Does Aging Impacts on Financial Behavior and Investment Decisions

Abstract

Purpose: The theory of behavioral finance explains that how the emotions and mental errors influence the investing decision of the investor in the investment market. Behavioral finance as a different stream brought a different perspective where studies in the area proved through various studies that individuals are not necessarily rational and logical in their financial decision making. Behavioral biases impacts and influence the investment decisions differently based on the various independent factors. One of the prominent factor that influences the investment decision is demographic variables, prominently gender, age, income, occupation and marital status. This paper pivots around the behavioral aspect of the financial decision maker based on the age; that whether the aged or elderly investors make better investment decisions. The other point of research was the effect of demographic variable (age) on different behavioral biases of financial decision makers.

Design/Methodology/ Approach: This empirical research is based on the data collected through an administered questionnaire and responses received from 290 investors in Delhi National Capital Region. Statistical tools were used for analysis and to discover the relationship between the various independent and dependent variables.

Finding: The research finding suggests the presence of significant association of age with different behavioral biases. Authors feel that outcome of research could be beneficial not only for the is the investors in understanding the said relationship while considering investment decisions and behavioral mistakes, but also to the dealers in financial products in recognizing buyers’ behavioral aspects.

Originality/Value: This paper will benefit the investors of all the age- groups to understand the biases that they unknowingly face. It will help the investors to take better financial decisions in the future.