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Second Annual BMO Psychology of Investing Report: Research Trumps Emotion When Canadians Make Investing Decisions

February 25, 2014

TORONTO, ONTARIO--(Marketwired - Feb. 24, 2014) - BMO Financial Group today issued the results of its second annual Psychology of Investing Report, which found that Canadians are 10 times more likely to classify themselves as research focused (71 per cent) than emotional (7 per cent) investors.

However, at the same time, only one in three reported that they rely completely on research, and just 28 per cent stated that they are in control of their emotions at all times when investing.

"In an ideal world, we'd base all of our investing decisions solely on rationality and research," said Mike Malloy, Senior Vice President, Managing Director, Regional Manager, BMO Nesbitt Burns. "However, we're only human so emotions can often cloud our judgment. The key to being a successful investor is to be self-aware when making decisions, understand what your risk tolerance should be and have a solid grasp of the fundamentals of the investing option you're considering along with the overall market climate."

Positively Emotional

The study also found that, for those who do let emotions play into their investing decisions, the emotions most commonly felt are:

-- Optimism (48 per cent) -- Anticipation (35 per cent) -- Confidence (35 per cent)

Only one in five reported feeling fear or apprehension when choosing an investment, with women more likely to feel one of these emotions than men (27 per cent vs. 16 per cent).

Canadian Investors Feeling National Pride

When asked to identify which geographies about which they are feeling most upbeat from an investing perspective, Canadian investors ranked their home and native land first, with 58 per cent being most optimistic about Canadian markets. This was followed by:

-- United States (34 per cent) -- Asia (29 per cent) -- Europe (21 per cent)

However, this national pride is tempered by a certain degree of unease, with just a third (34 per cent) of Canadians expressing optimism about domestic interest rates and the future prospects of the Canadian dollar.

"Canada's fundamentals have remained solid over the last several years, so it's not surprising that we tend to be upbeat about domestic investing prospects," noted Mr. Malloy. "However, this sense of optimism is somewhat tempered by concerns over the recent decline in the loonie and unease about what the future has in store for interest rates."

Regional Breakdown:

---------------------------------------------------------------------------- % that are % that rely on % that rely optimistic % that are % that are research for on emotion about optimistic optimistic their for their investing in about about the investing investing the Canadian interest Canadian Region decisions decisions market rates dollar ---------------------------------------------------------------------------- National 71 7 58 34 34 ---------------------------------------------------------------------------- Atlantic 65 8 56 33 38 ---------------------------------------------------------------------------- Quebec 73 10 61 41 39 ---------------------------------------------------------------------------- Ontario 72 5 61 33 35 ---------------------------------------------------------------------------- Prairies 70 3 55 39 29 ---------------------------------------------------------------------------- Alberta 75 6 57 31 33 ---------------------------------------------------------------------------- B.C. 66 7 47 29 20 ----------------------------------------------------------------------------

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The survey results cited in the BMO Psychology of Investing Report are from online interviews with a sample of 1,005 Canadians 18 years of age and older, conducted between January 24th and January 28th, 2014. A probability sample of this size would yield results accurate to +/- 3.1 per cent, 19 times out of 20.

FOR FURTHER INFORMATION PLEASE CONTACT: Media Contacts: Veronica Bart, Toronto (416) 867-3996 veronica.bart@bmo.comValerie Doucet, Montreal (514) 877-8224 valerie.doucet@bmo.comLaurie Grant, Vancouver (604) 665-7596 Source: BMO Nesbitt Burns

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Source: Marketwire (Canada)

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