Chapter 1

PROBLEM AND ITS SETTING

Rationale

The beginning of globalization process which started during the early 1900s

opened a new gateway for economic development in western countries most

particularly in the United States and in Europe and even in Asian countries, this fast

paced development has occur as evident by rising economic competency that can be

compared to highly developed countries. Although there has been significant rise in

the economic growth of these countries, it was only possible through addressing the

problems in the economy, one of these is engaging in ventures that may be favorable

to their respective countries through making the right investments (Mittal, 2010).

In 2018, the World Bank forecasts a 3.1% increase in the global economic

growth. This signifies that the global economy remains stable as of today. This makes

investing in profitable ventures more critical as to select the best investment to make

for individuals who have the capacity to do so. However, challenges in the economy

should not take for granted as forecasts may deviate from actual results of the

performance of the economy (Sharma, Sitlani & Sitlani, 2011).

The Philippine economy has experienced the fastest economic growth and

development over the last three years in 2016 as evidenced by its GDP which was

6.8%. Furthermore, the GDP rate peaked 7.1% at the third quarter of 2016 which was

the highest over the last three years (Philippine Statistics Authority). The result can

be interpreted that the Philippine economy is contracting and expanding and thus, the

growth can lead to accretion of wealth and rise the income levels across households.
 With these changes in our society, people must steward their wealth in a way that

it can afford them a fine retirement and the capacity to meet their own and their

family goals that may arise during their lifetime. In order to meet these goals, the

right selection of investment options that accommodates the individual’s needs and

preferences must be taken into account. There have been substantial acceleration in

the number and types of financial products that is available in the market and an

understanding of an individual’s investment preference in this local setting would

help those financial services industry to target the appropriate consumers (Arora,

Dhameja & Sahi, 2013).

The escalating trend in personal savings which was shown in the Bangko Sentral

ng Pilipinas’ survey on 2012 showed that total savings in million was P2,000,000, in

2014, P3,000,000 and in 2016, P3,500,000 can demonstrate that more individuals

know the merits of savings and the benefits of putting savings in a bank. Along with

the quick increase of availability of financial products and the trend of savings among

individuals, the consumer faces the varied investment alternatives from with them

can elect and direct their savings towards.

The challenge lies with what investment avenues to choose from as there are vast

information with regards to this, making the financial decision-making more complex

as these individuals are not equipped to interpret the information available for them.

As a result of this, consumers have to rely on their beliefs and attitudes that in effect,

would reflect their preference on which investment options to choose from. This

makes understanding the consumer’s product buying behavior is important. (Aren,

Aydemir & Tufekci, 2017; Garg & Verma, 2016; Olsen, 2010).

The recent economic development in Tagum City as evidenced by investors

investing in malls and infrastructures has led to opportunities for its citizens either to
open businesses or to be employed in these new businesses. The presence of multiple

banks across the city signifies that many individuals here in Tagum as well as

business owners have a know-how about financial decision-making and investing.

This can be proved with the city ordinance no. 661 in 2014 which titled, Tagum

City Investment Incentive Code which states in its declaration policy, to accelerate

social and economic growth and in bringing peace, progress, redistribution of wealth

to less developed areas in Tagum City, it is hereby declared to be the policy of Tagum

City to attract new investments, encourage expansion, diversification and retention of

existing industries while at the same time ensuring a clean, green, safe and child-

friendly environment, and providing equal opportunities to men, women and to

differently-abled persons within the context of sustainable development and in

accordance with the agro-industrial framework of the city and its surrounding areas.

This city ordinance encourages individuals to invest in various avenues available

within the city, but which of these avenues would individuals prefer to invest is the

question of concern. With the city’s economic growth, there are unlimited ways to

spend money as different financial products makes it way in the market, the same

way that there are unlimited ways to make your money grow through investing

hence, this study is conducted.

Research Objective

This study aims to determine the influence of psychographic factors on

investment preferences among middle managers of Tagum City. Specifically, it aims

to answer the following objectives:

1. To assess the level of psychographic factors among salaried middle managers

in terms of:

1.1 Psychographic Attributes

 1.2 Investor Biases

2. To assess the level of investment preference among salaried middle managers

in terms of:

2.1 Money Growth

2.2 Reliability of the Company

2.3 Security of Investment

3. To determine the significant relationship between psychographic factors and

investment preference.

