What type of investor are you?

No two investors are alike. Find out how to identify your investor type and which products are right for you.

Everyone has different investment objectives – whether it’s enjoying a more secure retirement or protecting the wealth of the next generation. Understanding your investor profile, including the level of risk you are prepared to take and your goals for capital growth, is essential to making informed financial decisions. Find your profile and which products best suit your financial situation and goals.

What does ‘investor type’ mean?

Investor type refers to the different profiles or categories that investors may have according to their risk tolerance, their past experience, their financial goals and their stage in life. Understanding your investor type helps make investment decisions more strategic and better tailored to your needs and preferences.

More than just a simple classification, the ‘investor type’ identifies the individual goals and motivations that lie behind financial decisions, opening up a new way of building more resilient portfolios.

Why is it important to know your investor type?

Understanding and applying the concept of investor type allows you to be more aware and strategic in how you manage your financial assets. Understanding your investor type allows you to develop personalised investment strategies that match your profile, goals and risk tolerance – which vary from investor to investor.

The investor type serves as a decision-making guide, allowing investment choices to be tailored to individual circumstances. It also helps to prevent rash and emotional decisions and provides an objective framework for deciding where to invest. This allows investors to manage their portfolios in a more balanced and informed manner.

What investor types are there? 

 There are 3 investor types: Conservative, Moderate and Dynamic. These are the differences: 

1. Conservative profile, focusing on asset preservation

Conservative investors value security and stability in their financial decisions. They tend to take a more measured approach, avoiding risk and opting for solid, low-volatility investments. Rather than looking for quick gains, they prefer stable returns over time.

If you consider yourself to be this type of investor, one of the options available to you is to delegate management decisions to qualified professionals, using their knowledge and experience to protect your assets safely and consistently.

From another perspective, complementary or cumulative to the previous option, safer options stand out, like Term Deposits. In this case, the main risk is inflation. Although the invested principal is insured (up to € 100,000 by the Deposit Guarantee Fund), inflation can erode the purchasing power of this amount over time. If the inflation rate is higher than the interest rate offered by the term deposit, the real return will be negative at the end of the term.

2. Moderate profile, balancing between preservation and appreciation

The moderate investor profile represents a balanced approach between seeking higher returns and needing to control investments.This type of investor is prepared to take slightly more risk than the conservative investor, tends to have a medium-term investment horizon, and is interested in opportunities that offer returns over a relatively short period. However, they want some flexibility to adjust their strategy if necessary.

If you fit this profile, you can also benefit from professional advice, both in terms of the monitoring of your investment decisions and in the full delegation of your investments.In this way, you can rely on specialists to help you make informed decisions, manage risk and understand the investment process. In terms of assets, Notes and Structured Deposits are examples of products that may be of interest to you because of their high potential returns compared to traditional investments, although they do require you to adapt to the product based on your knowledge. They usually offer an interest rate based on the performance of an underlying asset, such as a stock index. They therefore have upside potential and can offer a degree of capital protection.

3. Dynamic profile, focusing on asset appreciation

The dynamic approach represents an investor with a bold approach, willing to take on greater challenges to achieve higher returns. This type of investor is prepared to accept a high degree of risk in their investments, believing that this risk can be offset by higher returns. They are prepared to invest in volatile assets, even if this means experiencing significant fluctuations in the value of their investments.

This type of investor seeks to be informed and up to date on financial market developments and follows economic, political and technological trends that may affect their investments.They tend to value independence and the ability to make their own financial decisions.

If you feel you fit this profile, the products of choice for you may include equities or equity funds, but as with the previous profiles, delegating your investment may be an alternative. Through the portfolio management services, you can choose models with an asset allocation strategy designed for a higher growth profile, or strategies that invest mainly in equities.

Conservative

• Seeks returns over time, not necessarily very high, but guaranteed.

• Values peace of mind, delegating asset management decisions or setting up a low-risk, no-volatility product.

• Preferred products: Term deposits

Moderate

• Seeks medium-term returns.

• Values the security of professional help, but monitors and increases their level of knowledge.

• Preferred products: Notes and other structured products

Dynamic

• Seeks high returns and risk.

• Values making decisions independently or delegates their investments in volatile solutions.

• They are knowledgeable and informed.Preferred products: Shares and bonds

How do you know what type of investor you are?

Identifying your investor type involves analysing and considering various personal and financial aspects.

1. Carry out a financial self-assessment

What are your short, medium and long term financial goals? How do you feel about risk and volatility in investments? What is your investment horizon?

If your risk tolerance is low or you are basically looking for stable returns, you probably fit the Conservative profile. On the other hand, if you are an investor with ambitious capital growth goals and are prepared to endure abrupt market fluctuations, you will fit the Dynamic profile.

2. Analyse past experiences 

Think about your past investment experiences, successes and challenges. How did you react to market events that had a significant impact? For example, if you have had negative experiences with riskier investments, this may influence your current and future approach and you may prefer safer options.

3. Consult the experts

Talk to your account manager or private banker for a more objective assessment. Together you can analyse your financial goals, current situation and investment outlook. You may find that your risk tolerance is different from what you thought, and you will be better prepared to make decisions.

4. Take into account possible life changes

Your investor type is not static – it changes over time. Major life events such as marriage, children or retirement can influence your financial goals and preferences. For example, if you become a parent for the first time, your priorities and financial needs may change. You may need to switch to a more moderate profile to achieve a balance between growth and security.

5. Stay informed

The financial markets are constantly changing. Keeping abreast of trends, new financial products and changes in economic policy allows you to assess how these factors may affect your investment decisions and, if necessary, adjust your approach and investor type over time.

Banco Carregosa, specialised advice for all investor types

Knowing your investor type is critical to managing your wealth and achieving your financial goals. Each profile has its own complexities and challenges. With Banco Carregosa’s services, you can benefit from the advice of experts with in-depth knowledge of the market and find solutions such as Banco Carregosa’s portfolio management and advisory services. Contact us and implement strategies designed for you.