Investing is not a one-size-fits-all process. Every investor has his or her own investing personality that will help them accomplish goals and reach financial safety. If you are willing to take some time and ask yourself important questions, you can more quickly determine your own investing style. Below are just a few of the things you need to know to determine your own investing philosophy.
The first step towards understanding your investment philosophy is figuring out why you are investing in the first place. Are you attempting to make money right now, possibly in order to speed up your retirement or generate wealth? If so, you are looking at a more aggressive style of investing. Are you more concerned about the future and a safety net? You might be a more passive or risk-averse investor.
Your next step is looking at risk. Are you looking for the biggest rewards or the most robust safety net? These are usually two mutually exclusive things, and understanding your own willingness to lose money is a key part of understanding your investment philosophy. If you are willing to gamble more, you can pursue investments that are out of the norm or even hold a hint of danger. If you need safety, though, you are probably better off with a portfolio that emphasizes slow, steady gains over decades.
Your final goal is understanding your commitment to keeping up with your portfolio. This is usually a matter of time and inclination more than anything else. If you want to learn more about the market and be hands-on with your investments, you are looking at a more aggressive style of investment that will emphasize more frequent trades and possibly more risk. If you want to put your money away and forget about it until retirement, you are likely a passive investor who would be better off putting money in a safe portfolio and walking away.
Discovering your investment style is really a matter of learning about your own goals, risk tolerance, and your feelings about the market in general. If you can be honest about what you want and how you would ideally want to pursue it, you will be able to figure out the best way to invest your money. Furthermore, understanding such facts about yourself will make it easier for you to find and connect with a financial expert who shares similar values.