4. To determine the domain of psychographic factors that significantly influences

investment preference.

Hypothesis

The hypothesis of the study were tested at 0.05 level of significance stating that

there is no significant relationship between the level of psychographic factors and

degree of investment preference among salaried middle managers, and there is no

domain of psychographic factors that significantly influence investment preference.

Review of Related Literature

In this section of the study it expects to survey the related writing with respect to

the psychographic attributes, investor biases and investment preferences among

salaried middle managers. These references that talked about in this study are

assembled from various assets, such as, books, web and any extra resources which

are exactly identified with the current study.

Psychographic Factors

Throughout time, it was portrayed that investors are rational and sensitive when

it comes to their investment decision making in different types of investments and it

is presumed that they use their wits to assess risk return of their investment and
evaluating the value of their investment. They can accumulate all necessary

information at their hand to suit the trends in the market and arrive at the best

decision of which investment to chose (Bakar & Chui Yi, 2016).

This presumption however is questioned by psychologists and they found out

that investors apparently do not act as rational as economists think they do. Various

studies conducted by researchers as a result of the inexplainable market trends found

out that investors are not as objective as they are presumed to be. The inexplainable

market trends and factors have been given a clear explanation in a new era of finance

called behavioral finance (Adetiloye & Babajide, 2012; Ali, et. al., 2013).

Behavioral finance practically takes into account how different psychological

traits can have an influence on a person or group of people with regards to being an

investor, analysts or portfolio manager. This new field of finance sought to quantify

how feelings and limitations with the way a person thinks can affect a behavior of an

investor. This also wants to give light to why and how an investor can decide on a

certain path while ignoring the rational thing to do in a given situation (Kengatharan

& Kengatharan, 2014 ).

A study conducted showed that the level of psychological factor is higher than

the level of economic factor that affects the individual investor’s decision-making

behavior. The findings of the study suggested that there is significant relationship of

psychological and economic factors with individual investor’s decision-making. It

also showed that psychological factors as compared to economic factors have more

effect on decision-making behavior (Afaf & Sarwar, 2016).

Founders of behavioral finance have been able to give an explanation to a

number of psychological factors that can influence the decision making of an investor
in any type of investment. These psychographic factors can be identified in the

investors psychographic attributes and investor biases (Boon, et. al., 2016)

Psychographic attributes which relates to the investor’s financial risk taking

attitude and his perceived financial knowledge have been one of the determinants of

investment preference. The financial risk attitude consisted of two sub-constructs

which is risk control and speculative risk. Risk control can be defined as the person’s

likelihood to avert risk. It can be simpler understood on how high or low can an

investor tolerate when it comes to risks associated with the investment of his choice

(Sharma & Srivastva, 2016).

Speculative risk can be defined as the person’s inclination to be a risk taker. Risk

taking, trading activity and investment performance has a connection with personality

traits of an investors and the risk accompanied by making a choice of investor has to

rely on that investor’s attitude. The way a person takes a risk is significant when we

want to comprehend the concealed affair that can affect a person’s inferior preference

behavior. Risk is a chief element of an investment that makes it an essential factor

when determining financial investment decisions (Chamorro-Premuzic, Rogers &

Viding, 2013).

When investing, investors keep in mind about economic factors like expected

earnings, condition of financial statements of firms/companies, recent price

movements, risk and returns before investing. But investors are not able to evaluate

all these objectively since their emotional biases are also involved in the process

(Anis & Mauna, 2015).

Some financial analyst have examined the relationship between risks and return

in the stock markets concluding that the higher the risk, the higher the return and the

lower the risk, the lower the return. Generally, human decision making process is also
composed of risk and return relationship but the investors cannot evaluate risk and

return objectively but rather, they behave emotionally while making decisions. Their

decisions are the result of their perception towards risks and expected returns

(Prabakaran, 2017).

Another study which was conducted among Indian investors have shown that

along with attitude, subjective norms and perceived behavior control, proneness to

take a risk by an individual was an important predictor for investment intentions. It

can be concluded from these studies that the preference of an individual towards

investment can be affected by how she avoids risk which can be considered as a vital

part when engaging in investments (Pardhasaradhi & Sultana, 2012).

