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Where
are you with basic stock market concepts? That term can be
very confusing, but here it will mean the methods in which
you will invest. If you are working with online brokers or
even in person brokers to invest, the first questions they
will ask you will be about your knowledge of investments.
Do not make the mistake of not being thorough and honest here.
The goal is to understand not only that you want to make money,
but how fast and how safe you want to make that money. In
order to do that, you must define where you stand in basic
stock market concepts for investment.
There
are four main types of stock market investment methods, also
referred to as risk tolerance: Aggressive Growth, Growth,
Income and Capital Preservation. Every person is unique in
what they need and desire. The combination of how soon you
need to access the money and how much risk you are willing
to take really defines where you stand in these basic stock
market concepts.
Aggressive
Growth
For those who are planning to use the category of Aggressive
Growth, get ready for a wild ride. Aggressive growth is just
what it sounds like: rapid growth with a high level of investment
risk. These are stocks that are often considered the more
lucrative, but also the most risky. They are volatile securities.
If you fit into this category, you are interested in trading
in volatile securities that will tend to be riskier, but you
are willing to take that risk in the hopes of a significant
payout. The targeted rate of annual investment return for
an aggressive investor is above the stock market average.
Growth
A step down from aggressive, this category is a good option
for those that want to gain significantly but want to preserve
the amount of your initial investment as much as possible.
Those that have a decent amount of time to leave their investment
in the market are going to see better growth here, but there
will be some difficulties throughout the course of that time.
The rate of return expected as a growth investor is typically
par with the stock market as a whole.
Income
If you want to see income from your stocks, rather, you wish
to use the profits from your stocks as income, and then this
basic stock market concept is right for you. Even more conservative
than the growth category, you will see some risk but much
less than aggressive growth.
Capital
Preservations
You do not have a lot of time to wait for the market to straighten
out in order to provide you with a return on your investment.
You need to keep the amount of money you are investing safe
to use when you need it. For example, if you are planning
to retire in the next five years, you can use this category,
which will give you some profit, at a much lower level, but
preserves your investment better in the short term. Choosing
from these basic stock market concepts can be difficult for
anyone just starting out. Therefore, use the help of your
broker to determine where you stand. You may be able to find
online tests to help give you a better idea of where you stand,
too.
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