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INDIVIDUAL INVESTMENT PLANNING: A REVIEW OF LITERATURE

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INDIVIDUAL INVESTMENT PLANNING: A REVIEW OF LITERATURE

Pratiksha Mishra* Dr. Imran Nadeem Siddiqui

Assistant Professor- Amity Business School, Amity University Raipur, India

[email protected]

Abstract

The current research examines the relationship between individual investment planning, to find out the
reasons for not investing. In this paper examined the literature available in the field of investment
behavior of an individual. In order to review the literature, research papers have been collected from
various referred journals related to individual investors’ planning. Findings suggest that both
investment knowledge influences the investment planning of an individual. Other variables that have a
significant impact on investment planning include income, education, age, risk and return. The outcome
of the study shows that people not risk taker, they prefer to invest in the investments which have less
risk and moderate return.

Keywords: Investment Planning, Investor’s behaviour, Individual Investment Planning.

Introduction

Investment planning is the process of assessing investment goals of the individual, taking an inventory
of the money and other assets which, the person has, determine life goals and then take necessary steps
to achieve goals in the stipulated period. It is a method of quantifying a person’s requirements in terms
of money. Keeping all this in mind investment planning is done with the six-step process. This is self-
assessment of the client, identify personal goals and investment goals and objectives, identify
investment problems and opportunities, determining recommendations and alternative solutions,
implementation appropriate strategy to achieve goals and review and update plans periodically. A good
investment plan includes Contingency planning, Risk Planning (insurance), Tax Planning, Retirement
Planning and Investment and Saving options. In the market, there are different instruments which can
be adapted to fulfill the need of various planning objective. These instruments are different from each
other in terms of returns, risk, fund allocation, charges, investment terms, tax incentives, etc.

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Review of Literature

1. Gaurav Kabra et al. (2010) in this study they want to know the factors influence investment
behavior and the impact of these factors on risk tolerance and mindset of men and women while
taking investment decisions and is age can be a reason. For analysis, they used hedging and
regression analysis. They concluded that now investors are more matured and have adequate
knowledge but still an individual investor prefers to invest according to their risk tolerance
capacity.
2. Geetha and Ramesh (2012) have found in their study, ‘A Study on Relevance of Demographic
Factors in Investment Decisions’ that demographic factors such as gender, age, sex, education,
occupation, income, savings and family size influence the period of investment, frequency of
investment, reach of information of source and analytical abilities. The authors revealed that
demographic factors have a significant influence over some investment decisions. It also
discloses a general view of investor perception over various investment avenues.
3. K. Malar Mathi et al. (2012) the objective of this study is to understand individual investor
behavior. Data collected from review the literature, research papers have been collected from
various referred journals related to individual investors’ behavior. They development of
economy depend on the growth of rural market in the country. Lack of finance in rural is the
reason behind for low investment. Shifting to urban for jobs.
4. Jothilingam et al. (2013) carried out examination available literature on the investors’ attitude
towards investment avenues. This based on primary data and secondary data. It proposed that
woman investors should enthusiastic to make an investment in avenues other than gold, like
mutual funds, shares, and securities, currency. Conclude that investors preferred to invest in less
risky investment avenues like gold, mutual funds, and bank deposits. Investor avoids risk as
much as they can.
5. Shalini Sah et al. (2013) They wanted to identify the beliefs and attitudes of the individual
investors with regard to financial investment decision making, with particular reference to the
investor biases. They conducted an in-depth study to understand investor beliefs and
preferences. They found that individual investors have numerous beliefs and preferences that
bias their financial investment decisions. They suggested that an understanding of an individual
investor's psychology would help in better comprehending the way the individual investment
decisions are made.
6. Sindhu K. P(2014) The objective of this research paper was to establish the influence of risk
perception of individual investors on their investment decisions in mutual funds. The risk
perception of investors is an important factor that influences investment. This study based on
the review of literature and discussions with experts in the field, identified the factors influence
the risk perception of the investor.
7. Puneet Bhusan (2014) assessed the financial literacy level of salaried individuals affect their
investment preferences towards financial products. Primary data had done to collect data using
a non-disguised structured questionnaire. Multistage sampling method used in collecting data.
There are total of twelve districts in Himachal Pradesh. Out of these three districts namely
Shimla, Solan and Kangra were selected randomly (first stage). Measure the level of financial
literacy of the respondents using OECD approach in the study. Financial literacy of an individual
affects its awareness regarding financial products and investment preferences. Due to low
financial literacy individuals prefers traditional financial products.
8. Ashly Lynn Joseph and M. Prakash (2014). They have revealed in their paper ‘A Study on
Preferred Investment avenues Among the People and the Factors Considered for Investment’,
that to have an insight into different investment avenues available and to understand the
preferred investment avenue among the people of Bangalore City. In the present day world, new
financial products are available. It has become difficult and confusing to choose the best options
due to lack of proper financial knowledge to the common man to decide the factors which are
considered for making sound investment decisions. It is further analyzed that investors are not
much aware about investment in stock exchange and equity and are more inclined towards
traditional investments like bank deposits, insurance, post office savings etc. Awareness

