National Savings Month: discover your investment personality

As National Savings Month (July) kicks off, financial experts are urging individuals to discover their unique investment personalities to make more informed decisions about their financial future.

According to Duma Mxenge, the business development manager at Satrix, various factors contribute to shaping an individual’s investment approach, with upbringing playing a pivotal role. He recalled his own childhood, where a restrictive government and his parents’ cautious mindset shaped his conservative approach to finances.

“There are so many factors that impact our investment ‘personality’. For instance, upbringing can be a big factor. When I grew up, the environment was very restrictive, shaped by the government of the day.

“My parents’ personalities meant that this made them extremely cautious with their finances and had a highly conservative mindset. Children brought up with these values tended to adopt a similar conservatism, Mxenge said.

He highlighted there was not inherently a good or bad investment personality. Rather, he said, this was about recognising and embracing one’s natural traits to develop a suitable investment strategy.

Investment personality refers to unique characteristics – preferences and attitudes an individual develops towards investing.

This, he said, encompasses factors like risk tolerance, time horizon, financial goals, decision-making style, knowledge, and experience in investing.

Risk tolerance plays a significant role as it reflects an individual’s willingness to handle fluctuations in their investments. The time horizon is another essential aspect that influences investment choices, strategies, and assets allocation.

A person’s specific goals and objectives influences the level of risk the person is willing to take and the investment options they choose. In addition, a person’s level of knowledge and experience in the investment world also determines how confident and informed they feel when taking financial decisions.

As part of National Savings Month, Mxenge advised individuals to undertake a self-assessment.

Reflect on the following steps to discover your personality:

• Take some time for self-reflection to evaluate your financial experiences and how they have influenced your perspectives on money and associated risks.

• Assess your risk tolerance and comfort level with taking financial risks. Determine whether you lean towards a conservative approach, preferring safer, low-return investments, or if you have a higher risk appetite and are open to exploring potentially higher-yield opportunities.

• Set clear financial goals for both the short-term and long-term. These objectives may include saving for retirement, purchasing a home, funding your children’s education, or simply growing your wealth.

• Educate yourself on different investment options available, such as stocks, bonds, mutual funds, real estate, and more.

• Considering the complexity of finance, seeking professional advice from a financial adviser is recommended. A financial adviser can provide tailored guidance that aligns with your investment preferences, objectives, and risk tolerance, helping you to design a personalised investment strategy.

To navigate the markets confidently and secure financial future, investors can adopt a strategy that aligns with their true selves. Mxenge emphasised that achieving financial growth is an ongoing process that necessitates learning and adaptation.

“Stay informed, continue learning, and adapt your strategy as market conditions evolve. With the right knowledge and self-awareness you can make significant strides towards achieving your financial goals.”

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