When it comes to investing, we each our own motivations, and roadblocks. Despite our differences, we can often find parallels in the way we each go about our investing life.
There is a wide spectrum of different types of investors. Knowing where your behaviors and perspectives compare to others in a similar situation can be empowering. This type of knowledge can help to put some perspective behind your own investing strategy.
We explore a few common investor personas below. While we don’t expect anyone to fit squarely in one of these boxes – see if you recognize any aspects of your investing personality!
The Up-and-Comer: Thrifty, Idealistic, Tech-Savvy
This group is often juggling the responsibility to pay off student debt with their aspirations to jumpstart a fulfilling career. They’re idealistic, in the sense that they want to live and work in sync with their values. At the same time, they can be pragmatists who’ve learned to live on a tight budget.
Many in this group are just starting to turn a financial corner – they (finally) are seeing a margin of their income that can be put towards the future. If they can afford to start investing, they’re probably looking for a process that is online, accessible, and low-cost.
Over-conservatism. Individuals in this group tend to be young investors, and understandably have a fear of the often unpredictable market. Up-and-comers should keep in mind that it’s nearly impossible to grow your wealth without taking on some amount of risk.
The up-and-comer is completely plugged in to the always-on digital world – comfort with technology is a given. As the world of investing becomes increasingly more digital, this group is ready to dive in!
The Accumulator: Efficient, Multitasking, Forward-Thinking
Investors in their 30s and 40s are generally in the accumulation phase of life. Many in this group are buying houses, having children, advancing in their careers, and may be starting to take care of aging parents – they’re busy, busy!
Accumulators may earn a lot relative to up-and-comers, but their money is often all accounted for. For this group, time is generally scarcer than money. Many know they should be investing more intelligently for their own retirement or their kids’ education. But, at times, competing priorities can get in the way
Accumulators can struggle to overcome their own to-do lists and find the time to manage or grow their investments. Most in the group are comfortable with technology, but some might be hesitant to give up the old ways of paper statements and one-on-one advising entirely.
Accumulators are efficient. They’ll likely run with the right investing strategy once they can identify it and pencil it in to their schedule.
The Seasoned Saver: Focused on Sustainability
Some in this group have already retired, while others are looking forward to retiring soon. At this stage in the game, investors tend to be confident in their own expertise and investing strategy, but still are wary of outliving their capital. A seasoned saver tends to be more focused on generating current income and making it last, compared to other investors.
Individuals in this group can be all over the map in terms of comfort with technology. Some hesitate to invest online, but many others love it – and might have ample free time in retirement to get more involved in their investment plans.
Timing and balance. It’s tough to generate sufficient income to live on today, while keeping their investments growing enough to cover future needs.
Money – most of these folks have accumulated a nice nest egg. The challenge is managing it wisely and efficiently to last.
The Super Woman: Unsung, Under-Served
It should go without saying that women cut across all investing personas – but in some ways, they can also be a persona of their own with unique challenges, opportunities, and concerns. Women’s career arcs and opportunities can differ from men’s in ways that impact their investing life (and their available income).
Despite these challenges, women are persevering in the workforce while still providing for their families financially or otherwise. As of 2015, mothers were the sole or primary breadwinners (bringing in at least half of the family earning) in 42 percent of U.S. households. For those women who juggle family obligations, careers, and feel that the financial odds are sometimes stacked against them, it can be challenging to make personal financial goals, like investing, a priority.
Aversion to risk. As a group, women tend to be more risk-averse as investors (and in nearly all aspects of life).
Women can easily turn their challenges into strengths. A healthy risk appetite can help to make you a smart investor and promote balance in your portfolio.
We know that every investor has unique needs, and that your investing personality may be a mix of these personas, or other characteristics we didn’t mention. That’s ok! Still, it can be valuable to be acquainted with your own risk tolerance, goals, strengths, and challenges as you look to refine your investing strategy and build wealth.
How well do you think you know yourself as an investor? Let us know in the comments below.