Imagine a world where investment decisions are made solely based on the fundamentals and financial analyses of businesses. The possibility of that happening is similar to that of one walking out of a Singles’ Day sale empty-handed! It would be nice, but we all know that it is highly impossible.
Most investors, you and I alike, are not perfectly rational when making investment decisions (or shopping for that matter). We are greatly influenced by our emotions, biases and cognitive limitations. After all, we are only human.
Are our emotions defined by our personality?
The relationship between emotions and personality can be both direct and indirect. Different people have different ways of expressing their emotions, even for similar situations. A helpful analogy shared by William Revelle and Klaus R Scherer in their paper, “Personality and Emotions”, is to consider what personality is to emotion as what climate is to weather. To put it simply, “what one expects is personality, what one observes at any particular moment is emotion”. How can we use our personality to our advantage when it comes to investment?
Here is the good news: There is no “good” or “bad” personality type when it comes to investing. It is all about selecting the right investment products that best suit your personality.
In this article, I will be sharing on how to use your DISC personality to invest. This idea was taken from a recent client webinar, “Navigating the Recession based on your Personality type”, presented by Wilfred Lim, head of strategy, investment solutions, at PhillipCapital.
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What is DISC?
The DISC theory was first proposed by William Moulton Marston in 1928, a physiological psychologist, in his book, Emotions of Normal People. DISC is an acronym that stands for the four main personality profiles: (D)ominance, (I)nfluence, (S)teadiness and (C)onscientiousness. Each of the four personality profiles includes a list of behavioural attributes to describe it.
Over the years, there have been many versions of personality assessments created based on Marston’s DISC model. These assessments are typically used to improve communication, productivity and relationships in the workplace. Work aside, we can also use DISC to understand our emotions better and help us to increase our personal productivity.
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Using DISC for your investment decisions
Before reading on, you may want to find out your DISC profiling via the free DISC personality tests that are available online.
Each personality type has its own strengths and weaknesses. Identifying and recognising your personality profile is the first step to using the DISC strategy to your advantage. You can then use them to effectively manage your investments consciously. The table below shows how your personality sways your investment decisions and how you should use it to your favour.
However, although DISC profiling can help to determine your investing style and the products suitable for you, you should also consider your age, investment time horizon, risk profile and financial goals when making investing decisions.
Making better decisions starts with understanding yourself better. Need some guidance and advice in tailoring an investment strategy for yourself? Seek independent advice from our specialists at PhillipCapital to help kick-start your investment journey.
Claire Tan Si Ning is a business development assistant manager with the investment solutions department of Phillip Securities
