Millionaires Speak: What Drives Their Personal Investment Decisions?

Purpose The purpose of this paper is to understand the new kind of investors – women entrepreneurs – and to find out the factors that drive their investment behaviour and investment decisions. Design/methodology/approach The approach of qualitative enquiry was used for the research in which 18 in-depth exploratory interviews were conducted to identify the determinants of the investment behaviour shown by women entrepreneurs, a growing segment in investment. The accumulated data was analysed using open coding. Findings The research show that women entrepreneurs consider investment as a long-term instrument are risk averse and quite conservative. They are willing to take risks in business but not for making investment decisions. The reasons for this low-risk behaviour include lack of time to understand investments and lack of knowledge about various products. The research asserts that if they spend time to be informed about the nuances of investment instruments, they are likely to take risks for their investments as well. The interviews also reflect that women entrepreneurs often mimic the investment behaviour of their parents. Research limitations/implications The sample for this research was taken from only two cities in India and a broader research in other cities as well will expand the understanding of investment behaviours demonstrated by women entrepreneurs. The differences in women entrepreneurs’ investment behaviour due to culture and ethnicity of the respondent are also not considered. Practical implications The outcomes of the research will help the investment manager to get a better insight into the psychology of women entrepreneurs as investors. This will help them develop personalized and relevant portfolio recommendations. Second, the findings will help service providers to develop training modules for their investment advisors by sensitizing them to needs and wants of women entrepreneurs as potential investors. Third, the research will be of interest for policymakers and researchers to understand the determinants of personal investment decision-making amongst women entrepreneurs. Finally, it will help women entrepreneurs understand and mitigate their biases while taking investment decisions. It will lead them to take wiser investment decisions, thereby reducing the risk and maximizing opportunities of returns. Social implications The research will provide opportunities for enhancing gender equality amongst investors. This can be achieved by educating the investment advisors on the traits and preferences of women entrepreneurs as investors. Designing and delivering specific workshops on investment awareness for women entrepreneurs can also be accomplished based on the findings of this research. Originality/value To the researcher’s best knowledge, the investment behaviour of women entrepreneurs in India has been little investigated. This study appears to be the first qualitative research attempt in that direction. This paper will be useful in understanding the behavioural biases by women entrepreneurs in considering their personal investment decisions.

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Effect Of Cultural Dimensions On Stock Exchange Investment Decisions In Iran

Journal of Business & Economics Research (JBER) ◽

10.19030/jber.v10i12.7425 ◽

2012 ◽

Vol 10 (12) ◽

pp. 681

Author(s):

Zahra Amirhosseini ◽

Vivian O. Okere

Keyword(s):

Significant Relationship ◽

Stock Exchange ◽

Power Distance ◽

Investment Decisions ◽

Cultural Dimensions ◽

Main Hypothesis ◽

Geert Hofstede ◽

Personal Investment ◽

The Impact ◽

The Relationship

The purpose of this study is to analyze the impact of cultural dimensions on personal investment decisions in the Tehran Stock Exchange. The cultural dimensions model was well established by Geert Hofstede (1980). This research tested a main hypothesis and four subsidiary hypotheses. The data was gathered through library methods and questionnaires. The results showed that the main hypothesis which examined whether there is a significant relationship between cultural dimensions and investment decisions in the Tehran stock exchange was confirmed. Subsidiary hypothesis about the relationship between two of Hofstedes cultural dimensions, Power Distance and Individualism, and investment decisions was not confirmed at a meaningful level. However other subsidiary hypothesis of the research based on the relationship between Masculinity and Uncertainty Avoidance and investment decisions was significant at a meaningful level and confirmed.

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The psychology of personal investment decisions

Personal Finance and Investments ◽

10.4324/9780203895634-4 ◽

2008 ◽

pp. 39-78

Keyword(s):

Investment Decisions ◽

Personal Investment

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CEO personal investment decisions and firm risk

European Financial Management ◽

10.1111/eufm.12117 ◽

2017 ◽

Vol 23 (5) ◽

pp. 920-950 ◽

Cited By ~ 7

Author(s):

Wei Cen ◽

John A. Doukas

Keyword(s):

Investment Decisions ◽

Firm Risk ◽

Personal Investment

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Transferring Cognitive Talent Across Domains: The Case of Finance

10.21203/rs.3.rs-598488/v2 ◽

2021 ◽

Author(s):

Kristian Rotaru ◽

Petko S. Kalev ◽

Nitin Yadav ◽

Peter Bossaerts

Keyword(s):

Theory Of Mind ◽

Cognitive Bias ◽

Interpersonal Skills ◽

Investment Decisions ◽

Social Contexts ◽

Disposition Effect ◽

Personal Investment ◽

Emotional Dimension ◽

Intervention Policy ◽

Cognitive Deficiencies

Abstract We consider Theory of Mind, the ability to correctly predict the intentions of others. The skill requires abstraction from one’s own particular circumstances. Here, we posit that such abstraction can be transferred successfully to other, non-social contexts. We consider the disposition effect, which is a pervasive cognitive bias whereby investors, including professionals, improperly take their personal trading history into account when deciding on investments. We design an intervention policy whereby we attempt to transfer Theory of Mind skills, subconsciously, to personal investment decisions. In a within-subject repeated-intervention laboratory experiment, we record how the disposition effect is reduced by a very significant 85%, but only for those with high Theory of Mind skills. No such transfer is observed in subjects who score well only on the emotional dimension of interpersonal skills. Our findings open up a promising way to exploit cognitive talents in one domain in order to alleviate cognitive deficiencies elsewhere.

