Relationship between Demographic Variables and Investment Preferences in Pakistan

Abstract

The research was carried out with purpose of finding the relationship between Demographic variables and investment preferences. Contextual difference and inclusion of demographics as independent as well as new dimension of investment preferences made the study unique and novel in its essence. While adopting Leimberg financial management model the study sought for the basic inputs of resources allocation it had gone through regression and correlation analysis of 382 business students as sample. Empirical result of the correlation matrix are showing a positive significant correlation between modes of investment and annual savings whereas risk tolerance exhibits the same with gender, annual savings, age, experience and annual income and location except occupation which shows significant but negative correlation. The matrix also shows an insignificant correlation among modes of investment, gender, age, experience, annual income, occupation and location. Liquidity have a significant correlation with gender, age, education, experience, annual income, annual savings, occupation and location. Regression analysis depicts significant relationship between Modes of Investment and experience at job, Income, savings and location as evident from t-values -2.024, -3.610, 2.454 and p-values 0.044, 0.0000, 0.015, 0.000 respectively. Similar results were found for liquidity with Education and Savings given by t-values -2.129, 2.190 and p-values -0 .620, 0.029 respectively. Whereas Risk tolerance have significant results with Gender, Savings and Location shown by the t-values 2.037, 2.886, 58 and p –values .042, 0.004, and 0.000 respectively. However an insignificance relationship was found between Modes of Investment and Gender, Age and Education indicated by t-values-1.335, 0.049, -1.134 and p-values -0.543,0.005, and -0.445 respectively. Liquidity with Gender, Age, Experience, Income and Occupation given by t-values 0.117, 0.076, -1.220, -0.708,-0.144 and p-values .009, 006,-.120,-.075 and -.011 respectively. Similarly Risk Tolerance also evidenced insignificant relationship with Age, Education, Experience, Income and Occupation exhibited by their t-values -1.290, .638, -.035, -1.886, all less than 2 and p-values above 0.05 respectively. Key words: Investment Preferences, Risk Tolerance, Liquidity, Modes of investment preference.