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

SUPREME COURT ORDERS OCTAVIAR GROUP TO WIND UP

THE Queensland Supreme Court has ordered the Octaviar Group of companies (formerly known as MFS Group) to be wound...

CEOS BRAVE THE COLD TO RAISE $1.4 MILLION FOR THE HOMELESS

MORE than 400 executives confronted the cold last night in the annual Vinnies CEO sleepout, which took place benea...

JENNIFER WESTACOTT ON BANK TAX: IT EXPOSES GOVERNMENT "DESPERATION"

South Australia's new bank levy exposes the desperation of a government that is unable to get its own budget and ...

BASKETBALL'S COMEBACK CONTINUES WITH NBL CLUBS TO FACE OFF AGAINST CHINA'S NATIONAL TEAM

THE RESURGENCE of Australia's National Basketball League (NBL) continues with China's national team to play t...

Related News

BASKETBALL'S COMEBACK CONTINUES WITH NBL CLUBS TO FACE OFF AGAINST CHINA'S NATIONAL TEAM

THE RESURGENCE of Australia's National Basketball League (NBL) continues with China's national team to play t...

DOMESTIC TOURISM IN AUSTRALIA BREAKS RECORDS, INJECTS $61.7 BILLION INTO NATIONAL ECONOMY

DOMESTIC Australian tourists have spent a record breaking $61.7 billion on intra and interstate travel this year, acc...

THE DOCTORS WHO PLUNGED INTO THE SHARK TANK AND SURVIVED WITH A $500,000 INVESTMENT

THEIR mission is to change the face of cancer care with an app that empowers and connects patients and care givers...

IMF BRACES FOR BIG LOSS FOLLOWING WITHDRAWAL FROM SPOTLESS CLASS ACTION

LITIGATION fund IMF Bentham (ASX: IMF) is set to lose as much as half a million dollars after it ceases funding one o...

BOOK YOUR FUNCTION SPACE HERE

 

 

 

Contact us

Email News Update Sign Up Contact Details
Subscriptions

PO Box 2087
Brisbane QLD 4001

LoginTell a FriendSign Up to Newsletter