The Effect of Demographic Factors on Investor's Risk Tolerance

Investors invest their savings for the purpose of getting more money in order to finance their future consumption. Investment decisions are made with the expectation of earning certain rate of return and the actual return earned by the investor may differ from it. Investors provide more emphasis for risk associated with variable investment avenues when making their investment decisions. Different people have different risk tolerance level and it depends on several factors. The objective of the study is to identify the relationship between demographic factors and investor's risk tolerance. It is found that demographic factors such as age, education, investment experience and income of the investors are correlated with their risk tolerance and; gender, occupation and civil status are not related with risk tolerance