An insight on investment biases of Singaporeans.

• Main Authors: Chiang, Jia Bing., Siew, Joel Sheng-En., Toh, Raymond Wee Siong.
• Other Authors: Kong Yoon Kee
• Format: Final Year Project
• Language: English
• Published: 2013
• Subjects: DRNTU::Business
• Online Access: http://hdl.handle.net/10356/51301
• Institution: Nanyang Technological University

Understanding investment biases and their causes are crucial for investors and financial institutions in addressing the risks arising from them. Past studies focus on foreign investors and at most two of the five most relevant biases (Overconfidence, Disposition Effect, Home Bias, Confirmation Bias and Loss Aversion). However, our research focuses on all five biases of Singapore investors and to what extent they are influenced by the six factors (Age Group, Gender, Education Level, Income Level, Financial Literacy and Personality). Our results suggest that males exhibit a higher degree of overconfidence, disposition effect and home bias as compared to females. In particular, overconfidence and disposition effect are prevalent among investors with higher education, income and financial literacy. Our research shows that each of the six factors has an impact on two or more biases. Therefore, this helps the understanding on how to address the biases. In addition, we offer insights into understanding and mitigating the issue of home bias by examining the pertinent causes: product presence, transactions costs and information availability. Our findings show that increasing product presence and company information, and decreasing transaction costs would reduce home bias.