What Type Of Investor Are You?

06/13/00 10:10:43 AM

by Jason K. Hutson

Time frame, capital, patience, assertiveness, rule following, and temperament are all large parts of investment success. In order to make the most of our individual inherent abilities to perform well at certain functions you must ask yourself some very easy questions to determine what type of investments will work best for you.

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There is no easy way to become successful at investing. Hard work and persistence pay off for your investments just like they do in your career, and different types of investments should be used in varying degrees at different periods of your life. Visualize an investment that you are thinking about today and answer the following questions in terms of that investment. We'll try to quantify the parameters of this investment for you.

1. What is an appropriate time frame for this investment?

1 point - Less than two weeks
2 points - Two weeks
3 points - One month
4 points - Half a year
5 points - One year
6 points - 3-5 years
7 points - 10 years
8 points - 20 years
9 points - 30 years

2. How much of your available capital are you going to put in this investment?

1 point - 100%
2 points - 90%
3 points - 70%
4 points - 50%
5 points - 30%
6 points - 10%
7 points - 5%
8 points - 2%
9 points - 1%

3. How patient are you and how does this affect your investing?

3 points - Lose patience only under the most trying situations
5 points - Control my emotions well in most normal circumstances
7 points - Frequently lose patience during everyday tasks
9 points - Rarely display any patience for anything

4. How assertive are you and how does this affect your investing?

1 point - In control and ready to act at all times
3 points - Rarely hesitate in trying situations
5 points - Control my actions well in most normal circumstances
7 points - Lose assertiveness only under the most trying situations
9 points - Commonly change my mind

5. How well can you follow rules under very extreme circumstances?

3 points - Rarely act against a rule
5 points - Follow rules in most normal circumstances
7 points - Second guess and delay important decisions
9 points - Jump at the chance to bend the rules

Add up the numbers corresponding to each answer. The average person would probably score more than 25 points on this quiz. If you scored below 25 points you might be suited for a short-term, high-risk investment. If you scored above 25 points you are more suited towards longer-term investments with less decision-making involved. You can try this test again with different investment ideas in mind and if after several tries you haven't fit the profile of the high-risk investor then you should probably stay away from them.

Enter in your score from the quiz in the "Comments or Questions" section below and press "Submit"

Jason K. Hutson

Traders.com Staff Writer. Enjoys trendlines, support and resistance, moving averages, RSI, MACD, ADX, Bollinger bands, parabolic SAR, chart formations, and volume analysis.

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