What’s your investment style?

Knowing what your risk tolerance and investment style are will help you

choose investments more wisely. While there are many different types

of investments that one can make, there are really only three specific

investment styles – and those three styles tie in with your risk tolerance. The

three investment styles are conservative, moderate, and aggressive.

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.

At the same time, your financial goals will also determine what style of

investing you use.

investment styles

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.

Conservative investors want to maintain their initial investment. In other

words, if they invest $5000 they want to be sure that they will get their

initial $5000 back. This type of investor usually invests in common stocks

and bonds and short term money market accounts.

An interest earning savings account is very common for conservative

investors.

A moderate investor usually invests much like a conservative investor, but

will use a portion of their investment funds for higher risk investments.

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. 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.

Again, determining what style of investing you will use will be determined

by your financial goals and your risk tolerance. No matter what type of

investing you do, however, you should carefully research that investment.

Never invest without having all of the facts!