What type of investor are you?
Investing styles differ. There are investors, for whom, their portfolio is the first and last screen of the day. While some, forget their investing app passwords, only visiting it once every few months. Here's how we identify the type of investor you are.
Generally, there is a view that there are two types of investors.
1. Active investors are hands-on - always on top of their portfolio, checking the changes everyday, hooked onto news cycles and making decisions on a regular basis.
2. Passive investing has lesser involvement and hence also lesser buying and selling. Passive investors usually prefer funds, ETFs etc.
But, active and passive are not binary. It is a matter of degree.
Investors are found along the entire line - filling in the infinite gaps between being fully active and being very passive. What determines the position on this line? Well, it could be anything - interest, curiosity, drive, time, resources… or it could just be your job to track the markets 10 hours a day!
Now that we’ve established that you could be an active or passive investor - next question is - what’s better?
Again, no simple answer :)
If you have the time, resources, curiosity (or just the desire!) - be active. Remember though, you probably shouldn't buy and sell all day based on tips or Reddit advice. Put in the work, learn and stay the course. If you cannot commit, don’t fancy yourself as an active investor.
If you are passive, don’t worry. Being passive does not mean you aren't an investor. It simply changes the way you invest, the type of investments you make and your level of involvement. In fact, some of the best investors in the world are passive, long-term investors. Passive investors tend to favour ETFs and funds - leave the daily work to the markets or the fund managers. You may not see wild swings on a day-to-day basis (like in stocks) but fingers crossed, unless humanity blows up the planet of our current economic system, markets should do well in the long run.
On the other hand, if you are picking individual stocks, you should research the heck out of them and check on them regularly. Being a shareholder in a company makes you a part owner - so check what your company and its management are doing with your money. Don’t roll your eyes at quarterly reports or profit warnings - keeping a tab on these things is a part of your job as the owner of the company!
So whatever you choose - active, passive, somewhere in between, the final word - DYOR. You better do your own research. Taking advice from some scamster guru on Youtube or TikToker may sometimes make you money, but it won't make you learn anything of much value.
#investresponsibly