Mutual Fund vs. Life Insurance: Behavioral Analysis of Retail Investors

Abstract

During the post 1990 period, service sector in most of the Asian economies witnessed growth fueled by significant changes in their financial sector. India is now being ranked as one of the fastest growing economy of the world. During last one decade or so, role of Indian insurance and mutual fund industry as a significant financial service in financial market has really been noteworthy. In fact since 1992, a number of research studies have underlined the importance of these two in the Indian capital market environment as important investment vehicles. But the existing 'Behavioral Finance' studies on factors influencing selection of mutual fund and life insurance schemes are very few and very little information is available about investor perceptions, preferences, attitudes and behavior. Yet again, perhaps no efforts are made to analyze and compare the selection behavior of Indian retail investors towards mutual funds and life insurances particularly in post-liberalization period. With this background this paper makes an earnest attempt to study the behavior of the investors in the selection of these two investment vehicles in an Indian perspective by making a comparative study.

Factors influencing investment decision and behaviors of Thai mutual funds investors

“…Those are education level, income, and investment experience. These are similar to Alexander, Jones and Nigro (1998), Bailey, Kumar and Ng (2011), Das, Mohanty and Shil (2008), Bhavani and Shetty (2017) which found that mutual fund investor tend to have more higher education, income, and experience more than others financial assets.…”

“…Alexander, Jones and Nigro (1998) and Bailey, Kumar and Ng (2011) found that U.S. investors with higher income, higher educational level, and greater investment experience are more likely to invest in mutual funds compare to equity. Similar to the case of Indian, Das, Mohanty and Shil (2008) and Bhavani and Shetty (2017) found that Indian investor with the professional level degree in education tend to invest more in mutual fund than other financial assets. On the contrary, Akbar and Mona (2016) found that the demographic factors include gender, age, income and experience were not significant in the Islamabad investor decision, only education was significant.…”

Impact of Equity Investment Intention Towards Behaviour: An Empirical Analysis

“…Consequently, the investment decision made by the investors decides the inflow and outflow of funds from the capital market. An investment decision is complex due to its uncertain behaviour; thus, it requires real-time monitoring to analyse it (Das et al, 2008). There is a need to investigate the factors that influence the behaviour of retail investors in investment decisions.…”

Answering Savings Puzzle About Small Saving Schemes and Mutual Funds: Evidence from Tripura

“…31 Literature in Indian context has addressed divergent aspects like preference for savings in Small Saving Schemes (SSSs) and MFs. The multiple aspects of MFs such as its preference, 32,33 aware ness and investors' attitudes towards MFs, 34,35 influencing factors on the MFs' performance, 36,37 brokers' attitudes towards MFs 38 women savers' preference for MFs, 39 and perceptions analysis about MFs 40,41 have been documented. The influence of demographics on saving behaviours have also been studied in delve (e.g., family size, 42,43 age, 44 education levels, 45 income levels, 46 and occupations 47 ).…”