Determining What Kind of Investor You Are (Part 2)

Determining What Kind of Investor You Are (Part 2)

A Professional’s suggestions on How to invest for your character

How does an investor balance his or her portfolio with the risks?

Richard Flax, chief investment officer at Moneyfarm, suggests: ‘We will adjust the contents of the portfolio according to the investor profile. That essentially requires adjusting the values of higher risk assets (such as, equities and commodities) and lower risk assets (including, government bonds and cash).

The risk exposure in an asset changes according to how a client responds to risk, allowing a target level suitable for every profile.

Any investment approach must look forward and backward, considering various risk metrics, such as volatility and drawdown, and creating portfolios founded on projected gains and past risk parameters.

Why diversification and time are important

Investors need to diversify but must avoid being overly diversified. Many people in the UK invest in a single stock or just a few stocks, depending only on a few firms and experiencing great volatility.

On the other hand, one can shift to the other extreme and have plenty of funds that provide the same objective, adding complexity, increasing costs and, in the end, not giving the desired gains.

You have no other choice than to take greater risks. No free rides in the process. Your money can rise or fall; determine where you are in the picture where you are comfortable. Go for the long-term duration.

Which type of investor are you really?

Consider these professional suggestions:

First, the right time frame — with more time you have the potential to build more wealth through compounding and the lower the risk of short-term loss.

Determine also how you respond to loss, or volatility. Although volatility means nothing to an ordinary client – since performance is the main concern – how do you respond when the portfolio value drops?

Also, find out whether you are a nervous investor by asking yourself how often you check your portfolio.

A very important task is to educate yourself about the financial markets, as this determines how much you comprehend investing.

Lastly, how much do you possess? If you own several properties and have no mortgages, your capacity for risk is much greater as your will only lose a small amount in comparison to your wealth.

Looking forward and backward at the same time provides an advantage to the investor. As professionals, we aim for various degrees of risk based on what a client reveals to us and in what category of investor they fall into.

Determining What Kind of Investor You Are (Part 1)

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Many investors have no idea of what kind of investor they are. Instead of dealing with the question early on, they plod along with no idea what they are and what they are doing wrong.

This question is vital in finding out what your goals are, how you handle risk and how you respond to gaining or losing money – factors that greatly impact your investments.

Understanding these factors will help you avoid errors in choosing your investments. This will not only spare you from going through restless nights due to taking so much risk but also from losing bright opportunities to gain significant wealth.

Let us look at five various kinds of investor to help you appreciate the importance of this matter.

The conservative investor

The conservative investor is one who takes great effort in charting his or her course and safeguarding his money. Such type is a safe player, always concerned about gaining a better gain compared to merely holding on to cash; although this individual is content with being able to sleep soundly instead of tossing and turning at night in the hopes of achieving the biggest possible gains possible.

For various reasons these individuals could include senior investors nurturing their pension plans while making use of them, as well as younger investors who play it safe within shallow waters with their meager and hard-earned savings.

The focused investor

This type of investor is open to greater risk compared to the conservative version; although safeguarding their wealth is a primary consideration as well. And while they may be open to fresh ideas for investments, they tread cautiously and remain alert against anything that may endanger their investments.

The focused investors are always mindful of everything they do and remain steady on course with their investing strategy without being diverted or distracted by any mishaps. The have the tenacity to build their wealth through meticulous and prudent moves.

The driven investor

This type is the no-nonsense, business-only investor. They stay fixed on their goals and chart out a clear road map for those goals. He or she knows exactly the purpose for investing and what benefits to aim for. The next move is to choose the best investments to keep in a portfolio in order to attain the set goals.

The driven investor is open to taking on higher risk for greater gains, although this kind will make sure the rationale for doing something and what it will entail.

The exploring investor

This type of investor is obviously looking for a challenging discovery along the path of long-term investing. This individual has a deeply inquisitive mind. Investing has become a challenge for this investor and provides opportunities to test new ways of building wealth. Nevertheless, the exploring investor is not reckless but is open to experimenting to discover the most advantageous approach.

The exploring investor realizes that investing provides great wealth on the long-term basis and the chance to choose many directions goes well with this type. As a competent explorer, he or she keeps an emergency plan along with a broad mind for assessing the risks along the way.

The adventurous investor

The adventurous type of investor is one most open to taking steps that demand taking a leap of faith. This investor optimistically sees the glass as half-full, allowing for great possibilities in what others would see as dismal or risky.

This investor type has set up a contingency cash fund somewhere secure which allows him or her to handle investment risks.

As such, this individual goes for the unappreciated asset type or sector that is low-priced while others stay away from it, or could be picking more on the low market times – hoping that the long-term view favors such a strategy.

Nevertheless, the adventurous investor does not gamble; on the contrary, each move is strictly weighed for its consequences.

