Understanding investor profiles

We know investing is highly personal, everyone has different goals, timeframes and sensitivities to risk. Every investment is subject to some level of risk so it is important to take a few moments to work out your 'investor profile' so you understand the risk you are prepared to take to achieve the returns you want.

If you are the type of investor who is concerned about preserving the value of your investment, earning consistent modest returns over a long period of time, then you are a defensive investor. If you looking for higher returns with some protection for your investment, then you are a moderate investor. If you are looking for high growth in the value of your investments and are prepared to accept volatility in the short term, then you are a high growth investor.

investor profiles chart
Source: Morningstar

Take our risk profiler survey to find out what kind of investments may suit you best.

Understanding how the different asset classes work can be a big help when working out the right strategy for you. You don't want to lie awake worrying about your investments, so understanding your risk profile can help you get a good night's sleep.

Find out more about asset allocation

Meet Bob, he's a conservative investor

Bob's portfolio is made up of 50% fixed interest (Australian and international) and cash, with 50% in a diversified portfolio of Australian and international property and equities.

conservative investor chart
Source: Morningstar

Bob has a limited ability to earn income in the future, he wants his portfolio to keep up with inflation and not bounce around as share markets fluctuate. Capital protection is one of his main aims.

Bob would be very uncomfortable watching his investments lose value.

Bob is also looking for his investment to generate a bit of income to support his lifestyle.

Meet Polly, she's a moderate investor

Polly's portfolio is made up of 30% Australian and international fixed interest and cash, with 70% in a diversified portfolio of Australian and international property and equities.

moderate investor chart
Source: Morningstar

Polly wants her portfolio to grow steadily with time and outpace inflation, some level of volatility (ups and downs) is OK with her, and she is happy to invest for the longer term. Capital protection in the short term is not her main aim - steady long term growth is.

Polly would be a little uncomfortable watching her investments lose value in the short term.

Polly is happy to reinvest investment income to aid with her long term growth strategy.

Meet Colin, he's a growth investor

Having made several investments in the past, Colin's portfolio is made up of only 15% Australian and international fixed interest and cash, with 85% in a diversified portfolio of Australian and international property and equities.

growth investor chart
Source: Morningstar

Colin enjoys a good cash flow for managing his lifestyle, however he wants his portfolio to grow and provide him with some tax efficiencies. Volatility in share markets presents Colin with an opportunity to invest further and capital growth is his main aim.

Colin would not be uncomfortable watching his investments lose value in the short term.

Colin will keep his investment income in cash until it is reinvested into additional growth investments he also uses both direct and indirect investment strategies.

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