A study conducted in 2012 suggested that in order to better understand irrational

behaviors of an investor while making investment decision, one should know the

level of risk perception of an investor as it will guide them test the impact of this

psychological factor to investing. The investor’s risk taking behavior as well as how

he perceive things affect their perception on risk that can be associated in a particular

investment situation (Hunjra, Rauf-i-Azam & Riaz, 2012).

Another thing to consider when understanding the psychographic attributes of an

investor is his personal perception on certain investment types. The perceived

realization of a person with regards with the financial markets and investment

instruments can be known as the individual’s perceived financial knowledge. When

determining an individual’s perspective concerning their investments, one must

consider financial knowledge, individual’s profile and inclination on investment

(Narayan & Nihar, 2012).

A recent result of a study shows that respondents with an elevated level of

learning and with prominent financial knowledge tend to be more careful with
dealing with investments and engaging in one. The evidence shown in the study

suggests that when an individual seeks advise from people with financial knowledge,

the likelihood of them to change their approach when making investment choices

may make a variation in the outcome of their financial standing (Lemon & Verhoef,

2016).

Perception on different type of investments is another factor that can aide in

knowing why investors changes their preferences over investments throughout time.

Information that is acquired by an investor may have been cause by certain factors

like, physical, social and cultural, technologies and mechanical, environmental as

well as international factors. This can affect the cognitive process which in effect can

influence on how a person thinks as well as his perception in things (Hon, 2014).

This type of psychographic attribute does not necessarily mean seeing things the

way you do or hearing something with your own ears. Perception is a unique

interpretation of a situation and does not involve exactly remembering how things go.

Investors are different in their way of thinking, moreover, they have different

perception over risk and return and other related variables concerning investments

(Sahni, 2012).

Another psychological factor which is the investor’s biases have been first

identified in 1974, which is defined as a tendency towards a certain disposition that

guides the decision maker to a judgment in circumstances pertaining to investment

decision making. This includes overconfidence bias, optimism bias, self-control bias,

anchoring bias, framing effect, representativeness, hindsight bias, loss aversion bias,

status quo bias and regret aversion which were the indicators of investor biases that

anchor the style of investor’s preference of investment (Sahi, 2017).

 The profiling techniques of formulating investment programs for investors by

companies do not take into account that many investors are not in control of their

behaviors even when the investors are aware that the goals they set for themselves do

not align with the decisions they do. Identification of investors biases by financial

institutions or companies would them to identify the tendencies of the investors to be

bias, hence they can make better investment outcomes when making investment

decisions (Pompian, 2012).

A study conducted among the investors of Bhubaneshwar Stock Exchange which

examined the role of of psychological biases on the cognitive decision making

process of individual investor have found out that the investors are victims of

psychological biases and hence their decision making are affected. Another study was

conducted to examine the relationship between psychological biases and the decision

making of investors in the Malaysian share market suggested that psychological

biases have a positive significant impact on investor’s decision making (Tripathy,

2014; Lim 2012).

One of the investors biases identified its the tendency to rely on the advice given

by the financial expert. Information plays a critical role in individual risk taking in

risky investment decision making behavior. Financial expert advice may at times be

inevitable especially when an individual is dealing with situations where decisions

must be based not only with their own personal judgment but on the intuitive

judgment of experts on a given scenario (Karanja, 2017).

However, an article stated that previous studies of expert decisions makers have

made an conclusion that because of cognitive limitations of experts, they are

generally accurate, unreliable, biased, they lack self-insight and gain little with

experience. Since, experts are not exempted with human emotion which can be a
hindrance when making financial decisions, their opinions on the individual’s

financial decisions may not be precise (Azam et. al., 2013).

Although an expert’s advice may be true to certain situations, it is hardly ever

true that an expert would not commit a mistake when giving an advice. Furthermore,

even if an individual realizes this, their reliance on a being that’s more

knowledgeable to them, may affect on how they invest their assets as they do not

want to suffer losses which makes them have the tendency to seek out expert advice

(Singh & Yadav, 2016).

