If you suffer from an illusion of control, you may be more likely to invest in risky hybrid securities than normal shares or bonds. The Australian Securities and Investment Commission (ASIC) has been investigating investment choices in relation to biased thinking and risk attitudes. ASIC found that overconfident undergraduates with an illusory perception of control over their environment were more likely to choose a hybrid security —even if they didn’t know much about the complex product.
Gender gap narrows
In the US, 31% of female Millennials, born from about 1981 to the early 2000s, are now self-described "active investors" and 41% accept more investment risk, according to asset manager BlackRock. That compares with 15% and 22% of female baby boomers, respectively. Investment strategist Nelli Oster blogged that women, however, remain more risk-averse than men, noting also that pragmatism can found a good approach to investment.
Folklore of finance
Both consumer and professional investors could enjoy better returns by setting suitable long-term goals and using appropriate metrics when investing, according to a State Street/Center for Applied Research global survey. The researchers say investors tend instead to rely on financial folklore, based partly on irrational habits of thought. This behaviour should change, they say: "New behaviours lead to new beliefs, and over time a new folklore of finance will and must arise. True success depends upon it.”