Investor and investment coach Steve Moriarty says establishing a systematic approach to investing based on your personality type will set you up for success.
Steve believes your personality type has a major influence on your investment outcomes and journey. It will determine where your strengths lie and identify the weaknesses and limitations you need to protect yourself from.
The founder of Next Level Wealth joined Bushy Martin on the Get Invested podcast to talk about the importance of investors understanding their motivations and putting systems in place to make more objective decisions.
“It’s just this constant idea of thinking about your decisions. You have to get a sort of philosophy or a system because if you don’t do that, what you end up doing is investing emotionally, which is the most damaging way that you can invest,” Steve said.
“It’s really important that you understand your own motivations, because you’re interpreting according to your own framework. You can be the best investor in the world, but if you are overly emotional with your money, then you know you’re not going to go very well.
“But to do that, you’ve firstly got to know yourself. For example, if you try to lose weight, don’t put chocolates in the fridge and think that you’re going to have the willpower to do that. Instead develop a philosophy that says ‘when I really feel like eating chocolate, I’m going to go for a walk’.
“So you develop these strategies to not ignore your emotions, but to accept them and say ‘yes, I’ve now got this feeling that I urgently want to buy this stock. I’m going to have to go for a walk and wait for that feeling to calm down’ or to say that’s not part of your system.”
But how do investors establish these systems? Steve said it’s all about understanding your personality. In fact, there are nine types of personalities to be aware of.
“There are nine archetypes of personalities and within each of those types we have traits, behaviours and beliefs about a whole raft of things. So for example, some people say money is for freedom and others say no it’s for achieving and others say no money is for giving away to other people. And so money is the vehicle for expressing the personality,” Steve explained.
“Type one is a perfectionist, who are sort of status orientated. Type two is a giver – they’re those people who incessantly want to help everybody and generally give their money away. Type three is an achiever and type fours are basically romantics. Type five is a thinker – they’re people who are more introverted than most, want their own time and space, but they also want to do good deeds.
“Type six are sentinels – they’re the ones who always play devil’s advocate, are very conservative and they always highlight the downside, and that’s a valuable thing to have. Type sevens are epicurean – we love life and lots of stuff. Type eights are generally called leaders – they’re people who are quite intuitive, very family oriented, very insiders and outsiders. And type nines are balanced people – they’re people who generally go with the flow and will defer to other people to make the decision.”
Bushy also elaborated on how investors can then identify their strengths and weaknesses and follow an investment map.
“If you know both your strengths and weaknesses, then you can frame an investment style and system that exemplifies your strengths and controls your weaknesses and removes the risk of you in the equation. Then suddenly you’re off to a great start and not self-sabotaging yourself because you’re following someone else’s ideas,” he said.
Listen to the full interview here.
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