3 Investment Styles – Which Style Do You Belong To?

3 Investment Styles – Which Style Do You Belong To? image 0 All

You need to know your style of investment and risk tolerance in order to choose investments more wisely. There are 3 specific investment styles and they’re tied with your risk tolerance. Conservative, moderate, and aggressive are the 3 styles of investment.

It’s possible for your investment style to be conservative or moderate if you have a low tolerance for risk. But if your tolerance for risk is high, then you’re probably a moderate or aggressive investor. Determining the style of investing you use are your financial goals.

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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. If the amount they invested was $5000, then getting back their initial $5000 is what they want. With this type of investor, they would usually invest in short term money market accounts, bonds, and common stocks.

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An interest earning savings account is very common for conservative investors. Investing like conservative investors are moderate investor, except for the fact that they use a portion of their investment funds for investments with higher risk. Many moderate investors invest 50% of their investment funds in safe or conservative investments, and invest the remainder in riskier investments.

An aggressive investor is willing to take risks that other investors won’t take. Hoping to get larger returns either over time or in a short period of time, they would invest higher amounts of money in riskier ventures. Aggressive investors often have all or most of their investment funds tied up in the stock market.

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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. Don’t invest unless you have all the facts.

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