ijrfm volume 6, issue 4 (april, 2016) (issn 2231-5985

IJRFM Volume 6, Issue 4 (April, 2016) (ISSN 2231-5985) International Journal of Research in Finance and Marketing (IMPACT FACTOR – 5.861)

International Journal of Research in Finance & Marketing Email id: [email protected] http://www.euroasiapub.org

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A STUDY ON THE SALARIED INVESTORS PERCEPTION ON RETURN ON INVESTMENT

Dr.B.Thulasi priya

Assistant Professor,

Department of B.Com (e-Commerce),

PSGR Krishnammal College for Women, Coimbatore.

ABSTRACT

The process of investment is very complex to describe as investors perceptive, because it

always deals with individual investment behaviors. The process of investment is always identifying

with the investors‘expectations and selection of financial instruments where they want to invest

their financial resources. Generally preferable investment avenues are equity shares, debentures,

fixed deposits, insurance policies, mutual funds, real assets and liquid financial instruments. By

investing their funds in financial instruments, they are quit from the present consumptions means

it‘s quite often their expectation is very high in terms of future return as compare to present

expectations. A number of factors may be affected to investment decision of individual investors.

From the various risk-return opportunities, set investor can select the optimal portfolio for

investing their funds in various financial assets. Perception of investors about saving schemes will

have a significant impact on the saving behavior of people. Hence, it is necessary to study about the

nature of perception that exists among investors about saving schemes and institutions offering

such instruments. Investor’s investment in any particular investment avenues depend upon

anticipated return that will accrue from that particular investment. Many investment avenues offer

innovative promising solutions for varied financial requirements of investors. Using Friedman Rank

Test and Chi-square test the analysis is taken by the way of data collection from 500 Government

employees through questionnaire. Finally it was analysed that the investor opt for riskless ad high

return oriented investment avenues.

Keywords: Investment Avenues, Government Employees and Perception on Return on Investment.



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1. INTRODUCTION

Saving and investment play a vital role in any economy. Savings, is the excess of income over

the expenditure and investment, is sacrificing the current expenditure to earn higher returns. The

existence of financial market is major depends on the saving and investments scenario of any

country. In a modern economy, the excess of domestic saving over domestic investment suggests a

deflationary situation in which demand has not kept pace with increased capacity. Thus the

reversal of the saving-investment balance is viewed as a correction of the domestic supply-demand

balance, it had been observed through, above normal increase in demand for financial products in

the post reforms period and also through the past trends of saving in India.

India needs very high rate of investments to make a leap forward in efforts of attaining high

level of growth. Since the beginning of planning, the emphasis was on investments the primary

instruments of economic growth and increase in national income. In order to have production as

per target, investment was considered the crucial determinant and capital formation had to be

supported by appropriate volume of saving. There are a large number of investment instruments

available today. To make the investors lives easier the products are available for the investors. The

investors have much choice to choose among the existing investment avenues depending upon

their long term benefit and highly secured cum profitability and expected return. In this article the

investment preference of Government employees are ascertained.

2. REVIEW OF LITERATURE

Karthikeyan (2001) has conducted research on Small Investors’ Perception on Post Office

Saving Schemes and found that there was significant difference among the four age groups, in the

level of awareness for Kisan Vikas Patra, National Savings Schemes, and Deposit Scheme for Retired

Employees and the overall score confirmed that the level of awareness among investors in the old

age group was higher than in those of the young age group. No dissimilarity was observed between

male and female investors except for the Kisan Vikas Patra and National Savings Schemes. Out of

the factors analyzed, necessities of life and tax benefits were two major ones that influence the

investors both in semi-urban and urban areas. Majority (73.3 per cent) of investors of both semi

urban and urban areas were very much willing to invest in small savings schemes in opportunity

provided they have more for savings.

Kumar, Banu and Nayagam (2008) studied the financial product preferences of

Tiruchirapalli investors to rank their product preferences among investment choices, that is, post

office savings, bank deposits, gold, real estate, equity investments and mutual funds. The

preferences of the employees were known according to their attributes like safety of principal,

liquidity, stability of income, capital growth, tax benefits, inflation resistance and conceal ability.

