3 Types of Investors Based on Risk Profile

  Investments contain risks. Investment risk is low, medium, and high risk. In determining your investment choices, you should know your risk profile.

In the world of investing, there are three types of investors based on risk profile. Here's the explanation.

3 Types of Investors Based on Risk Profile

1. Conservative type

Investors are looking for safety. The level of risk tolerance is very low, so this type of investor tends to avoid risk and choose investment instruments that are very minimal in risk.

As a result of the risks that may occur, there are also those who delay the desire to invest. Investment instruments that are suitable for conservative types of investors, namely government debt securities, deposits, gold investments, and money market mutual funds.

2. Moderate type

It is an investor who dares to take risks. But remain cautious in choosing the type of investment instrument.

This type of investor still limits the amount of investment in risky investment instruments such as stocks. They can choose mixed mutual fund investments, or fixed income mutual funds, bond investments.

3. Aggressive type

As the name suggests, it is an investor who likes risk. Dare to take high risks to get a big profit anyway.

They dare to put more funds on stock investment instruments, stock mutual funds that provide high returns and high risk as well.

Things to consider in investing

In addition to the above types of risk profiles, it is also important to know the following before jumping into the world of investment. 

1. Adjust to capital

Investment is the activity of managing finances that require capital. The amount prepared according to the type of investment.

The riskier an investment, the greater the capital needed. If in fact capital is lacking, you should invest in risk-less instruments.

Even if it falls, the percentage decline is not very sharp and does not drain all the capital invested in the beginning.

2. Pay attention to the purpose

Next is to pay attention to the main motivation or purpose of the investment. The purpose of each investor is different.

There are investors who just want to get extra money in a flash, so choose short-term investments. But there are also those who are indeed long-term investment intentions for the purpose of preparing pension funds, children's education costs, and others.

Adjust to their respective objectives to facilitate the selection of the right investment instruments. Choose also the one that suits the financial condition.

3. High discipline

Investing is almost similar to learning, where to get the most out of it, one must be disciplined in investing.

Investment capital must continue to be added so that the value is more and more. In addition to adding capital, investors must also be persistent in studying the investments they choose.

Not necessarily an expert, but at least know the basic sciences for investment to be managed properly. With this science, investors know when to buy an investment and when to release it to switch to another instrument.

Thus, the capital owned is not "staying in place". Instead, keep turning so that the results are in accordance with what is expected. 

4. Diversify your investments

Not putting all funds on one investment instrument alone, but having a variety of portfolios. For example, you are an aggressive type, investing in stocks.

Allocate 60% money to cheap and good stocks, then 40% money for investments in lower-risk instruments, such as deposits or money market mutual funds.

If in this pandemic period, stock investments fall, there are other investments that still provide benefits. Your capital is not all in stocks, but partly expands through diversification.

Investments in accordance with the Risk Profile

Use your youth for something productive and positive, one of which is investing. The goal is to prepare financially in old age.

Currently, there are many investment options that you can choose according to your risk profile. Don't be afraid to start investing.

Most importantly, investment with capital or funds that you can afford to lose. That way, you still limit the risks that can occur at any time.

For example, you are a conservative type of investor, choosing money market mutual fund investments. So, how to start investing in mutual funds is to start with minimal capital, amounting to Rp 100 thousand.

Or you are an aggressive type, but the capital that you can afford to lose is Rp 1 million. So, how to start a stock investment is to start from a capital of Rp 1 million or below. This means buying one lot of shares A, one lot of shares B.