Furthermore, the findings show that investor behavior plays an important role in the relationship of risk profile, asset familarity and investment objective to portfolio;s choice of indi
INTRODUCTION
Research background
Portfolio is one of the concerns of most investors, especially those who are new to the market in their investment decisions It is understood as an investment structure, i.e a combination of many different asset classes to optimize returns and minimize investment risks Investors pouring capital into tangible assets such as buildings, machinery or real estate are considered real investments, while assets such as stocks and bonds are called financial investments It can be seen that individual investors today have many options to invest, but if they do not define a clear goal, the profit level is not optimal They choose an appropriate path depending on on their specific needs, risk preferences, and desired returns
This study aims to examine the diverse array of factors that exert an influence on the investment portfolio decisions made by individual investors in Vietnam Within a dynamic and swiftly changing economic environment, individual investors assume a crucial position in influencing the financial markets and making significant contributions to overall economic expansion Comprehending the factors that influence individuals' investing choices holds significant importance for policymakers, financial advisors, and market participants In Vietnam, the stock market has developed both in terms of the number of listed shares and the trading value, but individual investors' knowledge of the influence of factors on investment decision behavior individual investors are still limited leading to the risk of loss in investment activities is very large Factors belonging to investor behavior include a group of emotional and knowledge factors that influence individual investors' decision-making considerations Besides the group of factors belonging to investors, the group of factors belonging to the macro environment, factors belonging to the potential of investment securities have an impact on the investment decisions of individual investors.
Identify the issue
It is obviously that some private investors will make the choice of investment portfolio after reduce costs and time for stock transactions and improve investment efficiency A consultant who understands the investor's psychology when choosing a portfolio will help them make investment offers that suit the investor's wishes Therefore, factors affecting portfolio selection is an important topic for Rong Viet Securities Company in competing with rival companies For Rong Viet, the trust of our customers comes from our understanding of the market, understanding of customers, diverse products and services, experienced, dedicated, creative and professional staff Therefore, the company always develops customer research to provide the most reasonable suggestions The organization can ensure the investment portfolio matches the investor's risk tolerance and financial goals Once the organization has a grasp of the investor's wishes, it reviews the portfolio and makes adjustments as necessary to keep it in line with the evolving financial situation and goals From there, Businesses can create investor confidence and improve their reputation as well as increase profits.
Research questions
A primary research question in the research created based on objectives:
What are the impacts of risk profile, asset familiarity and investment objective on investment portfolio selection decisions of individual investors in the Vietnamese market?
Based on the primary question, the three secondary questions:
How the risk profile affect to investor behaviour in investment portfolio decisions?
To what extent does asset familiarity affect individual investors' portfolio choices?
What is the relationship between investment objective and individual investor portfolio choices?
Scope
The scope of the research is to find out the wishes of customers at 3 securities company which is VPS, SSI and Rong Viet Securities The research will focus on institutional practices regarding clients' portfolio selection trends as well as the factors that lead them to choose to invest in that portfolio However, because the number of employees of the company is spread across many branches around Viet Nam, this study only collects data from investor at branches in Hanoi.
Research ethics
The first problem is about data storage and security The researcher will keep all information pertaining to the organisation and study participants on a USB device, which will be password protected This measure is implemented to safeguard the confidentiality of sensitive information pertaining to the company and responders Moreover, it can effectively safeguard against unauthorised access to sensitive information, thus mitigating potential detrimental consequences for both the organisation and respondents
Another problem that a researcher might run into is getting informed consent If researcher want to do a survey with the right group of people who meet your study criteria, they will need the permission of a moderator, which can slow down your data collection To deal with this, the study was done with a senior manager who was a friend Hence, researchers will have more chances and benefits to get the information they need and survey the right people Researchers may also have trouble sending in their reports The submission form for the study paper could have problems, such as no cover page, no bookmarks, no table of contents, etc In this case, the researcher will need to keep the lecturer's orders up-to-date so that no requirements are missed and the research paper is better.
Limitations
Even though this study paper is put together after looking at a lot of sources, it has a flaw in that researchers sometimes get information from anonymous sources, which means that the information can't be checked for accuracy Researchers can avoid this problem by using reputable sources such as Google Scholar, Essential Health Links, and Research Gate The research will have more exact and trustworthy information, which will increase the value of the research Furthermore, the research is subject to limitations in terms of time, expense, and participant availability, as it is limited to the geographical scope of Hanoi Therefore, it is imperative to do additional research that encompasses a broader perspective on the selection of investment portfolios by individual investors.
LITERATURE REVIEW
Theoretical background
According to Azwadi (2011), investors measure risk based on the volatility of earnings, which includes standard deviation and beta, whereas returns can be measured based on historical earnings such as dividends and capital appreciation A rational investors have the ability to accurately measure risk and return and make investment decisions that yield great returns Nearly every type of investment has some kind of risk or uncertainty There is a link between the level of projected return and the amount of risk If investors want a high return, they must be ready to deal with a high level of uncertainty about that return
Nosic & Weber (2010) indicate that an individual's risk-taking behaviour when investing is affected by how they feel about risk (risk attitude), how they see risk (risk tolerance), and what they hope to get back (return expectations) Also, imperfections in behaviour like overconfidence and overoptimism have a big effect on risky behaviour Through a robust pattern of relative risk reduction malevolence, Seetharaman et al (2017) and Nur Aini & Lutfi (2019) demonstrated that investors tend to invest in high-risk assets when they have more wealth
Risk attitude refers to the extent to which an investor is willing to assume risk in the process of selecting assets in order to achieve their desired savings objective (Charness, Gary & Uri Gneezy 2010; Seetharaman et al., 2017) During the initial consultation, a financial adviser often engages in a discussion with the investor to ascertain their requirements and afterwards provide suitable investment recommendations (Haider, 2016; Buraschi, Porchia & Trojani, 2010 ) Every each investor will own their own unique level of risk tolerance Certain investors exhibit a willingness to assume a heightened degree of risk in pursuit of larger development prospects Conversely, there exist individuals who have concerns regarding prospective financial losses and hence choose to allocate their investments towards assets with lower risk profiles (Seetharaman et al., 2017) Most investors typically fall within a middle ground, recognising that in order to achieve growth on their investments, they must assume a certain degree of risk while making investing decisions
Risk tolerance is an individual's willingness to take investment risks It also refers to a person's response to and actions regarding investment risks According to Wulandari & Iramani (2014) and Daniela & Laura (2011), it is possible for investors to enjoy risk, avoid risk, or to be indifferent to risk Hence, investors can be categorised as risk-seeker, risk-neutral, or risk-averse Risk tolerance is a crucial factor in comprehending the extent of risk associated with investments and facilitating an individual's ability to endure and align existing risks with their investment objectives (Muga and Santamaría, 2007; Marwaha and Arora, 2017) By ensuring that the level of risk one is willing to assume is congruent with the anticipated future rate of return, risk tolerance aids in achieving a harmonious balance
Risk perception refers to an individual's cognitive process of interpreting and evaluating risks, which may deviate from objective estimations or factual reality Christelis, Jappelli & Padula
(2008) defined risk perception is a cognitive bias component According to Simon et al (2000) & Azwadi, (2011), there is an inverse relationship between the level of bias exhibited in an individual's behaviour and their perception of danger The impact of risk perception is significant in shaping human behaviour, particularly in the context of decision-making in conditions of uncertainty (Seetharaman et al., 2017; Forlani & Mullins, 2000) Investors commonly perceive a scenario as dangerous when they encounter a financial loss resulting from a poor judgement, particularly if that loss significantly affects their financial standing
