There are a lot of investment types today and there is quite a bit to learn about each different investment type. If you are a beginner in the investment market, the stock market can be a big scary place especially if you know little or nothing about investing. Fortunately, the amount of information that you need to learn has a direct relation to the type of investor that you are. Talking about investors, they are basically classified into three types: the conservative investor, the moderate investor and the aggressive investor. Furthermore, all these investment types fall under two levels of risk tolerance slabs: high risk and low risk. Read on to know about these investor categories and what makes them different from each other.
The conservative investor
Let’s begin with the conservative investor. The conservative investor often invests in cash. His/her money is usually invested in mutual funds, money market accounts or savings accounts. One of the major reasons for investments in these type of investment options is that these are some of the safest investment options and have a comparatively lower risk factor.
The moderate investor
The moderate investor, on the other hand, invests in cash and bonds. These investors also take interest in the stock market. Moderate investors often make their investments in real estate, if it is low-risk real estate. The idea is to keep the risk factor low while looking forward to generating more profit from investments.
The aggressive investor
The aggressive investor commonly does most of the investing in the stock market, which involves higher risk. They also tend to invest in business ventures as well as higher risk real estate. They look for stocks with higher risks and higher returns. They put a large part of their portfolios in stocks of less well-established companies. This means they take higher risks with their investments. These investors sometimes get higher returns for taking such big risks. However, they have to be very active in monitoring the stocks they put their money in.
Before making any kind of investment, it is very important to clearly understand the different types of investments. Learn what these investments can do for you. Figure out which investments can fulfil your financial goals and then take the risk of investing. Once you have a clear understanding of the different investment types, you need to align these with your financial goals. Another thing that needs to be taken care of is that you stay invested for a long time. Long-term investments can bring higher returns. However, you can also go for short-term investments. It really depends on your financial objectives. If you are looking for low-risk investments, investing in mutual funds is a good option.
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