Various Investment Avenues In The Market (Black Book Project)

Black Book Project on “A Comparative Study on Various Investment Avenues In The Market”, for MASTERS OF FINANCIAL MANAGEMENT (MFM).

Abstract

This study analysisthe investment portfolio of the individual and the various Risks and Returns calculation are made for the various avenues in order to suggest the suitable portfolio forthe individual based on the risk appetite of the person. Themethodology used is descriptive and exploratory research. The data were collected from 70 respondents using questionnaires. Most of the respondents were qualified and income group people.

It is shown from the analysis that the majority of the respondents feels that the risk and the return are more important factor in the investment and also in the insurance plan they prefer, accumulation plan, and in the case of mutual find they prefer Regular & Capital appreciation.

Statistical test shows that the occupation of the respondents have directly influence in the choice of the investment avenues and the ANOVA proves the risk and return are most important factor and the rank co-relation show that the investment Porto folio doesn’t suit the scientific portfolio.

Finally it has been suggested a that insurance should be viewed has a risk cover not an investment avenues,50 % should be in guaranteed addition, 30 % in mutualfund and 20% in stocks.

Introduction

An investment is a sacrifice of current money or other resources for future benefits. A sacrifice takes place now and it is certain but the benefits is expected in the future and tends to be uncertain. In the investment the risk elements and the time elements places a major role.

Investment avenues are classified as show below:

• Non-Marketable Equity Shares
• Financial Assets
• Bonds
• Money Market Instruments
• Mutual Funds
• Life Insurance Policies
• Real Estates
• Precious Objects
• Financial Derivatives

Almost every one has a portfolio of investments; the portfolio islikely to comprise financial assets and real assets. This project will bemainly focused on the financial assets such as insurance, stock, mutual fund, bonds etc.

Risks Involved With Investing

The most important relationship to know is that the risk-return trade-off. Higher risk greater the rewards and lower risk lesser the rewards. Hence, investor has got to make a choice about his willingness to require risk factor. Investor should remember of all the danger factor before taking investment decision.

MARKET RISK:

Sometimes prices & yields of all securities rise and fall. Broad outside influences affecting the market normally cause this. this can be true, may or not it’s big corporations or smaller mid-sized companies. this can be referred to as Market Risk. A scientific Investment Plan-SIP that works on the concept of Rupee Cost Averaging might help mitigates this risk.

CREDIT RISK:

The debt servicing ability (may it’s interest payments or repayment of principal) of a corporation through its cash flows determines the Credit Risk faced by you. This credit risk is measured by independent rating agencies like CRISIL who rate companies and their paper. A ‘AAA’ rating is taken into account the safest whereas a ‘D’ rating is taken into account poor credit quality. A well- diversified portfolio may help to mitigate this risk.

INFLATION RISK:

The root cause of Inflation, Inflation is that the loss of buying power over time. lots of times people make conservative investment decisions to protect their capital but find yourself with a sum of cash which will buy but what the principal could at the time of the investment. This happens when inflation grows faster than the return on your investment. A well-diversified portfolio with some investment in equities might help mitigate this risk.

INTEREST RATE RISK:

In a free enterprise interest rates are difficult if not impossible to predict. Changes in interest rates affect the costs of bonds similarly as equities. If interest rates rise the costs of bonds fall and the other way around. Equity could be negatively affected likewise in an exceedingly rising rate of interest environment. A well-diversified portfolio might help mitigate this risk.

POLITICAL/GOVERNMENT POLICY RISK:

Changes in government policy and political decision can change the investment environment. They will create a good environment for investment or contrariwise Can insurance be an investment avenue?Can insurance be an investment avenue? Life is uncertain. But the perils faced by human life are certain. Death may remove a individual but disability is that the worst. The scientific principles upon which insurance is predicated upon are as follows.

• 1. Shared Risk
• 2. Law of Large3
• 3. Predictable Mortality
• 4.Invested Assets
• 5.Fair and accurate Risk selection.