Each group of investment assets has similar characteristics and is subject to the same laws and regulations As a result, asset classes are made up of instruments that often behave similarly to each other across markets (Bogan & Fertig, 2012; Lusardi and Mitchell, 2014) There are defensive assets such as gold, money, residential real estate or growth investment assets, venture capital such as stocks, cryptocurrencies, real estate Each type of investment asset will have a certain profit potential as well as a certain level of risk According to Cruciani (2017), financial advisors often advise investors to diversify their investment portfolio according to investment asset classes, depending on the market situation to make appropriate structural adjustments to increase the probability of profit and risk reduction Specifically, when the market has many negative fluctuations, investors will tend to prioritize defensive asset classes such as: Money, gold, defensive stocks
According to Sahi, Arora, and Dhameja (2013), individuals have a tendency to develop a pronounced preference for specific assets only due to their familiarity with these investments This phenomenon engenders a perception of heightened knowledge or expertise in financial items, hence fostering a sense of reassurance and confidence In a study conducted by Frijns, Koellen, and Lehnert (2006), it was observed that there was a lack of conclusive data on the impact of asset familiarity on investors' investment behaviour and portfolio choices
According to Seetharaman et al., (2017) and Timothy (2012) , financial literacy refers to the acquisition and understanding of information and skills necessary for individuals to make informed and prudent decisions regarding their financial resources This encompasses the process of creating a financial plan, determining the appropriate amount to save, evaluating advantageous lending conditions, comprehending the effects on credit, and discerning various retirement investment options (Sun, et al 2021; Bogan & Fertig, 2012) It competencies assist individuals in making better informed decisions and exhibiting greater responsibility in managing their personal finances
By acquiring precise financial knowledge, investors can enhance their comprehension of effectively allocating their earnings, managing expenditures, engaging in investing activities, and effectively managing debts Conversely, it is challenging to establish personal immunity against the adverse effects of inflation, fraudulent transactions, and market instability Therefore, acquiring financial literacy also entails safeguarding oneself from economic catastrophes
There are a number of popular investment products that investors may come across as they pursue an investing career such as stocks, bonds, mutual funds, and Exchange Traded Funds (ETFs) The reason these portfolios are familiar is because their information is widespread and investors can track their movements (Chang, & Luo, 2009; Seetharaman et al., 2017) In particular, bonds can be considered as the financial counterpart to a significant component of an investment portfolio The absence of bonds may lead numerous individual investors to perceive their investment strategy as lacking a well-rounded composition.These securities are traded in large quantities, however small investors and readers frequently seek fundamental information about them, often after already investing their funds It is evident that bonds are favoured by small investors, who constitute the predominant demographic among mutual fund users However, it is equally apparent that certain investors are experiencing a state of perplexity, as they properly assume that financial instruments such as "guaranteed bonds" and "high income bonds" are indeed classified as bonds
The investment objective entails the formulation and implementation of strategies and measures aimed at attaining predetermined goals in the context of investment activities The evaluation of investment operations is determined by their level of advancement and capacity to attain objectives, rather than solely focusing on outperforming the market or maximising financial gains
Markowitz (1952) defined investment objective encompass the distinct financial aspirations and desired outcomes that investors strive to attain through their investment endeavours These objectives provide investors with a framework to make informed decisions regarding capital allocation, investment portfolio construction, and selection of investment techniques (Haider, 2016; Chiu, 2018) The impact of investment objectives on portfolio selection is significant, as varying objectives need unique techniques to constructing portfolios
Moreover, the investment aim can be understood as an investment product that is implemented by a securities company, wherein a robust investment plan is established to effectively pursue particular future financial goals on behalf of consumers (Sun et al., 2021; Chiu, 2018 ) The investment objective refers to the specific financial goal or target that an investor aims to achieve wherein the responses provided by the client will ascertain their level of risk tolerance and investment time horizon As clients experience significant life events such as marriage, retirement, home purchases, and changes in income, their financial objectives may undergo modifications In response, the portfolio manager will undertake a reassessment of the clients' investment goals and, if deemed appropriate, make adjustments to rebalance their investment portfolio
Income is an amount of money usually calculated as money that an individual, business or an economy receives in a certain period of time from a certain job, service or activity According to World Bank (2023), there are 4 income groups: low, lower-middle, upper-middle, and high income Investors will have a choice of portfolios depending on their income level to limit risks and optimize profits.The relationship between investment, income, and interest rates is commonly represented in economic models: I = f(Y, r) , where I represents investment, Y represents income, and r represents interest rates (Aini and Lutfi, 2019) In this model, interest rates have a negative impact on investment as they represent the cost of obtaining funds for purchasing investment goods On the other hand, income has a positive effect on investment as higher income indicates greater potential for selling goods produced by physical capital
Life-cycle investing is a financial planning methodology that places significant emphasis on the customization of investment strategies to align with an individual's evolving requirements and objectives over the course of their lifespan (Seetharaman et al., 2017; Shah et al., 2011) The objective of this method is to achieve a harmonious equilibrium between risk and return, with a focus on attaining long-term financial goals, such as retirement planning, wealth accumulation, and asset preservation Kaur & Vohra (2012) argue that the implementation of a meticulously planned life-cycle investment strategy can effectively assist individuals in the management of their financial resources, facilitating the attainment of their financial objectives and the preservation of financial equilibrium during various phases of life Life-cycle investing offers a complete framework for making well-informed financial decisions by taking into account several criteria, including age, risk tolerance, and investment horizon Additionally, Sun, et al (2021) describe the aforementioned cycle serves as a framework for comprehending the distinct phases involved in the process of investment decision making The proposed approach suggests the implementation of a sequential process to better the outcomes and improve the overall quality of both current and future investments It serve the purpose of informing future plans and projects, as well as facilitating their expansion
Hypotheses development
2.2.1 Risk profile and Portfolio’s choice of individual investor
Siebenmorgen and Weber (2004) explored how investment horizon affects risk perception, projected returns, and portfolio selection They discovered that people had different views of short- term and long-term risk, and so their willingness to assume short-term and total long-term portfolio risk varies Portfolios of investors with above-average risk profiles have greater exposure to hazardous investments (Hoffmann et al., 2010) It is evident from the findings of Pandit and Yeoh
(2014) that the greater an investor's risk propensity, the less likely they are to delay purchases of shares or investments
The decision-making process of investors in selecting investment alternatives is influenced by their level of risk tolerance (Pak and Mahmood, 2015; Snelbecker, Roszkowski, and Cutler, 1990) Due to unobservability and lack of confidence, Orerler and Taşpnar (2006) state that investors have a lower risk tolerance for new portfolios For well-known portfolios, investors are willing to increase their risk tolerance and wager more Ability to tolerate potential risks as determined by consultations with affected parties or the responses of investors to changes in risk exposure The level of risk tolerance is subject to potential fluctuations over time due to the acquisition of new information, the emergence of novel outcomes, and the evolution of society expectations (Evans, 2004; Azwadi, 2011) Investors consider risk tolerance as a prerequisite in structuring their investment portfolio Nevertheless, individuals with a high propensity for risk when nearing retirement age do not exhibit a tendency to decrease their allocation of low-risk assets, such as bonds, in favour of high-risk assets, such as stocks (Cohen, Gil & Kudryavtsev, 2012; Hariharan et al., 2000)
The observed correlation between risk and return expectations can be attributed to the influence of capital increments on investors' perceptions of overall returns According to Hariharan, Chapman, and Domian (2000) and Buraschi, Porchia & Trojani (2010), individuals tend to allocate their finances to low-risk assets and avoid high-risk assets to a greater extent when they perceive a higher level of risk According to previous research conducted by Aren and Zengin (2016) and Keller and Siegrist (2006), individuals who possess a reduced perception of risk are more inclined to opt for high-risk equities as opposed to low-risk deposits The trade-off faced by investors, wherein they seek higher returns in exchange for assuming a certain level of risk, contributes to an increased demand for assets with higher risk profiles
Hypothesis 1: There is a significant relationship between risk profile and Portfolio’s choice of individual investor
2.2.2 Asset familarity and Portfolio’s choice of individual investor
