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Personal finance is more personal than it is finance: a study on factors influencing investment choice on investments in Tiruchirappalli city corporation, Tamil Nadu

Personal finance is more personal than it is finance: a study on factors influencing investment choice on investments in Tiruchirappalli city corporation, Tamil Nadu
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This study aims at to know the objectives of investments and also aims at to know the factors that are considered before investments, i.e., factors influencing in selection of a particular type of financial instruments and the behaviour of investors.

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Personal finance is more personal than it is finance: a study on factors influencing investment choice on investments in Tiruchirappalli city corporation, Tamil Nadu

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Nội dung Text: Personal finance is more personal than it is finance: a study on factors influencing investment choice on investments in Tiruchirappalli city corporation, Tamil Nadu

  1. International Journal of Management (IJM)
    Volume 7, Issue 7, November–December 2016, pp.265–270, Article ID: IJM_07_07_028
    Available online at
    http://www.iaeme.com/ijm/issues.asp?JType=IJM&VType=7&IType=7
    Journal Impact Factor (2016): 8.1920 (Calculated by GISI) www.jifactor.com
    ISSN Print: 0976-6502 and ISSN Online: 0976-6510
    © IAEME Publication

    PERSONAL FINANCE IS MORE PERSONAL THAN IT
    IS FINANCE: A STUDY ON FACTORS INFLUENCING
    INVESTMENT CHOICE ON INVESTMENTS IN
    TIRUCHIRAPPALLI CITY CORPORATION,
    TAMIL NADU
    Dr. I. Francis Gnanasekar
    Associate Professor in Commerce, Former Vice-Principal & HOD
    St. Joseph’s College (Autonomous), Tiruchirappalli, India

    ABSTRACT
    This study aims at to know the objectives of investments and also aims at to know the factors
    that are considered before investments, i.e., factors influencing in selection of a particular type of
    financial instruments and the behaviour of investors. The data has been collected through
    structured questionnaire from the loyal, regular, serious, sincere investors. The data has been
    tested by different statistical analysis namely; Frequency table, Percentage analysis, Chi-square
    test, Descriptive statistics, Friedman rank test and so on. The findings of the study exposes that
    regular income is the main objective of investments and investor considering safety as a principal
    before investing. The Friedman rank test showed that not much difference between the top four
    factors like capital appreciation, to gain a regular return, investment return, and reducing future
    risk with regard to factors influence while selecting particular financial instruments.
    Key words: Safety of principal, Descriptive statics and Friedman rank test
    Cite this Article: Dr. I. Francis Gnanasekar, Personal Finance is more Personal than it is Finance:
    A Study on Factors Influencing Investment Choice on Investments in Tiruchirappalli City
    Corporation, Tamil Nadu. International Journal of Management, 7(7), 2016, pp. 265–270.
    http://www.iaeme.com/IJM/issues.asp?JType=IJM&VType=7&IType=7

    1. INTRODUCTION
    Investment may be defined as an activity that commits funds in any financial/physical form in the present
    with an expectation of receiving an additional return in the future. The expectation brings with it a
    probability that the quantum of return may vary from a minimum to maximum. This possibility of
    variation in the actual return is known as investment risk. Thus every investment involves a return and risk.
    Investment is an activity that is undertaken by those who our savings. Savings can be defined as the excess
    of income over expenditure. However, all savers need not be investors B S Bodla and Karam Pal (2016).
    The basic objective of the investors minimizes the risk as well as maximizing the returns from the
    investment. In the modern world investments are abundantly available viz., equity shares, preference
    shares, debenture/bonds, mutual funds, real estate, postal savings, gold and so on. Similarly, several factors

    http://www.iaeme.com/IJM/index.asp 265 editor@iaeme.com

  2. Dr. I. Francis Gnanasekar

    influencing the investors while selecting the particular type of financial interments viz., safety, liquidity,
    capital appreciation, personal factors, family influence and so on. Hence, the study was carried out to know
    the factors influencing the investors while selecting the financial instruments and behaviour of the
    investors.

    2. OBJECTIVES OF THE STUDY
    • to know the objectives of investments and find out the factors that investors consider before investing;
    • to identify important factors influencing in selection of a particular type of financial instruments; and
    • to study the responses and behaviour of the investors when company announce annual results.

