Millionaires Speak: What Drives Their Personal Investment Decisions?

56 Pages Posted: 19 Oct 2020 Last revised: 3 Dec 2020

See all articles by Svetlana Bender

Svetlana Bender

affiliation not provided to SSRN

James J. Choi

Yale School of Management; National Bureau of Economic Research (NBER)

Danielle Dyson

UBS

Adriana Robertson

University of Toronto - Faculty of Law

Date Written: October 2020

Abstract

We survey 2,484 U.S. individuals with at least $1 million of investable assets about how well leading academic theories describe their financial beliefs and decisions. The most important factors determining portfolio equity share are professional advice, time until retirement, personal experiences, rare disaster risk, and health risk. Beliefs about how expected returns vary with stock characteristics often differ from historical relationships, and more risk is not always associated with higher expected returns. Those who invest in active equity funds most often do so based on professional advice and because they expect to earn higher average returns. Only 19% of respondents agree that high past fund manager performance is strong evidence of stock-picking skill and that there are diminishing returns to scale in active management. Concentrated equity holdings are most often motivated by a belief that the overweighted stock has superior risk-adjusted returns.

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Suggested Citation

Bender, Svetlana and Choi, James J. and Dyson, Danielle and Robertson, Adriana, Millionaires Speak: What Drives Their Personal Investment Decisions? (October 2020). NBER Working Paper No. w27969, Available at SSRN: https://ssrn.com/abstract=3714461

Svetlana Bender (Contact Author)

affiliation not provided to SSRN

No Address Available

James J. Choi

Yale School of Management ( email )

135 Prospect Street
P.O. Box 208200
New Haven, CT 06520-8200
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Danielle Dyson

UBS

Regeringsgatan 38
Stockholm, 111 56
Sweden

Adriana Robertson

University of Toronto - Faculty of Law ( email )

78 Queen's Park
Toronto, Ontario M5S 2C5
Canada

HOME PAGE: http://https://www.law.utoronto.ca/faculty-staff/full-time-faculty/adriana-robertson

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