Define Yourself As an Investor, Before You Invest
If you have decided investing in the stock market or other investment vehicles is something you are going to explore, there is one thing you must do before you begin.
No it's not picking a stock, a mutual fund or an annuity with the best rate of return.
There is a component to investing that is common in all markets, and that is volatility.
You are going to have to deal with that volatility whether you want to or not.
You must define yourself as an investor before you invest.
There is risk and reward when investing in financial markets.
How much risk are you willing to take versus how much reward will it take to satisfy your goals? The person who is in their early 20's may often be willing to risk more than the middle-aged homemaker.
The young person has 40 years of productive income earning potential.
That makes perfect sense.
Perhaps a better way to help you determine your threshold for volatility and thus the type of investor you are is to look back at the markets in a rear view mirror.
Recently the stock market suffered record losses and seemingly very quickly.
If you had $20,000.
00 invested in your favorite tech stock and it lost 25% of its value in one day, would you be able to sleep that night? This investor would be considered an aggressive investor, willing to run the risk based on the potential reward.
There are many people willing to assume this risk, other are not.
Those that are not should choose different types of investments.
A more conservative investor might be invested in balanced mutual funds, fixed income securities like bonds and money markets.
The reward wont be as great, but it make sleepless nights far less frequent.
You investment adviser can help you determine what kind of investor you are.
Your own temperament for risk will give you a very good idea to serve as a foundation for making investment decisions.
However, remember all investing markets are volatile and all markets fluctuate, often to the negative.
You must identify yourself as an investor first and foremost before you invest
No it's not picking a stock, a mutual fund or an annuity with the best rate of return.
There is a component to investing that is common in all markets, and that is volatility.
You are going to have to deal with that volatility whether you want to or not.
You must define yourself as an investor before you invest.
There is risk and reward when investing in financial markets.
How much risk are you willing to take versus how much reward will it take to satisfy your goals? The person who is in their early 20's may often be willing to risk more than the middle-aged homemaker.
The young person has 40 years of productive income earning potential.
That makes perfect sense.
Perhaps a better way to help you determine your threshold for volatility and thus the type of investor you are is to look back at the markets in a rear view mirror.
Recently the stock market suffered record losses and seemingly very quickly.
If you had $20,000.
00 invested in your favorite tech stock and it lost 25% of its value in one day, would you be able to sleep that night? This investor would be considered an aggressive investor, willing to run the risk based on the potential reward.
There are many people willing to assume this risk, other are not.
Those that are not should choose different types of investments.
A more conservative investor might be invested in balanced mutual funds, fixed income securities like bonds and money markets.
The reward wont be as great, but it make sleepless nights far less frequent.
You investment adviser can help you determine what kind of investor you are.
Your own temperament for risk will give you a very good idea to serve as a foundation for making investment decisions.
However, remember all investing markets are volatile and all markets fluctuate, often to the negative.
You must identify yourself as an investor first and foremost before you invest