Investment Personalities

What kind of investment personality do you have?  There are three main types of personalities when it comes to investing:  the person who puts their financial future entirely in the hands of their broker, the person who helps their investor select different investments, and the do-it-all investor who doesn't rely on a broker at all.  The investment personality you have will predict many of the investments you decide to make.

 Investment Personality Types

Most beginning investors fall into the first category- the group that simply sends money to their brokers and fully trusts that they'll make the best decisions pertaining to the type of investments to make on their behalf.  This group of people do not understand financial risks associated with the investments they make, do not really understand how diversification of investment portfolio's work, and may believe that using a broker alleviates some (or all) of the risk associated with investing.

Unfortunately, the lack of understanding regarding investments means this group of people may end up losing money to a dishonest broker.  While this is not a common occurrence, it is important that you take some time to understand the basics of investing before handing money to the broker.  At a minimum, you should understand what investments fall into each of the three categories of risk: high, medium and low risk- and decide how you want your money to be invested.

The second investment personality type are the group of people who like to be involved in the decision making process regarding what to invest in.  This group might read newspapers and visit investment websites in order to learn more about the markets, and pay close attention to the performance of a few companies that they are most interested in investing with.  They rely on brokers for their second opinion, to see if they have made good choices, and refer to the brokers for help in filling out necessary paperwork and understanding the legal information.

The third investment personality includes the "do-it-all' type.  This group has researched the markets and has a solid understanding of investing.  They would be classified as sophisticated investors.  This investment personality type would be most likely to avoid a broker or financial advisor and make all of their own decisions.  They understand risk, although don't always make the best decisions when building their portfolio.  The trouble with this group of investors is they sometimes believe they know more than they do, and that overestimation of their abilities causes financial difficulties.

Striking a Balance

The best investors will have traits of all three of the main investment personalities.  If you fall within the first two categories primarily, you may be relying on your broker or financial advisor too much- and if you don't have the best of brokers you are not going to get the outcome you are looking for, financially.  It would be better for you to spend more time learning about investments and where you wish to put your money in order to earn the most on your investment.  Use your broker or financial advisor for advice and for help understanding, and take their suggestions as a starting point for your research.

If you fall into the third investment personality and you have been doing it all on your own, you may be missing some important guidance from a professional broker that could turn your investments into a bigger profit for you.