The authors studied this concept and found that the investors are unlikely to determine the

financial product preference, that is, which is better on each attribute. So, the investors needed to

make choices depending on what is available and what are his own priority ratings of the attribute

needed in the product. The rank preferences of investors were prioritized as post office, bank

deposits, gold, real estate, equity investments and mutual funds.



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3. STATEMENT OF THE PROBLEM

Salaried people often falsely believe that they do not need any financial planning as their income

and expenses are regular. The households presume that their savings automatically accumulate in

the bank and do not require any intervention to maximize financial gains. In spite of various

researches, in the areas of Savings and investment pattern of investors and individuals in various

financial and physical investment avenues like bank deposits, real estate, and assets like gold and

silver, it becomes all the more important to study and analyze the perception on return on

investment by adopting advanced research in the preferences towards various investment avenues

available to the Government employees.

4. OBJECTIVES

To study the various investment decisions on various investment avenues based on return

on investment.

To analyse the perception on return on investment of Government employees towards

various investment avenues.

5. RESEARCH METHODOLOGY

a) Sample Size

The employees of this study consists of the people employed in various fields like

manufacturing, trading and service providing sectors and are referred to as salaried employees in

our study. The study was conducted by selecting the salaried employees in the Coimbatore city,

and classifying them based on the criterion of belonging to the Government sector.

b) Sampling Technique

The present study is an empirical study just to identify the presence, nature & preferences

of the Government employees in Coimbatore about their investment habits. The study area is

featured by a good number of Government employees who have the ability to save & invest.

Besides, the study area is featured with all the facilities that are needed for mobilizing &

transmitting the idle savings. The study is based on personal interview, using a structured

questionnaire. Actually, the present study identifies the perception on return on investment from

referred investment avenues among the individual investors using self assessment test. The present

study is based on primary sources of data which are collected by distribution of a close ended

questionnaire using Convenient Sampling Technique from 500 Government employees. Secondary

data were collected from various journals, articles magazines, RBI annual report, etc.

c) Tools of Analysis

The collected data have been analyzed by making use of Friedman Rank Test and Chi-

square test.



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6. ANALYSIS

PERCEPTION ON RETURN ON INVESTMENT - FRIEDMAN RANK ANALYSIS

Friedman Rank Analysis has been employed to assess the perception on return on

investment among the Government employees. Table 1 below shows the information about the

perception on return on investment along with the mean ranking.

Table 1: Perception on Return on Investment Government Employees

Investment Schemes Mean Score Rank Bank Deposit 13.06 3 Private Chit 10.56 9 Provident Fund 12.08 5 Private Financial Deposit 9.14 14 Post Office Savings 11.14 7 Money Market Instruments 8.52 18 Tax Saving Schemes 10.00 11 ULIP 8.40 20 Forex Trading 8.43 19 Equity Shares 9.58 12 Mutual Funds 9.50 13 Growth Stock 8.70 17 Government Bond 9.04 15 Debenture 8.77 16 Gold 14.20 2 Silver 10.90 8 Diamond 10.03 10 Land 14.30 1 Building 12.43 4 Scheme of LIC 11.24 6

Government Employees

N 500

Chi-Square 1331.159 df 19

Asymp. Sig. .000

From the Table 1, it is found that Government employees perception on return on

investment is priorities as Land (14.30) followed by Gold (14.20), Bank Deposit (13.06), Building

(12.43) etc. for the level of returns. The value obtained for Government employees is 1331.159. The

investments which are considered for return on investment are significantly associated to the level

of investment.



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a) Age

To determine whether age is associated with perception on return on Investment

using chi-square test.

Table 2 : Age and Level of Perception on Return on Investment

The Table 2 observes that, the Government employees level on Perception on Return on

Investment reveals high (36.70%) within 30 years of age and the low Perception on Return on

Investment is analyzed as high (28.60%) above 50 years of age. The Chi-square test infers that age

is associated with Perception on Return on Investment among Government employees.

b) Gender Table 3: Gender and Perception on Return on Investment

From the Table 3, the Government employees level of perception on return on investment is

high (20.10%) among the female employees and the low level of Perception on Return on

Investment depicts high (21.10%) among the male employees. The Chi-square test infers that

gender is not associated with perception on return on investment as far as Government sector

employees are concerned.

