How to Choose An Investment Style? This is the focus of this article on investing strategies.
Wise people who have chosen the path of investing to secure their financial future especially when they retire from active service have also chosen to know their risk tolerance and investment style.
You need to have a proper understanding of this if you want to wisely choose your investment.
There are three major investment styles. There is the conservative style or strategy. There is moderate style and the aggressive style. You need to choose the one that’s suits your investing goals and objectives. You must also consider your risk tolerance as you choose a style.
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Taking Risk When Picking an Investment
Come to think of it, we all have different risk tolerance. Mine is different from yours and yours different from mine. So your ability to tolerate risks should help you to pick an investing style.There are three major investment styles. There is the conservative style or strategy. There is moderate style and the aggressive style. Read moreClick To Tweet
Naturally, if you find that you have a low tolerance for risk, your investment style will most likely be conservative or moderate at best. If you have a high tolerance for risk, you will most likely be a moderate or aggressive investor.
Just as I’ve said, your financial goals and objectives should play a great role to determine what style of investing you use.
Conservative Style of Investing
People who’re in their early twenties can go for a conservative or moderate style of investing since they have a lot of time on their hands to reach their financial goals and objectives.
However, if for example, you’re trying to get together the funds to buy a home in the next year or two, you might want to consider an aggressive style or strategy of investing.
Conservative or conventional investors usually want to always have their initial investment. They don’t always want to lose their money pumped into an investment. If they invest $2000 they want to be sure that they will get their initial $2000 back.
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The platform of common stocks, bonds, short term money market accounts and interest earning savings account are always the path conventional or conservative investors take.
This story is slightly different with moderate investors. It’s common to see moderate investors use a portion of their investment funds for higher risk investments. It’s common to see many moderate investors invest 50% of their investment funds in safe or conservative investments, and invest the remainder in riskier investments.
Aggressive Style of Investing
The power players are aggressive investors or those I love to call forceful investors. They’re always willing to take risks. The risk tolerance rate is usually higher than that of the other types of investors. They are always getting into riskier investments.
They always want higher returns in a short term. Aggressive investors often have all or most of their investment funds tied up in the stock market.
Let me inform you that there is no investing strategy that’s bad or good. You should pick the one that suits your financial goals and objectives and also consider your ability to tolerate risks.
Whichever you decide to choose and operate, you should understand one important style and disposition of great and successful investors: they always carry out adequate researches on where they put their money.
There are so many outlets today where you can get adequate information on the research you want to carry out. A future post will show you this.
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