Knowing what your risk tolerance and investment style are will help you choose investments more wisely. While there are many different types of investments choices one can make, there are three basic investment styles that will guide your choices: conservative, moderate, and aggressive. Naturally, if 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. (More about finding your risk tolerance in an upcoming post). Conservative investors want to hold on to their initial investment. If they invest $5000, they want to be sure to get at least that $5000 back. This type of investor usually invests in common stocks and bonds and short term money market accounts. High interest savings accounts are also common for conservative investors. A moderate investor usually invests much like a conservative investor, but will place some of their savings into higher risk investments. Many moderate investors invest 50% of their money in conservative investments to ensure at least some money is safe, and then invest the rest in riskier investments to try to earn higher returns. An aggressive investor is willing to take risks that other investors won’t take. They place higher amounts of money in riskier investment in the hopes of earning higher returns. Aggressive investors often have all or most of their investment funds tied up in the stock market, and may also be invested in various alternative investments. Again, determining what style of investing you will use will depend upon your financial goals and your risk tolerance. No matter what your style of investing, you should always carefully research each investment choice. Never invest without having all available facts. Related posts:Investments at a Glance: New summer educational series Visit Before You Invest over the following 12 weeks for…Investment Funds In this our latest post in the Investments at a…Types of Investment Scams New types of investment scams appear every day. However, most…CEDIFs – a local investment option for your RRSP Special guest post by Kevin Redden, Director of Corporate Finance…Are you vulnerable to investment fraud? There is no “typical” victim of fraud. Professional scam artists…Tagged as: advisers, investing, investing style, risk Share & Bookmark This Story! Bookmark on Delicious StumbleUpon Google Bookmarks Tip’d
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