What’s your Investing Personality Type?

Your personality influences a lot of things – one of them being, how you invest your money. Here are 5 common “Investing Personality” types, along with their potential pitfalls and workarounds. Which on are you? 

The Procrastinator 

You’re forever putting off investing, saving, and financial planning for a ‘better time’. You tend to spend first and save later. You’re likely to be leveraged from piling on EMI’s and personal loans. Any lump sums (bonuses, windfall profits) that you come into tend to magically evaporate before you have a chance to deploy them fruitfully. Many entrepreneurs tend to be procrastinators when it comes to their investments.  

Pitfalls of being a Procrastinator: You’ll most likely end up having to take up loans to fulfill your important financial goals, and possibly have higher levels of financial stress 

Workarounds: Appoint a trustworthy Financial Planner and get started with baby steps (such as SIP’s) towards well-planned Financial Goals. 

The Speculator 

You find investing to be a boring exercise, preferring instead to ride the roller-coaster ride of speculation. You like to be in control of your investments at all time, and therefore tend to lean towards direct equities over more passive investments such as mutual funds. You move in and out of investments quickly, in the hope of finding the ‘next big opportunity.'  

Pitfalls of being a Speculator: You could end up leveraging yourself and losing big; returns earned are likely to be tax-inefficient.

Workarounds: Educate yourself on the difference between speculating, saving, and investing. Allocate distinct pools for all three. Speculate with what you can afford to lose without worry.

The Impatient One 

Having made an investment, you expect instant returns. You tend to obsess over portfolio returns, comparing yours with those of your friends and colleagues. You check your portfolio frequently, sometimes several times a day. The sight of the smallest notional profit makes you want to book it quickly in order to ‘secure’ it. 

Pitfalls of being an Impatient One: You could end up exiting investments just as their cycles begin to turn around for the better.

Workarounds: Read books and educate yourself on value investing principles. Avoid checking your portfolio more than once a week. Rationalise your return expectations.

The Delegator 

You’re too busy with your day-to-day life to bother too much about your investments. You’re likely to be very successful in your line of work; some may even call you a workaholic who is obsessed with his trade. You rarely take time to understand the investments you’re making and the risks associated with them. You most probably have a ‘trusted aide’ (such as a Chartered Accountant…or worse, a LIC agent) who “manages” your investments for you.  

Pitfalls of being a Delegator: Your portfolio could be milked for commissions by an unscrupulous salesperson. 

Workarounds: Delegate, but push yourself to set up a monthly review meeting with your Financial Advisor(s) and your aide/ facilitator, and question each investment decision/ transaction and the logic behind it.

The Worrier 

You suffer almost from an almost instantaneous bout of “buyers regret” as soon as you’ve made an investment. You constantly check your investments, worrying that something may have gone wrong overnight. You have difficulty trusting your Financial Adviser, even if he’s got a long-term track record of success or has been referred by a close friend or colleague. Even the slightest negative returns unsettle you. 

Pitfalls of being a Worrier: You could end up booking losses time and again, only to jump back in near asset cycle peaks for the fear of missing out (FOMO). In the long run, your returns will take a huge hit. 

Workarounds: Take a detailed risk profiling quiz and follow a strict asset allocation strategy based on your risk tolerance. Rebalance your investments once a quarter to bring yourself back to your target allocation.