Investment Behaviour of Middle Class Households:An Empirical Analysis

Today's investor has a variety of options to choose from while making his/her investment decision. Saving and investment behaviour has always been an area of interest to the researcher. The economic cycles of boom, recession, depression and recovery not only effect the level of GDP but also the income of the households and hence the saving ratio and investment behavior. Keeping pace with the changing times and under the liberalized financial sector regime, the financial institutions are also decorated with innovative instruments to meet the growing demand of modern investors. But this innovative and diversified financial system could not lost the appeal of traditional means of investment. Through this study, an analysis has been made into investment behaviour of middle class households of Nagaon districts of Assam. The rationale behind choosing this study topic is the premise that the middle class in India has gained attention of the economists, policy makers and the marketers, as still there remains a considerable untapped potential in this income class of India. The study has been conducted to answer few important questions on the preference of the investment instruments and investment pattern of the middle class households, to know the various objectives of investment of the middle income class households and to know whether there has been any increase in their savings and the reasons for the same. Investment is one of the major issues of the middle class families as their small savings of today are to meet the expenses of tomorrow. This study also examines the risk tolerance capacity and investment horizon along with factors governing investment decisions. It is observed from saving and investment pattern of the middle class income households in Nagaon districts of Assam that Bank deposits (35.33%) are considered as the preferred investment option among the middle class investor's of the district. It is further observed that all age groups marked highest preference towards bank deposits and insurance investment so as to provide the benefit of safety and security of their life and investment. Similar feeling of preference towards investment in Bank deposits and insurance is also observed by all the respondents with different income slabs. It was found that majority of the respondents said that they look for tax advantage and high returns while investing in any instrument. Slight variations are also observed when respondents are classified on age and income groups. Further, it is observed that all the respondents marked interest towards medium term investment. Only some respondents of high income group show keen interest to build huge financial corpus. The study results brought out the fact that 71.33% of the respondents have recorded that their savings have increased in past five years. 31% of the households said that their savings have increased because of increase in their income which supports the hypothesis that the income and savings are directly related.