The extent of financial literacy and investment knowledge possessed by individual investors is an additional significant factor influencing their portfolio decisions (Lusardi and Mitchell, 2014; Timothy, 2012) Investors who possess a greater comprehension of financial markets and investment instruments are more inclined to align their portfolios with their objectives and make well-informed decisions According to Hibbert, Lawrence, and Prakash (2012) and Tesar & Werner (1995)., individuals with a higher level of financial knowledge are more inclined to allocate a significant portion of their investments in an efficient manner Finance professors exhibit a higher propensity to engage in overseas stock and bond investments, as well as foreign mutual funds Additionally, they demonstrate a greater inclination towards actively managing their retirement savings portfolios However, Lusardi & Mitchell (2007) and Chang & Luo (2009) show that it was discovered that a significant number of individuals possess insufficient financial knowledge, resulting in less than ideal investment choices Hackethal et al (2012) also highlights the significance of financial guidance in assisting individuals in making informed decisions regarding their investment portfolios, particularly for individuals with less financial knowledge In addition, Foad (2010) made a point that familiarity bias has multiple explanations Investors fail to appropriately appraise the risk of firm stock, according to behavioural theories, partly due to overconfidence in anticipating the returns of familiar assets and a preference for local assets to prevent disappointment Furthermore, Sahi, Arora, and Dhameja (2013) insists that individuals develop a strong preference for certain investments simply because they are familiar with them
Hypothesis 2: Asset familarity has a positive effect to Portfolio’s choice of individual investor
2.2.3 Investment objective and Portfolio’s choice of individual investor
In a study conducted by Praba (2011), the primary purpose was to examine the relationship between individuals' saving objectives and their choice of investment channel The primary saving objectives of investors are commonly identified as wealth maximisation, contingency management, and the wellbeing of their children Various criteria, such as age, gender, occupation, and annual income, contribute to the determination of people' investment objectives In their study, Jain and Mandot (2012) and Chiu (2018) conducted an investigation into the influence of demographic variables on the investment choices made by investors in Rajasthan Their findings suggested that a variety of demographic parameters, such as age, gender, income level, market awareness, and educational qualifications, have a substantial influence on investors' investment decision-making processes
The investment objectives of an individual investor play a crucial role in determining their portfolio decision Risk tolerance has a direct relationship to these objectives The fundamental principle of Modern Portfolio Theory (MPT) is the importance of aligning investment portfolios with the risk- return preferences of investors, as highlighted by Markowitz in 1952 Empirical research conducted by Barber and Odean (2000) as well as Benartzi and Thaler (1995) has demonstrated that individuals with distinct investment objectives display divergent levels of risk tolerance, thus leading to disparate portfolio selections
According to Veld-Merkoulova (2009), there is a positive correlation between longer investment horizons and the proportion of risky financial investments, irrespective of the investors' age Fagereng, Gottlieb, and Guiso (2015) in Norway argued it was observed that individuals tend to engage in stock market participation from a very young age, coinciding with the accumulation of assets and a higher allocation of their wealth towards stock investments As individuals near the stage of retirement, they engage in the process of portfolio adjustment, gradually diminishing its composition The research conducted by Shah, Zanwar, and Deshmukh (2011) reveals a notable correlation between the various periods of the lifecycle and aspects such as investment avenues, investment objectives, sources of information, and guiding factors in investment decision-making According to Maheswari (2014), a notable association exists between the age of an investor and their engagement in financial planning activities The influence of age on investment objectives and subsequent portfolio decisions is of considerable importance According to Ibbotson et al
(2007), individuals who are younger and have longer investment horizons tend to exhibit a greater propensity to assume elevated levels of risk in their pursuit of achieving larger investment returns
On the other hand, elderly investors who are nearing retirement place a higher importance on the preservation of their money and the generating of income (Bajtelsmit et al., 1999) The temporal dimension has a significant influence on the decision-making process regarding asset allocation within investment portfolios
Hypothesis 3: There is a significant relationship between investment objective and Portfolio’s choice of individual investor
Investor behaviour encompasses psychological and affective elements that impact the decision- making process of individuals when engaging in investment activities (Cruciani, 2017; Enriques & Romano, 2021) These variables possess the potential to exert a substantial influence on the composition and efficacy of an investor's portfolio
There exists a longstanding idea that human beings possess rationality and engage in thorough analysis prior to making investments (Barber & Odean, 2008; David, 2012) In actuality, researchers persistently demonstrate that human beings exhibit irrational behaviour and rely on intuition, emotions, and other subjective factors rather than conducting thorough investigation In recent times, there has been a notable surge in the recognition among individuals regarding the importance of prudent financial saving and investment practises As an illustration, individuals in Uganda have adopted commendable practises, such as engaging in collective savings, and making investments in financial instruments like government securities and mutual funds It is noteworthy to observe that the National Social Security Fund (NSSF) has a voluntary membership base over 20,000 individuals, indicating a positive trend in the development of a savings culture inside Uganda (Seetharaman et al., 2017; Baranova, Douglas & Silvestri, 2019) When individuals make independent financial decisions, they often lack the expertise and professional guidance necessary to inform their choices Hence, it is crucial for individuals to possess an understanding of the various variables that shape their decision-making processes, particularly the subtle factors that contribute to behavioural biases, often resulting in suboptimal choices
According to Thaler (1999) and Markowitz (1952), the behaviour of investors is influenced not only by their risk profiles but also plays a role in moderating the association between risk profile framing effects exert a significant influence on investors' risk perception, thereby impacting their asset allocation decisions, which are contingent upon the manner in which choices are presented (Christelis, Jappelli & Padula, 2008) Additionally, the categorization of investor risk profiles into risk-averse, risk-neutral, or risk-seeking categories has been well recognised in the literature (Benartzi & Thaler, 1995; Buraschi, Porchia & Trojani, 2010; Bogan & Fertig, 2012) These profiles have been found to significantly influence the process of portfolio selection Barber and Odean (2001) posit that investors who exhibit risk aversion tend to display a preference for safer assets, such as bonds, whereas investors who exhibit risk-seeking behaviour tend to be drawn towards riskier assets, such as equities
In addition, Peteros and Maleyeff (2013) and Baker & Ricciardi (2014) give evident that investors' portfolios exhibit underperformance as a result of decision-making that is influenced by biases Taking action merely based on recent financial gains is ineffective in all instances In a study conducted by Mohamed, Hachicha, and Bouri (2012), it was shown that the mean-variance theory, originally proposed by Markowitz (1952), supports the notion that investors exhibit rational behaviour by seeking to maximise their utility function Nevertheless, the advent of behavioural finance has necessitated the incorporation of other elements, such as the psychological aspects of investors (Kahneman and Tversky, 1979), into the realm of portfolio management The present idea, grounded in the study of behavioural elements, posits that the decision-making process of investors is influenced by psychology and emotions, which are intricately connected within their cognitive schema (Christelis, Jappelli & Padula 2008; David, 2012) The findings of their study indicated the presence of complementarities between the rational and behavioural theories of portfolio choice This is evident in the average cognitive map, which encompasses both technical notions and other behavioural concepts The researchers employed the mean-variance technique and posited that people' behaviour would be influenced by their emotional and psychological states Numerous cognitive biases, including the familiarity bias as identified by Tversky and Kahneman
(1974), provide empirical evidence supporting the influence of asset familiarity on investing decision-making Investors frequently demonstrate a tendency towards overconfidence when it comes to assets that they are familiar with, resulting in the manifestation of biassed portfolio selections
The relationship between investing objectives and portfolio decisions is mediated by investor behaviour Research has demonstrated that psychological factors have a significant role in shaping investors' interpretation and response to their investing goals, resulting in decision-making that may deviate from their original aims An empirical study conducted by Barber and Odean (2001) and Baranova, Douglas & Silvestri (2019) revealed that individual investors had a tendency to engage in excessive trading, resulting in inferior portfolio outcomes Investment objectives play a crucial role in shaping an investor's decision-making process Markowitz's key contribution to portfolio theory in 1952 posits that investors strive to optimise their investment portfolios by maximising expected returns while simultaneously minimising risk However, these aims can exhibit significant variation across individuals Certain investors place a higher emphasis on the preservation of assets, whereas others prioritise the pursuit of aggressive capital growth
Hypothesis 4(a): Investor behaviour has a positive impact on Portfolio’s choice of individual investor
Hypothesis 4(b): Investor behaviour mediates the relationship between risk profile and Portfolio’s choice of individual investor
Hypothesis 4(c): Investor behaviour mediates the relationship between asset familarity and Portfolio’s choice of individual investor
Hypothesis 4(d): Investor behaviour mediates the relationship between investment objective and Portfolio’s choice of individual investor.
