Business Research Methodology

ProposalComparative Study of Investing Patterns of Different

Age Groups

Under the Guidance of

Dr. VSR VIJAYAKUMAR

Submitted by-

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Group 4 Section-B
MembersDrishya Krishnan (2014090)
Garrima Parekh(2014091)
Gaurav Agarwal(2014092)
Gaurav Garewal(2014093)
Gaurav Mukim(2014094)
Gaurav Vij(2014095)

Acknowledgement

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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. Vijayakumars 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.

Table of Content
Content

Pg.
No.
2

Abstract

Research Proposal

Literature Review

Research Objectives

Methodology

Time Scale

Hypothesis

Variables

10

Results & Findings

11

Appendix

18

Questionnaire

19

Questionnaire Mapping

20

Cross-Tabulations

21

Primary Data

24

Bibliography

26

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Acknowledgement

Abstract

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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.

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 todays 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.

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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.

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.

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6. Life Insurance:
6

Life Insurance is also considered as a safe mode of investment. Its 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, ETFs 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
hes tax averse, he will invest in safe investments like Fixed Deposits.

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5. Investment Needs:
Investment needs refer to the amount of returns that the investor is expecting on his
investment.

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 softwares 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

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Investments in different sectors depends on time of the year

Variables
Measurement
Scale
Nominal
Nominal
Nominal
Ordinal
Ordinal
Ordinal
Nominal

Non Metric
Non Metric
Non Metric
Non Metric
Non Metric

Nominal
Nominal
Scale
Nominal
Nominal

10

Metric Or Non Metric

Metric
Non Metric
Metric
Non Metric
Non Metric
Metric
Metric
Non Metric

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Variable
Age
Gender
Investment
Reason for Investment
Type of Investor
Frequency of Investment
% of Salary Invested
Preferred Investment
Avenue
Risk Profile
Type of Industry
Investment Horizon
Time of the Year
Reference Groups

10

RESULTS
&

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11

Findings

11

Youth does not tend to make risky investments

Hypothesis 1

Variables
Age
Investment in Equity Shares
Risk

Independent

Dependent

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

Kolmogorov-Smirnova

Shapiro-Wilk

respondent

Statistic

20-30

.236

28

.000

.809

28

.000

yourself in terms of taking

30-40

.285

17

.001

.792

17

.002

risks

40-50

.363

19

.000

.740

19

.000

50-60

.286

14

.003

.810

14

.007

Above 60

.374

12

.000

.640

12

.000

20-30

.392

28

.000

.622

28

.000

you prefer

30-40

.380

17

.000

.632

17

.000

(Equity Shares)

40-50

.376

19

.000

.633

19

.000

50-60

.478

14

.000

.516

14

.000

Above 60

.417

12

.000

.608

12

.000

How would you rate

Financial instruments do

dimension1

dimension1

df

Sig.

Statistic

df

Sig.

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12

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

12

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
How would you rate yourself

df1

df2

Sig.

.805

85

.526

3.228

85

.016

in terms of taking risks

Financial instruments do you
prefer
(Equity Shares)

ANOVA
Sum of Squares
How would you rate yourself Between Groups
in terms of taking risks

df

Mean Square

3.156

.789

Within Groups

36.444

85

.429

Total

39.600

89

1.871

.468
.241

Financial instruments do

Between Groups

you prefer

Within Groups

20.452

85

(Equity Shares)

Total

22.322

89

Sig.

1.841

.129

1.944

.111

Analysis

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13

Since the p value is greater than .05, therefore we will reject the hypothesis and conclude that
youth tends to make risky investment.

13

Gold investments are not higher during festive seasons

Hypothesis 2

Variables
Time of investments
Investment in Gold

Independent

Dependent

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

Test for Normality

Tests of Normality
Kolmogorov-Smirnova

When do you prefer to

invest

Statistic

df

Shapiro-Wilk

Sig.

Statistic

df

Sig.

Financial

Starting of the financial year

.390

40

.000

.623

40

.000

instruments do you

End of the financial year

.336

22

.000

.640

22

.000

prefer

Festival seasons

.440

17

.000

.579

17

.000

(Gold)

Others

.401

11

.000

.625

11

.000

a. Lilliefors Significance Correction

Since the value of the independent groups, using Shapiro-Wilk test is less than .05, therefore
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)
Sum of Squares
Between Groups

df

Mean Square

1.281

.427

Within Groups

21.175

86

.246

Total

22.456

89

F
1.734

Sig.
.166

Analysis

Page

14

Since the p value is greater than .05, therefore we will reject the hypothesis and conclude that
Gold investments are higher during festive seasons.

14

Mutual funds and debentures are preferred for long term investments

Hypothesis 3

Variables
Time Horizon
Investment in Debentures
Investments in Mutual Funds

Independent

Dependent

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

Kolmogorov-Smirnova

Shapiro-Wilk

your money invested /

Time Horizon

Statistic

df

Sig.

