Want To Be A Better Investor? Your Mindset Matters More Than You Think

Always strive to better manage your emotions when handling your investment portfolio

- Ankit Garg

Psychology has always intrigued mankind, not only because of its complexity but also its effect on our daily lives and the world as a whole. It affects not only our relationships with family and friends but our relationship with money as well. Recently, a lot of research has been conducted about human beings' attitude towards money in general and investing in particular. This subject, at the intersection of investments and human psychology, is known as behavioral finance.

But long before behavioral finance became a fancy term in the worlds of academia and finance, economists and fund managers Bailard, Biehl and Kaiser proposed their own 'five-way model' in 1986, defining distinct investor profiles based on their level of confidence and their actions.

They divided investors into five categories: celebrity, adventurer, individualist, guardian and straight arrow. Let's understand them one by one.

Adventurer: These investors are spontaneous and confident. They typically have huge conviction on their "gut feeling" and act on it quickly. They are generally risk-takers and have some knowledge about the subject matter.