European Journal of Business and Management www.iiste.org ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online) Vol.8, No.11, 2016 147 The Influence of Demographic Factors on the Investment Objectives of Retail Investors in the Nigerian Capital Market Nneka Rosemary Ikeobi 1* Peter E. Arinze 2 1. Department of Actuarial Science, Faculty of Management Sciences, University of Jos, Nigeria P.O Box 6215, Jos, Plateau State, Nigeria 2. Department of Banking and Finance, Faculty of Management Sciences, University of Jos, Nigeria Abstract Demographic factors, as a group have been found to determine the type and level of investment an investor makes. The aim of this paper is to determine the influence of demographic factors on the investment objectives of retail investors in the Nigerian capital market. Primary data was obtained through a structured questionnaire administered on 180 respondents and analyzed with simple descriptive techniques. Chi-square test and correlation analyses were conducted to assess the effect of demographic factors on the investment objectives of retail investors in the Nigerian capital market. The results reveal that investors’ employment status and income are the most influencing factors on their investment objectives. While income has significant effect on all investment objectives, employment status has significant effect on all investment objectives with the exception of diversification objective. Educational qualification of investors has a significant effect on security investment objective. Demographic factors like gender, age, marital status and capital market experience have no significant effect on the investment objectives of retail investors in the Nigerian capital market. These findings should assist capita market operators when advising their clients on where to invest. They should also act as a guide to policy makers in coming up with policies aimed at repositioning the Nigerian capital market for more efficient fund mobilization for investment in the economy. Keywords: Demographic factors, Retail investors, Investment objectives, Nigerian capital market. 1. Introduction Investment objectives of individual or retail investors refer to their financial goals and are related to what they want to achieve with their portfolio of investments. Thus, an investor may want to maximize current income, maximize capital gains or set a middle course of current income along with some capital appreciation. It is also possible for an investor’s investment objective to be for purely speculative reasons. When an investor is able to clearly define his investment objectives, it becomes easier to determine the investment strategy or plan of attack to achieve the objectives. The investment objectives are generally concerned with return and risk considerations. These two objectives go hand in hand, as the risk of an investment determines how high an investor can set the return objective. The investment objectives of retail investors are closely tied to their risk tolerance – that is the extent to which they are willing to accept more risk in exchange of a higher return. The appetite for risk is usually a factor of the socioeconomic or demographic characteristics of investors, such as age, gender, marital status, family responsibilities, education and investment experience. For example, the older an investor gets, the more likely he or she will have more people relying on him or her for support and so the more risk-averse or less risk-tolerant he or she will be. Also some studies (Al-Ajmi, 2008; Kabra, Mishra & Dash, 2010) have shown men to be less risk-averse than women, even as Muhammad and Hafiz (2014) reported that gender had no effect on investors’ level of risk tolerance. Most studies were tailored at finding the impact of demographics on investors’ risk tolerance level rather than on their investment objectives, although the two go hand in hand. The author did not come across any study that specifically addressed any of these issues in Nigeria and this necessitated the need for this study. This study is therefore designed to determine the impact of demographic variables of Nigerian retail investors on their choice of investment objectives. An understanding of the differences that may exist between different demographic groups will be of benefit to stockbrokers and investment managers. This will assist them in advising their clients on the appropriate investment portfolio that best meets their needs and aspirations. It will also be of benefit to company management on what investors require in terms of returns so as to attract potential investors to invest in the company stocks. Capital market regulators are not left out as this information will be a guide in coming up policies to enhance capital mobilization in the Nigerian capital market. 2. Review of Literature Although the options for investing in the capital market are continually increasing, all investment vehicles can be classified or categorized according to three fundamental characteristics – income, safety and growth – which correspond to types of investment objectives. Investment objectives of retail investors are closely tied to their risk tolerance, and their appetite for risk or lack of it, is frequently a factor of some socioeconomic or