What kind of Investment animal are you ?

There are many types of investors in the city but those who gain the greatest notoriety and newspaper headlines tend to be those that back the big winners or conversely, those who are involved in the most shocking losses.

Two of the most memorable examples of this are George Soros and Nick Leeson. Both men sit at opposite ends of the table in terms of why they made the headlines. The common ground they share though is the fact that they both bet BIG and as we all now know the result, there was One Big Winner and One Shocking Loser !

One point worth noting though is that whilst Nick Leeson lost Barings Bank millions by betting on the Asian market going up, George Soros made a billion by betting on Sterling going down.

Sometimes in order to make the elusive big win you have to decide clearly as to which side of the fence you are going to sit on and then bet Big. This decision will ultimately make you a Hero or a Zero. The only key factor which will separate the winner from the loser is the decision as to whether you are going to be a Bull or Bear.

In the example of Soros and Leeson either man could have won or lost. In the end history has now revealed a picture of someone who controlled his emotions (both technically and tactically) as against someone whose emotions led to a domino effect of bad decisions serving to make an ever worsening situation worse.

Had fate been slightly different, Leeson might never have become the household name he has now turned into, but believe it or not his story actually engenders an unspoken sympathy from some in the city who at times sail a bit too close to the wind themselves.

In the stockmarket there are two very distinctive types of animal which control the fortunes of our stock exchange and these are the BULL and the BEAR.

Bulls are those who believe the market is going to go up whereas Bears are those who think the market is going to go down.

I was once told that these terms are due to the way that the two animals behave in attack eg (apparently when a bull goes for the kill it digs it’s horns downwards before thrusting it’s head aggressively up, whereas a bear generally rears up on it’s hind legs before attacking it’s victim in a downward movement.)

Successful investment is in fact much more subtle than being either a Bull or a Bear.

The most successful investors I have met over the years tend to be those with a fairly long term approach. They generally conduct their own research and look for key indicators that the investment they are about to commit to is fundamentally good value, others however, are not necessarily so diligent and are simply looking for the quick buck.

As a private investor there are a series of questions you need to ask yourself first; what type of investments are right for me, what is suitable to my circumstances and “what type of investment animal am I ?” .

An honest Q&A with yourself can you reveal a fairly accurate self-profile. As a basic guide the initial process you need to go through is to look at your age, your income, your assets, your attitude to risk and finally your objectives.

Maybe you fit into one of the following groups:

• Under 30, partnered/married, no-children and a joint income of up to £60,000
• 30-45, partnered/married, young children, joint income, savings, assets of £500,000
• 45-55, partnered/married, children at Uni, joint income, savings, assets of £800,000
• 55 +, partnered/married, children left home, income, savings, assets of £1,500,000+

If you feel number 1 is reflective of your circumstances then you are probably not looking for investments which you cannot realise as cash at short notice therefore small investments into readily realisable/liquid products might suit.

Investment Animal Type = Rabbit

If number 2 is closer to your circumstances then maybe you can allow for your money to be invested into medium term products, however if you have an occasional requirement for short term cash then the investments may still need an opt-out which allows you to access the funds if necessary.

Investment Animal Type = Dolphin

If number 3 is more appropriate to you then maybe your investment strategy is based on what you want to do after retirement. Short term cash not being an issue your interests probably lie in solid investments with long term growth and income potential.

Investment Animal Type = Camel

If you consider yourself a number 4 then you may well have a completely different attitude to investment which allows for a higher risk approach. Assuming you have established a solid base of blue chip reserves a bit of risk is not such a bad thing.

Investment Animal Type = Lion

The main decision we all have to come to at some point when it comes to investing our money is suitability, is the product you are about to invest into suitable to your individual circumstances. Of course there are many professional who can help you decipher the answer to that question however the most important person to consult first is yourself.

...so let’s hear it...are you a Rabbit or are you a Lion?