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programs should be introduced by the government and stock broking firms to make people aware
about investment options with their merits n demerits so right decisions are taken for their
personal finance.
9. Devi and Chitra (2014) have revealed in their study, ‘A Study on Salaried Employees Behavior
towards Domestic Savings and Investment in Rasipuram Town’, that the investment is made by
different categories of investors keeping in mind period of investment avenues, investment
decisions taken and level of satisfaction of investors. The data was analysed with the help of
Chi- Square test and F- Test. It was further concluded that investing has been an activity of rich
and business class but today it has become a routine course for every individual. Moreover,
increase in working population, larger family incomes, provisions for tax incentives, availability
of large and attractive investment avenues, etc also paves a way for saving and investment. The
study further recommends that adequate supply of savings should be maintained as a central
policy objective for economic stability.
10. Laxman Prasad et al. (2015) the objective of their study was to understand investor attitude
towards investment option selection and to identify what all factors affect the investor attitude
towards investment option selection with special reference to sip. Before investing investor
should do proper research about the risk involved in the investment or it is better to take
suggestions from the asset management company before investment.
11. Uddin. A (2016) this paper is based on the study to find out the motivating factor to invest in a
systematic investment plan and the problem in this scheme. The sample size is 100 respondents
who are a SIP account holder in Gandhinagar city in Gujarat and have been taken for the purpose
of the study. Data have been collected from primary sources using the questionnaire method.
Collected data were analyzed using various statistical tools. Results of the study found that for
higher returns with low risk the investor motivates to invest in a systematic investment plan on
the other hand knowledge and the operational platform is one of the main barriers that investor
is facing of the scheme.
12. Fachrudin K.R., Fachrudin K.A (2016) research worked towards determining the domination of
education, experience and financial literacy on investment decisions by individual investors in
the city of Medan. This study used a questionnaire to collect data and the sample consisted of
250 respondents. Data were analyzed using descriptive statistical analysis and Structural
Equation Modelling. The results showed that investors with undergraduate degrees are 46.80%.
36.00% of the investor has a maximum of 3 years of investing experience in the stock market.
No significant relationship between education and investment. Financial literacy is found to
build up the links between education and experience toward investment decisions. The
implication is that financial literacy is vital for the right investment decision.
13. Mahalakshmi Kumar and Rajesh Mankani (2017) research whether working women are aware
of various investment options available with special reference to Mumbai city. Primary data was
collected through a structured questionnaire and a descriptive cross-sectional design was
adopted. Education helps women to become aware of the need to earn, save and invest. It
increases their ability to understand various investment avenues, their pros, and cons and helps
them to make the right investment decisions to achieve their investment goals. It empowers them
to obtain financial independence which in turn can give them empowerment in other areas as
well. Education gives women confidence and the ability to understand the importance and need
for making decisions regarding investment for attaining their financial goals. This motivates
them to collect information about various investment avenues so that they can maximize returns
with minimum risk.
14. Baiq Fitri Arianti (2018) analyzed and measured whether financial literacy, financial behavior,
and income influence the investment decision of an individual. Data was collected through
questionnaires, the sample size was 100 and the techniques used are descriptive statistical
analysis, data quality test, classical assumption test, multiple linear regression test, F test, t-test
and coefficient of determination. Financial literacy doesn’t has significant effect on investment
decisions but Income has significant effect on investment decsions.
15. Varun Sagar Singal et al. (2019) in this research they tried to identify the factors affecting
investment decisions on mutual funds, the impact of behavioral factors on an investor and what
are the factors that stop people from investing. Fundamental factors such as past performance,

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the experience of the fund manager, risk, return, diversification plays a very vital role in the
decision-making process of an investor.

Findings
1. The data analysis of research reveals that the safety is concerned as important factor while
doing investment, so remaining avenues are less found less considerable while doing
investment by investors.
2. It is absolutely essential and needed to save what you earn, to have a plan for your own
future, and to resist the spending funds that you do not already have.
3. People are not much aware about various investment choices and also not much aware about
the investing pattern in stock market, equity etc
4. High financial literacy group have higher awareness level for all financial product and low
financial literacy primarily invest in traditional and safe financial products and do not invest
much in those financial products which are comparatively riskier and can give higher returns.
5. Education helps women to become aware of the need to earn, save and invest.
6. Experience does not significant effect on investment decisions toward a positive relation.
7. The growth of the economy is dependent on the growth of the rural market in the country.
8. The investors prefer less-risky investment avenues like gold, mutual fund and bank deposits.
9. The fundamental factors and investor perception play a very vital role in the investment
decision making process.
10. Sip are always risky in nature so it is better to take suggestions from any Asset Management
Company before investment.

Conclusion
According to the study, different demographic factors such as age, gender, annual income and no. of
dependents have a significant impact on individual investment Planning. This study attempts to find out
the investment habit of people, understand their investment planning and factors influencing the
investment decision through past research paper studies. Many of them do not consult a financial adviser
because they only invest in an investment like fixed deposit, gold and health insurance which gives
moderate returns and has low risk. They are, not risk-taker. If they will consult with a financial adviser
there are various investment avenues available in the market. Financial literacy level tells the awareness
regarding investment avenues of an individual. Education gives women confidence and the ability to
understand the importance and need for making decisions regarding investment for attaining their
financial goals.

References
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2. Arianti, B. (2018). The influence of financial literacy, financial behavior, and income on investment decisions.
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3. Sahi, S., Arora, A., & Dhameja, N. (2013). An Exploratory Inquiry into the Psychological Biases in Financial
Investment Behavior, Journal of Behavioral Finance, 14:2, 94-103, DOI: 10.1080/15427560.2013.790387
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