What type of investor are you?

Only half of Swiss people invest their money. Many people have reservations when it comes to investing. They think they don’t have enough money to invest, fear losing their money or just find it too complicated. Our “Pizza Portfolio” event concept came about with the aim of deconstructing these hurdles and informing people in a clear and concise way. A food truck selling pizza travelled to seven different locations around Switzerland. The five pizzas on offer represented example portfolios for different investment strategies. In order to show each strategy clearly, the pizzas were sliced and arranged on the pizza box according to the respective proportions.

The right (pizza) portfolio for each investor type

From the Margherita Sicura for investors with a low risk appetite to the Rischio Piccante for investors focussing on growth – the five pizza dishes illustrate the right portfolio for each investor type.

Margherita Sicura

This pizza is for investors with a low risk appetite. With its high proportion of bonds, the Margherita Sicura offers security with relatively low returns.

Quattro Solidi

The Quattro Solidi has a variety of toppings and, thanks to its wide diversification, offers a lower risk than a Prosciutto e Profitto. A certain proportion of shares provides intensive flavour and the chance of solid returns.

Verdure Moderate

Pizza lovers looking for something more balanced should try out the Verdure Moderate. Its ingredients and investment options offer a good balance between opportunity and risk.

Prosciutto e Profitto

This protein-rich pizza aims for gains and quick growth with its high equity component. Anyone ordering a Prosciutto e Profitto should be ready to accept risk, as large fluctuations in the value of invested money can follow quick growth.

Rischio Piccante

This is an extremely spicy pizza, and its portfolio carries great risk. Be prepared for a lot of chilli, but the Rischio Piccante’s high equity component means you have the chance of high returns.

The individual components in detail, or: which asset classes are available for your portfolio

How to determine your investment strategy

The Pizza Portfolio analogy is simple: just like the five different pizzas, individual portfolios can also be put together. The decisive factors are your preferences and needs; your investor type. But what investor types are there, and what should you keep in mind to find out what yours is?

As a rule of thumb: your risk capacity and appetite along with your investment horizon decide your investor type and should have a direct impact on your portfolio. However, diversification, personal goals and market dynamics also have a big influence.

Diversification: the right mix does the trick

Diversification is an important part of any successful investment strategy. By mixing different asset classes, you minimize the risk of loses and increase your chances of steady returns. Funds offer diverse investments as they cover many markets.

A diverse investment strategy should also contain shares, bonds, real estate funds and gold. You can determine the respective allocation based on your risk appetite and capacity and your investment horizon.

Investment horizon: how long can you invest money for?

Your investment horizon plays an important role when choosing your investment strategy. Shares and real estate are best suited for long-term investments due to their growth potential. A longer horizon generally means more risk can be accepted.

Long-term investment strategies like buy-and-hold and rule-based investing have proved to be effective. Strategies focusing on regular investing and reinvesting income are suitable for building wealth. Compound interest has the greatest effect on long-term investments.

Risk appetite: how brave are you?

Your risk appetite is one of the main factors when it comes to choosing your investment strategy and putting together your portfolio. More cautious investors go for conservative strategies whereas those willing to take a risk opt for growth-oriented options. You can minimize risks through diversification and careful selection of your investments.

How to manage risks in your portfolio

Risk is usually assessed and managed based on volatility and historical returns. There are different ways to minimize risk and these can be used independently of the chosen investment strategy.

On the one hand, a balanced mix of different investment classes is recommended. For example, stable investment products like bonds or a diverse range of funds, like PostFinance’s asset allocation funds, can be integrated into your portfolio.

On the other hand, it’s important to regularly check your portfolio and adapt it according to your investment strategy.

If you want more protection, you can consider hedging strategies such as order types supported by the stock exchange. Precautionary measures are essential for any good investment strategy. Always remember the golden rule: only invest what you can afford to lose.

How do market dynamics affect your investment strategies?

Though we chose to represent investment strategies with five Pizza Portfolios, finance markets are constantly changing. You should therefore adapt your investment strategies to combat price fluctuations. A flexible strategy, adaptable to differing market conditions, is very important.

When you adapt your portfolio depends on your investment strategy: conservative strategies tend to remain stable, while growth-oriented approaches, for example, benefit from positive market phases by making additional investments in strongly performing asset classes. Current trends like sustainable investing and technological innovation can also influence your choice of investment strategy. 

Setting your own personal target

Your financial goals, whether they are securing a comfortable retirement or financing a house purchase, directly affect your choice of strategy. Your risk capacity determines how much risk you can and should take.

Buying and selling strategies: the right time depends on you

Unlike spontaneously deciding on a pizza, your buying and selling decisions when it comes to investments must be well thought out. But how do you know when to sell in your given investment strategy? Ideally when you have reached your targets or market conditions change.

The best time to buy is usually during market corrections or when valuations are attractive. Different purchasing strategies, such as regular investments or timing the markets, can help depending on the investment strategy.

But don’t be too hasty: long-term strategies trump short-term tactics on the market.

Yield enhancement

You can increase your chances of a good return by carefully choosing your investment products and practising good diversification. Important to know: investment strategies offering the highest potential returns tend to be riskier and include a high equity component. Costs are another factor influencing your returns. Try to minimize these with low-cost funds and low transaction fees.

Five useful tips for setting up a successful investment strategy

• A successful investment strategy begins with careful planning and clear goals. Develop a solid concept based on solid foundations and a clear strategy.
• It’s essential to regularly check and adapt your portfolio so you can react to market fluctuations and your own personal situation.
• Stick to your chosen investment strategy but be flexible enough to react to any fluctuations.
• Pay particular attention to aspects like diversification, costs and risk management.
• Professional advice can be of great assistance, particularly for more complex investment strategies.