Stock Market Investment: Types of Investors
Stock exchange market is hailed as one of the most open markets for anyone and everyone. Any individual is entitled to buy and sell stocks at any moment of time. However, each individual, depending on the trading personality, has different reasons for stock market investment. Some of the most common factors among all is the risk factor, knowledge of stock market and current economy, and the willingness to invest etc. to name a few. Here we will look at the types of investors based on the aforementioned factors:
Active Investors: These investors are fully skilled, qualified and knowledgeable about the stock market. They carry out a lot of market research before making a certain investment. Their favorite prime time is Business and financial news. In addition, these type of investors don't indulge in immediate trading such as buying one day and selling the next day to earn quick profits. However, keeping the stocks for a relatively longer duration doesn't take away the fact that they pay complete attention to the ongoing market trends. Active Investors pay attention to every minute detail before making an investment and generally earn good profits.
Passive Investors: As the name suggests, these are the investors that don't target huge profits and return while making an investment but instead are content with reasonable value of the sum invested. They prefer lower stress and free time rather than involved in research and analysis of stock market all the time. In fact, they tend to invest in mutual funds so that the money managers of the funds can take care of the sell and purchase. Such investors set a certain parameter for profits and returns, and as and when, the stock reaches this parameter, they sell it instantly with a decent chunk of profit.
Speculators: These investors are those whose only motive is to make quick money. They lookout for stocks which are going to be soaring high in the next few days and invest accordingly. Sometimes, in order to make real quick money, they spread rumors like the merger of a company so that it could get them good profits and returns. They usually don't keep a stock for long as they prefer to earn quick money by repeating this process of buying and selling again and again over a period of time. They believe in outperforming and upsetting the market by making quick little money over and over again.
Retirement Investors: People investing for retirement tend to change their tactics as they approach retirement age. They may choose an aggressive approach when they are younger. This involves buying riskier stocks that have the potential for growth. Such an investor may switch to more moderate-risk stocks during midlife and then switch to dividend stocks that produce income during retirement.