A STUDY ON

SAVING & INVESTMENT PATTERN OF

PEOPLE IN INDIA

A Presentation By: Market Xcel Data Matrix Pvt Ltd

16, Sant Nagar, Delhi-110065

Research Background

The
The Indian
Indian consumer
consumer is
is changing
changing and
and evolving.
evolving. And,
And, so
so are
are his
his consumption
consumption and
and investment
investment patterns.
patterns. As
As
Indian
Indian buyers
buyers loosen
loosen their
their purse-strings
purse-strings and
and are
are less
less reluctant
reluctant to
to investing
investing in
in unconventional
unconventional investment
investment
options,
options, the
the entire
entire investment
investment story
story is
is getting
getting redefined
redefined

The
The familiarity
familiarity and
and usage
usage of
of investment
investment options
options in
in metros
metros and
and high
high growth
growth towns
towns is
is high.
high. People
People are
are
increasingly
increasingly investing
investing and
and multiplying
multiplying money
money through
through various
various investment
investment options.
options. We
We at
at Market
Market Xcel
Xcel
targeted
targeted small
small towns
towns to
to see
see how
how the
the current
current and
and potential
potential investors
investors think
think and
and act
act there
there

We
We covered
covered 24
24 towns
towns in
in total.
total. The
The characteristics
characteristics that
that make
make these
these cities
cities lucrative
lucrative for
for our
our study
study are:
are:

Rising
Rising per
per capita
capita income
income among
among the
the masses
masses

High
High degree
degree of
of quest
quest for
for status
status and
and economic
economic advancement
advancement

Includes
Includes major
major tourism
tourism destinations
destinations thereby
thereby uplifting
uplifting the
the economy
economy

Strategic
Strategic location
location to
to set
set up
up manufacturing
manufacturing units
units exemplified
exemplified by
by Government
Government initiatives
initiatives

Highly
Highly price
price sensitive
sensitive markets
markets although
although have
have aa good
good amount
amount of
of propensity
propensity to
to spend
spend

Not
Not an
an early
early adopter
adopter of
of new
new things
things but
but have
have high
high desire
desire of
of owning
owning established
established brands,
brands, high
high
potential
potential as
as the
the expansion
expansion activities,
activities, specific
specific industry
industry set
set ups
ups etc.
etc. are
are taking
taking place
place in
in these
these cities,
cities,
having
having aa multiplier
multiplier effect
effect on
on growth
growth and
and revenue
revenue flow
flow

Research Objective & Process

The key research objective can be defined as :
To understand the saving and investment pattern of small town consumers. Key Information Areas being:

Demographics- Personal and household incomes, residing pattern

What drives investors to use different investment options available and what could be
the motivators- reasons for saving money/making long term investments

Sources of information/key Influencers

Financial investment options aware of, ever instead in, future potential

Sample Design

To achieve the study objectives we specifically targeted Emerging and nascent cities across four geographical
zones of India. 6 cities in each zone was covered in the survey.

NORTH

EAST

WEST

SOUTH

Total

Amritsar
Jalandhar
Agra
Varanasi
Panipat
Srinagar
Asansol
Bhubneshwar
Guwahati
Jamshedpur
Patna
Ranchi
Indore
Nasik
Goa
Rajkot
Aurangabad
Bhopal
Mangalore
Coimbatore
Thiruvananthapuram
Madurai
Mysore
Vizag

Targeted

Achieved

160
160
160
160
160
160
160
160
160
160
160
160
160
160
160
160
160
160
160
160
160
160
160
160
3840

160
163
162
162
163
161
160
160
160
161
161
169
160
163
162
162
163
163
160
164
160
160
160
160
3879

Definition:
Emerging cities: - These cities are characterized by factors like growing income, rising aspirations, scarcity of branded stores and growing corporate
activities.
Nascent cities: - These cities reflect low per capita incomes and limited corporate activity. The consumers of these cities are more price conscious and
have a very low propensity to experiment new brands.