    3. HYPOTHESES
    • There is no significant difference between age of the investor and their investment behaviour (Buy a Stock)
    • There is no significant difference between age of the investor and their investment behaviour (Hold a Stock)
    • There is no significant difference between age of the investor and their investment behaviour (Sella Stock)

    4. REVIEW OF LITERATURE
    Dhiraj Jains and Nakul Dashora (2012) analyzed the rationality of the investors of Udaipur during different
    market expectations, dividend and bonus announcements, the impact of age, income levels and other
    market-related information on investment decisions of investors from Udaipur. The study exposed that,
    investors prefer ‘A wait and watch policy’ for taking their decisions, and are very cautious and their
    decisions are influenced by various psychological factors and behavioral dimensions.
    Syed Tabassum Sultana and S Pardhasaradhi (2012), examined the factors influencing Indian
    individual equity investors. The empirical findings of factor analysis exposed that all the 40 attributes are
    reduced to the following ten factors Individual Eccentric, Wealth Maximization, Risk Minimization, Brand
    Perception, Social Responsibility, Financial Expectation, Accounting information, Government & Media,
    Economic Expectation and Advocate recommendation factors.
    Francis Gnanasekar and Arul (2014), has stated that investors are of different categories. In this study,
    the researchers found out various types of investors like a conservative, moderately conservative,
    Aggressive and moderately aggressive. Moreover, investor’s risk tolerance varies on the basis of age, sex,
    income; financial goals and so on.
    Khoa Cuong Phan and Jian Zhou (2014), examined that factors influencing individuals’ investment
    behavioral intention in the Vietnamese stock market. The empirical findings of the study exposed that
    existence of psychological factors which supports the hypothesis that four psychological factors
    (overconfidence, excessive optimism, a psychology of risk and herd behavior) do have a significant impact
    on the individuals’ attitude towards investment. Concurrently, the study has also brought out that gender
    has a strong moderation affect in the relations between the psychological factors and the attitude towards
    investments, between the attitude and behavioral intention, between subjective norms and behavioral
    intention as well as between perceived behavioral control and behavioral intention of Vietnamese
    individual investors.
    Francis Gnanasekar and Arul (2015), Portfolio investment covers a range of securities, such as stocks
    and bonds, as well as other types of investment vehicles. A diversified portfolio helps spread the risk of
    possible loss due to the below-expectations performance of one or a few of them. They are categorized in
    two major parts foreign institutional investment and investments by non-residents.

    http://www.iaeme.com/IJM/index.asp 266 editor@iaeme.com

  3. Personal Finance is more Personal than it is Finance: A Study on Factors Influencing Investment Choice on
    Investments in Tiruchirappalli City Corporation, Tamil Nadu

    5. METHODOLOGY
    5.1. DATA
    The researcher attempts to collect the information regarding investment detail and investment pattern of
    the investors. For this purpose, the researcher identifies a number of stock broking agencies through survey
    and internet. By referring to the addresses of the stock broking agencies, it is found that most of them
    mainly in Thillainagar, Railway Junction area, Chattram Bus Stand, Palakarai, Woraiyur and Thennur.
    From these areas, there are 23 stock broking agencies exist. Among 23 stock broking agencies, six agents
    are not permited to collect the data from their clients; three stock broking agencies are closed due to some
    reasons. Rests of the 14 stock broking agencies are allowed to collect data. The researcher contacted the
    branch managers of 14 branches through phone and got the appointment for discussion. The researcher had
    several rounds of talks, discussion with the branch managers. The researcher collected the names and
    address of the regular customers of the stock broking agencies. The branch managers of the stock broking
    agencies selected 50 loyal, regular, serious, sincerely investors. The stock broking branch managers felt
    that only the above selected 50 respondents have been selected from each broking agencies. From the 14
    agencies, 50 respondents were selected. Thus, 700 questionnaires were distributed and collected back.
    Then, the researcher conducted data validity test viz., Chrona Alpha Test. The test reveals 0.809. i.e., 80.9
    per cent as its result.

