Study on Determinants of Investment Preference of Investors in Nagpur City
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Study on Determinants of Investment Preference of Investors in Nagpur City


Dr. Yogesh Gharpure

Prof. Abhishek Shahu


 Financial institutions thrive on the investments of individuals. The economic market is hugely dependent on investing capabilities and the investor’s inclination towards one or the other instrument. There is a great fluctuation in the investment decisions among different economic strata of the society, depending on the market trends. If some analytical tool could be developed to understand the behavioural pattern of the society as a whole, it could be useful for the financial institution, in general, and at the macro level and also to provide a framework for the government to implement certain pro public plans.

This study has analysed the data of 358 individual investors in Nagpur, the second capital of Maharashtra. The demographic data was subjected to statistical analysis and it was correlated with the behavioural pattern of the investment options available. It was observed that prediction is difficult to generalise since the behaviour is a faltering phenomenon. However, some factors were very significant like Age, Gender, Rate of savings and Investment, and Family Type.


Investors are a huge and important group influencing the economics of market. There are so many service providers who depend on the preferences of the investors. Hence gaining knowledge of investors’ behaviour preferences becomes essential for such business houses. The initial intention of focusing on Behavioural Finance theories was to explain stock market anomalies and market fluctuations by applying psychology and other social science theories and in turn to increase the efficiency of financial markets (Pompain, 2011). The study has shown that from the point of view of an investment effect, personal characteristics of investors were involved, such as personality, genetic characteristics, education, social position, economic capability, experience, emotion, cognition, etc. Pompian and Longo (Pompain & Longo, 2004) investigated 100 investors using the Myers-Briggs personality test list and questionnaire and found that there were remarkable differences among individual investors with different preferences of investment types, choices of information channels and trading behaviours. Kourtidis (Kourtidis, 2011) built a D-GARCH-M model to estimate the volatility of returns for stocks, bonds and market indices. This study examined the relation between Investors’ Risk Preference and return on stock market, It found that the extent of risk aversion and risk-seeking was different in investors. Clark-Murphy and Soutar (Clark-Murphy, 2005) applied cluster analysis in their study and divided the study population into four categories according to  different attitudes and decision-making behaviours of individual investors. They found that individual investors in each category have different features in investment preferences and target selections. Hira and Loibl (Hira, 2008) emphasised the differences of investment behaviour caused by gender and they found that gender had an impact on the acquisition sources of investment information and risk-taking level. Barnea (Barnea, 2010) used twin investors’ investment records discuss the linkages among individual investor’s characteristics, market participation and capital investment distribution behaviours. The authors attribute the genetic component of asset allocation to genetic variation in risk preferences. Kabra (Dash, 2010) found people of different ages and genders have varying risk tolerance levels in decision making processes by factor analysis and regression analysis. A survey conducted by Groww involving 26000 women participants noted that 64% of women are financially confident and take investment decisions on their own. In the study the investment options were correlated to income, education and to their primary investment goal (PTI, 2020).


The objective of this study was to assess the impact of factors on preference of investment option like Age, Gender, Rate of savings and Investment, Family Type, Occupation.


The options chosen for investment preference were Mutual Funds, Equity Shares, Bonds, Fixed Deposits, Real Estate, Insurance and Bullion. The responses were collected by conducting a survey on the basis of continence sampling. The response was collected through google form which was sent to them over email and WhatsApp. The survey received total 358 responses. The respondents were asked to rate their level of preference over a scale of 1 to 5 where “1” means least preferred investment option and “5” being highly preferred option and “3” is considered and neutral. The respondents were also given an option “NA” indicating no experience of investment in respective investment. The preference of respondents were compared on the basis of various demographic factors for each investment option separately. The Pearson Chi-Square test was applied to identify significant difference in preferences, for the purpose of analysis, response “3” (neutral) and “NA” is eliminated.

Data Analysis

Respondents selected for the study were of either gender and were from a wide range of age groups. They were from joint as well as nuclear family. Number of dependents varied from one to six. Percentage of income that was invested was categorised from less than 10 % to more than 50 %. The occupation data was also randomly selected to avoid any bias. Data is represented in Fig.1.

Figure1- Demographic data of respondents.

More men than women were chosen. Majority of respondents belonged to age group 21-30. There were more nuclear families; Number of dependents were three in most cases. Occupation was business or private employment, and level of investment was in the range of less than 10 to 20% of income.

