Are You A Conservative Moderate Or Aggressiveer

I am sure at one point you have been asked the question, “Are you a conservative, moderate, or aggressive investor?” You might be thinking I have a long investment time frame, but with my retirement money, I don’t want to be too aggressive, so I must be moderate. Other times, when the markets head south, you might think, I don’t want to lose too much money so really I should be a conservative investor. Often times, theses terms can still leave you wondering if your investment mix is right for you.

Sometimes the financial jargon that we as financial professionals throw around makes it very difficult for an investor to truly understand their plan. When it comes to understanding your investment allocation it is really important to feel …show more content…
Looking back, I have found that some clients will identify themselves as moderate or aggressive when the markets “appear” to be doing great, but quickly switch to “conservative” when the markets turn down. This is a normal emotional response as the goal of investors is to try and make as much as possible while at the same time try to lose as little as possible. The problem is this can lead to poor short term results for investors who get more aggressive when the markets are high and then sell off investments when the markets move lower.

Defining your investment approach simply as conservative, moderate, or aggressive, may be a bit confusing if you don’t fully understand what those results could look like say over the next 6 months or if we had another financial crisis like we did in 2007 – 2009. An investor might identify themselves as a moderate investor, until they opened up their monthly statement in March of 2009. It quickly can become clear that the amount of money the self identified “moderate” investors were willing to lose was significantly different than what the financial professionals were willing to