Who You Shouldn't Be...

Your investment style is an extension of your own personality. A calmer demeanour would most probably have a conservative approach to investing and would choose safer deposits over riskier returns. Their approach would be in stark contrast to the route adopted by the hyper lot who take risks hoping it results in higher returns. And there are also those that are comfortable with striking a balance between risk and return: the moderates.

No matter which style of investing you choose for yourself, there are a few personality traits that are best kept away when managing your money. So, while it is very interesting to note the kind of investor that you are (or could be), it is probably more enlightening to realize the kind of investor that you should never turn into. Here are three types of investors that you should be wary of: (We hope they don't seem familiar to you!)

The Hoarder

Its one thing to stock up on the best sales in town, but it's really quite another to pack your house with so much that you probably have to sleep on the porch! That's precisely the problem with the Hoarder.

Characteristic: He is so carried away with accumulating all possible investment avenues that he simply doesn't have the time to focus on reviewing his portfolio and is most often stuck with funds that he could do without. His portfolio would probably resemble a sort of supermarket of funds, complete with a section on new launches (NFOs) and cash-backs (Dividend paying funds). On the face of it, the Hoarder might seem like the eternal optimist, clinging on to a fund even when it has repeatedly disappointed over the years. However, do not confuse his lack of reviewing to be optimism. The only real reason that the Hoarder stays with a poor performing fund is because he is too busy adding some more to his portfolio.

Word of Advice: Dear Hoarder, don't make your investment strategy an end-of-season sale. Remember, the only things that can grow in a hoarded space are Cobwebs. May be its time for you to clean out the closet!

The Bundle of Nerves

The Bundle of Nerves is always looking for the slightest movement in the market to drive him into action, either to add a new fund or to let go of an old one. Keeping his portfolio constant is not his style. And, yes, he keeps his financial advisor on his speed dial.

Characteristic: The Bundle of Nerves doesn't need caffeine to stimulate him; a minor market fluctuation should do the trick. He believes that "Change" (or rather Churn) is the key to having a successful portfolio. An avid follower of investment shows, stock market predictions and financial channels' minute-by-minute update, the Bundle of Nerves needs to see constant movement in his investments to feel at ease - either by increasing or reducing the number of his funds. The Bundle of Nerves lacks the most important skill in investing: Patience!

Word of Advice: Dear Bundle of Nerves, that uncomfortable, edgy feeling that you go through every time the markets move isn't going anywhere -- until you do something about it. It's time to figure out if the constant changes are worth keeping you up and pacing the floor at all hours. May be it's time to slow down a little. The next time you think of a portfolio shuffle, count to three. Thousand.

The Sitting Duck

The Sitting Duck is just plain nice! Financial jargon does not make sense to him, and write-ups in financial dailies appear alien, and none of the financial expert columns he wrote to relevantly answered his query, yet he is more worried about not doing enough to be an ideal investor to an omnipotent and benevolent advisor.

Characteristic: The Sitting Duck is excited about investing, and he trusts blindly. Most first time investors believe that their financial advisor or investment guru will have an answer for absolutely everything related to investments. It takes them a while to understand that their advisor too is human, and that it is only human to err. It helps to note that the part in the discussion where the investor is asked for his views on the proposed "get-rich-quick" plan also offers scope for refusal. The Sitting Duck fails to see that a proposal proposes, and that he has the absolute right to dispose of it.

Word of Advice: Dear Sitting Duck, if it feels like you're being cheated and looks like you're being cheated, take it for granted. You are being cheated. Don't let it continue. The next time you sit with your advisor to discuss a new plan, keep your cell phone handy, and have a friend call you. It's up to you to decide whether it's an 'emergency' or 'a wrong number.'

While every individual has different objectives, beliefs and level of knowledge, whatever type of investor you are, we hope you are not a hoarder, a bundle of nerves or a sitting duck. We've told you about what type of an investor you should not be, so let's focus on traits you can follow to become an ideal investor:

• Adopt a long-term perspective when it comes to investing your hard earned savings. Assess your income and the financial goals you would like to achieve, also understand the level of risk you are willing to take.

• Once you have decided the amount you want to invest, and calculated the risk you can take, choose the investment product carefully. Click this link to learn how you can choose a mutual funds.

• If you are investing through an advisor, ensure that he is focused on your financial objectives, and is not trying to work on his goals at your expense. Before you sign the dotted line, make sure to ask your financial advisor some important questions.

• As a long-term investor, you shouldn't panic when your investments experience short-term movements. When tracking the activities of your investments, you should look at the big picture instead of small hurdles.

• And most importantly, remember that there are many ways to be successful and no one strategy is inherently better than any other. However, once you find your style, stick with it.

There are exceptions to every rule, but we hope that these tips and common-sense principles we've discussed do benefit you. We'll cover more on how you can become an ideal investor in our upcoming articles. Remember, just as your personality reflects in your investment style, the success of your investments would reflect in your lifestyle. Be a confident, sensible and long term investor.

Happy Investing!

Above article is authored by Quantum.

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