Do you know what your risk style is? Is your risk style for investing geared towards blue chips like GE, Microsoft or Dell? Or is your risk style ramped up and looking for profit as you scour the penny stocks waiting for the next big thing? As an investor, your risk style absolutely needs to be defined and no one can do it better than you.
You should ask yourself a few questions and depending on those answers can you be sure which risk style is yours.
1.
Am I educated regarding the stock market? Answering this question is very important, as the more educated you become; the more tempted you are to stretch the limits of investing.
2.
What is my financial situation? Can I spare a few hundred to invest or can I spare a few thousand to invest? This is also big in developing your risk style- you don't want to invest money you absolutely need.
Extra or disposable income is what is advised for the riskier trader.
Trading for income so that you can make ends meet is stupid and reckless and should be avoided at all costs.
3.
What is my age? This is critical for investors to choose their risk style.
What I mean is, if you're close to retirement and are seeking to build wealth, any financial planner will tell you to stick with the low risks of bonds, blue chips or the money market.
Historically, these investments have provided their investors with long term steady profits.
Personally, my risk style is high.
I choose IPOs, penny stocks and tech stocks because of the potential that surrounds them.
Investing in these types of stocks also has their drawbacks, as at the drop of a hat they could come crumbling down to earth and you could be out a lot of money.
However, over the past 12 months I have done exceptionally well investing in IPOs and penny tech stocks and to date I have been able to bank cumulative gains reaching 3000%, and because of that, my risky style has paid off big time.