Which type of investor are you?

Which type of investor are you?

NAV TL;DR

If you don’t have time to read through the whole article, you can check out our short version below:

  • Identify your financial goals. This will determine your priorities and the amount of time you have to remain invested.
  • Select the risk level that you are comfortable with and manage your expectation on potential returns.

More than satisfying your curiosity, learning about your investor profile and risk appetite puts you in a better position to decide what to invest in to achieve your financial goals. So let’s start!

Your financial goals

It’s important to identify your financial goals as it changes the amount of time you have to remain invested (your investment horizon). Different investment horizons will affect your approach to investing.

Short term goals are priorities that can be achieved within 2 years, for example, repaying a personal loan. To achieve them, you should:

  • Maintain a disciplined approach to savings. Putting your money in principal-protected products like fixed deposits or Singapore Savings Bonds could give your savings an additional leg-up.
  • Compare promotions and cashback deals to reduce your overall spending.
  • Complement your monthly savings with some investing. Consider buying unit trusts or ETFs, which may yield higher returns than the interest on a savings account
  • Opt for accumulating share classes or unit-dividends instead of cash-dividends to take advantage of reinvesting and compounding e ects.
  • Review your progress regularly to ensure that you are on track to achieving your goal.
  • Take advantage of grants or subsidies that could be available for specific goals like your child’s education needs or buying a new house.

Long term goals are priorities that can be achieved within 2 to 5 years, for example, saving for the down payment on a home. To achieve them, you should:

  • Invest in products that adopt a long-term perspective when selecting underlying assets.
  • Make time to review your existing investments regularly and rebalance your holdings as necessary to maintain a balanced, diversified portfolio.
  • Avoid knee-jerk reactions to market events. Conduct a fundamental analysis of the investment to help you to determine if the investment has growth potential in the long term.
  • Keep an eye out for market opportunities that may arise from time to time.

Understanding your risk appetite

 

Willing to accept…

 

 

Minimal Risk

 

 

You are looking to preserve capital as a main priority. You are fine with minimal or low returns.

 

Low Risk

 

You are looking to achieve some potential returns over the medium to long term under normal market conditions.

 

Moderate Risk

 

You are looking to achieve high potential returns over the medium to long term under normal market conditions.

 

High Risk

 

You are looking to achieve much high potential returns over the medium to long term under normal market conditions.

 

Significant Risk

 

You are looking to achieve maximum potential. However, you are prepared to lose a significant part or all of your capital and are able to make good any losses that exceed your main investment amount (eg. from investment loans).


Understanding your risk appetite is key to helping you invest in products that are suitable for you.

Are you a techie or a people person?

Digital Savvy Investor

Savvy is your middle name! Comfortable with technology and digital platforms, you feel right at home when it comes to researching, analysing, executing and managing your investments.

 

What you need to consider

 

 

Suitable investment strategies

 

User experience and interface design

 

Online trading connected directly to your bank account for a smooth trading experience

 

Convenience of paperless account opening and seamless fund transfer

 

Useful digital functionalities such as charting and price alerts to assist your trading in advance

 

Availability of wide range of investment products on a single platform for easy building and monitoring of your investment portfolio

 

Access to a range of investment research, insights and contextual product ideas that match your risk rating and transaction history

 


Human-Touch Investor


You want to be heard and understood. You will appreciate an insightful financial advisor who listens and tailors investment advice accordingly before offering investing or product-specific recommendations.

 

What you need to consider

 

 

Suitable investment strategies

 

The credibility and track record of your financial advisor

 

Obtain an accurate financial needs analysis with your financial advisor regarding your investment goals, risk appetite and knowledge of investment instruments

 

Fee for professional advisory services

 

Update your financial on any changes in your financial situation or goals to ensure that the recommended investment products are refined correspondingly

 

A well-structured financial needs analysis and customised investment advice

 

Review your investments regularly so that you can rebalance your holdings as necessary to maintain a balanced, diversified portfolio


Do you seek to do good through your investments?

Socially Conscious Investor

Responsibility is a big thing for you. While financial return is important to you as an investor, you also consider a company's values and its ability to benefit society at large.

