Warren Buffett, an American business magnet once said “Success in investing doesn’t correlate with I.Q.. What you need is the temperament to control the urges that get other people into trouble in investing.” After all, the key to being a great investor is a man’s temperament. The most successful investors ably beat the market not because they have perfect timing or tons of money but because they identify their natural inclinations.
So, we designed the following short quiz to help you identify your investment style and accordingly choose the investing strategy that is best for you.
You are shopping and in front of you is a range of product. Which one do you pick?
- Your regular brand, though it misses on the hype
- A more expensive brand you always wanted to try that is on sale today.
- A new brand that has just entered the market with sky-rocketing promises
- A moderately priced product from a lesser known brand that has favorable customer reviews.
Which activity are you most likely to choose at a theme park
- A merry-go-round with your family
- The Light and laser show
- The roller coaster
- The food court
How much information is required for you to make investment (buy or sell) decisions?
- You prefer regular company updates that are widely followed and analyzed by the media and individual investors.
- You prefer to get first-hand information about the company, its market standing and customers
- You follow any news circulating about the company you are investing in and do your own analysis.
- You’re content with whatever industry news comes across, even if it is spotty news about the company you have invested in.
How would you react if your investments fell in value by 15 per cent over a one-year?
- My world would be on fire! I will pull out all my money and put it in a savings account.
- Pull out a part of my money and invest it in a safer tool.
- Wait and watch before I consider other investment options.
- Yayy, this is time I have been waiting for. It’s 15 per cent cheaper to put in more money in the same investment.
How inclined are you to risk short term losses for higher long-term returns?
- Not sure
Which category best describes your investment goals?
- Security: My primary concern is the security of my investments.
- Income and inflation protection: My most important goal is to receive steady, consistent income from my investments, but I would also like my money to keep ahead of inflation over the long term.
- Conservative growth: My first goal is the long-term growth of my investments but I am willing to accept a lower return to have less fluctuation in the value of my investments.
- Growth: I want to get the best rate of return on my portfolio over the long term, and realize that the total value of my investments may decline occasionally.
So what type of investor are you?
Risk-taking capacity: No Risk
Your investment goal is to earn modest income while protecting your investment principal. You do not mind opting for lower returns in exchange for greater security.
Risk Level: Income/Low
You are a conservative investor looking for a combination of growth and income, with an emphasis on income. You prefer your investments to produce a steady stream of income without major declines in value.
Risk Level: Moderate
You are a growth seeker and your primary objective is to see the value of your investments increase over the long term. You do not fear the risk of short-term declines in your overall portfolio value, in order to achieve long-term growth.
Risk Level: High
You seek aggressive growth and are willing to take the risks necessary to achieve above-average, long-term growth. You accept that the total value of your portfolio may decline substantially from time to time.
So did it match you?