In Attitude-1 we have discussed what is Attitude and the factors which shape one’s attitude.
Earlier to this we had discussed about classification of (Indian) investors into different categories and we found that the “middle class” (in India) is the biggest group.
We will take two groups of investors and discuss about their behavioral patterns :
1. The Middle Class
2. Freshly retired or those nearing retirement
Factors shaping middle class Indian investor’s attitude.
If we look at the circumstances of upbringing of this class of young and middle aged persons, we find the following common traits :
1. They mostly grew under financial constraints. Their parents could just provide them with basic needs.
2. They mostly got their education from ordinary educational institutions.
3. “Savings and Simple living” had been the mantra with which they grew up.
4. While applying for a job, “safety” of the employment (and not the challenges or prospects) had been the prime consideration.
5. Some of the favorite savings instruments patronized by them (and their fathers!) had been FD, Post Office Saving Schemes, LIC and govt. debt. schemes. The basic idea behind making any investment was to get fixed (assured!) returns with safety of the invested capital.
6. “Insurance Policies” were (probably still are!) taken primarily to save taxes and also for financial growth.
7. They could not get sound financial advice from “Professionally Qualified Financial Advisors” since this concept came much later.
8. In general, the income or the salary structure was also very moderate. This also made their thinking and life style very moderate.
9. Media exposure was restricted. Radio, cinema, newspapers and magazines were the only source. Conveyance and communication were also slow. All these factors collectively narrowed down their vision of life.
10. Because of some ancient religious beliefs, society was subjected to many taboo and superstitions. This restricted “out-of-the-box” thinking. As a result, areas of growth and expansion got restricted.
From the above, you can understand the mindset of this class. But this mindset had some positive features also. People were not restless (unlike today’s youth!) and they led quite a contented life.
From 1990 onward, with globalization the socio-economic scenario started changing. Media and computers brought phenomenal changes. Out of the many, two changes were very significant. One, the vision expanded from local to regional to national and to the global level. And secondly, every activity got “speeded up”.
Almost in every sector, the global multinationals spread out in India. Emphasis shifted to concepts like “Global standards”, “Global networking”, “Split second decisions to remain ahead of the competitors”, “Expansion of knowledge base”, “24×7 working hours”, salary and perks became “annual compensatory package”. Many more such terminologies came into existence and became the “buzzword”!
This race also brought different types of “Investment Instruments” for different types of needs. But none of these instruments were tested in the Indian soil. The credibility- claim, of these instruments (and their owners) depended solely on their being “phoren”! Unqualified (and simetimes unscrupulous!) agents were recruited to sell these instruments at random. Without much knowledge about the new emerging investment scenario, the agents succeeded in “mis-selling” their products. For the investors, this obviously resulted in BAD INVESTMENTS!
In the following Attitude – 3, we shall discuss the current mindset…or how the investor’s behavior changed and the factors which led to this change.
I know, many of you must be relating yourselves with the situations explained above. Well, don’t feel bad or cheated because there were many who got swayed during this period.
See you in Attitude-3!