Research Proposal

Prepared by: Gan Soon Sheng (CGA 150025)

Date of proposal submission: 16th December 2016

Research topic: Determination of the factors affecting individual

investment behaviour: A study on Young Malaysians

1.0 Research Objectives

The purpose of investment is to maximize individual income and achieve long-

term financial goals. Investment by starting early can be a brilliant financial

move as the initial capital will grow over the time with power of compounding.

One of the long-term goals of investment is to guarantee the retirement income

and quality of life after retirement. According to the article (Shagar, 2016) from

The Star on May 2016, 68% of EPF members with age of 54 have savings less

than RM 50,000. They probably exhaust their saving with monthly expenses

which is approximately RM 830.00 within five years. There are also numerous

uncertainties such as macro-economic environment, inflation rate, unexpected

expenses, etc., which likely diminish the quality of retirement life. The research

aims to investigate the factors which affect individual investment behaviour.

This study will deliver a statistical illustration to the chartered financial planner

and individual investors who are keen on achieving long term financial goals for

thorough understanding of individual investment behaviour. The banks and

financial planner can develop new financial products that best suit the

individuals with distinct preferences.

2.0 Research Design

The research is an empirical study to determine the relationships of numerous

variables and the individual investment behaviour. An empirical assessment will

be developed with quantitative method to obtain the numerical measurement

and analyse the result. Primary data collection with well-designed

questionnaires will be conducted to gather the direct and specific information

from the sample groups.

3.0 Literature Review

When we examined the previous literatures, the factors influencing individual

investment attitude were generally classified into two categories, which are

social-economic factors and behavioural factors (the psychological biases and

personality traits). Kourtidis et al. (2011) opines that the four major factors of

psychological biases and personality traits are overconfidence, risk tolerance,

self-monitoring and social influence.

A survey was conducted by Nagy and Obenberger (1994) to determine the

underlying factors which influence decision-making of individual investor with

substantial holdings in fortune 500 firms. The empirical evidence shows that the

criteria of wealth-maximization is greatly significant, whereas individual stock

brokers, family members and co-workers were found insignificant.

Obamuyi (2013) also attempted to uncover the socio-economic factors which

will affect investment decision in Nigerian, However, the non-economic factors,

which are rumours, opinions of family member, loyalty to the company’s

services / products and religions were shown as insignificant impacts among

investor.
4.0 Limitations

The research has a quality issue of the composition of the sample. The limited

heterogeneity in respondents' demographic characteristics may fail to be

representative of the nature and extent of the variables to the final outcome.

5.0 References

Kourtidis, D., Sevic, Z., Chatzoglou, P. (2011), Investors’ trading activity:

A behavioural perspective and empirical results. The Journal of

Socio-Economics, 40, 548-557.

Nagy, R.A., Obenberger, R.W. (1994), Factors influencing individual

investor behaviour. Financial Analysts Journal, 50(4), 63-68.

Obamuyi, T.M. (2013), Factors influencing investment decisions in capital

market: A study of individual investors in Nigeria. Organizations and

Markets in Emerging Economies, 4(7), 141-161.

Shagar, L. K. (2016). 'Malaysians not saving enough for retirement' Retrieved

December 16, 2016, from

http://www.thestar.com.my/news/nation/2016/05/04/malaysians-not-

saving-enough-for-retirement/