Which Investor Personality Best Describes You?

Based on many studies, our different character traits and preferences, together with a selection of emotional and mental behavioral biases, have a very strong effect on the way we invest. This is known as behavioral finance. As part of a two-part series on Behavioral Finance, we are going to start by studying the different personality varieties of most investors. In regards to money and investing, there are lots of factors that lead to the “how” and “why” of important financial decisions.

Investor Personality Types

There are actually four different kinds of investors, as reported by the CFA Institute, each with their own distinct behavioral biases. Understanding your very own investor personality type can do a lot toward assisting you to determine and meet your permanent investment goals, in addition to producing better returns. (For more from Brad Sherman, see: 6 Things to ask a monetary Advisor.)

Which of those profiles best describes you?



Preservers are investors who place a great deal of increased financial security as well as on preserving wealth as an alternative to taking risks to increase wealth. Preservers watch closely over their assets and so are anxious about losses and short-term performance. Preservers have trouble taking action for fear of making the incorrect investments decisions.

Common Difficulties with Preservers: A wise investment strategy should consider short-, mid- and long-term goals. By overemphasizing short-term returns, a trader risks making an emotional decision in line with the short-term performance, which could turn out to be more detrimental in their eyes over time.


Accumulators are investors who are interested in accumulating wealth and are also confident they are able to achieve this. Accumulators are likely to desire to steer the ship in terms of making investment decisions. They are really risk takers and typically assume that whatever path they choose will be the correct one. Accumulators have frequently been successful in prior business endeavors and so are confident that they will make successful investors as well.

Common trouble with Accumulators: Overconfidence. We recently wrote your blog on the problem with investment newsletter picking and active management. Overconfidence is a natural human tendency. As investors, accumulators consistently overestimate their ability to calculate future returns. History has demonstrated that it must be impossible to calculate markets at massive, yet accumulators continue to attempt to do so and expose themselves to extreme risk.


Followers are investors who usually continue with the lead of their friends and colleagues, an overall investing fad, or the status quo, as opposed to having their own personal ideas or making their unique decisions about investing. Followers may lack interest and knowledge of the stock markets along with their decision-making process may lack a long-term plan.

Common Issues with Followers: The herd mentality can be a perception of investors piling in to the same investments as others. This could be the basis of investment bubbles and subsequent crashes in stocks and shares. While you are a follower, you will be typically following fund managers who definitely have tools and recourses to behave on new information in a small part of an additional. As soon as the average investor “follows” them in to a position, it is usually already happening. It usually is crucial that you understand your investment decisions and exactly how they fit to your overall plan. (For more, see: The Importance of Diversification.)


Independents are investors who definitely have original ideas about investing and enjoy being mixed up in investment process. Unlike followers, they can be very interested at the same time of investing, and are also engaged in the stock markets. Many Independents are analytical and critical thinkers and trust themselves to produce confident and informed decisions, but risk the pitfalls of only following their particular research.

Common Issues with Ind
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