Another bias identified is the overconfidence bias which can be understood of

having an excess confidence over ones decisions. Overconfidence can be explained

as an unwarranted faith in one’s perceptive reasoning, judgments and cognitive

liabilities. Individual’s belief and way of thinking are neither precise nor not

subjected to different biases but rather, they exercise overconfident forecast about a

certain situation. Synonyms for overconfidence were imprudence, audaciousness,

brashness, brazenness, forwardness, impertinence, presumptuous and pushiness

(Anum, 2017).

Self-attribution bias which is another investor’s bias can be frequently associated

as the simplification of overconfidence among people. This bias is especially

characterized when a person distinguishes success because of their attributes and puts

the blame for failures on things or events that is beyond their jurisdiction. To put it

simply, a person trusts his investment capability when for example, his stocks in the

market goes up but if it goes down, he enumerates different situation that may cause

the unfavorable outcome such as the state of the economy or market (Qadri &

Shabbir, 2014; Hunjra, Qureshi & Rehman, 2012).

 The situation mentioned would result for the individual to be overconfident of

his abilities. This may prove fatal when making financial decision to the extent that it

will not only imbalance your judgment but it will cost you money to try and put the

faith of your financial investment to luck and omens. It is beyond the scope of the

way on how people make their financial decisions nowadays (Atif, 2014).

Self-control another identified bias, is the ability to override or inhibit undesired

behavioral tendencies, such as impulses. It was also suggested that there is a

relationship between self-control abilities and investment behavior. Once you already

have understanding when it comes to investing, what you needed is the temperament

to control the urges that get other people into trouble (Campbell, 2016).

On the other hand, when people lack of self-control it may also be connected to

overspending. Many individuals have potential problems associated with lower levels

of self-control which may be characterized by the low saving rates, lack of

emergency fund savings and over-indebtedness which makes these individuals

financially fragile. Individuals with self-control problems make more use of quick

access and high cost credit items such as payday loans that may eventually result in

over-indebtedness (Gathergood, 2012).

When an individual has no control over his income, an effect of this is that he

may spend more than what he has. The implication of this is that he may have

nothing left to invest out of his income. Professional financial advisers can help

individuals improve their self-control ability as well as deal with financial problems.

In the practice of financial counseling, a self-control model has been proposed for

more effective financial management. They propose that financial counselors can

design intervention procedures such as budgeting (Lusardi & Mitchell, 2014).

 Another identified investors biases is the budgeting tendency. Budget is

something that should be consider when investing. As it is a means to develop a

saving or spending habit, one should consider in what way do they use their money

as poor spending habits can lead to a financial disaster. In order for an individual to

invest, there must be a sufficient amount of money which has to do with the

individual’s budget (Galperti, 2016).

For this paper, budgeting tendency may be known as the inclination of an

individual to plan for saving and spending. This plan for saving and spending may

result in a surplus budget where profit or an excess of cash after expenses is

recognized. Another result for it is the balanced budget where the revenues is

expected to equal expenses and finally, the deficit budget where an individual’s

expenses exceed his revenues. Realizing these types of budget may help us

understand the nature of how this is significant to the investment of individuals as

only the individuals with surplus budget can afford to make investment since their

revenue or income exceeds their expenses. (Gedmintiene & Visockaite, 2016).

The tendency to adapt to the changing financial requirements with the passage of

time can be understood as the adaptive tendency. This another investors bias is a

concept of adaptive consumer behavior that encompasses the problem experienced by

the consumer in reconciling his or her current lifestyle to a changing economic

environment (Arora, Dhameja & Sahi, 2012).

Changes in the environment especially such as modernization, when they are

significant have the effect of forcing change in consumer life style. The theory of

social change suggests that there is usually a lag between an environmental change

and the corresponding response. This is reflected in the consumer’s attempt to

maintain his or her accustomed life style as long as possible when faced with a

changing economic environment (Furnham & Gunter, 2014).

Accommodations to the changing environment are made initially where they will

least affect the consumer’s life style. Consumers may increase their borrowing or

reduce their saving before resorting to behavior modification that may have a more

direct impact on their life style, such as consumption behavior modification. With the

current standing of our economy where a large inflow of different products makes its

way to the market, individuals easily change their preferred products because of the

invention of a better one (Moghaddam & Nejati, 2013).

This may make financial institutions confused if they are not updated with the

current market because nowadays, as fast as second can be the period when the

individual’s preference may change. The modernization has brought up varied

investment products to choose from that makes it confusing to point out just one of

these investment avenues that individuals prefer to invest to (Schenk, 2016).

