukim(2014094) Gaurav Vij(2014095)

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Acknowledgement

We take this opportunity to thank Institute of Management Technology, Nagpur for giving us

an opportunity to take this course and learn. We express our appreciation to our Professor Dr.

VSR VIJAYAKUMAR for his immense support and his invaluable guidance throughout this

Research proposal. It would not be possible for any student to accomplish this proposal without

Dr. Vijayakumar’s support. We even wish to appreciate all the effort put in by our fellow

students of Institute of Management Technology and others who helped us in filling the survey

and supporting us with the completion of the proposal.

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Table of Content

Content Pg.

No. Acknowledgement 2

Abstract 4

Research Proposal 5

Literature Review 6

Research Objectives 8

Methodology 8

Time Scale 8

Hypothesis 9

Variables 10

Results & Findings 11

Appendix 18

Questionnaire 19

Questionnaire Mapping 20

Cross-Tabulations 21

Primary Data 24

Bibliography 26

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Abstract This paper examines the investment decisions of different age groups investors and investment

patterns with different income level. We find that older and experienced investors are more

likely to follow rules of thumb that reflect greater investment knowledge while young age

group tends to make risky investments However, older investors are less effective in applying

their investment knowledge and exhibit worse investment skill, especially if they are less

educated, earn lower income, and belong to minority racial/ethnic groups. The youth being

more enthusiastic and have an urge to learn invest in a more systematic manner Overall, the

adverse effects of aging dominate the positive effects of experience. These results indicate that

older investors' portfolio decisions reflect greater knowledge about investing, but investment

skill deteriorates with age due to the adverse effects of cognitive aging.

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Introduction

We have taken up financial investing preferences among different age groups as our topic and

over this research period we will try to understand how investing patterns and risk taking ability

of people change among different age groups.

TITLE

Comparative Study of Investing Patterns of Different Age Groups

BACKGROUND

The process of reforms as part of liberalization has resulted in greater investment in Indian

market. In today’s economy of less income growth and highly increasing cost of living, one

has to know how to use his/her savings to generate higher returns. Availability of too many

options and no clear idea about these choices is creating a hostile situation for the investor to

choose the best among the available alternatives.

An investor has several investment alternatives (such as stocks, bonds, precious metals, etc.)

to choose from, depending on his risk profile and expectation of returns. Different investment

substitutes represent a different risk-reward trade off. Low risk investments are those that offer

assured, but lower returns, while high risk investments provide the potential to earn greater

returns. Hence, an investor can choose the most suitable investment on the basis of his/her risk

tolerance.

Although we are exposed to various forms of investments, we need to understand a right mix

of saving patterns. There are different perceptions of the young generation and the older ones

while investing so we need to undertake a comparative study between each of them.

Organisations spend lot of money in devising investing plans for all age groups. Thus, we are

going to conduct a research on the same.

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Literature Review

An investor has various investment avenues while

investing his money. However these investment

decisions are affected by a number of other factors

such as his age, his income, his savings etc. All these

factors contribute towards selecting of an investment

avenue.

In our Research Project, we study how different factors such as age, gender, income, savings

etc. affect the investment decisions of people. Such researches are made by various agencies

such as Mutual Funds, Investment Planning Managers to make their decisions as to which

investment to offer to which investor.

INVESTMENT AVENUES

1. Equity:

Equity investment refers to investment in equity shares or stocks of companies. This is a

sector where most of the speculation takes place. Investors get return on their equity

investment. There are various risks associated with equity investment.

2. Bonds:

Bonds are basically debt instruments that are issued by government sector companies to the

public to raise money from them for financing purposes.

3. Corporate Debenture:

When debt instruments are issued by corporates, they are termed as corporate debentures.

Corporates issue debentures to raise money for specific purposes of projects etc.

4. Bank Fixed Deposits:

Bank Fixed Deposits are considered the

safest mode for investment. Banks collect

money from depositors in the form of Fixed

Deposits and provide them with a regular

return up to 9% on their investments.

5. PPF:

Public Provident Fund is a fund where

investors contribute a certain amount of their income every year towards the fund and they

are given returns on it. PPF is considered as one of the safest investment.

6. Life Insurance:

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Life Insurance is also considered as a safe mode of investment. It’s an investment where

people park in their money and contribute a certain premium regularly. The benefits of a

Life Insurance Policy can be reaped on maturity of the policy.

