Because we all have different goals and expectations, we all have different reasons for investing. Understanding the type of investor you are is a key step toward understanding what sort of investment approach is best for you. Here are some steps to consider.
Every investment you consider has inherent risks along with the potential for return:
- Risk is an investment’s chance of producing a lower-than-expected return or even losing value.
- Return is the amount of money you earn on the assets you’ve invested, or the investment’s overall increase or decrease in value.
Increased risk provides the opportunity for higher returns and greater losses. Lower risk investments typically offer lower return potential.
The amount of risk you carry depends on your appetite — or tolerance — for risk. Only you can decide how much risk you’re willing to take for the potential of higher returns. But it will depend on your attitude toward risk, your goals, risk tolerance and circumstances, and how much of your money you’re investing.
None. You prefer to select your own investments and are confident making your own investment decisions. You may be happy with a self-directed brokerage account.
Some. You’re not totally sure that you’re ready to make all of your financial decisions, but would like some say. A Financial Advisor can provide the resources you need to help you make decisions based on your needs, goals, risk tolerance and today’s investing environment.
A lot. You prefer to rely on a professional to help you make decisions regarding all aspects of your portfolio.
Also, think about how often you’ll want to monitor and adjust your investments over time.
- Do you prefer to review a quarterly statement?
- Do you want to monitor your brokerage account online?
- Would you want to meet with a Financial Advisor annually to review your investment plan?
It’s easier to find a suitable place to invest your money with a plan that aligns to your goals and appetite for risk.
- Are you interested in preserving your money?
- Are you hoping to see modest growth in your investments?
- Or, does your goal include seeing significant growth and the highest possible return?
What are your ultimate goals?
- A comfortable retirement
- Paying for education
- Buying a house
- Living without debt
Before you start investing, it’s a good idea to ask yourself what you’re saving and investing for. Setting the right goals can go a long way when developing an investing plan.
Your investing options with Wells Fargo
You may prefer working with a Financial Advisor, investing on your own online, or something in between. We can help you select the level of guidance and control you need.
One way to help keep risks in line with your tolerance is to diversify your investments, which means you’d distribute your money across a range of different investments. A well-diversified investment portfolio combines different types of investments that carry different levels of risk. Diversification does not guarantee profit or protect against loss in declining markets.