Behavioural Finance & Investment Decisions

Behavioural finance is a study of Investor¿s psychological traits. Behaviour may be a reflection of an interaction of cognitive and emotional factors and this can be captured more effectively using an approach that focuses on the interplay of different decision-making systems. The book aims to identify the behavioural factors of individual Investors, the financial risk tolerance level and its impact on Investment decisions and the Investment pattern of Individual Investors. Seven behavioural factors were identified such as attitude, cognitive, herding, risk, economic, emotional and market factors. Attitude towards Investment is the major factor among the seven behavioural factors, followed by market and cognitive factors. It was inferred that Investment in property is their most preferred avenue, while it is noted that Investors have actually invested in deposits and insurance the most. Majority of the Investors are categorised as average risk profile category. It was evident that behavioural factors have significant relationship with the Investment decisions and Investment decision has significant relationship with Investment performance.