The propensity to make decisions about buying, holding and selling investment,

based on whether they are perceived as acceptable according to the effects that

certain companies activities, products and services can have on the environment and

society at large can be defined as the socially responsible investing bias. Among

private investors, there has be an increase in socially responsible investments over the

years that is driven by consumer preferences. These preferences of some private

investors for socially responsible investing can be linked to the fact that private

investors sees to it that their investment is consistent with their personal values which

can be driven by political or social beliefs (Capelle-Blancard & Monjon, 2012).

Another overview encourages their members to follow the socially responsible

investing approach since this is an ethical investment. What may be legal and what
may be ethical may be two different things. Some individuals invest in firms that they

believe have the ethical values that uphold their beliefs even if the return on their

investment for it may below. This makes the individual prone to investment

unsatisfactory since they only rely on their ethical and social values to determine

their investment preference (Klein & Von Wallis, 2015).

Although it may work in the present or current time to invest in such way, in the

long run, individual’s will see that because of their social responsibilities, they have

not achieved their desired outcome for their investment (Mol, Van Koppen &

Wagemans, 2013).

Investment Preference

Many studies have been conducted to comprehend consumer’s preference towards

investments. However, the vast and varied forms of investment make it hard for

individuals to choose from these lists of investments. Study found out that there are

three factors investor considers when investing namely money growth, security of the

money invested and reliability of the company (Desai, Geete & Thakur, 2013).

Growth of the money is one of the factors investor considers upon investing. In a

study, several profitability variables such as dividend, rapid growth and quick profits

beside other variables such as investment for saving purposes and long-term growth

were empirically identified as effective factors on the attitudes of individual investor

in making investment decision (Paradi & Zhu, 2013).

When a person wants to invest his money to a financial market the first thing that

comes to his mind is that how much return he will get. Small investors invest more

funds and expect handsome return from the market The investor preference always

lies in the money growth and handsome amount of return. The growth and return

work as bread and butter for every investor (Lou, 2012).

 Another factor of investment is security of the money invested. Based on the

study titled a study of factors affecting investor's preference between mutual fund and

equity, the customer prefers those companies where he or she feels safe. Security of

the amount invested is very critical or significant for every investor (Lavanya,

Mohanasundari & Vetrivel, 2016).

Another factor which investors consider is reliability of the company. Aside

from expected returns, firms’ position and performance was also one of the results

revealed in the factor analysis. The reliability plays a vital role in customer minds

they take experts help and suggestion according to market situations or trend and they

analyze it. They take into account if they could be able to trust a certain company. In

the present scenario where there are different companies participating or hungry for

customer investment cause very high to understand which company he or she can

invest. The customer preferences always follow the brand or good companies (Desai,

Geete & Thakur, 2013).

Investors has a lot of investment avenues to park their investments, choosing the

most profitable investment can be the matter of difference between investors. In a

study conducted among salaried women employees in Namakkal District suggested

that the major features of an investment that the respondents preferred are safety of

the principal amount, liquidity of the company, income stability of the investing

company, appreciation and easy transferability of investment. It was furthered

discussed in the study that investor invests based on their risk taking attitude

(Murugesan & Shanthi, 2016).

Another study conducted among investor in the Chennai District resulted that

more than half of the respondents prefer to invest in investing companies that has
quality advisory services, they also prefer investments that is stable in the market and

finally, they prefer investments that has an easy trading procedures (Gandhi, 2015).

Correlation Between Measures

There’s a significant relationship between the two variables in which the

psychographic factors relatively influences the investment preference of middle

managers. Psychographic factors can affect how the investors will invest and what

are the things that investors consider when making investments, thus it affects the

investors preference over investments. In the same manner, the way that an investor

invests and the things he consider first can have an influence over his investment

preferences. Psychographic factors can have an influence over investment preference

when we take into account the psychographic attributes and the investor biases of the

investors (Arora, Dhameja & Sahi, 2012).