Six Tips on Effective Long-term Investment

Keeping your money in bank savings accounts at present will produce negligible interest rates. Hence, leaving all your money in banks may give you considerable safety but not much growth. On the other hand, investing your money in stocks may bring higher returns; but the risks are much higher. And you could actually lose part or all your money at times.

Try these few easy rules to help you remain strong in the market and gain big returns through a large long-term stock portfolio:

1. Spread your investment. Diversification distributes your risks through a number of stocks in various markets as well as in bonds, mutual funds and other instruments. Follow a rule of thumb such that each instrument or stock should not be more than 10% of your entire portfolio. Likewise, try to invest in diverse national regions, Asia, Europe, US and rising new markets areas. Also invest into hedge funds, commodity funds and property funds. This strategy provides a safeguard against any failure in any specific sector.

2.  Investigate. Do your research in various industries and from diverse sources. Opt for firms with products and strategies you are familiar with. Browse or visit as many online resources that provide tips on evaluating and comparing investments. Although historical performance does not assure future performance — in general, choosing a mutual fund or unit trust that showed a strong record in the last couple of years and which requires low management fees is a good move.

3. Invest back dividend payouts. A significantly big percentage of the entire gains in majority of portfolios is a result of reinvesting dividends and not from stock price increase. For instance, a 3% yield may seem paltry; however, in the long run, it will produce a huge profit. Opt for investments that have a sound record of dividend payouts and retain them as your long-term leverage.

4. Keep the performers and sell the nonperformers. Constantly check how your investments perform in relation to the market index. You will be tempted to sell when some of your holdings are doing well for a quick profit; however, hold on to them on a long-term basis to maximize gains. As for market nonperformers, get rid of them even if you have the urge to keep them for a possible upsurge or an increase of your holding at basement prices. That is not the best investment approach, as suffering a low setback early in the process is better than a big loss in the future. Never allow you emotions to convince you to hold on to your stocks.

5. Avoid mob rule. Although difficult to pull since most people rush headlong, buy whenever the stock market is down, sell when the stock market up your least performing stocks and invest into other instruments, such as bonds and property.

6. Look far into the future. Avoid making trades so often, as agents’ fees will diminish your gains. Remember, be patient and aim for the long-term results. Trends and fashions do not last long. Be prudent in diversifying your portfolio. Never lose your equanimity at times when markets collapse – take them as open seasons for buying courageously.

Lastly, when you do need money, be ready to sell. Your investment is meant to support your personal and family financial needs; hence, make use of it instead of belt-tightening or living like Spartans in order to accumulate wealth until that time when you are too old to enjoy it – or worse, too dead.

Three Investment Tips from Warren Buffett

We all know who Warren Buffett is and what he has achieved as a phenomenal investor. More than that, however, he is also a good story-teller and an effective teacher. For fifty years, he has essentially painted his company, Berkshire Hathaway, to become a gigantic mural showcasing the numerous investment styles and management strategies he has implemented.

Every year, Buffett writes to Berkshire Hathaway shareholders in his capacity as chairman and chief executive, continually strengthening his reputation as a leading investor. Let us consider three valuable tips contained in his latest letter:

1. Fees can do you in

Less than a decade ago, Buffett wagered that passive index fund would surpass several hedge funds. He is way ahead by a wide margin on that bet, even as early as a couple of years ago, that the bet was effectively settled before the ten-year deadline. Buffett explains it this way in his letter:

“Although most managers at both levels were honest and smart people, the results for their investors were quite dismal. Unfortunately, the large fixed fees paid to the concerned funds and funds-of-funds, which were absolutely unjustified by performance, meant that their managers received huge compensations for the past nine years. Gordon Gekko would have said: ‘Fees never sleep’.”

2. Use their fear as your weapon

Mr. Buffett retells the parable of Mr. Market this way:

“When times are troubled, you have two choices: First, as an investor, use people’s fear as an opportunity to buy at low prices. Second, your own fear will work against you, as it is also needless. Investors who wait patiently on the long-term and avoid huge fees and unwanted expenses will surely do well in the end.”

The better choice is to let others panic and stay calm; likewise, remain on course for the long haul.

3. At times, share buybacks is the way to go

They have various titles: repurchases, buybacks or capital returns; and companies love offering them. If you have surplus cash hidden and you wish to enhance your return on equity and to improve per-share earnings, as well as to satisfy investors without being tied yearly, go for the Share Buyback.

Buffett put it so plainly; every investor will not need an interpreter or mentor to get it.

“Here is a simple analogy: With three equal partners in a business valued at $3000 and one is bought out by the other two for $900, each one makes $50 out of the deal. However, if the two paid $1100 in the buy-out, the remaining partners lose $50 each. This holds true for corporations and their shareholders.”