 

What you need to consider

 

 

Suitable investment strategies

 

A company’s social mission and corporate values, alongside your personal experience with the brand

 

Learn about the different measures of socially responsible investing (SRI) and the main goals of impact investing

 

The integrity of the data on social responsibility measures

 

Invest in companies or investment products that have a socially responsible mandate, or that have a specific focus on impact investing

 

Sound business fundamentals and potential for sustainable growth

 

Explore other investment products (beside company stocks) that are geared towards social sustainability – such like the Women’s Livelihood Bond – or digital microfinance platforms


Performance Investor

You can be a highly motivated socially conscious investor also. Nothing deters you from achieving your financial goals because you’re likely to hold a portfolio that delivers the best returns during market booms while offering you the best protection against bad market conditions.

 

What you need to consider

 

 

Suitable investment strategies

 

Access to the financial information of companies

 

Consider a mixture of companies with strong earnings growth (growth stocks) and those that appear under-valued (value stocks) to include in your portfolio

 

Availability of peer-comparison tools and charting functionalities

 

Ensure that you are keeping a well-diversified portfolio to protect against fluctuating market conditions

 

Ability to place different types of orders (market, limit, good-till-date etc)

 

Be savvy about fees in the form of transaction charges, management fees and expense ratios, and be aware of illiquid financial products that become a cost


Are you a jittery newbie or a confident seasoned driver?


L-Plate Investor


Your progress has been held back by your uncertainty. As you embark on this journey, you would like to obtain more knowledge and guidance on how to grow and manage your portfolio.

 

What you need to consider

 

 

Suitable investment strategies

 

Set aside time and budget for starting out

 

Spend some time to understand your unique financial needs and risk profile, to help you discern the kinds of investment most suitable for your needs

 

Refer to easy-to-understand guides to help you decide on what concrete actions to take

 

Join an investment club (either online, via social trading apps or with a physical group) or attend seminars to see how other people invest for their financial goals

 

Obtain knowledge of how basic investment products work to assist in your investment decision

 

Implement only strategies that you understand, and avoid starting with complex strategies or products such as alternatives and derivatives


Steady-lah Investor


As an investor with more experience under your belt, you may have already seen a few market cycles. Maybe you have even grown a sizeable investment portfolio to meet your financial goals.

 

What you need to consider

 

 

Suitable investment strategies

 

Ability to quickly access your portfolio, view consolidated reports and P&L performance

 

Once you have a core portfolio in place, consider setting aside a small portion for alternatives like commodities, private equity, and real estate to further diversify and balance out your holdings

 

Access to research papers relevant to your holdings

 

Rebalance your portfolio regularly by taking the gains from outperforming asset classes to buy into lagging asset classes

 

Knowledge of fees, minimum amounts and liquidity measures associated with alternative investments

 

As markets and economic environments shift, be sure to also review your investments to ensure that they are still in line with your goals  


Are you charging ahead or taking the backseat?

Chiong Investor

Investing is fun to you. You enjoy devoting your time to watching the markets, analysing companies, and trading to take advantage of market opportunities.

 

What you need to consider

 

 

Suitable investment strategies

 

Competitive transaction fees/sales charges

 

Balance your investment portfolio with a strategy of longer-term investments and short-term trading

 

Charting functionalities for your technical analyses; and availability of marco-economic and industry research for your fundamental analyses

 

Understand the difference between limit and market orders to better plan your trading strategy

 

Access to real-time market data to help you time your trades

 

Subscribe to investment newsletters and updates to keep abreast of the latest promotions so that you don't miss out on opportunities to your investments


Lepak Investor

‘Chill’ is your favourite word. You prefer to sit back, relax and leave it to the experts. It gives you peace of mind to let someone more experienced take the driver’s seat.

 

What you need to consider

 

 

Suitable investment strategies

 

Your minimum investment amount

 

Consider investing in Unit Trusts, where a professional fund manager makes investment decisions for you, or in ETFs that passively track and index

 

Management fees

 

If you have more upfront capital, invest in discretionary portfolios that are specially tailored to your investment needs

 

Market cycles and the power of compounding

 

Taking advantage of market cycles and the power of compounding 


Having a deep understanding of yourself and your affinities can help you better choose investment products that are suited to your needs and beliefs. Have you started investing yet?

Ready to start?

Speak to the Wealth Planning Manager today for a financial health check and how you can better plan your finances.

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Alternatively, check out NAV Planner to analyse your real-time financial health. The best part is, it’s fuss-free – we automatically work out your money flows and provide money tips.

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