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Vancouver, B.C. (May 22,
2001): Investors who want to develop
their long-term investment portfolio may want
to become acquainted with their investment personality,
also known as the investor profile.
Adrian Mastracci, fee-only
investment counsel and president of Vancouver
based KCM Wealth Management, comments,
"One of the significant guidelines that I apply
in structuring investment portfolios for my clients
is their particular investment personality."
"The characteristics of a client's
investment personality is essential information,"
says Mastracci, "I structure a client portfolio
that reflects the stated goals and desires only
after considering the client's comfort with the
chosen investment personality. I also find that
two spouses may each have a different investment
personality."
Mastracci notes, "A client's investment
personality may change through time. Priorities
often change as we progress through life. Someone
first starting out may be an aggressive investor,
while someone approaching, or in the midst of
retirement, is more attentive to the preservation
of the nestegg."
"Ignoring your distinct investment
personality characteristics can produce some undesirable
results," indicated Mastracci, "You will be much
happier and sleep better with a portfolio that
has been designed with your investment personality
in mind."
To assist in understanding the characteristics
of investment personalities, Mastracci outlines
the six that he uses:
1. Guaranteed
Investors with no tolerance for unpredictability
in investment returns. These individuals generally
invest in guaranteed interest vehicles, which
are stable investments having predictable income
and no fluctuation in capital value.
2. Conservative
Investors with low tolerance for variation in
annual returns. These investors usually desire
stability with fairly predictable growth and relatively
little fluctuation in capital value.
3. Moderate/Balanced
Investors who accept a trade-off between growth
and security of capital, without significant variation
in returns and small fluctuations in capital value.
These investors are comfortable with a balanced
approach of emphasis between achieving growth
and a steady return.
4. Growth/Business
Investors who are patient and willing to tolerate
some variability in investment returns and some
fluctuations in capital value. Such investors
are primarily interested in growth, with capital
preservation as a secondary consideration. These
are also referred to as "business risk" investors.
5. Aggressive Growth
Investors who seek significant potential growth,
willing to tolerate greater fluctuations in capital
value. Superior long-term investment results are
sought after as the investor accepts much greater
volatility in returns.
6. Maximum Growth
Investors who aspire to maximum potential growth,
willing to tolerate significant fluctuations in
capital value. These investors accept a significant
emphasis on equities in order to gain the potential
for long-term growth, and can tolerate greater
variations in investment returns. These individuals
are also referred to as speculative investors.
"Occasionally, a client displays
two investment personalities, a primary and a
secondary," observes Mastracci, "As an example,
a client with a 'growth/business' primary personality
may ask me to guide 90 to 95 percent of the total
portfolio within the context of the primary profile,
and the client then guides the remaining 5 to
10 percent within a 'maximum growth' profile."
Mastracci summarizes, "Investors
may not have thought of themselves as having distinct
investment personalities. If your current portfolio
structure does not bear resemblance to your investment
personality, it may be prudent to review the appropriateness
of the asset allocations."
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