The 3 Types of Investors | Investing Guide

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Identify your investor personality

It’s the investor who is risky, not the investment.

Robert Kiyosaki, author of Rich Dad, Poor Dad

Investors are humans, and naturally, get influenced by emotions. But sometimes emotions can be detrimental to an investor’s success.

Acing the investment game needs a good mix of objectivity, rationality, and confidence. After constant effort and self-reflection, you will be able to get better, but it’s impossible to overcome your emotions completely.

That’s why, it’s impossible to change your behavior and become an ‘ideal investor’ because such a person doesn’t exist. Instead, we can help you identify your investor personality and optimize your wealth-building process according to what suits you best.

Which, among the following 3, do you identify as the most?

1) Passive Preserver

Passive preservers are folks who care a lot about keeping their money safe rather than taking big risks to make it grow. Often conservative, these people hate change or have other emotional reasons to preserve their money.

Risk Tolerance: Low
Advantage: Capital preservation and high liquidity
Main Hindrance: The fear of losing money is greater than the desire to grow it.

So if you identify as the ‘cautious type’ when it comes to money, you need to realize that making emotional decisions won’t serve you in the long run. Keeping up with inflation is essential, at the least, and trusting experts, like putting your money into mutual funds instead of investing in stocks directly will be a good idea.

Worrying about how to pick the right mutual fund? Our course on How to Pick the Best Mutual Fund by Twinkle Jain will get your basics right and help you pick the most suitable fund.

2) Friendly Follower

Friendly followers are people without an investing plan but know that they should invest. They aren’t knowledgeable enough and just follow the herd when it comes to money choices.

Risk Tolerance: Low to medium
Advantage: Able to capitalize on investment trends
Main Hindrance: FOMO takes precedence over calculated investment choices.

A friendly follower needs to be aware of what they’re getting into. Blind trend-following can lead to risky portfolios and luck can be confused for mastery. Building a diversified portfolio and investing based on data-backed research is the solution for friendly followers.

If you have the traits of a friendly follower, consider enrolling in Prasad Lendwe’s Complete Course on Fundamental Analysis, where you’ll learn how to pick the right stocks by analyzing the management, financial statements, valuations, etc.

3) Independent Individualist

An independent individualist is a strong-willed, independent thinker who is knowledgeable enough to make their own investment decisions, but may overestimate their abilities to ‘beat the market’.

Risk Tolerance: Medium to high
Advantage: Knowledgable and self-assured
Main Hindrance: Unwilling to seek another opinion limits abilities.

So if you’re the DIY type, there are just two things you need to do - listen and learn. Keep growing your stock-picking skills and stay open to learning new stuff without any bias. That's the key!

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Another investor type is the active accumulator, who is an amplified version of the independent individualist. Typically a first-generation wealth creator, they believe that they can shape their investment outcomes. Often overly confident, realizing their delusion can alone improve their decisions drastically.

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Which type of investor are you?

Are you a passive preserver, a friendly follower, or an active accumulator? Hit the reply button below and let us know!

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