According to a just-released ASX report, the Australian Share Ownership Study, there are four main kinds of Australian investors.
Some 34% of the Australian adult population own shares directly. That’s 6 million people all told. Of this number, 22% are “Self Reliant Dabblers”, while another 22% are “Informed Diligents”. A further 25% are “Confident Traders”, but the greatest number — 31% of all direct share owners — are what the authors of the study have termed “Unsure Delegators”.
That the majority of investors feel unsure and under-informed likely reflects large-scale and often bewildering (even to experts) share market trends including the GFC and the slowing of the mining boom, which has seen former high flyers such as BHP Billiton (ASX: BHP) and Rio Tinto (ASX: RIO) underperform the overall market in recent years. For instance, while the S&P/ASX 200 index (Index: ^AXJO) (ASX: XJO) has risen 11.5% year to date, shares of these behemoth mining companies have fallen by 6% and 16.2% respectively.
So which kind of investor are you? Simply read through the categories below to find out where you fit. (The definitions below are taken directly from the ASX report.)
1. Self Reliant Dabblers: Those within this segment have limited knowledge of the share market and while they are keen to ﬁnd out more, they note that shares would never be a major part of their investment portfolio. They believe that share market success is more about luck in timing and enjoy managing their investments.
2. Informed Diligents: These investors are knowledgeable and reasonably skilled in the share market. They enjoy managing their investments however also rely on expert advice to shape their decisions and are highly disciplined. They share a level of excitement about the share market challenge.
3. Conﬁdent Traders: Like the Informed Diligents, those within this segment are the most knowledgeable, skilled and conﬁdent investors, tending to buy/sell shares independently. They enjoy managing their investments and are the segment most excited about the share market challenge. Conﬁdent traders are fairly disciplined and are mostly self-directed, relying on their own gut feel.
4. Unsure Delegators: Categorised by their lack of knowledge of the share market, Unsure Delegators rely on the advice of experts for investment decisions. Of all the segments, they are the ones most likely to ﬁnd the share market confusing and do not ﬁnd the share market an exciting challenge. This is now the largest of the current direct retail investor segments.
Looking to progress from Unsure Delegator or Self Reliant Dabbler to Confident Trader? Simply sign up now for The Motley Fool’s FREE email newsletter, Take Stock, which offers a range of educational tips and share market commentary, as well as ASX investment ideas from dividend plays to growth stocks, every single week of the year. Just click here now, it’s free!
Motley Fool contributor Catherine Baab-Muguira has no financial interest in any of the companies mentioned in this article. Take Stock is The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.