Demographic Profiling

Profiling
N=3879

10%

12%
32%
Gender

SEC

27%

30%

88%

Male
21yrs - 34yrs
46yrs - 55 yrs
14%

SEC A1

Female
35yrs - 45yrs

SEC A2

Never Married

SEC B1

SEC B2

Married

29%

30%

56%

Age

Marital
Status
71%

No specific quota was followed in terms of age, SEC, Gender and Marital status. Higher participation of male audience was a natural outcome.
More than 50% of the audience belong to 21 34 years

Profiling Cont
Family
Structure

N=3879

1%

1% 2%

41%

9%

45%

A significantly high
number of
respondents stay with
the family

14%

Nuclear Family
Joint family

Staying
Pattern

89%

Staying alone/ with friends at a different location

Staying with entire family
Staying with some members of family

Nuclear family with elders

Single person/ sibling/ other

Family
Members

51%
32%

The number of family

members is 4 or more
in maximum of our
cases

15%
3%
1-2

5 or more

To achieve the study objective it was imperative to understand the residing pattern of the people as the lifestyle directly impacts expenses, saving and
investment pattern
The living pattern implies the commitments related to family. Hence, the respondent would first meet familys expenses, then save and invest.

Profiling Cont - CWE

Education

Occupation
N=3879

33%

Shopowner

11%

Businessman/Industrialist with no employees

10%

Supervisory Level

Businessman/Industrialist with 1-9 employees

6%

Officer/Executive - Middle / Senior

5%

Self-Employed Professional

4%

Petty trader

26%
56%

9%

Officer/Executive - Junior

Skilled worker

6% 2%

17%

Clerical / Salesman

3%
3%

Businessman/Industrialist with 10+ employees 1%

10%

School 5-9 years

SSC / HSC
Some college but not Graduate (Incl. Diploma)
Graduate / Post graduate
Graduate / Post graduate - Professional

Chief wage earners occupation and education were measured primarily to confirm the Socio Economic Class

Profiling Cont- Respondent

N=3879

Occupation

31%

20%
13%

12%
8%

8%

6%
1%

We achieved a fair representation of different occupational profiles. 31% of our respondents were businessmen, 20% were private employees, 12%
were into government job and so on

10

Profiling Cont - Income

N=3879

32%
28%
22%
17%

25%
19%
15%

16%
8%

8%
3%

Household

Self

The incomes were in line with city profile. We did not happen to meet people that belong to high income group

4%

1%

3%

11

Concept
Testing

Savings And Investments

12

Investment Options
Q1. What is the common tenure you make investments for?

60%

56%

54%

56%

44%
38%
25%

21%

Overall
(n=3879)

Long Term investment purpose

18%

North
(n=971)

Short Term investment purpose

19%

East
(n=971)

21%

25%

25%

19%

West
(n=973)

18%

South
(n=964)

Both long and short term investment purpose (blend of investment plans)

54% of the audience have cited to have made investment in long term options
East has got the highest percent of audience (60%) who have cited to have made investment in long term options
People from North show a slightly different investment pattern. More number of people invest in short term investment options than any other center

Reasons for saving money 13

Base: Those who invest in Long term options

OR both Long and Short Term options

Q2. Please tell what are your reasons for saving money?
Q3. I will now read out to you some of the reasons that people like you have mentioned as the reasons for saving money. Which of these is applicable to you?

Parameters
Base
To arrange for inflation
in the future

Overall

North

East

West

South

2890

602

787

788

713

28%

To maintain the
standard of living even
when at old age

33%
37%

To make provisions for

my future

34%

Tax Savings

Insurance
Investment (for growth
of money)

Safety of my money
(Principal amount is
safe)
Stability of the returns
(Regular return on
investment)

51%

24%

12%

12%

12%

14%

63%

15%

26%

21%

74%

67%

62%
16%

25%

2%

11%
53%

56%

56%
33%

34%

61%

49%
51%

62%

44%
56%

56%

32%
56%
18%
61%
14%

21%

7%

59%

61%

21%

74%

63%

19%
47%

30%

79%

47%

12%

74%

17%

32%

12%
42%

24%
59%

56%

48%
54%

51%

10%

49%

32%

22%

37%

18%

67%

51%

16%

9%
85%

47%
52%

59%

42%

34%

68%

19%

24%
38%

74%

36%

58%

Good rate of return

(high rate of return)

