What type of investor are you?

There are 2 key ways to invest money in the stock market based on how often you do it and what you want to get out of it.

November 4, 2021

What are stocks, ETFs, and mutual funds?

As you learn more about investing, it’s helpful to take a moment to pause and ask yourself “What type of investor am I?” and understand the key differences between trading and investing.

2 approaches

There are different ways to invest based on how often you do it and what you want to get out of it.

Trading is like a sprint

Active traders often buy and sell investments multiple times per day, week, or month. They’re willing to accept a higher risk of losing money, as the stock market could change drastically with little notice.

People who make frequent trades typically do a lot of research before investing in any stock, ETF, or mutual fund, and they tend to pay very close attention to daily changes in their investments and the market overall.

Investing is like a marathon

On the other hand, investors are in it for the long haul. They invest their money with a plan to ride out the ups and downs (often over years), before selling their investments.

Investors may be less concerned with daily or even quarterly trends in the stock market because they don’t plan to make fast decisions to sell.

So where do you fall?

Based on the time and attention you want to spend looking after your investments and how much risk you’re willing to take with your money, you may already have your answer. And maybe it’s not one or the other, but somewhere in between.

Either way, it’s important to set out on your investing journey with a plan for yourself.