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BMO report: 47% of B.C. residents cite role of emotions in investment decisions

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Almost half of the residents of British Columbia in Canada say that emotion plays a role when making investment decisions, surpassing the national average, new research reveals.

BMO Financial Group published this finding in a summary of results from a survey cited in the BMO Psychology of Investing Report. The survey is based on interviews with a random sample of 1,000 Canadians 18 years of age and older, conducted between Nov. 6 and Nov. 8, 2012.

Examining the mindset of Canadian investors, the inaugural report builds on the BMO Psychology of Spending Report released in September, part of a series of studies from BMO that examine the personal finance and investing behaviors among Canadians and the resulting effects.

At a presentation entitled “The Art of Investing,” held Tuesday at the Vancouver Art Gallery, Serge Pépin, vice president, Investment Strategy, BMO Asset Management Inc., disclosed the report’s findings. He stated that people living in British Columbia are the most emotional investors in Canada, with many unaware of what is in their portfolios or not putting enough money away for the future. On a positive note, almost 80 percent hold an investment.

During the presentation, Pépin revealed the following about B.C. investors:

  • Almost half (47 percent) say that emotion plays a role when making investment decisions, surpassing the national average of 41 percent;
  • Sixty-three percent of B.C. investors have made an investment decision based solely on impulse;
  • Almost two-thirds (61 percent) report they are not always in total control of their emotions when investing;
  • Anticipation, trust and fear are the emotions felt most intensely when deciding how to invest.

In his presentation, Pépin also revealed that many British Columbians do not know how to make an investment and lack the confidence to do so:

  • Forty-five percent of British Columbians are not confident investors;
  • Almost one-third (28 percent) are not familiar with the companies in which they invest. Some are not even sure in what they have invested;
  • Only 17 percent conduct careful and extensive research before making investment decisions.
  • Fifteen percent have invested based solely on a company’s name or logo.

As to how much they are investing, 43 percent of British Columbians do not believe they are investing enough and 21 percent do not hold any investments at all. Respondents identified the following barriers:

  • Not enough savings (83 percent);
  • Focusing on paying off debt (82 percent);
  • Not sure who to turn to for advice (76 percent).

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