There are only three main investing categories, but each has many subcategories. The three main categories are stocks, bonds, and cash, but many people get overwhelmed when looking for investments because it can get complicated. Figuring your investment style helps you narrow your options and decide where to invest your money. There is a lot to learn about any investment, but understanding how much you can risk and the dangers involved will define style.
Just as there are three main categories of investments, there are also three categories of investment styles conservative, moderate, and aggressive. There are also two risk tolerance levels: high risk and low risk. If you’re new to investing in the stock market, you don’t have to worry about learning everything. Find out your investment style and learn more about the investments available to you.
You don’t need to know the market inside out; brokers and practice accounts are for. But you must know enough to have a basic understanding of how it works and not feel cheated.
What is your investment style?
The conservative investor is typically a low-risk investor. This type of investor invests in stocks that grow slowly over time. Attractive investment opportunities for this investment style usually include a traditional savings account at a local bank, US savings bonds, mutual funds, or certificates of deposit. This type of investment is safe but has a meager interest rate, and it takes time to earn some profit, but they are very safe investments with low risk.
The moderate high yield and investment grade has some money in low-risk assets but is willing to take a small risk in hopes of a quick profit. This type of investor has money set aside for experimentation or is willing to risk some cash out of a hunch. Real estate is also an area for this type of investor to explore. The aggressive investor is not afraid to take risks but is confident and generally booming. Each of these investment styles can be an individual investor or a group of people deciding how to grow a single funding source.