The investment behaviour of retail investors. Role of individuals' financial behaviour in the Spanish Securities market

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De La Pena Condado, Sergio
Issue Date
MBA in Finance
Dublin Business School
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The aim of the research paper is to examine and better understand the capacity of individual investors to adequately invest on the Spanish stock market (BME) and how their decisions and choices made in this financial framework along the Behavioural Finance branch of knowledge, can affect and determine a customer’s financial standing. Moreover, the purpose of this work is to determine whether their personal strategies when accessing to markets are effective in earning surplus returns of each transaction executed. There is much research into the relationship between individual or retail investor behaviour and their own investing methods, but we encounter very few research studies run to understand the nature of individual behaviour in the Spanish financial market. Therefore, this study represents one such attempt to fill this gap, investigating the factors influencing individual investor behaviour and their way of investing in Spain. Data employed were collected from two sources, primary and secondary research methods. For primary data, they were obtained through the use of quantitative questionnaires administered to investors categorised as young, experienced or professionals. Secondary data were collected from various sources such as business library, journal articles, eBooks, catalogues, textbooks and internet. In the first part of the dissertation, a critical review of definitions and explanations within the investments and behaviours, financial markets and attitudes towards risk is undertaken. Finally, in the second and concluding part, the research findings from the implementation of primary data are described and analysed. The data collected through the questionnaire showed that the majority of retail investors effectively managed to invest their savings or incomes into the markets and most people’s view of investment was generalized positivism related to them having the adequate and precise money allocated in different instruments. It also revealed that retail investors have access to their open positions and tends to reorganize the investment philosophy adopting a conservative approach, seeking for capital preservation as a primary objective and almost any tolerance to fluctuating returns at the end of the year. This is ultimately supported by the general investment purpose of safety and profitability as strong key priorities before deciding whether to invest in certain product or not. Author keywords: Investment behaviour, financial securities, stock market, retail investors, individuals' decision-taking, investment products