Research model
This model is constructed using two primary studies conducted by Seetharaman et al (2017) to identify the components of the reward system, which encompass performance bonuses, recognition programmes, and promotion opportunities Additionally, the factors influencing motivation and job satisfaction, which impact the performance of talented employees, were derived from the research conducted by Martono et al (2018) Both of these studies highlighted the impact of the compensation system on the performance of talented individuals in a general sense
Portfolio’s choice of individual investor
METHODOLOGY
Research philosophy
Saunders et al., (2007) defined that research philosophy shows how data are gathered, analyzed, and used in a scientific and organized way when doing research on a topic Some common and basic research philosophies are positivism, interpretivism, and pragmatism Each can have different
Positivism is also used in this study because the opinions given are based on facts and not on the researcher's own feelings This philosophy said that experimental study was the only way to learn something (Silverman, 2013) Researchers are given study questions and hypotheses to test and analyze based on what they see Every topic that is measured and described must have a position, or it will be rejected (Bryman, 2012)
This kind of philosophy makes it easier and cheaper to collect data and makes it easy to compare data It also gives researchers a good place to start their study (Purnamasari, 2016) But when it comes to getting results, being rigid can be bad Every choice is based on the choice made before it and must be made step by step Also, researchers have a hard time if they don't fully understand the thing they are studying, which makes it hard for them to measure data (Dutton, 2005).
Research approach
A research approach is a method of examining a problem or beginning to solve it (Singh, 2015) It consists of a deduction approach beginning with theory and verifying it in the real world through testing and validating the hypothesis After the development of empirical research theories, the induction method is frequently employed, and practice commences (Bloomberg, 2008)
This study utilized the deduction method because it was based on theory, specifically innovation through competency development, and validated by quantitative research Quantitative research emphasizes on numerical data, beginning with fundamental theory and advancing through testing hypotheses (Silverman, 2013) Testing hypotheses will determine whether research is accepted or rejected (Saunders et al., 2007).
Research strategy
The research strategy illustrates how researchers intend to conduct the work(Saunders et al., 2007)
A researcher can readily conduct experimental research, case studies, interviews, surveys, and literature reviews, among other methods This research collects and verifies data via survey (Bell,
2011) An online survey using Google Forms will be conducted to facilitate the collection of data from participants Furthermore, the researchers will establish contact with the responders via email with the purpose of extending an invitation to participate in the survey Conducting surveys online offers several advantages, including time efficiency and cost-effectiveness for both researchers and respondents Additionally, respondents experience reduced pressure when responding to surveys, making the online survey method more convenient compared to interviews The survey sampled a representative portion of the population in order to theoretically assess and observe variables between various data Moreover, this strategy enables the collection of voluminous data; thus, a researcher will have access to a source of data collection that is richer and more objective (Bryman,
Sampling method
This study used the self-selection sampling method, a form of non-probability sampling method The utilisation of self-selection sample approach enables researchers to conduct surveys on specific individuals or organisations of interest (Glen, 2015) Using this approach, scholars will establish the survey instrument and extend invitations to individuals within a certain organisation to participate The participants will willingly participate in the research of their own volition and will not have direct contact with the researcher (Laerd, 2012) This sampling method can effectively streamline the process of selecting appropriate study subjects based on specific requirements, hence optimising time management for researchers Furthermore, as participants in research, respondents exhibit a willingness to actively engage by providing comprehensive responses and offering accurate information (Davis, 2005).
Method limitation
The philosophical underpinning of research is rooted in positivism, which emphasises the need of obtaining quantitative outcomes that can be subjected to statistical analysis The aforementioned restrictions can be characterised as predominantly deductive, whereas inductive analysis is typically associated with the philosophy of phenomenology Positivism encompasses the concept that academics should prioritise the study of objective reality, while phenomenology emphasises the exploration of subjective meaning and human experiences (Davis, 2005) When employing positivism as a research approach, researchers have the potential to maintain absolute objectivity and independence from their investigation Regardless, the research conducted is solely independent and all evaluations are grounded solely on factual evidence, taking into account the external world (Jawale, 2012).
Sample size
The sample size in this study refers to the number of individuals included in the research, categorised by age, gender, or physical location (Desu, 2012) The determination of the sample size is influenced by various factors such as the desired level of precision, dependability, response rate, and the specific target population The sample size will be determined by the researcher using an online sample size calculator This study utilised a sample size of 322 individuals investor at
Vietnam The sample size was determined based on a population of 1950 investors who receive securities consulting services from Securities Company The study employed a 95% confidence level, a 5% margin of error, and a population percentage of 50% Furthermore, it is imperative for researchers to have a well-defined strategy for determining the appropriate sample size, as an excessively large sample can result in resource inefficiencies (Siersma, 2016) Insufficient sample size can impede the researcher's ability to obtain comprehensive information, resulting in equivocal findings Consequently, the researcher is compelled to exercise increased vigilance.
Time horizon
Time horizon is used to describe how long it will take to finish the research It can be either cross- sectional or longitudinal (Bryman, 2012) Goddard and Melville (2004) say that a longitudinal study is the best choice if the goal of the study is to collect a lot of data at different times This is because a longitudinal study can be changed as information changes over time If the researcher wants to look at a certain time period, they will use cross-sectional With this kind of time frame, the attention won't be on how things change, but on how they are now (Armstrong, 2001) This study used a cross-sectional method because it was done quickly and its goal was to test a certain problem at a certain time.
Variable definition
This study comprises three categories of variables: 3 independent variable (risk profile, asset familarity, investment objective), 1 mediating variables (investor behaviour), and 1 dependent variable (Portfolio’s choice of individual investor)
Variables Types Items Measurement Sources
Investment objective Independent 5 Sajuyigbe et al.,
Investor behaviour Mediating 6 Nur Aini & Lutfi,
2019 Portfolio’s choice of individual investor Dependent 3
Descriptive analytics
The researcher used descriptive analytics in order to evaluate and analyse the raw data Descriptive analysis employs a substantial volume of data in order to offer a precise and comprehensive summary of the hypothesis (Wang, 2019) The efficacy metrics can be utilised to assess the strengths and weaknesses of the data, hence enabling the acceptance or rejection of the hypothesis According to Hindle (2018) and Hoeks (2013), a descriptive analysis is conducted to determine the average value of a dataset using the mean, as well as identifying the most frequently occurring value using the mode Furthermore, empirical investigations have the capability to analyse data by examining several statistical measures such as mean, median, min, max, skewness, and kurtosis
In this study, the data collected through surveys was measured and analysed by Smart PLS and structural equation modelling (SEM) Smart PLS is a software tool designed to aid researchers in constructing structured equations using the partial least squares (PLS) method (Hair, Ringle, and Sarstedt (2011) Accordingly, the utilisation of structural equation modelling facilitates the examination and evaluation of the hypothesised relationships within a statistical model This system comprises factor analysis and multiple regression techniques, which are employed to examine the association between measurement variables and latent components One of the advantages of this approach is its ability to effectively illustrate the interconnections among data within a singular investigation Furthermore, the coefficient of determination, commonly referred regression model explain the variability observed in the dependent variable (Gelman, Goodrich, Gabry, & Vehtari, 2019) The researcher will opt for an intermediate threshold of 0.5 in order to discern strong or weak interpretations A value ranging from 0.5 to 1 indicates a good model, while a value less than 0.5 signifies a bad model (Irandoukht, 2021) However, in certain research contexts and with specific data types, it is not always necessary for the regression model to possess a corrected R-squared value exceeding 0.5 in order to be considered significant
According to Robson (2010), Reliability refers to the enduring stability observed throughout a specific time period The validity of a study is a reliable indicator of the consistency and accuracy of the measuring toolbox employed (Mehrens & Lehman, 2015) In the Smart PLS, researchers are able to assess the reliability of their data through many methods One such method is by examining the Outer loading values, which indicate the strength of the relationships between the observed indicators and the latent constructs Additionally, researchers may utilise the Cronbach's Alpha statistic, which can be visualised through a histogram, to evaluate the internal consistency of the measurement items Another measure of reliability that can be obtained is the composite reliability, which provides an indication of the overall reliability of the measurement model If the reliability value is more than 0, a value of 7 will be more significant There exist two distinct forms of validity, namely convergent and discriminant validity The HTMT coefficient greater than 0.9, indicating a lack of discriminant validity between the two concepts Convergence will be assessed using Average Variance Extracted (AVE), which should higher than 0.5 in order to achieve the established criteria Researchers can assess discriminant validity using the heterotrait-monotrait ratio of correlations (HTMT) In order to establish discriminant validity, the value obtained from HTMT should be significantly different from 1 Ideally, a value that lower than 1 is preferred There are also have Path coefficient, which is a statistical measure that indicates the potential linkages between research concepts In order to establish statistical significance, the associated P- value should be lower than 0.05.
