How Indian investors should plan their move insight into financial mastery of risk tolerance

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Strong points

  • Indian investors’ equity allocation is extremely high, regardless of their risk tolerance
  • Investors uncomfortable with losses take on higher risk
  • Investors with higher financial fluency time the markets with strategic lump-sum investments with SIPs

Indians are investing more than ever in the markets. As the investor base in the country is on an upward trend, it is also creating space for experts who can guide citizens on the various parameters they need to take care of when investing their hard-earned money. Here’s a look at unique investment behaviors and patterns.

The information was drawn from their unique Investor Personality Assessment feature which assesses investors on four key metrics of risk tolerance, loss aversion, financial fluency and levels of overconfidence and draws a 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 strategists (35%) – a type of investor who are action takers willing to take calculated risks. Next come explorers (31%) – smart investors and, at times, overconfident risk takers.

The other types of investors – Protector, Analyzer, Seeker, Adventurer, Seeker, and Observer – make up the remaining 34% of investors nationwide.

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

While high risk tolerance can yield good long-term results, the report also shows that investors with low risk tolerance also invest heavily in stocks, indicating that risk-taking capacity is being overlooked.

The report further states that the majority of Indians are uncomfortable with taking losses. Yet they take high risks, which inevitably makes them uncomfortable in times of market volatility.

Interestingly, according to the report, Indian investors with high financial literacy make strategic lump-sum investments alongside their ongoing SIPs, unlike investors with lower financial literacy who stick only to SIPs.

Also, on the positive side, female investors are considered to be more organized and better planned, which is evident with their higher share in the personality types of strategists and researchers than males.

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Robert D. Coleman