Investment Behavior of Orphan and Nonorphan Investors During COVID-19 in Shanghai Stock Market.

PURPOSE: Orphaned children carry many psychological and emotional issues with them throughout their lives, which influence every decision they make, including investment decisions. A lack of self-determination and low confidence may make orphans make more risky decisions than their nonorphan counterparts. In this study, we aimed to see how this risky behavior was reflected in investment choices during the COVID-19 pandemic. METHODS: A well-structured questionnaire was distributed to 230 adult investors (130 orphans and 100 nonorphans) between January 22 and March 13, 2020. RESULTS: Orphans were found to be risk-takers during the COVID-19 pandemic, as hypothesized from their childhood history. Moreover, female investors showed more sensible (less risky) behavior than male investors when investing in fixed-income securities. Income and age showed significant inverse relationships with risk tolerance, while education showed a positive but insignificant effect. CONCLUSION: This study indicates that orphan investors enjoy taking risks and their behavior toward risk remains consistent, even in abnormal conditions, such as a global pandemic. It also suggests that their risk-taking behavior remains stable from orphanhood through to adulthood, contradicting many reports that orphans make reasonable decisions in adulthood.

Saving for a Better Retirement: How Risk Attitudes Affect Choice of Retirement Scheme.

Over 3 million people in Hong Kong and 21 million people in the UK are saving for retirement under the mandatory provident fund and individual savings account schemes, respectively. Yet, we know little about how individual preferences, such as risk attitudes (risk-seeking and risk-averse) that are known to impact highly consequential decisions in a variety of real-world contexts, impact retirement investment choices. In two experimental studies (Study 1-Hong Kong sample and Study 2-United Kingdom sample), we show that personal risk attitudes were a strong predictor of the profile of retirement investment portfolios. Specially, risk-averse people allocated more of their savings to low-risk funds than risk-seeking people. The pattern of findings is consistent in both Hong Kong mandatory and the UK voluntary retirement investment schemes. These findings are considered in light of policy decisions made in Hong Kong retirement and UK pension schemes.