Behavioral finances of financially savvy households: the types of investors

Abstract

The article discusses behavioural finance theories in households’ decision-making process. Classical finance theories based on financial markets' rational behaviour assumption are analysed, the subjective factors influenced on households' decision-making were identified. Behavioural theories and behavioural anomalies in the decision-making process are classified; the opportunities of their application in the financial market are described. Behavioural finance theories’ influence on the households' financial decisions were researched to allocate investors’ types based on their behavioural characteristics. Investors’ type classification could help minimize households` mistakes in the personal finance management. Taking into account households` weaknesses in the personal finance management, they could choose more effective strategy for better personal finance management.