FINDINGS
Data analysis
The mean value of risk profile in Rong Viet Securities ranged within the range of 3.7 to 3.9 This indicates that a majority of participants expressed agreement or strong agreement (rating 4 or 5) when evaluating the effectiveness of the risk Furthermore, the mode value for a set of 4 items is determined to be 4, indicating agreement This implies that option 4 (agree) is the most commonly chosen response among survey participants
In relation to the Standard Deviation, the range of values for the five items was seen to be between 0.9 and 1.1, indicating a limited degree of dispersion among the values Furthermore, the maximum for these items is 5, whilst the minimum is 1
The kurtosis of 4 factors was found to be less than 3, suggesting that the values associated with these variables exhibit a normal distribution Additionally, the negative skewness values indicate that the dataset for the 4 items has a larger tail on the left side, with the majority of values concentrated on the right side This suggests that a significant proportion of respondents selected options 4 or 5 in relation to risk profile
Table 1: Descriptive analysis of Risk profile
It is clearly that the mean of value for 5 factors is approximately 3.8, thus respondents are tended to select the option 4 and 5 (agree and strongly agree) about the asset familarity of Rong Viet Securities, and the most selected option among participants is 4 (agree) based on the mode value Also, the maximum value of all factors is 5 which is strongly agree, but there are some respondents still strongly disagreed because of the appearance of minimum value of 1 (strongly disagree) for these five factors
For the distribution, the value of kurtosis for all factors is lower than 3, showing a normal distribution for data of five factors Furthermore, the skewness value for 5 items is negative, which mean data tends to be tilted to the right side which will be shown by the below histogram, hence most of respondents selected option of 3,4 or 5 (neutral, agree and strongly agree) for items of asset familarity
Table 2: Descriptive analysis of Asset familarity
AF1 AF2 AF3 AF4 AF5
In a similar vein to the variables of RP and AF, the mean value for the IO variable indicates that the majority of participants tend to select either option 4 (agree) or option 5 (strongly agree) The average value for the 5 items is approximately 3.5 to 3.7, with option 3 (neutral) being the more favoured choice based on the mode value Furthermore, it should be noted that the maximum rating for a set of 5 items is 5, which corresponds to a "strongly agree" response Conversely, the minimum rating is 1, indicating a "strongly disagree" response
The kurtosis and skewness of this variable exhibit similar characteristics to those of the RP and
AF variables This observation can be attributed, in part, to the fact that the kurtosis value for the
5 items of the IO variable is less than 3 This value suggests that the dataset follows a normal distribution, characterised by neither excessive width nor narrowness In addition, it is worth noting that the skewness value is negative, indicating that the dataset consisting of five items exhibits a longer tail on the left side
Table 3: Descriptive analysis of Investment objective
IO1 IO2 IO3 IO4 IO5
The majority of participants indicated their agreement with options 4 and 5 (agree and strongly agree), particularly option 4, in relation to the investor behaviour variable This is evident from the mean value from 3.6 to 3.9 and the mode value of 4 The minimum and maximum with values of
1 and 5, respectively There remains a subset of responders who hold a firm stance of strong disagreement
In relation to the distribution of the dataset, it can be observed that the kurtosis value for the 6 items varied between 0.1 and 1.1 Notably, these values remain below the threshold of 3, indicating that the distribution of the dataset for the five items may be considered as normal Furthermore, it is probable that the IB variable representing the value of 6 items will have a rightward tilt, as indicated by the negative skewness values for all the items
Table 4: Descriptive analysis of investor behaviour
IB1 IB2 IB3 IB4 IB5 IB6
Portfolio’choice of individual investors
In essence, the mean value of the CPI variable for 3 items predominantly fell within the approximately 3.7 This indicates that a greater number of respondents selected the options 4 and 5 (agree and strongly agree), particularly opting for option 4 based on the mode value (4), compared to those who chose option 1 or 2 (strongly disagree and disagree)
The approximate value of the standard deviation for the dataset is 1, as determined by the analysis of 3 components The distribution of values for all factors in the PCI variable has a narrow dispersion, with a concentration around a central point Additionally, the maximum value for items in the PCI variable is comparable to that of other variables, as it is equal to 5
In the interim, there exist disparities in the minimal value The minimum value of elements PCI1, PCI2 and PCI3 is 1
Table 5: Descriptive analysis of Portfolio’s choice of individual investor
According to Hair et al (2017), a greater value of outer loadings in the reflective measurement model indicates a better evaluation of the reliability of items inside the model It is recommended that the value of outer loadings should be higher than 0.7 The results indicate that the outer loading values in the model are predominantly over 0.7, suggesting that the majority of items in the model demonstrate excellent reliability
AF IB IO PCI RP
In assessing the Internal Consistency Reliability, several indicators will be evaluated, namely Cronbach's Alpha, Composite Reliability, and Average Variance Extracted (AVE) These indicators will be analysed as outlined below
Cronbach's Alpha serves as a metric for assessing the reliability and validity of latent variables within a model, with a recommended threshold of 0.7 or higher It is evident that the Cronbach's Alpha coefficients for the five variables in the model above the threshold of 0.7 All values were higher than 0.7 to ensure reliability of data This finding demonstrates that the researcher's constructed survey allows for precise measurement of all variables
The composite reliability is an additional metric employed to assess the internal consistency dependability It serves as an alternative to Cronbach's Alpha, offering a more dependable measure for evaluating convergent validity The coefficient mentioned in this context is derived from the computation proposed by Wong (2011), which relies on the distinct outer loadings seen among latent variables Furthermore, to mitigate the issue of indicator redundancy, it is imperative that the composite reliability value falls between the range of 0.7 to 0.9 It is evident that the values for all
According to Hair et al (2017), a research idea can be considered to account for more than half of the variation of observed variables if its Average variation Extracted (AVE) value is 0.5 or above AVE shown convergent validity of data and values should be higher than 0.5 to achieved validity The average variance extracted (AVE) values for the five variables in the model ranged from 0.560 to 0.631, indicating that it satisfied the specified criterion The findings suggest that the construct accounts for a significant proportion of the variations seen in more than half of its items
DISCUSSION
The relationship between risk profile and Portfolio’s choice of individual investor
The findings revealed Hypothesis 1 that there is no significant association between these two variables, as evidenced by the p-value of 0.820 (>0.05) Consequently, the hypothesis was rejected However, these findings present a contrasting perspective as evidenced by other studies conducted by Joao (2010), Schuler (2011), Mensah (2015), and Nonhlanhla et al (2015) The potential reason for this outcome may be attributed to the utilisation of self-selection sampling method by the researcher, wherein participants were invited to participate on a voluntary basis In particular, the organisation now has a rather low proportion of investor with over 40 years of age, and it is possible that their perspectives may offer a more thorough understanding.
The relationship between asset familarity and Portfolio’s choice of individual investor
Hypothesis 2 examined the correlation between Asset familarity and Portfolio’s choice of individual investor Nevertheless, the outcome of the analysis demonstrated that the aforementioned hypothesis was refuted, as evidenced by the p-value of 0.943, surpassing the significance level of 0.05 Although there are certain benefits associated with asset familiarity, such as a decrease in perceived risk, it may not necessarily be the most optimal criterion for individual investors when making investment decisions.There has been debate in previous studies regarding the association between these variables, perhaps resulting in conflicting viewpoints According to the findings of Sajuyigbe et al (2013), researchers have provided evidence to suggest although the state of being familiar with something may offer individuals a sense of psychological comfort, it is important to acknowledge that this familiarity can also lead to the development of cognitive biases and a decrease in overall performance The correlation between the level of familiarity with assets, the extent of investor education, and the degree of experience highlights the significance of financial literacy and the involvement of financial advisors in facilitating informed decision- making among investors Additional investigation is required to examine the intricate impacts of asset familiarity on diverse categories of investors and under diverse market circumstances, ultimately offering significant insights for both professionals and regulators in the finance domain.
