RISK TOLERANCE AND INVESTMENT PARADIGM OF INDIVIDUAL INVESTOR

Abstract

The varieties in the financial services sector have provided the individual investor with
a lot of opportunities to invest. Savings are the words that any investment advisor will
use. Savings are the difference between the amount investor earns and the amount
investor spends. One reason could be that there are certain materials aims that they
want to save for. Pakistani investor's behavior has been changing strategy in the posteconomic
reforms era in investment activity, preferences in selecting various financial
instruments, evaluating and in analyzing the investment avenues. The objective of the
study was to understand investment pattern among the investors of Peshawar
(Pakistan). The data was collected through structured questionnaire distributed to 770
peoples from different Socio Economic Classes in Peshawar. A significance difference
was found in safer investment and riskier investment ways. Analysis has been done
through One Way ANOVA. It was calculated that the most preferred investment options
are Insurance and bank deposits as more customers' basis their investment decision on
safety of investment. Most of the factors influencing investment decisions were high
returns, tax benefit and safety. These results indicate that majority of investors in
Peshawar are risk averse. Further studies should investigate the risk tolerance and
investment avenues with moderating role of financial literacy.