What's your investor personality?

May 26, 2016

How much does personality affect your investment style?

Your investor personality affects your investments in more ways than you might think. It affects how comfortable you are with taking risks, which can determine what types of investments you’re most likely to make. Your personality may also have an impact on how willing you are to seek advice or whether you prefer to do everything on your own.

In our investor personality series, we’ve identified five personality types, each of which has its strengths and challenges:

1. Saver

Savers don’t think of themselves as investors at all. They keep their money in a savings or chequing account or possibly a simple investment like a term deposit or GIC, because they want to know it’s safe and readily accessible. This is a good way to save for short-term goals, but it may make reaching long-term goals a challenge.

2. Cautious investor

This personality type doesn’t like to think about their investments losing value, even for a short time. They mostly avoid higher-risk investments, such as equities. Much like savers, their capital may be relatively safe, but they may not be earning enough to reach their long-term goals.

3. Confident investor

These investors seek higher-risk investments, such as equities and high-yield bonds, because they know that with higher risk comes the potential for higher returns. However, confident investors may be tempted to take on too much risk, which could lead to extreme losses they won’t be able to recover from.

4. DIYer

DIY types like to do all of their own research and choose their own investments. They have a keen interest in personal finance and are willing to commit a lot of time to researching specific investment products and investing in general.

5. Advice-seeker

Advice-seekers know the benefits of working with a financial advisor. They understand that financial advisors have an obligation to make investment decisions that are well suited for their clients. As a result, their portfolios are built to match their financial goals and objectives, investment time horizon and tolerance for risk.

You might find that your investor personality evolves as you age, which makes sense because some of these personality types are better suited to different life stages.

You might also find that you fit into more than one of these categories. That’s a good thing, because a truly balanced approach to investing means adopting the best aspects of all of these personality types while avoiding their pitfalls.

To learn more about how your personality affects your investment decisions, contact your financial advisor or visit AGF.com to learn more.

The contents of this Web site are provided for informational and educational purposes, and are not intended to provide specific individual advice including, without limitation, investment, financial, legal, accounting or tax. Please consult with your own professional advisor on your particular circumstances.

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