Age Government Employees

Perception on Return on Investment Total

Low Moderate High Up to 30 11 51 36 98 (11.20%) (52.00%) (36.70%) (100.00%) 31 to 50 68 198 52 318 (21.40%) (62.30%) (16.40%) (100.00%) Above 50 24 49 11 84 (28.60%) (58.30%) (13.10%) (100.00%) Total 103 298 99 500 Df: 4 Calculated 2 Value:26.219

Table value: 5% level: 9.488 1% level: 13.277

Gender



Low Moderate High Male 70 196 65 331 (21.10%) (59.20%) (19.60%) (100.00%) Female 33 102 34 169 (19.50%) (60.40%) (20.10%) (100.00%) Total 103 298 99 500 d..f: 2 Calculated 2 Value:0.180




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c) Marital Status

To determine whether marital status is associated with the perception on return on

using chi-square test

Table 4: Marital Status and Perception on Return on Investment

From Table 4, In case of Government employees the level of Perception on Return on

Investment is high (30.00%) among single or unmarried employees and the low level of Perception

on Return on Investment is analyzed as high (21.20%) among married employees. The Chi-square

test infers that marital status is not associated with perception on return on investment as far as

Government employees are concerned.

d) Educational Qualification

To determine whether educational qualification is associated with the perception on

return on Investment using chi-square test

Table 5: Educational Qualification and Perception on Return on Investment

It is evident from Table 5 that the Government employees level of Perception on Return on

Investment is high (23.10%) among Diploma qualified employees and the low level of perception

Marital Status

Government Employees Perception on Return on Investment

Total Low Moderate High

Married 91 261 78 430 (21.20%) (60.70%) (18.10%) (100.00%) Single 12 37 21 70 (17.10%) (52.90%) (30.00%) (100.00%) Total 103 298 99 500 Df: 2 Calculated 2 Value: 5.370


Educational Qualification



SSLC 6 8 3 17 (35.30%) (47.10%) (17.60%) (100.00%) Diploma 11 29 12 52 (21.20%) (55.80%) (23.10%) (100.00%) H.Sc., 4 8 2 14 (28.60%) (57.10%) (14.30%) (100.00%) Under Graduate 24 63 17 104

(23.10%) (60.60%) (16.30%) (100.00%) Post Graduate 31 102 36 169

(18.30%) (60.40%) (21.30%) (100.00%) Professional 27 88 29 144 (18.80%) (61.10%) (20.10%) (100.00%)

Total 103 298 99 500 d.f: 10 Calculated 2 Value:5.231




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on return on investment is high (35.30%) at school level educated employees. From the Chi-square

test, it is inferred that educational qualification is not associated with perception on return on

investment among Government employees.

e) Monthly Income

To determine whether monthly income is associated with perception on return on

investment using chi-square test.

Table 6 : Monthly Income and Perception on Return on Investment

From the Table 6 the high and low level of Perception on Return on Investment among

Government employees reveals high (30.80%) up to Rs25000 of monthly income. From the Chi-

square test, it is inferred that monthly income is associated with perception on return on

investment of Government employees.

f) Monthly Expenditure

To determine whether monthly expenditure is associated with the perception on


Table 7: Monthly Expenditure and Perception on Return on Investment

It is evident from the Table 7 that, the level of perception on return on investment of

Government employees reveals high (30.90%) up to Rs15000 of monthly expenditure and with

low level of Perception on Return on Investment is high (24.80%) between Rs15001 to Rs30000 of

Monthly Income



Up to Rs25000

24 50 33 107 (22.40%) (46.70%) (30.80%) (100.00%)

Rs25000 to Rs50000

59 168 40 267 (22.10%) (62.90%) (15.00%) (100.00%)

Above Rs50000

20 80 26 126 (15.90%) (63.50%) (20.60%) (100.00%)



Monthly Expenditure



Up to Rs15000

24 72 43 139 (17.30%) (51.80%) (30.90%) (100.00%)

Rs15001 to Rs30000

57 143 30 230 (24.80%) (62.20%) (13.00%) (100.00%)

Above Rs30000

22 83 26 131 (16.80%) (63.40%) (19.80%) (100.00%)





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monthly expenditure. From the Chi-square test, it is inferred that monthly expenditure is associated

with perception on return on investment among Government employees.

g) Monthly Savings

To determine whether monthly savings is associated with the perception on return

on Investment using chi-square test.

