According to the World Bank, Australia has one of the best economies in the India-Pacific region, with an annual GDP of US$1.33 trillion. The country still managed to perform well compared to the rest of the Asian countries despite a -0.3 dip in its economic performance last year.
Despite several setbacks, including the credit crisis, global financial instabilities, and regulatory changes, Australia is considered one of the best international markets for investments. The country offers a diversity of asset classes that is both defensive and performing.
If you are starting a venture in the money market, there are investment opportunities in Australia that can help you build an asset portfolio. But first, you need to understand your investment behaviour because it determines your risk tolerance and saving objectives.
Why You Need to Understand Your Investment Personality
It is essential to understand your investment personality because it affects your risk appetite, tolerance, and savings objective. But, more importantly, you will be able to choose the type of portfolio to handle so you can maximise its potential growth.
For example, young investors saving for their retirement funds can take a high-risk approach for better yields. But it is often based on their investment personality and whether they choose to stay on the safer side.
Understanding your investing profile is a crucial first step to your eventual money growth. It makes it easier to create an investment portfolio based on your risk profile because you understand your risk personality and know which products and investment opportunities are suited for you.
The Four Types of Investment Personalities
Investor personalities are typically divided into four broad categories – conservative, balanced, aggressive, passive. Your attitude towards the financial risks involved in investment will determine your investment choices.
One of the critical questions that will help you determine your investment status is how you will react to sudden market shifts and unexpected financial drops. Each trait will help you determine behavioural impacts and how you can enhance your investing experience.
- Conservative – Conservative investors tend to lean more on the stable investment side, seeking a steady equity growth. Thus, a conservative investor does not prioritise high growth but rather focuses on moderate returns and a steady income stream.
- Balanced – Medium-risk investors have a portfolio that equals the income stream from growth and security investments. They often prioritise income ranking before equity growth.
- Aggressive – Aggressive investors are actively involved in Exchange-traded Funds (ETF) from either established or less-established investment companies. Aggressive investors like to take big risks, particularly when high returns are involved.
- Passive – Passive investors are also referred to as limited partners having no active participation in the day-to-day transactions of stocks. These people are more focused on controlling stockholders and managing the business.
Looking for Quality Investments in Australia
Looking for investment opportunities in Australia is often not that hard when you know where to look and start your income stream. Highly focused investing firms allow you to gain better capital appreciation by putting your money in a diversified market.
When investing, these firms generally consider your investment personality and put your money in the appropriate markets. And this is the reason why it’s always important to understand your investment style because your yields are matched with your financial goals.