Risk tolerance in South Africa

Abstract

Risk tolerance became prominent from the 1900s onwards, however, very little research was conducted on the said topic between the Great Depression of 1929 and the end of World War II in 1945. The importance of risk tolerance levels for individual investors are that these levels will influence the manner in which investors choose investment options. Researches indicate that numerous factors influence investors’ risk tolerance levels which include age, gender, race, marital status, and income and wealth. The latter upon which this study is based. The study aims to draw a conclusion from the correlation between income and wealth of male and female investors. The research made use of a quantitative method based questionnaire. Data on investors were collected from a South African investment company. The study questionnaire was distributed online and a research sample of 600 individual investors were collected. The study concludes that there is a significant difference between male- and female risk tolerance levels and high- and low income investor groups.

Keywords: Gender, income, risk tolerance, risk appetite, financial decision-making.