STUDY LINKS PERSONALITY TO INVESTMENT CHOICES

Written on the 1 April 2015

STUDY LINKS PERSONALITY TO INVESTMENT CHOICES

PERSONALITY traits can influence how people trade on the share market and impact investment outcomes, according to new research.

Researchers from Curtin University, Monash University and University of Western Australia conducted three studies to determine risk-taking and overconfidence by using the Five-Factor Model.

The Model is based on genetics and divides personality traits into categories including extroversion, agreeableness, conscientiousness, neuroticism and openness to experience.

Project lead and Curtin School of Economics and Finance professor Robert Durand says people will take or avoid risks to achieve investment goals that align with their personality.

"Extroverts for example, may take increased risks due to their need to seek excitement," Durand says.

"People high in conscientiousness may be more cautious in taking risks due to their need for control, order and self-discipline, and people high in neuroticism may avoid risks due to fear or negative consequences."

Durand says previous behavioural finance research neglected to investigate the impact of personal characteristics, despite it being at the core of decision-making.

He says delving deeper into the link between personality and investment decisions has important implications for investors and analysts.

"It also has important implications for our understanding of finance as we potentially have an understanding of how various, seemingly unrelated, phenomena, are linked," he says.

"Investors construct portfolios that are congruent with their personalities and self-knowledge might lead investors to articulate and understand the type of decisions they make.

"From this understanding, investors might be able to modify their behaviour and also avoid some mistakes."

The studies were published in the Journal of Behavioural Finance and the Review of Behavioural Science.


Latest News

DREAMWORLD PARENT COMPANY DEMOTES CEO DEBORAH THOMAS

ARDENT LEISURE, the parent company of Gold Coast's Dreamworld theme park, has reshuffled its core leadership w...

MELBOURNE SHOPPING CENTRE SELLS FOR $48m AS CHINESE DEMAND RAMPS UP

A MELBOURNE shopping centre has been sold for $48 million, bringing the total spent by Chinese investors on Victor...

HOW WEDDING WOES INSPIRED A BOOMING BUSINESS FOR MEGAN ZIEMS

WHEN she was dress shopping for her wedding in 2010, Megan Ziems (pictured left) was disappointed to discover a ma...

SPOTLESS REJECTS DOWNER'S 'HOSTILE' $1.2B BID AS IT PROMISES A STRATEGY RESET

CLEANING and catering services company Spotless has rejected a $1.26 billion takeover bid from mining services firm D...

Related News

FURNITURE DISRUPTOR SET TO SHARE HIS ONE OF A KIND BUSINESS MODEL

IT'S no secret that Australians love homemaking. Their ceaseless quest to create the perfect place to call hom...

WEEDING OUT THE ASX'S BURGEONING CANNABIS TREND: 8 COMPANIES TO WATCH

A NICHE is budding on the ASX in the form of medical cannabis, an industry which has been on the country's rad...

FRESH CLASS ACTION TO REVEAL ANOTHER SIDE OF SLATER AND GORDON DOWNFALL

ACA LAWYERS has issued a formal letter of demand to Andrew Grech (pictured), managing director of Slater and Gordo...

STARSHIPS WERE MEANT TO DELIVER DOMINO'S PIZZA

NICKI Minaj may have been off the mark when she declared 'starships were meant to fly'. However, she m...

EVENTS COMING UP

 

Contact us

Email News Update Sign Up Contact Details
Subscriptions

PO Box 2087
Brisbane QLD 4001

LoginTell a FriendSign Up to Newsletter