René Basson, Head of Brand at Satrix

Does being firstborn mean you prefer more conservative investing options? If you’re a ‘laat lammetjie’ – a South African term for the youngest child, often indulged and seen as more adventurous – are you more inclined to love risk?  With March being South Africa’s ‘baby boom month’, René Basson, Head of Brand at Satrix, explores whether birth order impacts investment style.

She says, “As the last-born of four, I certainly believe birth order plays a role in shaping personality traits, which may play out in investing preferences. Studies show it could influence risk tolerance and market participation. Knowing these things about yourself gives you tools to unpack your money and investing mindset, to make the best possible decisions for your financial future.”

What Does Research Say About Birth Order and Investing?

A study on ResearchGate found that firstborns typically have lower risk tolerance compared to ‘later-borns’, who are more likely to allocate a larger portion of their assets to stocks, suggesting a higher risk appetite. Interestingly, firstborn males tend to be more risk-tolerant than firstborn females, pointing to gender differences in investment behaviour.

Male children without siblings are also more likely to take financial risks and engage in the stock market, according to SSRN. Conversely, only-born females tend to be more conservative in their investment choices.

Dr Kevin Leman, a psychologist who has studied birth order for decades, explains that parents treat their children differently depending on their birth order. Firstborns often experience stricter parenting, which may make them more cautious, while later-borns grow up with more freedom, possibly fostering greater risk-taking behaviour. These factors could shape financial decision-making later in life.

It’s important to note that the research in this area is still limited and can vary. Birth order is just one factor influencing investment behaviour, and individual financial decisions are shaped by a range of factors.

A Light-hearted Look at How Birth Order Might Influence Investing Styles

Firstborns
Often described as responsible and risk-averse, firstborns may prefer more conservative investments, such as money market funds, which align with their cautious nature. Firstborn males may be a bit more willing to take risks than their female counterparts, but generally, the trend may lean toward low-risk investments.

Middle Children
Known for their adaptability and negotiation skills, middle children may prefer investments that strike a balance between risk and reward. A balanced fund or ETFs could match their approach, offering the right mix of growth potential and security.

Youngest Siblings
Typically seen as more free-spirited and adventurous, youngest siblings may have more appetite for high-risk, high-reward investments, such as equities and emerging markets. They might also explore unconventional investments, such as cryptocurrencies or thematic ETFs, reflecting their tendency to challenge the status quo.

Only Children
Research suggests that only-born males are 4.7–13.7% more likely to invest in the stock market than other birth order cohorts, indicating their greater confidence in taking financial risks. As a result, they may gravitate toward aggressive equity funds or sector-specific ETFs, which provide higher risk but also the potential for substantial returns. On the other hand, only-born females may tend to be more conservative in their investment choices, potentially favouring safer options like balanced funds or fixed income investments.

Why It Matters

Understanding your investment personality can help you build a strategy that matches your risk tolerance and goals. “Recognising your natural tendencies can help you make more informed investment decisions,” says Basson. “At Satrix, we encourage investors to explore their financial personalities to guide their choices, aligning them with their risk appetite.”

It’s also fun to share findings with your family. With holidays coming up, why not ask if loved ones see birth order impacting different family members’ traits – and whether this plays into money dynamics as well. Share ways you can help each other grow, whether this means venturing into high-growth investments or adding more conservative options.

Embrace Your Birth Order

While birth order can offer insights into your investment style, developing a diversified portfolio with both high- and low-risk options is key.

“Investing is about balance,” says Basson. “Pushing yourself outside your comfort zone, whether by taking more risks or being more cautious, can strengthen your financial future.”

There’s no right or wrong way to invest – just like there’s no right or wrong birth order. Your experiences and personality shape your financial decisions. Embrace your traits and turn them into strengths as you make confident investment choices.

ENDS