Study: Younger Investors More Tolerant of Risk

Posted by adaniels in Blog on November 30, 2012

A new survey seems to suggest that younger investors are more comfortable with risk. OnWallStreet.com  reports that the risk level of younger investors in mutual funds is now higher than the level seen before the financial crisis in 2008.

The Investment Company Institute surveyed four thousand households in May and discovered that 39% investors under 35 were able to tolerate “above-average or substantial financial risk” in order to get the returns they want. This is up from 31% in the previous two years and is even a little higher than the 37% level in May of 2008, just before the recession.

On the other hand, the risk tolerance of those 65 and older is much lower – 13% as of May 2012, which is similar to the 14% number in May 2008.

“Willingness to take financial risk is strongly affected by age, but has also varied over time within age groups,” said Sarah Holden, who is the organization’s Senior Director of Retirement and Investor Research. She said that “between 2011 and 2012, the willingness to take investment risk among all but the youngest shareholder group fell or remained about the same, while the youngest age group’s risk tolerance increased.”

According to the survey, 53.8 million American households own mutual funds. That adds up to 44.4% of all U.S. households.

Written by Lisa Swan

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