Roaming Returns

032 - Being Unaware Of Your Investor Profile Leads To Costly Mistakes

February 03, 2024 Tim & Carmela Episode 32
Roaming Returns
032 - Being Unaware Of Your Investor Profile Leads To Costly Mistakes
Show Notes

Most people don't operate with their personal investment style in mind, and when you invest in a way that's out of alignment with yourself, you have a higher chance of making costly mistakes. 

Those losses deplete your funds with limits your ability to grow your money. And failures also trash your confidence and hope for retirement. So do yourself a favor and put some extra effort in at the beginning so you get off on the right foot by avoiding unnecessary problems. 

Many brokerages have resources to help you clarify your investing style. Here are links to 3 companies that provide a questionnaire to get you started. We walked through Schwab's in this episode. 


If you want to do a deeper personal assessment, it might be more helpful to ask yourself the following questions. 

What are your investment goals?

  • Preserve the money you invest at the start
  • To grow your money over time
  • Do you want your investments to provide regular income

What is your time horizon?

  • Do you need your money soon to buy a house, pay for college, etc
  • Do you need your money to maintain your standard of living in retirement years much further down the road
  • Or are you somewhere in the middle

Immerse yourself in the differences between the investor profiles.

Conservatives

  • Prioritize security more than growth
  • Have little to no risk tolerance
  • Focus on shorter term investments ranging from 0-5 years
  • Portfolio consists of 80-100% in fixed income investments

Moderates

  • Fall between conservative and aggressive
  • Are willing to give up some liquidity & security to make higher returns
  • Are comfortable with medium range investments from 5-10 years
  • Portfolio consists of 60-65% in fixed income with the rest in dividend or growth stocks

Aggressives

  • Prioritize profitability above all else
  • Have the greatest tolerance for risk/losses because they know higher profits come in long run
  • Focus on long term investments 
  • Are savvy investors who have more money so they can give up immediate liquidity
  • Are all about returns

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