Buffett, therefore, suggests: “Before considering any repurchases, a CEO and the board should unite and say, ‘What is good at a certain price is bad at another’.”

If you are the kind of shareholder who delights in a company repurchasing shares, let this be a lesson to cure that impulse. Just make certain the decision is good.

A lot of investors stayed away from Berkshire Hathaway shares, thinking the firm was big, its shares pricey and its chairman old. But within the past year, those shares went up 29%.

Trump’s entry and other factors helped raise the share price. But as Buffett keeps telling people, short-term predictions are unreliable and they need to buy quality shares on long-term investments.

Devin Consultants Financial Management in Singapore and Tokyo’s Clients

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At Devin Consultants, Our Clients Come First

We commit ourselves to the mission of offering and making available professional financial solutions and investment services to all people. We stand by the principle that by placing our clients’ interests first and foremost, reducing complicated investment matters in simple, understandable words, and assisting individuals in need, we will achieve our mission.

Investments Planners with One Philosophy

Each and every member of our financial team undergoes stringent training in administering Devin’s main philosophy, which is founded on sound academic research and modern Behavioral Finance.

Every one of our planners believes that all people, whether wealthy or having average income, deserves excellent financial counsel and planning guidance. With any of our professional experts, you can trust that YOU ATTAIN THE HIGHEST BENEFITS ABOVE ALL and derive the best experience with Devin Consultants.

Begin Planning your Financial Security Today

Our Devin Consultants expert will guide you create a plan in merely 3 easy steps.

  1. Talk

You can talk and we will listen as you detail your needs, goals and anxieties. We will then create a customized plan that shows you how we can assist you attain your investment objectives.

  1. Act

We will collaborate with you in executing the plan. We continue to guide you through the process by providing you with updates on your financial status and necessary adjustments as events transpire in your life.

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No need to fret as long as we are here for you. Get in touch with us when you need us for any problem at all. If it is about money, you can depend on us. Call or email us today.

Essential Needs of Devin Consultants Financial Management in Singapore and Tokyo

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Creating More Wealth to Meet Your Essential Needs

Devin Consultants carries the fiduciary mandate to serve your needs as a top priority. Hence, we ask a minimal annual fee according to the value of your assets, not the transactions. That is, we do not demand commissions or third-party payments – removing a possible source of conflict of interest often seen in the investment industry.

What are your needs?

Right at the start of our relationship, we collaborate with our clients directly. Particularly your leadership, in order to evaluate the following essential matters:

  • Strategic plan
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  • Top priorities
  • Mission statement
  • Yearly budget
  • Legal and financial structure of the organization
  • Other pertinent issues

The information we get from you will be used to effectively manage your assets. The following procedure will utilize your information to build, institute and manage a financial plan tailor-fitted according to your goals and needs:

  1. We undertake a meticulous assessment of your goals to determine your risk tolerance level and assist you in laying down a financial plan schedule dovetailed to your objectives.
  1. We help you make, evaluate or reconfigure (if necessary) your Investment Policy Statement such that it represents your investment requirements while seeking to reduce the potential liability risk of the company as well as board members.
  1. We create a properly-diversified asset distribution approach suited to your needs and objectives in order to achieve liquidity and minimize risk exposure.
  1. We offer current, unrelenting portfolio care and management, along with appropriate strategic adjustments done through our day-to-day monitoring of your assets.
  1. We undertake bookkeeping duties of your account, as well as provide you with monthly updates and access to your accounts online.
  1. Lastly, we will perform regular review of Your Investment Policy Statement and Asset Allocation to validate that all aspects of your strategy remain viable and suited to your dynamic requirements.

Starting with the larger perspective to the tiniest item, Devin Consultants manages your organizational financial needs while focusing on achieving your highest interests.

Devin Consultants Financial Management in Singapore and Tokyo’s Interests

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Focusing on Your Highest Interests

Company executives and members who sit on boards possess special and vital duties with regard to managing assets which have been entrusted to them. As such, Devin Consultants also has the similar fiduciary duty to assist you in undertaking your responsibilities.

Being a registered provider of investment advice, we are prepared to serve your fiduciary needs according to your best interests. We are not in the habit of offering the latest hot tips or grabbing the newest fad, because charting your company’s financial security should never be seen as a game of chance. Instead, we help you attain your essential goals efficiently and effectively through making solid and discriminating investment decisions.

Moreover, Devin Consultants has put together a professional and well-experienced powerhouse of financial experts to support its clients. These are trained to listen to your story and appreciate your company’s financial circumstances so that they can provide personalized investment solutions aimed at helping you to attain your goals. Our financial experts are a rich source of insights and information to resolve your issues and find the appropriate solutions, providing you with continuing assistance and guarantee that you obtain the excellent service.