What Kind Of Investor Are You?
Before you start to invest your money you have to answer a very important question. You may think that question is, where do I want to invest my money? Although that is a very important question, and we will get to that later, there is a more important question. I know it’s hard to believe but it’s true. Remember we mentioned that investing involves risk and there are no guarantees with investing? Because of this, you need to know what kind of Investor you are. You need to consider your goals and how much risk you are willing to take.
Why are your goals important? Your investment goals will help you to determine what kind of investments to choose. Investing for your child’s college savings fund is different than investing for your retirement. Not only will the amount for each goal be different, but the need for you to access the money will also be different. The former may be 5, 10, or 15 years away while the latter may be 20, 25, or 30 years away. Therefore, the types of investments also need to be different. You will need to choose more conservative investments for goals with a need to have access to your money sooner. While you can choose riskier investments for goals in which you do not need to have access to your money for a long period of time. Matching goals with investments is very important.
Next, your risk tolerance is also very important. What does that mean? It is the amount of risk an investor is comfortable taking and the degree of uncertainty an investor is able to handle, such as swings in the market. Risk tolerance can vary with age, income, and financial goals. It can be determined by various methods, including questionnaires designed to reveal the level at which an investor can invest and still be able to sleep at night. Once you determine your goal(s) and risk tolerance, then you can begin to develop an investment strategy. Now, you should have the information you need to begin investing. All the best.
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All investment strategies and investments involve risk of loss. Nothing contained in this website should be construed an investment advice. Any reference to an investment’s past or potential performance is not, and should not be construed as a recommendation or as a guarantee of any specific outcome or profit.