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Anyone who is part of the investment world knows that the first step to making good financial investments is to identify your investor profile. Currently, there are a universe of tools that perform this task for free, just do a brief search.
Investor profiles can be summarized as conservative, moderate and aggressive. It is also possible to find other synonymous nomenclatures and even a combination of some profile characteristics creating a new investor profile.
What is the profile of an investor in the investment world for?
In general, according to your investor profile, it is possible to determine more assertively which investments you should make to achieve your financial goals, that is, which investment opportunities are most aligned with your characteristics as an investor.
We can understand the investor profile as a tool that filters for you the financial opportunities that are most aligned with your goals.
So, instead of digging through all the financial market products, this tool gives you a map of possible financial products for you and this can definitely save you some of your time.
Sounds simple, doesn’t it? And, in fact, it’s supposed to be simple, but over time people started to confuse the objective of the investor profile and believe in some myths about the subject limiting their investment opportunities.
What is the main myth that people have built about the investor profile?
The main myth about profiles is that they are a rule that must be followed to the letter and more than that, immutable. For example, if my investor profile was classified as conservative, I should only invest in fixed income and this profile will “die” with me.
So, what was a tool created with the objective of enhancing your investments is being used to limit your financial opportunities when you take this information as the only and unquestionable truth.
Any good book on investing for beginners can explain the two main variables for good investing very well. The first variable is the investor profile you already know and the second is your objective.
As people tend to forget that it is their short and long term goals that should be used primarily to define their investment strategy, they end up taking longer to achieve what they want, when they can.
This probably indicates that beginners investors make investments according to what is sold to them. This can be anything from savings bonds sold by your bank manager to the promise of becoming an overnight millionaire with cryptocurrencies.
Why are people missing out on good investment opportunities because of their investor profile?
Thus, as these people are totally guided only by their investor profile and do not have a specific investment objective, they are consequently missing out on good opportunities that are only found in income products. variable, such as stocks and cryptocurrencies.
And, if your investor profile is considered conservative, it is yet another limitation that you put yourself to “look the wrong way” at cryptocurrencies and not want to know anything about it.
As we explained earlier, it is not only the investor profile that is considered when building your investment portfolio, you must also consider your short-term goals (such as building your financial reserve) as well as your long-term goals. (like your retirement).
And so, if you want to achieve your goals (we hope so) it wouldn’t be very wise to put all your money in the same fixed income product, would it?
What to do to explore your investor profile?
Most investment advisors recommend portfolio diversification as a primary investment strategy and you should think about this if you want to improve your returns.
Diversification is good for two main reasons. First, it is a good alternative to protect your investments from the external variables of the world that are far from your control. The second reason is performance.
As you will be investing in different products, they will consequently perform and deliver different results. And, it is in the combination of these results that you gain more than investing only in a single option.
So, if you’re conservative and your heart beats at the slightest possibility of losing 1 penny of your money, you need to reconsider your investment strategy thinking about the long term.
Variable income may not be the best option for short-term investments, but if you have the dream of your financial freedom, you should study the subject.
Why invest in cryptocurrencies even if your investor profile is conservative?
Investing in cryptocurrencies is not out of this world and is not illegal. You also don’t need to become a trader, let alone obsess over reading market news every minute.
But you should also be aware and down-to-earth that you probably won’t become a millionaire overnight, as some people did.
So, to make good investments in cryptocurrencies, you just need to love your money and take the time to learn about them.
When we say having love for your money, we are referring to the fact that you value your money to the point of not getting caught up in the illusory promises of extraordinary short-term gains, as we unfortunately still see in the cryptocurrency market.
And, we know that you already value your money too much, so much so that you only invest in fixed income to prevent any loss, but at the same time you are missing out on many good opportunities in the cryptocurrency world.
Understand cryptocurrencies as stocks, you don’t need to invest in every cryptocurrency project out there to get good results, this is actually a really bad idea, as well as being practically impossible as there are over 14,000 cryptocurrencies in the world and counting.
Choose the most solid projects like Bitcoin and Ethereum and start your studies. We are sure that when you get in touch with the market, you will see that it is as normal and simple as investing in fixed income, but it can definitely be more profitable in the long run. Ready for the challenge?
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