Behavioral Approach of Young Professionals Towards Financial Investmentstowards
Chapter 1: Research Problem
This chapter contains the main text of the paper and includes the following parts arranged according to prescribed order: Background of the Study, Statement of the Problem, Hypothesis, Conceptual Paradigm, Significance of the Study, Scope and Limitation of the Study, and Definition of Terms.
Background of the Study
Today, young professionals are in crucial financial condition. They are trapped between supporting aging parents and or supporting their own family. For single professionals, the dilemma of how they will handle their own finances is high. With the newly gained freedom over their own income, the possibility of spending it the way they like it is endless.
Indeed, being able to manage the increasing demands of multiple social roles becomes an important measure of maturity as young adults take on more responsibility for planning and living the lives they choose ( Ecdes,Templeton,Barber&Stone, 2003).
There are several factors that affects the behavioral approach of young adults when it comes to financial planning. One of which is financial literacy. Previous research has found that financial literacy can have important implications to financial behavior. People with low financial literacy are more likely to have problems with debt (Lusardi and Tufano 2009), less likely to participate in the stock market (van Rooij, Lusardi, and Alessie 2007), less likely to choose mutual funds with lower fees (Hastings and Tejeda-Ashton 2008), less likely to accumulate wealth and manage wealth effectively (Stango and Zinman 2007; Hilgert, Hogarth, and Beverly 2003), and less likely to plan for retirement (Lusardi and Mitchell 2006, 2007a, 2009). Financial literacy is an important component of sound financial decision-making, and many young people wish they had more financial knowledge.
This research paper entitled “Behavioral Attitude of Young Professionals towards Financial Investments” is conducted to identify the level of behavioral
This chapter contains the main text of the paper and includes the following parts arranged according to prescribed order: Background of the Study, Statement of the Problem, Hypothesis, Conceptual Paradigm, Significance of the Study, Scope and Limitation of the Study, and Definition of Terms.
Background of the Study
Today, young professionals are in crucial financial condition. They are trapped between supporting aging parents and or supporting their own family. For single professionals, the dilemma of how they will handle their own finances is high. With the newly gained freedom over their own income, the possibility of spending it the way they like it is endless.
Indeed, being able to manage the increasing demands of multiple social roles becomes an important measure of maturity as young adults take on more responsibility for planning and living the lives they choose ( Ecdes,Templeton,Barber&Stone, 2003).
There are several factors that affects the behavioral approach of young adults when it comes to financial planning. One of which is financial literacy. Previous research has found that financial literacy can have important implications to financial behavior. People with low financial literacy are more likely to have problems with debt (Lusardi and Tufano 2009), less likely to participate in the stock market (van Rooij, Lusardi, and Alessie 2007), less likely to choose mutual funds with lower fees (Hastings and Tejeda-Ashton 2008), less likely to accumulate wealth and manage wealth effectively (Stango and Zinman 2007; Hilgert, Hogarth, and Beverly 2003), and less likely to plan for retirement (Lusardi and Mitchell 2006, 2007a, 2009). Financial literacy is an important component of sound financial decision-making, and many young people wish they had more financial knowledge.
This research paper entitled “Behavioral Attitude of Young Professionals towards Financial Investments” is conducted to identify the level of behavioral
Bibliography: 2. Annamaria Lusardi & Peter Tufano, 2009. "Debt Literacy, Financial Experiences, and Overindebtedness," NBER Working Papers14808, National Bureau of Economic Research, Inc. 3. Maarten vanRooij & Annamaria Lusardi & Rob Alessie, 2007. "Financial Literacy and Stock Market Participation," Working Papers wp162, University of Michigan, Michigan Retirement Research Center 4 5. Victor Stango & Jonathan Zinman, 2009. "What Do Consumers Really Pay on Their Checking and Credit Card Accounts? Explicit, Implicit, and Avoidable Costs," American Economic Review, American Economic Association, vol. 99(2), pages 424-29, May. 6. Annamaria Lusardi & Olivia S. Mitchell, 2006. "Financial Literacy and Planning: Implications for Retirement Wellbeing,"DNB Working Papers 078, Netherlands Central Bank, Research Department. 7. Glass, Gene V., and Hopkins, Kenneth D. Statistical Methods in Education and Psychology. 2nd ed. Arizona: Arizona State University. 1984 8 9. Guinigundo, Diwa C. “The Philippine financial system. Issues and Challenges” Switzerland: Basel (2005). 11. Arenas, M.L. “Population Growth and Philippine Development.” Retrieved December 26, 2007 from http://www.ey.com/GLOBAL/content.nsf/Philippines/ Population_growth_and_Philippine_development, 2006. 12. Gultiano, S. and Xenos, P. “Age-structure and Urban Migration of Youth in the Philippines.” Retrieved December 26, 2007 from http://www.cicred.org/Eng/ Seminars/Details/Seminars/Popwaves/PopwavesGultiano.pdf, 2004. 13. Roberts J. A., Sepulveda C. J. (1999). Demographics and money attitudes: a test of Yamauchi and Templer 's (1982) Money Attitude Scale in Mexico. Pers. Individ. Dif. 27, 19–35. 14. Diener, E., & Seligman, M. E. P. (2004). Beyond money: Toward an economy of wellbeing. Psychological Science in the Public Interest, 5, 1–31. 15. Kyle, A. and F.A. Wang, (1997), .Speculation Duopoly with Agreement to Disagree: Can Overcon.dence Survive the Market Test?.Journal of Finance, 52(5), 2073-90. 17. Gervais, Simon, and Terrance Odean, 2001, “Learning to Be Overconfident,” Review of Financial Studies, 14, 1-27. 18. Hirshleifer, David and Guo Ying Lao, 2001, On the survival of overconfident traders in a competitive securities market, Journal of Financial Markets 4, 73-84. 19. Lintner, G. (1998). ‘Behavioral finance: Why investors make bad decisions’, The Planner, 13(1):7-8. 20. Barber, Brad M., and Terrance Odean, 2001, “Boys will Be Boys: Gender, Overconfidence, and Common Stock Investment,” Quarterly Journal of Economics, 116, 261-292. 21. Korniotis, G. M. and A. Kumar, 2011. “Do Older Investors Make Better Investment Decisions?”, Review of Economics and Statistics 93 (1), pp. 244-265. 22. Davis, G. D. and Y. Chen, 2008. “Age Differences in Demographic Predictors of Retirement Investment Decisions”, Educational Gerontology, 34 (3), pp. 225 – 246. 23. Felton J., B. Gibson and D. M. Sanbonmatsui, 2003. “Preference for Risk in Investing as a Function of Trait Optimism and Gender”, Journal of Behavioral Finance, 4 (1), pp. 33 – 40. 24. Boxill, Ian; Chambers, Claudia; Wint, Eleanor (1997). Introduction to Social research With Applications to the Caribbean. University of The West Indies Press. Chapter 4, page 36.)