Table 8 : Monthly Savings and Perception on Return on Investment

The Table 8 portrays that, the Government employees level of perception on return on

investment reveals high (23.00%) between Rs7501 and Rs15000 of monthly savings and the low

level of perception on return on investment reveals high (29.70%) up to Rs7500 of monthly

savings. From the Chi-square test, it is inferred that monthly savings is associated with perception

on return on investment among Government employees.

h) Employment Sector

To determine whether employment sector is associated with perception on return on

Investment using chi-square test.

Table 9 : Employment Sector and Perception on Return on Investment

Monthly Savings



Up to Rs7500 38 68 22 128 (29.70%) (53.10%) (17.20%) (100.00%)

Rs7501 to Rs15000

30 97 38 165 (18.20%) (58.80%) (23.00%) (100.00%)

Above Rs15001

35 133 39 207 (16.90%) (64.30%) (18.80%) (100.00%)




Sector Perception on Return on Investment


Bank 4 23 10 37 (10.80%) (62.20%) (27.00%) (100.00%) Insurance 2 17 6 25 (8.00%) (68.00%) (24.00%) (100.00%) Local Bodies 14 45 12 71

(19.70%) (63.40%) (16.90%) (100.00%) Postal Dept. 18 44 10 72 (25.00%) (61.10%) (13.90%) (100.00%) Elec. Board 10 39 13 62 (16.10%) (62.90%) (21.00%) (100.00%) Educational Institutions. 34 82 22 138

(24.60%) (59.40%) (15.90%) (100.00%) Railway Department 5 9 6 20 (25.00%) (45.00%) (30.00%) (100.00%) Telecommunication 6 17 3 26 (23.10%) (65.40%) (11.50%) (100.00%) Govt Hospitals 10 22 17 49 (20.40%) (44.90%) (34.70%) (100.00%)





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The Table 9 shows that, the level of perception on return on investment of Government employees reveals high (34.70%) in employees employed at Government hospitals and with low level of perception on return on investment is analyzed as high (25.00%) in employees employed at postal and railway department. From the Chi-square test, it is inferred that employment sector is not found to be associated with perception on return on investment of Government employees.

i) Period of Investment

The chi-square test is used to determine whether Period of Investment is associated

with return on Investment

Table 10: Period of Investment and Perception on Return on Investment

The Table 10 shows that the Government employees, level of perception on return on

investment reveals high (25.60%) up to 5 Years as period of investment and with low level is high

(28.30%) with above 10 Years as period of investment. From the Chi-square test, it is inferred that

Period of Investment significantly associated with perception on return on investment of

Government employees.

j) Nature of Investment

The chi-square test is applied to determine whether nature of Investment is

associated with perception on return on Investment

Table 11: Nature of Investment and Perception on Return on Investment

Period of Investment



Up to 5 Yrs. 44 130 60 234 (18.80%) (55.60%) (25.60%) (100.00%) 6 to 10 Yrs. 25 92 29 146 (17.10%) (63.00%) (19.90%) (100.00%) Above 10 Yrs. 34 76 10 120

(28.30%) (63.30%) (8.30%) (100.00%) Total 103 298 99 500

d.f: 4 Calculated 2 Value:17.917 Table value: 5% level: 9.488 1% level: 13.277

Nature of Investment



Liquid 36 103 26 165 (21.80%) (62.40%) (15.80%) (100.00%) Non-Liquid 24 48 13 85 (28.20%) (56.50%) (15.30%) (100.00%) Both 43 147 60 250 (17.20%) (58.80%) (24.00%) (100.00%)





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The Table 11 shows that, the level of perception on return on investment of Government

employees reveals high (27.00%) with both liquid and non-liquid nature of investment. From the

Chi-square test, it is inferred that nature of investment is not associated with perception on return

on investment of Government employees.

k) Level of Satisfaction

To determine whether Level of satisfaction is associated with the perception on


Table 12: Level of satisfaction and Perception on Return on Investment

The Table 12 portrays that, the Government employees the level of perception on return

on investment reveals high (59.30%) with high level of satisfaction and with low level of

perception on return on investment is analyzed as high (69.20%) with low level of satisfaction.

