When it comes to investing money, you have to make rational decisions as much as possible. Should you venture into a riskier investment that can bring more returns but also entails more risks of losses? Or do I prefer a conservative investment where I can sleep well? But those who hardly take any risks can only make a limited return. The laws of the market are tough here. For this reason, the correct investment strategy is of the utmost importance. The decisive factor for which strategy you choose should be the type of investor you embody.
The one-time-one of the investment knows four types of investors:
This distinction was developed in complex analyzes and has long played an important role in the world of investment. This is testified not least by the types of investor, tests that everyone who wants to open an online share account must have carried out.
Therefore you should know your own investor type
The reason why these distinctions are so important in risk awareness is clear: Investments should be a passive matter. This means that there is no need to deal with it because the money does the work and makes the profits. If, for example, you choose an investment strategy that is too risk-conscious, it can sometimes happen that you are no longer able to make rational decisions due to the high risks involved. For example, some people can hardly sleep when investing in a risky stock and have to check prices every few minutes. However, such cases are not useful. Because it is not uncommon for you to be inclined to make impulsive decisions if you are not emotionally balanced.
Investment strategy depending on the type of investor ensures relaxed nights
If you now know the personal investor type, you can precisely define your investment strategy based on your own risk profile. People who are more conservative will tend to weight their portfolios with conservative investments such as precious metals, bonds or real estate. To do this, you tend to sprinkle in a small percentage of risky investments such as stocks or cryptocurrencies. In this way you can ensure that you have a portfolio in every situation that, on the one hand, enables the greatest possible profits, but that does justice to your own need for security.
How do you find out your own investor type?
Many websites now offer tests that determine your personal investment type. In this test, for example, the age is asked, as well as the monthly savings that are currently set aside, as well as the assets already invested. Knowledge about investments in general is also asked, as are certain topics that reveal how much one likes to take risks. Such investor type tests are available on almost every online broker and usually even mandatory there for every new user.
The four types of investors
But now we come to the four types in which you can generally divide the vast majority of investors. Of course there are gradations, but in principle this setting gives a good impression of what type of investments best suit you.
Security-oriented investor type
The security-oriented investor plans over an investment period of 6 months and longer. He / She attaches great importance to steady performance with a secure return on earnings. Just as is the case with conservative investments such as real estate and bonds. Investors in this category should definitely focus on conservative investments, such as real estate and bonds, but also a certain percentage in precious metals. Risky securities and instruments, such as shares, options or cryptocurrencies, are only of limited interest to such investors.
One speaks of a conservative investor if one has an investment horizon of three years or longer and expects higher returns. Price gains are also an issue for such investors, as can be expected, for example, from conservative blue chip stocks that pay dividends. In addition to shares, real estate and shares are of course also interesting for such investors, as well as those of technology companies in which large increases in value are expected. The majority of conservative investors should also invest in conservative stocks, but they can weight equity stocks more heavily.
The third large group of investor types is the profit-oriented investor type. Capital growth is the focus of the investment strategy. This has a horizon of about 5 years and more – because over such a period, temporary price fluctuations and crashes can usually be ironed out. The primary investments of this group are stocks. Precious metals and real estate as well as bonds are weighted rather low. Last but not least, profit-oriented investors are also open to risky investments such as startups, options and cryptocurrencies, albeit to a small percentage.
Opportunity-oriented investor type
The group with the highest risk awareness are the opportunity-oriented investors. They are less interested in investing assets safely and in return generating small returns. These investors sometimes even expect that part of the investments will be lost, because that is part of the calculation. Due to the fairly wide spread of risk investments, an investor speculates, however, that he will land at least a large jackpot, for example with a special risky share. The bottom line is that the losses that are likely to occur elsewhere are far away. This fourth group of investors clearly needs the thickest fur. With this strategy, it almost goes without saying that the portfolio falls into the balance in every minor economic crisis.
So the investor type is an important thing that can help you a lot in determining your own investment strategy. Depending on the type you belong to, you can build a portfolio that is tailored to individual needs and your own nerves. Every investor is recommended to carry out such a test.