What type of investor should I be?

Getting started with investing is much easier than it used to be. It also improves your returns if you are already investing. The field is no longer limited to the wealthy or large financial institutions. Nowadays, more and more people like moms, dads, students and even children are trying their hand at what used to be the exclusive playground of the rich. However, before diving into a very exciting and potentially financially rewarding world, you should consider what type of investor you actually want to be. In the thirty years I've been investing, I've seen people who haven't answered this question come and go, and I've seen it with alarming frequency recently. Think about that for a second. you have really thought about what you need to do to start creating wealth for you and your family. If not, you need to seriously consider what type of investment style would be best for your position. Investor Types Buyers and community holders put their money into stocks they believe are good value and hold them for 1 to 50 years. This investment style is best suited for people who are long-term oriented in nature, not looking for a quick profit and have an eye for good companies. The most famous supporter of this approach is the second richest man in the world, Warren Buffet, so you could say that it is not such a bad style. Day trading is the complete opposite of the buy-and-hold approach and involves individuals buying and selling stocks in a very short period of time, usually within the same day. If you have a lot of time and are prepared to follow market movements very closely, then this approach may be for you. Another thing you need to look at is what kind of analysis you want to do on the stock you are considering. Generally there are two schools of thought, one is fundamental and the other is technical. You will always find people pushing one or the other, but it makes more sense to incorporate both. Fundamentalists tend to look at company profits, management direction, future growth plans/prospects, the economy as a whole, and similar company and economic factors. While those with a mathematical or scientific background can look at stock price charts using various technical analysis techniques, ratios, indicators and trends to determine which stocks they want to look at next. You should realize that relying entirely on one or the other is not the wisest thing to do. For example, a chart that has every indication that a stock will be a good choice going forward is useless if the company is about to file for bankruptcy. As I mentioned before, a combination of both should be considered. When deciding what type of investor you want to be, one of the most important considerations is your risk threshold. In other words, how much are you willing to lose. This will again have an impact on the investment style you choose and will also relate to the level of returns you may be aiming for. Investors come in many guises and there is no right or wrong way. Different things work for different people. It is important that you decide which method works best for you and stick with that method.