The relationship between investment objective and Portfolio’s choice of individual investor 35 5.4 Investor behaviour as mediator
Hypothesis 3 also rejected due to the findings is 0.106 (>0.05), which mean that there is no relationship between investment objective and portfolio’s choice of individual investor According to the study of Frijns, Koellen and Lehnert (2006), they did not find any clear evidence on the influence of asset knowledge on investors' investment behavior and their portfolio choices This result contrasts with a previous finding by Barber and Odean (2001), which showed that financial knowledge or understanding of a specific investment product has a significant impact on investor behavior investments and they are more likely to invest in those products or assets
It can be seen that investor behavior plays an important role in the relationship of risk profile, asset familarity, investment behavior with portforlio's choice of individual investor H4(a), H4(b), H4(c) and H4(d) are accepted according to the results 0.000, which lower than 0.05
H4(a): Investor behavior plays a critical role in the portfolio choice of individual investors It encompasses the psychological and emotional factors that influence how investors make decisions regarding their investments (Dorny, Daniel & Hubermanz, 2005) Understanding one's own behavior and biases is essential for making informed investment decisions that align with their objectives and risk tolerance, ultimately leading to better long-term financial outcomes Moreover, seeking advice from financial professionals who can provide guidance and help mitigate behavioral biases can also be beneficial for individual investors
H4(b): Shiller (2000) delves into the significance of behavioural finance in comprehending the behaviour of investors amidst market crises The research conducted by the individual in question sheds light on the manner in which severe market events can serve as indicators of the inherent risk profiles of investors, as well as the ways in which collective behaviour can influence the dynamics of the market According to Nur Aini and Lutfi (2019), the risk profile of an individual investor significantly influences their decision-making process while constructing a portfolio This aids investors in assessing the optimal equilibrium between risk and return that is congruent with their financial objectives, investment timeframe, and risk appetite
H4(c): The phenomenon of herding behaviour in financial markets can be influenced by the level of asset familiarity among investors This occurs when investors tend to imitate the actions of others and allocate their investments towards assets that they are already acquainted with Consequently, this behaviour can result in the formation of market bubbles and subsequent crashes Accordingly, Shiller (2011) emphasises the inclination of investors to conform to prevailing market trends, particularly in instances where such behaviour may lack rationality During periods of market bubbles, a significant number of investors engage in asset purchases mostly driven by the actions of their peers, so playing a role in the emergence and subsequent collapse of these bubbles Bikhchandani et al (1992) conducted a study that examines the "information cascade" idea, emphasising the role of familiarity in amplifying herding inclinations.The study conducted by
Chang and Luo (2009) examined the influence of asset familiarity on risk perception The results indicated that investors generally view familiar assets to be less hazardous compared to unfamiliar ones The diminished perception of risk can result in investors allocating a greater proportion of their investment portfolios to assets that are known to them, therefore potentially exposing themselves to the danger of lacking diversification
H4(d): According to Merton (1990), asset allocation is a key feature of investor behaviour that is influenced by investing objectives Investors who prioritise wealth preservation tend to exhibit a preference for low-risk assets such as bonds Conversely, individuals seeking capital appreciation are inclined to allocate a greater proportion of their portfolio to equities In addition, researchers in the field of financial psychology have conducted investigations into the correlation between various investing objectives and the behaviour exhibited by investors Furthermore, Shefrin (2002) proved that persons who prioritise income generation are more inclined to invest in dividend-yielding stocks and bonds, placing emphasis on investments that generate income.
CONCLUSION
The research project aims to investigate “Factors affecting the choice of investment portfolio by Individual Investors in Vietnam” For individual investor behavior, three components including
“Risk profile”, “Asset familarity” and “Investment objective” are considered, specifically the positive relationship with the investor's decision In addition, based on some previous studies, it can be seen that these factors have directly influenced actions in the investment process; therefore, the intermediate variable “Investor behavior” is also checked
Investigating the factors that influence individual investors' portfolio choices is a concern for investment advisors as well as securities companies Many methods have been applied in securities companies to help increase sales and profits for the organization One of the most effective methods is to study the reasons leading to customers' portfolio choices, in which investor behavior acts as a mediating factor to help explain portfolio choice of individual (Aziri, 2011; Faris, 2014; Burns, advisors come up with investment offers that match the psychology and desires of customers, in order to optimize profits for customers Therefore, the organization can attract more potential investors and improve sales and profits In fact, some previous researchers had similar views with the researcher's results ( Bayyoud and Sayyad, 2015; Ghaffari, 2017)
After finishing this research, the four research questions in the beginning of the project can be answered obviously First, at Rong Viet, risk profile, asset familiarity and investment objective do not directly affect portfolio's choice of individual investor but these relationships have a positive relationship through investor behavior factor Thus, if organizations want to grasp the portfolio's choice of individual investor, they must grasp the factors that influence investor behavior Hence, the investor advisor can offer investment options that suit customers' requirements, thus helping them optimize profits and businesses also improve the organization's reputation and sales However, during the research process there are still some limitations The first limitation is due to time and geographical constraints, which means the researcher only has 3 months to conduct the research, so the research can only be conducted in Hanoi Therefore, the data collected will not be comprehensive enough for the entire population Second, due to objective reasons, the survey can only be conducted online Therefore, the number of potential respondents will be reduced In addition, based on the convenience sampling method, respondents will voluntarily answer the survey, thus some respondents are not willing to share information Therefore, the data collected will not be of high quality as the researcher expected Due to these limitations, researchers need to change the scope of the study as well as the sampling method in subsequent studies to ensure the quality of the results.
