Theoretical aspects of implementation of the principles of financial behaviour in order to make investment decisions

Abstract

All finances are based on human behavior, because every person's expenses and savings are defined not only by financial situation, but also by expectations and emotions. Human is not perfect, especially when it comes to the rational management of his property. It is especially true when one is making serious mistakes while taking decisions on investments on the basis of past and current situation. Person's financial decisions can lead not only to his, but to whole community prosperity. This article aims to investigate the issues of financial behavior when making investment decisions. After examined the financial behavior issues and defined some factors, who determine the return on investment and its risk involved, it was found that person's financial behavior is formed on the basis of different economic, psychological, and sociological principles as a whole.