Academy of Financial Services
This paper investigates the mediation relationship of individuals’ financial risk preference between their personality traits and stock investment decisions by using the 2014 Health and Retirement Study (HRS). Structural equation model results show that that individuals’ stock market participations and stock share investment decisions are influenced by personality traits when considering financial risk preference as a mediator. Results indicate that those with higher openness and extroversion are more likely to participate the stock market and have higher stock share in their investment portfolios. These with higher conscientiousness and agreeableness are less likely to participate the stock market and have lower stock share in their investment portfolios. Financial planning implications are provided.
Author(s): Yi Liu, Sarah Asebedo