“Taking risk” is one of the top factors Millionaires cite as contributors to their financial success
Young Millionaires are more aggressive investors and less averse to taking risk than their older counterparts, according to Millionaire Corner research of Affluent investors.
“Taking risk” is one of the top factors Millionaires cite as contributors to their financial success. At the same time, Millionaires rank “the level of risk” as their top consideration when selecting an investment and overall lean toward a moderate risk tolerance. Roughly half say “it is more important that I protect my principal than I grow my investments,” while one-third say, “I am willing to take significant investment risk in order to earn a high return on my investments.”
It is important for these investors that their financial advisors are in sync with their risk tolerance. Eight-eight percent of Millionaires we surveyed said they feel their advisor understands their appetite for risk. And the youngest Millionaires, with more working years ahead of them and more time to recoup losses, are hungrier.
Seven percent of respondents describe their tolerance for investment risk as “most aggressive” compared to just 1 percent of seniors over the age of 65. Similarly, 41 percent of young Millionaires said they aggressively seek high returns and are willing to place a significant portion of their investments at risk, vs. 13 percent of baby boomers ages 44-54 who describe their risk tolerance as aggressive.
Conversely, young Millionaires are less likely (42 percent) to seek moderate returns while putting a limited portion of their investments at risk. In comparison, 59 percent of those ages 44-54 and 67 percent of boomers say they have a moderate risk tolerance
Those who describe themselves as conservative investors also increases with age, with young Millionaires the least likely to identify themselves as such.
Age is not a factor in Millionaires’ self-evaluation of their financial literacy, which could have a bearing on risk tolerance. The majority (62 percent) say that they are fairly knowledgeable about financial products and investments, but still have a lot to learn.
Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.
A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.