{"id":1269,"date":"2023-10-24T10:15:22","date_gmt":"2023-10-24T02:15:22","guid":{"rendered":"http:\/\/blog.imoney.my\/?p=1269"},"modified":"2023-10-23T21:58:05","modified_gmt":"2023-10-23T13:58:05","slug":"the-one-question-a-new-investor-should-ask","status":"publish","type":"post","link":"https:\/\/www.imoney.my\/articles\/the-one-question-a-new-investor-should-ask","title":{"rendered":"The One Question A New Investor Should Ask"},"content":{"rendered":"
No human being is created equal, and the same concept can be applied to investing.<\/p>\n
As a new investor, one of the first things you should seek to understand is yourself. The question \u201cwhat type of investor am I?\u201d<\/em><\/a> should always rank above \u201cwhat should I invest in?\u201d<\/em> The better you understand yourself and your individual circumstances, the easier it is to devise an investment strategy that is suitable for you.<\/p>\n There are many ways to categorise an investor, but here are two widely acceptable methods:<\/p>\n As a rule of thumb, younger investors (e.g. below age of 30) have a better ability to recover from short-term losses as they can continue to accumulate wealth through their day jobs in the years ahead.<\/p>\n As such, they can generally tolerate the ups and downs of risky investments.<\/p>\n In contrast, near-retiring investors (e.g. age 50 and above) should hold more conservative investments, as they can no longer rely on employment income to offset any investment losses.<\/p>\n The way in which an investor has accumulated wealth can provide clues about the investor\u2019s ability and willingness for risk.<\/p>\n Wealth that has been created through entrepreneurial activities (e.g. though the sale of a successful business) may be the result of considerable risk taking. Therefore, such an investor may demonstrate a greater willingness for risk.<\/p>\n In contrast, an individual that has accumulated wealth through conservative spendings and careful savings over a long period of time will most probably demonstrate a lower degree of tolerance for risk.<\/p>\n Perception<\/em> of wealth is important too. Regardless of whether one is rich or poor, how you perceive yourself will likely determine your willingness for risk. An investor that believes that his\/her wealth is small (by whatever measure) will likely also have a stronger desire to protect it.<\/p>\n Having a good understanding of the type of investor you are is extremely important as it can help determine what you ought to invest in.<\/p>\n Unlike cereal brands in the supermarket, picking the wrong investment can be costly and can significantly affect your well being (financially as well as emotionally), and you can avoid this easily by having a better understanding in your individual circumstances. So, what type of investor are you? Answer this question before you dive right into beginning your investment journey<\/p>\n You have heard this before – all investments come with risks.<\/p>\n There are no risk-free investments. But knowing what type of risk you are taking is just as important. Here are some of the most common investment risk you should know.<\/p>\n<\/span>Stage of life \u2013 how old \/ young are you?<\/span><\/h2>\n
<\/span>Source and measure of wealth<\/span><\/h2>\n
<\/span>Why is this important?<\/span><\/h2>\n
<\/span>Types of investment risks<\/span><\/h2>\n