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.
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.