The concept of life assurance has evolved over a period of your time to fulfill the various needs of the customers. The two basic needs that are common for individual are (a) Risk Coverage and (b) Future savings. Risk here means Death. the most common kinds of insurance are: 1. Term Insurance 2. life insurance

Types of Policies

Term Insurance:

This type of policy covers risk i.e., death. The person gets the Sum Assured given that death occurs and also the money is paid to his nominee. Generally the amount of coverage varies from 1,5,10,15 or 20 years. The advantage during this style of insurance is that the low cost involved. The insured can renew the policy after expiry if such a n option is out there within the policy. The policy may also be converted into a savings policy if that option is additionally available. Generally the businesses don’t implement a medical test for renewal.

ENDOWMENT INSURANCE:

In this type of insurance the insured can enjoy the sum assured whether or not he survives the policy term. It covers the family on the death of the insured. it’s a sound plan for all form of customers. It may be utilized to accumulate a fund in order to managed the future events . The endowment plans have the selection of participating within the profits of the corporate that the next premium is charged. Another endowment plan variation is ‘Money Back Policy’ which is additionally popular among parents who have children, as they get the cash at regular intervals. Another version of this policy is ‘Joint Life policy’ where both the husband and wife’s life is covered. Another version is ‘Unit Linked Insurance Plan’ where the premium paid consists of two parts (a) Risk premium and (b) Investment premium. risk premium takes care of providing security to the family and also the second part is invested in three different modes supported the selection of the insured as follows:

• Secured Fund: Not less than 10% in EQUITY, Not less than 80% in DEBT, LIQUID – Not less than 20%
• Balanced Fund: Not less than 30% in EQUITY, Not less than 80% in DEBT, LIQUID – Not less than 20%
• Risk Fund: Not less than 50% in EQUITY, Not less than 75% in DEBT, LIQUID – Not less than 25%

Another sort of insurance product is that the ‘Whole Life Insurance’. There are two variations to the present policy. the primary one is Pure whole Life where the premiums are continuously payable under the throughout the lifetime of the insured till death. The other is that the Limited Payment Whole insurance where premiums are payable for a limited and shorter period at the choice of the insured or till death, whichever is earlier. The advantage of this policy is that the danger coverage is there till the tip of the policy.

CONCEPT OF investment company

Mutual fund could be a mechanism for pooling the resources by issuing units to the investors and investing funds in securities in accordance with objectives as disclosed in offer document.Investments in securities are spread across a large cross-section of industries and sectors and thus risk is reduced. Diversification reduces risk because all stocks might not move within the same direction within the same proportion at the identical time. investment firm issues units to the investors in accordance with quantum of cash invested by them. Investors of mutual funds are referred to as unit holders.

The profits or losses are shared by the investors in proportion to their investments. The mutual funds normally set out with variety of schemes with different investment objectives, which are launched from time to time. A fund is required to be registered with Securities and Exchange Board of India (SEBI) which regulates securities markets before it can collect funds from the general public./p>

DIFFERENT Types of open-end fund – SCHEMES SCHEMES in line with MATURITY PERIOD.

A investment company scheme are often classified into open-ended scheme or close-ended scheme betting on its maturity period.

OPEN-ENDED FUND/ SCHEME :

An open-ended fund or scheme is one that’s available for subscription and repurchase on an eternal basis. These schemes don’t have a set maturity period. Investors can conveniently buy and sell units at Net Asset Value (NAV) related prices which are declared on a commonplace. The key feature of open-end schemes is liquidity.

CLOSE-ENDED FUND/ SCHEME:

A close-ended fund or scheme incorporates a stipulated maturity period e.g. 5-7 years. The fund is open for subscription only during a specified period at the time of launch of the scheme. Investors can invest within the scheme at the time of the initial public issue and thereafter they will buy or sell the units of the scheme on the stock exchanges where the units are listed. so as to produce an exit route to the investors, some close-ended funds give an option of selling back the units to the investment company through periodic repurchase at NAV related prices. SEBI Regulations stipulate that a minimum of one among the two exit routes is provided to the investor i.e. either repurchase facility or through listing on stock exchanges. These mutual funds schemes disclose NAV generally on weekly basis.

