A Spectrem study of investors based on net income has shown more than a third (36 percent) of all investors were willing to take a significant risk in order to get a high rate of return. As income increased, so did the inclination to take the risk, but even among those with a net income of over $750,000, less than half (47 percent) said they would be willing to take a significant risk with a part of their portfolio with a look toward a high rate of return.
In fact, the level of risk associated with investments is the highest factor in the selection of an investment, according to the Spectrem income study. Nearly 90 percent of investors said the level of risk was an important factor, while only 78 percent said the reputation of the company in which the investment was made would be a factor.
Other examples of high risk investments include aggressive growth funds, emerging markets mutual funds, foreign company stocks, precious metal mutual funds and penny stocks.
The majority of the time, the more wealth an investor has, the more willing they would be to take a high risk investment. But few segments of investors show even 50 percent of investors willing to take the high risk.
In a Spectrem Group study of High Net Worth Millennials under the age of 45, just over forty percent of investors with a net worth under $1 million said they would be willing to take a significant risk on a part of their investments in order to earn a high return. Among Millennial investors with a net worth greater than $1 million, the percentage increased only 2 points, to 49 percent.
When looking at the older investors, the only segment that showed over 50 percent interest in high risk investments was the Generation X group, aged 45 to 54, with barely over half of those with less than $1 million net worth and 55 percent of those with greater than $1 million net worth showing willingness to take a significant investment risk for the possibility of a significant return.
For more information on Spectrem Group research of High Net Worth Millennials, click here