Maybe you’ve dipped a toe into investing.
Perhaps you’ve socked away money in an interest-bearing savings or money market account or CD. Or maybe you’re a confident DIY trader who knows your way around the stock market.
No matter your experience, all investors fall into a category (or categories) that can help determine your investing style. And it's important to understand your investing style or personality as it can help as you think about setting — and meeting — financial goals for your future.
Many questions exist about when to invest or what to invest in. But knowing how you want to invest and understanding your risk tolerance with regard to investing, may be two very important factors impacting your level of comfort when it comes to trying to grow your money for your future.
As with many money habits — are you more of a spender or saver? — your approach to investing was most likely shaped when you were young. It can have ties to experiences from your childhood or teenage years in viewing how your family dealt with money.
“The psychology of money is where all these things start,” says Tori Dunlop, the founder of Her First 100k, a money and career platform for millennial women. “The majority of money habits are cemented by age seven. So much of your relationship around money is about how the people around you growing up, like your parents, managed money.”
Dunlop was lucky in that her parents talked about money and investing while she was growing up. One important lesson her dad taught her? “He said we’re aggressive early because you have time,” she adds. “If you lose some money, you have 30 to 40 years to gain it back.”
While some may jump into investing with both feet, not everyone has that same type of mindset. And negative experiences with money may lead to fears around investing. To gain a better understanding of where you land, here are five investment styles to help you figure things out and build out your own portfolio.