How to define your investor profile?

It is important to define your risk aversion in order to maximize your returns while limiting your losses.


Before you start investing your money, you need to ask yourself the right questions. What are my goals? What is my investment horizon? What is the risk I am willing to take? Determining your investor profile is the first of the best practices.


Some assets are subject to high volatility over time and fluctuate greatly up and down. These investments are risky and do not correspond to all investor profiles. They should be handled with care and preferably with a long-term vision.

However, this risk is necessarily associated with significant potential gains. This is the case of the crypto-currency market, whose extreme volatility is no longer presented. The price of Bitcoin (BTC) can, in fact, see its value fall by several tens of percent in just a few hours. But for those with a long-term view, it is the best performing asset in any sector. We are talking about a performance of 200,000% over the last 10 years.

Risk aversion

In order to deal with volatility, it is essential to first determine your level of risk aversion. Risk tolerance is the emotions you may have when faced with the volatility of your investment and therefore the potential losses it may generate. Thus, a risk-averse person will prefer low-risk investments with low volatility and therefore low returns.

The danger of not defining one's risk tolerance from the start is that one may make hasty decisions during moments of panic, especially when the markets crash.

How to define your investor profile?

Investing your money is a way to meet different life objectives such as realizing a project, preparing your retirement or generating passive income. Contrary to popular belief, it is not necessary to be wealthy or to spend hours a day working on your savings. Nevertheless, it is necessary to determine one's investor profile before taking any steps. For this, it is important to take into account several simple but essential criteria.

Investment Horizon:

For any investment, you must first estimate the period during which you will not need your money: 6 months, 1 year, 5 years, 10 years? This is not an easy question to answer because you need to know where you see yourself in the years to come. Indeed, the purchase of an apartment or the arrival of a child are elements which can require important liquidities and thus limit your investment horizon.

The advantage of having a long term vision is that it is possible to seek more performance. So you can position yourself on more volatile and therefore riskier products, but which, over a long period, will most likely be winners.

The age :

Age is probably the most important factor in determining an investor's success. The earlier you take control of your personal finances, the more likely you are to see your wealth grow. At age 25, you will be more likely to take a long-term position than at age 75, where you will be looking to minimize your risk. Thus, the younger you are, the more you can claim a high risk because you will be able to invest with a long-term vision.

The other advantage of investing at a young age is that it is possible to use compound interest which is, as Einstein said, the 8th wonder of the world. By reinvesting your earnings as you go along, your wealth can grow exponentially: this is the magic of compound interest.

Economic Situation :

Although it is now possible to invest your money from 1€, your personal economic situation will strongly impact the amount you are willing to invest. Depending on your income, your daily expenses, your assets, your debts or your potential inheritance, only you can determine how much you can invest.

Marital Status: :

Are you single or in a couple? With or without children? Your family situation should not be neglected before investing your savings because it is not without knowing that investing presents a risk of loss of capital. As the head of a family of 4 children, you have the duty to ensure the material needs of your unit. You will not be able to take the same risks as a single person without children on whom nobody relies.

Personal Goal:

Define what you are looking for through your investment. Is your goal to supplement your income, anticipate your retirement, buy a second home? Determining a goal beforehand allows you to refine your strategy and stick to it. This guideline will guide your investments and the risk you are willing to take to reach your goal.

Investor profiles

After asking yourself the right questions, let's determine together in which category your investor profile fits.

The prudent investor :

The cautious investor is the one who is the most risk averse, often a married person with children or close to retirement. They are often married with children or close to retirement. They have a hard time seeing the value of their portfolio fluctuate and want to minimize the risk of losing their capital as much as possible. He will then mainly position himself on secure products with low yields, such as life insurance with fixed-rate euro funds or government bonds.

Conscious investor :

The conscious investor takes a measured risk. He is looking for the perfect balance between risk and return with, on the one hand, investments with a guaranteed rate of return and, on the other hand, more speculative investments to boost the performance of his portfolio.

Fearless Investor :

The intrepid investor likes risk because he knows that it will allow him to reach his personal goals more quickly. They are not afraid to see the value of their assets go up and down and are even willing to accept potential losses. He invests in a dynamic way and follows his financial investments very regularly.

Diversify your portfolio in cryptocurrencies

When it comes to investing, cryptocurrencies are increasingly coming to the forefront. In 2021, 8% of French people announced that they had already bought digital assets according to a study conducted by IPSOS for ADAN.

Nevertheless, many investors do not yet dare to take the plunge because of the extreme volatility of the digital currency market. However, contrary to what one might think, it is also possible to gain exposure while minimizing one's risk. This is what FinTech Ambrosia, regulated by the AMF, proposes.


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