Everyone’s an investment guru, whether it’s the taxi driver, your hairdresser or your mate at the pub. Many people are willing to let you in on the latest and greatest investment, “and if they had enough cash themselves, they’d be right in it”.
This attitude has even permeated our television screens, as seen in Sunday night’s premiere of Downton Abbey – where all rules of diversification, considered research and financial prudence appear to have been ignored!
It is interesting to note the different attitudes to investing among the general population. On the one hand, you will have people who are totally risk-averse, and unless they have money in their bank account, they won’t be able to sleep at night. On the flip side, the more risk-friendly treat investing with the same care and attention that one invests in buying a Scratchie!
Of course, this difference in attitude has been a favourite topic of researchers, who have published many studies showing that there is a difference in investing attitude between women and men. Not this debate again!
It appears that women are more conservative, prefer to conduct more research (including obtaining specialist advice), and tend to take a longer-term view so that they don’t panic over short-term reversals.
The reasons for these differences appear to be a consideration of Mars Vs. Venus – and to identify the “best investment strategy” is largely unhelpful. It is possible to be too conservative as easily as it is possible to be too gung-ho, with neither extreme producing the best results.
So how should investors overcome this?
What is ‘best’ will largely depend on your attitude to risk, so to identify the best investment strategy for you, it follows that you need to be aware of your risk profile.
Fortunately, risk profiling is a normal step taken when qualified financial planners prepare financial plans. Even if you don’t have ‘two bob to rub together’, it’s a worthwhile exercise to find out where you are on the risk scale.
Surprisingly, the outcome is not gender-dependent. I have seen a number of couples where the female is more risk-tolerant than her male partner…which makes for some interesting discussions! The value of risk profiling is in knowing why your attitudes to money do differ, as this often helps to avoid money-related fights (which are a very common thing!) to be a major stumbling block in a relationship.
So why would you be risk profiled? It’s an interesting exercise if nothing else, and can reveal why you act the way that you do. But make sure it’s carried out by a qualified financial planner (like our friends at accumul8 Wealth Management), so you can fully appreciate the significance of your profile.
After all, there may not be any inheritance coming along to save you after a dodgy investment, like in Downton Abbey. But with sound financial planning, you shouldn’t need to be rescued!
For a limited time, we are offering our readers a FREE risk profile (valued at $99!)
Contact us today to find out how your risk attitude may be affecting your investment strategy.