Retail investors' financial risk tolerance and their risk-taking behaviour: The role of demographics as differentiating and classifying factors

This paper empirically examines whether demographic factors namely gender, age, marital status, income, occupation, and education could be used individually or in combination to differentiate among retail investors in terms of financial risk tolerance (FRT) and risk taking behaviour (FRB), and classify retail investors into FRT and FRB categories. A single cross sectional survey was conducted among 778 retail investors with various levels of investment experience, through a structured questionnaire covering a variety of demographic factors. Four of the six demographic factors were found to be useful in differentiating between levels of investors' FRT and FRB as well as classifying individuals into different FRT and FRB categories.