Your personality influences several parameters in your life, and one of them includes how you save and invest your money in life. In this article, we will cover five common investing personality types along with their probable downsides and workarounds. Read on to know which investing personality type do you belong to.
Do you as an investor have a constant habit of putting off your financial plan, savings, and ultimately choosing the right investment options for investing for a ‘better time’? Such investors have the tendency to save later and spend first. If you are one such investor, then you are likely to be bombarded with piling personal loans and EMI (equated monthly installment). Any lumpsum sum of money that you attain from any source (sale of investments, bonuses at work, inheritance, court settlements, etc.) tend to magically disappear before you get a chance to use them efficiently. Such investors are advised to get the services of a financial expert or advisor and begin with baby steps such as setting up an SIP investment or systematic investment plan.
Such investors wish to be in control of their investments all the time and often prefer investing in directing equities rather than choosing more passive style of investments such as mutual fund investments. These investors tend to move in and out of their investments in a short span in the search of the next big opportunity. One of the biggest pitfalls of being one such investor is that you can end up losing big and the returns earned on your investments are likely to be tax inefficient. To avoid such situations, you must aware yourself with the differences between different investment concepts such as saving, speculating, and investing and then wisely allocating your funds across these three distinct pools.
The impatient investor
Such investors expect instant returns from their investments and end up obsessing over their portfolio returns. If you are one such investor, you might end up exiting from your investments just at the start of the investment cycles to turn around in hope of better returns. It is important that such investors read books and educate themselves with the principles of value investing. Also, you must avoid checking your investment portfolio too often.
Such investors are extremely busy in their life to be bothered from their investments. These investors tend to be highly successful in their line of work. However, this results in these investors hardly making any time to understand their investments and rather delegating this work to some highly trusted aide who manages your mutual fund investments for you. Such investors must be cautious of crooked salesperson who might milk your investment portfolio to earn higher commissions. Such types of investors are advised to review their financial portfolio at least once a month and question each transaction or investment decision and the logic behind it.
Such type of investors constantly checks their investments worrying that things might go against their investment portfolio. Such investors have trust issues against their financial advisors even if they have an amazing track record of investing success. Such investors are bothered by even slight negative returns on their portfolio. One of the biggest pitfalls of being one such investor is that you could end up booking losses from time to time which might result in your returns taking a huge hit. Such investors are advised to stick to their risk tolerance and invest in different types of investment that compliment their risk appetite.