How & Why to Determine Your Investor Profile

Episode Transcript:  

 Are you feeling overwhelmed or underwhelmed with investment opportunities that you are looking at? We today, we're gonna take those feelings and turn them into focus on ready to scale. Hey guys. My name is Jeanette Friedrich, director of Investor Relations here at Blue Lake Capital. Now, this morning as I was taking my, yes, believe it or not, two to sometimes three hour long commute into the office, I was listening to a podcast that was appropriately called interesting times.

In this podcast, the host was actually doing an interview with Peter Thiel, and he was expressing a lot of frustration and concern over what he considers basically the stagnation of innovation in the United States and globally. Now, I laughed to myself a little bit as I was listening to this interview because I detected something that I think he didn't say out loud, but it was definitely implying.

Which was, he was frustrated 'cause he wanted something to invest in and he didn't feel like there was anything good out there. So I think you might be able to relate to that as other people I have spoken to, I know do as well, which is feeling either overwhelmed or underwhelmed by the different investment options that we're surrounded by.

All the time. So if you're feeling that way, there is an easy way to actually help alleviate some of that frustration. And it's really going back to the basics. And what I mean by that is that when you understand who you are and why you are investing, essentially what your investor profile is, it can really help you to narrow it down.

Remain focused and stay true to the objectives that you are trying to achieve in your investments. So the easy way to do this is to basically just ask yourself three questions. Now, it doesn't really matter if you've been investing in something for two years or 20 years, respecting and recognizing what type of investor profile you have.

Really is worth it. So first of all, you wanna ask yourself basically, why? Why are you doing this? Do you need reliable income right now? Or are you trying to build wealth over many decades to come? The second reason that you wanna be able to think about that. It is because once you determine that answer, it will help you answer the next question, which is, how comfortable are you with risk?

How? How much risk are you willing to take to get what it is that you're going after? In other words, can you handle volatility, market swings, what will keep you up at night and what will allow you to sleep? What can you tolerate? Okay. And then the last question that you really wanna ask yourself is, what role is this investment going to play in your life?

Are you just reinvesting distributions or dividends that you're getting from another investment into a new investment? Or are you actually relying on the returns from this investment for your living expenses? That's a critical question to take into consideration because it really will help drive your focus.

Into what is going to work best for you. So based on your profile, based on your answers, you're probably gonna fall into one of three profiles. So you have an income oriented investor. That's the first profile. Now basically income oriented investors, what they are looking for is to generate reliable income today while preserving capital and peace of mind.

Basically, these are folks who have made their money and just wanna be smart with what they're doing with it. So what they're looking for generally is just steady cash flow and capital preservation. These types of investments typically will be found in high quality bonds, dividend paying stocks. CDs, money markets or income focused real estate investment trust, better known as REITs.

Now, the next profile is growth focused investors. Now growth focused investors, they're going big, are going home. They're looking to build substantial wealth over the long, long-term by embracing market cycles willingly and openly ly, because that's how typically some really big money can be made. So they're comfortable with volatility in pursuit of long term appreciation.

Typically, these types of investments are equities, especially in emerging SEC sectors, venture capital, private equity that is often purchasing and selling businesses and growth oriented real estate, such as value add strategies. Now the third type of investor profile is essentially the balanced investors.

Somebody who's looking for kind of the best of both of those worlds. Now the reality is, is when you're trying to get the best of both worlds, you're not going to. So you just have to accept that from the beginning. But it's basically taking the same ambitions each of those profiles have, and moderating that down just a little bit further.

So essentially. Blended investors are basically looking for a little bit of income, but also a little bit of growth, so they want a mix of cash flow along with a little bit of capital appreciation. Tomorrow. They're not looking to go big or go home, but they are looking for at least some type of upside.

Now, typically, you will find those types of investments to be in diversified mutual funds or ETFs that are blending stocks and bonds or in target date funds that automatically adjust the risk over time. Or in hybrid vehicles such as having convertible bonds or core plus real estate strategies. So once you've identified your profile, it's much easier to filter opportunities accordingly.

So if you're an income investor, then don't even waste time looking at some type of high volatility tech fund that typically a VC might get into. That's not who you are, and that's not what your risk profile aligns with. It's a waste of your time and it will only cause frustration. If you're a growth investor.

Why are you even gonna look at bonds? You don't play in the bond market at 3%. Yield is nothing to you. Don't waste your time looking at investments that you know are just gonna be a disappointing or return profile. And if you're a balanced investor, then make sure that you're paying attention to actually being balanced.

Stop looking at equities. If you're light on real estate or if you're heavy in real estate, then start looking at equities. Basically, investing is not a one size fits all. Uh, type of lifestyle or financial strategy. So it's really important to understand your own investor profile and let that lead you instead of getting overwhelmed or underwhelmed by all the different investment opportunities that are out there.

I hope you guys found this helpful. Remember, it's back to the basics. Stay focused, stay consistent, stay disciplined, and you will eventually hit your goals. I hope to see you guys. On the next episode. All right. Just fix this last part. I hope you guys found this helpful, and I'll see you on the next episode.