In order to assess these preferences, many researchers has taken it to their hands

to know what affects investor’s preferences of investment, one of which have stated

that psychological factors such as psychographic attributes and investor biases

appeared to be the variable in knowing how an individual makes their investment

decisions. Psychographic attributes that can affect investment preference such as

financial risk attitude and perceived financial knowledge have been studied in the

past years and known to be one of the determinants of investment preference (Kalra

& Sahi, 2013).

Psychological factors have strong effects on decision making, because they have

the tendency to make us like and dislike something. Nowadays, in financial

transactions, behavior is also taken under consideration because it plays an important

role on decision making. There is no doubt that investors act on market sentiments
but they also use their gut feelings hence their preferences over investment also

changes (Hunjra & Riaz, 2015).

Psychologists found that decisions could be influenced by unavoidable

psychological and emotional factors, a better understanding of these factors will help

the investors to select a better investment decision and to avoid repeating their

mistakes in future by making conscious decisions in extracting the best investment

option (Bilgehan, 2014).

A study conducted among investors in India showed that investors manifest risk

tolerant nature quite remarkably. However, their research resulted that at a seemingly

unconscious level, investors have an ultimate desire for safety when it comes to

investing which calls for a need to identify the acts that an investor do when they take

into account the safety of their investment. Their study suggested that investors

consider the increased transparency, liquidity and better portfolio of a management

when investing, these are the key factors needed by the financial institutions to be

evident in their company. The foregoing relates to the investment preference of

investors being influenced by psychographic factors (Narayan & Nihar, 2012).

Investment choice is different among set of people as every person can be

affected by their different circumstances. The circumstances that an investor is in can

define what is his needs as well as the objectives he has when engaging in

investments, this will ultimately lead to the investment preference of that investor.

Apart from the circumstances that an investor may be in, one that can affect an

investors preference is his level of investment awareness on different investments

which can be related to psychographic factors (Sweet, 2013).

This review of related literature and studies help the researchers in providing

empirical basis and further explanations in relations to theoretical framework which

is the core of the investigation. It supports the study of how psychographic factors

affects the investment preference among middle managers. This helps in determining

the relationships and differences to compare the previous studies.

Theoretical Framework

This study is anchored on the study of Arora, Dhameja and Sahi, (2012) which

states that in determining the investment preferences of the investors, the

psychographic factors should be considered. These psychographic factors refer to

psychographic attributes and investor biases of investors.

It was found that there is a significant relationship between investor’s preference

and those investors who are loss averse; this tendency refers to psychographic

attributes of an individual. Furthermore, there are various psychological biases that

could lead an investor to prefer other investment avenues.

The theory for the independent variable which is psychographic factors is based

on the study of Arora, Dhameja and Sahi, (2012) which states that psychographic

information characterized by psychographic attributes which refers to any attributes

relating to personality, values, attitudes, interest, or lifestyles (Minor & Mowen,

2001) and investor biases which is defined as a tendency towards a certain

disposition that guides the decision maker to a judgment in circumstances pertaining

to investment decision making (Arora, Dhameja & Sahi, 2012) is useful to

understand how investors feel, what is important for them, and how they make their

investment decisions.

It was found in a study that investors are not as rational as they are portrayed to

be, the anomalies that causes the investors to not behave rationally have been

explained in a new emerging area of finance called behavioural finance (Adetiloye &

Babajide, 2012; Azam et. al., 2013).

 Behavioural finance considers how various psychological traits affect how

individuals or groups act as investors. This tries to understand how emotions and

cognitive errors influence behaviours of individual investors (Kengatharan &

Kengatharan, 2014). Researchers in behavioural finance believe that investors’

decisions are affected by a number of beliefs and preferences. The resulting beliefs

and biases will cause investors to overreact to certain types of financial information

and under react to others, making them to make irrational decisions and risk taking

behaviours (Gitman et. al., 2015). This information helps us to understand why a

certain investment choice is more favorable to them.

The understanding of human behavior and mental tendencies, of who we are and

why the way we act helps us to look deeper into the decisions that we make.

Individuals with different personalities (Almlund, et. al., 2011; Borghans, et. al.,

2008; Durand, et. al., 2013; Durand, Newby & Sanghani, 2008), different

demographics (Ricciardi, 2008), varying degrees of cognitive abilities and prior

knowledge (Hansen, 2005; Howard & Sheth, 1969; Jaccard & Radecki, 1995; Lonial,

Mangold & Raju, 1995), varying risk-taking propensities (Bauer, 1960; Conchar et.

al., 2004; Dohmen, et. al, 2009) and levels of involvement (Bloch & Richins, 1986)

engage in qualitatively different types of choice processes. Each individual investor is

a unique person, the reactions and decisions of two unique individuals faced with the

same set of external stimuli may be different from each other.

