Intelligent investor always win over average investor. So, what makes intelligent investor unique and different from average investor? Dealing with risk in different manner is true difference between intelligent and average investor. Average investor view risk from different prospective than the intelligent investor.
If you really want to be smart investor you need to change your viewpoint about risk. Probably you need to change your view on what you think is risky and what is secure.
For Average Investor Investment means Fixed Deposit while for intelligent investor, investment means mutual fund or equity. For average investor security is important for intelligent investor financial freedom is important.
Here is difference which will display contrast between average investor and intelligent investor’s view of risk. Looking at this difference you can clearly say that you are falling in category of Intelligent investor or not.
Intelligent Investor vs Average Investor
| Average Investors | Intelligent Investors |
| Single financial statement. | Multiple financial statements. |
| Takes everything on their name. | They often invest using corporate entities. |
| Think insurance is Investment. | Insurance is only for risk cover. |
| They prefer keeping money in bank or as cash. | They Invest extra money for earning returns |
| They prefer investment in fixed return asset class Fixed deposit, NSC. | They prefer variable return asset class – Equity, Mutual Funds. |
| Focuses on job security. | Focuses on financial freedom. |
| Focuses on professional education. Avoids making mistakes. | Focuses on financial education. Understands that mistakes are part of learning. |
| Does not seek financial information and trust in free advice | Always seek financial information and ready to pay for it. |
| Looks at past indicators performance, such as P/Es. | Looks for future indicators—such as trends, change in product line and changes in management. |
| Invests alone, asking no one for advice. | Make financial plan and take paid advice from experts. |
| Seeks external security, such as a job, company, or government. | Values personal self-confidence and independence. |