One of the financial pieces that you should think about revolves around the kind of investor you are and want to be. Understanding the type of investor you are can help you understand what steps you should be taking to improve your financial picture. For instance, if you want to be a hands-off investor (not a technical term, just one of the types I identify), we should be getting you introduced to a financial advisor, a CPA, and a financial coach fairly quickly so you can have these people do what they do best to get your finances in order.

What types of investors are there? Well, I’m going to give you my explanations of types because this is my blog. If you want to learn about official types, I’m sure you can find one of the many studies that have their own terminology from a myriad of financial journals.

My “types” of investors are defined as:

1. The “Do-It-Yourselfer”, called the DIYer for most of this post.
2. The “Hands-Off” Investor
3. The “Dabbler”

Once again, completely random names that I use in my brain and are not official based on any studies or financial guides.

What are each of these investor types? Let us break them down.

The DIYer is someone who traditionally has a large interest in personal finance already. They want to spend some of their personal time learning how to improve their finances and about the different techniques and philosophies available. In essence, they sort of have managing their finances as a part-time job of theirs because they enjoy doing it (and doing so saves them money in comparison to paying advisors).

In general, the DIYer is someone who is very focused on keeping their personal costs, and costs within their investments, low. They also have a degree of confidence in their ability to manage their own money, largely because their interest in personal finance has them read and study enough about the subject that they are eager to do their own thing. DIYers usually value the opinion of experts and educators but want to try things on their own first (and maybe forever).

The Hands-Off investor is largely the opposite of the DIYer. This person can often be someone who has almost zero interest in personal finance. This person usually looks at personal finance as more of an annoying chore that takes time away from happier things, similar to a chore like cleaning the bathroom (for most people). They know they should learn more about personal finance and their money, but have their interests lie elsewhere (and often nowhere near the personal finance realm). This individual is more open to paying someone well to take this part of their lives off their hands. They would prefer to pay low fees for the service, but honestly, are just happy to not have to deal with it much.

And the “Dabbler” is someone who is in the middle. And Truthfully, this segment of “types of investors” is by far the largest. Most people fit the bill of a Dabbler over that of a completely Hands-Off investor or a DIYer. This is largely because most people do have at least a certain amount of interest in saving money on taxes or on investing (or something related to personal finance). Most people also want to do what they can to lower their costs within their investments and in other areas so they can keep more money over the long-term. So, usually what you will hear from a “Dabbler” is that they want to learn more when they can, and are not afraid to learn how to do something and take it over. But it is not their chosen past-time. Most of the time, Dabbler’s like to double check their steps or ideas with experts to get more comfort with what they are planning.

So, based on this breakdown, what range do you feel like you fit into? I can happily tell you I enjoy getting nerdy and finding new ways to make money and save money. I also have a decent amount of experience in managing money, and feel confident doing so myself (though I still like to learn new things from others whenever I can). Maybe you are with me, or maybe you are more of a Dabbler (you probably are not a Hands-Off investor if you are voluntarily reading this post, ha).

Now that you feel like you know where you fit, what should you do?

If you are a DIYer, there is a lot of help in the world for you already. You can read tons of books that are available for free at your local library, or you can pay very small sums for the ones that are not. You can listen to finance podcasts and watch finance Youtube videos. There is information all around you, and if you are nerdy enough to want to find it, you are set. But, no matter how much you can learn, there will still be scenarios where you should have a professional help you out. For most DIYers, your best partners will be your accountant (if you have a semi-sophisticated investment life or for times when you have larger investment sales/purchases) and a estate and business planning attorney to assist with wills, trusts, business side-hustles, etc. So, make sure you have these people in your arsenal, and you trust those you work with.

For the Hands-Off investor (even though you are probably not reading this), you should very quickly find more people to step in and get you on the right foot with your finances, since you won’t be putting the same time in to improve your finances as the other investors. I would recommend working closely with a financial coach to help you progress through improving credit, debt management, savings/emergency funds, etc. Then you should be finding the financial advisor you trust to help you continue investing and making sure you are on the road to someday being able to actually retire. On top of those, having a good accountant and estate planning attorney will still be important moving forward.

For you Dabbler’s, many of you are actually on your way to becoming DIYers, you just need that spark to happen in your life to create that switch. It could be a family member falling ill, realizing you want to get out of a job you, or other life events. And then again, many of you will just stay Dabblers, which is perfectly fine.

The issue with being a Dabbler is largely that the financial services industry is not particularly designed to help you. If you are a Hands-Off investor, you can build a relationship with a financial advisor and others that want to, and are in business to, work for you for the rest of your life (and charge you for it, of course). It is in the interest of a Hands-Off investor to pay someone to be their “money person” so they don’t have to think about it, and it is in the interest of the financial advisor to work with that investor (for financial benefit and to have a gratifying work experience). If you are a DIYer, you can easily join finance communities and groups and take advantages of the plethora of material available from other DIYers that like to share what they learn.

But as a Dabbler, the cost of a financial advisor is often more than you need or are willing to pay because you usually don’t need someone to do everything for you (and you may not trust advisors as much as you should, personality wise). On the flip side, the time needed to switch and go straight DIYer is pretty daunting to jump into. So you may not be ready to go that direction either. Therefore, you often find that you are off on a big island with other Dabblers, wondering how to proceed with your money.

My note to you, if you are a Dabbler, is to start with something low cost but effective to help you understand what next direction is best. This can be a simple financial or investing course that consolidates the steps you should take next or one-on-one coaching with a financial coach (which will be much less expensive than long-term financial advisor fees). Often, a grouping of hours of working with a coach can get you on the right path and then you can manage many pieces yourself after a few years (with occasional assistance here and there from the coach, an accountant, etc.). You do not have to pay fees continuously throughout the year(s) but you still gain confidence in the directions you are going. Make sense?

Figure out who you are as an investor and take the path that fits you best. Just make sure that path does not include you procrastinating for months or years (even if you don’t like finance, you Hands-Off people). You need to use the time you have now to jump 10 steps ahead of your future self. It will save you and/or make you tens of thousands or even hundreds of thousands during your lifetime.

Enjoy.

Also, want some extra money smarts from a billionaire like Warren Buffet? Well, just check out this post below. Or see crazy, and random, picture time of sharks, below.