22 July 2011

What kind of investor type are you?

Recently I met up with a friend who has his own business. He enjoy trading online with a small amount to him. So I just wonder why he likes to spend his precious time on making small amount (refer to his fortune).

He is a successful businessman who got the business knowledge from his father. So he is quite a savvy guy on investing. However, he is quite conservative on his long term investment. He told me that what his father taught him was to be conservative in business by managing cash flow well.

So I believe that most of his own fortune is in cash deposit & real estate & fixed income instruments. Equity should be in a smaller portion.

I am quite surprise with his asset allocation. What I am guessing is partly due to his family business that he cannot afford to lose as he has the responsibility to protect his family's fortune.

So I make an assumption that, for 1st generation, they are more aggressive as they have the Desire to be rich soon. For 2nd generation onwards, they do not have the need to get rich in shorter time as they are already rich, hence their behavior would tend to protect the wealth instead of creating more wealth.

Such behavior tells us that we should be acting more aggressive if and only if we are the 1st generation. Wealth accumulation and wealth protection is totally contrast with each others. However, we can strive to a balance in between.


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