What is Your Investing Style?

Everyone who invests has an investing style. Understanding your risk tolerance as well as your style of investing will make it possible for you to choose investments that are right for you. To choose wisely it helps to know your investment style. You can make any number of investments but investment styles are broken down into three categories. There is the conservative style, the moderate style and the aggressive style. Each one is associated with a specific risk tolerance.

Everyone who invests has an investing style. Understanding your risk tolerance as well as your style of investing will make it possible for you to choose investments that are right for you. To choose wisely it helps to know your investment style. You can make any number of investments but investment styles are broken down into three categories. There is the conservative style, the moderate style and the aggressive style. Each one is associated with a specific risk tolerance.

A conservative investing style is one where the investor looks at safe options for the long-term. A moderate style is one where the investor looks for a balance between security and good returns. An aggressive style is one that is focused on change and growth.

If you are the kind of individual that has a low tolerance for risk then your style of investing will either be conservative or moderate (or it will fall somewhere in between the two). If your tolerance risk is high then you are a moderate investor or an aggressive investor (or you fall somewhere in the middle). Often your financial goals will also help to determine the style of investing that is best for you.

Each investment style requires different strategies as well as different solutions when it comes to achieving your goals. Your goals may involve having a fixed income, having liquidity and financial growth. The style (or approach) you choose can play a very important role in the success of your investment.

Different goals necessitate a different approach to investing. If you want to start saving for your retirement while in your 20s or early 30s then a conservative or moderate investing style can work well for you because you have lots of time. On the other hand if you would like to purchase a house in the next one to three years then an aggressive investing style would work more to your advantage.

When deciding upon your investor profile you must consider a variety of factors. Your age is one. The strategies you will use and the goals you have are different at various stages of your life. The level of knowledge you have about investing also makes a difference. Are you new to investing or have you been doing it for years? Do you understand the workings of the market or has your education just begun? Do you know what a mutual fund is? How about a stock or a bond? Your answers to these questions all figure into the investing approach that is most suitable for you.

How much income security you have is another determining factor. In other words, the more secure the income is that you earn, the less likely it is that you will need to withdraw money from it earlier than anticipated.

Other factors that play a role in your investing style include your investment goals and your tolerance for risk.  You also need to have an idea of when you think you may need to begin cashing in your investments, your expected rate of return and the risk involved in getting it.