How to Start Investing Based on Your Personality
How to Start Investing Based on Your Personality
According to a recent Magnifi study, 80% of investors say that investing advice tailored to their goals yields better results. This makes sense—if you’re investing in a way that suits your neighbor, chances are you won’t reach your own aspirations. After all, your investing personality is uniquely yours.
What is an investing personality?
An investing personality is a person’s distinctive investing character. It suggests one’s ideal way to achieve financial happiness through investing. It’s important to find investments that fit your personality, not just your goal, so you can stick to your personal investing plan for the long haul.
Let’s discuss the different investing personalities, why it’s important to invest in line with your values, and how you can get personalized guidance based on your personality.
What’s your investing personality?
Research from Magnifi identifies 4 investing personalities:
- Touch investors prioritize relationships above all else.
- Security investors want their financial future to be a sure thing.
- Purpose investors seek to positively impact the world.
- Viewpoint investors express their intellectual curiosity through investing.
Once you read through the above personalities, ask yourself: Which investing personality do I relate to? Perhaps you’re one investing personality through and through, or maybe you’re a hybrid. Whatever the case, these personalities can help guide your future investment decisions as you build a custom portfolio—and it’s super important to know which camp you belong to.
The answer to that question may not be obvious to you. If you need clarification, take the quiz on Magnifi Personal, which divulges which kind of investor you are based on your responses to a scientifically-backed financial personality assessment for investing.
If your investing personality is a hybrid, your results will even show percentages of each personality and which one is in the forefront. Here’s an example of what that looks like:
There are a lot of elements in investing that vary from person to person. But does tailoring your investments in line with your personality actually make a difference in your portfolio? Let’s find out.
Why your investing personality matters in a long-term strategy
The investing personality is a new and important layer to empowering people to invest for the long term. If you find investments that fit your personality, you're more likely to stick with the plan and take advantage of the power of investing and reinvesting over time.
The science behind investing personalities:
Magnifi’s investing personality assessment is rooted in positive psychology. Author Christopher Peterson described positive psychology as the “scientific study of what makes life worth living.” Applying positive psychology to investing tells us that we’re more likely to reach our financial goals when we take an approach-based mindset versus an avoidance mindset. Basically, asking the question, “What am I driving toward?” is more effective than “What am I avoiding?”
Plus, personalization leads to better investing outcomes because money is personal. Money is a medium of exchange to provide people, families, communities, and businesses what they need to live and thrive. The global markets are an avenue to grow your money, which—for most people—is driven by deeper things like love, relationships, aspirations, comfort, and joy. If financial happiness is the endgame, the journey is just as crucial as the outcome.
It’s worth noting that everyone's version of financial wellness is different because each of us values somewhat different things in our lives. Your investing personality enables you to achieve financial wellness according to your own definition.
Finding investments that reflect your values and meet your goals can be challenging. With Magnifi, investors can streamline the process of finding and making investments that match their personalities and priorities, increasing the probability to stay the course during the inevitable market gyrations.
How to access investing guidance based on your personality
How should you invest your money? Well, anyone can access investing guidance that matches who they are. The key is to know where to look.
Of course, you can pay for a financial advisor, but that costs at least 1.18% of your invested assets, according to a 2021 AdvisoryHQ study (1). That’s not to mention the fact that financial advisors aren’t incorporating positive psychology into their individualized investing strategies.
On the other hand, you can do it yourself, but many fear the DIY strategy because they don’t feel like an expert. Robo-advisors don’t offer personalization, but there’s another solution.
With Magnifi’s AI (artificial intelligence) investing technology, you can find out your investing personality just by asking your assistant: "What's my investing personality?" After seeing the details of your investing personality, you can uncover investments that others with similar personalities have historically been interested in. This can help guide your investing decisions without taking away your agency as an individual investor.
Plus, in a recent Magnifi study, 25% of respondents said AI can help them conduct investing research faster, which helps them fit portfolio management into their busy lives. If long-term investing is in your life plan, things just got easier for you.
Over time, as your investments grow, your asset weights (aka percentages of each investment) are bound to shift. You can always ask Magnifi, “Am I on track to reach my mortgage payoff goal?” or whatever goal you’re trying to achieve. The AI assistant will assess your portfolio and recommend any adjustments as needed, and you can take action based on your own investing personality.
Ready to invest? Consult your investing personality.
At its core, an investing personality is the guidance you need to achieve financial happiness.
60% of Magnifi survey respondents have positive feelings toward AI. This is up from 5 years ago, when just 25% of people were excited about AI. Technology like Magnifi Personal helps fuel this shift, thanks to its trustworthy data and the fact it lets users maintain control of their own investments—all the while keeping their investing personality in mind. That’s as personalized as investing gets.
References:
- "What are the Average Financial Advisor Fees & Investment Fees Being Charged in 2021?" AdvisoryHQ, https://www.advisoryhq.com/articles/financial-advisor-fees-wealth-managers-planners-and-fee-only-advisors/