    5.2. Tools and Techniques Used for this Study
    The researcher collected primary data through a questionnaire from the loyal investors in Tiruchirappalli
    city area and used Statistical Packages for Social Sciences (SPSS) with appropriate coding for the drawing
    inferences. Tools are used in this study namely; Frequency table, Percentage analysis, Cross table,
    Friedman rank test and Chi-Square test are applied to analyze the data.

    6. DATA ANALYSIS AND INTERPRETATION
    Table 1 Objectives of Investment
    Objectives No. of the Respondents Per cent
    High Returns 176 25.1
    Tax benefits 94 13.4
    Regular Income 313 44.7
    Capital appreciation 117 16.7
    Total 700 100.0
    Source: primary data
    It is clear that from the table 1, among the 700 respondents, 176 respondents say High returns are their
    main investment objective, 94 respondents say Tax benefits are their investment objective, 313
    respondents say Regular income is their investment objective and 117 respondents say Capital appreciation
    is their investment objective.

    Table 2 Factor to be considered before Investments
    Factor No. of the Respondents Percent
    Safety principal 234 33.4
    Low risk 216 30.9
    High returns 226 32.3
    Maturity period 24 3.4
    Total 700 100.0
    Source: primary data

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  4. Dr. I. Francis Gnanasekar

    It is clear that from the table 2, among the 700 respondents, 234 respondents consider the ‘safety
    principal’ is the factor to be considered before their investment plan, 216 respondents felt that ‘Low risk’ is
    the factor to be considered before their investment plan, 226 respondents considered ‘High returns’ is the
    factor to be considered before their investment plan and 24 respondents planned Maturity period is the
    factor to be considered before their investment plan.

    Table 3 Descriptive Statistics
    No of Std.
    Factors Mean Minimum Maximum
    respondents Deviation
    Tax benefits 700 4.77 2.889 1 9
    To gain Regular returns 700 3.90 2.296 1 9
    Reducing Future Risk 700 4.53 2.305 1 9
    Capital appreciation 700 3.48 2.183 1 9
    Reputations of the firm 700 5.68 2.164 1 9
    Investment return 700 4.03 2.306 1 9
    Time horizon 700 6.17 2.188 1 9
    Investment goals 700 5.51 2.559 1 9
    Risk tolerance 700 6.92 2.126 1 9
    Source: primary data

    Table 3 (A) Friedman Rank Test
    Factors Mean value Rank
    Tax benefits 4.77 5
    To gain Regular returns 3.90 2
    Reducing Future Risk 4.53 4
    Capital appreciation 3.48 1
    Reputations of the firm 5.68 7
    Investment return 4.03 3
    Time horizon 6.17 8
    Investment goals 5.51 6
    Risk tolerance 6.92 9
    Source: primary data
    In order to study the important factors influencing in selection of a particular type of financial
    instrument by the investors, an attempt have been made to compute their mean influencing factors. The
    mean influencing factors reflect the overall influenced factors for the investors while selecting financial
    instruments. The lower mean value represents higher influenced factors and vice-versa. The table 3 shows
    that among the nine importance factors capital appreciation is ahead of others in factors influencing. It is
    closely followed by to gain a regular return. The investment return is the third important factors
    influencing the investors. The important factors influence depends upon the type of financial instruments.
    In order to verify the above-mentioned fact, Friedman Rank test is used. The result of the test furnished
    in the Table 3 (A). It is understood that capital appreciation stands first rank and it is the most important
    factors influencing the investors. The second influencing factor is to gain regular returns and it is closely
    followed by investment return. The least influencing factor is a risk tolerance. From the above analysis it is
    clear that the basic factors influencing the investors, is the capital appreciation from their financial
    instruments, followed by gain as a regular return.

    http://www.iaeme.com/IJM/index.asp 268 editor@iaeme.com

  5. Personal Finance is more Personal than it is Finance: A Study on Factors Influencing Investment Choice on
    Investments in Tiruchirappalli City Corporation, Tamil Nadu

