1. Although a financial plan should be based on logic and risk-profiling to serve financial goals, most investors are driven by emotions which come from their personality traits.
2. Therefore, an investor should ideally choose investment products that suit his temperament, as it is possible that of two people with same job, with similar family background and with similar upbringing, one cannot withstand volatility while the other can negotiate it well.
3. In such a situation, the first person's portfolio should be less volatile in nature while the second person who can withstand volatility can have a portfolio with products that can show relatively higher levels of volatility and also risks.
4. The temperament is reflected by his ability to complete his financial journey with conviction towards his ideas, and without any distraction from event flows and noises around him.
5. When investment decisions are made by following what others are doing, that too reflects an investor's personality, but this herd mentality is something that investors should avoid.
2. Therefore, an investor should ideally choose investment products that suit his temperament, as it is possible that of two people with same job, with similar family background and with similar upbringing, one cannot withstand volatility while the other can negotiate it well.
3. In such a situation, the first person's portfolio should be less volatile in nature while the second person who can withstand volatility can have a portfolio with products that can show relatively higher levels of volatility and also risks.
4. The temperament is reflected by his ability to complete his financial journey with conviction towards his ideas, and without any distraction from event flows and noises around him.
5. When investment decisions are made by following what others are doing, that too reflects an investor's personality, but this herd mentality is something that investors should avoid.