What Type of Investor Am I?

Investments that are supposed to give profits always have risks involved. Therefore, the possibility of losing money is always there. There is also a chance that your investments do not meet your objectives financially. In general, a bigger potential return of investment means a higher risk and a longer investment timeframe.

If you make a low investment and you get low returns, it means that you are just cashing in. If you have a slightly higher risk and a slightly higher return, you are tagged as a defensive investor. A much higher risk and a higher return makes you a conservative investor. Having an investment that has a high risk and a high return makes you a moderate investor.

A higher risk and a higher return is what growth investors face. Lastly, having the highest risk and highest reward makes you a high growth investor. Before you invest, you must decide your level of comfort as far as risk is concerned and how prepared you are in taking on the risks of the investment.

You should also ask yourself how comfortable you are with the short term movements in your investment value. You can also have two risk profiles. One risk profile can be used for your super while the other is for your investments. You can do this because superannuation is a longer investment term.

If you are investing to save for the deposit of a property that you would like to buy, you would want to take a short term risk. However, investing in superannuation and not thinking of retiring within 15 years makes you tougher in riding out short term fluctuations in your investment value to get bigger returns.

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