Different Types of Stock Market Investors
How risk-tolerant are you? Are you willing to give it your all or do you prefer to take things one step at a time?
Everyone can purchase stocks. The only difference is that every person has unique and individual reason why they buy a certain stock. Each person also has his or her own trading personality. The trading personality that you have will depend on the amount of risk that you find tolerable, your willingness to research, how you perceive the future of the economy will be, and whether you are in a hurry or not.
However, even with all these differences, the styles of trading all boil down to some distinct types. Which of the following approaches sound just like you?
An active investor is someone who stays up to date with the performance of their stocks. These are the investors who do lots of research and always keep pace with the financial news every day. Active investors don’t necessarily purchase today then sell tomorrow. However, they make sure that they pay close attention to the changes in the trends and sell or buy depending on these trends. These people are avid investors who take extra care with every investment decision they make and don’t necessarily hold on to long term investments.
A passive investor is someone who doesn’t try to aim for the highest possible gains all the time. Instead, passive investors accept reasonable gains in order to enjoy more free time and lower stress levels. These people are those who may choose to invest in mutual funds so the money managers of the funds will be the ones to make decisions on whether to buy or sell. A passive investor may purchase individual stocks in established companies then hold on to that investment for one or more years. Passive investors have the tendency to eliminate stress from decisions on investment through setting the parameters to add more sticks to their portfolios. For instance, if there is a 20% increase in their stocks, they might decide to sell off some to gain profits.
People who invest for retirement have the tendency to shift their tactics once they are nearing their age of retirement. They might opt for a more aggressive approach during their younger years. It involves investing in stocks with more risks and more growth potential. These investors may then choose stocks with moderate risks during midlife and settle for dividend sticks that can generate income when they reached their retirement age.
There are investors who are looking for opportunities to earn quick money. They browse the market searching for stocks that might go up due to an upcoming deal. They tune in to the news for important announcements regarding mergers that can have a positive effect on the company and they pounce on those companies’ stocks. Speculators often sell after they make some money out of the stock. Their reason is that they can always do the same buy and sell process again frequently to outperform the stock market.
So, which type of stock market investor are you?