Are You An Investor or Trader?

By: Randy Martin

Investing in securities can broadly be classified as investing in bonds and stock market investing. How much you apportion for each depends on your risk taking capacity. Bond investing is safer compared to stocks but bonds give lower returns, particularly during inflationary times. Stock market investing, on the other hand, can be quite profitable but come with more risks: stock prices tend to fluctuate often.

You should invest partly in bonds and the balance in stocks. If you are older, invest less amount of money in stocks and more in bonds. However,if you are young,you should invest more in shares of companies. Choose those companies for stock market investing that have growth potential and proven track potential.

There are different sizes and categories of stocks. There are: large, mid and small caps, and penny stocks. As a beginner, you should invest in large and mid cap companies. Once you gained enough experience, you should consider investing a small portion of your money in small caps and hot penny stocks. This is a risky kind of investing but if handled properly it can give large returns. Note that it needs expertise and nerves of steel.

You should not jump in something Stock market investing; it needs a lot of time to learn the basics of stock market investing. You can start investing once you have gained some experience. It is suggested to invest small amounts of your money over a period of time rather than investing all the money at once.

Bond investing is quite easy as compared to stocks. You can get a list of high rated companies and government bonds from your banker or broker easily. Bonds will give you a good return only if you hold them for a long time period. On the other side people wanting returns in short period can look for investing in stocks and at the same time stocks can be held for long time too.

Ignore tips from others on which share to buy. This applies especially to hot penny stocks as these are considered the riskiest investments. They are to be considered only after you do thorough research on the company concerned and all other related factors. Happy investing!

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