What kind of investor profile are you?
There are many types or profiles of investors. What investor profile do you have?
You want to protect your assets (bonds, government bonds), you feel good about guaranteed investments, the expected return on this type of investment does not exceed inflation, but you are at 100 % protected against bear markets.
The risk averse investor. They choose safer investments, even if it means sacrificing performance.
Your preference is for security and guaranteed formulas, but you are not against a small dynamic part (bonds, government bonds at 0% rate or combination with a maximum of 20% in certain branch). The expected return from this kind of strategy slightly exceeds inflation and in the event of very bad markets, a slight drop in your portfolio may appear.
You are looking for a balance between fixed income returns and more volatile markets (50% in guaranteed investments and 50% in funds. A momentary dip is possible. You want to see the portfolio grow well in positive market times and are prepared to accept some losses in difficult markets.
You are ready to take risks, you mainly aim for long-term returns, you know the financial markets. Invest 25% in fixed-return formulas and the rest in equity formula. You are aiming for high long-term returns but are aware that the portfolio may experience negative years in terms of returns.
You want to get the full potential of the financial markets. You are open to speculation. You are ready to invest everything in shares, funds. You aim to optimize your return and withstand periods of sharp declines.
How to define your investor profile?
Here are the factors to take into account to determine your investor profile.
1. Risk appetite
It just depends on your personality! Some temperaments are more playful than others, and investing in the stock market also involves taking bets.
2. Your family situation
a) If you are a couple or have children, it is better to be more reasonable in your investment choices, so as not to risk the safety and well-being of your loved ones.
b) If you are single, you have more freedom in your choices, which are yours alone.
3. Your financial situation
a) If your wealth is small, you should be careful not to risk everything you have. It is in your interest to protect your starting capital, even if it means devoting only a small part of your investments to riskier products.
b) If you have more wealth, you can afford to risk more of it without jeopardizing your current situation.
4. Your age and investment horizon
The shorter your investment horizon, the more careful you have to be and not take unnecessary risks. The financial markets can experience sometimes unexpected fluctuations, which can cause sudden losses in a short time horizon. The younger you are, the longer the investment horizon can be, the more time you have to wait for more favorable conditions in the event of a market failure.
5. Your goals
a) If you are looking for additional income, a prudent investor profile will be sufficient and you will not have to take high risks.
b) If you want to increase your capital quickly, you will have to take more risks.
6. Your available time
The riskier the investment, the longer it takes to monitor it and potentially act quickly on events. If you don’t have a lot of time on a daily or at least weekly basis, then it’s best to opt for cautious investments that don’t require too regular monitoring.
7. Your skills
a) If you are new to the financial markets, it is best to adopt a cautious profile to give yourself time to learn and gain experience without risking losing all your assets.
b) If you are more familiar with the stock market, you can afford to take more risks since you are familiar with its mechanisms and you have a clear vision of your investment strategy.