An Empirical Study Of Household Investment Preferences

Abstract

The Indian market has recently been introduced to a variety of financial products. Each of these financial instruments provides a diverse array of benefits and opportunities in terms of risk exposure, interest rates, etc. The majority of individuals are unable to capitalize on the higher returns offered by these products as a result of a dearth of financial literacy. In order to invest in these financial instruments, a suitable financial education program must be implemented to provide them with an understanding of the risk and return characteristics of these products. The survey results suggest that respondents are well-informed about traditional and secure financial products, while the majority of the population has a limited understanding of modern financial products like Derivatives and Futures & Options. Additionally, the majority of respondents allocate their funds to conventional and secure investment vehicles like Bank Deposits, Life Insurance, and Post Office Savings. To augment financial inclusion in India, the government should modify the financial Act to include an index fund and a debt-linked savings scheme (DLSS) in the investment options available under section 80C. This will prepare the Indian financial market to withstand any outflow of foreign funds.