Many first time investors do not know there are different styles of investments. It’s important to know your risk tolerance and investment style. A first time investor should know which category that they will fall in when it comes to investment style. This information will be helpful when making wise choices for investments. There are different kinds of investments but only three investment styles. Also, there is a connection between investment styles and risk tolerance. The investment styles are aggressive, moderate and conservative.
If you don’t like to take risk then your investment style will probably be conservative or moderate. On the other hand, if you like to take risks then you will probably be a moderate or aggressive investor. A moderate investor is really the middle between conservative and aggressive. Furthermore, your financial goals will have some affect on choosing an investment style.
There are many reasons behind which style of investment a person may choose. For example, a man in his twenties that’s saving for his retirement would probably have a conservative investment style. On the other hand, someone that’s planning to buy a house in the next year would have more of an aggressive style.
If a conservative investor puts 200.00 into a stock then the conservative investor will expect to get back the 200.00 plus extra money. Conservative investors tend to invest in short term money market accounts, bonds, and common stocks. It is very common for a conservative investor to have an interest earning savings account.
A moderate investor is very similar to a conservative investor but take more risks. Also, moderate investors will invest half of their money into safe investments and the other half into riskier investments.
Aggressive investors will take high risks that the conservative or moderate investor will avoid. In addition, aggressive investors will invest large sums of money for short and long term. The goal of the aggressive investor is to receive a large return from the investment. Aggressive investors tend to have a lot of money invested into the stock market and some high risk real estate investments.
It will be very helpful to your investment future to determine your investment style. Investment style will help with financial goals and determine the risks you are willing to take. It really doesn’t matter which style of investing that you choose but you should always do research on the investment. It’s really important to do some research before making any investments.