Do you know what kind of investor you are? Depending on how you prefer to invest and what kind of investments you currently have, you can identify your investment style. Knowing how you're comfortable investing will help you integrate personal finance more fully into your life.
New investors often don't know exactly where to put their money. Research is focused on possible investment options, and they might turn to a financial planner or other professional for help. Everyone has to start somewhere, and many beginner investors are either conservative or moderate in their initial investment style.
A conservative investor is risk-averse. If you prefer safe investments less likely to lose money and can handle the lower return rates that come with them, then you're probably a conservative investor. Conservative investors are usually long-term investors. Long-term investments offer more security because downward and upward trends happen over months, not days. You have time to consider your options and decide what to do.
The mark of a moderate investor is a financial profile with a mix of risky and safe investments. If you're a moderate investor, you may have a portion of your portfolio in high-yield stocks, but you might also heavily invest in bonds, mutual funds, or gold. The idea of security appeals to a moderate investor, but higher returns are also important.
High returns are the name of the game for aggressive investors. Long-term investments that take patience don't usually make the cut with this kind of investor. If you're an aggressive investor, then you're seeking growth above all else, and the risk is worth the potential gains. High-risk investors are also more likely to invest in new businesses and ideas.
Passive investors have a lot of overlap with both conservative and long-term investors, though some people remain passive investors their whole lives despite growing knowledge of finance and investment. Passive investors are interested in investments that don't take a lot of attention or monitoring. A long-term investment that will yield gains 20 years from now might appeal to a passive investor. One consequence: If you hold on to investments for too long, you could end up losing the money you gained.
An active investor isn't just someone always looking for new investments; this is someone active in all aspect of their personal finances. Active investors learn about businesses and industries before investing and aren't afraid to move money around for better opportunities. You can learn to be comfortable with fast, high-yield investments by becoming familiar with forex trading. Becoming an active investor takes an initial push to learn about personal finance and to get more comfortable with risk.
No one style of investing is better than any other, though some have higher yields. Reading these investment types should give you an idea of what kind of investor you are. Manage your finances in a way that makes you feel comfortable and in control by identifying your comfort level and type.