UPDATED: March 2022
Understand Which Type of Investor You Are – So, you’re thinking about getting started with investing but don’t know how to go about it. What kind of investor are you? Most people tend to find investing complicated, especially when the market conditions aren’t favorable. However, it doesn’t have to be a scary ordeal for you because if you do your due diligence and research, you’ll put yourself in a good position to reap the benefits of your investments and secure a healthy financial future for yourself.
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Understand Which Type of Investor You Are
Before you start investing in the market, you will first need to learn how to invest. You also need to learn the basic types of investors based on risk. You can go about things by hiring a hedge fund manager, or you can kick things off by investing passively in index funds with the help of a robo advisor. The key thing to understand is that there are three main types of investing styles. These are:
1. DIY Investing
Do-It-Yourself or DIY investing is a full-on hands-on approach, where you will need to do all the research before investing in anything. You’ll have to regularly keep track of all your stocks, which is a time-consuming activity, but you’ll have complete control over your investment portfolio.
If you’re thinking about investing on your own, the best thing to do is to find a stockbroker and open your brokerage account. Once you’ve opened your account, you start buying and selling stock by yourself. A good option would be to invest in an index fund since that tracks the stock index similar to the S&P 500.
2. Passive Investing
People who don’t have any interest or the time to do all the work by themselves can choose the “set-it-and-forget-it” approach for investing. There are plenty of options available if you’re hiring someone else to do the investing for you. The best option is using a robo advisor to invest in exchange-traded funds (ETFs) or mutual funds.
Robo advisors are a good option for people who don’t want to be too involved in the process of investing in stocks. These platforms will do all the heavy lifting for you, and all you need to do to set them up is to answer a couple of questions about how much risk you want to take and what your investing goals are.
3. Getting a Stock Advisor
The third investing style is a combination of passive and DIY investing. When you hire a stock advisor or sign up for a service that picks stocks for you can be a good way to select stocks by yourself and get insight from an expert. You’ll have to learn how to open your broker account, but you can leave the time-consuming research to others.
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