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Rationale
The beginning of globalization process which started during the early 1900s
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
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
help those financial services industry to target the appropriate consumers (Arora,
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
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
Aydemir & Tufekci, 2017; Garg & Verma, 2016; Olsen, 2010).
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
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
existing industries while at the same time ensuring a clean, green, safe and child-
accordance with the agro-industrial framework of the city and its surrounding areas.
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
Research Objective
in terms of:
in terms of:
investment preference.
investment preference.
Hypothesis
The hypothesis of the study were tested at 0.05 level of significance stating that
In this section of the study it expects to survey the related writing with respect to
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
Psychographic Factors
Throughout time, it was portrayed that investors are rational and sensitive when
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
that investors apparently do not act as rational as economists think they do. Various
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).
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
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
also showed that psychological factors as compared to economic factors have more
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)
attitude and his perceived financial knowledge have been one of the determinants of
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
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
Viding, 2013).
When investing, investors keep in mind about economic factors like expected
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
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
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
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
realization of a person with regards with the financial markets and investment
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).
knowing why investors changes their preferences over investments throughout time.
Information that is acquired by an investor may have been cause by certain factors
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
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
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
bias, hence they can make better investment outcomes when making investment
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
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
must be based not only with their own personal judgment but on the intuitive
However, an article stated that previous studies of expert decisions makers have
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
true that an expert would not commit a mistake when giving an advice. Furthermore,
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
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
(Anum, 2017).
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 &
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).
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
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
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
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 to plan for saving and spending. This plan for saving and spending may
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
only the individuals with surplus budget can afford to make investment since their
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
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
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
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
investment products to choose from that makes it confusing to point out just one of
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
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
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
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
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
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
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,
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,
Investors has a lot of investment avenues to park their investments, choosing the
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
discussed in the study that investor invests based on their risk taking attitude
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).
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
when we take into account the psychographic attributes and the investor biases of the
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
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
Psychological factors have strong effects on decision making, because they have
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
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
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
when investing, these are the key factors needed by the financial institutions to be
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
This review of related literature and studies help the researchers in providing
affects the investment preference among middle managers. This helps in determining
Theoretical Framework
This study is anchored on the study of Arora, Dhameja and Sahi, (2012) which
and those investors who are loss averse; this tendency refers to psychographic
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
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 &
individuals or groups act as investors. This tries to understand how emotions and
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
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
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)
a unique person, the reactions and decisions of two unique individuals faced with the
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
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
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
something that you purchased with your money to generate income or profit hence,
Financial products can be vast and choosing can be hard especially if you are not
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:
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
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
Investment Preferences
Psychographic Factors
Money Growth
Psychographic Attributes
Reliability of the Company
Investor Biases
Security of Investment
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
beneficiaries on what are the preference of middle managers with regards to different
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
The results of the study will benefit the financial service providers, middle
managers, students and future researchers. For financial service providers, this study
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
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:
other cognitive characteristics that influence the behavior, attitude, and functions of