Investment Traits You Should Know About

Understanding the key factors driving investment decisions is an excellent way to invest in NFTs. Read on to know the common NFT investment traits.

August 24, 2022

Like other financial markets, several factors weigh in on an individual when making an NFT investment choice. Behavioral analysts have looked at the impact of the environment, demography, and other socio-economic factors on investors. Their results show a varied trend amongst five significant metrics— risk tolerance, knowledge, level of patience, right decisions, and goal setting.

Investors can be categorized into four groups based on their behaviors with the abovementioned approaches. These are the preservers, followers, independents, and accumulators. Let's examine these four traits under the lens of those metrics so you can identify with and harness your strengths before you start investing. 

1. Preservers

  • Risk tolerance: Extremely Low
  • Decision-Making Frequency: Low
  • Knowledge: Low
  • Level of Patience: High
  • Right Decision: Moderate
  • Goal Setting: Low

Preservers are usually established people from different walks of life. Their primary aim is capital preservation, and they typically side with traditional investment vehicles with some guarantee of compounding and capital security. Preservers are very risk averse and care less about astronomical increases in a short period.

2. Followers 

  • Risk Tolerance: Moderate
  • Decision-Making frequency: Low
  • Knowledge: Very low
  • Level of Patience: Low
  • Right Decision: Low
  • Goal Setting: High

Followers are usually moved by market sentiment or hype. They are averse to taking responsibility for their investments and often seek refuge in the decisions of others that are publicly announced. These investors usually prefer flipping, using terms like "YOLO" and "to the moon" to describe their market perception. Followers are often after quick gains and do not back their desire with a corresponding level of knowledge. The emotional roller coasters with Followers often make them overestimate their rewards and underestimate their risks.

3. Independents

  • Risk Tolerance: Very High
  • Decision-Making Frequency: High
  • Knowledge: High
  • Level of Patience: Moderate
  • Right Decision: Moderate
  • Goal Setting: High

These are very active investors who seek out opportunities as soon as they arise and will often take risks that others wouldn't due to their high-risk tolerance levels. Independents derive joy and satisfaction from analyzing markets on their own and getting results based on data-backed predictions, although their high-risk tolerance could be bad for their portfolios. 

4. Accumulators

  • Risk Tolerance: High
  • Decision-Making Frequency: High
  • Knowledge: High
  • Level of Patience: High
  • Right Decision: Moderate
  • Goal Setting: High

Accumulators are unique among the three groups because they prize compounding, dollar-cost averaging, and capital preservation as preservers. They're very knowledgeable about risks but are also cautious, a trait known to Independents. These often zoom out of the news and keep buying, which usually pays off in the long run.

How does your investment trait impact your NFT investment path?

With hundreds of NFT projects sprouting daily, most buyers find it hard to avoid guesswork when finding NFTs to invest in. This is largely because there are no rule books on assessing valuations other than pointers from past trading experience. Knowing your investment trait and carefully evaluating the metrics will inform your decision of what NFT to invest in– whether you are going for blue-chip tokens tied to physical assets or new collections buzzing on discord groups.

The psychology of investing is complex, but it doesn’t have to be mysterious. We hope this article has helped you understand yourself and make better-informed investment decisions. 

So, what kind of investor are you? Are you the impulsive type who buys on a whim or the more analytical type who does their research before investing? 

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