I am the type of person who willingly takes the risk when it comes to a lot of things including investments. In my investments through insurance companies, I have chosen to put all of our invested money in aggressive funds knowing that the risks are high but the returns are also high. Some of the people I know chose to put their funds under the conservative bonds because of fear of losing it big when the market falls. I would like to know your feedback when it comes to choosing where you put your investments. What type of investor are you, are you more on the aggressive side or the conservative side?
The usually acceptable generic answer to your question is age-dependent. In my opinion, the answer hasn't changed over decades. Those starting a working career can afford to be aggressive. Those closer to retirementhe should probably be more conservative. It's a transition over time.
I'm more conservative. I lost some money not too long ago and it forced me to be a lot more cautious and invest more conservatively. However when I do have a lot more money to invest then I'd be willing to take some measured risks once again.
I'm definitely more conservative. Not super conservative though, I do still have like 98% of my portfolio in stocks but most of those are big and stable companies with quite predictable earnings and they certainly aren't going anywhere anytime soon. So stocks but low risk ones for me.
Pretty aggressive, but I do many things to mitigate risk. I diversify, and I limit the amount of money I have in any one investment. And the more risky an investment is in general, the less of it I buy. And I am also likely to use options as insurance and to hopefully profit on the downside if a more volatile investment goes against me, or if the market overall goes against me. I will generally have far more money in companies that earn lots of money than in companies that are more speculative, tend to be highly volatile, have little or no earnings, and that are often very small cap companies. And these more speculative companies may be traded and turned over far more frequently. I'm not a long-only investor, and am usually always at least a little hedged overall. I also like to have a few bucks in alternative investments such as commodities ETFs and real estate companies. One thing to keep in mind is that "aggressive" shouldn't equal "stupid". A fund manager who has done horribly over many years or decades who promotes himself as "aggressive" should be avoided. If he's picked the wrong small cap growth stocks repeatedly, been in too much cash or short instruments when the market was booming upward, was too long on too many risky investments during bad times, etc - he's probably not the best person to invest with. Nobody is always right all the time, but if someone has consistently performed poorly over 5, 10, or 15 years, they probably aren't that great.
I, generally, tend to keep more on the conservative side as an investing strategy, but not overly so. My portfolio is very well diversified, so I don't feeling I'm missing out. I also do my homework on any investment. Finally, though I know some poo-poo it, I do keep a good amount in cash as an "emergency fund". Perhaps too much, but if things go bad fast, I'd like to have a ready reserve on tap.
Risk profiles are generally meant to be about the combination of an ability and willingness to take on risk. So there will be plenty of people with the ability to do so in terms of having funds, but whether they are that way naturally inclined is another matter. There will also be those with no money that are happy to take a more speculative approach to their finances. I always see myself as "balanced". Every time I do a bank risk profile survey I come out that way as well (admittedly I'm probably gaming the process a bit though as I have a sense of what they're looking for anyway). I've always liked the balance of investing long term with a gradual growth approach, while getting my spice and excitement with a few more speculative plays.
I'm also more conservative and will rather look for slow, long term gains than the quick, shirt profit investment some people prefer. While there nothing wrong with looking for the risky investment, people need to realise they will often lose as much as they gain, so over a period of time they'll be either breaking even, or showing a minor profit or loss anyway so the risks would have a lot of time been for nothing.
I would say I'm in the middle. I put my long term investments in more aggressive funds because their potential to increase is high, however, some of my money is placed in more conservative instruments like bonds. There is a saying in investing that you don't put all your eggs in one basket. Spreading your money across various investment instruments minimizes your losses in the long run.
