authors
RS Anantharajan and S Manasa

abstract
This study delves into the complex relationship between behavioural finance and the psychology of investing, emphasizing the ways in which emotional and cognitive biases impact investor decision-making and market dynamics. Behavioral finance provides a more complex explanation of financial behaviour by including psychological insights, in contrast to standard financial theories which presume that investors act rationally. Important cognitive biases that contribute to market oddities like bubbles and crashes include herd mentality, overconfidence, and loss aversion. These biases frequently cause investors to make poor decisions. Furthermore, investment methods are significantly shaped by emotional reactions such as fear and greed, particularly in times of extreme market conditions or uncertainty. This research attempts to understand how investor psychology affects both individual financial decisions and larger market trends by looking at theoretical frameworks and real-world case studies. The results imply that a better understanding of behavioural finance concepts can enhance investing results by assisting investors in lessening the negative consequences of psychological biases. The study offers methods for integrating behavioural finance insights into portfolio management and advisory services, with practical consequences for financial advisers and institutions. In the end, this study emphasizes how critical it is to comprehend the psychological foundations of investing in order to make more rational and effective financial decisions.