Do You Know Your Investment Style?

By: Scott Johns

Being familiar and sticking to your own style of investing will help you make more methodical choices instead of taking unnecessary and uncalculated risks. It really boils down to three different styles of investing and those styles describe your risk tolerance. The three investment styles are conservative, moderate, and aggressive.

If your risk tolerance is low then you will probably be sticking around the conservative or moderate risk investments. If you dont mind taking higher risks then you would be an aggressive investor investing in stocks such as penny stocks. Remember, it is also your financial goals that dictate what style of investing you fall into. Conservative investments are usually long-term investments with a return that accumulates over years rather than over night like some penny stocks.

Retirement goals can be associated with conservative and moderate risk investments. However, if you have a goal to buy a house or a car using investment gains then youll most likely be involved in more aggressive investments.

Those who fall in the conservative investment category usually want to maintain the money they initially invested. This means theyre usually happy and comfortable investing so long as the investment never dips below the money they initially invested. Common stocks and bonds are usually preferred by this type of investor. Also, using savings accounts or CD bank accounts can fall into the conservative style.

If you feel you are a moderate risk investor then you will probably invest half of your available funds into conservative investments for safety sake and then the other half in higher risks, higher return potential investments. This hybrid style sort of keeps you anchored while "playing" with higher risks.

At the other end of the spectrum we have aggressive investors. These investors will take risks that other investors are simply not willing to 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. Investing mostly or solely in penny stocks can also be described as aggressive.

It is important to determine what style of investing you will use before taking uncalculated risks. Your style 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!

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