What Kind Of Investor Are You?

Having a good knowledge of what your risk tolerance and investment style are will assist you in choosing your investments with more care. Although there are several different kinds of investments that one can carry out, there are really only three specific investment styles – and those three styles connect with your risk tolerance. The three known investment styles are conservative, moderate, and aggressive.

Obviously, if you find that you have a low tolerance for risk, your investment style will most likely be conservative, or, at best, moderate. If you have a high tolerance for risk, you will most surely be a moderate or aggressive investor. Simultaneously, your financial goals will also determine what style of investing you make use of.

If you start saving for retirement in your early twenties, you should make sure you use a conservative or moderate style of investing – however, if you are trying to get together the funds to buy a home in the next coming years, you would want to use a more aggressive style.

Conservative investors usually want to maintain their original investment. In other words, if they invest $5000 they will want to make sure that they will get their initial $5000 returned. This kind of investor usually invests in common stocks and bonds and short term money market accounts.

An interest earning savings account is also quite common for more conservative investors.

A moderate investor will usually invest a lot like a conservative investor, but will make use of a portion of their investment funds for higher risk investments. Several moderate investors will invest 50% of their investment funds in safe or conservative investments, and will invest the remainder in investments which are more risky.

An aggressive investor will be willing to take risks that other investors might not take. They will invest higher amounts of money in riskier ventures in the hopes of achieving larger returns – either over time or in a shorter amount of time. Aggressive investors will often have all or most of their investment funds tied up in the stock market.

Once again, determining what kind of investing you will use will be determined by your financial goals as well as your risk tolerance. No matter what type of investing you carry out, however, you should always carefully research that investment. Don’t ever invest without having all of the facts in mind first!

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