Summary of the findings

This thesis studied the effects of different factors on consumers’

investment intentions. Two structural models were presented, one for stock investments and one for investment funds. Both models assessed the relationships between subjective investment knowledge, expected investment value, expected sacrifice, compatibility, perceived behavioral control and investment intentions.

Moreover, the research improved the understanding of the dimensions of value and sacrifice that average household consumers expect from investing. Whereas previous research has already defined and measured consumers’ value perceptions in the investment context (Puustinen 2012;

Puustinen et al. 2013), the sample of those studies only included members of the Federation of Stock Investors, and thus it was expected that a sample including ordinary consumers would yield different results.

Therefore the target population of this research was average household consumers.

Based on the literature review, two higher order latent models were constructed, one for expected investment value and one for expected sacrifice. Based on the results of the second order confirmatory factor analyses, expected investment value among average household consumers falls into three dimensions; namely, expected economic value, expected functional value and expected emotional value. Thus, symbolic benefits (self-esteem and altruism) are not something average household consumers expect from stock or fund investing. Hence, consumers do not expect investing in stocks or mutual funds to help them to boost their self-esteem or status among their peers. Neither do average consumers expect to gain altruistic benefits, that is, to demonstrate their goodwill through stock or fund investing.

Expected sacrifice then again consists of four dimensions: effort, financial risk, source risk, and psychological risk. Accordingly, consumers expect less value from investing when they anticipate investing to require a lot of effort, such as searching, learning or cognitive work. Therefore, consumers are prone to choose “easy” options for wealth allocation.

Moreover, whereas standard finance considers financial risk as objective and measurable, the results of this research suggest that consumers base their decisions on their perceptions of the risk, which might sometimes be quite far from the reality. Source risk, then again, refers to the consumers feeling of distrust regarding the information they receive about the investment. Thus, if the consumers do not trust providers or sellers of the investment, they expect to receive less value from investing. The last dimension of expected sacrifice is the psychological risk of investing.

Accordingly, consumers might want to avoid mental stress, worrying and anxiety, and therefore shun investing.

The relationship between expected sacrifice and expected value was strong in the funds-model (ß = -0.682), however, in the stocks-model the relationship was insignificant. This might indicate that the consumers who expect value from stock investing are indifferent about the sacrifices that investing would require, whereas fund investors are more concerned about investment related sacrifices. Also, it might be that the respondents were less familiar with stock investing and therefore they might have had difficulties in estimating the sacrifices and expected value. However, in the stocks model expected sacrifice affected perceived compatibility negatively (Ƴ = -0.157), referring that the more sacrifices one expects to have to make, the less compatible one perceives the stock investing to be with his or her life.

One of the central findings of the thesis was that when it comes to stock investments, the level of expected value is strongly affected by the consumer’s self-assessed knowledge level (Ƴ = 0.524), whereas in the case of investment funds, subjective knowledge has a strong direct effect

on expected sacrifices (Ƴ = -0.401). As to the best of our knowledge, no prior research has studied how consumers’ knowledge levels affect their evaluations of the investment products and investment related sacrifice.

However, as discussed in the theoretical part of the thesis, several research papers within the field of consumer behavior have suggested that knowledge level has an impact on consumer evaluative processes and thereby affect their product assessments.

A certainly surprising finding was that the relationship between expected investment value and investment intentions was insignificant in both models. Then again, in both models expected investment value affected compatibility and thus also had an indirect effect on investment intentions.

The relationship between expected value and compatibility was slightly stronger in the funds model (ß = 0.736) than in the stocks model (ß = 0.637). Conversely, compatibility had a somewhat stronger effect on investment intentions in the stocks-model (ß = 0.683) than in the funds-model (ß = 0.587). Thus, consumers seem to be more concerned about the changes in behavior that stock investing would require than about the requirements of fund investing.

Another unexpected finding was that consumers’ self-assessed wealth (perceived behavioral control) had quite a small impact on their investment intentions in both models. In the funds-model the relationship was slightly higher (Ƴ = 0.228) than in the stocks-model (Ƴ = 0.169). Accordingly, even if consumers would have the money to invest and acknowledge it, they do not necessarily invest it.

The results also suggest that consumers with and without prior investment experience evaluate the dimensions of expected investment value and expected sacrifices, as well as the compatibility, behavioral control, subjective investment knowledge and investment intentions differently.

The largest effects in both investment alternatives were in investment intention, implying that consumers with no investment experience are

significantly less likely to invest than consumers with prior investment experience. The second largest difference between the investors and non-investors was in their evaluation of the investment’s compatibility. Other notable differences in the stocks model were found in subjective investment knowledge and perceived behavioral control whereas in the funds model the greatest effect sizes were in behavioral control, functional value, subjective investment knowledge, and effort. Noteworthy was that the difference in the evaluation financial risk was not statistically significant between the groups in the case of both investment alternatives.