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What Type of Investor Are You?

What Type of Investor Are You

Estimated Reading Time: 4 minutes

Are you looking to get started in investing? If so, you need to know who you are as an investor. What type of investor are you and how can that improve your investing strategy? There are three different types of investors: conservative, balanced, and aggressive. One type of investor is not better than the other, this is solely on the type of person you are, how soon you are looking to withdraw the money, and if you can handle the “heat” that investing brings.

What Type of Investor Are You Article

When I started investing, no one explained to me that knowing what type of investor you are will help maximize your returns and keep you sleeping peacefully at night. I always did what the HR manager recommended for my 401K. Yes, you read that right…I said HR manager. You know the Human Resources lady who probably has no idea about her own financial goals but is trying to tell you how to reach yours…(insert side eye here).

Anyways, that was in 2006 and I have definitely learned my lesson since then. I have learned more about myself as an investor and this knowledge has helped my investment decisions. At this point in my life, I am an aggressive investor with some balanced investor traits, I will talk more about that later, but I would have never figured it out without doing the research. Let’s figure out what type of investor you are.

Conservative Investor

A conservative investor means you want little to no risk with the chance of losing money. If you find yourself checking the stock market every day and worrying about gains and losses, you might be a conservative investor. If you are conservative, the stock market is NOT for you. There are other avenues to invest your money. Conservative investors should invest in bonds, annuities, and real estate investment trusts. Those investments have little risk associated with them and you will still gain some money.

Key Characteristics of a Conservative Investor:

  • Needs investment money within 3 to 5 years
  • Troubled with the thought of losing money
  • Rather invest with companies with a long history proven of success than to risk money with new companies

Aggressive Investor

An aggressive investor is ok with high risk investments. If the stock market takes a dip, an aggressive investor will ride out the economic hardship with hopes of recouping their money back and earning even more gains. Aggressive investors often do not need to cash in on their investments for 15 or more years. This gives time to bounce back from economic hard times. Aggressive investors are usually knowledgeable on when to buy and sell investments during economic turns.  If you are an aggressive investor, look into stock and mutual funds for high returns.

Key Characteristics of an Aggressive Investor:

  • Doesn’t need the investment money for 15 years or more
  • The stock market rollercoaster does not scare them
  • Prefers to make investment decisions by reviewing new technologies and great ideas rather than companies with longevity

Balanced Investor

A balanced investor is a combination of being aggressive and conservative.  If you are a balanced investor, the rollercoaster of the stock market sometimes alarms you so you would rather be cautious and spread your money in low risk and high risk investments. Balanced investors are not day traders in the stock market but would like a “set it and forget it” option to their investments. If you are a balanced investor, you should invest in anything that meets your comfort level: stocks, bonds, mutual funds, real estate and more.

Key Characteristics of a Balanced Investor:

  • Needs the investment money in 5 to 15 years
  • Prefers money to be balanced in low risk and high risk investments
  • Often investing for retirement

I hope this helps you decide what kind of investor you are. During my years of investing, I have discovered that I am a combination of an aggressive investor and a balanced investor. Since I have many years until retirement, the ups and downs of the stock market do not bother me as I thought it would. I have learned all of this by figuring out what kind of investor I was and now I am on the right path to retirement and reaching my financial goals.

If all of this still sounds overwhelming, I recommend finding a Financial Advisor you can trust and seeking them for specific information for your investing goals.

What type of investor are you?

 

 

9 Comments

  1. The Lady says:

    I’m Aggressive & Greedy at this point. I’m in it for the long haul and am anxious to dump debt ASAP so I can pour as much as possible into investing. This is a good base-setting thought exercise for anyone curious about investing. I thought I’d was “moderate risk tolerance” but learned that I’m much more comfortable (and excited) with the ups and downs than I thought!

  2. I guess I’d consider myself somewhere between balanced and aggressive. I’m more of a set it and forget it (though I check my accounts at least twice a month) person. However, I understand the ebb and flow of the market, and would not only keep my money in my investments during a crash, but I’d throw as much as possible into investments during that time.

  3. We are aggressive and automate everything. That’s the key! Set it and forget it!

  4. I’m also between balanced and aggressive 🙂

  5. Reid says:

    I am more of a balanced investor. I like diversification.

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