13%

54%

52%

55%

44%

Investments has emerged as the largest reason at Aided level (67%). However, at an overall level it is Making provisions for future is the most
common reason. A major chunk of Northern people make savings to save tax.
The graph reflects that savings are led by a number factors- inflations, safety, growth, insurance, tax saving, control future etc.
Sum of percentages may exceed 100 on account of multiple responses

Reasons for Long Term Investments

Base: Those 14
who invest in Long term options
OR both Long and Short Term options

Q4. What are your reasons for investing in long term investment options? UNAIDED.
Q5. I will now read out to you some of the reasons that people like you have mentioned as the reasons for making long term investments. Which of these is applicable to
you?

Parameters

Overall

North

East

West

South

2890

602

787

788

713

Base
To arrange for inflation
in the future

58%

To maintain the
standard of living even
when at old age

38%
32%

37%

34%

37%
36%

42%
35%

To make provisions for

my future

53%
43%

47%
51%

Tax Savings

44%
54%

43%
56%

For growth of money

Good rate of return
(high rate of return)

16%

Safety of my money
(Principal amount is
safe)

16%

Stability of the returns

(Regular return on
investment)

13%
18%

16%

78%

59%
17%

72%

61%
3%

3%
55%

59%

31%
26%
54%

51%
38%

34%
42%
52%

54%
56%
17%
19%

12%
17%
57%

52%

50%

14%

19%

18%

42%
29%

38%
51%

74%

58%
19%

61%

58%
24%

61%
49%

30%
24%

18%
20%

Insurance

54%

58%

28%

23%

22%

14%

12%

18%
56%

58%

42%

11%

19%

18%
65%

3%

5%

2%
42%

58%

48%

57%

61%

We asked the same question for long term investments to find out the relationship between savings and long term investments. The reasons for
making long terms investment and savings are on similar lines. Growth of money and To fight inflations are the most prevalent reasons for making
long term investments. At an aided level Provisions for future has emerged as the largest reason for making long term investments

Reasons for Making Investments Top 3

15

Q6. Please rank the top 3 reasons which are the most important ones for you.

n = 2890
* BASE is of all those respondents who have stated these options at Unaided or
Aided level
Parameters
(Figures in %)

BASE*

Rank 1

Rank 2

Rank 3

To arrange for inflation in the future

2502

23%

6%

10%

To maintain my standard of living even when I am not working in

the old age

2022

20%

21%

16%

To make provisions for my future

2800

45%

18%

13%

Tax Savings

3142

12%

16%

9%

Insurance

1091

12%

21%

16%

Investment (for growth of money)

2240

12%

23%

23%

Good rate of return (high rate of return)

2160

8%

19%

24%

Safety of my money (Principal amount is safe)

2240

10%

16%

24%

Stability of the returns (Regular return on investment)

1687

3%

5%

16%

To make provisions for my future (45%) is stated as the key reason for investment followed by To arrange for inflation in the future (23%)

Influencers for final Investment options

16

Q7. For making decision about investing money in various investment options, who are the people/ sources around you which you consult in order to seek more
information before taking the final investment decision?

Key Influencers
Overall

80%

North

East

27%

93%

63%

West

South

Expert views

3%
2%

17%

47%

86%

78%

30%

5%2%

23%

1%
1%

4%3%

3%
1%

48%

1%

21%

22%

28%

18%

26%

31%

8% 4%

25%

23%

27%

32%

24%

3%
1%

2%

2%
1%

27%

23%

Financial consultant Investment / Insurance Advisors Friends Relatives Children Parents Spouse

Use own knowledge

80% of the audience use their own knowledge for decision making on financial investments. Spouses opinion has a huge role in decision making
North has shown a higher percentage with 93% of the audience use their own knowledge. Expert opinion also matters a lot

Intention to continue with long term investments

17

Q8. You have mentioned that you invest in long term financial investment options. Will you continue investing in the long term investment options in future?

