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Determining and understanding your investor profile

We keep reviewing the main rules to successfully invest in the stock markets and we have to say that many rules need to be respected in order to be successful. Today we are going to review another important aspect which is determining and understanding your investor profile.

In the stock market (in the same way as in life in general), each person / investor is different. Some like to take risks, (some even way too much), when others are sometimes too cautious to seize opportunities at the right time. What really matters is that you know yourself and never forgive your goals and objectives.

There are no official definition of the number of investor profiles and there are also many different ways to differentiate investors (young investors, investors with small portfolios, financial institutions etc..)

However, no one will argue that all investors fall into one of the three following categories: the conservative, the moderate, and the aggressive. The definition of the profiles is associated with the “Tripod of Investments” that are essential factors used in the evaluation of an investment which is liquidity, security, and profitability.

A conservative or risk-averse investor might choose to put their money into a bank account with a low but guaranteed interest rate, while an aggressive investor will be the most likely to invest in stocks and even in high risk stocks (but associated with potentially higher returns too) such as Vietnamese stocks. Before investing, remember that a high return will always involve a high risk. Conversely, it is impossible to find a low-risk product that will offer a high return.

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