Bridging the Gap: Rural Investors' Perceptions and Challenges in Mutual Fund Investments in India
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Abstract
This research investigates the perceptions of rural investors in Karnataka's Hubli-Dharwad district toward mutual funds, focusing on their awareness, having habits, and investment behaviors. As mutual funds become increasingly accessible to rural communities, understanding these factors is essential for promoting financial inclusion and empowerment. The study identifies both opportunities and challenges faced by rural investors, including the complexity of financial processes, limited resources, and a strong reliance on personal networks for advice. The research employs an exploratory methodology, surveying 250 rural investors across three villages—Mantur, Kusugal, and Amargol—using convenience sampling. Data analysis incorporates statistical methods such as Chi-Square tests and ANOVA to examine relationships between key variables, including sources of mutual fund information, investment concerns, and savings behaviors.
Key findings reveal that personal networks significantly influence rural investors' decisions and concerns. For instance, 21.2% of respondents relying on personal networks express worries about losing money, indicating a lack of trust or understanding. Additionally, 30.4% of those consulting local agents find the investment process complicated, highlighting the need for clearer communication. The clarity of information provided by advisors is critical in building confidence: only 7.6% of investors feel fully confident in their understanding of mutual funds. Gender differences appear minimal in perceptions; however, saving methods like fixed deposits correlate with less frequent mutual fund investments compared to savings accounts.
The study recommends implementing community-based financial literacy programs delivered by trusted local leaders, using simplified communication materials in local languages to demystify mutual funds. Accessible digital tools and mobile platforms in regional languages could empower rural investors to manage their investments independently. Promoting Systematic Investment Plans (SIPs) could also make mutual funds more appealing by allowing small, consistent contributions. Personalized support from trained local advisors can further build trust and ease the investment process for rural investors. This research contributes to a deeper understanding of rural financial behaviors and aims to foster greater financial inclusion and empowerment through mutual fund investments.