Ever wondered what type of investor you are, based upon your personality type?
When it comes to investing, our personality traits directly impact how we choose to invest and the amount of risk we are willing to take.
According to behavioural finance, it is possible to group different investor styles, based upon the five dimensions of personality, which are openness, conscientiousness, extraversion, agreeableness, and neuroticism.
Drawing upon investment psychology, we’ve explored the key traits of each personality profile, so you can determine which category you resonate with.
The Self-Assured Investor
Feeling confident in your investing abilities? If you’re a Self-Assured Investor, you’ll have experienced one or more market cycles and understand that time is your most valuable asset. You’re also immune to the noise in the marketplace and pay less attention to mainstream media. Being in the driver’s seat is important to you, so it’s likely that you’ll self-manage your portfolio and are prepared to take calculated risks to accumulate wealth over time, because you know that longevity pays off.
The Conscientious Investor
If careful decision making is most important to you, you may be the Conscientious Investor. You have an interest in investing and are prepared to do so in a patient manner. You’re comfortable with delayed gratification to build up your wealth and won’t make decisions until you’ve analysed the facts which is your greatest strength. In order to gain more confidence in investing, you might find it beneficial to work with a financial advisor, who can provide the knowledge and experience you seek.
The Passive Investor
Those who fall into this category may have little interest in investing, however they have been influenced by family or friends to do so. Introverted in nature and extremely risk averse, if you fall into this investor personality type, it’s likely that you’ll be meticulous when it comes to reading and understanding information before making an investment decision. You may dabble a little in investing by holding a small amount of shares without adding regularly to your portfolio, which means you’re less likely to accumulate wealth through investing.
The Emotional Investor
Due to their strong reliance on intuition, the Emotional Investor is likely to make less informed decisions, based upon how they are feeling about the market. This personality trait can cause the individual to be swayed by mainstream media to fuel their decisions, as well as being influenced by the opinions of others. Rather than consider the facts, they’ll trust their own instincts, without gathering the necessary information first. One of the strengths of this investor is that they aren’t afraid to take risks which may pay off in the long run, however on the contrary may cause the investor to suffer unnecessary losses.
The Rowdy Investor
Highly extroverted, if you fall into this category, it’s likely that you enjoy sharing your investment strategies on social media or at the family barbecue. You feel knowledgeable when it comes to investing, being the first to provide advice to others about the latest investment ideas. Unfortunately, some people who fall into this personality type find they lack motivation to take action, or lean upon untrustworthy sources. It’s highly recommended that the Rowdy Investor seeks assistance of a Financial Advisor to develop an investment strategy and make informed decisions about their future.