Investing Styles Of Investors

Each investor has a unique style of investing. Investing style refers to the approach, the mindset under which the investors frame their expectations and choose to achieve those objectives. Investing style is determined by the amount and type of resources, time constraints, risk tolerance level and alternative means. The three different investing styles – conservative, moderate, and aggressive. 

Conservative Investor: Conservative investors aim to maintain initial investment. 
When they invest Rs.5,000 conservative investors make sure that they require the initial investment back. Therefore, they invest in less risky investments like bonds and short term money market accounts. Conservative investors are uncomfortable with market volatility; they protect their investment value from inflation effects and have basic knowledge of investment. They prefer shorter time horizon. 

Moderate Investor: Moderate investors increase the value of their portfolio,protecting their assets from losses. They behave like conservative investors but put a portion of their funds in risky investments. They put 50% of their funds in risky investments and the remaining in conservative investments. They have a good understanding of investment markets. They keep a diverse portfolio. They accept moderate risk and prefer moderate to long-term time horizon. 


Aggressive Investor: Aggressive investors concentrate on the investments that have 
significant growth and realize greater returns. They invest more than 75% of their 
investment in stocks and mutual funds. Aggressive investors have a good understanding of financial markets. They are willing to take high risk with their investments. They invest for long-term.

The challenge for investment management, therefore, lies in choosing the appropriate investments that will meet the investment objectives of the investor subject to his constraints. To take on this challenge, the investor needs to acquaint himself with different types of investments that are available in the financial market.


Investment Constrains

An investor seeking fulfillment of one of the above goals operates under certain 
constraints also there.Constrains in Investment are

• Liquidity 
• Age 
• Need for Regular Income 
• Time Horizon 
• Risk Tolerance 
• Tax Liability.