What Is Your Investment Personality



What Is Your Investment Personality?

Successful investing starts with identifying your investment personality to get the right combination of investments within a portfolio. Regardless of age or level of investment expertise, it’s important to reassess your investment profile annually to ensure you are making quality investment decisions that reflect personal lifestyle and financial goals.

To determine your investor profile, it is advisable to start with a visit to an investment professional to discuss your investment goals, need for income, comfort with risk and length of time to invest.

Consider using an asset allocation service such as BMO MatchMaker Strategic Investment Service. The service uses a comprehensive questionnaire to determine your investor profile and matches the profile to a strategic portfolio of BMO Mutual Funds.

"Asset allocation is the key to investment success and investors should hold a percentage of each of the three assets classes - cash equivalents, fixed-income and equity investments," says Ed Legzdins, President and CEO, BMO Mutual Funds. "Once an investor knows whether their profile is security, balanced, growth or aggressive growth oriented, it’s easy to determine how much of each asset class they should be holding."

Diversifying your portfolio through asset allocation helps to reduce your potential for risk. Studies have shown that over ninety percent of a portfolio’s performance can be attributed to having the right mix of asset classes, not individual security selection.

Here is a basic snapshot of the types of investments investors should consider based on varying investor profiles:

Security investors - want to protect capital, as they may need it in the next few years, and are more risk averse. This means the portfolio has a high concentration of cash equivalent securities such as Treasury Bills and money market funds.

Balanced investors - are comfortable with a moderate level of risk, seek moderate growth and may have some income needs. This type of portfolio maintains a balance of fixed-income investments such as high-quality bonds or mortgages, and equity holdings.

Growth-oriented investors – are looking for long-term growth and are willing to experience market fluctuations which provide the opportunity for higher longer-term gain. Growth investors should hold a greater concentration of equities than fixed-income investments.

Aggressive-growth investors – are comfortable with a higher degree of risk investments and have a long-term investment horizon. This type of portfolio has a target asset mix of 95% equity and 5% fixed-income investments, designed for high growth potential.

Information provided by BMO Mutual Funds, a wholly owned subsidiary of Bank of Montreal. For more information call 1-800-665-7700 or 1-888-636-6376 (Quebec) or log on to mutualfunds.

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