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What type of investor am I?

Step 2

Now it’s time to take a look at yourself. Ask yourself this: ‘How am I with money?’ Are you the kind of person who makes financial decisions effortlessly or are you indecisive when it comes to your personal money matters?

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How you are with money says a lot about the kind of investor you are. In this step, we will find out based on your answers to several questions what type of investor you are.

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How patient are you?

Are you looking to make money fast from investing? If so, we have to disappoint you. Chances of that are slim. Investing is really something where you have to be in it for the long haul. The longer you invest, the smaller the risk of disappointing investment results leading to you failing to achieve your investment goal. After all, the stock market has good and bad years. That said, history shows us that the good years outnumber the bad. So, to take maximum advantage of the good years, you need patience.

Are you an active or a passive investor?

Is investing something you find interesting? Are you willing to make time to follow the stock market news? If you can answer ‘yes’ to both questions, it looks like you’re an active investor. An active investor decides for themselves what investment instruments to invest in. If investing does not really interest you or you have no idea where you’ll find the time for it, don’t worry, passive investing may be more your thing. Let’s take a look at the difference between active and passive investing.

Active investor Passive investor
You’re willing to put time and energy into investing. You like to follow the latest financial and stock market news, for example. You prefer not to have to put a lot of time into investing. When it comes to financial news, you only read the headlines.
You develop your own investment strategy. While you do want to invest, you’d like someone else to do the work for you.
You choose what shares to buy on the stock market and keep up with the latest developments at the companies and funds you invest in. You’re happy to let investment experts decide what products to include in your portfolio.
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What level of risk is right for you?

As we already mentioned at the previous step, investing is something you do with money you can spare. But even then it can be nerve-racking to see your investments drop in value. When that happens, will you have nerves of steel or would a sharp drop in the value of your investments keep you up at night? This is something you should consider beforehand, because you might then want to consider going for low-risk investment vehicles with a smaller chance of severe price fluctuations. After all, sleeping well at night is also important.

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What is your goal?

It’s easier to decide what investment option is the best fit for you if you have a clear goal in mind. Do you have a clear goal for later, such as a big trip? Or are you ‘just’ looking to build up some capital? Even if you don’t know what you’re investing for, it’s important to set a target. A clear goal will provide direction and help you maintain a long-term focus.

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Ask yourself the following questions when setting a financial goal

  • Can you spare the money invested for a long period of time?
  • How much are you looking to make from your investments?
  • In how many years do you want to reach that amount?
  • How much can you invest (monthly or quarterly, for example)?

Want to find out if your goal is realistic? We have a useful article for you to read that will give you an idea of how likely it is that you will reach your goal, either by investing, saving, or a combination of both.

Learn more about starting with investing ...

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1. What is investing?

Learn what investing with ABN AMRO entails and what you can invest in. Find out what the best time is to start and why investing really is a long-term pursuit.

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Investing for beginners

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3. Can I invest risk-free?

By now you know that investing means taking risk. You could lose all or part of your investment. There is no such thing as 100% risk-free investing. There are, however, ways to limit the risk.

Continue to step 3

Investing involves risks

Investing involves risks. You could lose (some of) the money you invested. If you are going to invest, it is important that you are aware of this. Invest with money you can spare. Read more about the risks associated with investments.