Delving into the investment psyche:investigating the determinants influencingindividual investors' decision-making

Behavioral finance combines the psychological aspects of human behavior with tra-ditional finance concepts. This study's objective is to identify determinants influ-encing the investment decisions of an individual investor. The study is based onthe five cognitive biases that impact investment decisions. Adopting a quantitativeand descriptive research approach, the study uses data from 400 investors to iden-tify the variables that significantly impact investment decisions. Factor analysis isused to determine the influential critical factors. Five cognitive biases are measuredusing 12 different variables. The results indicate that herding, overconfidence and mental accounting are the main cognitive biases that significantly impact investmentdecision-making. Investor overconfidence is the most critical of these parameters,which together effectively govern investment decisions. The paper provides portfoliomanagers with a helpful tool for understanding the different ways in which investorsbehave, and for improving the quality of advice for their investors. It also providesguidelines to investors on the critical biases that hinder investment growth, and howto identify these weaknesses and avoid them. Financial services providers will alsofind their improved knowledge of their clients helpful when designing products