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The Effect of Financial Literacy on Personal Investment Decisions amongst Medical Practitioners in Sri Lanka

European Journal of Business Management and Research ◽

10.24018/ejbmr.2021.6.4.952 ◽

2021 ◽

Vol 6 (4) ◽

pp. 123-126

Author(s):

S. H. M. L. Walakumbura

Keyword(s):

Sri Lanka ◽

Financial Literacy ◽

Investment Decision ◽

Investment Decisions ◽

Financial Knowledge ◽

Primary Data ◽

Policy Makers ◽

Medical Practitioners ◽

Personal Investment ◽

The Impact

Financial literacy is very essential for any individual in order to efficient and effective decisions regarding their personal investments. Based on that scenario, this study examines the impact of financial literacy on personal investment decisions amongst medical practitioners in Sri Lanka. Personal investment decision has been considered as the dependent variable while financial knowledge, financial skills and financial attitude has been considered as the proxies for the independent variable. Deductive approach has been employed using primary data which is obtained from 205 respondents throughout the country. Descriptive and inferential statistics such as multiple linear regression have been used for the analysis purpose. The results suggested that there is a significant impact between the financial knowledge and financial skills on investment decision while the financial attitude does not have a significant impact on the investment decision. The empirical findings of this study are helpful for any individual who is willing to take effective investment decisions, academics, policy makers and all other related interested parties.

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Transferring cognitive talent across domains to reduce the disposition effect in investment

Scientific Reports ◽

10.1038/s41598-021-02596-2 ◽

2021 ◽

Vol 11 (1) ◽

Author(s):

Kristian Rotaru ◽

Petko S. Kalev ◽

Nitin Yadav ◽

Peter Bossaerts

Keyword(s):

Social Cognitive ◽

Investment Decisions ◽

Social Contexts ◽

Disposition Effect ◽

Perceptual Dimension ◽

Cognitive Dimension ◽

Personal Investment ◽

The Social ◽

Intervention Policy ◽

Cognitive Deficiencies

AbstractWe consider Theory of Mind (ToM), the ability to correctly predict the intentions of others. To an important degree, good ToM function requires abstraction from one’s own particular circumstances. Here, we posit that such abstraction can be transferred successfully to other, non-social contexts. We consider the disposition effect, which is a pervasive cognitive bias whereby investors, including professionals, improperly take their personal trading history into account when deciding on investments. We design an intervention policy whereby we attempt to transfer good ToM function, subconsciously, to personal investment decisions. In a within-subject repeated-intervention laboratory experiment, we record how the disposition effect is reduced by a very significant 85%, but only for those with high scores on the social-cognitive dimension of ToM function. No such transfer is observed in subjects who score well only on the social-perceptual dimension of ToM function. Our findings open up a promising way to exploit cognitive talent in one domain in order to alleviate cognitive deficiencies elsewhere.

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Transferring Cognitive Talent Across Domains: The Case of Finance

10.21203/rs.3.rs-598488/v1 ◽

2021 ◽

Author(s):

Kristian Rotaru ◽

Petko S. Kalev ◽

Nitin Yadav ◽

Peter Bossaerts

Keyword(s):

Theory Of Mind ◽

Cognitive Bias ◽

Interpersonal Skills ◽

Investment Decisions ◽

Social Contexts ◽

Disposition Effect ◽

Personal Investment ◽

Emotional Dimension ◽

Intervention Policy ◽

Cognitive Deficiencies

Abstract We consider Theory of Mind, the ability to correctly predict the intentions of others. The skill requires abstraction from one’s own particular circumstances. Here, we posit that such abstraction can be transferred successfully to other, non-social contexts. We consider the disposition effect, which is a pervasive cognitive bias whereby investors, including professionals, improperly take their personal trading history into account when deciding on investments. We design an intervention policy whereby we attempt to transfer Theory of Mind skills, subconsciously, to personal investment decisions. In a within-subject repeated-intervention laboratory experiment, we record how the disposition effect is reduced by a very significant 85%, but only for those with high Theory of Mind skills. No such transfer is observed in subjects who score well only on the emotional dimension of interpersonal skills. Our findings open up a promising way to exploit cognitive talents in one domain in order to alleviate cognitive deficiencies elsewhere.

Download Full-text