Impact of Risk Tolerance on Investment Decision-Making Among Individual Investors

Abstract Risk tolerance plays a crucial role in determining investment behaviour among individual investors. Investors differ significantly in their willingness to accept financial risk, which influences their asset allocation and investment strategies. This study investigates the impact of risk tolerance on investment decision-making among individual investors. A survey was conducted among 225 respondents from different demographic groups. Statistical tools such as correlation and regression analysis were used to evaluate the relationship between risk tolerance and investment behaviour. The results indicate that higher risk tolerance significantly increases participation in equity and high-return investment options. Conversely, investors with low risk tolerance prefer safer assets such as fixed deposits and government securities. The findings emphasize the importance of understanding investor risk profiles for effective financial planning.