• Please be sure to read the rules and adhere to them. Some banned members have complained that they are not spammers. But they spammed us. Some even tried to redirect our members to other forums. Duh. Be smart. Read the rules and adhere to them and we will all get along just fine. Cheers. :beer: Link to the rules: https://www.forumsforums.com/threads/forum-rules-info.2974/

Types of investing

BigAl

Gone But Not Forgotten
SUPER Site Supporter
Thought I would start a basic thread on the types of investing for the newbies that may want to know .Please add to it as you see fit or if I missed something .I am keeping it very basic as to not become to confusing .

To me , There are basically three types of investing into the stock market .Basically they are as follows:


1. Low Risk investor

2. Mid risk investor

3. Hi risk investor

They mean exactly as they say . A "low Risk" investor stays in areas that are low risk and have a very proven record of success.Usually not high returns on investment but a steady increase over time

A "High Risk" investor goes for areas in the market that provide high returns for investment but also a much higher rate of losing it all .


"Mid Risk" falls in the middle of these two .

You will find that younger investors may go "mid risk or high risk ,wheres older retired investor will stay in the "Low Risk sector.

Some investors mix it up and may have a combination of all 3 . They have there "Nest Egg" in Low risk but then a pre determined certain amount to try for the bigger rewards of Mid or High Risk.

Think of your Investment Portfolio as a triangle with many smaller triangles at each point . Never keep all your eggs in one area or point . That is very bad investing and dangerous .Think of the triangle as 3 points in which each one is a different area of investment . For Example You may decide to have :

Cash in one point

Stocks in another point

real estate investment in another

And so on .

Each main point then has smaller triangle points to work within that area .

The reason for this is simple . Lets say the finace sector of the market takes a big hit and starts going down , You do not want your total investment just in the Finace sector and lose . I could just as easily used the Energy , medical , or any sector of the market that goes down for an example .

You want to spread your risk to try offset the possibility of this happening ...and it will eventually if you invest .Thats where the triangle comes into play , it spreads the risk .


There is actually a circle pie graph to give you an idea of percentages of investment one should have in each area of investment types that most brokers work from . I'll try to find it and post to this thread.
 

waybomb

Well-known member
GOLD Site Supporter
Do you see shorting as high risk, med, low, or something else?

What about taking a long position - same question?

ForEx? US $ markets? Commodities? Playing the Goldman roll? DRIPs?

My thoughts are each one of those could be any of hi, med, lo.

For example, I've been keen on ForEx for over a year now. Haven't put a dime in it yet, watching certain currencies daily, trying to learn and find what drives exchange rates. So right now, for me, it is too risky. There are others that are consistently making a killing in it; it is not risky for them. They understand that game. Same game that I would join, but would be a huge risk for me.
 

BigAl

Gone But Not Forgotten
SUPER Site Supporter
Do you see shorting as high risk, med, low, or something else?

What about taking a long position - same question?

ForEx? US $ markets? Commodities? Playing the Goldman roll? DRIPs?

My thoughts are each one of those could be any of hi, med, lo.


Fred Thats quite a list and i'll give my opinion on what I know . My position is any time I am not in control of my investment personally , I am in a area of investing that I do not want to be .

You will never see me in Mutual Funds or Forex . I am at the mercy of someone else making the decisions on what to buy and i don't like that . Commodities is a area that you need to be on the very top of your game ,all the time . You can lose it all before you can blink .

Selling "short" or "long" has never appealed to me and again I do not want to stand over a computer watching stocks constantly and hoping I made a smart move .I just don't go there .I consider it extremely high risk .Betting with stock I don't own makes me too nervous .

DRIPS are fine with me and I do have some set up . Its nice to "auto reinvest" if you feel very comfortable with the company your holding shares of . Its a nice way to aquire additional shares in a company and bypass the broker comission too .
 

waybomb

Well-known member
GOLD Site Supporter
So in your case, high risk is something not a stock.

But for some, it could be a low risk.

Sometimes I'll here somebody talking about a high risk, and in my world, it is not a high risk at all.

Point being, it is darn hard to label something a high risk or low risk, and have it applicable to all.

Now, stupid is another category. For instance, investing in GM as they go bankrupt. Or buying Enron at a nickel. I guess that could be considered high risk; I call it plain stoopid.

I think you need to add stoopid as a category.
 

BigAl

Gone But Not Forgotten
SUPER Site Supporter
So in your case, high risk is something not a stock.

It can definitely be a stock . The higher the rewards the more risk involved .

But low,mid, or high risk can also be used to describe how one might invest . I am a certified Low Risk type of investor . No magic wand or crystal ball for me . I try or attempt to make a postive return with investments that have , in the past, averaged a slow but steady return on investment . If I get real lucky now and then and make a pretty decent return quickly ..... well that is just luck and not how I planned it .
 
Top