Paper “is investment with intuition keeping the portfolio inflation safe” paper

“Is Investment with Intuition keeping the Portfolio Inflation Safe?”
* Professor Harsh Purohit (Ph.D), Dean, WISDOM, Faculty of Management Studies,
Chair- ICICI Bank Chair for BFSI, Banasthali Vidyapith
deanwisdom@banasthali.in
** Gargi Pant, ResearchScholar, WISDOM, Faculty of Management Studies
Banasthali Vidyapith
gargipant87@gmail.com
Executive Summary:
Retirement planning is an emerging concept for the Indian women. There are only few women
who are fortunate enough to receive a stable income after retirement. The main mantra to make
the retirement more comfortable is to start saving early for retirement. The present study is an
attempt to study the financial portfolio of female respondents and analyze if their retirement
plans are sufficient against the change in inflation rate and correspondingly suggest them the
amount which will be sufficient for their post retirement income against the rise in cost of living.
Analysis has been done with the help of the portfolios developed on the basis of current and
prospectus savings and expenses. Female faculty members of different designation and income
groups are considered for analysis. The pattern of their investment is analyzed at different
inflation rate varying from 6% to 12%. The results show that those faculty members’ who are
investing on the basis of their intuition are guarding their portfolio better against inflation than
those who are investing on the basis of other factors.
Keywords: Retirement planning, Economic Market, Retirement income, Inflation rate, Income
group.

Introduction:
Retirement is another phase of life in which one wants to spend time with friends, relatives and
children’s. Retirement planning in India is not as popular as in other countries. In India
individuals invest with the influence of friend or relatives. For more of us retirement means a
party with a suitcase and you need not to go to office from the next morning. Retirement
planning for different class of employees is different as financial planning of academic
institutions has received less publication (Hopkins and Massy 1981, Wyatt, Emery and Landis
1979) even some of the researcher have developed simulation models to track faculty rank and
their retirement planning These models are used to determine the effects of different promotion,
tenure, and retirement policies (Gray 1980). Increasingly the timing of retirement is negotiated
between the employer and employee for making less routine of work, Moreover retirement of
one spouse affect the employment and the retirement planning of other spouse. Many of the
retirees make a choice whether to retire together or not (Moen 1992) and the most important
question which arises is what is intuition and why is it important? Some of the researchers
argued that intuition is information that individual accesses form their subconscious mind and a
subconscious mind is able to synthesize up to 50 million bits of information per second (Myer
2002). Hedges also identifies uncertainty about the future and the complexity of the financial
planning system as factors that compound the difficulties involved in planning for retirement.
Overview of Retirement Planning:
Planning for the future can be a tough task. It is easier and preferable to invest or save early for
your retirement at the early age the older you are harder it is to save more. Many older women
rely only on employer’s pension fund as their only source of income after retirement as they
don’t have any retirement plan and little savings. The main mantra to secure retirement is to
build a sound retirement plan today, you can see your retirement in the new light once you start
thinking about it and make a plan that covers all your financial needs. You are more likely to
participate in a retirement saving plan in which you have to decide how much to save and how to
invest the money. Your decision have a direct effect on how financially secure your retirement
is. Security of your retirement income is up to you. Whenever you are planning for your
retirement you have to evaluate your asset and sources of your retirement income and the value

of your asset and savings for retirement at the time of retirement. When you are drafting your
retirement plan the most important thing you have to keep in mind is the inflation rate and the
future value of your money and the assets. Intuition has been strongly associated with various
models of pattern recognition, mostly devised by cognitive psychologists. For rationalists,
opportunity recognition exists in the external world as complex patterns of observable stimuli
(Baron, 2004). Guillemard and Rein (1993) explain that the individual’s age of retirement, as
well as the way one transfers to economic inactive market from economic market has changed
significantly over time. It has been often seen that higher education employees participate in
university-sponsored defined contribution pension plans that place the investment decision
responsibility upon them. In order to examine investment decision-making behavior with
retirement savings plans we investigated attitude-mediated. David A. Love (2010) analyzed that
it has been examined by some researchers that women live 10 years more than males so they
have to save more for their retirement. Researchers, such as Jacobs et al. (1991a), have analyzed
that early retirement trends has also affected to women.
RelatedLiterature:
Miniaci and Stancanelli (1998) Women leave their job by the reason other than retirement or
disability, most of the time it’s because of child care or old in-laws at home. The family caring
become an easy exit way to retire from the job. Blöndal and Scarpetta, 1998b; Quinn et al.,
1998 found in their study that the self employed persons tend to choose retirement later than the
person employees to someone else. In their other article in 1998a they found that better educated
employees stay in the job for a longer period of time and employees retire early if there is a slow
professional growth in their sector. David A. Love (2010) investigated in his paper that sudden
family changes and expectations in marital status and children leads to sharp adjustments in
household savings and portfolio choice. Widowhood reduces the optimal share in stocks and in
risky assets Divorce, in contrast, leads to sharp portfolio adjustments in opposite directions for
men and women, with men moving to a riskier allocation and women to a safer one. Merton and
Samuelson (1992) demonstrate wealth -to- income ratio is the key to understanding optimal
asset allocation because it summarizes the exposure of future consumption possibilities to
fluctuations in financial markets. However, the wealth-to-income ratio is not the only channel
connecting divorce and portfolio choice. Kunnanatt and Emiline (2012) found in their study

