For this reason the term has particular relevance when considering the wide range of personality traits that feed into personal investment decisions, as well as how an individual deals with issues of financial security and risk . Hence, there is a link between personality and investment behavior. An underlying assumption of the Psychonomic Investor Profiler is that individuals will treat different aspects of their life in the same way. For example, if people are cautious by nature, avoiding danger to themselves, they will also be cautious when it comes to investing their money. What changes their investment behavior, under variable risk conditions, is not only how they personally view that risk but also how they view money itself - that is, its gain or loss.
Money is a very powerful agent of behavioral change.
In this way an investor's level of cautiousness also changes. The approach differs from other systems, therefore, in that it doesn't assume that people have totally different attributes depending on the circumstances they're faced with. Two investors with the same profile characteristics may make very different financial choices. What's different about them is their propensity for risk, not their innate characteristics. In the Psychonomic Investor Profiler, individuals are assessed according to whether they have a high, medium or low propensity for risk, within their particular balance of personal traits.