The dependent variable is based on the study of Desai, Geete and Thakur, (2013)

which considered that money growth, security of the investment and the reliability of

the company are the major factors of customer’s investment preferences. When a

person wants to invest his money into financial market, the first thing that comes to

his mind that how much is the return of the investment and the risk associated with it.
A study conducted found out that wealth maximization are important to investors

although they are affected by a variety of decisive factors while choosing investments

(Nagy & Obenberger, 1994).

An expanded study across different countries showed that investors took

company environmental and social behavior into consideration in making investment

choices, which is actually reflected through stakeholder’s attitude towards the

company from different sides of company performance (Williams, 2007).

Another study conducted on a Bangladeshi Stock Market identified that industry

attractiveness, historical data, expected dividends, financial indicators, loss

minimization and changes in capital gain has a great influence over the investment

decision making (Afrin, Khan & Rahman, 2015). A study in Orissa resulted that

investors invest in investments that they feel safe, has good periodic return and can

be liquidated when they want to (Debasish & Mohanta, 2011).

Investment has been confused with many definitions in this new era. Often,

everything people purchases such as bed, cars and other properties can be considered

in their point of view as an investment. To make it clear, investment can be defined as

something that you purchased with your money to generate income or profit hence,

properties that can depreciate over time cannot be considered as an investment.

Financial products can be vast and choosing can be hard especially if you are not

familiar with any of it (Beattie, 2018).

Conceptual Framework

Figure 1 shows the conceptual framework paradigm of the study. The indepedent

variable of this study is the psychographic factors with the following indicators:

psychographic attributes which refers to any attributes relating to personality, values,

attitudes, interest, or lifestyles of the investors and investor biases which is defined as
a tendency towards a certain disposition that guides the decision maker to a judgment

in circumstances pertaining to investment decision making (Minor & Mowen, 2001;

Arora, Dhameja & Sahi, 2012).

The dependent variable is the investment preference among middle managers

with the following indicators: money growth which refers to the return on investment

associated with the type of investment invested by the investor, reliability of the

company which encompasses the reputation of the investment company as well as the

financial position and performance of the company and security of the investment

which involves the level of assurance that the investment would not be at loss (Lu

Zheng, 1999; Desai, Geete & Thakur, 2013).

 Independent Variable Dependent Variable

Investment Preferences
Psychographic Factors
 Money Growth
 Psychographic Attributes
 Reliability of the Company
 Investor Biases
 Security of Investment

Figure 1. Conceptual Framework

Significance of the Study

With the increasing trend of savings and the vast financial products available in

the market, it will be hard for individuals to choose and direct his investment towards

various investment alternatives. Thus, this study is conducted to assists its

beneficiaries on what are the preference of middle managers with regards to different

investment avenues based on the psychographic factors characterized by these

investors when engaging in investments. In effect, it will help them make the right

decision even if there are complex and vast information available on how to best

invest their money.

The results of the study will benefit the financial service providers, middle

managers, students and future researchers. For financial service providers, this study

will help them to consider the psychographic factors of middle managers so as to

better understand and advise them and in effect, would enable them to target their

audience more sharply for them to develop appropriate marketing strategies and

further build investor’s trust.

For investors, the result of this study will serve as the basis of the investors in

choosing the best investing avenues. For middle managers, this study will throw a

light on the awareness of the investment products available in this local setting that

will eventually give them the knowledge and idea on how to invest their income. For

students, as future professionals, they will gain understanding on how they will use

their income efficiently in the future. For future researchers, the research will become

a helping hand to future researchers for their future studies in this similar area.

Definition of Terms

For clarity and better understanding of the study, some major terms are defined:

Investment Preference. As used in this study, it refers to the desired investment of

an investor on different investment avenues.

Psychographic Factors. As used in this study, it refers to thoughts, feelings and

other cognitive characteristics that influence the behavior, attitude, and functions of

the person mind.