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Investor Types - What Type Of Investor Are You
There are many different types of investors in the
stock market. Some people are bearish, believing that
the market is going to fall, while others are bullish,
believing that the market is about to rise. Within both
categorizations, investors can be classified into
the following types: Aggressive, Moderately Aggressive,
Moderately Conservative, and Conservative. Which type
are you?
Aggressive investors tend to concentrate on equity
investments such as individual stocks and mutual funds.
They are open to more risk, willing to see large short
term swings in market performance on an annualized basis.
They aim for large growth in the market, often above
what the long term market performance has shown. They
are also seeking quick growth in their portfolio, and
some are even called "Day Traders." The recommendation
for this investor is to have a minimum timeframe of
15 years before they will need their principal investment,
to allow for variations in the market to average out.
The average rates of return that an aggressive investor
expects to see is between 12-14%, a few percentage points
above the long term stock market average.
Moderately Aggressive investors also seek longer
term investment gains through a mix of equity investments.
While many of the investments are the same, the overall
portfolio contains some more conservative investments,
creating a portfolio that builds wealth with less annual
swings in the portfolio's performance. An investor
with a time frame of between 6-10+ years is most appropriate
for this type of portfolio and the average level of
return that an investor can expect to receive is between
10-11% annually. This annual investment return represents
the stock market's long term average growth over the
past several decades.
Moderately Conservative investors are much less
willing to accept variations in their portfolio's balance.
Individuals that are going to need their money within
3-6 years are most suitable for this investment strategy,
or those looking for a regular income stream.
A moderately conservative portfolio is often more weighted
to individual bonds or bond mutual funds, and can expect
to earn between 6-8% in annual growth. Moderately
Conservative investors also typically receive income
from dividends on a quarterly or annual basis from their
investments.
Conservative investors are typically those with
either a short term goal (less than 3 years), or those
who are in retirement seeking a regular income stream.
These portfolios tilt away from equity investments into
more preservation investments, like real estate investment
trusts (R.E.I.T.'s), individual bonds, bond funds, municipal
bonds and annuities. These assets are not intended
to provide great growth within the portfolio, but are
designed to provide income and preserve the principal
balance over the investor's estimated lifespan.
These descriptions are meant to serve as a guide
as there are many different definitions of these categories
throughout the international stock markets. In order
to determine what type of investor you are, take a risk
tolerance quiz online and consider your gut feelings
about the level of risk that you are willing to accept.
Whether you are aggressive, moderately aggressive, moderately
conservative or conservative, you are sure to build
long term wealth when investing into the stock market.
Author: Mika Hamilton
For a free DVD by a Self Made Millionaire, visit: http://www.investing-in-australia.com.au
Keywords :Investor Types
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