Positive Emotions and Investment Decisions: A Conceptual Exploration

Abstract

Investment decision making is a crucial step to be taken by every individual on a regular basis, whether it's short term or long term, for consumption or for saving purposes but require the least bit of knowledge about financial terms. On the other hand, there are many factors which directly or indirectly affect our decision making and emotional factors are one of them. Emotions can be used as accurate appraisal and expression of internal feelings to motivate, better planning, consistent practices and achieve the financial goals. Emotions not only affect our mental ability, but also the physical activities which defines the overall personality of the individual, emotions can be of different types, but we mostly know positive and negative which is the reflection of our beliefs and values and result into our decision. This paper will start with the explanation of investment decision making and how investment decisions can change with the effect of positive emotion. Based on the literature, it was found that positive emotions are positively related to the investment decision making and person with positive emotion and attitude take wise and better financial decision. With the calm mind and positive emotions people can think better and it reflected in their financial decisions.