Fear of losing money, not spending habits, affects investor risk tolerance, study finds
Wednesday, July 30, 2014 - 14:00
in Psychology & Sociology
As the U.S. economy slowly recovers, many investors remain wary about investing in the stock market. Investors' "risk tolerance," or their willingness to take risks, is an important factor for investors deciding whether, and how much, to invest in the stock market. Now, Michael Guillemette, an assistant professor of personal financial planning in the University of Missouri College of Human Environmental Sciences, along with David Nanigian, an associate professor at the American College, analyzed the causes of risk tolerance and found that loss aversion, or the fear of losing money, is the primary factor that explains investors' risk tolerance.