It is important to look at yourself honestly and figure out what your risk tolerance and what your investment styles are before you begin to build your portfolio. The good news is that there are only three different styles to choose from so this makes it easy to narrow down the type that you are. These are aggressive, moderate and conservative and are used to decide your risk tolerance when choosing stocks to purchase.
If you think about your life and how you handle certain situations then you can get an idea your investment style. If you are not a big risk taker and if you chose safe situations rather than putting yourself out there then your investment style is more than likely conservative and maybe moderate if you can take a risk or two without panicking. Those who love to take risks and who want to get big returns are in the aggressive category.
You can also use the different investment styles to decide how to invest your money. Those who are trying to build a nest egg for their future should invest in a conservative manner because it is important to have the security rather than the flash in the pan type of return. Those who need to make some quick cash need to be more aggressive so they can get that quick money back and that cannot be done acting conservatively.
~~ Conservatives – Expect to at least get their starting money back. If they put in a grand, then they want a grand back. The best types of investments are stock, saving accounts, money markets and bonds.
~~ Moderates – Moderate investors differ from conservatives because they take their returns and reinvest it rather than having a plan for the money. They prefer to split their funds into separate accounts with one being for the conservative investments and one for those that are a bit riskier.
~~ Aggressive – This is the hardest type to be because there are so many swings in the financial situations. These investors take huge risks for huge returns that do not always come about. The stock market is the most common place to find this investment type and they are usually on the ground level of the newer companies coming to the fore.
All investors should understand their inherent investment style but not be afraid to switch it up a bit. Look at the types of investing that there are and choose the one that is right for the time. You can stay in your comfort zone while still bringing in a bit of money.