IMPACT OF DEMOGRAPHIC FACTORS ON INVESTMENT DECISION OF INVESTORS IN RAJASTHAN

Abstract

ABSTRACTThe markets have been moving from statism to more of dynamism and are continuously changing the exposure to risk. As the level of risk has been increasing, more and more money is at stake among different demographic profiles. This paper explores relationship between level of risk and demographic factors of investors' confined to Rajasthan state. Depending upon risk appetite, there is an increase in number of investment avenues available for investors like bank deposits, government / private bonds, shares and stocks, exchange traded funds (ETF), mutual funds, insurance, derivatives, gold, silver, currencies, real estate, etc. Most of the investors' primary objective of investment is to earn regular income and expected rate of return differs from individual to individual based on their level of market knowledge and risk taking ability. This paper further reveals that there is a negative correlation between Marital Status, Gender, Age, Educational Qualification and Occupation of the investors' also there is a positive correlation between Cities, Income Level and Knowledge of the investors'. This has been identified on the basis of cross analysis by applying Correlation analysis.Keywords: Investment, risk, critical, correlation, investors, occupation.INTRODUCTION:Economist and policymakers have observed that demographic factors both intrinsic as well as extrinsic like age, gender, marital status, qualifications, occupation, annual income , geographic location etc have an impact on the level of risk that investors take further based on their behavioral and decision making aspect.Assessing one's risk tolerance, however, can be tricky. One must consider not only how much risk he can afford to take but also how much risk he can stand to take. An investor's ability to handle risks may be related to individual characteristics such as age, time horizon, liquidity needs, portfolio size, income, investment knowledge etc.This study critically examines the impact of a single vital and social statistics of human population i.e., risk preferences on the investment decision of investors in Rajasthan .A brief review of the literature was done in order to develop the idea and the necessary concept of the study.REVIEW OF LITERATURE:Richard B. Freeman (1979) in his analysis showed that from the late 1960s through the mid 1970s when the number of young workers increased .rapidly, the earnings of young male workers fell relative to the earnings of older male workers, altering male age-earnings profiles, particularly for college graduates. His study suggested that the increased number of young male workers was the major causal force underlying the increased earnings of older men relative to the earnings of younger men.Bajtelsmit, V. L. & Bernasek, A. (1996) in their research study explained for gender differences in investment and risk-taking in an effort to help guide data collection and identification of relevant variables for empirical research.Hinz, R. P., McCarthy, D. D., & Turner, J. A. (1997) studied that financial wealth had a significant and positive impact on the average level of risk chosen in a portfolio. As it was an additional measure of financial sophistication, they again confirmed the conclusion that more sophisticated investors entertain a higher average level of portfolio risk. They showed that dummy variable for having no financial wealth had no significant effect, statistically, on risk-taking.Wang, H. And S. Hanna, (1997) concluded that relative risk aversion decreased as people aged (i.e., the proportion of net wealth invested in risky assets increases as people age) when other variables are held constant. They concluded that risk tolerance increased with age and therefore rejected the constant life-cycle risk aversion hypothesis.Barber, B. M., & Odean, T. (1999) in their research article, identified that rational investors traded only if the expected gains exceeded transactions costs. …

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