What Kind of an Investor Are You?: A Guide to Finding the Investment Solution That Is Right For You

Sarah Robertson is editor of the Canadian Book Review Annual.

In this book, Richard Deaves, professor of finance at the DeGrotte
School of Business, McMaster University, explores principles of
behavioural science—the psychology of investing— to help readers
determine the investment solution that is right for them. “It is not a
book,” he states, “about how to get rich quickly or easily in
financial markets. … It is my belief that patient saving and
investing, taking on an appropriate level of risk, and keeping a sharp
eyes on costs, will eventually win out.” In other words, What Kind of
Investor Are You? is not recommended for day traders and like-minded
investors who are deficient in the patience gene.

At the outset, readers are directed to complete an online questionnaire
designed to test their investment knowledge and to assess “such things
as [their] risk tolerance, investment personality, and investment
temperament.” In the book itself, Deaves discusses investment
fundamentals, mutual funds and their limitations, investor psychology,
common mistakes made by self-investors, the pros and cons of indexation,
asset allocation and its implementation, and retirement issues. He
concludes that “it is extremely difficult for anyone—money managers
as well as investors—to outperform the market on a risk-adjusted
basis.” The low-cost, no-frills model portfolio (a grand total of four
exchange-traded funds) that Deaves presents at the end of the book is
certain to antagonize fee-hungry investment advisers.

Despite the fact that it’s dense with financial terms and concepts,
What Kind of Investor Are You? lacks a glossary. The superscript note
numbers are set as unwieldy Roman numerals instead of the conventional
Arabic numerals. The book’s interior design is nothing to write home
about, and the author’s predilection for complicated formulas does not
always make for reader-friendly prose.

Caveats aside, What Kind of Investor Are You? is the real deal. In
striking contrast to the ubiquitous get-rich-quick book, it offers more
steak than sizzle.