How does your personality impact your investments?
It’s true that no two people are the same, and this is mainly attributed to their personalities. While this is in no way a psychology lesson, we must acknowledge that ‘personality’ influences our perception and choices, which makes people characteristically different. And it’s not that different in the world of finance, particularly investment.
If you’ve kept your eye on our blog for a while, then you already know the basics of investment. And for those that don’t know, don’t sweat it! We’ll recap quickly for you. So, are you ready to find out the role your personality plays when it comes to your investments?
What is an investment?
Investment, in short, means placing your money into assets and securities that are set to yield you higher returns in the future; meaning more money. Investments come in various forms and shapes, and everyone has their take on the subject. Some prefer to invest in stocks while others much rather choose bonds, and then there are people that diversify their portfolio.
And what does my personality have to do with that?
Glad you asked! As we previously mentioned, personality is the main driver that influences our thoughts and, most importantly, our choices. As an everyday example, extraverted people are more likely to be seen out most Thursday nights than introverted people, who much prefer solitude to be their own companion. And we can see that in the world of finance, too. And here’s how:
Risk takers vs risk averse
For those adventurous personalities that are not afraid to take risks, they are more likely to invest in volatile securities whether they notice it or not. If your motto in life is ‘You only live once’ or ‘What’s a life without a little risk?’ then you’re more likely than not to gamble when it comes to your investments. Win or lose, it doesn’t matter; you’re willing to take the risk if it means there’s a 1% chance to reap great returns.
But if you’re someone who likes to play it safe, you’re more likely to research the securities market and invest in the safest assets and securities available, valuing evading losses than accumulating gains.
Brain vs heart
If you’re someone who leads with their heart, then sometimes, you are prone to feel more than you’d like. We’re not saying it’s a bad thing, but you might be more susceptible to emotional triggers than those who have learned to tame their minds in response to such stressors. Consequently, emotionally-loaded individuals have a higher chance at damaging their portfolio by making the wrong decisions as opposed to those with a more apathetic attitude.
Curious vs cautious
Those of curious nature always want to know more, especially when it comes to new things. Curious personalities love to explore possibilities, which is why they don’t mind trying their hands at diversifying their investment portfolio and venturing a bit. Cautious personalities, much like those that are risk averse, tend to avoid risky ventures and take more time to think about their choices. This is also why cautious people tend to avoid investments and prefer keeping their funds in cash, which makes it hard to reach certain financial goals in the future.
Interesting, isn’t it? Who would’ve thought personalities could play such an important role in influencing our financial decisions! If you want our opinion, the middle-ground is always the safest place to be, but there’s nothing wrong with venturing outside your comfort zone. What do you think?
If you’d like to know more about how you can grow your wealth and diversify your investments, our wealth management department will guide you and create a strategy that fits your personality and goals. You can learn more here.
