INVESTINGWORLDWIDE
INVESTING FOR EVERYONE
Many motivated investors simply want a good return on their investments. 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.
It is very important that you take your time in sit down with family and friends if necessary , because this decision can be very risky. This can be a "make you" or "break you" scenario in the investment world.
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.
When, I started out investing, I didn't know anything. I started reading everything I could get my hands on books, newspapers, and magazines etc... I had a learning curve out of this world. So getting off on the "good foot " is critical to your investing success.
For example, saving for retirement in your early years, you should use a conservative or moderate style of investing – but if you are trying to get together the funds to buy a town home in the next year or two, you would want to use an aggressive style.
Here are the three styles broken down:
Conservative investors - want to maintain their initial investment. In other words, if they invest $2000 they want to be sure that they will get their initial $2000 back. Conservative investors often invest in cash. This means that they put their money in interest bearing savings accounts, money market accounts, mutual funds, US Treasury bills, and Certificates of Deposit. These are very safe investments that grow over a long period of time. These are also low risk investments.
Moderate investors - usually invests much like a conservative investor, but will use a portion of their investment funds for higher risk investments. Many moderate investors invest 40% to 60% of their investment funds in safe or conservative investments, and invest the remainder in riskier investments. Moderate investors often invest in cash and bonds, and may dabble in the stock market. Moderate investing may be low or moderate risks. Moderate investors often also invest in real estate, providing that it is low risk real estate.
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.
Aggressive investors commonly do most of their investing in the stock market, which is higher risk. They also tend to invest in business ventures as well as higher risk real estate. For instance, if an aggressive investor puts his or her money into an older townhouse building, then invests more money renovating the property, they are running a risk. They expect to be able to rent the townhouse out for more money than the townhouse is currently worth – or to sell the entire property for a profit on their initial investments. In some cases, this works out just fine, and in other cases, it doesn’t. It’s a risk.
However, 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! If you have the money, I recommend you get a Financial Advisor or Planner.
It is very important that you take your time in sit down with family and friends if necessary , because this decision can be very risky. This can be a "make you" or "break you" scenario in the investment world.
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.
When, I started out investing, I didn't know anything. I started reading everything I could get my hands on books, newspapers, and magazines etc... I had a learning curve out of this world. So getting off on the "good foot " is critical to your investing success.
For example, saving for retirement in your early years, you should use a conservative or moderate style of investing – but if you are trying to get together the funds to buy a town home in the next year or two, you would want to use an aggressive style.
Here are the three styles broken down:
Conservative investors - want to maintain their initial investment. In other words, if they invest $2000 they want to be sure that they will get their initial $2000 back. Conservative investors often invest in cash. This means that they put their money in interest bearing savings accounts, money market accounts, mutual funds, US Treasury bills, and Certificates of Deposit. These are very safe investments that grow over a long period of time. These are also low risk investments.
Moderate investors - usually invests much like a conservative investor, but will use a portion of their investment funds for higher risk investments. Many moderate investors invest 40% to 60% of their investment funds in safe or conservative investments, and invest the remainder in riskier investments. Moderate investors often invest in cash and bonds, and may dabble in the stock market. Moderate investing may be low or moderate risks. Moderate investors often also invest in real estate, providing that it is low risk real estate.
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.
Aggressive investors commonly do most of their investing in the stock market, which is higher risk. They also tend to invest in business ventures as well as higher risk real estate. For instance, if an aggressive investor puts his or her money into an older townhouse building, then invests more money renovating the property, they are running a risk. They expect to be able to rent the townhouse out for more money than the townhouse is currently worth – or to sell the entire property for a profit on their initial investments. In some cases, this works out just fine, and in other cases, it doesn’t. It’s a risk.
However, 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! If you have the money, I recommend you get a Financial Advisor or Planner.
