Investor Types – What Type of Investor are you?

Investor types

Take this simple test on investor types and answer the 2 questions below. Which investment options would you prefer- A or B?

A) You invest Rs.100 and there is an equal chance of the investment becoming either Rs.50 or Rs.200 in 2 years

B) You invest Rs.100. You will make 6-8% p.a. over next 5 years.

Answering A) would classify you as an aggressive investor,

answering B) would classify you as a passive or conservative investor.

Let’s try to classify the investor types even deeper, in a step by step fashion.

Most people would broadly fit into typical investor types or a typical “investor profile” as detailed below. Read our primer in our blog on Understanding Asset Classto understand the terms used in this blog

Investor Profile 1: Highly Aggressive (Adventurer)

The highly aggressive investor will be skewed towards equity and will even venture in to small stocks and risky investments. Normally these are sophisticated investors, hence you will find that they hold minimum cash and give lesser weight age to debt securities.

Not all Adventurers are sophisticated professionals. Some of them could be pure speculators who are betting big given their higher disposable cash surplus, which they like to use for trading and investments.

Suitable for:

High risk takers with very long term view (5+ years). Typically youngsters, those with high disposable income, etc.

Investor Profile 2: Aggressive (Opportunist)

The folks here try to spot opportunities and change their strategies like a chameleon. However, unlike chameleon which can change dramatically these investors don’t become conservative because they are keen on taking some calculated risk to build wealth.

Unlike the highly aggressive folks, the Opportunists don’t mind having Gold in their portfolio for two reasons. One is to insulate from risks in typical financial assets and secondly to serve as a hedge against inflation.

Suitable for:

Moderate-High risk takers with somewhat medium term view (1-3 years). Typically suited for those with medium-high risk appetite which include those in 20’s and 30’s including married people assuming they have sufficient savings (Rs.4000+) every month to invest.

Investor Profile 3: Moderate (Balancer)

These investors take the middle path because they don’t want to take extra risks to score a little more returns. In this case they have 40% each in equity and debt , while the rest is held in gold. Balancers have an equal priority for returns as well as preservation of capital.

Their portfolio can be compared to a balanced fund portfolio.

Suitable for:

Moderate risk takers. Conservative single professionals or married professionals with moderate risk appetite will find this suitable. Those who are afraid or scared of Gold should avoid equity mid and small cap altogether because it is highly insensible to bet on small stocks when you don’t have the guts to invest in Gold, which has been a good asset class for centuries.

Investor Profile 4: Conservative (Preserver)

As the name indicates these folks are always keen on keeping their capital safe.

Capital safety is first priority and returns are secondary.

Some of them may invest in blue chip stocks or large cap funds, but that will just be a small portion of the portfolio.

The biggest drawback for this group is the inability to build wealth. However, for those who have sizable assets or wealth a Conservative stance may be good assuming you are happy with low returns in order to ensure safety of capital at all times. However, this strategy doesn’t work for those in the middle class and below because you will not be building wealth.

Suitable for:

Low risk takers. Particularly those with limited knowledge or ability to manage equities and high risk assets. Suited for retirees, older professionals with huge savings, rich class with sufficient asset and cash surplus, those who have already investments in business/real estate and want to find a safe avenue, etc.

These investors may just get a paltry return or zero returns, but the size of investment can make the cash flows significant. All said and done, the post tax returns are going to be very low or close to zero. The silver lining may come from equity or gold if they perform well.

Investor Profile 5: Ultra Conservative (Sideliner)

Being ultra conservative simply means you end up stashing cash under the carpet or invest in bank FDs and liquid funds with no scope for capital appreciation or asset growth.

This philosophy works only for high networth individuals who have already made assets, wealth and investments and want to play safe.

Suitable for:

People who want to play it 100% safe. Particularly those with limited knowledge or ability to manage equities and high risk assets.

This strategy/style is suited for retirees, older professionals with huge savings, people with large assets and surplus cash, those who have already investments in business/real estate and want to find a safe avenue, etc. These are similar to conservative, but the only difference is that Ultra Conservative should be okay with getting very low or even negative returns (post tax).

Because of their conservative style the Sideliners stay away from Gold and Equity and lose the opportunity to build wealth for the long run.

Conclusion – Investor Types

The lesson here is not to be too aggressive or too safe, but to use a mix of various strategies. When markets crash one can be aggressive in investing in blue chip stocks (not small stocks), because these are well known names that are bound to recover.

Just like the changing roles of a hero from a in a movie – from a fighter to a savior, from a romantic guy to a responsible citizen, the investor also may need to change styles. For instance during market crashes some investors may become conservative and move their funds to safer avenues like debt, while some may find the yellow metal a safer heaven to hide.

Whichever profile you fall in to, you have to review your asset allocation at some point and revise your strategies in order to get better returns or safety and achieve financial goals.


  • I’m assuming that except for Conservative and Ultra Conservative investors, all others invest in all 5 asset classes discussed above.
  • The %age allocated for Gold is a suggested allocation given the needs of the investor profile.

Reading Profile Charts:

You can get a quick snapshot of your profile from the charts below which provide easy visual insights. In the Pie Chart, the green colors represent long or short-term debt, while orange/red refers to equity large ca/equity small or mid cap, respectively. The yellow metal is shown in yellow. However finer details are also provided along with the charts below.

Hopefully this blog must have thrown light on investor types and helped you identify your investor profile. So what type of Investor are you? Please comment below.


About the Author

Sridhar is a financial analyst and his work experience spans areas of financial analysis, modeling, valuation and research on companies, specific sectors, etc. Sridhar is an MBA graduate with Finance major from Maharishi Institute of Management.

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