Investor risk tolerance on mutual fund investment decisions. It aims to understand how varying levels of risk tolerance influence fund selection, asset allocation, and investment strategies. By examining factors such as age, income, financial literacy, and market conditions, the study seeks to identify the key drivers that shape an investor’s risk-taking behavior. Additionally, it explores the role of behavioral finance in investment decision-making, highlighting how psychological biases affect risk perception. The research provides insights that can help financial advisors, mutual fund companies, and policymakers develop better strategies to align investment options with individual risk profiles, ultimately leading to more informed and rational investment decisions. Design/Methodology/approach: A comparative analysis is conducted to examine how different investor segments respond to market fluctuations and how their investment preferences shift over time Additionally, secondary data analysis is conducted using historical mutual fund performance reports and investment patterns of different risk-tolerant investor groups. Statistical tools, such as correlation analysis, regression models, and risk profiling techniques, are applied to establish relationships between risk tolerance levels and mutual fund choices. Findings: Investor Risk Tolerance and Its Effect on Mutual Fund Investment Decisions reveal that risk tolerance significantly influences an investor’s choice of mutual funds. Investors with high-risk tolerance tend to prefer equity-oriented mutual funds, which offer higher potential returns but come with greater market volatility. In contrast, risk-averse investors prefer debt or balanced mutual funds, prioritizing stability and predictable returns over high-risk opportunities. The study also highlights that demographic factor such as age, income, education level, and investment experience play a crucial role in shaping an investor’s risk-taking behaviour. Originality: The originality of the study on Investor Risk Tolerance and Its Effect on Mutual Fund Investment Decisions lies in its comprehensive approach to analysing the relationship between an investor’s psychological risk appetite and their mutual fund selection. Unlike traditional financial studies that focus primarily on risk-return trade-offs and portfolio diversification, this research integrates behavioural finance theories to explain how psychological biases, emotions, and external market conditions influence investment decisions. By incorporating both quantitative data analysis and behavioural insights, the study provides a holistic perspective on why investors often deviate from rational decision-making models. Research limitations/implications: Investor Risk Tolerance and Its Effect on Mutual Fund Investment Decisions has certain research limitations and implications that need to be considered. One of the key limitations is that risk tolerance is not static; it evolves over time due to changes in an investor’s financial situation, age, market conditions, and economic outlook. This makes it challenging to create a fixed model that accurately predicts investment decisions over the long term. Additionally, the study relies on self-reported data collected through surveys and questionnaires, which may be subject to biases, as investors may not always accurately assess their own risk appetite or may provide socially desirable responses rather than honest ones. Practical implications: Investor Risk Tolerance and Its Effect on Mutual Fund Investment Decisions has significant practical implications for financial advisors, mutual fund managers, investors, and policymakers. Understanding an investor’s risk tolerance allows financial advisors to provide more personalized investment recommendations, ensuring that clients choose mutual funds that align with their risk appetite and financial goals. This can help prevent mismatched investments, where risk-averse investors unknowingly invest in high-risk funds or aggressive investors settle for low-return investments that do not meet their long-term objectives. For mutual fund companies, the study highlights the importance of designing and marketing investment products tailored to different risk profiles. Social implications: Investor Risk Tolerance and Its Effect on Mutual Fund Investment Decisions has several social implications that impact financial well-being, economic stability, and investor behaviour. One of the key social benefits of understanding risk tolerance is the promotion of financial literacy and responsible investing. When individuals are aware of their own risk-taking behaviour, they are more likely to make informed financial decisions, reducing the chances of impulsive or emotionally driven investments that could lead to significant financial losses. This contributes to greater financial security for individuals and households, ultimately leading to improved economic well-being.