New research from BMO indicates that emotions play a role in investing decisions for 40% of respondents. The BMO Psychology of Investing Report, produced by Pollara, also revealed the following:
• nearly 60% of respondents say they have invested on impulse at least once;
• two-thirds report they have not been in total control of their emotions when investing;
• anticipation, trust and fear are the most intense emotions that respondents feel when deciding how to invest; and
• only 16% are very familiar with the actual investments they hold in their portfolios.
“While we’re only human, wise investing means more than simply following your heart,” said Serge Pépin, vice-president, investment strategy, with BMO Asset Management. “It’s critical not only to take the time to understand the market environment before making any financial moves, but also to ensure you’re in the right frame of mind to make such decisions.”
The report also found that many Canadians lack the confidence and knowledge needed to make investment decisions. Additionally, many are not even sure of their current investment holdings.
• 44% of respondents said they are not confident when investing.
• Only one-quarter do careful and extensive research before making investment decisions.
• 35% are not familiar with the companies in which they have invested.