ROLE OF RISK RETURN TRADE-OFF ON LONG TERM INVESTMENT DECISIONS BY RETAIL INVESTORS: AN EMPIRICALSTUDY

Recent studies in empirical finance have shown that, anticipated excess returns on stocks and bonds, real interest rates, and levels of risk change over time in patterns that can often, be predicted. Moreover, these trends usually continue for extended periods. Through this research work, we tend to introduce an empirical model designed to capture these intricate patterns while remaining straight forward to use in real-world scenarios. We also examine what this model means for asset allocation decisions. Shifts in investment opportunities can impact the balance between risk and return for bonds, stocks, and cash over different time horizons, leading to what is known as a "term structure of the risk-return trade-off.” This paper explores how changing investment opportunities affect risk over various time horizons. We also present an empirical study that effectively reflects the intricate patterns of expected returns and risk, while remaining practical and easy to implement. While the concept is strongly supported in theory, real-world evidence has shown mixed results this analysis is especially relevant for retail investors looking to understand international investment dynamics. A study survey was conducted among 213 retail investors to know the role of risk-return trade-offs on long-term investment decisions by retail investors and concluded that risk-return trade-offs in the long term play a crucial and significant role in investment decisions.

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Publication Details

Journal
Journal of Informatics Education and Research
Published
2025-06-24
DOI
https://doi.org/10.52783/jier.v5i2.3033
Primary Topic
Corporate Finance and Governance
Type
article
Field-Weighted Citation Impact
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article

ROLE OF RISK RETURN TRADE-OFF ON LONG TERM INVESTMENT DECISIONS BY RETAIL INVESTORS: AN EMPIRICALSTUDY

Shivangi Ameriya
Journal of Informatics Education and Research
Corporate Finance and Governance
article

ROLE OF RISK RETURN TRADE-OFF ON LONG TERM INVESTMENT DECISIONS BY RETAIL INVESTORS: AN EMPIRICALSTUDY

Shivangi Ameriya
article en

Abstract

Recent studies in empirical finance have shown that, anticipated excess returns on stocks and bonds, real interest rates, and levels of risk change over time in patterns that can often, be predicted. Moreover, these trends usually continue for extended periods. Through this research work, we tend to introduce an empirical model designed to capture these intricate patterns while remaining straight forward to use in real-world scenarios. We also examine what this model means for asset allocation decisions. Shifts in investment opportunities can impact the balance between risk and return for bonds, stocks, and cash over different time horizons, leading to what is known as a "term structure of the risk-return trade-off.” This paper explores how changing investment opportunities affect risk over various time horizons. We also present an empirical study that effectively reflects the intricate patterns of expected returns and risk, while remaining practical and easy to implement. While the concept is strongly supported in theory, real-world evidence has shown mixed results this analysis is especially relevant for retail investors looking to understand international investment dynamics. A study survey was conducted among 213 retail investors to know the role of risk-return trade-offs on long-term investment decisions by retail investors and concluded that risk-return trade-offs in the long term play a crucial and significant role in investment decisions.

Journal of Informatics Education and ResearchVol. 5(2)
IPS Academy (IN)
Openalex Percentile: Top 79%
Corporate Finance and Governance
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