Defining Yourself As An Investor

One of the benefits of a shaky economy and a near collapse of the financial markets is it forces everyone to reevaluate who they are as investors. When the markets are going well and everyone is making money many people lose focus of whom they are.

Indeed, many people change who they are. When it comes to money and investing money, generally people can be assigned to three groups. They are, investors, speculators, or just outright gamblers.

If you suffered any losses during the last two years because of economic conditions, job loss, or any other catastrophic financial crisis is safe to assume you have started to adjust and reset your thinking. As with anything, balance in your investing strategy, and your investing philosophy is the key to long-term success.

Let’s look at a few issues that you may have discovered that need to be changed in your own investment style. Most people would rather be known as an investor above all else.

As an investor you would not trade your assets frequently. On the other hand a speculator does. The gambler cannot get motivated unless he is trading frequently, as much as every day. Where do you fit in?

An investor not only invests his or her money, but saves his money. An investor contributes to his investments with continual savings from current income. There is a continuous effort to build assets through savings as well as appreciation.

The investor recognizes the different types of assets and knows that each asset carries with it an inherent risk. This includes cash, which can quickly be affected by inflation. Risk is often less and is neutralized by diversifying assets. While speculators and gamblers may recognize risk, they are not affected.

In individual investor plans for the way he or she they will manage their assets. They will have am investing plan and it will be in concert with recommendations of an investment or financial advisor. Speculators and gamblers go it alone.

If you ever talk to anyone says they can predict market tops and market bottoms, run the other direction. No one can do this. What you can do as an investor is to invest regular amounts every month in rising markets and falling markets.

Investors have an ability to think about their assets long-term. Speculators and gamblers want to be in and out of markets as quickly as possible. While they may hit an occasional home run, the frequency in which their investment strike out will have an adverse effect on their access, in time.

Buying stocks for the short-term is a risky proposition for any person. However, the longer you hold stocks fell more risk is reduced in stocks have outperformed all other traded assets over periods of time 15 years and longer. Investors understand this.

Investors actively make changes at the minimum quarterly to their portfolios. Re-balancing a portfolio is a necessary component to a successfully managed portfolio. You must have a percentage of each asset as a base line and re-balance regularly to avoid being caught with too many assets in one investing vehicle.

How many investors do you know that trade on margin and borrow against their stocks? Trading on margin has advantages for speculators and gamblers. For investors trading on margin it could force sales of performing assets at the wrong time.

Investors have a plan and work your plan. A properly orchestrated plan actually does not need daily maintenance or oversight. Speculators and gamblers often follow the market minute by minute.

Everyone who has ever contributed one dollar to an investment, stock, or any investment vehicle should be able to relate to what was outlined above. Everyone fits in somewhere and everyone must define who he or she is. At the end of the day everyone needs to sleep at night, and identifying and working within the parameters of who you are as an investor will accomplish that for you.