Investment Personality Types
What are 'investment personality types'?
Investment personality types basically tell you how involved you want to be in your finances, in your investments, in the research that you do. So I've identified three main categories. There's the ‘consumed investor'. A ‘consumed investor', is someone who lives and breathes for investing. They love it. If they won the lottery, they'd probably still be involved in their investments and still want to be actively involved in doing everything they can with their investments. A perfect example of that is Jim Cramer, the CNBC guru. He is obsessed with investing. That's a ‘consumed investor'. They represent probably less than 5% of the population. There aren't too many of them out there. The next category are the ‘involved investors'. The ‘involved investor' reads Business Week every week and likes to look at the performance of their accounts once in a while, has some ideas about what they want to do with their investments. Likes a little bit of activity, but certainly not to the extent of the ‘consumed investor'. Then, there's the third category. The ‘hands-off investment personality'. That's about 90% of the population. That's for the rest of us. The hands-off investor wants the benefits of the investment, but just doesn't have the time, the desire or the expertise to be that hands on. They just want to set it up and kind of forget about it.
Will one investment personality type create wealth more quickly than another?
That's an interesting question, and I really don't know if there's a good answer for it. Some might say, if you're a consumed investor, if you're watching the TV every day, and you're reading, you're researching, you're doing this, there's probably a good chance that you're going to do better than everyone else. Maybe, and certainly, there are some consumed investors that do a lot better than the average, but at the end of the day what can happen is if we're so involved, if we're so consumed, we tend to make really short-term decisions. Instead of focusing on the long-term, the bigger picture, we're in and out. We make the decisions when maybe it's not the best decision to make. The hands-off investor would set it up and kind of forget about it, and think that it's probably not going to do that well, when in fact that kind of philosophy and that kind of strategy does really very well.