RECOMMENDATIONS
The present study primarily emphasised quantitative findings Future investigations should consider integrating qualitative data to enhance analysis and comprehension of the subject matter Besides, given that the associations between risk profile, asset familiarity, and investment objective with individual investor portfolio choice have been disproven, it is imperative for researchers to explore alternative factors such as " Patriotism and Social Identification" and "Tax Considerations" and thoroughly investigate the implementation of these factors prior to conducting the study Furthermore, it is recommended that researchers broaden the area of their research to include international settings This will enable them to conduct their research with a broader range of knowledge and a more comprehensive perspective
In order to enhance the precision and dependability of data in subsequent research endeavours, it is advisable to employ a bigger sample size Academic researchers may opt to gather data from additional securities firms in order to enhance the comprehensiveness and accuracy of their comparative research findings In addition to utilising quantitative data (surveys), researchers may also employ qualitative data (interviews) to obtain more comprehensive responses When employing surveys, researchers are typically able to determine which answer option is selected by participants, but are often unable to ascertain the underlying reasons for their choices Interviews will be utilised in conjunction with surveys in order to facilitate direct communication between researchers and participants, enabling a deeper understanding of the underlying reasons and conditions that influence their answer choices (Malterud, Siersma & Guassora, 2016) This approach enhances the validity and reliability of the collected data Therefore, researchers have the ability to make informed assessments by considering the appropriate contextual factors of the respondents
Moreover, with regards to the sample methodology employed, this study adopts the "Self-selection sampling method" whereby respondents willingly choose to participate in the survey, hence introducing the potential for numerous variances Alternatively, researchers may opt to employ the
"stratified sampling method" within the framework of probability sampling This approach is favoured due to its capacity to mitigate bias, hence enhancing the accuracy and validity of the study's findings While engaged in the process of studying Furthermore, the task becomes more manageable when the population is segmented into distinct categories Moreover, the researcher has the opportunity to incorporate additional variables that exert an influence on the choice of portforlio, thus enhancing the comprehensiveness and contemporaneity of the study
Risk profile – Investment advisors need to determine and help clients measure the level of risk when investing Specifically, with the dividend investment method, Blue-chips and Mid-caps stocks will tend to be long-term investments, with little profit but their risk tolerance is low On the contrary, penny stocks are often short-term, high-profit investments because they are constantly changing and investors need to take risks and accept high levels of risk as well as need to call margin Therefore, investors need to understand the level of risk as well as their financial capacity, which investment portfolio is suitable for them to optimize profits At this time, the investment advisor needs to fulfill his role well in building a risk management strategy for investors and explain it in detail so that investors can minimize the risk level of the investment invest In addition, the advisor needs to clearly discuss and analyze for investors the level of risk and return when investing in that portfolio so that they can bring the most benefits as well as optimize profits profits and reduce investment risk Furthermore, the advisor needs to know the client's level of risk perception to know the causes of investor behavior, thereby creating an investment portfolio that best suits the investor When the investment maximizes risk, the reputation and credibility of the investment advisor and the organization also increase, thereby attracting customers and building a loyal customer base for the organization
Asset familarity - It is obvious that gold, dollars and real estate are familiar assets to Vietnamese investors Therefore, assets such as stocks and bonds are still unfamiliar concepts and make them cautious when investing, especially when recent financial scandals have occurred For example, in the case of FLC Real Estate Group, the chairman of this group was investigated for suspicion of stock market manipulation After that incident, related stock groups had unusually increasing and decreasing trading sessions Sometimes they increase to the ceiling at the same time after continuously falling to the floor for many sessions (Pham, 2022) Or like the case of bond manipulation by Tan Hoang Minh Group and some subordinates to illegally raise money from investors The amount of money appropriated by investors was up to 8,000 billion VND (Hoang,
2022) All these scandals make investors lose trust in these investment portfolios and have to be careful when investing This has negatively affected investor behavior and can lead to a Domino effect in investing, not only investors but the entire community (Nguyen, 2012) Therefore, if advisors want to diversify an investor's portfolio, they first need to build investor trust by reinforcing ethics A thoughtful consultant needs to be alert and avoid luring risky investors into super-risky portfolios for immediate gain They need to have a long-term vision and create investor confidence in that investment portfolio Second, investment advisors play an important role in improving investors' financial literacy during periods of soaring stock markets and providing investment suggestions that bring high profits, thus increase investor confidence in that portfolio as well as the organization
Investment objective - Each age and salary level has different investment goals and that also leads to diversity in investors' portfolio choices For example, those under 25 years old are considered Gen Z, they will tend to invest in short-term for experience while long-term investors aged 40 and over will tend to invest in long-term and risky short Investigating customers' psychology and desires when investing is essential for advisors because it affects investor behavior Furthermore, during the investment process, investors are easily distracted by the opinions of people around them and change their goals This can easily cause investors to suffer from FOMO syndrome, which is understood as the feeling that when a stock increases sharply in a short period of time and other investors are making very good profits, thereby motivating them to buy a lot this stock and forget about your original goal (Nguyen, 2023) Therefore, advisors need to analyze the market situation thoroughly so that investors can control their thinking and not be influenced by surrounding opinions Specifically, advisors need to carefully build investment strategies and closely monitor stock market movements and synthesize them to report to investors with the aim of convincing and creating trust for them Therefore, investors increase their confidence in the advisor and continue to stick with the organization for a long time.
REFLECTION
Researchers have succeeded in discovering the relationship between risk profile, asset familarity and investment objectives with portfolio choice of individual investors Specifically, researchers can successfully address the indirect impact of the above factors through intermediate variables on investor behavior, thereby providing meaningful recommendations and conclusions Besides, the researcher has successfully utilized the time and resources Although it was not possible to directly reach the participants, the researcher needed to conduct an online survey, but the researcher was still able to collect enough data as initially expected However, it would be better to combine quantitative data with qualitative data in further studies because the researcher can find out why respondents chose these answers in the survey to There are more comprehensive projects
However, there are still some problems that arise when researchers carry out this study For the first time, the researcher must change the conceptual framework of the research paper to make it more logical and academic Then, the researcher must spend a lot of time choosing data collection and analysis methods to avoid unreliable results However, the researcher was still able to promptly handle difficulties and complete the project on time thanks to the support from the lecturer Another problem involves setting variables In research model, independent variables have not been appropriately selected because these variables do not directly affect the portfolio choice of private investors in Vietnam When conducting a literature review, these variables are considered more specifically, they have only a small impact on investors' thinking Therefore, the wrong variables lead to incomplete results Researchers need to study more carefully before making decisions on selecting variables for further studies
In the beginning, researchers spend a lot of time choosing research topics related to finance and investment because it is quite broad and difficult to choose Thus, the researcher can generate concept maps during the topic selection process According to Wieczorek (2016), the researcher can connect all the ideas on this topic to find the specific goal and research questions Accordingly, he suggested that the researcher should take notes and list all the potential topics for easy comparison and make the best choice for the research paper After researching and consulting documents, the topic also needs to be approved by the instructor
Additionally, the researcher also met the issue of sample size The size of the sample plays a crucial role in empirical studies that aim to draw conclusions about a population based on a subset of data (Mellion, 2010) Insufficient sample size can result in incongruous findings (Pan, 2016) In order to ensure the meaningfulness of the results, researchers may consider expanding the research sample to include 200 investors, with a minimum of 20 individuals who have a long-term investment history Moreover, it is advisable for researchers to conduct their investigations across a diverse range of securities businesses, including but not limited to VN Direct Securities or those affiliated with banking institutions, in order to obtain a more thorough and robust outcome Therefore, researchers are able to provide accurate and specific recommendations for the aforementioned company
