To help you choose investments more wisely, you need to know your investment style and risk tolerance. There are 3 specific investment styles and they're tied with your risk tolerance. The three investment styles are conservative, moderate, and aggressive.
It's possible for your investment style to be conservative or moderate if you have a low tolerance for risk. If you have a high tolerance for risk, you will most likely be a moderate or aggressive investor. Also, you investing style will be determined by your financial goals.
If you are saving for retirement in your early twenties, you should use a conservative or moderate style of investing - but if you are trying to get together the funds to buy a home in the next year or two, you would want to use an aggressive style.
Maintaining their initial investment is what conservative investors want. In other words, if they invest $5000 they want to be sure that they will get their initial $5000 back. Usually, this type of investor would invest in common stocks, short term money market accounts, and bonds.
For conservative investors, an interest earning savings account is very common. A moderate investor usually invests much like a conservative investor, but will use a portion of their investment funds for higher risk investments. Around 50% of their investment funds are invested in safe or conservative investments while the remainder are invested in riskier investments.
An aggressive investor is willing to take risks that other investors won't take. They invest higher amounts of money in riskier ventures in the hopes of achieving larger returns - either over time or in a short amount of time. Aggressive investors often have all or most of their investment funds tied up in the stock market.
Your investing style will be determined by your risk tolerance and financial goals. No matter what type of investing you do, however, you should carefully research that investment. Never invest without having all of the facts!
It's possible for your investment style to be conservative or moderate if you have a low tolerance for risk. If you have a high tolerance for risk, you will most likely be a moderate or aggressive investor. Also, you investing style will be determined by your financial goals.
If you are saving for retirement in your early twenties, you should use a conservative or moderate style of investing - but if you are trying to get together the funds to buy a home in the next year or two, you would want to use an aggressive style.
Maintaining their initial investment is what conservative investors want. In other words, if they invest $5000 they want to be sure that they will get their initial $5000 back. Usually, this type of investor would invest in common stocks, short term money market accounts, and bonds.
For conservative investors, an interest earning savings account is very common. A moderate investor usually invests much like a conservative investor, but will use a portion of their investment funds for higher risk investments. Around 50% of their investment funds are invested in safe or conservative investments while the remainder are invested in riskier investments.
An aggressive investor is willing to take risks that other investors won't take. They invest higher amounts of money in riskier ventures in the hopes of achieving larger returns - either over time or in a short amount of time. Aggressive investors often have all or most of their investment funds tied up in the stock market.
Your investing style will be determined by your risk tolerance and financial goals. No matter what type of investing you do, however, you should carefully research that investment. Never invest without having all of the facts!
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