There are Six Investor Personality Types:
1) Cautious; 2) Emotional; 3) Technical; 4) Busy; 5) Casual; and 6) Informed
Knowing why you make certain investment decisions can help you become a more educated investor. There are several studies that determine investor personality type. The CFA Institute categorizes investor personality types into four main groups: Preservers, Accumulators, Followers and Independents. Barnwell Two-Way Model groups investors into “passive” and “active.” One of the best studies uses Psychonomic Investor Profiling which holds that a person’s propensity to risk is unlikely to change regardless of circumstances. Psychonomic refers to the laws of science as they relate to the mind’s internal and external psychological environment.
A cautious investor makes conservative investment choices. They have a strong need for financial security and prefer to avoid high risk ventures.
An emotional investor likes to trust their gut instinct rather than doing thorough due diligence. They believe in “luck” or “providence” and follow the “hot tips” that seem fashionable at the time.
A technical investor makes financial decisions based on hard facts and numbers. They do excessive due diligence and are constantly looking for the latest developments.
A busy investor is constantly checking the latest price movements and is always buying and selling based on the latest gossip or hearsay from financial journals.
A casual investor is more laid back when it comes to finance and investment. They want a professional advisor to take care of things.
An informed investor relies on information from multiple sources before making a financial decision. They expect their understanding of investment markets will give them a better chance of achieving a higher return.
Which type of investor personality do you have?