‘Mutual Fund Sahi Hai’ hope you must have heard these words too frequently these days & many of you must also have started investing in mutual funds. But just doing anything is not enough in any aspect of life or investments rather doing things right is important.

I know many investors who started investing in mutual funds long ago may be like 10 years ago, but unfortunately they didn’t made good returns out of that. Why? because they didn’t dealt with mutual funds in the right way. And of course in the same period there are many investors who made good returns and are happy.

The flourishing Indian economy brought a lot of wealth to the country & with that came many complex avenues to invest. This growth categorised investors based on their psyche, this Categorisation of investors can be seen more clearly by an investment professional.

But matter of the fact is investors themselves don’t know under which category they fall into.

Earlier in my parents & their parent’s time investment objectives were pretty simple, it was just ‘save for tomorrow’. Now things have changed because at that time house hold expenses were pretty low now they are quite high. It’s not just because of CPI inflation but because of Lifestyle Inflation.

Now we can’t think just of tomorrow, but we have to do provisioning for day after tomorrow.

There are many type of Investor :

The Savers

These type of investor are those who are just investing in fixed income instruments and are not willing to take any risk.

They think stock market is risky and is for speculators & gamblers; they talk to you till you don’t discuss equities with them. They work to earn money and invest in FD’s & other fixed income instruments which hardly beat inflation.

The spoilers

This type of investor are the most hazardous for other investors, actually they themselves don’t do any good investments but they give casual financial advice to all of their friends and relatives. We must remember they could be knowledgeable in their own field but that might not be true in case of personal financial planning.

They are our near & dear ones who ensures that they give everybody their unsolicited advice. However they don’t know that they are actually harming their loved ones by their one time casual advise. Advising is actually a regular phenomenon which is very disciplined & focused.

Moreover, you could give them credit when their advice works positively (though luckily in short-term) but you can’t complain if the things go wrong. The bigger problem starts when their advice goes positive in short-term, and we tend to believe in them so much & bets too much on their advice only to get disheartened later.

The Know everything Kind

These are the most interesting of all type of investors; they think they know everything & think they have read enough on Google to make them an investment guru.

These investors don’t like to listen to real professional advice, but rely more on mass media. We will do a separate article on reality of media. They just keep on upgrading their knowledge only to get confused, and they hardly make any good long term investments.

If they would have been a cricketer then they would have not needed a coach, because they know how to hold a bat & throw a ball. They are simply amazing.

One more thing they are best at is; They have many missed investment stories to tell when they get older. Like I had an opportunity to invest here but I didn’t due to this & that.

The Speculator 

These type of investor are the real opportunist & think that investments are like opportunities they get in their business or job.They keep on looking for investment opportunities in equity market as well. 

They don’t understand the value of asset allocation & it’s importance in making a all season investment portfolio. They just keep on discussing sensex levels & doing research on it, what they forget is that sensex denotes just 30 companies and there are so many companies outside sensex too.

These kind achieve less and miss more, just by trying to time the market

The Analyst

These type of investor are more interested in technical charts & ratios.

They just talk about Sensex, PE, PB, EPS & what not. They think investing is a rocket science & they want to be a scientist. I guess.

They keep on wasting their time to understand how market works & its micro parameters. They forget that ratios tracks stock markets & market tracks economy & it’s not vice versa.

Investing is more about Emotional, Behavioral & Self-control rather than some scientific mechanism.

 

 The Robo Chasers

These type of investor think that any online website or mobile app can manage their money. They start following any website & invest accordingly; they don’t understand that nobody can provide you financial advice without interacting with you.

You & your requirements are unique to yourself only & financial advice can never be same for two different persons. It depends upon your risk profiling & lifestyle only.

I find many investors seeking investment advice on various online discussion platforms, asking in which fund they should invest. And moreover to my surprise they instantly get an answer. They are done with their financial planning in few seconds.. wow, it’s so simple!

 

The Baits

These type of investor need to be consoled, as their investments are seldom correct. Investment by them is  made mainly due to relationship pressure or obligation. They can’t even ask the agent about the product they are investing in & why they should invest in that product.

They mess up their investments & have no control on them. They become baits for their relatives & are never able to manage their investments.

The Smart Investors

These type of investor are the one who are disciplined & follow all the basic guidelines of investing. They value professional advice, ask questions & are interested in knowing rather than preaching.

Smart investors understand the value of being a passive investor in stock market rather than being an hyper active investor. They are the one who make money in the stock markets & never follow mass media.

If they fall into the media trap & herd mentality (which is inevitable), they discuss with their advisor & come out of the trap easily.They don’t become greedy or fearful with market sentiments & don’t follow unprofessional advice.

I hope many of you would have related one of these types with yourself. Now what’s more important is to be realistic & act to improve for betterment.

Do write in comments if I have missed any other type of investor or you want to add something….