A Research Paper on Investment Perspectives of Young

Professionals in India

Ms. Supriya Haridas Kakade

Abstract
"The individual investor should act consistently as an investor and not as a speculator." - Ben
Graham. Investment is one of the foremost concerns of every individual investor as their small
savings of today are to meet the expenses of tomorrow. Taking into consideration the survey of 50
young professionals in India in age group 20-35, this paper attempts to analyze the investment
pattern, saving objectives, preferences and awareness of young investors for various investment
options available in India. The research was done especially among the young professionals
majority of them working in private IT sector with average salary between Rs.20,000-50,000. For
this study, we have used Exploratory Research Design. The study used a structured questionnaire
in which young professionals in India were asked about their investment habits and awareness.
Secondary Data was collected from Business Journals, websites and business news channels. The
result shows that, the investment decisions are significantly influenced by several factors such as
age, gender, income levels, family and peers of the investors. Returns, future safety and tax
benefits are the three main reasons behind the investments. The youth of India is nowadays
becoming more inclined towards various investment options available. Along with male investors,
women tend to save enthusiastically moreover in more disciplined way. From the research point of
view, such a study will help in developing and expanding knowledge in this field of personal
finance and investment.

Key words: Young professionals, Savings, Investments, Future safety, Returns

Introduction
Investing is 'the act of committing money or capital to an endeavor with the expectation of
obtaining an additional income or profit’. Legendary investor Warren Buffett defines investing as
“the process of laying out money now to receive more money in the future.” Investing is about
“working smarter and not harder.” It is a way to set aside money while you are busy with life and
have that money work for you so that you can fully reap the rewards of your labor in the future.
Also, savings and investments play a major role in economic development of any country and the
primary objective of all government’s policy has been to promote savings and capital formation in
the economy which is a primary instrument of economic growth. Investors need not have physical
cash or actual resource to engage in investment. They may borrow to invest and return the assets or
their equivalent monetary value with or without interest.

Every individual investor possesses different mindset when they decide about investing in a
particular investment avenue such as stocks, bonds, mutual funds, fixed deposit, real estate, life
insurance etc. In each life cycle stage, every individual desires his hard-earned money to be
invested in most secure and liquid avenue. However, the investment decisions vary from person to
person depending upon their financial abilities and the purpose for which investment is to be done.
In India, number of investment avenues are available for the investors. Some of them are
marketable and liquid while others are non marketable Some are highly risky while others are
almost risk less. There are more products available within each asset class be it Equity, Mutual
Fund, Gold, Real Estate, etc. In various empirical studies, it has been found that information being
an important factor on taking decision to invest, which influences them on choice of investment
and later on how they act after investment (Kasilingam & Jayabal, 2008).

‘Youth is wasted on the young’, said Irish playwright George Bernard Shaw. Most people in their
later stage of life realize that the financial strain suffered by them could have been avoided if they
had started saving or had invested wisely in their early stage of earning. It takes very little to
ensure financial security if one begins to plan his/her investment timely. The investment habit of
the small investors particularly has undergone a sea change. So that investment companies
continually introduced new types of funds in an effort to attract investors capital and maximize
assets under management. However, investment is increasingly considered as a subject falling
under behavioral science rather than finance or economics. It is governed more by trends and group
behavior rather than rationality and cold calculations.

With this background, a humble attempt is made to study the investment perceptions of young
professionals in India.

2
Objectives of the study
The study has been conducted with the following objectives:

1. To study the investment perspectives of young professionals in India.

2. To study the relative preferences towards investment various avenues available.

3. To study the factors affecting the investment behaviors of young professionals.

Hypothesis
Youth in India is nowadays becoming more inclined towards investment avenues available.

Long and medium term investments with low risks are preferred widely.

Investment nowadays is becoming behavioral aspect where it is influenced by what is in trend

rather than rationality and calculations.

Methodology of the study

The study is basically exploratory in nature. The scope of study extends to the young professionals
in India in age group 20-35 with monthly income ranging from Rs.20,000-Rs.50,000.

 Primary Data: Primary data was collected from structured questionnaire with 50
respondents and it was then analysed for the purpose of study.

Sampling Techniques
 The sample consisted of young investors between age group 20-35.
 Sample size: 50
 It included salaried employees (Private IT and Non-IT sector), Government employees and
self-employed people with monthly income ranging from 20,000-50,000.

