Financial Risk Tolerance and Investment Decision in Nepal

Abstract

This study examines financial risk tolerance and investment decision among investors in Nepal, Rupandehi, focusing on their attitudes, perceptions, and decision- making processes in the stock market. The research aims to find the key factors influencing investment decisions, including risk tolerance, return expectations, and external influences such as peer recommendations and broker guidance. This study specifically explores four key factors investors' attitudes, investors' perceptions, risk, and return based on their significance in the literature. The objectives include analyzing investors' attitudes toward equity investment, understanding the preferred forms of return among investors in securities investment, and examining the factors shaping investment decision in the equity market. Primary data are collected through a structured questionnaire using convenience sampling. The analysis revealed that all tested variables significantly impact investment decisions. The findings indicate that most investors prioritize generating maximum income with asset growth, with a preference for short-term returns in the form of capital gains rather than long-term investments. Furthermore, the stock market in Nepal, Rupandehi, is expanding, attracting more investors. However, a significant number of investors lack financial knowledge and are often influenced by artificial transactions conducted by brokers and peer recommendations.