What is My Investor Profile?
- By Jaskarn Pawar
- Investing
- Unrated
Jaskarn Pawar
Jaskarn is Director of UK company Investor Profile Ltd. You can find out more at http://www.investorprofile.co.uk
View all articles by Jaskarn PawarWhat is My Investor Profile?
Someone's investor profile can incorporate many different aspects of their lifestyle.
These can include a person's personality, family, finances, future goals, past experiences and knowledge of investing.
An investor profile can be defined as a general attitude towards investing.
It relates to the types of investments that would best suit an individual based on how they would react to variations in the returns that these would provide.
The returns can include both income and capital gains.
So it is quite an all encompassing definition but can be established quite quickly with a few key bits of information and some focused questions designed to understand how you might react to different circumstances towards your investments.
When trying to establish your own investor profile it is firstly important to get a good understanding of your own situation.
This can include all manner of personal and financial information as described above.
At this point you are really trying to establish what sort of life stage you are in, what your responsibilities are towards yourself and others and how this affects your financial choices.
Then you want to tally up what you have in the way of assets and how these are currently invested.
This will give you a good picture of who you are, how you have been with money to date, and perhaps how you will need to be with money in the future.
You then want to put yourself in different investment scenarios and think about how you might react.
Say you've invested $10,000 and a year later this is worth $8,000. How would you react?
Some people might want to sell and cut their losses. Some people might want to buy more because the price is low. Some people might be relaxed knowing they have invested for the long term and that short term values really don't matter.
Different people react in different ways.
Think about the risk and reward trade-off.
That is, are you happy to take high risk knowing that there could be a high potential reward, but also knowing short term values could be very volatile?
Or would you be happier in lower risk funds knowing that the return is likely to be lower but more predictable, with no crazy highs and lows from year to year?
All of these considerations will go in to helping you understand what your own investor profile is and how best you could invest your money so that you can sleep at night safe in the knowledge that you have made the right choices.
These can include a person's personality, family, finances, future goals, past experiences and knowledge of investing.
An investor profile can be defined as a general attitude towards investing.
It relates to the types of investments that would best suit an individual based on how they would react to variations in the returns that these would provide.
The returns can include both income and capital gains.
So it is quite an all encompassing definition but can be established quite quickly with a few key bits of information and some focused questions designed to understand how you might react to different circumstances towards your investments.
When trying to establish your own investor profile it is firstly important to get a good understanding of your own situation.
This can include all manner of personal and financial information as described above.
At this point you are really trying to establish what sort of life stage you are in, what your responsibilities are towards yourself and others and how this affects your financial choices.
Then you want to tally up what you have in the way of assets and how these are currently invested.
This will give you a good picture of who you are, how you have been with money to date, and perhaps how you will need to be with money in the future.
You then want to put yourself in different investment scenarios and think about how you might react.
Say you've invested $10,000 and a year later this is worth $8,000. How would you react?
Some people might want to sell and cut their losses. Some people might want to buy more because the price is low. Some people might be relaxed knowing they have invested for the long term and that short term values really don't matter.
Different people react in different ways.
Think about the risk and reward trade-off.
That is, are you happy to take high risk knowing that there could be a high potential reward, but also knowing short term values could be very volatile?
Or would you be happier in lower risk funds knowing that the return is likely to be lower but more predictable, with no crazy highs and lows from year to year?
All of these considerations will go in to helping you understand what your own investor profile is and how best you could invest your money so that you can sleep at night safe in the knowledge that you have made the right choices.
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