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Importance of Knowledge

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Importance of Knowledge

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What Type Of Investor Are You?
 
How Investor Profiling Is Changing The Way Investment Advice Is Given  
 
 
 
 
|Over the last few years psychologists have discovered that investors appear to fall into | |'types', and that knowing what 'type' of investor an individual is can feed into improved | |investment gains. Jonathan Myers examines the current state of play. |

 
|  | |  | |Every investor is different, with different financial goals, different tolerances to risk, different personal situations and | |different desires. From the point of view of investment management, these characteristics are often defined more rigorously as | |objectives and constraints. Objectives being the type of return being sought, while constraints include factors such as time | |horizon, how liquid the investor is, any personal tax situation and how risk is handled. | |Nevertheless, it's really a balancing act between risk and return, with each investor having unique requirements, as well as a | |unique financial outlook. What must remain constant throughout, however, is the delivery of an investment program that is not | |only specific to an investor's personal needs but that also works well and provides financial security for the future. Within | |these constraints too, there should also be the opportunity to have some fun with investments if clients should so wish. For | |example, by, say, using a small proportion of available funds for dealing in more speculative investments such as technology | |companies or emerging market stocks....