EMPLOYEES' RISK PERCEPTION AND INVESTMENT CHOICES FOR EQUITIES, MUTUAL FUNDS, AND ULIPS

Abstract

Individual investors' perceptions of risk greatly influence their choices when it comes to stocks, mutual funds, and Unit Linked Insurance Plans (ULIPs). It affects investors' propensity to invest by influencing how they assess the riskiness of various financial goods. Risk perception is affected by several things, such as behavioral biases, lack of financial knowledge, and the unpredictable nature of results. Investors can make better decisions and maybe get higher returns on their investments if they know about these things. Although risk perception has a substantial influence on investment decisions, it is not the only one. Risk tolerance, financial literacy, and behavioral biases are important. Understanding these dynamics can help investors and financial advisors lower perceived risk while increasing investment performance. To optimize investing strategies, risk perception might lead to conservative investment behavior, but risk tolerance and financial goals must be taken into account. There are many things that affect how salaried employees think about risk and the investments they make. These include their level of financial knowledge, behavioral biases, and how safe they think their investment choices are. All of these things affect how they feel about stocks, mutual funds, and Unit Linked Insurance Plans (ULIPs). A lack of knowledge about money and a desire for safety are two reasons why salaried workers tend to choose safer investment options, according to the study. This trend is made worse by how they think about risk, which is a very important factor in how they choose investments. This study underscores notable differences in awareness, risk perception, and investing preferences between government and private sector employees concerning equities, mutual funds, and ULIPs. Employees in the private sector exhibit heightened understanding and diminished risk perception, however demonstrate a nuanced preference for direct equity as opposed to mutual funds and ULIPs.