3
Data Analysis
This research is empirical in nature. The scope of this study extends to young population in India.
Data was collected through a structured questionnaire and analysed to study investment
perspectives, investment habits and demographic profiles which is important factor affecting
investment decisions of young professionals in India.

Socio- Economic Profile of the Respondents:

a. Age wise distribution:

Age wise distribution No. of respondents Percentage

20-25 27 54%

25-30 19 38

30-35 4 8%

b. Marital Status:

Unmarried 38 76%

Married 12 24%

c. Monthly Income:

Below 20,000 4 8%

20,000-40,000 27 54%

Above 40,000 19 38%

4
 I. Types of Investments

II. Main Purpose of Investment

5
 III. Preferred Investment Strategies

IV. Factors influencing Investment Decisions

6
Limitations:
 Sample size was very small i.e. 50 due to time constraints; the findings may differ with
higher sample size.
 The research sample mainly consists of young professionals working in IT sector, majority
of them from Pune region. The analysis may vary with people from different cities and the
industrial sector they are working in.

Findings:
Observations drawn from the above study are as follows:

1. Majority of the respondents were unmarried (76%) , salaried employees with monthly income in
range 20,000-50,000, with almost 60% of the respondents working in private IT sector.

2. Percentage of investment varies from person to person depending upon their income,
perspectives about investment and peer effect. Majority of the young professionals found to be
investing in the range between 20%-50% of their income.

3. Young professionals prefer to invest for medium term (42.9%) and long term (59.5%) as
compared to short term (35.7%).

4. Main purpose behind investment was found to be good returns (74.4%) followed by future
safety (58.1%) and tax benefits (39.5%).

5. Trading is found to be most preferred investment strategy followed by other instruments such as
mutual funds, bank fixed deposits and public provident fund.

6. The sample population under study was found to possess adequate awareness about investment
strategies available in India. The investment decisions are mainly influenced by family members
followed by peers, media and professional agencies.

7
Conclusion and Recommendations
It is evident from the above study that young population in India is nowadays becoming more
inclined to various investment instruments available. The financial behavior of individual investors
has a connection with the various investment options available, preference and influence of
surrounding environment (family, media, etc). Various issuers of financial products in money and
capital market should focus on spreading more awareness among young professionals through
various programs enhancing their interest in investment, especially long term. They should provide
more transparency in terms of investment schemes and returns. Complexity in procedures of stock
exchange, mutual funds should be reduced providing easy access to the methods and instruments.
More dedicated awareness campaigns should be undertaken to inculcate and promote investment
habits in young professionals as they are the potential investors.

Literature Review
Several studies have been conducted on the various aspects of the capital markets in the past.
These studies mainly relate to various instruments of capital market, shareholding pattern, new
issue market and scope, market efficiency, risk and return, performance and regulation of mutual
funds. However, not much of research work has been done on investment patterns amongst the
young age group of the working population and investor’s perceptions.

Gina Chowa, Mat Despard & Isaac Osei-Akoto (2012) in their paper ‘Youth saving patterns and
performance in Ghana’ attempted to find whether the youth will participate in savings via formal
financial services if given the opportunity. The study found that most youth in the sample, set aside
money regularly, hold onto their set aside money for short periods of time and use it mostly for
short-term consumptive purposes. The study concluded that, youth of a developing country have a
high propensity to save but, lack of proper knowledge and information restricted the youth from
venturing out into the area formal savings and investments.

Murithi Suriya, Narayanan and Arivazhagan (2012), in their study reveal that female investors
dominate the investment market in India. According to their survey, majority of the investors are
found to be considering two or more sources of information to make investment decisions. Most of
the investors discuss with their family and friends before making an investment decision.

Jaakko and Tikkanen (2011) in their study on “Individuals’ Affect-Based Motivations to Invest in
Stocks: Beyond Expected Financial Returns and Risks” found that most investors had affected
based extra motivation to invest in stock, over and above financial return expectations.

8
Appendices:
Investment Questionnaire:

9
10
11
References
1. www.indianjournals.com

2. http://www.econlib.org/library/Enc/Investment.html

3. http://www.investopedia.com

4. www.researchgate.net

5. A research paper: ‘A Study of Saving and Investment Behaviour of Individual Households’ by

Suman Chakraborty.

12