7. Post Office-NSC:

Post Office Saving Deposits or National Savings Certificates are investment options that

accept deposits in small amounts and provide returns. However the returns are less but the

returns are assured and there is minimal risk associated with them,

8. Gold/Silver:

Gold and Silver have been one of the most famous investment options since ages. People

having been investing money in them by buying gold and silver biscuits, cars, ETF’s etc.

hoping for the prices to appreciate continuously.

9. Real Estate:

Real Estate is one sector when the returns are tremendously high. People take loans to

invest in houses and their prices multiply in years and then they sell it to gain money.

10. Mutual Fund:

A Mutual Fund is a financial instrument that pools money from various investors and then

invests that money into various financial instruments spread across different sectors.

Mutual Funds are managed by Fund Managers.

FACTORS THAT AFFECT INVESTMENT DECISIONS:

1. Risk Tolerance:

Risk refers to the deviation that a person can undertake with his returns. Each person has

a different risk taking capacity and depending on that they make investments.

2. Return Needs:

More the risk a person undertakes, the higher is the return he will expect.

3. Investment Horizon:

The investment horizon refers to the time horizon for which the person keeps his money

invested.

4. Tax Exposure:

Tax Exposure means the extent to which the investor is ready to bear the tax burden. If

he’s tax averse, he will invest in safe investments like Fixed Deposits.

5. Investment Needs:

Investment needs refer to the amount of returns that the investor is expecting on his

investment.

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Research Objective To analyze the investing patterns among different age groups

To compare the investing preferences among different age groups

Methodology We would be adopting the descriptive type of business research because we would be collecting

the data and then summarizing it. We would be using qualitative and quantitative research

approaches.

Under Positivistic approach we would be doing surveys and cross sectional approaches.

For our field-work we would be dispensing questionnaire to the desired participants.

Two sets of questionnaire will made for different demographics. The each questionnaire would

be a combination of qualitative and quantitative. We would be using sites like, google doc,

survey monkey to make the questionnaire and send it to our focus group through mails, social

networking sites as well as direct approach.

Since we limited by time and resources, the survey would be cross-sectional in nature.

We would also refer internet and interviews for secondary data collection.

statistical tools like ANOVA and Regression Analysis through software’s like SPSS.

Time Scale 6.2.2014 - Framing of the title and objectives of the study. Drafting a research proposal

17.2.2014 - Making of questionnaire in accordance with the objectives of the research

27.2.2014 - Pilot testing of the survey questionnaire

3.3.2014 - Survey

15.3.2014 - Analysis of the data collected

19.3.2014 – Final writing of the report

Resources

24*7 Internet Supply

Access to EBESCO Database

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Hypothesis

Setting up and testing hypotheses is an essential part of statistical inference. In order to

formulate such a test, usually some theory has been put forward, either because it is believed

to be true or because it is to be used as a basis for argument, but has not been proved, for

example, claiming that a new drug is better than the current drug for treatment of the same

symptoms.

In each problem considered, the question of interest is simplified into two competing claims /

hypotheses between which we have a choice; the null hypothesis, denoted H0, against the

alternative hypothesis, denoted H1. These two competing claims / hypotheses are not however

treated on an equal basis: special consideration is given to the null hypothesis.

HYPOTHESIS 1 Youth does not tend to make risky investments

HYPOTHESIS 2 Gold investments are not higher during festive season

HYPOTHESIS 3 Mutual funds and debentures are preferred for long term investments

HYPOTHESIS 4 Investments in different sectors depends on time of the year

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Variables

Variable Metric Or Non Metric Measurement

Age Metric Scale

Gender Non Metric Nominal

Investment Metric Nominal

Reason for Investment Non Metric Nominal

Type of Investor Non Metric Ordinal

Frequency of Investment Metric Ordinal

% of Salary Invested Metric Ordinal

Preferred Investment

Avenue

Non Metric Nominal

Risk Profile Non Metric Nominal

Type of Industry Non Metric Nominal

Investment Horizon Non Metric Scale

Time of the Year Non Metric Nominal

Reference Groups Non Metric Nominal

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RESULTS

&

Findings

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Hypothesis 1 Youth does not tend to make risky investments

Variables Independent Dependent

Age

Investment in Equity Shares

Risk

Univariate OR Multivariate

It is a multivariate hypothesis and number of dependent are more than one.

Test for Normality

Tests of Normality

Age of the

respondent

Kolmogorov-Smirnova Shapiro-Wilk

Statistic df Sig. Statistic df Sig.