Statistic

df

Sig.

Financial instruments do

Less than a year

.538

20

.000

.236

20

.000

you prefer

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

Financial instruments do

Less than a year

.487

20

.000

.495

20

.000

you prefer

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

(Mutual Funds)
dimension1

(Bonds/Debentures)
dimension1

a. Lilliefors Significance Correction

Since the value of the independent groups, using Shapiro-Wilk test is less than .05, therefore
the data is normal.
ANOVA
Sum of Squares
Financial instruments do

Between Groups

you prefer
(Mutual Funds)
Financial instruments do

Between Groups

you prefer
(Bonds/Debentures)

df

Mean Square

1.073

.268

Within Groups

15.549

85

.183

Total

16.622

89

1.600

.400

Within Groups

19.300

85

.227

Total

20.900

89

Sig.

1.466

.220

1.762

.144

Hypothesis 4

Investments in different sectors depends on time of the year

15

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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

15

ANALYSIS

Variables
Time of the Year
Investments in Different Sectors

Independent

Dependent

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

Normality Test
Tests of Normalityb
When do you prefer to

Kolmogorov-Smirnova

invest

Statistic

df

Sig.

Shapiro-Wilk
Statistic

df

Sig.

Which industry do you

Starting of the financial year

.364

40

.000

.634

40

.000

prefer to invest

End of the financial year

.336

22

.000

.640

22

.000

(Infrastructure)

Festival seasons

.380

17

.000

.632

17

.000

Others

.448

11

.000

.572

11

.000

Which industry do you

Starting of the financial year

.377

40

.000

.629

40

.000

prefer to invest (Energy &

End of the financial year

.359

22

.000

.637

22

.000

Power)

Festival seasons

.410

17

.000

.611

17

.000

Others

.401

11

.000

.625

11

.000

Which industry do you

Starting of the financial year

.453

40

.000

.559

40

.000

prefer to invest (Banking &

End of the financial year

.496

22

.000

.474

22

.000

Finance)

Festival seasons

.410

17

.000

.611

17

.000

Others

.448

11

.000

.572

11

.000

Which industry do you

Starting of the financial year

.536

40

.000

.292

40

.000

prefer to invest

End of the financial year

.430

22

.000

.590

22

.000

(Agriculture)

Festival seasons

.521

17

.000

.385

17

.000

Which industry do you

Starting of the financial year

.428

40

.000

.591

40

.000

prefer to invest (Industry &

End of the financial year

.406

22

.000

.613

22

.000

Services (Textile, Services,

Festival seasons

.440

17

.000

.579

17

.000

Others

.401

11

.000

.625

11

.000

Retail, Tourism, Mining))

a. Lilliefors Significance Correction

b. Which industry do you prefer to invest

Page

16

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

16

Analysis
ANOVA
Sum of Squares
Which industry do you

Between Groups

prefer to invest

df

Mean Square

.756

.252

Within Groups

21.699

86

.252

(Infrastructure)

Total

22.456

89

Which industry do you

Between Groups

.443

.148

prefer to invest (Energy &

Within Groups

21.657

86

.252

Power)

Total

22.100

89

Which industry do you

Between Groups

.288

.096

prefer to invest (Banking &

Within Groups

17.312

86

.201

Finance)

Total

17.600

89

Which industry do you

Between Groups

1.088

.363

prefer to invest

Within Groups

9.312

86

.108

(Agriculture)

Total

10.400

89

Which industry do you

Between Groups

.059

.020

prefer to invest (Industry &

Within Groups

19.941

86

.232

Services (Textile, Services,

Total

20.000

89

Sig.
.999

.397

.586

.626

.477

.699

3.348

.023

.085

.968

Retail, Tourism, Mining))

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17

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 doesnt as for all of them, p
value is greater than .05.

17

Page

18

Appendix

18

Questionnaire
1) Name: ______________________
2) Age
18-25

25- 35

35- 50

Above 50

40 60

60 - 80

3) Gender
Male

Female

4) Do you invest?
Yes

No

5) What percentage of salary do you invest?

0 20
80- 100

20- 40

6) Since when are you investing

1 year 5 years
more than 7 years

Less than 1 year

5 years 7 years

7) Reason for Investment (tick at least one)

Quick Money

General Savings

Future provisions

8) Financial instrument do you prefer?

Equity Shares
Bonds/Debentures
Gold

Preferential Share
Real estate
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
1 year 3 years

5 years 10 years

above 10 years

3 years 5 years

Page

19

Less than a Year

12) When do you prefer to invest?

19

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

Page

20

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

20

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.

Page

21

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

21

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.

Page

22

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

22

Page

23

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.

23

Page

24

Primary Data

24

25

Page

25

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

Page

26

4. Research article from: http://www.chimc.in/volume3No2/RESEARCH%20PAPER2.pdf

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