From the Chi-square test, it is inferred that Level of satisfaction is found to be highly associated

with Perception on return on investment of Government employees.

l) Risk Perception

To determine whether Risk Perception is associated with perception on return on

Investment using chi-square test.

Table 13: Risk Perception and Perception on Return on Investment

Level of satisfaction



Low Moderate High Low 76 42 5 123 (61.80%) (34.10%) (4.10%) (100.00%) Moderate 26 207 32 265 (9.80%) (78.10%) (12.10%) (100.00%) High 1 49 62 112 (0.90%) (43.80%) (55.40%) (100.00%)



Risk Perception



Low 71 36 3 110 (64.50%) (32.70%) (2.70%) (100.00%) Moderate 30 230 47 307 (9.80%) (74.90%) (15.30%) (100.00%) High 2 32 49 83 (2.40%) (38.60%) (59.00%) (100.00%)





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The Table 13 shows that, the level of perception on return on investment of Government

employees reveals high (59.00%) with high risk perception and with low level of perception on

return on investment is analyzed as high (64.50%) with low risk perception. From the Chi-square

test, it is inferred that risk perception is highly associated with perception on return on investment

of Government employees.

7. FINDINGS

A) The perception on return on investment of Government employees investments are ranked

as Land, Gold and Bank Deposit.

B) To analyze the significant relationship between perception on return on investment and

demographic and socioeconomic factors chi-square is applied. The following factors are

significantly related with the perception on return on investment:

Majority of Government employees within 30 years of age have high perception on return

on investment.

Government employees earning a monthly income of up to Rs25,000/- and with income

bracket of Rs25,000/- to Rs50,000/- reveal high level of perception on return on

investment.

Government employees having monthly expenditure comprising Rs15,000/- depict high

level of perception on return on investment.

Government employees’ high perception on return on investment is not significantly

associated with monthly savings.

Level of perception on return on investment is not significantly associated with the

employment sector.

The Government employees having both liquid and non-liquid nature of investment reveal

high perception on return on investment.

Majority of Government employees infers high level of satisfaction towards perception on

return on investment.

Government employees reveal higher risk perception with high level of perception on

return on investment.

8 . SUGGESTIONS TO INVESTORS

The investors who are in need of secured investment should invest in government

securities and government bonds which are less risk securities and good way for salaried

individuals to utilize their savings. There are no chances of default in these securities.

The investors need to understand their risk tolerance level because everywhere there are

many investments alternatives.

It was found that the instruments of the capital market like equity shares, debentures, and

mutual fund units have not influenced the employees. Hence, the policy should be to spread

these and other financial instruments.

It was analyzed that any of the educated employees seems to invest more. So steps should

be taken to give investment education for illiterates.

Many of the employees have medium and long term nature of investment. So it is

mandatory for the employees to choose safe and reliable investment avenues.



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Saving money is the traditional habit of employees. But it is blind saving. It is necessary to

save the amount for future benefits and getting maximum returns. The employees are

suggested to save their money into beneficial avenues.

The employees should approach to the professional such as Tax Consultant, auditors to get

dual benefits. They should avoid the listing of trials or not to take self decisions when they

wants to make investment into any avenue. It is better to consult with experts in that field.

9. CONCLUSION

From the analysis, it is clear that perception of investors has an impact on range of

investment. Perception is influenced by age, education and risk perception and it has an

association with preference and saving motives of individuals. It is inferred that if investors get

good return during their investment tenure, they will have positive perception which in turn

results in the satisfaction. It is concluded that there is a direct impact on satisfaction among

Government Employees based on their investment risk and returns.

REFERENCES

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Somasundaram, V.K., (1998), 'A Study on Savings and Investment Pattern of Salaried Class

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mailto:[email protected]

ijrfm volume 6, issue 4 (april, 2016) (issn 2231-5985

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