How would you rate

yourself in terms of taking

risks

dimension1

20-30 .236 28 .000 .809 28 .000

30-40 .285 17 .001 .792 17 .002

40-50 .363 19 .000 .740 19 .000

50-60 .286 14 .003 .810 14 .007

Above 60 .374 12 .000 .640 12 .000

Financial instruments do

you prefer

(Equity Shares)

dimension1

20-30 .392 28 .000 .622 28 .000

30-40 .380 17 .000 .632 17 .000

40-50 .376 19 .000 .633 19 .000

50-60 .478 14 .000 .516 14 .000

Above 60 .417 12 .000 .608 12 .000

Since the value of the independent groups, using ‘Shapiro-Wilk test’ is less than .05, therefore

the data is normal.

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Test to be Used

Since, the distribution is normal, therefore we will use parametric test. We will use ANOVA

as there are more than three independent group.

Test of Homogeneity of Variances

Levene Statistic df1 df2 Sig.

How would you rate yourself

in terms of taking risks

.805 4 85 .526

Financial instruments do you

prefer

(Equity Shares)

3.228 4 85 .016

ANOVA

Sum of Squares df Mean Square F Sig.

How would you rate yourself

in terms of taking risks

Between Groups 3.156 4 .789 1.841 .129

Within Groups 36.444 85 .429

Total 39.600 89


you prefer

(Equity Shares)

Between Groups 1.871 4 .468 1.944 .111


Total 22.322 89

Analysis

Since the p value is greater than .05, therefore we will reject the hypothesis and conclude that

youth tends to make risky investment.

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Hypothesis 2 Gold investments are not higher during festive seasons


Time of investments

Investment in Gold

Univariate or Multivariate It is a univariate hypothesis and number of dependent is one.

Test for Normality

Tests of Normality

When do you prefer to

invest



Financial

instruments do you

prefer

(Gold)

Starting of the financial year .390 40 .000 .623 40 .000

End of the financial year .336 22 .000 .640 22 .000

Festival seasons .440 17 .000 .579 17 .000

Others .401 11 .000 .625 11 .000

a. Lilliefors Significance Correction


the data is normal.

Test to be used Since, the distribution is normal, therefore we will use parametric test. We will use ANOVA

as there are more than three independent group.

ANOVA

Financial instruments do you prefer

(Gold)


Between Groups 1.281 3 .427 1.734 .166


Total 22.456 89

Analysis Since the p value is greater than .05, therefore we will reject the hypothesis and conclude that

Gold investments are higher during festive seasons.

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Hypothesis 3 Mutual funds and debentures are preferred for long term investments


Time Horizon

Investment in Debentures

Investments in Mutual Funds

UNIVARIATE OR MULTIVARIATE It is a multi-variant hypothesis as number of dependent variables are more than one.

Normality Test

Tests of Normality

For how long do keep

your money invested /

Time Horizon




you prefer

(Mutual Funds) dimension1

Less than a year .538 20 .000 .236 20 .000

1yr - 3yrs .419 15 .000 .603 15 .000

3yrs - 5yrs .401 11 .000 .625 11 .000

5yrs - 10yrs .446 21 .000 .570 21 .000

Above 10yrs .459 23 .000 .551 23 .000


you prefer

(Bonds/Debentures) dimension1

Less than a year .487 20 .000 .495 20 .000

1yr - 3yrs .453 15 .000 .561 15 .000

3yrs - 5yrs .401 11 .000 .625 11 .000

5yrs - 10yrs .372 21 .000 .633 21 .000

Above 10yrs .392 23 .000 .622 23 .000



the data is normal.

ANOVA



you prefer

(Mutual Funds)

Between Groups 1.073 4 .268 1.466 .220


Total 16.622 89


you prefer

(Bonds/Debentures)

Between Groups 1.600 4 .400 1.762 .144


Total 20.900 89

ANALYSIS Since the p value is greater than .05, therefore we will reject the hypothesis and conclude that

mutual funds and debentures are not preferred for long term investments

Hypothesis 4 Investments in different sectors depends on time of the year

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Time of the Year

Investments in Different Sectors

Univariate OR Multivariate It is a univariate hypothesis and number of dependent is one.

Normality Test

Tests of Normalityb

When do you prefer to

invest



Which industry do you

prefer to invest

(Infrastructure)




Others .448 11 .000 .572 11 .000


prefer to invest (Energy &

Power)




Others .401 11 .000 .625 11 .000


prefer to invest (Banking &

Finance)




Others .448 11 .000 .572 11 .000


prefer to invest

(Agriculture)





prefer to invest (Industry &

Services (Textile, Services,

Retail, Tourism, Mining))




Others .401 11 .000 .625 11 .000


b. Which industry do you prefer to invest

(Agriculture) is constant when When do you prefer to invest = Others. It has been omitted.

