What Type of Investor are You?
Do you like quizzes? My favorite website for quizzes is Nat Geo Kids. Yes it is for “kids” but I have been challenged on quite a few of the questions.
The quizzes cover a ton of different topics. Brain Busting, Mind Bending, Halloween, Royalty. Really fun and designed for ages 6-9 oops.
I missed the question on Nefertiti.
The information for the quizzes comes from the Nat Geo Kids Magazine. I might need a subscription.
Quizzes (nationalgeographic.com)
The Nat Geo quizzes are much more entertaining than the boring quizzes that we always see. What does my body type tell me about my favorite food, color, or perfect pet. Boring.
The one quiz I have not found is a quiz on the type of investor I might be.
So I developed my own quiz.
My quiz is based on no scientific data. No focus groups, no surveys, no body type analysis.
The quiz is based solely on the many conversations I have had with investors from all ages and backgrounds. There are some common themes.
Let’s see what type of investor you might be:
#1. The main reason I want to invest is:
A. Get in on the ground floor with new and exciting companies
B. Expect to double my money in 3 years or less C. Have control over my future money
D. Save for retirement
#2. Investing is MOST like:
A. Gambling
B. Guesswork or throwing darts
C. Having a plan
D. An alternative to cash
#3. I follow financial news:
A. Daily
B. Weekly
C. Once a month
D. Rarely
#4. If my investments decline in value I will:
A. Sell everything immediately
B. Never invest again
C. Wait for the market to recover
D. Review my diversification strategy
E. C and D
#5. Will I need to speak to anyone once I have invested?
A. No, I don’t need to speak to anyone unless I have a specific question
B. No, I’m happy with a robo advisor
C. Yes, a real person with depth of knowledge and experience
D. Yes, occasionally for information
#6. The main reason I do NOT invest is:
A. Investing is too time consuming
B. There is too much jargon
C. I don’t have enough money
D. I don’t trust the financial system
E. All the above
If you answered mostly A you are a Live In The Moment or High-Risk type of investor. You are happy to invest if it is exciting. You equate investing with gambling and are ready to go ‘all-in” .The minute it looks like your investments are going south you bail. The idea of fast money is more appealing than having to think long term.
What is the Best Investment Strategy for a Live In the Moment Investor?
You would be a good day trader! It is the constant activity that makes you happy, not studying the merits of an investment. You don’t have to commit to anyone, um, I meant any stock for more than a few days. You like the idea of taking risk. The possibility of big rewards drives you.
If you answered mostly B you are an On The Fence investor. You are somewhat skeptical of the markets but willing to put in some time and effort to see what happens. You don’t have much faith in financial media. Your outlook for returns is relatively short term so you may miss any upside by selling too soon.
What is the Best Investment Strategy for On the Fence?
You need to have investments where you have conviction. Either through personal experience, your interests, or a source that you trust. If you are interested enough in a specific company, chances are you will stay in the investment long enough to see some rewards. Mutual Funds and ETFs are probably not going to be very interesting for you.
If you answered mostly C you are a Strategist. You see the benefits of investing and gaining knowledge from experienced professionals. You are not consumed by what is happening in the daily markets. You have a longer-term view of investing. Once you have a portfolio you feel comfortable with you might look at it occasionally, but you will not have a knee jerk reaction when you see prices decline.
What is the Best Investment Strategy for a Strategist?
Build a portfolio with simple guidelines. Be methodical. Invest in each sector. Invest in different asset classes. Keep allocations to each investment consistent i.e. no more than 5% of your total portfolio invested in any one security or fund. You are a planner. You see the benefit of a consistent strategy over the long term.
If you answered mostly D you are a Saver. Conservative by nature you are a low-risk investor. Having cash gives you a feeling of security even though intellectually you know inflation diminishes the value of cash. You like to read. You like to understand what you are investing in and do not take investing lightly. You are committed to long term investing. Compared to the High-Risk investor, you are the tortoise who will finish the investment race and win.
What is the Best Investment Strategy for a Saver?
Take it slow. Never jump into an investment without doing a lot of reading. Although stocks offer attractive returns you might want to dampen down your risk with a healthy allocation to bonds. Because you are conservative your primary objective is to preserve capital. You are practical and thoughtful so stocks that have a lot of volatility might make you uncomfortable. Stocks with long histories of paying dividends are a good alternative.
What type of investor are you?
Hope you enjoyed the quiz!
There is not a “one size fits all” investment strategy. It is about choosing the right investment strategy for you.
This website is for informational purposes only and does not constitute an offer to sell, a solicitation to buy, or a recommendation for any security, nor does it constitute an offer to provide investment advisory or other services by The Modest Economist LLC.
