investor at table reading

Three Types of Investors

Understand what separates successful investors from average investors

It’s easy to call yourself an investor. I’ve met people across the world that have claimed that they invest and are investors, but that doesn’t tell me much. Usually, I have to ask a few questions to find out what kind of investor they are.

This is because there are investors, and then there are people who dabble in investing. Have you ever wondered why some investors make more money with a lot less risk than others?

It’s because those people are a different kind of investor who bring a different type of mindset to the table.

To me there are three kinds of investors.

Type-C investor

Type-C investors are financially uneducated and look for people to tell them what to invest in. People in the E and S quadrants have been forced into the investing game because of changes in retirement plans. They have little interest in investing in their education so they can become better investors. They know little-to-nothing when it comes to finances, which means they have to rely on the advice of other so-called experts.

What are the chances of a Type-C investor becoming financially free? About as much as winning the lottery.

Type-B investor


Type-B investors seek answers. They often ask questions like:

  • What do you recommend I invest in?
  • Do you think I should buy real estate?
  • What stocks are good for me?
  • I talked to my broker, and he recommended I diversify. What do you think?
  • My parents gave me a few shares of stock. Should I sell them?

Type-B investors should interview several tax advisors, attorneys, stockbrokers, and real estate agents. They should find advisors who practice what they preach and run fast from anyone who is selling investment advice and getting rich on commissions and fees alone. Type-B investors should look for investment advisors who make money investing in the same investments they are selling.

I often find that many high-income employees and self-employed folks fall into the Type-B investor category because they are busy and have little time to look for investment opportunities.

Type-A investors

Type-A investors look for problems. In particular, they look for problems caused by those who get into financial trouble. Investors who are good at solving problems expect to make 25 percent to infinite returns on their money. They have a strong financial foundation and possess the skills necessary to succeed as business owners and investors. They use those skills to solve problems caused by people who lack such skills.

For example, when I first started investing with only $18,000, I focused on small condominiums and houses that were in foreclosure because of problems created by investors who did not manage their cash flow well and ran out of money.

After a few years, I was still looking for problems, but this time, the numbers were bigger. Several years ago, I was working on acquiring a $30 million mining company in Peru. While the problem and numbers were bigger, the process was the same.

What type of investor are you?

For instance, I am a Type-C investor when it comes to mutual funds. When I’m asked, “What mutual funds do you recommend?” I reply, “I have no idea. I don’t like them.”

As a Type-B investor, I seek professional answers to my financial problems. I seek answers from my advisors, including tax and wealth strategists, stockbrokers, bankers, and real estate brokers. When you find good ones, these professionals provide a wealth of information many people do not personally have the time to acquire.

And as a Type-A investor, I find and solve problems that others cannot or do not want to solve, and I make a lot of money in return. I also may give my money to other Type-A in areas where I am not an expert but whom I trust.

Of course, becoming anything other than a Type-C investor takes a solid financial education and a network of individuals who can help you succeed. I encourage you to invest in building your financial IQ today and to start finding new relationships and partnerships that can help you grow financially.

Original publish date: January 28, 2014