What’s your investor personality type?
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Observant ... self-awareness helps you get through short-term issues that could compromise long-term goals. Photo: Tanya Lake
Investor: know thyself: if you are innately mistrustful of the sharemarket, don’t pour all your money into it; if you value reward over stability, have a bias towards growth assets.
The corporate sector has for some time been in the thralls of defining personality “types”: the concept of the “alpha” male or female migrated from studying animal group behaviour to standard management speak. Now it’s also become fertile ground for investors who are trying to match their financial strategy to their innate attitudes towards money and finance.
“It’s important because people are hard-wired for short-termism,” says Perth-based Patrick Canion of RMG Financial Services, whose website features a prominent discover your personality-style quiz. “Self-awareness helps you get through those short-term issues that, if acted upon, could compromise your long-term goals.”
All this can veer decidedly into the vapid terrain of pop psychology. So for the first time two Swiss academics have used empirical evidence to separate investors into four distinct personality “types”. Carmen Keller and Michael Siegrist asked a random 1569 households on whether they agreed or disagreed with a range of statements about money and finance. They then used statistical analysis of the responses to come up with four discernable types of investors.
Safe players
“Safe players” are focused on financial security, and emphasise saving over spending. They are interested in money, confident in their knowledge, and gain satisfaction from making prudent financial decisions. But they take a dim view of the stockmarket and gambling.
Open books
Then there are the “open books”. Like the safe players, they have a negative attitude towards shares and investing – but there the comparison ends. They know and care little about money, and are not confident in their financial know-how.
Money dummies
The least attractive moniker is “money dummies”: those who care and know little about money and the art of making it. What separates them from the open books is that they have no bias against the sharemarket.
Risk-seekers
Finally, we have the “risk-seekers”. This category of people is even more obsessed with money than the safe players, but unsurprisingly they are much more tolerant of higher risk securities. They have the most positive attitude towards stocks and gambling.
Of course, the complexities of our personalities are too numerous to fit comfortably into such small boxes. But it does show us that – even with all other things being equal in a financial sense – what’s right for one person may not be right for the other.
Patrick Commins Smart Investor
