Find Out What Investment Strategy Fits Your Personality With This Quiz
Charlie Yuan Ting Jing, CFA, CQF
Oct 20 2022
Reviewed By Steven Kiang Kai Han, CFP
Introduction
Investing can be a great way to grow your wealth over time. But before you start investing, it's important to figure out what investment strategy is right for you. The quiz further in the content will help you find out what type of investor you are and which investment strategy will fit your personality.
What is investor personality?
Investor personality is a psychological profile that describes the typical characteristics of an investor. These profiles can be used to predict an investor's risk tolerance, investment preferences, and behaviour.
There are various types of investor personality profiles. This article will discuss the Bailard, Biehl, and Kaiser (BB&K) Five-Way Model
Bailard, Biehl, and Kaiser (BB&K) Five-Way Model
The BB&K Five-Way Model is a personality assessment tool frequently used by investors. The model was developed by Thomas Bailard, David Biehl, and Ronald Kaiser. It takes into account an individual's level of confidence and preferred method of action along two dimensions. Since then, it has been widely used by investors to improve their performance.
The first dimension is the Level of Confidence. This reflects how confident the investor is in all areas of life, including his career, his health, and his finances.
The second dimension is the Method of Action. This pertains to whether the investor is systematic, careful, and analytical in their approach to life, or if they are emotional, intuitive, and impulsive.
The BB&K Five-Way Model produces five personality types based on these two dimensions, which are:
- The Adventurer: This type of person loves new experiences and is always up for an adventure. They are also very fearless and are often the life of the party.
- The Celebrity: Also known as the attention seeker, they love to be in the spotlight and are always seeking approval.
- The Individualist: The individualists are Independent-minded, creative, and spontaneous. They are also an idealist who tends to stand up for others against authority.
- The Guardian: This type of person is typically very cautious with their money and possessions, and they often have a difficult time letting go of things.
- The Straight Arrow: This category of person is always honest and straightforward. They tend to be very logical and level-headed, and they usually stick to their decisions.
Personality Quiz
This quiz will help you identify your personality type. Please choose either left or right for the following questions from 1 to 8, remember your choice, and tabulate your answers with the marks given in the next section.
| No. | Left | Right |
|---|---|---|
| 1. | I am not confident with my choice in life | I am confident with my choice in life |
| 2. | I need to take advice on my decisions | I can make my own decisions |
| 3. | When friends in hardship, I listen | When friends in hardship, I advise |
| 4. | I think twice before speaking | I speak straight without hesitation |
| 5. | I need to be sure to act | I am willing to take chances to act |
| 6. | I believe in careful analysis | I believe in quick analysis |
| 7. | I am rational | I am emotional |
| 8. | I prefer stability, low-risk low return | I prefer growth, high-risk high return |
Quiz Marks Tabulation
0 marks are awarded for the left choice, while 1 mark is given for the right choice. Add up the marks for questions 1 to 4 to get your level of confidence (green). Repeat the same way for questions 5 to 8 to get your Method of Action (yellow). The table below will categorize which personality type you belong to.
The Investment Strategy for Your Personality Type
Adventurer tends to hold highly undiversified portfolios because they are confident and willing to take risks. Their confidence leads them to make their own decisions and makes them reluctant to take advice. Adventurers are usually well-suited for growth investing. Growth investing requires active management and confidence in your stock selection. Growth stocks are normally perceived as riskier investments and their profitability is highly dependent on market conditions.
Celebrities tend to like being the center of attention. They may have opinions about some things but also recognize their limitations. They may be willing to seek and take advice about investing. Celebrities are usually well-suited for thematic investing. Thematic investing involves identifying the latest and hottest investment themes in the market. For example, the current hot investment theme is Electric Vehicles, which is led by Tesla. A thematic investor may find stocks related to Electric Vehicles if they believe electric vehicles are the future of transportation. Celebrities take pride in having stock exposure under the spotlight theme.
Individualists are independent and confident in their lifestyle or career choices. They like to make their own decisions, but only after careful consideration. Value investing, which requires active management and confidence in stock selection, is well-suited for individualists. Value stocks may be sideways and out of the coverage of analysts in the market, however, individualists will hold on to them until the market finally uncovers the value in the value stocks. Warren Buffett, an advocator for value investing, believes that this method is how great wealth is earned and deserved.
Guardian is cautious and concerned about the future. As people age and approach retirement, they may become guardians. Guardians are cautious and concerned about protecting their assets. They may seek advice from those they perceive as being more knowledgeable than themselves. Dividend investing fits the protective nature of guardians. Dividend investing is conducted by choosing stocks that give high dividends and are supported by strong company fundamentals like assets and cash flow. Dividend investors can live peacefully with the dividends they receive each year.
Straight Arrow is a level-headed and safe investor who is willing to take on a moderate amount of risk for the potential of earning a matching return. Factor investing is a good fit for Straight Arrow because investment strategies are created for each individual factor. This way, investors will hold a very diversified portfolio with an approximation of the market’s return. Investors can select from various factors including value growth, market capitalization, and balanced. TED Optimus will be releasing information on factor investing in future updates. Be sure to keep an eye out for updates.
Bottom line
Your personality type can impact every aspect of your life, from your career to your relationships. That's why it's so important to understand what your personality type is and how it can affect your life and investment.
Having this knowledge of your personality type can help you in making better decisions concerning your career, lifestyle, and investment strategy as a whole. In a nutshell, a suitable strategy based on your personality will give you better returns in the market.
Author
This article is written by Charlie Yuan Ting Jing, CFA, CQF
Charlie Yuan Ting Jing is the Head of Operations and Financial for TED Optimus Sdn. Bhd. Previously Charlie worked at Asia Analytica (Research arm of The Edge Market) as a Research Analyst. Charlie has a Bachelor Degree in Finance and Investment. Charlie earned his CFA charter in 2020 and CQF certificate in 2022. Charlie won champion in Bursa Malaysia Invest Hack 2020 and PNB Investment Quiz Challenge 2016. He is an in house author from TED Optimus.
Disclosure
Information and articles provided by The Trade Wizard (TTW) are for general knowledge and educational purposes only. They do not constitute an offer, recommendation or solicitation to enter into any transaction. This article has not been prepared for any particular person or class of persons and it has been prepared without regard to the specific investment or insurance objectives, financial situation or particular needs of any person. You should seek advice from a licensed or an exempt financial adviser on the suitability of a product or investment for you. In the event that you choose not to seek advice from a licensed or an exempt financial adviser, you are fully responsible for your investment decision, including whether the investment is suitable for you.
To the best of our knowledge, all content is accurate as of the date posted. The opinions expressed are the author’s alone and have not been provided, approved, or otherwise endorsed by our partners. This commentary may contain forward-looking statements, which by definition are uncertain. Actual results could differ materially from our forecasts or estimations. The Trade Wizard (TTW) will not be held liable for the use of and reliance upon the opinions, estimates, forecasts, and findings in this article.
The author(s) may have a beneficial position in the shares mentioned above (if any) either through stock ownership, or other derivatives. He(She) wrote this article on a personal capacity, and expressed personal opinions. He(She) is not receiving compensation from the listed company covered in this article (other than from The Trade Wizard (TTW)). He(She) has no business relationship with any company whose stock is mentioned in this article.