Self-awareness, a hallmark for the spiritual and the well adjusted, can also be handy for investors. "It's important to understand how you're wired based on your core personality, especially in a time of major market volatility," says Will Prest of Transamerica Retirement Management. A new study from the firm, based on a 2007 survey of more than 2,000 over-50 investors, found that they fall into four distinct investing groups: venturers, adapters, anchors, and pursuers. The survey's questions focused on how investors feel about change: from whether they thought it was stressful or exciting to how they felt about change in their lives. Here are characteristics of the four investing personalities (I'm a pursuer, according to Transamerica's online quiz):
Venturer: "Nothing Ventured, Nothing Gained"
Investors that fall into this category are highly confident and relish change. Most say they're fully engaged and prepared for retirement, says Prest. "They feel that of all the major changes in their life—such as marriage, changing jobs, and moving—that easing into retirement will be the easiest," he says. Venturers also tend to be do-it-yourself investors. Many respondents in this group said they're willing to take on risk. But in this market, says Prest, this group's overconfidence could lead to financial missteps.
Adapter: "Take It as It Comes"
Adapters also have a high level of confidence, but they don't necessarily take on risk (most have mixed feelings when it comes to risky investments). Only 54 percent of respondents in this category said they felt change was exciting, according to the survey. "They're not necessarily looking for change, but they're able to adapt to a situation," Prest says. "As long as they avoid knee-jerk reactions, they'll figure out how to be successful." More than half of adapters are confident they'll have the life they want in retirement, but only 40 percent enjoy the investing process. Adapters are also the most likely to ask a financial adviser for help.
Anchor: "Stay on the Safe Side"
This group is all about consistency. "They don't view the transition to retirement as easy at all, and change stresses them out," says Prest. They're also worried about money and tend to be conservative investors. Of respondents that fall into this group, 65 percent plan to work in their retirement years to meet their everyday living expenses. What's more, 80 percent said they don't put money in risky investments, and 85 percent said change is not exciting. "The thing with anchors is that the fear of loss is so real for them that risk makes them uncomfortable," Prest says. "In a crisis, they probably just want to hide, although if they invest like say they do, they don't have all that much in risky investments."
Pursuer: "Pursue Anything Once"
Members of this clan crave change and are "always looking for a silver bullet," says Prest. "These are the people that have five different books they read a part of but never finish." Of respondents in this category, 29 percent are confident that they'll have enough money in retirement, 33 percent say they need help making financial decisions, and 22 percent rate their investing knowledge as above average. This group also has the lowest median household income and the least household assets. "This proves that when you're constantly chasing the next thing, it affects your net worth," Prest says. Especially in this market environment, he advises, pursuers need to formulate a plan and stick to it.
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