Employees overcome reluctance and divert savings to stocks

Employees overcome reluctance and divert savings to stocks

New Delhi: Government and public sector employees, which until recently had strong aversion to invest in capital markets are shunning their prototype mindsets to equip themselves with risk taking abilities as 58% of them are choosing stocks and mutual funds preferred investment instruments, bearing potential for much higher returns within a time period of 2-3 years.

In a survey on Changing investment patterns of govt. employees’ in which 510 employees offered their latest investment modes, nearly 300 indicated their savings first preference in shares and various schemes promoted by private and state owned mutual funds. The employees belong to middle and upper middle cadre in central sector and PSUs under its jurisdiction.

The major factors for government employees to enter into stock markets is the easy availability of expert advisory services in India which mitigates risks of losses. As a result of massive investment in India in the stocks and infrastructure sector has lured government employees and motivated them to show a tilt towards stocks and mutual funds against traditional channels of investment in post offices, banks and other fixed deposit schemes promoted by governments.

Of late noticed that investment in stocks and mutual funds have enriched their investors in little time which has worked as a motivation force for government employees also.

The chamber pointed out that despite stock markets’ volatile nature, element of risk taking is now getting into government employees psyche as a result of which domestic capital markets are attracting protected lot of government employees also. Investors from governments are now focusing on investments in stock markets and their focus has shifted from the traditional routes of investments like RD, PPF, Postal Term Deposit Account, NSC, KVP.

Key Findings

* Share market is giving investors more than double returns in a very short span of time, i.e. from 15 to 90 days

* With an investment of about Rs50,000-1,00,000 in share markets, investors are conveniently multiplying their incomes to over Rs3-4 lakhs supported by booming 20,000 sensex mark

* Over 42% were keen to invest in shares of infrastructure, real estate, IT, automobile companies as these sectors are giving them huge returns and growing at an unprecedented rate

*32% government employees especially from central government continue to choose traditional routes of investment in post offices and banks schemes. FM’s recent announcement that investments in post office term deposits and senior citizens scheme with five-year maturity term will get tax benefits, has reposed their faith

* With regard to government employees’ investments in mutual funds, it was found that equity linked mutual fund schemes (growth oriented fund), infrastructure mutual funds and Systematic Investment Plans (SIPs) are gaining popularity

* 37% choose growth fund compared to other mutual funds

* Remaining 26% and 18% opt for infrastructure mutual fund and SIPs.

* Upper level employees in Navratna companies like ONGC, NTPC, BHEL, IOC etc., are placing large sums of investments in stock markets, especially through online trading

* Investing in Indian stocks are profitable for not only for long and medium-term investors, but also position traders, short-term swing traders and short term intra-day traders

*47.72% investors received rates of return between 10-20% on investments in Mutual Funds while only 14.28% felt they received return above 30% on their invested amount during the last FY