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Investing seems hard, here’s how to make it easier

Learn to simplify investing by understanding asset 'personalities' and align them with your goals. Assess volatility, returns, earnings, and liquidity for smarter decisions.

Posted June 19, 2024
Last updated June 19, 2024

Illustration of rocket ship on a laptop to illustrate crypto investing
Illustration of rocket ship on a laptop to illustrate crypto investing

Investing seems hard because there’s so many different ways you can invest today. Believe it or not, there is a financial product for everybody. We just need to make sure that the product fits our particular financial goals and situations.

If you’ve been reading up on some general advice on the Internet, you probably have read the same opinions: “If you are young, you can invest in more risky assets; if you are older, stick to more conservative assets”.

But that’s a bit too much overgeneralising, is it? In this article, you’ll learn how to see different assets by their “personality” so that you can make better financial decisions by considering various personal factors.

Assets have personalities?

I use the term “personality” to help illustrate my point. It’s not a finance term.

All assets have four main characteristics (the “personality”) that define their performance and how that will affect your portfolio. Some assets like to grow slowly but surely, some are more volatile, and others like to cling to you very tightly (i.e. hard to sell). 

So, it kind of makes sense to think of assets as having different personalities, and our job is to find the ones that are “compatible” to our own situation. The four main characteristics or dimensions that all assets have are Volatility, Returns, Earnings, and Liquidity.


Here are two charts of fictional assets performing over a year. Do you see any difference? 

One is clearly more volatile than the other, even if both reach the same price change of 5% at the end of the year. If you see yourself as more risk-averse, you’d probably prefer the first one. 

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The first asset seems better suited for a more conservative investor because if they buy it at any point along the timeframe, there isn’t much risk for it to lose value. It’s almost like a straight line, and it’s slowly but surely increasing in value.

Examples of very low volatility assets include money market funds, short-term bonds and term deposits, also known as certificate of deposits. 


Of course, with less risk comes with less reward. The first asset may offer conservative investors a peace of mind, but a more risk-loving investor would see that there is potential in making more than 5% with the second asset.

Illustration of lump sum investing vs dollar cost averaging.

The trick isn’t to buy in lump sum and hold that asset (left). If you do, you’d end up having to deal with volatility and potentially a disappointing return. Notice that there are times when the asset is valued at 10% before the year is even up. 

A common strategy is to buy this asset multiple times at the beginning (right). This strategy is called dollar-cost averaging, and it’s effective at reducing the risk of buying the asset when it is too expensive. This strategy involves buying the asset at an average price over a longer timeframe, so the effect of volatility becomes minimal. 

Even so, the returns can still be pretty decent given a relatively small volatility. You can even prepare for an unusual surge in price and lock in the gains at a higher price than anticipated. 

Examples of assets with historically high returns (and high volatility) include stocks in the technology sector and crypto.

Learn more about Dollar-Cost Averaging (DCA):


Some assets have cash flow, and allow you to earn passive income. Bond issuers pay out bond holders in cash (known as coupon), and some public companies pay their shareholders also in cash (known as dividends).

The charts below illustrate what an investor’s portfolio value might look like if all cash inflows are accounted for, besides price appreciation. 

Illustration showing dividend paying stocks vs bonds.

For dividend-paying stocks, the green dots represent when dividend payments occur, which could increase the total value of investment in the stock. Dividend payments are not a guarantee, but companies that regularly pay dividends have a high likelihood of paying dividends in the future.

Big note: This is not a price chart, so don’t assume that dividend payments will immediately affect the price of a stock. 

On the other hand, bonds are fixed-income assets that guarantee the holder payment in coupon. If an investor holds on to the bond until maturation, they will receive all the coupons (interest payment) and the principal (the amount loaned) in cash at once. 

If the investor wants to sell the bond before maturation, it’s a slightly different story. It may look like bond holders can’t lose money because earnings are guaranteed, but the sell price of the bond is subject to market conditions.

When central banks raise the cost of borrowing, newer bonds in the market are much more prized because investors could earn more with a higher yield. This forces the bond holder with a lower yield bond to sell it at a discount, if they ever want to sell it. 


Some of the older generations think that one of the best ways to invest is in real estate. This has been a controversial topic in recent years, due to social issues like the incredible rise in property value, which makes it harder for younger generations to buy them.

On paper, it seems as though property owners are enjoying a steady rise in net worth just by owning a property that appreciates in price. In reality, realising the gains in capital appreciation is often a lengthy and complicated process.

Unless a property owner is desperate for some cash, most property owners face the inevitable problem of not being able to sell their properties at the price that they want. Unlike the crypto, stock and bond markets, property prices are not transparent, and the process of evaluating the price of a home involves a lot of negotiating.

illutration comparing liquid markets vs illuquid markets.

Not to mention, properties must be sold whole, which, unlike stocks, further adds complexity and cost of transactions (i.e. brokerage cuts, capital gains tax, etc).

Of course, real estate comes with perks too. If you can manage a property business, it can become a reliable source of income. Without volatility to worry about, properties can be held for generations, which in turn can help accumulate generational wealth.

So, which one is for you?

Well, the answer obviously depends on what you value the most. With higher volatility comes higher potential reward, if you are able to apply an investment strategy. If you value small but consistent earnings, there are many options to choose from. 

If you value earnings based on your own efforts, and you have the capital and the know-how, I think you might even opt to build your own business, like property rental. But if you value liquidity, it might be more fitting for you to look at liquid markets, like stocks and crypto.

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Disclaimer: Information is current as at the date of publication. This is general information only and is not intended to be advice. Crypto is volatile, carries risk and the value can go up and down. Past performance is not an indicator of future returns. Please do your own research.

Last updated June 19, 2024

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