How Indian investors should plan their move an insight on Risk tolerance financial mastery


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Highlights

  • Equity allocation of Indian investors is extremely high irrespective of their risk tolerance
  • Investors with a low comfort level to losses are taking a higher amount of risk
  • Investors with higher financial mastery timing markets with strategic lumpsum investments with SIPs

Indians are investing in markets more than ever. As the investor base in the nation witness an upward trend, it also creates a space for experts who can guide the citizens about different parameters they need to take care of as they put their hard-earned money. Here’s an insight into unique investing behaviors and patterns.

The insights have been drawn from their unique feature of Investor Personality assessment that assesses investors on four key parameters of risk tolerance, loss aversion, financial mastery, and overconfidence levels and draws a map of their unique investor psyche.

The assessment gives investors 8 unique Investor Personality tags that are closest to the type of investor they are. The report reveals that the majority of Indian investors are Strategizers (35%) – a type of investors who are action takers willing to take calculated risks. This is followed by Explorers (31%) – investors who are smart and, at times, overconfident risk takers.

The other investor personality types – Protector, Analyzer, Seeker, Adventurer, Researcher, and Observer- constitute the country’s remaining 34% of investors.

As per the report, Indians have an average risk tolerance range between 52 and 81 which means they are comfortable taking a decent amount of risk when it comes to investing.

While high-risk tolerance can deliver good outcomes over the long term, the report also shows that investors with low-risk tolerance are also investing heavily in equities, indicating risk-taking capacity is being ignored.

The report further indicates that the majority of Indians have low comfort levels with respect to incurring losses. Yet they are taking high risks, which is bound to make them uncomfortable during market volatility.

Interestingly, as per the report, Indian investors with high financial mastery are making strategic lumpsum investments along with their ongoing SIPs as opposed to investors with lower financial mastery who are sticking to only SIPs.

Further on the positive side, women investors are seen to be more organized and well-planned, which is evident with them having a higher share in personality types of Strategizers and Researchers compared to men.

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