Successful entrepreneurs have higher appetite for risk in business than in their personal investments
• The wealthier entrepreneurs are, the higher their appetite for risk in the wealth creation phase
• Successful entrepreneurs become more cautious about risk in their personal investments
• South Africans are most likely to see a high-risk attitude as being important in generating their wealth; those from the UK and US are least likely
• Just looking at risk is old-fashioned; understanding financial investment behaviour is being brought to a new level
Successful entrepreneurs are more likely to take risks in creating their wealth, according to a new report from Barclays Wealth entitled Barclays Wealth Insights: Risk, Return and Reward. Some 60 per cent of those with assets of more than $1 million said a high appetite for risk had been a big influence in generating their wealth, compared with 36 per cent of those with less than $1 million of assets.
While entrepreneurs are willing to take risks to succeed in business, they are more risk averse with their personal investments. The report shows that individuals with more than $1 million do not take higher risks with investments than those with less money. This suggests that entrepreneurs are more willing to take risks in their own businesses, than with investments.
The report reveals some interesting differences between the attitudes to risk in developed countries compared with developing countries. Respondents from South Africa (84 per cent) are most likely to view a high-risk attitude as being an important factor in gaining their wealth. This in part reflects the social and economic problems the country has faced, which has spurred an entrepreneurial culture. Conversely, those from the UK (25 per cent) and US and Canada (36 per cent) are least likely to view risk taking as a driver in the creation of wealth. This is because these countries are more established market cultures where a greater proportion of people acquire wealth through less risky paths, such as income from a job, inheritance or marriage, in addition to the entrepreneurial route.
Understanding the different attitudes to risk and behaviour is key to ensuring investors make the right investment choices and capitalise on their portfolios, the report shows.
