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A Study on The Influence of Personality Trait on Investment Intentions

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The objective of this study is to examine the relation between personality traits and investment intentions among working class people belonging to Generation Y. Quantitative method is used to measure personality traits and investment intentions of the respondents. Statistical tools like Descriptive statistics and Chi-squared test were used to analyse the data. The discoveries uncovered that personality traits have some effect on a person’s risk resilience conduct, which thus, impacts their long term or short term investment perspectives. The aftereffects of this investigation infer that investment advisors ought to think about individual qualities and individual risk resilience, among different components, when counselling individual investors on investment. The research is important from both the scholastic and additionally the practitioner’s viewpoints. With respect to the scholarly point of view, the research adds to the current group of information, particularly in the Indian viewpoint where, to the best of the researcher’s learning and data, such a broad investigation with respect to psychographic factors effect on investment intentions has never been directed.Keywords: Personality traits, Investment intentions.


It is for the most part said that, keeping in mind the true objective to be compelling in the stock market, one ought to possess  know how of market, well informed about how a market evolves and   knowledge of the established sort of corporation to park resources. People have confidence that specialists can accurately time the market and make precise purchasing and offering forecasts, which eventually outcomes in immense benefits. However in the meantime there are distinctive decisions making factors that affect ‘individuals’ speculation decisions and likewise the market comes about. A person’s investment choice process depends on a perplexing mix of demographics , individual qualities, markets (i.e. expected risk, rate of return, transaction costs, market environment, etc.) Some discoveries exhibit doubt about the objectivity of financial specialist practices and show that choices can be motivated by mental and behavioural factors.  Impact of personality on risk tolerance and investment decisions, International Journal of Commerce and Management,  disagreed that people who make decisions favour fulfilling plans in opposition to ideal ones because of bounded understanding and absence of genuine procedural and choices can be sharp as opposed to either discerning or legitimate. In spite of the fact that leaders endeavour to settle on choices on an objective premise, their basic leadership process is restricted by their intellectual capacities, for example, propensities, values, reflexes, information, and so forth., and also by outside ecological components.

The effect of these variables settles on the basic leadership process more convoluted, as opposed to making it a straightforward limited normal process. Mental and ecological variables are involved in impacting the circumstances and assets accessible to decision makers, and sound financial conduct does not generally occur in this present. Earlier research has additionally demonstrated that financial specialists have a tendency to have conduct inclinations identified with individual attributes, generalizations, past trading experiences, etc .Investment management and personality type.The fundamental motivation behind financial investors occupied with investment is to both boost their pay and limit their costs. In this state, people save some of their salary for utilisation and some to save. Inside this system, people course their funds into investment. Likelihood of benefit and misfortune in the investment procedure makes decision making difficult for people. Choices of individuals investors are not always rational as conventional finance anticipated.

There are numerous mental, socio-social and natural components which influence investment behaviour. Inside this extension,  express that speculators can not be objective, they can just have limited rationality.  “Personality traits and financial decisions of the households “, Goethe University Frankfurt am Main Working Paper focused on how personality trait and demographics plays a significant role in ones financial planning among Generation Y. Personality traits influences financial planning more than demographics such as course majors and gender and distinctly exhibits that specific personality aspects controls individual choices in financial planning. The implication that different aspects of financial decision making such as unwillingness to take risks, illogical interpretation and socially responsible investing is influenced by conscientiousness, openness and agreeableness. Cliff Mayfield, Grady Perdue, Kevin Wooten  examined the influence of personality traits on an investor behavior. The study analyses the impact of personality trait on an investor’s understanding of risk and their eagerness to accept risks. Extroverted individuals tend to embark on short term investing, whereas people higher in neuroticism do not indulge in investing short term as well as long term.

According to Jack Noone, Kate O’ Loughlin and Hal Kendig  impact of socio economic status on financial decision making can be interpreted by non-economic factors (personal circumstances), psychology and financial understanding. According to Krutika Mistry Market condition and investor’s decision making have a positive relationship concerning Indian stock market. Several investors do not take into consideration different financial component ahead of investing in the stock market, some investors have a herding behavior that is they make investment decisions based on the masses.  The influence of personality trait and demographics on financial decision making among . Socioeconomic ,psychological and demographic determinants of Australian baby boomers’ financial planning for retirement , Australasian Journal on Ageing ,  International Journal of Management and Commerce Innovations. This study is a noteworthy forward development for the academicians considering and looking into investment behaviour in light of the fact that a research of this kind has never been done in India to the best of analyst’s learning. This research is one of the first of its kind in Indian settings, however comparable investigations have been led in western nations. The meaning of this research for Indian investment market is that given the plenty of investment instruments accessible and furthermore the immense social, cultural, linguistic, statistic, geographic and psychographic assorted variety in a nation like India.

