3 Categories of Investors

This post will discuss about types of investors. Thus, each of us could define our self what type of investor is and carry out the relevant activities and actions to each case. But before investigate with a specific profile, we have to write down our financial plan first, to choose which profile suits us.

Well, now focusing on the types of investors. The investor profile is classified as risk aversion that we have. So obviously the roads of investors are completely different and even more if they have different ages, investment objectives or deadlines.

Investor profiles are classified as conservative investor, moderate investor, and aggressive investor, in which I have made further distinctions for the great difference between investors of one kind or another. That would be as follows:

Investor Profile: Conservative

Within the category of conservative investors included:

1. Conservatives with zero tolerance for risk: This type of investor is usually someone who runs away from risks that could jeopardize their money even only slightly. Therefore the only place where the money goes is to be on the bench in a deposit account or buying points of the state or a money market fund or fixed income. Of course the high returns do not go with this type of investor who prefers to see a 3% or at most a 4% annual returns.

2. Conservatives with little tolerance for risk: This type of investor usually has the most money in fixed income. We can find someone that uses a periodic investment with a very small portion of salary. This investor have 70% or 80% of his portfolio invested in fixed income. In general, an investor does not seek to enrich themselves, just a few points exceed inflation over time.

3. Conservatives with some tolerance for risk: This type of investor has realized that having a system to manage their money properly, long-term returns will be able to get around a 6% -9% per annum. They are willing to take a little larger risk in search of these returns.

These are the conservatives, in general, long-term investors unwilling to take risks. They prevent to a loss of more than 10% of its capital, even generally will not get big annual returns, but enough to outpace inflation in a few points. They do not usually invest in emerging markets and risk.

Investor profile: Moderate

Following our distinction of the different profiles of investors are going to talk about the moderate profile. Within the category of moderate profile distinguish between 2 subcategories:

1. Moderate-conservative: They are able to assume more risk than conservatives. Estimated that about 50% have it in equities and 50% in fixed income. Depending on time horizon chosen.

2. Moderate-aggressive: Aggressive Moderates have more of their money in equities than fixed income. These would be between 55% -75% invested in equities. Here we begin to see investors who use technical analysis to longer time frames generally and seeking to benefit from a trend.

This type of investor is willing to risk a little more capital either by different securities and markets in exchange for returns ranging between 7% -15% return depending on the year. Obviously we are talking about investors who have studied the market, with systems working for them and it is likely that these results are not repeated every year.

Investor profile: Aggressive

In conclusion we will conclude with the aggressive investor profile, which is divided into:

1. Moderate-Aggressive: Uses systems investments mainly in equities. The investment horizon is short term for the predominantly technical. Or in the case of long-term investment seeks growth stocks, small-cap emerging markets. Typically the high turnover of its portfolio securities that caught a gain or loss on any leaves that underlying value. There are those who hold these values volatile and adjusted every x time. The weighting of their portfolios would be around 75% -85% equity.

2. Very-Aggressive: These investors have an account that used to speculate on the very short term and precisely not to be killed on the road, but are quite willing to take bigger risks in exchange for getting returns of between 20% -40% a year or even a few more years (of course may also be less, or squander your account.) For long-term investors would overweight investing in emerging and small cap with 0% fixed income portfolio. 100% of the portfolio in equities.

Final Thoughts:

The best thing is to have money invested in long, short and medium term, and diversified. But this is restricted to people who have enough capital to take the budget properly weighted. Therefore initially identify a profile where we are feel comfortable. If it's not clear, take a look at our personal financial planning, then find the answer to whether we can afford to be more aggressive. Or otherwise more prudent for the personal circumstances of each. We'll be talking about different systems in the long term, short, fundamental, technical, arithmetic, etc. And above all considerations of risk taking and money management, more important than the system itself, if you do the technical analysis.

That's it for now, we must make our financial planning. If possible, divide it into periods of time, such as 3 years, 5 years, or 10 years. And once done, identify our investment profile. At this point we have an idea to search what investment instruments do we choose. The first step to winning is knowing yourself and invest as you feel comfortable.

Put your comment below for any opinion. Happy investing

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