Your personality may be your biggest asset, but when it comes to the financial aspect of it, that very asset can also turn into a liability! Read on for how various personality types handle the financial market, and what they should watch out for.
1. Risk taker
You are adventurous, most likely an extrovert, and are open to taking high levels of risk. You listen to advise and consider opinions and information but also go against popular choice based on your knowledge and experience.
Watch out for: Ponzi schemes and high-value investments.
What works well for you: Diversified portfolios, with risky and non-risky instruments. Penny stocks also suit your personality type, considering that trading low-value stock will satiate your appetite for the risk of the gamble and keep you insulated from losing too much money.
You are young, overconfident, and a financial novice, with a personality that slightly borders on greedy (uhmm!). You tend to buy whatever suits your fancy, without due diligence. More often than not, you are not fully aware of the consequences of your financial actions. Greed drives you, while inexperience fuels silly decisions.
Watch out for: Large losses in quick succession that may lead to complete financial ruin because of a low level of research and extreme overconfidence.
What works well for you: Diversified and well-researched investments, leaning towards low-risk instruments and ETFs. Get your hands dirty on a small scale as you learn the ropes.
3. Eager, over-informed bull
You are eager, excitable, volatile, and always on top of hot, new tips. You are open to following the herd in a bullish market, always ready to lap up tips that are the flavour of the day. You are also highly emotional, which leads you to make decisions with your heart rather than with your head.
Watch out for: Bearish markets. Since your investments are not based on independent research and more along the lines of what a ‘credible’ person has recommended, try to see the difference between genuinely hot and bogus tips. Though your optimism can be rewarding at times, it can also lead to a reluctance to pull out when necessary.
What works well for you: Bullish markets, and doing your own research before taking the leap.
4. The persistent one
You are patient, willing to wait long periods, disciplined, and calm. You buy only after doing your homework, and your portfolio is dotted with investments that represent sure short through long-term growth. This steady nature usually translates into profits since you eliminate the chance of mistakes caused by emotion.
Watch out for: Research is your forte so you may pick up stock that is currently undervalued and unrecognized by others. Do the due diligence, because telling the future is not always easy. And sometimes you may not know what political (or ecological) crisis could hit your investments.
What works well for you: Stable blue-chip companies with sound fundamentals that will eventually translate into profit for you. You could also choose small companies that have a big future, since you are thorough by nature and well informed enough to take an educated risk.
5. The lift taker
You are casual and laid back. You either don’t have the time or the mental acumen to play the market, but want in on the game, in the hope of making easy money. You are likely to piggyback your investment portfolio through professionals.
Watch out for: When you choose not to drive, but only to hop onto someone else’s ride, it is only a matter of time before you get taken for a ride. Watch out for ‘fashionable’ investments and the flavour of the day since lack of research at your end could spell complete disaster.
What works well for you: Index funds, index exchange-traded funds, and target date mutual funds. Remember to keep an eye on your proxy investments, if only to know where you stand.
6. The against-the-current swimmer
You are stubborn and strong-willed, always ready to insist on what you believe is right. You are open to taking huge risks because of your overconfidence and may end up making extremely foolish decisions.
Watch out for: Overly risky and unconventional investments that have been completely written off by others.
What works well for you: Stable brands, but you could indulge your contrary personality by putting small amounts of money in stuff on the fringes.
7. No guts no glory
Under-confident and jumpy, you scare easily and don’t have the stomach for the highs and lows of the market. You are open to offloading your portfolio at the slightest sign of trouble.
Watch out for: Short-term fluctuations are usually your downfall – where a stronger personality would usually ride the storm, you collapse under the fright of financial loss and instability and start selling.
What works well for you: With so much distrust and suspicion around investing, you should put money only in investments that are sure shot winners. Fixed deposits, blue-chip companies, and government bonds should be your only foray in the financial market.
8. The steady as she goes investor
Averse to risk, you are confident and focused by nature. Not to be distracted by the fluctuations of the market, you are in for the long haul. You don’t change your mind very often, not let emotions get in the way of important decisions.
Watch out for: What you may consider to be a short-term fluctuation in the market which you usually ignore may end up unravelling your carefully built up portfolio – keep an eye out for the nature of the market ups and downs.
What works well for you: Long-term investing, blue-chip companies and ETFs. If you do intend to play the market, lots of research and background checks are a good idea. Once you are satisfied and confident about where you are placing your money, you can be practically oblivious to the action around you.
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