INVESTMENT CHOICE AMONG UK INVESTORS

A Study on the Effect of Demographics and Personality on Investment Choice among British Investors

Table of Contents

Abstract5

Chapter 1: Introduction6

Background of the Study6

Problem Statement8

Significance of the Study9

Limitations of the Study10

Chapter 2: Literature Review12

Investor Relations16

Modern portfolio theory and the application to real estate19

Behavioural finance and property investment decision making23

Ethical investments and green shares, and green marketing: an overview28

Demographic and socio-economic characteristics31

Psychographic characteristics34

Behavior37

Chapter 3: Research Methodology39

Aims of the Study39

Research Method39

Hypotheses40

Chapter 4: Analysis of Findings and Discussion42

The conceptual empirical model of the investors' willingness to invest in “green shares”42

Investors' willingness to invest in “green shares” - descriptive empirical results45

Results of econometric estimations: the willingness to invest in green shares47

Findings48

Composition of responding funds and investment behaviour48

Investment holding patterns50

Factors that determine disposal decisions and rationality of behaviour53

Information and investment decision-making processes56

Chapter 5: Conclusion59

Discussion, summary and conclusions59

Recommendations64

Limitations of the Study66

Guidelines for Future Research67

References70

Appendix - A: Tables80

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Appendix B: Figures86

Abstract

Wealth management in the modern investment market is not confined as a luxury of high net worth individuals. Rather, it is an essential tool for every investor irrespective of gender, age, income and occupation. The increased demand for wealth managers and wealth management theories draw the attention for scientific studies and observations on investment and investment determinants. As the economy of a country progresses, so is the populace of that country not only in terms of income but emotionally and educationally as well. This leads to a systematic approach for all activities, particularly economic activities. Many theories have been propounded by experts in the field of investment to help making investment decisions rationally. These rational investment decision theories stem from standard finance or neoclassical economics. However, investment decisions by individuals are influenced not only by rational theories but irrational or behavioural theories as well. This acknowledgement develops a new branch of knowledge-behavioural finance- which deals with how investment decisions are taken in line with behavioural aspects of individuals. The present study is such an attempt to seek the behavioural determinants of investment decisions of individuals. The study is undertaken among individual investors in London in the United Kingdom. The study takes a sample survey to understand the effect of demographic profile and personality type (risk taking capability) of investors on their investment decisions and choice.

Chapter 1: Introduction

With the growth of the British economy and the rise in the wealth of the people, there is a growing demand for Wealth Management functions. Wealth Management involves understanding the clients' financial and investment requirements and accordingly providing financial planning and portfolio management services. The practical experiences of Wealth Management professionals emphasize that customer behavior and psychology play a very prominent role in successfully building and sustaining a Wealth Management relationship. Behavioral finance is a nascent but growing discipline, which studies investor's psychology while making financial decisions. Demographic profile and investor personality can be the two determinants for making perception about the investor psychology, which if scientifically studied could help the Wealth Management professionals to advice their clients better. This paper aims to investigate the effect of demographic profile and ...