Adults Less Likely To Invest In Stocks If They've Experienced Childhood Trauma

People are significantly less likely to invest in the stock market if they suffer the loss of a parent during their childhood.

That's according to Durham University Business School and Kings Business School. The data also found that this pattern of behaviour only holds true in cultures that emphasise independence over community. This link is less likely to be seen in more collectivist cultures. The investigation was conducted by Louis Nguyen, Professor of Finance at Durham University Business School, alongside Yibing Wang, and Tarik Driouchi,, both Professors at King's Business School, who wanted to explore how early-life trauma interacts with national culture to shape long-term financial decisions.

The researchers came to their eventual findings using data from the US, China, South Korea, 21 European countries and Israel. The analysis proves that the emotional and financial effects of parental loss can persist in to adulthood this drastically effecting the course of that person's life. It also influences people's sense of willingness to undertake financial risks.

Parental loss during the early years of life is strongly linked to lower levels of stock market participation in individualistic cultures which proves that people will be more adventourous to take on certain risks including financial ones if they have some form of support which they can fall back on including a prent or carer who can protect them financially if things don't turn out the way they had expected them to.

In fact, early parental loss in individualistic cultures – like the United States and the UK - is strongly linked to lower levels of stock market participation. Whilst this relationship is far weaker in collectivistic societies – like China and South Korea –, where in-group financial and emotional support is more prevalent and culturally reinforced.

This difference, the researchers argue, stems from two cultural mechanisms. First, individuals in collectivistic countries like China are more likely to receive financial support from family and community after early loss — a 'cushion' that reduces risk aversion.

Second, people in individualistic cultures like the US are more sensitive to trauma and more likely to internalise distress, leading to long-term caution in financial decisions.

If someone decides to take a risk on the stock market and potentially double or triple their money, it is more than just a personal choice as it shapes of much savings and income a household can have available to it. Different cultures also fundimentally influence the way how personal experiences like bereavement translate into financial behaviour and economic engagement."

The study also notes that lower stock market participation has wider socioeconomic implications. Stock ownership contributes to household welfare, firm financing, and long-term economic growth. A deeper understanding of how trauma and culture interact, the researchers say, could help policymakers design better support systems.

They suggest that survivor benefits, child welfare programmes, and trauma-informed interventions could help reduce the long-term effects of early bereavement — and promote greater financial inclusion in societies where individuals are expected to bear hardship alone.

In the UK, excluding workplace pensions, only 23% of people have invested in the stock market, compared to nearly two-thirds in the US. UK chancellor Rachel Reeves would like Britons to invest more in stocks – particularly UK stocks – rather than keep their money in cash.

According to a 2025 Finder survey, 15% of UK adults currently have a stocks and shares ISA. 3.8 million people subscribed to a stocks and shares ISA in the 2022/2023 tax year, down from around 3.9 million people in 2021/2022. A third (31%) of all ISA subscriptions in 2022/2023 made were to stocks and shares ISAs.

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