SCHEMES in step with INVESTMENT OBJECTIVE:

A scheme may be classified as growth scheme, income scheme, or balanced scheme considering its investment objective. Such schemes could also be open-ended or close-ended schemes as described earlier. Such schemes could also be classified mainly as follows:

GROWTH/EQUITYORIENTEDSCHEME:

The aim of growth funds is to supply capital appreciation over the medium to longterm. Such schemes normally invest a serious a part of their corpus in equities. Such funds have comparatively high risks. These schemes provide different options to the investors like dividend option, capital appreciation, etc. and also the investors may choose an option counting on their preferences. The investors must indicate the option within the form. The mutual funds also allow the investors to vary the choices at a later date. Growth schemes are good for investors having a long-term outlook seeking appreciation over a period of your time.

GROWTH /EQUITY ORIENTED SCHEME:

The aim of growth funds is to supply capital appreciation over the medium to long- term. Such schemes normally invest a serious a part of their corpus in equities. Such funds have comparatively high risks. These schemes provide different options to the investors like dividend option, capital appreciation, etc. and also the investors may choose an option counting on their preferences. The investors must indicate the option within the form. The mutual funds also allow the investors to vary the choices at a later date. Growth schemes are good for investors having a long-term outlook seeking appreciation over a period of your time.

INCOME / DEBT ORIENTED SCHEME:

The aim of income funds is to supply regular and steady income to investors. Such schemes generally invest in fixed income securities like bonds, corporate debentures, Government securities and securities industry instruments. Such funds are less risky compared to equity schemes. These funds don’t seem to be affected due to fluctuations in equity markets. However, opportunities of capital appreciation also are limited in such funds. The NAVs of such funds are affected thanks to change in interest rates within the country. If the interest rates fall, NAVs of such funds are likely to extend within the short run and the other way around. However, long run investors might not bother about these fluctuations.

Balance Fund

The aim of balanced funds is to supply both growth and regular income per schemes invest both in equities and fixed income securities within the proportion indicated in their offer documents. These are appropriate for investors trying to find moderate growth. they typically invest 40-60% in equity and debt instruments. These funds also are affected due to fluctuations in share prices within the stock markets. However, NAVs of such funds are likely to be less volatile compared to pure equity funds.

MONEY MARKET OR LIQUID FUND:

These funds also are income funds and their aim is to supply easy liquidity, preservation of capital and moderate income. These schemes invest exclusively in safer short-term instruments like treasury bills, certificates of deposit, cash equivalent and inter-bank call money, government securities, etc. Returns on these schemes fluctuate much less compared to other funds. These funds are appropriate for corporate and individual investors as a way to park their surplus funds for brief periods.

GILT FUND:

These funds invest exclusively in government securities. Government securities haven’t any default risk. NAVs of those schemes also fluctuate because of change in interest rates and other economic factors as is that the case with income or debt oriented schemes.

Index Funds:

Index Funds replicate the portfolio of a specific index like the BSE Sensitive index, S&P NSE 50 index (Nifty), etc these schemes invest within the securities within the same weight age comprising of an index. NAVs of such schemes would rise or fall in accordance with the increase or fall within the index, though not exactly by the identical percentage because of some factors called “tracking error” in technical terms. Necessary disclosures during this regard are made within the offer document of the fund scheme.

There are exchange traded index funds launched by the mutual funds, which are traded on the stock exchanges.

FEATURES/ROLE/BENEFITS

MOBILISING SMALL SAVINGS:

Mutual funds mobilize funds by selling their own shares, referred to as units to an investor a unit in investment company means ownership of a proportional share of securities within the portfolio of a fund. this offers benefit of convenience and also the satisfaction of owning shares in many industries. thus, mutual funds are primarily investment intermediaries to accumulate individual investments and pass away the returns to small fund investors.

INVESTMENT AVENUE

One of the fundamental characteristics of a investment firm is that it provides as Ideal Avenue for investment for persons of small means, and enables them to earn reasonable returns.

An investment may be a sacrifice of current money or other resources for future benefits. Numerous avenue of investments are available today. The two key aspects of any investment are time and risk. Mutual funds also offer good investment opportunities to the investors. Like all investments, they also carry certain risks. The investors should compare the risks and expected yields after adjustment of tax on various instruments while taking investment decisions. The investors may seek advice from experts and consultants including agents and distributors of mutual funds schemes while making investment decisions.