Future Intention
100%

Yes
99%
97%

96%

89%

Overall
(n=2890)

North
(n=602)

East
(n=787)

Almost everyone would continue investing in long term investment options

West
(n=788)

South
(n=713)

Awareness for Financial Investment options Aided18

Q9. What are the financial investment options you are aware of?
Financial Investment Options

Overall

North

East

West

South

BASE

2774

602

700

780

692

PPF (Bank or Post Office)

57%

Indira Vikas Patra

65%

79%

National Saving Certificate

69%

85%

Post Office Monthly Income

Scheme

Company Fixed Deposits

32%

Fixed Deposit (Post Office)

46%

39%

Traditional Life Insurance

Policy (for guaranteed returns )

61%

Stocks and shares

Exchange Traded Funds

(ETFs)

29%
5%

54%

63%
22%
10%

29%

22%

18%

91%

89%

93%
34%

90%

89%

86%
13%

81%

88%
48%

100%
27%

86%

44%

17%

19%

38%

85%

89%

100%

99%

70%

89%

Unit Linked Insurance Plan (for

investment and insurance)

Gold ETF

44%
82%

Mutual Fund

Infrastructure Bonds

100%

78%

48%

58%

Bank Fixed deposit

100%

68%

78%

96%

56%

52%
91%

87%

88%

52%

54%

56%

16%

89%
18%

61%
53%

8%

65%
21%
2%

Bank fixed deposits, National saving certificates, life insurance plans, mutual funds and post office deposits are popular modes of investments
People are quite aware of long term investment options available
* BASE is of all those respondents who have shown their intention to invest in long term options in future

Financial Investment Options-Ever Invested

19

Q10. Which of these have you ever invested in

Financial Investment Options

Overall

North

East

West

South

BASE

2774

602

700

780

692

PPF (Bank or Post Office)

27%

Indira Vikas Patra

National Saving Certificate

8%

93%
4%

Fixed Deposit (Post Office)

29%

Mutual Fund
Unit Linked Insurance Plan (for
investment and insurance)

26%

13%
26%

Exchange Traded Funds

(ETFs)

2%

24%

23%

27%

2%

34%
30%

8%
44%

16%
34%

95%
1%

25%

54%
12%

91%
3%

17%

16%
49%

Stocks and shares

Gold ETF

25%

13%

Traditional Life Insurance

Policy (for guaranteed return )
Infrastructure Bonds

6%
32%

12%

89%

98%
5%

22%

21%

Bank Fixed deposit

Company Fixed Deposits

2%
28%

19%

18%

21%

5%
27%

24%

18%

24%

5%

20%
25%

Post Office Monthly Income

Scheme

22%

40%

12%
42%

55%

12%

25%

13%

22%
5%

24%
1%

1%

Bank fixed deposits are the most prevalent option among target audience. 93% have stocked money in Fixed deposits at some point of time
Close to half of interacted audience have invested in life insurance policy as well. This indicates safety and secure future derive investment decisions
* BASE is of all those respondents who have shown their intention to invest in long term options in future

20
Financial Investment Options Invested in Last 1 Year
Q11. In which of the following options have you invested in the last one year?
Financial Investment Options

Overall

North

East

West

South

BASE

2774

602

700

780

692

PPF (Bank or Post Office)

Indira Vikas Patra
National Saving Certificate
Post Office Monthly Income
Scheme
Bank Fixed deposit
Company Fixed Deposits
Fixed Deposit (Post Office)
Mutual Fund

0.22

0.14
0.1

0.09

0.08

0.05

0.08

0.09

0.09

0.1

0.04

0.23

0.33
0.01

0.01

0.09

0.17

0.15
0.04

0.17
0.06

0.04
0.11
0.02

0.07
0.16

0.04
0.12

0.12
0.02
0.16

0.22
0.06
0.11

0.45

0.34
0.09

0.04
0.23

0.02

0.29
0.02

0.24

Infrastructure Bonds

0.1

0.11

0.08

ULIP
Traditional Life Insurance
Policy (for guaranteed return )