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Analysis

ANOVA



prefer to invest

(Infrastructure)

Between Groups .756 3 .252 .999 .397


Total 22.456 89


prefer to invest (Energy &

Power)

Between Groups .443 3 .148 .586 .626


Total 22.100 89


prefer to invest (Banking &

Finance)

Between Groups .288 3 .096 .477 .699


Total 17.600 89


prefer to invest

(Agriculture)

Between Groups 1.088 3 .363 3.348 .023


Total 10.400 89


prefer to invest (Industry &

Services (Textile, Services,

Retail, Tourism, Mining))

Between Groups .059 3 .020 .085 .968


Total 20.000 89

As the value in agriculture is less than .05 therefore we can say that investment in agriculture

depends on the time the year while investment in other sectors doesn’t as for all of them, p

value is greater than .05.

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Appendix

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Questionnaire

1) Name: ______________________

2) Age –

18-25 25- 35 35- 50 Above 50

3) Gender –

Male Female

4) Do you invest?

Yes No

5) What percentage of salary do you invest?

0 – 20 20- 40 40 – 60 60 - 80

80- 100

6) Since when are you investing –

Less than 1 year 1 year – 5 years

5 years– 7 years more than 7 years

7) Reason for Investment (tick at least one) –

Quick Money General Savings Future provisions

8) Financial instrument do you prefer?

Equity Shares Preferential Share

Bonds/Debentures Real estate

Gold Commodity

9) How do you rate yourself in terms of taking risk?

Low Moderate High

10) Which industry do you prefer to invest?

Infrastructure Energy & Power Banking & Finance

Agriculture

Industry & Services (Textile, Services, Retail, Tourism, Mining)

11) For how long do keep your money invested / Time Horizon –

Less than a Year 1 year – 3 years 3 years – 5 years

5 years – 10 years above 10 years

12) When do you prefer to invest?

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Starting of the financial year

Ending of the financial year

Festive season

Others, mention______________________

13) From where do seek your investment advice –

Broker Friends Financial Websites

Others, ______________________

Questionnaire Mapping

1. Objective 1

2. Objective 3

3. Objective 3

4. Objective 3

5. Objective 3

6. Objective 1

7. Objective 3

8. Objective 3

9. Objective 2

10. Objective 1

11. Objective 2

12. Objective 2

13. Objective 1

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Cross-Tabulation

On cross-tabulating ‘age’

against ‘Reason for investing

as quick money’, we find a

declining trend. The age

group of ‘20-30’ shows a

higher intent on investing for

quick money while as the age

progresses lesser number of

people tend to invest for quick

money.

Here we see that there is

a very high number

responses between the

ages ‘20-30’ who said

‘No’ to ‘investment for

future provisions’. There

is a parity between age

group of ’40-above 60’

who prefers to invest for

‘Future provisions’

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In our 1st hypothesis we

proved that the youth are

risk taking. Here we clearly

see, greater number of

respondents opting for

‘equity shares’ are between

the age group of ‘20-30’.

There is lower but equal

distribution among the

respondents for equity

shares.

Investment in real

estate market are

usually made by the age

group of ‘40-50’. This

could be because the

investments in this

instrument in very high

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We see that all age groups

take their financial advice

from a broker. But it the

youth i.e. age group ‘20-30’

and the immediate next age

group also looks for online

financial advice and analysis.

This shows how the youth are

well aware of IT technology

(internet) and how it can help

them in every aspects of life.

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Primary Data

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BIBLIOGRAPHY

1. http://investmentopportunitiesinindia.wordpress.com/2012/07/23/investment-

scenario-in-indian-market/

2. Zikmund G. Willaim – Business Research Methods – Thomas Southwestern

Publications – 7th Edition, Page number: 20-40

3. http://www.indianresearchjournals.com/pdf/IJSSIR/2012/May/7_IJS_MAY2012.pdf

4. Research article from: http://www.chimc.in/volume3No2/RESEARCH%20PAPER-

2.pdf

http://investmentopportunitiesinindia.wordpress.com/2012/07/23/investment-scenario-in-indian-market/

http://investmentopportunitiesinindia.wordpress.com/2012/07/23/investment-scenario-in-indian-market/

http://www.indianresearchjournals.com/pdf/IJSSIR/2012/May/7_IJS_MAY2012.pdf

http://www.chimc.in/volume3No2/RESEARCH%20PAPER-2.pdf

http://www.chimc.in/volume3No2/RESEARCH%20PAPER-2.pdf

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