Investors getting started in a registered retirement savings plan or registered retirement income portfolio should first become acquainted with their distinct investment personalities -- also known as investor profiles.

The characteristics of an individual's investment personality are essential information to achieve desired goals, such as financial independence and retirement.

Spouses can have different investment personalities. Therefore, it is important to design each spouse's portfolio within his or her separate profile.

Priorities can change individuals' investment personality as each of us progresses through life. Someone starting out may be an aggressive investor, while someone approaching, or in the midst of retirement, is more attentive to preserving their nest egg.

Portfolios that ignore investors' profiles can produce undesirable results. Investors are much happier and sleep better with portfolios designed within their investment personalities.

Here are six basic investment personality types:

Guaranteed
Investors with no tolerance for unpredictability in investment returns. These individuals generally invest in guaranteed-interest vehicles. They seek investments with predictable income and no fluctuation in capital value.

Conservative
Investors with low tolerance for variations in returns. These investors generally desire stability with fairly predictable growth and relatively little fluctuation in capital value.

Moderate/balanced
Investors who accept a trade-off between growth and security of capital, without significant variation in returns. Small fluctuations in capital value are acceptable. These investors are comfortable with a balanced approach between growth and steady return.

Growth
Investors who are patient and can tolerate some swings in returns and some fluctuations in portfolio values. Such investors are primarily interested in growth, with capital preservation as a secondary consideration. These are also referred to as "business risk" investors.

Aggressive growth
Investors who seek significant potential growth, and who are willing to tolerate greater fluctuations in capital value. Superior long-term results are sought as the investor accepts much greater volatility.

Maximum growth
Investors who aspire to maximum growth and who will tolerate significant fluctuations in capital value. Their portfolios have a significant emphasis on equities to gain the potential for long-term growth. These investors can tolerate high fluctuations in returns. They are often referred to as "speculators."

It is not unusual for an investor to display two investment personalities, a primary and a secondary one.

For instance, an investor whose primary personality is growth could request that 80% to 90% of his total portfolio be designed within that context, while the remaining 10% to 20% be chosen to meet his secondary personality of aggressive growth.

However, investors should periodically review whether their secondary personality portfolio still meets their long-term objectives. In many cases, investors redirect these funds to the primary personality portfolio within a few years.

Often, investors do not not see themselves as having distinct investment personalities. Those who do understand their profiles have a better appreciation of the portfolio risks they incur.

So take the time to unwrap your investor profile. Your portfolio allocations should bear resemblance to your investment personality. Otherwise, it is time to review those allocations.
 

NOTE: The information provided above is intended for general informational purposes only. It does not constitute advice for anyone's specific situation. Everyone should always first consult directly with their advisors to determine the appropriateness of any information contained above before taking any action. KCM Wealth Management Inc. assumes no responsibility for any loss or damage arising from the use of, or reliance upon the above information.