Did you know that when it comes to investing, you have a personality type? For instance, you may be very comfortable taking risks with your investments if doing so may lead to higher returns. Or you may be willing to accept more modest gains in order to keep your money better protected.
Understanding how you feel about taking investment risks is one key to knowing your investing style – the strategies you prefer using to reach your goals.
You’ll want to know your investing style to help you choose investments and allocations in your retirement plan. By considering your comfort level with risk, the amount of time you have until retirement and other important factors, you can decide which investment options make sense for you.
Use this chart to help identify what kind of investor you are: conservative, moderate, aggressive or somewhere in between. Ask yourself the following and think about where you land on the spectrum:
- Retirement timeline: How close are you to retirement: getting close or far away?
- Risk tolerance: How comfortable are you taking risks with your investments to seek higher returns: not at all comfortable or very comfortable?
- Income needs: How soon do you need your investments to create income: now or later?
- Growth needs: Are you more interested in keeping your investment value stable or having it grow?
