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Discover Your Investment Personality

Discover Your Investment Personality

What’s Your Investment Personality?

Do you read the Wall Street Journal every morning and actively monitor your investments throughout the day? Or do you want as little to do with your finances and investments as possible? Maybe you’re somewhere in between these two extremes…

One Investment Personality is no better than another. 

They each have their own advantages and disadvantages that we’ll explore in a later section. If investing bores or intimidates you, you’ll learn a strategy that is perfect for you. If you want to be more involved, you will learn a strategy custom-tailored for your personality that will put you on the fast track to reaching your goals.

The bottom line is that you don’t have to dedicate hours and hours a week to your investments if you don’t want to, but you do need to know and understand your Investment Personality to best maximize your return and keep yourself sane in the face of today’s information overload.

There are three Investment Personalities:

1.) “Hands-Off.” The Hands-Off Investment personality wants a simple and straightforward approach to investing that requires very little time and personal involvement.

2.) “Involved.” The Involved Investment personality also wants a simple and straightforward approach to investing, but is comfortable taking a more active role in their investments.

3.) “Consumed.” The Consumed Investment personality wants the greatest potential for investment return and needs to be in control and fully involved in all aspects of their investments.

Which type are you?

If you don’t immediately recognize your Investment Personality or are unsure, take the quiz below by circling the letter that best. Don’t dismiss the Investment Personality Quiz as a cute self-discovery tool. It is very important you discover your Investment Personality because it determines your Investment Strategy and that strategy determines what and how you should invest to achieve your goals. If you don’t have any investments yet, circle the letter you think will best describe your investing tendencies.

The Investment Personality Quiz

1) I check the performance of my investments:

A. Almost never between account statements

B. Usually a few times a month

C. Nearly every day

2) I read financial magazines such as Fortune, Forbes, or BusinessWeek:

A. Rarely or never

B. Once in a while, if I have time

C. Regularly

3) Do you enjoy researching various investments?

A. About as much as I enjoy a headache

B. Sometimes

C. Absolutely

4) What describes you best?

A. I’d be happy with an 8% annual return, if I didn’t have to spend any time researching or paying attention to my investments.

B. I’d be happy with a 10% annual return, if I spent an hour a day on my investments.

C. I’d gladly read and research 15 hours a week to get a 12% annual return.

5) Do you know what makes up the GDP and what it measures?

A. I’ve never heard of GDP

B. Not exactly

C. Yes, of course

6) If you had to go back to college for one class, which class would you take:

A. Short Stories

B. Personal Finance 101

C. Advanced Economics and Investing

7) What did the Dow close at yesterday? (Pick a number and then check the actual figure in the newspaper, on the news, or online.)

A. If was off by more than 2,000 points

B. If was off by 200 to 2,000 points

C. If was correct within 200 points

8) What do you do with your investment accounts when they arrive in the mail?

A. Take a quick glance at them

B. Set them aside to look them over on the weekend

C. I go through them in detail that day to see how everything is doing and to make sure there are no mistakes.

9) If you were financially independent:

A. I’d be able to hire someone to deal with my investments.

B. I’d spend about the same amount of time on my investments.

C. I’d be able to spend even more time researching investments and monitoring the performance in my accounts.

10) I’d prefer to be:

A. As uninvolved in my investments as possible.

B. Somewhat involved in my investments.

C. As actively involved in my investments as possible.

Scoring the Investment Personality Quiz

Count the number of answers you selected for each letter:

A’s _____       B’s _____       C’s _____

  • I scored highest in A’s: I have a “Hands-Off” Investment Personality. 
  • I scored highest in B’s: I have an “Involved” Investment Personality. 
  • I scored highest in C’s: I have a “Consumed” Investment Personality. 

“Hands-Off” Investment Personality

If you have a Hands-Off Investment Personality, you want as little to do with your investments as possible. You want the benefits of investing, but you don’t have the desire, the time, or the experience to take an active role in your investments. You’re not opposed to saving or investing, you just don’t want to be involved in the daily minutia.

Don’t be disappointed or discouraged if you have a Hands-Off Investment Personality. You don’t have to be an investment guru to succeed as an investor. You do not need to dedicate hours to investment research and have a degree in finance and accounting to do well investing. I believe this is one of the reasons there are a lot of onlookers who would like to invest but who are too nervous or scared to begin.

I enjoy eating good food, but I don’t want to be a farmer, a rancher, or a chef. I want to benefit from the fancy dinner, I just don’t want to grow the vegetables, raise the livestock, or prepare the meal. As a Hands-Off investor, you’ll still benefit from investing in stocks and bonds just like the financial gurus, and you’ll be saving and investing just as much as someone who has an Involved or Consumed Investment Personality. The only difference will be the degree of daily management.

“Involved” Investment Personality

If you have an Involved Investment Personality, you want to have more involvement than the Hands-Off personality, but not as much as the Consumed Investment Personality. You like to know what’s going on, but you don’t necessarily have the time, skill, or desire to be fully involved. You don’t want to give up control of your investments, but you don’t want to spend hours a week in the investment trenches either.

You think you have a pretty good idea of how to invest and have a general sense of what works and what doesn’t. Although you can talk the talk, you don’t have enough time or desire to know everything going on in the economy or stock market. It’s hard enough keeping track of how your own investments are performing.

You may read the business section of your local newspaper, keep current on what’s happening with the economy, and track the performance of your investments. You choose investments by reading magazines or talking to others. It’s a reactive approach — any research you do is a result of reading or hearing it somewhere first.

If you had more time, you might get more involved, but you’d never want to do as much research or have as much control as the Consumed Investment Personality. It’s not a matter of time or skill — it’s a matter of choice and desire.

“Consumed” Investment Personality

If you have a Consumed Investment Personality, you probably already knew it. You love the stock market and want to be as involved as you can. You, quite literally, are consumed with investing: you research, monitor the economy, and check your accounts.  The Consumed Investment Personality probably represents less than 5% of the population.

You need as much control as possible.  It’s worth spending several hours a week reading the Wall Street Journal and other financial publications because you enjoy it. You wouldn’t want it any other way. If you quit your day job, you’d consider entering the financial services field if you’re not in it already!

You select investments after you’ve done your research and you make changes to your portfolio to take advantage of any changes you’ve identified in the economy. Control, flexibility, and involvement are very important to you and worth the extra time it takes to generate a better investment return.

The proceeding blog post is an excerpt from The Six-Day Financial Makeover: Transform Your Financial Life in Less Than a Week!, available now on Amazon.


About the Independent Financial Advisor

Robert Pagliarini, PhD, CFP®, EA has helped clients across the United States manage, grow, and preserve their wealth for the past 25 years. His goal is to provide comprehensive financial, investment, and tax advice in a way that was honest and ethical. In addition, he is a CFP® Board Ambassador, one of only 50 in the country, and a real fiduciary. In his spare time, he writes personal finance books, finance articles for Forbes and develops email and video financial courses to help educate others. With decades of experience as a financial advisor, the media often calls on him for his expertise. Contact Robert today to learn more about his financial planning services.

Reach us at (949) 305-0500