What’s your savings plan persona?

When I got my first job at 16, I spent every paycheck as soon as it landed in my hands. I was so excited to have money that the thought of saving it never entered my brain. Years later, after I had moved out and had to figure out my own finances, I still pushed away any advice about saving or investing. Future me could take care of that.

One of my big roadblocks was that I didn’t know where to start. I wasn’t going to just put it anywhere — I would need to do careful research, which required time I didn’t have. Unfortunately, my hesitation cost me a lot. If I had started just three years earlier, I might have double the money saved I have now.

I don’t want you to repeat my mistakes. That’s why I’ve created three fictional profiles of different kinds of investors and savers. If you don’t know where to start investing, I hope this will spark your imagination.

None of these examples should be followed to the letter or seen as investing advice: investing always comes with risk, and you need to make your own decisions. Instead, think of them as a starting point for your own personal saving journey.

The Careful One

Photo by cottonbro

The Careful One isn’t dumb: they know that investing is risky, and they really don’t feel like seeing their savings swing wildly. They want slow, steady growth.

Their savings plan looks like this:

80% Broad Market ETFs

20% Sector ETFs

0% Individual stocks

0% Crypto

This Savings Plan is designed with one thought in mind: no one beats the market. Broad market ETFs, like the S&P 500 or MSCI World Index, allow just about as much diversification as possible. A small allowance for sector ETFs allows this investor to invest in something they believe in: maybe it’s a clean energy ETF, or a healthcare sector one, or one of the many indexes that tracks a whole country, like the MSCI Germany ETF.

The Undecided One

Photo by Julia M Cameron

ETFs are great, but what if you miss out on the next Tesla or Apple? And what about crypto? The Undecided One has a hard time choosing between risk levels. Luckily, they don’t need to. By dipping a toe into each of these asset classes, they get the benefits of all of them.

Their savings plan looks like this:

50% broad market ETFs

25% sector ETFs

20% individual stocks

5% crypto

Half of this savings plan still tracks the market, which forms a low volatility base. The riskier the asset class, the less this investor puts into it. The 5% they allocate to crypto might not seem like a lot. Still, if that allocation outperforms, it can make a big difference in the portfolio. And if it sinks, the rest of the portfolio can potentially make up for it.

The Adventurous One

Photo by Pixabay

The Adventurous One understands one thing: they’re not going to live forever. The future is never guaranteed, and playing it safe is boring. They’re not scared of risk: their middle name is YOLO. They prioritize big gains over long-term growth.

Their savings plan looks like this:

0% Broad Market ETFs

10% Sector ETFs

60% Individual stocks

30% Crypto

This portfolio will almost certainly be volatile. Swings of several percent can be expected daily. The 10% invested into sector ETFs provides a little bit of stability, but even these can rise and fall several percentage points each day. Still, the adventurous investor is comfortable with that. If one of their bets pays off — like a crypto coin doubling in value — it can more than make up for any losses in other assets. It’s high risk, high reward.

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