that gender makes no significant difference in investment pattern. They also found that
government in developing countries taking steps to educate people for investment avenues.
Martenson (2008) observed that women are more likely to invest in short term investment than
men in comparison of long term investments. They prefer to have short term achievements.
Vaughan (1979) observed in the study that an Intuitive judgment is something which you know
but are not being able to explain how you know. Similarly, intuition is often thought of a “gut
feeling” which we made without reflection to a rational conclusion based on explicitly available
evidence. Intuitions are immediate insights rather than reasoned responses. Tversky &
Kahneman (1974) found in the judgment and decision-making literature, intuitions are often
classified as mental shortcuts which are highly susceptible to irrational biases.
Objective of the study:
(a) To evaluate that the investment decision taken by female faculty members is with
changing inflation rate.
ResearchMethodology:
“Research is performing a methodical study in order to prove a hypothesis or answer a
specific question.” (Martyn Shuttleworth, 2008). Research is any original and systematic
investigation undertaken in order to increase knowledge and understanding and to establish facts
and principles. It comprises of creation of ideas and generation of knowledge that lead to new
and substantial improved insights.
Data Collected:
 Data Type: The data was collected from the Primary sources. Primary research is an
essential part of any paper and was implemented in the initial stages to understand the
outline and build a framework for the later analysis. The collection of Primary data
involved the pro-active seeking of data, and which was useful in the analysis and
planning of the research project.
 Data Source: The data is taken from the female faculty members of the Banasthali
University.

Data Analysis &Tools:
The study will use a variety of questions to find out the complete information about the topic
under research. The present study is an attempt to study the attitude of female faculty member
towards retirement Planning. The data was collected from Banasthali University. With the help
of online retirement calculator the data was analyzed and results were drawn after using various
tools. In addition to statistical analysis, data management (case selection, file reshaping, creating
derived data) and data documentation (a metadata dictionary is stored in the data file) are
features of the base software
Empirical Result and Discussion:
Associate Professor
Case I: Ms. Geeta Pathak
Present Age: 35 Years
Retirement Age: 60 Years
Income pa.: Rs. 4,32,000
Expenses pa.: Rs.96,000
Savings for retirement pa.: 2,00,000
Inflation Rate: 6%
Observation: Your current saving will not be sufficient to meet your post retirement expenses.
Analysis: As per the analysis you need Rs. 17510215 to meet your post retirement expenses if the
inflation rate is 6%. Your current savings towards retirement is Rs. 300000 Per annum and your
total savings at the age of retirement will be Rs. 13728589. Value of your assets at the time of
retirement will be of Rs. 19226448 and there is a gap of Rs. 0 between money required and
savings. So you are not required to save additional money for your retirement. Our analysis
forecast that there is no to meet your after retirement expenses. Ms. Pathak is using investment
analysis for investing her money. After retirement your annual retirement expenses will be Rs.
769713 and her savings are sufficient to meet her post retirement expenses. She has planned her
retirement so well.

Belowtable depict your retirement needat the age 60 at the inflation rate of 6%.
Savings
Current Savings towards Retirement Per Annum Rs.300000
Savings at theAge of Retirement Rs.13728589
Asset Value
Current Asset Value Rs.4125000
Asset Value at the time of Retirement Rs.19226448
Expenses
Present Annual Expenses Rs.240000
Annual Expenses at the time of Retirement Rs.769713
Additional Money Required
The TotalAmount of Savings Required to maintain Current
Life Style
Rs.17510215
Gap Between Money Required and Savings Rs.0
So You need Additional Annual Savings Of Rs.0
So You need Additional Monthly Savings Of Rs.0
Inflation Rate: 8%
retirement will be of Rs. 19226448 and there is a gap of Rs. 603897 between money required
and savings. So you are required to save annual additional money of Rs. 13196 for your
retirement. Ms. Pathak is using investment analysis for investing her money. After retirement
your annual retirement expenses will be Rs. 1118630 and her savings are not sufficient to meet
her post retirement expenses.
Savings
Asset Value
Expenses

Life Style
Rs.33558934
Inflation Rate: 10%
and savings. So you are required to save annual additional money of Rs. 704363 for your
retirement. Ms. Pathak is using investment analysis for investing her money. After retirement
your annual retirement expenses will be Rs. 1614600 and her savings are not sufficient to meet
her post retirement expenses.
Savings
Asset Value
Expenses
Life Style
Rs.65188067