Number of dependants ranged from one to six with highest frequency of three dependents. The maximum percent invested was up to 10% of income, followed by less than 10%. It was interesting to note that among all the parameters, the weighted preference was for investment in Fixed Deposit.

Investment preferences based on gender

CriteriaMFSharesBondsFDsReal estateInsuranceBullion

More men (76.6%) were ready to invest in Mutual Funds. There was a significant difference between the choice of women and men in investing in shares and fixed deposits. Both men and women were equally inclined to invest in insurance and real estate. Surprisingly high score was given to bullion by men (75.0%), as compared to women (65.9 %), however difference is not significant.

Age Preference

CriteriaMFSharesBondsFDsReal estateInsuranceBullion

78.2% people in age group 20-30 had inclination for mutual fund but as age increased, it declined to 50%. More people in the age group 30-40 were ready to invest in all options but as age advanced the preference decreased for mutual fund, shares, reals estate and bullion. The preference was highest for fixed deposits in all age groups. The Age factor has significant impact on investment preference towards, Shares, Fixed Deposit and Insurance. The change in preference is specifically observed in the Age group of 41-50.


CriteriaMFSharesBondsFDsReal estateInsuranceBullion
Financial Profession100.0050.0025.0033.30100.0050.0050.00
Govt. Employee66.7050.1068.4094.5090.0093.3083.40
House Wife83.3050.00100.0087.4075.0086.9060.00
Private Employee69.2070.8059.4089.3085.2073.0069.20

Financial professionals were totally for investment in mutual funds and in Real estate. Surprisingly more housewives were for investment in Bonds. People in business tended to invest more in Shares (83.5%) while professionals (non-finance) were least inclined. All housewives were ready to invest in bonds as against 25% of financial professionals. Government employees showed highest tendency towards FDs as against Business people.

96 % of business people were prone to invest in real estate as against those in finance with zero preference.

Most of the government employees are inclined to invest in insurance while the lowest score was given by financial professionals.

Business people showed preference for Bullion while only 50% of financial people were inclined to invest in bullion.

Family type

CriteriaMFSharesBondsFDsReal estateInsuranceBullion

Fixed Deposits were the choice for investment in both types of families. Joint families were less inclined towards investment in Mutual Funds, shares and bonds.

Investment as Percent of Income

CriteriaMFSharesBondsFDsReal estateInsuranceBullion

It is observed that respondents in the range of 30%-40% of investment level are more inclined to put money  in bonds and shares . However overall investment in shares and bonds was less as compared to Fixed Deposits and real estate.  Across all ranges of investment level, Investment in FDs and insurance was consistent. FD was a clear winner for investment.

People were equally inclined to invest in bullion ranging from less than 10% to 30-40 %


The paper compares the preference of investment based on demographic factors. As it can be observed that demographic factors do have impact on preference of investment. The occupation of investor and level of investment has higher impact on choice of investment as compared to other factors. Similarly, investment in shares appears to be highly affected by demographic factors. The fixed deposit comparatively differs as preference of investment in some categories; however, it remains on higher side of preference of all. The difference in investment preference requires further studies to identify the underlying reason for difference, for example, the risk seeking nature of business person explains their preference towards risky and high return investments and need for security of person living in nuclear families justifies their high preference towards insurance. The paper provides the insight to fact that demographic factors does have an impact on investment decision. However, it may be due to changing investment need of individual with different demographic characteristics. A study finding relation between demography and investment expectations and needs will help in creating better understanding in this area.


  • Barnea, A. C. (2010). Nature or nurture: What determines investor behavior? Journal of Financial Economics, 583-604.
  • Clark-Murphy, M. &. (2005). Individual investor preferences: A segmentation analysis. The Journal of Behavioral Finance, 6-14.
  • Dash, M. K. (2010). Factors Influencing Investment Decision of Generations in India: An Econometric Study. Int. J. Buss. Mgt. Eco. Res,, 15-26.
  • Hira, T. K. (2008). Gender differences in investment behavior. Handbook of consumer finance research, 235-270.
  • Kourtidis, D. Š. (2011). Investors’ trading activity: A behavioural perspective and empirical results. Journal of Socio Economics, 548-557.
  • Pompain, M. (2011). Behavioral finance and wealth management: how to build investment strategies that account for investor biases . Jhon Wiely & Sons.
  • Pompain, M. M., & Longo, J. M. (2004). A new paradigm for practical application of behavioral finance: creating investment programs based on personality type and gender to produce better investment outcomes. Journal of Wealth Management, 9-15.
  • PTI. (2020, March 09). Retrieved from

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