Risk tolerance influence on the financial decision-making of stock market investors in Manila City: Basis for enhancing personal finance management strategies

ABSTRACT: This study aims to examine the influence of risk tolerance on the financial decision-making of stock market investors in Manila City, with the goal of enhancing personal finance management strategies. The research specifically investigates how investors willingness to take financial risks and their perceived ability to handle financial losses impact their saving, budgeting, spending, and investing behaviors. A descriptive-correlational research design was utilized, and data were gathered through survey questionnaires distributed to 56 purposively selected stock market investors in Manila. The instrument measured levels of risk tolerance and financial decision-making and the relationship between the two variables was analyzed using multiple regression. Findings indicate that investors in Manila generally show a high level of risk tolerance, which significantly correlates with sound personal finance strategies and strong adherence to financial plans. Despite their openness to risk, these investors apply cautious and rational approaches to managing their finances, demonstrating balanced investment behavior. Grounded in Prospect Theory, the study affirms that investors psychological responses to risk and fear of losses significantly influence financial choices. The results support the theory’s application in understanding investment behavior in volatile environments. This research contributes original insights by focusing on stock market investors in a rapidly developing urban setting, filling a gap in local literature. It emphasizes the importance of aligning investment strategies with individual risk profiles and proposes the development of targeted personal finance management strategies to promote informed, resilient financial decision-making.

Filipiniana