Proceedings of the 39th International Academic Conference, Amsterdam

THE INFLUENCE OF DEMOGRAHIC FACTORS ON RISK TOLERANCE FOR SOUTH AFRICAN INVESTORS

ZANDRI KOEKEMOER

Abstract:

Financial risk tolerance, which is a known term in the financial world, indicates the amount of risk an investor is willing to tolerate when making investment decisions. Researchers indicate in previous studies that financial risk tolerance could be influenced by demographic factors such as gender, race, age, income and marital status. Hence, it is important to analyse the effect of demographic factors on financial risk tolerance, as it will ultimately affect investment decisions of South African investors. As a result, the aim of this study is to analyse the influence of demographic factors on South African investors’ investment decisions. This study can be used as a forecasting tool for South African investment companies to predict risk tolerance levels based on the demographics of their client base. Results from this study indicate that male, African, young investors earning R700 000 and more and who have never been married are more risk tolerant and are willing to invest in high risk portfolios. The results from this study, in a South African context, were similar to previous non-South African studies.

Keywords: Risk tolerance, investors, demographics, logistic binary regression, South Africa

DOI: 10.20472/IAC.2018.039.024

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