Factors Influencing Investment Decisions: A Study of Individual Investors in the Indian Stock Market

Abstract

The increased competition and enormously complex products in the financial services industry make potential investors perplexed as to how to handle the choices they need to make. The quality of the choices made by investors is shaped by a multitude of factors. Nowadays, researchers in the field of finance have already been paying attention to issues impacting individual investors' investing preferences. The current research being conducted in the Indian stock market intends to better understand the factors that influence the investing decisions of individual investors. This study is designed to investigate the factors that are affecting the stock preferences of individual investors and also seeks to ascertain the relevant factors influencing their investment decisions. An attempt is also made to know the effect of these on their socio-economic variables in the context of the Indian stock market. In addition to the analysis of ranking data, an independent t-test, Analysis of Variance (ANOVA) and relevant post hoc tests were conducted to meet the objectives of the study. The results of primary data analysis indicate that return, risk, and past performance of stocks are the three major factors considered by individual investors while making investment decisions. The present study contributes to the academic community's interest in the micro area of behavioural finance dealing with the mind and motivations of individual investors, especially in the context of emerging markets. At the same time, the inferences drawn from the present study can be used by future researchers to understand the current preferences of individual investors on factors influencing stock investment decisions.

The Effect of Geographical Diversification Towards Property Investment Decisions in Indonesia

“…Hence, property has become one of the most frequently chosen investment options, as the survey data shows that the majority of investors own between 4-7 property units. Possible return from property investment is one of the driving motivations for investors to gain benefits in the future, thus affecting property investment decisions (Natasha and Hassan, 2015).…”

“…Hartono (2000) stated that possible return is the return expected to happen in the future and is uncertain in nature, so investors will choose investments they deem more worthy compared to other investment instruments. Possible return becomes an important factor in investment decision making as every investor expects a good return for their investment (Natasha and Hassan, 2015). The motivation of investors in investing in real estate is caused by the belief that the price of real estate will increase from year to year.…”

“…Studies on property investment decisions have been done before with the variable of financial knowledge (Lusardi & Mitchell, 2014;Mandell & Klein, 2009), possible return (Omisore, et al, 2012), risk preference (Yao, 2017, and geographical attribute used as variables related to an investment portfolio in property (Natasha & Hassan, 2015). This study aims to explore the effects of financial knowledge, possible return, risk preference, and geographical attribute towards investment decisions in property in Indonesia.…”