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Volume VI Issue I 2020

Volume VI Issue I 2020
PSYCHOLOGY OF INVESTMENT: HOW TO BE A BETTER INVESTOR

Year:2020 Volume VI Issue I

Print ISSN :2454-6542,Online ISSN:2454-6542

Received on:29th Feb 2020, Received in Revised Form:3rd March 2020, Accepted On:29th March 2020

Saanyukta Sikdar
Asst. Prof.(In-charge), Dept of Eco and Finance, ISM Patna

Ravi Kumar Singh
Asst. Prof, ISM Patna

Corresponding Author: saanyukta.sikdar@gmail.com

Abstract

Every investment decision should consist of three important principles: using a long-term investment approach, following a right strategy to maximize the return on investment and proper allocation of investible funds based on risk profile. But while applying these three principles during an investment decision, an individual investor is affected by many other factors such as his/her demographics, lifestyle, reference group and their effect on individual investment psychology. In this perspective, a study of Investors’ Psychology is considered highly relevant in order to make every individual who is in some way or the other also an investor, aware of the various biases that may result in their suboptimal portfolio returns. The present article aims to assist the readers in developing a thorough understanding of the relationship between an investor’s psychological aspects with their investment behavior. This article deals with the quirks of the mind, their impact on making decisions and the consequences on investment performance. The aim of this article is to make the readers aware of the situations where emotions can get in the way of sound investing. Thus, the main objective of this study is to help understand how vulnerable most investors are to Psychological influences, and what they can do to protect their portfolios from the destructive effects of their own emotions.

Keywords

Rational finance, Behavioral Finance,Cognitive illusions, Heuristics and Biases.

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