    Table 4 Cross Table of Relationship between Age of the Investors and their Investment Behavior
    Buy a Stock
    Age
    Above expectation As per expectation Below expectation Total
    Up to 30 180 69 31 280
    31- 40 119 55 13 187
    41-50 79 17 18 114
    51 and above 63 34 22 119
    Total 441 175 84 700
    Hold a Stock
    Age
    Above expectation As per expectation Below expectation Total
    Up to 30 50 217 13 280
    31- 40 39 131 17 187
    41-50 4 96 14 114
    51 and above 34 73 12 119
    Total 127 517 56 700
    Sell a Stock
    Age Above expectation As per expectation Below expectation Total
    Up to 30 65 66 149 280
    31- 40 50 30 107 187
    41-50 22 10 82 114
    51 and above 57 12 50 119
    Total 194 118 388 700
    Source: primary data

    Table 4 (A) Chi-Square Test
    Value d.f Asymp. Sig. (2-sided)
    Buy the Hold the Sell the Buy the Hold the Sell the
    stock stock stock stock stock stock
    Pearson Chi-Square 19.142a 33.888a 47.557a 6 .004 .000 .000
    Likelihood Ratio 19.915 39.903 45.408 6 .003 .000 .000
    Linear-by-Linear
    4.312 .489 5.152 1 .038 .484 .023
    Association
    N of Valid Cases 700 700 700
    Source: primary data
    The table 4 exhibits the correlation between age of the investors and their investment behaviour. The
    behaviour of the investors namely ‘Buy a Stock’, ‘Hold a Stock’ and ‘Sell a Stock’ when the companies
    announce the annual results. The ‘F’ test carried out to know the association between age of the investors
    and their behaviour.From the table 4 observed that F Pearson chi-square has the probability of 0.004 which
    is lower than 0.05 (0.00

  6. Dr. I. Francis Gnanasekar

    that there is a strong relationship between age of the investor and their investment behaviour (Sell the
    Stock).

    7. FINDINGS OF THE STUDY
    • It is found out that majority of the respondents (44.7 per cent) are planning a regular income, is the main
    investment objective.
    • It is found that the majority of the respondents (33.4 per cent) consider the safety principal as their
    investment objective.
    • When Friedman Rank Test for factor influencing for selecting financial instruments was applied, it was
    found that not much difference between the top four factors like capital appreciation, to gain regular return,
    investment return, and reducing future risk with regard to factors influence.
    • When chi-square test for age and investment behaviour (Buy the Stock) was applied, it was found that there
    is a strong relationship between age of the investor and their investment behaviour (Buy the Stock).
    • When chi-square test for age and investment behaviour (Hold the Stock) was applied, it was found that there
    is a strong relationship between age of the investor and their investment behaviour (Hold the Stock).
    • When chi-square test for age and investment behaviour (sell the Stock) was applied, it is found that there is a
    strong relationship between age of the investor and their investment behaviour (sell the Stock).

    8. CONCLUSION
    The study envisages the behaviour of the investors and factors influencing while selecting the particular
    type of financial instruments. The findings of the study exposed that regular income is the main objective
    investment and investor considering the safety principal for before investing. The Friedman rank test
    showed that not much difference between the top four factors like capital appreciation, to gain a regular
    return, investment return, and reducing future risk with regard to factors influence while selecting
    particular financial instruments. So, personal finance is more personal that it is finance.

    REFERENCE
    [1] B S Bodla and Karam Pal (2016), Introduction to Security Analysis, http://www.ddegjust.
    ac.in/studymaterial/mba/fm-304 pdf, accessed on 13th October, 2016.
    [2] Dr. R. Khader Mohideen and S. Amirthavalli. Impact of Micro Finance through Self Help Groups in
    Pudukottai District. International Journal of Management (IJM), 7 (2), 2016, pp. 134 – 141.
    [3] Journal of Arts, Science & Commerce, 3 (2) 78-88.
    [4] European Journal of Business and Management, 4 (18) 50-61.
    [5] Protagonist International Journal of Management and Technology, 1 (1) 1-15.
    [6] American Journal of Business and Management, 3 (2) 77-94.
    [7] Parishwang Piyush, Himanshu Negi and Navneet Singh, Study of Housing Finance in India with
    reference to HDFC and LIC Housing Finance Ltd. International Journal of Management (IJM), 7 (3),
    201 6, pp. 39 – 49.
    [8] International Journal of in Multidisciplinary and Academic Research, 4 (1) 1-16.

    http://www.iaeme.com/IJM/index.asp 270 editor@iaeme.com

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