Original Research

The association between South African investors’ financial risk tolerance and demographic variables

Leandri Maritz, Merwe Oberholzer
Journal of Economic and Financial Sciences | Vol 12, No 1 | a469 | DOI: https://doi.org/10.4102/jef.v12i1.469 | © 2019 Leandri Maritz, Merwe Oberholzer | This work is licensed under CC Attribution 4.0
Submitted: 26 March 2019 | Published: 29 October 2019

About the author(s)

Leandri Maritz, School of Accounting Sciences, Faculty of Economic and Management Sciences, North-West University, Potchefstroom, South Africa
Merwe Oberholzer, WorkWell Research Unit, Faculty of Economic and Management Sciences, North-West University, Potchefstroom, South Africa

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Orientation: The expected utility theory was used as the lens to focus on how South African investors’ demographics are associated with their financial risk tolerance.

Research purpose: To determine the association between eight demographic variables of investors and their financial risk tolerance scores.

Motivation for the study: Instead of applying a single aggregated risk tolerance score, this study distinguishes itself from most other studies to refine risk tolerance into various factors.

Research approach/design and method: Data for this study were obtained from FinaMetrica Pty Ltd, namely the results of their 25-item risk tolerance questionnaire, which also includes eight demographic variables of the respondents. In total, 3473 of the respondents were considered valuable. This study identified three risk tolerance factors: factor 1 (level of risk), factor 2 (past experience) and factor 3 (personal feelings and attitudes).

Main findings: The study found that men are statistically significantly more risk tolerant than women, and investors’ education level, income level and combined income are all positively statistically significantly associated with risk tolerance as per factors 1, 2 and 3. Some unique findings were revealed from this study, that is, as investors age, their risk tolerance increases (as per factor 1); married investors are more risk tolerant than the unmarried (as per factor 2); and the number of dependents is positively associated with risk tolerance, factors 1 and 2.

Practical/managerial implications: The practical value of the study is that investors and financial advisors have a more enhanced view to better understand the degree of association of demographic variables on investors’ level of risk; the roles of past experiences and personal attitudes and feelings are associated with demographic variables.

Contribution/value-add: Breaking up the risk tolerance into factors contributes to a more refined analysis being conducted.


financial risk tolerance; demographic variables; South African investors; finametrica; expected utility


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