Independent Investor is a trading portal for retail traders and investors which helps to make sense of complicated and tiresome world of finance. No matter what you want to trade, be it shares, CFDs, financial spread betting, forex, or commodities, you will find the necessary information.
Trading and investing are completely different approaches to wealth creation, and understanding the difference will help you decide which route is best for your money. Your ability to withstand risk will influence the speed at which you achieve your desired financial growth.
Investors buy stocks and hold them for a long period of time, hoping to earn a steady return that is above inflation and ensures that their stock portfolio is fairly secure over time. A well balanced portfolio may offer a return as much as ten percent or more and would usually consist of a carefully allocated and well researched range of stocks and bonds that match the investor’s risk profile.
An investor that follows a more aggressive approach to investing would have a portfolio that has seventy to eighty percent of the funds invested in stocks with the balance invested in bonds. A conservative portfolio would comprise of seventy to eighty percent of the funds invested in bonds and the balance invested in stocks.
Time is usually a distinguishing factor in the decision of how portfolio funds are to be invested. Investors that will only need the money that they are investing in later life will tend to manage an aggressive portfolio and those investors that are nearing retirement or the need to earn a more consistent cash flow would choose a conservative portfolio where they have bonds that will provide for this exact need.
Traders are in the market to receive the best possible return on their money. They will thoroughly research the market and changes in the market and market cycles in order to leverage the most profit from their trades.
The intention of a trader is to grow their portfolio aggressively in order to achieve returns that are higher than the market average. This approach requires time, knowledge and expertise. Traders will usually have a watch list which comprises of a list of stock that they are interested in,where they constantly monitor technical criteria until certain signals tell them that it is a good time to take a position in a stock or sell quickly before the market turns.
Investing in a conservative or aggressive portfolio or becoming a trader that is determined to outperform the market will depend on your risk preference, the time that you can actively devote to the stock market, and your knowledge and understanding of the market, the economy and external factors that may influence the different sectors in the market. Always ensure that you contact a financial advisor that can help you to construct a portfolio that meets your needs and addresses your appetite for risk.
