What Type of Investor Are You and How Will it Affect Your Trading Strategy?

Starting out in the world of investing can be a rather daunting task, but when you have some direction and a strategy geared towards the financial goals that you intend to achieve, the road ahead starts to become less intimidating.

When you start out as an investor in the stock market, it is important to decide on the level of risk that you are prepared to expose yourself to. There are quite a few factors that need to be taken into consideration before putting all your money into your first stocks.

Age is a very important factor when trading and if you are 55 years of age or older you should be avoiding unnecessary risk, because if you make any financial mistakes it is unlikely that there be enough time to regain your money from those losses. The amount of time that you have at your disposal will also determine how active you are on the market.

There are three basic types of investors:

1. The conservative investor will usually be close to retirement and have a larger amount of capital and time, but may lack the expertise of trading in their personal capacity and will prefer to approach a financial institution, where they can be assisted by a fund manager that will be able to identify the needs of the investor and help meet those needs through a range of funds spread over the market.

In these circumstances the trading in the funds will be done through a financial advisor instead of a stock broker. The investor is usually able to switch between funds in positive or negative markets at the advice of the financial advisor, which will ensure that any opportunities are taken advantage of and that the investor’s capital is safe during any downturn in the economy.

The conservative approach will give the investor security at a lower level of return on their capital. Preserving capital and staying above the current level of inflation will be the main objective.

2. The moderate investor has a long term approach to stock trading and will spend a considerable amount of time searching for stocks in different sectors that have value and future growth potential.

This investor will aim to buy these stocks at the lowest possible price and then hold onto them for as long as they have growth or growth potential.

The main objective will be wealth creation, capital preservation and a moderate return that is above the rate of inflation and is able to withstand any changes in the economic climate.

3. The aggressive investor is generally young, very competent with an extensive knowledge in stocks and the stock trading. They spend a great deal of time on their investments and expect the highest return possible.

Speculation forms a large part of this short-term investment strategy, with the stock selection aimed mainly at stocks that offer smaller more frequent gains. Trading only in a few select stocks, the trader will take advantage of support and resistance lines in an aid to buy and sell as close as possible to the line, yielding the highest return.

Aggressive trading is usually pursued as a career or as an income supplement, with profits being reinvested in more secure stocks.

Establishing the trading category that best identifies your risk preferences to the stock market will enable you to take the correct steps to plan your investment strategies, as well as the knowledge and time that you will need to reach your objectives.

Internet Schemes Debunked: They Are Laughing at You and What You Can Do About That

One important change over the last 25-30 years is that most people work harder but have less to show for. I live in Toronto where costs for most things for day to day living increased 5-10 times since 1982 while the minimal wage has only increased less than three fold. Worse, a job that paid maybe $25,000 in 1982 does not return $75,000 today, but maybe $55,000 or so. So there is a further dip in your buying power. Back then you could still buy a 5 year old car for a few hundred dollars and insurance would run you another couple hundred dollars or so. And gas? At 24 cents a liter gas was simply not a problem. Rents? Around $300-400 per month for a three bedroom apartment with parking. Today, much of that buying power is gone and a lot of younger people simply cannot afford to drive a car while older people have to work harder and harder just to keep their heads above water.

No wonder that some are turning to the internet hoping to supplement their income by participating in many of the advertised money-making opportunities. Somehow replying to an ad posted on an electronic bulletin board seems to have more of a sense of legitimacy than answering a five line ad in Popular Science and the same people who would ignore that latter can get quite excited about the former. And then with one click here you are. Welcome to the land of confusion! A lot of times it is difficult to know just what exactly is being sold. There is a lot of emphasis on traffic but often little on what that traffic is for. I guess the thinking is that it really does not matter what the traffic is for. As long as a few dozens out of a few millions do something different than the rest you are could be on your road to riches. Hopefully that different event is clicking on a website and buying something. In that case the person who provides the traffic and funnels it to that product’s web page can earn a commission on each sold item. But sometimes just clicking without buying can return a commission too although these deals are harder and harder to find. Traffic, products and pay per sale or pay per click commission are the fundamentals of internet marketing.

But just immerse yourself one afternoon into the mad, mad world of internet marketing and you will be easily convinced that you really are clueless and the only way to become educated is to buy, buy, buy! Actually, what is being offered is not education but wealth. And lots of it. Talk about hitting pay dirt. Did you know that you can retire rich from selling dirt? And I am not talking about buying and selling real estate but about making batteries from dirt. This is an actual product that is advertised for sale. It pays (no pun intended) to remember that buying an internet marketing scheme that has no good product to support it is like buying hot air without a balloon.

Does the word “webinar” sound like something that sat in your fridge too long like a half-eaten Subway sandwich that you put away last summer and came face to face after Thanksgiving? And if you don’t know anything about internet marketing, and you will become fast convinced that you don’t, otherwise why are still scraping by on your regular job, you’ll have to attend several dreaded webinars until your stomach is really going to start turning. Clickbank, squeeze pages, affiliate programs, it’s easy to get a panic attack. How do you know what works and what doesn’t? In a short while you’ll be made to believe that they all work and the only thing that is not working is you.