A Study on the Influence of Behavioural Finance on Investment Decisions: Demographic Factors and Investor Preferences in Bengaluru

Abstract

This study explores the influence of demographic factors and psychological biases on investment decisions among individual investors in Bengaluru. Utilizing structured questionnaires and statistical analysis, the research investigates the impact of variables such as age, gender, income, and education, alongside behavioural factors including risk perception, overconfidence, herd behaviour, and loss aversion. The findings reveal that younger and higher-income investors tend to exhibit a greater appetite for risk, whereas older investors prefer safer investment avenues such as fixed deposits and insurance. Overconfidence is positively associated with equity investments, herd behaviour significantly influences mutual fund selection, and loss aversion leads investors to favour traditional savings products. The study concludes that investment decisions are not solely driven by rational analysis but are significantly shaped by a combination of demographic characteristics and behavioural tendencies. These insights offer valuable implications for policymakers, financial advisors, and financial product designers in crafting investor-centric strategies and improving financial decision-making frameworks.

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