The Effect Of Behavioral Factors On Individual Investor's Investment Decisions

Abstract

This thesis investigates the influence of behavioral factors on individual investment decisions and the moderating effect of demographic characteristics on the stock market in Ho Chi Minh City. A sample of 400 individual investors in the Ho Chi Minh stock market was used for the study. This study examines bias, overconfidence, mental accounting, and flocking bias as behavioral factors. Both SPSS and SmartPLS were utilized to analyze the survey data in the study. All behavioral factors substantially influence individual investment decisions, according to the findings. In addition, the study discovered that occupation moderates the relationship between mental accounting and investment decisions. However, occupation does not mitigate the influence of the remaining behavioral factors on investment decisions, nor does gender moderate the influence of any of the behavioral factors. The research's theoretical and practical implications are discussed. The findings suggest that investment professionals and financial advisors should be aware of their clients' behavioral biases and tailor their advice accordingly. In addition, the study contributes to the existing literature on behavioral finance by demonstrating the influence of behavioral factors on investment decisions in the context of the Ho Chi Minh City stock market. Despite the fact that this study contributes to the literature on behavioral finance, it has certain limitations. There are only 400 individual investors in the sample, which may limit the generalizability of the results. In addition, the study examines only a subset of the behavioral factors that may influence investment decisions; other variables may also play a role. The study is constrained to the context of the stock market in Ho Chi Minh City, and the results may not be applicable to other markets.