In India, the household sector contributes about 80% of Gross Domestic Savings (GDS). The sector's investments are predominant in fixed income bearing instruments or physical assets, and less predominant in financial assets like shares and mutual funds. This paper makes an attempt to analyze the determinants of household portfolio, particularly the ownership of risky assets, using a sample of 345 households from Coimbatore city. The study finds that reading habit and age are positively and significantly related with the ownership of risky assets. There is thus a need for policy intervention to improve the financial knowledge level of the households through appropriate educational programs.

The Indian economy is growing at a healthy rate and has been attracting a very good amount of foreign investments ever since economic reforms commenced in the early 1990s. The rapid changes taking place in the financial markets due to financial sector reforms, the proliferation and complexity of investment products, and the number of financial scams reported during the last decade-and-a-half, calls for more information on personal finance. If the households have insufficient knowledge regarding the saving process, they are unlikely to be able to make optimal investments. Lack of financial knowledge may result in households saving too little and too late in life to reach their various life cycle goals in general and their retirement goals in particular. This will result in their inability to achieve the desired balance between consumption while working and consumption on retirement. Additionally, lack of information regarding the risk-return distribution of various investment options might lead households to have lopsided investment portfolios.

Many financial assets are available in the form of bank fixed deposits, government and corporate fixed income securities, mutual fund units, common stocks, provident and pension funds, insurance, home, real estate, gold, etc. Each asset has a different rate of return, risk and liquidity.

Every individual's need differs from others' and hence the investment patterns may also differ accordingly. Therefore, there might be varying degrees of preferences for different investment vehicles among the households. Every household tends to keep some cash balance and maintain certain amount in the form of bank deposits to meet its transaction and precautionary needs. In the case of salaried class, contributions to employee provident and pension funds are more or less compulsory due to the legislative bindings on the employers. Life insurance covers the household to meet situations arising out of untimely death of the breadwinner. The surplus income above these needs awaits investment in competing financial and non-financial assets.

Applied Finance Journal, Household Investments, Gross Domestic Savings, Financial Assets, Financial Sector Reforms, Financial Scams, Foreign Investments, Indian Household Sector, Financial Reforms, Financial Markets, Financial Deregulation, Financial Magazines.