0.12

0.01
0.04
0.14
0.04
0.34

0.04
0.1
0.04

0.03
0.11
0.01

Stocks and shares

Gold ETF
Exchange Traded Funds
(ETFs)
The investment pattern has remained similar for last year too. Stocks and shares and mutual funds have generated more interest as a good number of people have
invested in these instruments during last one year

* BASE is of all those respondents who have shown their intention to invest in long term options in future

21
Financial Investment Options Proportion of Investment
Q12. What proportion of the total investment that you made in the last 1 year goes to the various investment options?
Financial Investment Options

Overall

North

East

West

South

BASE

2774

602

700

780

692

PPF (Bank or Post Office)

Indira Vikas Patra

0.15
0.14

National Saving Certificate

0.06

Post Office Monthly Income

Scheme
Bank Fixed deposit
Company Fixed Deposits

0.19

0.1

0.09

0.19

0.03

0.1
0.28

0.18

0.5
0.18

Traditional Life Insurance

Policy (for guaranteed return )

0.01

0.17

0.19
0.11

0.24

0.19

0.26

0.16

0.1

0.07

0.05

0.04

0.01

0.03

0.04

0.04

0.03

0.01

0.07

ULIP

0.08

0.1

0.04

Fixed Deposit (Post Office)

Mutual Fund

0.21

0.13
0.09
0.01

0.05
0.19
0.08
0.02

0.09
0.18
0.1

0.03

0.1

0.08

0.05

0.07

0.1

0.01

Infrastructure Bonds
Stocks and shares
Gold ETF
Exchange Traded Funds
People seem to have tendency to put the surplus money in fixed deposits
(ETFs)
A significant amount was also invested in PPF, NSC, infrastructure bonds and stocks

* BASE is of all those respondents who have shown their intention to invest in long term options in future

Financial Investment Options Future Intentions

22

Q13. Which of these do you plan to invest in the current financial year?
Financial Investment Options

Overall

North

East

West

South

BASE

2774

602

700

780

692

PPF (Bank or Post Office)

Indira Vikas Patra

0.17
0.04

National Saving Certificate

0.04

0.06

0.08

Post Office Monthly Income

Scheme
Bank Fixed deposit
Company Fixed Deposits

0.12

0.32

0.84
0.01

Mutual Fund

Infrastructure Bonds
Stocks and shares

0.05

0.06

0.78

0.89
0

0.34

0.56
0.04

0.38

0.56

0.05

0.04

0.06

0.05

0.06

0.04

0.05
0.55

0.21
0.67

0.55

0.45

0.43

0.44

0.45
0.64

0.88
0

0.06

0.1

0.37

Traditional Life Insurance

Policy (for guaranteed return )

0.04

0.45

0.48

ULIP

0.05

0.09

Fixed Deposit (Post Office)

0.06

0.02

0.02

0.08
0.45

0.1

0.03

0.8
0.01

0.1

0.15

0.38
0.55

0.09
0.05

0.78
0.01
0.06

Gold ETF
Exchange
Traded
Funds
The new
modes
of investments- Stocks and shares, Infrastructure bonds, mutual funds seem to be attracting a lot of attention. A major proportion of respondents
(ETFs)
indicated their intentions to invest in the specified modes in near future
Bank fixed deposits are still most desired
Rest of the options are losing sheen

* BASE is of all those respondents who have shown their intention to invest in long term options in future

Amount invested in last 1 year

23

Q14. How much money have you invested in the last one year (in Rupees)?

