The Paradigm Shift from Tangible to Financial Assets: An Empirical Study of Household Investment Portfolios in Rural Bulandshahr Uttarpradesh

The present study aimed to look at the change from real assets to monetary assets in the rural household of Bulandsehar district, Uttar Pradesh. The study was undertaken to find out the reason behind the preference of investment of the households, determinant of household investment and the magnitude of financial asset investment taken by the rural investors besides the traditional type of investment. The results show that tangible assets like gold, silver, land and real estate continue to be a part of rural households' asset portfolios. All these assets are viewed as safe, familiar and culturally important. They are popular because they have a tradition, and people think that the physical assets are the protection to the bout of uncertainty in the economy. So, investment in physical assets is the top priority investment goal of many rural households. Traditional assets still dominate but it was clear that there was a rise in the interest of financial assets suggested by the study. Household investment portfolios increasingly include financial instruments (mutual funds, insurance policies, pension schemes and bank deposits). Various factors, such as increased banking infrastructure, the expanded range of digital finance services, government's financial inclusion initiatives and a massive awareness drive on finances in the country have, however, been strong drivers to this transition. The study also highlighted the significance of Financial Literacy on their Investment Behaviour. Those respondents with higher financial product knowledge had higher preference on diversified investment portfolios, as shown in the illustration. Technically more educated households are more likely to be at least contemplating alternative investment options and not just traditional investments. Results show rural investors are willing to embrace financial assets but at a slow pace. Today, many people still rely on safety and stability in deciding what investments to make. Hence, low risk financial products find ready acceptance more than high risk investment products. Based on the results it is inferred that a change in the attitudes of households for investment in rural Bulandsehar is taking place. Now this is not a one time switch from tangible asset to financial asset; it is rather diversification of the portfolio. What is happening is greater cross sectionalization of the household to achieve greater financial security and long term creation of wealth by using both the traditional investment instruments and financial product instruments. Future studies could be extended to other districts/states to compare with Bulandsehar. Investigating differences with respect to investment behavior in different age groups, income categories, occupational groups and educational levels might also be studied. Longitudinal studies would be of benefit in providing data for a period of time analysis to help determine the nature of investment trends and financial changes. Further, the effects of e-finance, fintech innovation and governmental financial literacy promotion initiative on investment behavior of the rural people can be explored. This study's result adds to the literature of household finance, financial inclusion and gives all policy makers, financial institutions and researchers an action sense who are interested in giving growth to an informed investment in a sustainable financial development of rural India.

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