Canada’s younger millennials have a greater appetite for risk-taking in their investments, contradicting the widely-held belief that this is a cautious group: the finding emerges from submissions by this year’s applicants to the scholarship program offered by Toronto-based Bridgehouse Asset Managers, an affiliate of Brandes Investment Partners.
Students between the ages of 16 and 22 applied for the fourth annual scholarship program by taking an investor personality quiz, which is based on the Know Your Client rule. They then submitted an essay explaining what they learned about their financial personalities through the quiz. Ten winners are chosen to receive an award of $2,000 each, which is designated for tuition fees.
Approximately 60% of the entrants declared themselves to have a higher risk tolerance, with 30.5% identifying themselves as “strategists” when it comes to their investing behaviour. Slightly less than one-fifth (18.2%) were labeled “thrill seeker/strategist” after taking the quiz and 12.2% identified with the “thrill seeker” label.
“Despite the prevailing view that millennials are cautious investors, our young people are demonstrating an increasing amount of self-awareness and self-confidence in their investment personalities,” says Carol Lynde, president and chief operating officer, Bridgehouse Asset Managers, in a statement.
Approximately one-third (32.6%) of the millennials found their investing personalities are risk-neutral. Only 6.5% of the respondents found their personalities fit the three risk-averse categories, with the most risk-averse label of “observer/analyst” applying to the smallest segment of young people (1.4%).
The responses from the quiz did find that women respondents make up a much greater proportion of the more cautious investors. For instance, of the 1.4% who identified with the “observer/analyst” label, 90.5% were women and 9.5% were men. The second-most risk-averse label of “analyst” applied to 3.5% of the respondents, with 83.7% of those individuals being women.
The experience proved to be an enlightening and rewarding for the 10 winners.
“The online investor personality quiz has highlighted to me that I need to be a more responsible and knowledgeable investor,” wrote 22-year-old Kristen from Ontario who is one scholarship winner. “After researching and informing myself more about my investments, I have learned that perhaps diversifying my portfolio more would be a smart and logical next step.”
Twenty-year-old Oluwapelumi, an Alberta winner, wrote that successful investors, “are willing to take risks. However, they approach financial opportunities critically by relying on research and reliable financial advice.”
The 2015 program ran from May 1 to June 15 with 1,415 millennials applying for the program. The next scholarship program will open to applicants on Apr. 1, 2016.