A Study of Behavioural Factors and Its Impact on Investment Decision
Main Article Content
Abstract
Background and Research Problem –
Investment is not a simple process; it involves several stages to reach an optimum decision. Investment in shares, gold, real estate, and financial derivatives is a crucial task due to the involvement of huge funds. An investor decides after properly analysing the risk and return associated with assets. Investors have several methods available for decision-makings like fundamental or technical analysis, ratio analysis, fund flow and cash flow analysis etc. which depend upon the requirement. The behaviour of investors also plays a significant role in investment decisions. Sometimes, it happens that investors make decisions based on their behaviour or emotion and the study of this field is called Behaviour Finance.
Objective –
This paper is an attempt to find out the impact of behavioural factors on investment decisions with the help of various factors like heard news, emotions, and advice from others’ intuition etc. The sub-objectives of the research paper were
- To know the concept of Investment & Behavioural Finance
- To know how Behavioural factors affect investment decisions.
- To know the impact of behavioural factors on the investment decision of the investor.
Research Method – Analytical research was used for the study. Primary data was collected with the help of a Questionnaire. Behavioural factors like Overconfidence, Herd mentality, perceptioin and other factors were considered to fulfil the research objective. The raw data was converted into a proper table format, a pie chart and visualiztoiin were created and interpretation was done to get the concluded result.
Finding and Suggestion– The research showed that investors are not rational and their decisions are affected by their mentality, emotions, mouth publicity, and crowd actions. It is not a good fit that investors only consider internal factors but on the other hand, they have to use external techniques like financial analysis, cash flow and other analysis techniques to avoid loss and earn good profits.
Limitation – The result of the study is strictly dependent on the responses given by samples and factors taken into consideration.