Problem Statement

As a result of the literature review, the present study undertakes the examination of behavioral intentions as related to personal investment and portfolio management. This study emphasises at investigating the factors that impacts individual investor behaviour and how personality trait of an Individual plays a role in determining their investment decisions specifically with respect to Generation Y. The purpose of this research is basically based on how investors are not always rational while making important financial decisions and a major part personality trait plays in it. The primary objectives are: To identify and study about different personality traits influencing an investors intention towards investment. To collect data from working class people belonging to Generation Y. To analyse and establish the relationship between an Individual’s personality trait and their investment intentions. To give suggestions, recommendations and further scope of research in this field.

Research Methodology

This study consists of both primary data and secondary data. Secondary data is collected from available case study and recognized journals. As the research entails the study of investment decision making, the data collection was restricted to the employed people belonging to Generation Y and the sample was collected from salaried people working in Bangalore. A Pilot study was initially undertaken with a sample of 30 respondents after which the questionnaire was finalized and checked for validity and reliability. The final questionnaire contained two sections for psychographic  and investment intentions .The data was collected from a final sample of 200 individuals and then put up for analysis in SPSS using descriptive and inferential methods of statistical analysis. The data collected have been analysed by using the following tools: Reliability test, descriptive statistics and Chi-Square test.

Formulation of Hypothesis

  1.  Individuals with higher conscientiousness are more likely to engage in short term or long term investingH0: Individuals with higher conscientiousness are less likely to engage in short term or long term investing
  2.  Individuals who are open to experience are more likely to engage in short term or long term investingH0: Individuals who are open to experience are less likely to engage in short term or long term investing
  3.  Extroverted individuals are more likely to engage in short term or long term investingH0: Extroverted individuals are less likely to engage in short term or long term investing
  4.  Agreeable individuals are more likely to start investing in futureH0: Agreeable individuals are less likely to start investing in future

The independent variable considered in the study are the four personality traits namely Conscientiousness, Extraversion, Openness to experience and Agreeableness. Shown in table 1 are the descriptions of the four traits. The dependent variable for the study are short term, long term investment intentions and future time perspective. Respondents The respondents were generally aged between 24 to 33 working in Bangalore. The study is not gender biased and different class of people were surveyed irrespective of their income level, job and marital status.  Descriptions of the Personality traits[image: ]Source: Adapted from Professional manual: Revised NEO personality inventory (NEO-PI-R)Reliability is determined by using Cronbach’s alpha, the data is simplified through descriptive statistics and the relationship is tested using chi-squared test in Statistical Package for the Social Sciences (SPSS).

Data Analysis

A value of 0.625 reported of these items is an estimate of true alpha, which in turn is lower bound for true reliability as shown in table 2. The study consists of 200 valid respondents and the analysis didn’t exclude any responses i.e., 0% were excluded in the total of 200 respondents. Cronbach’s alpha will generally increase when the correlations among the items increase and the value of 0.60 is suggested to be the minimum limit of acceptance (Hair et al., 2010). The Cronbach’s Alpha does not change appreciably and remains above 0.6 throughout. This further confirms that respondent’s responses are consistent and reliable.


Considering one’s personality traits and risk taking ability before carrying out the investment process constitute the framework of the recommendation. Investment advisors must put an end to “one size fits all” philosophy and create investor-centric customized financial plans suited for investors belonging to different class. A final recommendation to investment instrument marketers to create and sell products according to the psychological needs of the investor rather than large-scale production of mechanistic financial products which will not maximize the psychological as well as financial well-being of the investors.


The verdict of this study that extraversion predicts short term investment intentions is similar to the findings of researchers. Literature involving the four traits and wide areas of operational and psychological health is approving of our general finding. This study investigates the factors that influence individual investor behaviour and how personality trait of an Individual plays a role in determining their investment decisions. In this research, extraversion and conscientiousness are both positively correlated to short-term and long term investment intentions. The questionnaire used in the present study did not include a measure of risk in investment intentions such as having a choice for lower risk with less return. However, past research has for the most part concentrated on the influence of cognitive factors, for example, financial literacy on financial conduct. Less research has concentrated because of non-intellectual elements.

Research Implications

This study bears an important value in the financial and investment category, including investment advisors and also the investors. The outcome of this study can even be utilized to build up a model of mental testing for potential customers of investment advisory firms. Additionally, this study is a noteworthy forward development for the academicians considering and looking into investment behaviour in light of the fact that a research of this kind has never been done in India to the best of analyst’s learning. The research additionally gives a guidance to additionally inquire about in the territory of cognitive effects on basic leadership with respect to financial decisions and in addition different fields.

Limitations of the Study and Scope for Further Research

This research has multiple constraints. Firstly, it was carried out only in one specific city, i.e. Bangalore. Secondly, only personality traits were considered specifically. Different personal aspects like gender, occupation and monthly income were not taken into account which possibly have a relevant impact on their investment plans. Inspite of all these restrictions, the research imparts productive intuition in interpreting the association between personality traits and investment decisions.

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A Study on the Influence of Personality Trait on Investment Intentions. (2019, August 08). GradesFixer. Retrieved July 5, 2022, from
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