Abstract Objectives To construct and validate a psychological measure called the Financial Risk-Taking Scale (FRTakS) and to translate, adapt, and validate a psychological measure called the Financial Risk Tolerance Scale (FRTolS) with a Brazilian sample. Exploratory and confirmatory factor analyses were used to assess evidence of the validity of the scales’ internal structures. We also tested the convergent validity between FRTakS and FRTolS. Method After construction (FRTakS) and adaption (FRTolS), the instruments were evaluated by expert judges for the relevance of their items to the scales, followed by pretesting. A cross-sectional study was then conducted using a convenience sample of 834 people who responded to invitations sent to a mailing list or to an online invitation on the Brazilian Securities and Exchange Commission website (Comissão de Valores Mobiliários [CVM]). Results Mean age of participants was 39.27 years (standard deviation [SD] = 10.82), they had high educational level (60.9% post-graduate), were married or living together (60%), and their spending power was 41.36 (SD = 13.27). Exploratory and confirmatory analysis identified two factors in FRTakS (Investment and Spending Money), both with 4 items; and identified a single factor in FRTolS, comprising 7 items. Conclusion Reliability indexes for the goodness of fit of the factor structure were satisfactory. There was a positive and significant correlation between the FRTakS Investment factor and FRTolS, confirming convergent validity. The results suggest the existence of a two-dimensional factor structure for FRTakS, and a one-dimensional factor structure for FRTolS. The instruments also exhibited convergent validity with each other.
Retail investors' financial risk tolerance and their risk-taking behaviour: The role of demographics as differentiating and classifying factors