The 3 Types of Investors
Investors and future retirees have numerous different kinds of investing strategies. eRollover has consolidated them into three main categories. The following are the three types of investors most commonly seen:Savers
Savers are those people who spend the majority of their life slowly growing their “nest egg” in order to ensure a comfortable retirement. Savers explicitly choose not to focus their time on investing or investment strategy; they either entrust others to dictate their investments (money managers or financial planners) or they simply diversify their investments across a number of different asset classes (they create “a diversified portfolio”).The bulk of Savers are investing for long-term financial security and retirement. They start saving in their 20’s and 30’s by putting money in 401(k) accounts, mutual funds, and other diversified investments, and in 30 or 40 years, they have enough to retire on.
Speculators
Unlike Savers, Speculators choose to take control of their investments, and not rely solely on “time” to get to the point of financial independence. Speculators are happy to forgo the relatively low returns of a diversified portfolio in order to try to achieve the much higher returns of targeted investments. Instead of just spreading their money across stock funds, bonds, real estate funds, and a variety of other asset categories, Speculators are always looking for an investing edge. Perhaps they get a hot stock tip and try to cash in on the next Google.Speculators recognize that they can have higher returns than Savers, and are willing to do or try anything to get those returns. Speculators are always looking for the next great investment; for them, it’s all about being in the right place at the right time, and taking a chance on getting rich. If today’s investment doesn’t work out, there will always be another one tomorrow.
While the Speculator recognizes the potential gains from smart investing, he doesn’t always invest smart. He is very much a gambler, and while sometimes those gambles pay off, often times they don’t. As a result of the keen interest, and active investment style, these types of investors fall more in the “do it yourself” category. The Speculator would be a great fit for an online brokerage, where they can manage their own funds with very low transaction costs. In addition, they would find the up to date financial news and strategies as extremely appealing to their investing journey.
Specialists
The third type of investor is the Specialist. Like the Speculator, the Specialist realizes that there is a more powerful investing strategy than just diversifying across a range of asset classes. But, unlike the Speculator, the Specialist understands that the key to successful investing isn’t luck, “hot tips”, or “being in the right place at the right time”; it’s education and experience. The Specialist recognizes that investing is no different than any other competitive endeavor — there will be winners and there will be losers, and the winners will generally be those who are most prepared.The Specialist can make money in his chosen investment area during any market — hot, cold, or in-between. The Specialist knows his investment area inside and out, and instead of just entering and exiting investments, the Specialist has a plan.
In fact, having a plan is the key difference between the Specialist and either the Saver or the Speculator. The plan is the blueprint for achieve investment success, and with it, the Specialist can achieve huge returns with relatively low risk. The Specialist may fall in either category, either “doing it themselves” or “relying on a trusted advisor”, and would take a keen interest in eRollover’s education center to improve their overall investing knowledge.
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