PROFESSIONAL MANAGEMENT:

It is possible for the small investors to possess the good thing about professional and expert management of their funds. Mutual funds employ professional experts who manage the investment portfolios efficiently and profitably. Investors are relieved of the emotional stress involved in buying or selling securities since mutual be sure of this function. With their professional knowledge and experience, they act scientifically with the correct timing to purchase for and sell for his or her clients. Moreover, automatic reinvestment of dividends and capital gains provides relief to the members of mutualfunds. Expertise available selection and timing is created available to investors in order that the invested funds generate returns.

DIVERSIFIED INVESTMENT:

Mutual funds have the advantage of diversified investment of funds in various industry segments spread across the country. this can be advantageous to small investors who cannot afford having the shares of highly established corporate due to high market value. Thus, mutual funds allow uncountable investors to own investment during a sort of securities of the many different companies. Small investors therefore share the advantages of an efficiently managed portfolio and are freed from the matter of keeping track of share certificates etc of various companies, tax rules, etc.

BETTER LIQUIDITY:

Mutual funds have the distinct advantage of offering to its investors the advantage of better liquidity of investment. There is always a ready market available for the mutual funds units. In addition to this, there’s also an obligation imposed by SEBI guidelines. for example, in the case of openended fund units, it’s possible for theinvestor to divest holdings any time during the year at the net Asset Value.

REDUCED RISKS:

There is only a minimum risk attached to the principal amount and return for the investments made in investment firm schemes. this is often usually made possible by expert supervision, diversification and liquidity of units. Mutual funds provide small investors the access to a reduced investment risk resulting from diversification, economies of scale in transaction cost and professional finance management.

INVESTMENT PROTECTION:

Mutual funds in India are largely regulated by guidelines and legislative provisions put in place by regulatory agencies like the SEBI. The Securities Exchange Commission (SEC) within the USA allows for the availability of safety of investments. In order to protect the investor interest, it’s obligatory part of mutual funds to broadly follow the provisions laid down during this regard.

SWITCHING FACILITY:

Mutual funds provide investors with flexible investment opportunities, whereby it’s possible to modify from one scheme to a different. This flexibility enables investors to shift from income scheme to growth schemes, or the other way around, or from a close-ended scheme to an open-ended scheme, all at will.

EQUITY SHARES

Equity Share represents ownership capital. As a Equity share holder, you’ve got a ownership stake within the company. This significantly implies that you have a residual interest in income and wealth. The Share movements are reflected within the various index points: Bombay Stock Exchanges Sensitive Index, S&P Nifty Index

BOMBAY STOCK EXCHANGES SENSITIVE INDEX:

Perhaps most generally followed stock market exchange index in India, Bombay stock exchange Index, Popularly called sensex reflects the movements of 30 sensitive share from specified and non-specified groups.

S&P Nifty Index:

Arguably the foremost rigorously constructed securities market index in India, the nifty index reflects the worth movements of fifty stocks selected on the bases of capitalization and liquidity.

STATEMENT OF PROBLEM

Based on the definition of problem, it’s clearly understandable that a problem doesn’t necessarily mean that something is seriously wrong with a current situation that has to be rectified immediately. But a “Problem” could simply indicate an interest in a difficulty where findings the correct answers might help to boost an existing situation.

In this scenario the investment portfolio should be mainly focused on availability of correct quantity of cash at the correct time to the correct person may be called as an efficient portfolio.“Here the problem of the study is mainly focused on looking for efficient portfolio of the individuals supported risk appetite of the person”

OBJECTIVE OF STUDY

PRIMARY OBJECTIVE

• To find out the various parameters that an investor look from an investment.
• To learn what a investor look from an insurance plan.
• To know the investors level of information in open-end fund and also the various factors that they give the impression of being from the Mutual Funds
• To discover which Investment Avenue gives high return from the investor point of view.
• To find out which Investment Avenue gives high return from the investor point of view.
• To know which Investment avenue gains more Risks from the investor point of view

SECONDARY OBJECTIVE:

To calculate Risk and Return for Insurance plan, Mutual Funds Schemes and Stocks. To correlate the ranks and suggest the Portfolio. To the organization it is to get to know that which avenue attack’s more number of investors within the form of portfolio they follow.

