Behavioural Drivers and Investor Typologies in Investment Selection: Evidence from Retail Investors in Central India

Abstract

The study explores the behavioural drivers that influence investment selection among retail investors in Central India,
focusing on the interplay between psychological and financial factors. Based on responses from 508 participants, K-Means
cluster analysis identified three distinct investor typologies—Aspirational Growth Seekers, Conservative High Earners, and
Independent Risk Takers. Cross-tabulation and Chi-square tests confirmed significant associations between investor types,
risk-taking behaviour, and investment objectives, with Cramer’s V values indicating moderate to strong relationships. The
findings reveal that investor behaviour often diverges from financial reality; individuals with lower income levels may pursue
aggressive growth, while wealthier investors tend to prioritise capital safety. The study highlights the diverse nature of retail
investor behaviour and reinforces the value of behavioural segmentation in understanding financial decision-making. The
insights can help financial advisors and policymakers design more tailored investment strategies and promote informed,
goal-aligned investment behaviour.