4 Types Of Investors: Which One Do You Belong?

Knowing which type of investor you are can help you to choose and identify your preferences easily. We break down investors into four types: active, passive, growth, and value investor.

Active investors:

Active investors often inconsistently check their shares and investment performance. Generally, They are hyperactive, interested in financial news, and monitor the financial market trends closely every day. Furthermore, this type of investors act based on the trend changes; buy and sell stocks relying on their monitoring analysis of trends. They like working with full-time portfolio managers and pay very close attention to their investments.

Passive investors:

The essence of passive investing is holding the security for the long term. Typically, they use buy and hold strategy for long term investment horizons. Passive investors do not trade much. Instead, they buy and hold on to a diversified portfolio of assets. This type of investor keep their portfolios simple and limit their buying and selling, making it a particularly cost-effective way to invest.

Growth investors

Growth investors focus on increasing their capital. Typically, they invest in innovative small companies with expected growth to increase above-average rates compared to the overall market. Many investors are attracted to growth investing because buying stock in emerging companies can gain substantial profit as long as the companies are successful. This type of investor more offensive rather than defensive. Simply put, growth investing is a more active approach to increase the portfolio and earn a higher return on the investment capital. On the other hand, defensive investing prefers investments that create passive income while also protecting the wealth that is already built up, such as bonds or dividend-paying blue-chip stocks.

Value Investors

Value investor use the strategy of picking stocks which trade less than their intrinsic value. They actively seeking for stocks that they believe the market under values. The market often overreacts to good or bad news; therefore, the stock price movement do not reflect the company’s long-term fundamentals. This situation creates an opportunity for the value investor to make a profit by buyig stocks at discounted price. They believe when the stock’s real intrinsic value is recognized, the share price will bring substantial results. They also know value stocks have lower price volatility during highs and lows of the market.

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