Case II
Ms. Shambhavi Das
Expenses pa.: Rs.2,28,000
Observation: Your current saving will not be sufficient to meet your post retirement expenses as
your intuition is right but if inflation rate rise up to 10% in that case the savings are not sufficient
for your post retirement income.
Inflation Rate: 6%
savings. So you need not required to save annual additional money for your retirement. Ms. Das
is using her intuition for investing her money. After retirement your annual retirement expenses
will be Rs. 408313 and her savings are sufficient to meet her post retirement expenses.
Savings
Asset Value
Expenses
Life Style
Rs.9288733

Inflation Rate: 8%
savings. So you need not required to save annual additional money for your retirement. Ms. Das
will be Rs. 492235 and her savings are sufficient to meet her post retirement expenses
Savings
Asset Value
Expenses
Life Style
Rs.14767075
Inflation Rate: 10%
and savings. So you required to save Rs. 208086 additional money for your retirement. Ms. Das

Savings
Asset Value
Expenses
Life Style
Rs.23876195
Case III
Dr. Savita Jain
Expenses pa.: Rs.3,00,000
Observation: Your current saving will be sufficient to meet your post retirement expenses.
Inflation Rate: 6%

savings. So you need not required to save any additional money for your retirement. Ms. Jain is
using her intuition for investing her money. After retirement your annual retirement expenses
Savings
Asset Value
Expenses
Life Style
Rs.9414510
Inflation Rate: 8%
Analysis: As per the analysis you need Rs. 13989846 to meet your post retirement expenses if
the inflation rate is 8%. Your current savings towards retirement is Rs. 500000 Per annum and
your total savings at the age of retirement will be Rs. 8322744. Value of your assets at the time
of retirement will be of Rs. 21451079 and there is a gap of Rs. 0 between money required and
Savings
Asset Value

Expenses
Life Style
Rs.13989846
Inflation Rate: 10%
Analysis: As per the analysis you need Rs. 20872429 to meet your post retirement expenses if
the inflation rate is 10%. Your current savings towards retirement is Rs. 500000 Per annum and
your total savings at the age of retirement will be Rs. 8322744. Value of your assets at the time
of retirement will be of Rs. 21451079 and there is a gap of Rs. 0 between money required and
Savings
Asset Value
Expenses
Life Style
Rs.20872429

Limitation of Study:
 The current research only cover inflation rate till 12%. If the inflation rate rises the results
might be different.
 This research confined to Banasthali University, Rajasthan state only and may not give
similar result when generalized to other institutes or regions.
 Female faculty of education institution are taken no other professional faculties are taken
for the research.
Conclusion:
It has been concluded that the respondents are investing on the basis of intuition and investment
analysis. Analysis has been done with the help of the portfolios developed on the basis of current
and prospectus savings and expenses. The result shows that those faculty members who invest on
the basis of intuition are having balanced portfolio in comparison to them who doesn’t consider
intuition as a factor of investment. The pattern of their investment is analyzed at different
inflation rate varying from 6% to 12%. There are faculties who gives more importance to
investment analysis tools for investing their portfolio is balance if the inflation rate is 6% but
with the increase in inflation rate there portfolio is not able to provide them sufficient post
retirement income. The results show that those faculty members’ who are investing on the basis
of their intuition are guarding their portfolio better against inflation than those who are investing
on the basis of other factors.

Bibliography:
• Bodie, Z., Merton, C. R. & Samuelson F. W. (1992) Labor Flexibility and Portfolio Choice in a Life-Cycle
Model. Journal of Economic Dynamics and Control 16(3–4):427–49.
• Charlmers, j. (2001) “Early retirement: does it lead to Dependency on Income support” pp 1-8.
• David A. L. (2010) The Effects of Marital Status and Children on Savings and Portfolio Choice,
Department of Economics, Williams College, The Review of Financial Studies,vol.23 No 1.
• Greenwald, A.G., & Banaji, M.R. (1995). Implicit social cognition: Attitudes, self esteem, and stereotypes.
Psychological Review, 102, 4-27.
• James H. Dulebohn* t and Brian Murray** (2007) “Retirement Savings Behavior of Higher Education
employees.”
• Kery H. Teresa “What women need to know about Retirement” pp. 8-10.
• Kunnanatt, T. J. & Emiline, M. (2012). Investment strategies and gender: A study of emerging patterns in
India. Journal of Gender Studies, Vol.21, No 4, 345-363.
• Martenson, R. (2008). Are men better investors than women? Gender differences in mutual funds and
pension investments.Journal of financial services marketing. Vol.13, No 1, 72-81.
• Tversky, A. & Kahneman, D. (1974). Judgment under uncertainty: Heuristics and biases. Science, 185,
1124-1131.
• Vaughan, F.E. (1979). Awakening intuition. Garden City, NJ: Anchor Press/Doubleday.

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