Identifying the Investor in You -What Kind Are You?

15 Jan

There are billions of people in the world and not even a single one of them is same as the other. Even the identical twins have dissimilar finger prints and have different mindset, even a different preference in pizza toppings. This is why when it comes to the world of investing you’ll find different types of investors. Broadly speaking there are three types of investors.

  • Pre-Investor
  • Passive Investment Strategy
  • Active Investor

So, let’s delve deeper into each type of investor and find out what type of investor should you aspire to be.

Pre-Investors

The name may deceive you but pre-investors aren’t investors in the first place. They live from pay check to pay check and never make that leap to various investment avenues. These are the people who are financially illiterate and contently like to live all their life stuck in a rat race. They do not have any plans what-so-ever in becoming financially independent. If you are such a person then your financial situation will deplete overtime so you must work towards becoming an active investor or at least a passive investor.

Passive Investor

A passive investor is better than pre-investor. This type of an investor do not know about how he himself can make investments in the market but realizes that investing is the first step in becoming financially independent. So, they invest their money in a tax free mutual fund or other investment avenue where a finance professional is responsible for the management of money. They are known as passive investors as they themselves are not actively investing in the market rather they are dependent upon financial institution and financial advisors who generates income for them.

Active Investor

This is the type of investor that you should aspire to be. If you have enough time to learn about investing and if you are not afraid of putting your money on a roller coaster ride then you should definitely progress your way up to become an active investor because it will make you financially independent within few years.

An active investor knows how to manage his money and is not only financially literate, but he also knows a lot about different financial markets and how to invest in them. They can spot opportunities and trends in the market. You don’t really need to be an economics major to be an active investor, what you need is a will and the courage to take risk and speculate with your own money.

With the above description about each type of investor, we believe that you can easily identify which type of investor are you. If you are a per-investor, which unfortunately most of the Brits are, then it’s time that you start getting some basic financial lessons in order to manage your money prudently.

Being an active investor does not mean that you will spend your days lying on your couch watching super bowl. In fact as an active investor you will be responsible for your investment and you’ll find yourself doing more work than a passive investor.