REVIEW OF LITERATURE

Palanivelu K. Chandrakumar (2013) This analysis separates the investment avenues into various parts such as debt with a higher risk and rate of return. Debt which has a fixed amount of rate of interest on investment, Fixed deposits are only with the bank , insurance, public fund, with very less rate of return on investment, and safe. Data that analysis revealed 60% of responses like to invest their amount in insurance , 20% of responses like to invest their money in banks in term or fixed deposits, 30% of people invest in metals such as Gold, property and silver.

N. Panda J. K. Panda (2012) The study analyses the categories in the discrimination of investing people in the suggestion of investing their money based on their gender and age. There are various types of investment options that are analyzed in this research paper like Debentures, Life Insurance, Bonds, Debts, Pension, Property, Metal etc. investment suggestions are taken by the investing peoples only and the company has to wait to see the result of it, while some investors are best in investing their money with best investment avenues.

Srividhya S. Visalakshi (2013) The research paper analyzed that there are different types of schemes of investment avenues like fixed deposit,bonds,government deposits, real estate, post office deposit, Mediclaim’s, equity, mutual fund etc. The analysis is done by the private colleges and government colleges which says that maximum teachers of college save below 1 lakh. Most of the Investors investing in Fixed Deposit for return also and not to take the risk.

Odoemene Met. al.(2013):-Investing in Investment avenues for the future returns. We get the results after analysis that the policy which have made for the investors not properly study and analysis and any proper saving schemes made for rural areas. Because improper study and analysis is difficult for the farmers and low class category people to make the decisions for Savings and investments. The motive of Saving and Investments is to take care of families or fulfil the requirements in future uncertainty.

Prasanna Kumar (2014) Investment means getting benefits in later life. Investment categories are such as Equity, Government deposit, dealing in property, shares, bonds, etc. The responses of the analysis tell us that the various people select bank deposits investment.

Ravi Vyas (2012) The analysis says that the various types of investing schemes are preferred by the investors. People think that Mutual Funds investment is secured than any other investment with good rate of return in future. Responses analyzed that most people invest their money in metal such as Gold, Silver, etc. Mutual Funds investing people are very moderate in the country. For better security, safety, liquidity, risky, tax saving, and normal payback of Mutual funds have low scores among people.

Gauri Prabhu N.M. Vechalekar(2013):- Mutual funds are the place where investors can invest their funds in the global capital market also. The huge amount of money is collected in Mutual funds and then it is invested in shares, debentures, bonds, and other securities which are available in the capital market. This paper analyzes the knowledge and awareness about the mutual funds between the peoples. The study states that between age 21 to age 40 are more active or interested in more investments. Private sectors employees invest more rather than the Government sectors employees.

Priyanka Jain (2012):- The analysis states that there are various Investments avenues and schemes are available in the market for Investments. It study that equity shares are lower return, heavy capital, liquidity, risk, market, tax allowances. Debentures are higher return than equity shares with 10% risk and marketability. Bank deposits give moderate rates of return and also normal capital and risk, liquidity.

Gaurav Chhabra, Ankesh Mundra(2014):- The study indicates that there are various Investment options and avenues available with the people in the market. In earlier times, there was no knowledge of investments and banking because investors have so much cash, gold jeweler, and unique and rare (prestige) stones as savings. Now the people are investing in Mutual funds, pension funds, debts, equity schemes, medical policies etc through banks and various clubs.

SCOPE OF THE STUDY

The Scope of the study is to probe among the investor of Chennai. The study was conducted for the amount of three months carrying various places in Chennai. Primary data was collected from the investors and Secondary data was collected from the Journals, Magazines and computing machine.

Equity-oriented mutual funds displayed an adverse yield of around 25 percent during March and April, because the extensive market witnessed observed symbolic downturn amid coronavirus generated recession worries. The 44-player mutual fund industry is not resistant to the economic setback of Covid-19, and moving forward, small and mid-cap equity schemes might persevere persisting under stress in the short to medium term as a results of unpredictable movements within the market.