Agarwal, S (2017) ‘Investor’s demographics and its impact on investment behaviour’, Portfolio
Selection Using Multi-Objective Optimisation, pp 125–158 doi:10.1007/978-3-319-54416-
Antoniou, S., Polychroni, F and Vlachakis, A N (2006) ‘Gender and age differences in occupational stress and professional burnout between primary and high-school teachers in Greece’, Journal of Managerial Psychology doi: 10.1108/02683940610690213
Aukutsionek, S (2022) ‘Investment behavior of enterprises in 2021–2022’, Russian Economic
Barometer (QuE), (3), pp 3–12 doi:10.20542/reb.eng-2022-3-3-12
Azwadi , A (2011) Predicting Individual Investors’ Intention to Invest: An Experimental Analysis of Attitude as a Mediator Available at: https://www.researchgate.net/publication/269168739_Predicting_Individual_Investors’_Int ention_to_Invest_An_Experimental_Analysis_of_Attitude_as_a_Mediator (Accessed: 07 September 2023)
Bagozzi, P (2011) ‘Measurement and meaning in information systems and organizational research:
Methodological and philosophical foundations’, MIS Quarterly: Management Information Systems doi: 10.2307/23044044
Baker, H.K and Ricciardi, V (2014) ‘Investor behavior: An overview’, Investor Behavior, pp 1–
Baranova, Y., Douglas, G and Silvestri, L (2019) ‘Simulating stress in the UK corporate bond market: Investor behaviour and asset fire-sales’, SSRN Electronic Journal [Preprint] doi:10.2139/ssrn.3404234
Barber, B M., & Odean, T (2000) Trading Is Hazardous to Your Wealth: The Common Stock
Investment Performance of Individual Investors The Journal of Finance, 55(2), 773-806
Barber, B M., & Odean, T (2008) "All that glitters: The effect of attention and news on the buying behavior of individual and institutional investors." Review of Financial Studies, 21(2), 785-
Benartzi, S., & Thaler, R H (1995) Myopic Loss Aversion and the Equity Premium Puzzle The
Bikhchandani, S., Hirshleifer, D., & Welch, I (1992) A theory of fads, fashion, custom, and cultural change as informational cascades Journal of Political Economy, 100(5), 992-1026
Bogan, V.L and Fertig, A.R (2012) ‘Portfolio choice and mental health’, SSRN Electronic Journal, pp 955–992 doi:10.2139/ssrn.1507190
Bryman, A (2015) ‘Social Research Methods (4th Edition) by Alan Bryman’, Abhigyan VO - 32
BURASCHI, A., PORCHIA, P and TROJANI, F (2010) ‘Correlation risk and optimal portfolio choice’, The Journal of Finance, 65(1), pp 393–420 doi:10.1111/j.1540-
Chandra, Abhijeet & Ravinder Kumar (2012) Factors influencing Indian individual investor behaviour: Survey evidence Indian Institute of Management Calcutta, Decision, 39(3), 141-
Chang, E C., & Luo, Y (2009) Asset familiarity and trading volume Journal of Banking & Finance,
Charness, Gary & Uri Gneezy (2010) Portfolio choice and risk attitudes: An experiment Western Economic Association International, 48(1), 133-146 https://doi.org/10.1111/j.1465- 7295.2009.00219.x
Chiu, I.H.-Y (2018) ‘Regulating collective retail investment funds in the United Kingdom with the objective of investor protection, and some implications’, Research Handbook on the Regulation of Mutual Funds [Preprint] doi:10.4337/9781784715052.00025
Chow, W.S & L.S Chan (2008) Social network, social trust and shared goals in organizational knowledge sharing Information & Management, 45(7), 458–465 https://doi.org/10.1016/j.im.2008.06.007
Christelis, D., Jappelli, T and Padula, M (2008) ‘Cognitive abilities and portfolio choice’, European
Cohen, Gil & Andrey Kudryavtsev (2012) Investor rationality and financial decisions Journal of Behavioral Finance, 13, 38–50 https://doi.org/10.1080/15427560.2012.653020
Cruciani, C (2017) ‘Understanding investor behaviour’, Investor Decision-Making and the Role of the Financial Advisor, pp 3–36 doi:10.1007/978-3-319-68234-1_1
Daniela, Laura (2011) The saving and investing consumer behavior analyses on the Romanian financial market Annals of the University of Oradea Economic Sciences, 2, 798–804
Davey, G (2013) ‘M A Forrester (Ed.), Doing Qualitative Research in Psychology: A Practical Guide ’,
Qualitative Research in Psychology doi: 10.1080/14780887.2011.578541
David , E.A (2012) Investment behavior, Investment Behavior - an overview | ScienceDirect Topics
Available at: https://www.sciencedirect.com/topics/social-sciences/investment-behavior (Accessed: 07 September 2023)
Douglas, B and Thomas, A W (2014) ‘Cronbach’s alpha reliability: Interval estimation,hypothesis testing, and sample size planning’, Journal of Organizational Behavior
Enriques, L and Romano, A (2021) ‘Institutional investor voting behaviour’, Theories of Choice, pp 227–262 doi:10.1093/oso/9780198863175.003.0012
Evans, Jeffrey L (2004) Wealthy investor attitudes, expectations, and behaviors toward risk and return Journal of Portfolio Management, 7(1), 12-18 https://doi.org/10.3905/jwm.2004.412350
Foad, Hisham (2010) Familiarity bias Behavioral Finance: Investors, Corporations, and Markets Wiley Chapter 15 https://doi.org/10.1002/9781118258415.ch15
Gelman, A et al (2018) ‘R-squared for Bayesian regression models - The problem Defining R 2 based on the variance of estimated prediction errors’, American Statistician
Haider, M.A (2016) ‘A cross-country comparison of factors affecting foreign portfolio investment in emerging economies: In the case of Bangladesh, China, India, and Pakistan’, Journal of Management and Sustainability, 6(4), p 79 doi:10.5539/jms.v6n4p79
Hair Jr., J F., Matthews, L M., Matthews, R L., & Sarstedt, M (2017) PLS-SEM or CB-SEM: updated guidelines on which method to use International Journal of Multivariate Data Analysis https://doi.org/10.1504/ijmda.2017.10008574
Hair, J F., Ringle, C M and Sarstedt, M (2011) ‘PLS-SEM: Indeed a silver bullet’, Journal of Marketing
Theory and Practice doi: 10.2753/MTP1069-6679190202
Hammersley, M (2015) ‘On ethical principles for social research’, International Journal of Social Research
Henderson, R (2011) ‘Doing qualitative research: a practical handbook’, Studies in Continuing Education doi:
Henseler, J., Ringle, C M., & Sinkovics, R R (2015) The use of partial least squares path modeling in international marketing Advances in International Marketing, 20, 277–320
Hoeks, S et al (2013) ‘Tools and techniques - Statistics: Descriptive statistics’, EuroIntervention doi:
Ivković, Zoran, Clemens Sialm & Scott Weisbenner (2006) Portfolio concentration and the performance of individual investors Journal of Financial and Quantitative Analysis
Kaur, Mandeep & Tina Vohra (2012) Understanding individual investor’s behavior – A review of empirical evidences Pacific Business Review International, 5(6), 10-18
Laerd (2012) Non-probability sampling | Lổrd Dissertation In Lund Research Ltd
Malterud, K., Siersma, V D and Guassora, A D (2016) ‘Sample Size in Qualitative Interview Studies: Guided by Information Power’, Qualitative Health Research doi: 10.1177/1049732315617444
Manley, S C., Hair, J F., Williams, R I., & McDowell, W C (2020) Essential new PLS-SEM analysis methods for your entrepreneurship analytical toolbox International Entrepreneurship and Management Journal https://doi.org/10.1007/s11365-020-00687-6
Markowitz, H M (1952) Portfolio Selection The Journal of Finance, 7(1), 77-91
Marwaha, K and Arora, S (2017) ‘Individual investor behaviour towards investing in low and medium-risk investments: An exploratory study’, IIMS Journal of Management Science,
McDonald, S (2005) ‘Studying actions in context: A qualitative shadowing method for organizational research’, Qualitative Research doi: 10.1177/1468794105056923
Merton, R C (1987) A simple model of capital market equilibrium with incomplete information The
Muga, L and Santamaría, R (2007) ‘The momentum effect: Omitted risk factors or investor behaviour? evidence from the Spanish stock market’, Quantitative Finance, 7(6), pp 637–
Nur Aini, N.S and Lutfi, L (2019) ‘The influence of risk perception, risk tolerance, overconfidence, and loss aversion towards investment decision making’, Journal of Economics, Business
& Accountancy Ventura, 21(3), p 401 doi:10.14414/jebav.v21i3.1663
Ryan, G (2018) Introduction to positivism, interpretivism and critical theory In Nurse Researcher https://doi.org/10.7748/nr.2018.e1466
Saunders, M., Lewis, P and Thornhill, A (2008) Research Methods for Business Students 5th Ed, Research methods for business students
Seetharaman, A et al (2017) ‘A study of the factors affecting the choice of investment portfolio by individual investors in Singapore’, Accounting and Finance Research, 6(3), p 153 doi:10.5430/afr.v6n3p153
Shefrin, H., & Statman, M (1985) The disposition to sell winners too early and ride losers too long:
Theory and evidence Journal of Finance, 40(3), 777-790
Shmueli, G., Sarstedt, M., Hair, J F., Cheah, J H., Ting, H., Vaithilingam, S., & Ringle, C M (2019)
Predictive model assessment in PLS-SEM: guidelines for using PLS-predict European Journal of Marketing https://doi.org/10.1108/EJM-02-2019-0189
Sun, W et al (2021) ‘Factors affecting institutional investors to add crypto-currency to asset portfolios’, The North American Journal of Economics and Finance, 58, p 101499 doi:10.1016/j.najef.2021.101499
Tesar, L L., & Werner, I M (1995) Home bias and high turnover Journal of International Money and Finance, 14(4), 467-492
Timothy, S (2012) ‘8 investor protection failures in private investment funds’, The Law of Private
Investment Funds [Preprint] doi:10.1093/law/9780199657735.003.0008
Vissing-Jorgensen, A (2002) Towards an explanation of household portfolio choice heterogeneity:
Nonfinancial income and participation cost structures Journal of Economic Dynamics and Control, 26(7-8), 1005-1043
Wang, X., & Cheng, Z (2020) Cross-Sectional Studies: Strengths, Weaknesses, and Recommendations In
Chest https://doi.org/10.1016/j.chest.2020.03.012
Wolf, C., Joye, D., Smith, T., Fu, Y., Vehovar, V., Toepoel, V., & Steinmetz, S (2016) Non- probability Sampling In the SAGE Handbook of Survey Methodology https://doi.org/10.4135/9781473957893.n22
Wong, K K (2011) Review of the book Handbook of Partial Least Squares: Concepts, Methods and
Applications, by V Esposito Vinzi, W.W Chin, J Henseler & H Wang (Eds) International
Journal of Business Science & Applied Management 6 (2), 52-54