Seeing Your Investment Personality

Provided By www.stocktradingonline.org

Your investment goals are necessarily a reflection of your temperament and personality and should be taken into consideration when considering investment options.

Go beyond your goals and see if you can pin down the traits and characteristics they stem from. Are your goals— and you—realistic? How do you regard money, and how do you handle it? Are you easy-come, easy-go? Or do you count the pennies? Are decisions involving money difficult for you to make? Are you on top of your budget, or always running to keep up?

These are generalized questions, and there are no absolutely right answers. Gamblers should stay out of the market, but, on the other hand, tight-fistedness is no virtue, either. An overly cautious or conservative temperament may well react too slowly to changing conditions in the market, and thus miss out on opportunities.

The value in knowing yourself and how you are likely to respond in a variety of financial situations is quickly apparent to the stockholder. As has already been said—and will be said again—there are risks as well as rewards in owning stocks. Almost any kind of personality can count profits with ease. But it requires a certain rigor, a certain fortitude to face up to the adverse situations that may rise to smite you. Will you panic if a stock begins to falter and slide downhill? Will you dig your heels in stubbornly and ride an ill-advised purchase to the bottom? Can you reconcile yourself to taking a small loss in order to avoid a bigger one? Can you content yourself with a modest profit? Are you likely to get itchy and desert a stock whose performance is steady but not spectacular?

Continuous and largely unpredictable movement is the one certainty any investor can start with. Relative to this movement, the investor is a reasonably constant factor. His opinions may change, but his viewpoint will always be his own; he will always have his individual perspective by which to judge what the wild waves of the market are saying.

If he is aware of himself and the basis for his standards in financial operations, he will be better able to handle his investment problems, better able to make the knotty choices and decisions which confront him, and thereby assure himself greater chances of success.

Is It Safe to Invest? You feel yourself financially able and personally qualified to invest. You can meet the conditions of reasonable stability, reasonable flexibility, and reasonable caution. But nagging doubt remains. Wouldn't you really be better off with your extra cash in a savings account or real estate? Is it really safe to invest?

Well, how much safety do you require? Since there are no absolutely sure things anywhere, safety must be looked at as a matter of degree. There are no guarantees of success in stock ownership, no guarantees against loss. Even the thoughtful, conscientious investor can be taken to the cleaners.

It should be remembered, however, that investment in stocks is a way of sharing in the profit potential of American industry. Is the American economy safe? It seems to be.

For corporations, prosperity is reflected in earnings. For stockholders, it is reflected in a larger share of these earnings through increased dividends, or in capital gains—a rise in the value of the stock hi the open market owing to the pressure of investors who anticipate further earnings by the corporation and wish to get aboard.

No matter which kind of stock you choose, remember to take your personality and limits into account. It's no good buying risky stock if it makes you lose sleep at night. Go ahead and find something that makes you comfortable -- with all the options out there, it shouldn't be too difficult.

This article is a small snippet from www.stocktradingonline.org

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