Risk tolerance emerged as the most influential factor, with 75 per cent of women with higher risk tolerance choosing equities, while nearly 90 per cent of those with lower tolerance preferred safer options. (Representational Image)
Hyderabad: A recent study shows that 60 per cent of women investors in Hyderabad opt for conservative investments like bonds and fixed deposits, while only 25 per cent prefer high-risk assets such as equities.
According to a paper ‘Impact of Psychological Factors on Individual Investment Decisions: A Case Study of Women Investors in Twin Cities of Telangana’ written by D. Sujatha, Dr A. Krishna Sudheer, and Achini Neha, the factors like risk tolerance, overconfidence, and regret aversion significantly shape these investment decisions.
Risk tolerance emerged as the most influential factor, with 75 per cent of women with higher risk tolerance choosing equities, while nearly 90 per cent of those with lower tolerance preferred safer options. “I’ve always preferred secure investments. Bonds and fixed deposits feel safer to me, especially with the economic uncertainties we face,” said Anita Rao, a 45-year-old teacher.
The study found that regret aversion bias played a significant role, with 50 per cent of women preferring safer investments to avoid future regret. This conservative stance, while reducing risk, also limited their potential for higher returns. The findings throw light on the need for financial advisors to offer personalised advice, helping women navigate these psychological biases.
The study also highlights overconfidence bias, which affected over 30 per cent of women. These investors tend to overestimate their decision-making abilities, resulting in frequent trading. Confirmation bias, which led 40 per cent of participants to favour information that supported their existing beliefs, often resulted in missed opportunities for diversification.
“I used to think my decisions were foolproof, given my qualifications and a little research that I did, but later I have realised the need to consult experts,” said Meghana Reddy, a 34-year-old IT professional, who has since diversified her portfolio after seeking professional advice.
Trend-chasing bias was found among 35 per cent of the women surveyed, making them susceptible to market volatility. Many followed market trends without thorough analysis, leading to potential losses during downturns.
“I used to follow the crowd, but after a few setbacks, I’m more cautious. Now, I focus on long-term stability rather than quick gains,” Priya Jain, 29, a fashion entrepreneur, told Deccan Chronicle.
“The idea that women can’t process numbers or money was a crazy lie made up to keep women away from accountability and independence. Tailored guidance can empower women to make more informed, balanced, and diversified financial decisions,” said Madhava R.K., a chartered accountant-turned-financial adviser
( Source : Deccan Chronicle )
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