Are You a Latte or an Espresso Kind of Investor

What’s your ‘cuppa’ investing style? Risk tolerance plays a massive role in investment decisions. It’s determined as much by the timeframe you’re working within as it is by your personality and circumstances. In investing, risk refers to growth assets, e.g. equities, within a portfolio, that can bring big rewards but are also sensitive to market swings. Some people need ‘instant’, consistent returns; others opt for aggressive ‘espresso style’ growth. Read on to see which ‘coffee’ correlates with your risk appetite.

Duma Mxenge, Business Development Manager at Satrix, says, “It’s important to align your investment portfolio with your goals, time horizon, and risk capacity and tolerance. This means knowing yourself and your risk profile. Work with a trusted financial adviser to consolidate a diversified portfolio that facilitates growth while considering your unique preferences and circumstances.”

Find your risk profile ‘coffee’ correlation below:

Conservative – The “Instant Coffee” Drinker 

You like an ordered approach to life, and you don’t like unpredictability. You prefer to know that your money is safe so that you can sleep easy at night. In short, you don’t like taking unnecessary risks, in fact you don’t like taking risks at all! You know you’ll feel uneasy if you lose money in the “markets”. This will mean you’ll look for investments allocated to cash or bonds, rather than equities. This strategy works when you have a short-term perspective toward wealth preservation. It’s important to note though, that over the longer term, a cash investment may not keep up with inflation and you could lose “buying power” in the future. You understand that your investment choice will offer you stability and a smoother investment journey rather than providing you with stellar investment returns.

The ideal investment fund for you?

An investment fund that offers you as much certainty as possible, a fund that is classed as low risk.

Cautious – You Typically Go for a Latte (Café Au Lait for our Serious Coffee Fans)

You’re a thinker who likes to know what the outcome of your decisions will be. You don’t like to take risks with your investments, but you do appreciate the need for a little more risk, or more exposure to growth assets, to ensure that your investments keep pace with inflation. You know you’ll feel anxious when markets go through an uncertain patch, so you tend to go mainly for cash-type investments but with some exposure to growth assets. You’re prepared to dip your toe in the water, but you like to understand exactly what you’re “in for” before you invest.

The ideal investment for you?

An investment portfolio with a limited amount of exposure to growth assets, and one that invests across a diverse range of shares and asset classes.

Moderate – The Committed Cappuccino Drinker

Interested in new ideas and possibilities, you approach the world with enthusiasm and curiosity because there’s so much out there to discover. At the same time, you understand that you need your portfolio to keep growing to support you in all that you want to do and discover. You’re not averse to the idea of a higher allocation to growth assets. You can endure some market volatility by taking on more equity exposure with at least a portion of your portfolio, so long as you know your entire portfolio is not at risk. 

The ideal investment for you?

An investment managed by an investment professional and that has a mix of both growth assets and lower risk investments such as cash and bonds. The investment has exposure to assets both locally and abroad. 

Moderate Aggressive – You’re Willing to Give a Cortado a Try

You’re determined. You know what you want, and you’ve done your research into how you can get there. Your primary aim is to achieve capital growth to realise your realistic ambitions. You are prepared to tolerate fluctuations in your returns because you know that the longer-term picture is worth the short-term pain, even if that means you make a loss sometimes (although the losing is probably not permanent – markets always recover, and market ‘ups and downs’ are normal). 

The ideal investment fund for you?

While still diversified across all the major asset classes, both locally and abroad, your portfolio will be tilted more towards equities because they offer the best long-term returns of all the asset classes and give your wealth the best chance of growing over time.

Aggressive – No Question, It’s an Espresso for You

You understand that markets go up as well as down, but that they always recover. You’re comfortable with this – in fact you know that when markets are down, it’s an opportunity to buy more units in your fund at a lower price. You’re more than willing to take on the sometimes-volatile nature of markets in order to realise the best possible return on your investment. You have the long-term horizon in mind – in fact you’re planning to invest for at least 10 years, possibly even longer. You have other emergency funds available to you, should you need them, so you know you won’t have to sell out of your growth assets in the near term. Not influenced by what other investors are doing, you think big and act accordingly. But that doesn’t mean you’re reckless. You do your homework and back experts that you believe in, and are happy to give them the flexibility to invest as they see fit. 

The ideal investment for you?

An investment fund that exposes you to more risk but offers potentially much more in the way of returns, giving fund managers the leeway to invest where they believe the opportunity is the greatest.

Developing the Barista in You (Choosing a Fund)

Satrix has a broad range of exchange-traded funds (ETFs) and index-tracking unit trusts available, and the Satrix Access Range is a great place to begin your investment journey, especially if you don’t like to be overwhelmed by choice. It includes four of our flagship funds that cater for a range of investment time horizons and risk appetites. 

With no minimums low-cost access to local and global products via our SatrixNOW online investment platform, it’s easy to own the market.

Discover Your Investment Personality

Take our fun quiz to uncover your investment personality and gain insights into how you can optimise your investment strategy. 

Disclaimer

Satrix is a division of Sanlam Investment Management. Satrix Investments (Pty) Ltd is an approved FSP in terms of the Financial Advisory and Intermediary Services Act (FAIS). The information does not constitute advice as contemplated in FAIS. Use or rely on this information at your own risk. Consult your Financial Adviser before making an investment decision. Satrix Managers (RF) (Pty) Ltd (Satrix) is a registered and approved Manager in Collective Investment Schemes in Securities.

While every effort has been made to ensure the reasonableness and accuracy of the information contained in this document (“the information”), the FSPs, their shareholders, subsidiaries, clients, agents, officers and employees do not make any representations or warranties regarding the accuracy or suitability of the information and shall not be held responsible and disclaim all liability for any loss, liability and damage whatsoever suffered as a result of or which may be attributable, directly or indirectly, to any use of or reliance upon the information.