E-gold is believed to be a secure investment option in times of political and financial unpredictability. it’s considered a hedge against inflation and currency degradation. It tends to achieve from extensive stimulus procedures. Gold is an asset that seems to be able to grow in value even amid uncertain and difficult times. With domestic gold prices at high record, analysts look at the upward movement lasting for the yellow metal. During the Covid-19 outbreak, the BSE Sensex fell to 25,981 points in March 2020from its peak of 42,320 points. While BSE has since recovered considerably, it’s still wanting its previous high. Gold, however, has surpassed all other asset classes, having risen almost 20 percent from the lows in March, and 50 percent in the last one year to touch the a historic high of Rs. 49,000 within domestic market.

RESEARCH METHODOLOGY

The present study used convenience sampling and followed the first survey method. Respondents (male and female) were a group of investors who fell in the people 20 to 55.

SAMPLING DESIGN

While Developing a Sampling Design. The Researcher must listen to the subsequent points.

SAMPLING FRAME: Sampling Frame is Representation of elements of target population that incorporates an inventory or set of direction for identifying the target population.

TYPE OF SAMPLING:

PROBABILITY SAMPLING:

Under this Sampling procedure, every item of the universe has an equal chance of inclusion within the sample. the acceptable method for this study is probability sampling, In probability sampling technique, Simple Random Technique has been followed for this Study.

Research Design:

The research design chosen for the project has been descriptive in nature.

DESCRIPTIVE RESEARCH:

Descriptive research includes surveys and fact-finding enquiries of different kinds. The major purpose of descriptive research is description of the state of affairs as it exists at present. The questionnaires are used for collecting responses from the respondents.

Sources of Data:

There are two different methods for collection of information to conduct this Descriptive Research study.

Primary Data Collection Method, Secondary Data Collection Method

In this study the primary data collection method have been used to collect data.

Primary Data Collection: Primary data are those which are collected a fresh and for the primary time and thus happen to be original in character. Primary data collection is nothing but the information that is directly collected from the people by the researcher himself. Primary data may pertain to demographic / socio economic characteristics or the customers, altitudes and opinions of individuals, their awareness and knowledge and other similar aspects.

In this study Primary Data collection method has helped the researcher to an excellent extent in arriving at the results.

METHODS OF PRIMARY DATA COLLECTION:

The method used for collecting Primary data is Survey.

SURVEY METHOD: Survey method is that the systematic gathering of information from the respondents survey is that the most typically used method of primary data this can be widely used because of its ease of use. The present study used convenience sampling and followed the first survey method. Respondents (male and female) were a bunch of investors who fell within the people 20 to 55.

Recent Trends

As the Covid19 pandemic was getting severe and the returns started to surge and the market become highly volatile to invest and majority of the investment avenues started giving poor returns. COVID 19 has a significant impact on the equity fund as compared to the debt funds. Many investors considered shifting to debt fund or hybrid fund to invest their money into as Debt funds grow the wealth with little to no risk.

In Debt mutual funds the funds are collected from the public and major portion of this amount is invested in Government bonds, RBI Bonds and other fixed income securities. Whereas in Equity Mutual funds major portion is invested in the stock market. The returns of debt mutual fund increased where as in equity mutual fund it has decreased and it should be considered that the returns of the Equity mutual fund are on the total AUM.

In reality many investors who invested in equity mutual fund before the pandemic faced huge losses but debt mutual fund had the benefit of safety on the funds invested. It is clear that debt funds are a safe haven. In spite of the global pandemic which has adversely affected the entire world, debt funds have still given more than 5% returns during the pandemic. In contradiction, equity funds have been significantly hit due to COVID 19. All of them have given negative returns with as high as – 8% by HDFC Equity Fund. This fund also has the highest NAV amongst the funds studied. There is a steep downfall in the Sensex and Nifty charts which are the base funds for most of the mutual funds since the beginning of March 2020 due to COVID 19.

Such a decline leads to a negative impact on investors regarding the stock market and mutual funds and investors consider shifting to safer investment avenues. Investors have turned to gold as the COVID-19 Pandemic started to affect other investment avenue and underpinned its status as a safe haven. The Metal is getting support from a long list of factors like geopolitical tensions are rising, dollar becoming weaker and government and central banks worldwide have unleashed vast stimulus and relief funds to try and boost economies.

