Psychological Factors Influencing Mutual Fund Investment Decisions: An Empirical Study Among Investors

Abstract

Investment decisions are influenced not only by financial considerations but also by a range of psychological and behavioral factors that shape investor perceptions, attitudes, and decisionmaking processes. This study investigates the psychological determinants influencing mutual fund investment decisions among individual investors, with particular emphasis on factors such as risk perception, financial literacy, return expectations, trust, and behavioral biases. A quantitative research design was adopted, and primary data were collected through a structured questionnaire administered to 75 respondents selected using convenience sampling. The collected data were analyzed using descriptive statistical techniques to examine the relationship between psychological factors and investment behavior. The findings suggest that psychological attributes significantly influence mutual fund investment decisions, with investors demonstrating varying degrees of risk tolerance, confidence, and susceptibility to behavioral biases. The study contributes to the growing body of behavioural finance literature by providing empirical evidence on the role of psychological factors in mutual fund investment decisions. The findings may assist financial advisors, asset management companies, and policymakers in developing strategies to enhance investor awareness, improve financial decision-making, and encourage informed participation in mutual fund investments.