Behavioral Finance: Understanding Investment Decisions Among Individual Investors

Abstract

In the early 1990s, India started to open up to the outside world. Steep GDP growth has been facilitated by privatization, liberalization, and globalization together. An important aspect in this was the investors. As a result, the administration thought of enticing more investors. Sophisticated investors from all over the world started to pay more attention to the Indian capital markets, especially after 2003. In this instance, it is vital to examine the How, Why, When, Where, and Amount of the Investors’ Investments. A further tool for comprehending the decision-making process of investors is behavioral finance, a relatively new field of study. Emotions and psychology play a part in the way investors make financial decisions. It says that people are not foolish or illogical. They are common individuals with diverse prejudices. Numerous elements, such as personality and demography, can affect how risk and return on investment are evaluated. They can also have an impact on investor psychology and attitudes, investment selection, and decision-making processes. In this study, we look at how Bengaluru’s individual investors’ choice of investment instruments is influenced by their personalities and demographics. Frequency analysis along with other statistical methods were used to describe the variables. Only respondents who have invested in any form of financial instrument at least once are selected for the study.