Fixed deposits are ideal for investors with very low risk appetite and are looking for assured returns; usually the rate of interest is higher than what is offered for a savings bank account. Currently also RBI reduced the lending rates due to COVID-19 pandemic and due to that some of the FD interest rates came below saving bank account interest rates.

Conclusion

Covid‐19 has impacted the financial markets dramatically. The risk and return expectations of investors have changed, leading them to reallocate their portfolios. Following the COVID-19 breakout, investment in shares, mutual funds, and life insurance are witnessing a growing trend in India. COVID-19 has empowered businesses to move towards digital transformation and has changed the way goods and services are offered to customers. More than any other business, financial services like banking and investments have seen an increase in digitization after the breakout of the pandemic.

New investments in shares, mutual funds, and life insurance have seen a significant increase during the year 2020 with digital facilitation. To support the investment trend, regulators like the Securities Exchange Board of India (SEBI) have eased the offering of mutual funds and initial public offerings through unified payment interfaces (UPI), intending to give easy access to the above-mentioned investment avenues and increase investor participation (SEBI, 2020). Generally, investors have different motives to invest in an investment avenue. Further, understanding the motives of investors is crucial than ever before to sustain the positive investment trend in shares, mutual funds, and life insurance.

Due to the present financial crisis pertaining to COVID‐19, investors have started to reallocate their portfolios. In the pre‐COVID period, the main preferences of investors in descending order were stocks, mutual funds, real estate, bank deposits and public provident funds.

Currently, governments of the world are raising high financial resources to support emerging economies and stimulates satisfaction levels for investors that could evaluate the socio-economic impacts on the growth of economic stability. Uncertainty due to the outbreak has impacted the financial market risk assessment domain and other supporting sectors that can be used to evaluate another financial commodity market.

The positive impact of COVID-19 on increasing investment in shares, mutual funds, and life insurance requires examining the investment motives that drive investors towards these avenues. An empirical study to analyze the investment motives is performed by considering a wide range of investment factors. The results of factor analysis grouped the investment motives into six categories, such as Nature of investment (i.e., periodical return, expert advice, convenience, tax benefits, return growth, and riskiness), Future financial needs (i.e., uncertain events, retirement planning, house purchase, child future, and healthcare), Investor personal characteristics (i.e., knowledge, confidence, ability, responsibility, and belief), Safety and stability of investments (i.e., time frame, safety, stability, and liquidity), Investor behavioral aspects (i.e., previous experience, prior loss, following majority decision), and Investor options (i.e., mental accounting). A successful investor undertakes all possible measures to earn good returns. Investment avenues range from risk‐free simple asset such as bank deposits to complex and risky assets such as stocks and bonds.

Investors are recommended to take a little risk in their portfolio so as to maximize their own returns since the markets have shown recovery now. It is a good time to invest now since the market will boost as soon as vaccine for COVID 19 will be available. Therefore, taking calculated risks should fetch them good returns. Portfolio managers/Fund managers are recommended to diversify the risks and encourage risk averse investors to take on some risk in their portfolio.

It was traditionally recognized that the high‐income group had preference to invest in securities market, specifically in shares. Recently, the middle income and salaried class investors have begun to invest in stocks due to increased awareness and better services provided by brokerage agencies.

FINDINGS:

From the survey that was carried out, the findings were as follows:

The risk and return expectations of investors have changed, leading them to reallocate their portfolios.as per analysis is shows that there is no age group for investing in financial market as many as young people have started to invest.

The analysis shows that people don’t invest a fixed amount, it depends on their monthly budget or monthly fix income or salary.

Normally people save the amount after their deducting monthly expenses which is depend on their monthly income. after all expenses and standard of living is depend on people’s monthly income.

As per analysis now a day’s people invest their money in different financial market I.e. share market, mutual fund etc.

As per survey people try to invest for long term period as there is lesser risk involved with high returns.

People want returns or growth in fast or speedy way but in fastest way there is higher risk involved.

As per survey people monitor their investment on regular basis as market perform on daily basis.

As per survey people use Demat ac for trading on regular basis and if market drops they wait to increase more instead of bearing loss amount.