Upto Rs 25,000

Overall (n=2774)

North (n=602)

Rs 25,001 Rs 50,000

33%

9%

13%

17%

71%

West (n=780)

More than 1,00,000

17%

37%

44%

45%

5%

10%

5%

34%

19%

Rs 75,001 Rs 1,00,000

33%

37%

East (n=700)

South (n=692)

Rs 50,001 Rs 75,000

11%

8%

7%

17%

3%

15%

11%

Though, people have strong desire to try out different investment options, the current level of investment is little small. People like to make small
investments particularly in East
People from North have invested comparatively higher amount in long term investment options

* BASE is of all those respondents who have shown their intention to invest in long term options in future

Way Forward

24

Summary

25

Amid the worsening economic scenario during 2011-2012, Indian investors from smaller cities showed confidence in
investing. Small town investors understand the significance of making investments as much as large town dwellers. The
definition of savings and investments seems identical and led by factors that revolve around:

Secure future

Way to fight inflation

Safety of money

High rate of return and

Insurance

Maintaining a particular level of lifestyle is not among the drivers

According to Association of Mutual Funds in India (Amfi), between September 2011 and March 2012, proportion of assets
contributed by Tier-I, II & III cities and smaller towns in assets under management (AUM) of the Indian mutual fund industry
increased 3.63 per cent to 28.88 per cent. In absolute terms, these regions contributed Rs 7,500 crore more to the
industry's AUM.

On BSE, the share of investors from cities such as Rajkot, Ahmedabad, Bangalore, Indore, Jaipur, Patna and Ludhiana has
grown more than three-fold, although on a smaller base

Churn in investment from small towns is lower and they invest for a longer term. In bigger cities there are more distributors,
independent financial advisors and banks, which eventually lead to lot of churning. However, in small towns people rely less
on others advise.

Life is stable and family is key to investment decision. The amount spent is generally the surplus out of meeting family
expenses and commitments

Summary

26

Deposits at banks and post offices have been major investment avenues so far and continue to remain so in near future

However, non-conventional modes are picking up fast. 64% of survey participants said they intend to invest in stocks and
shares, 37% would like to invest in infrastructure bonds. This indicates a huge scope for financial companies and
advisors

Compared to large towns the respondents look confident. They take their own investment decisions. Multiple sources of
information are generally not referred to. However, the experts opinions are given due importance. Though, the tendency to
consult financial investors is low, the expert opinions are sought through television, newspapers etc.

The major investment portfolio is undertaken by larger audience include Traditional Life Insurance & Bank Fixed Deposits

The idea is to increase the awareness level and promote the gamut of offerings

Key motivators to invest would be the credibility of the brand and the confidence in assured return on investment with
safety of money

Low awareness hence low off take thus need to take up promotional activities to increase visibility

The platform is missing hence we advocate disseminating clear information and benefitsmarket competitiveness in no
way discourages players from entering as the segment is seen to be offering huge potential in future

People from small towns are more than willing to invest if one makes products available to them with good advice. The

Summary

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People from small towns are more than willing to invest if one makes products available to them with good advice. The fact
is reiterated from the fact that:

Top five brokers in the country have over 50% of their Clients outside the six metros

Nearly 51% of all IPO applications now come from outside the big cities

About 40% of the equity-based mutual fund applications are from the non-metros

Active demat accounts are being operated in 73% of all pin code areas

Purulia and Hamirpur have more demat accounts than Gurgaon

The risk-averse middle class is slowing shifting from fixed income avenues such as fixed deposits and small saving
instruments as fallen returns are looking too low to take care of retirement needs. The same growth can be fuelled if the
investors are reached through proper medium and due guidance is provided

What Do Financial Institutions Need To Have ?

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It is evident that audience look for .

A popular,..around. product in which they can trust

Reliable products with consistent returns

A trustworthyReliable name

The task is to:

Build Awareness- Should make general public aware of the various products via different communication media with
higher listenership/viewership

Provide Rational Offering + Emotional Connect

Rational : Secure and offering consistent returns

Move the focus towards small investors

Based on the insight that todays consumer are opting for Mutual Fund, Stocks & Shares - hence does
require strong reassurance here

Decode The product offerings to make it a real smart choice for the small town investors

Product uniqueness and Brand Assurance makes it easier for the channel to sell it to the end
consumer

This could also effectively use Security of investment & Credibility of institution

Thank You

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