Head of the Post Graduate Programme
For generations, wealth creation has been the main motive of humans. Wealth creation is a strategic approach that needs to be practiced from a very young age. The balance between savings and expenses helps individuals to invest money. The knowledge of the financial market and products and efficient investment planning can help to generate sustainable wealth. Efficient investment decision-making can help investors to derive higher and more stable returns on their investments. Investors need to probe for an investment option that can help them to cover up the opportunity cost attached to keeping cash. Investment is nothing but placing one’s money in avenues that can multiply it and thus wealth creation requires judicious investment decision making.
As per UN population stats, Deloitte Analysis, India is the leading country in the world with the largest millennial population in absolute terms across the globe. Generation Y or Millennial, or ‘Gen Y’ in short – as they are now referred to as, are a population group who are in the age bracket of 18-35 years. This Gen Y constitutes nearly 34 percent to the country’s total population, in absolute numbers it is a population of over 440 million, forming the majority chunk of India’s population.
India is perceived to emerge as a young country because two-third of the population has been constituted by Gen Y by 2021 and therefore the level of financial awareness and promoting investment decision making of these Gen Y Investors is important as it can pave the way for the success of the Indian economy.
In Investment decision-making, risk and expected return play a major role, but do these investors really make use of the concepts of risk and expected return for their investment decision-making in real life? And the answer is “NO”.
Investors operate in financial markets, which indeed, are complex systems, very difficult to interpret and understand completely. The Investment decision making process is indeed very difficult for naïve investors to understand before investing in the market. The psychological factors of young investors affect their investment decision making and make them inclined towards investing in risky ventures with expectations of windfall gains in a short period of time. It is evident their emotions have a control on their investment decisions as well as intelligence is also seen to be overruled by the emotions.
It is evident that pessimistic people make risk averse investment decisions as compared to the normal one. Also, overconfidence of youngsters leads to investment decisions in risk prone investments with probability of volatile returns like the way we have seen youngsters have invested in crypto currency more than the growth stage funds options available in the market. Therefore, feelings and emotions play a vital role in the decision-making process. It is accepted that emotions viz. Happiness, unhappiness, and surprise form the basis for a learning system as a prerequisite process to promote basic rational and intelligent behavior.
In India there is a huge gap in expert’s suggestions and investors’ investment action. Many social, political and economic events occur in the financial market that the investors can’t control. Youngsters today have multiple options of portfolio selection and management. The immense and varied information available to investors leads to confusion and as a result mostly they rely on their emotional reactions.
In the volatile and uncertain market conditions investment, decision making gets affected because of the perception-based and judgment-based analysis of the investor. It has been proved the thought process and the ability to analyse investment information gets affected due to changes in mood and emotions. Overall, Gen Y is prominent as the most optimistic age group when compared to older generations. Despite suffering investment losses, Gen Y remains astonishingly confident. This may be because Gen Y perceives a safety net created by their parents for them. In addition to biological and psychological factors, socioeconomic and demographic factors such as education, income, wealth, race, ethnicity, and gender can exacerbate the adverse effects on efficient and rational decision-making. It can be concluded that rational investment decision-making is the only success mantra for creating wealth and remaining happy in life.
Head of the Post Graduate Programme
#jims #jimsdelhi #managementcollegeindelhi #pgdmcollegesindelhi #mbacollegesindelhi #toppgdmCollegesindelhi #topbschoolsindelhi #GenerationY#EfficientInvestmentDecisionMaking# Expected Risk#Expected Returns
For more information visit: https://www.jagannath.org/
