So with all the recent volatility in the market, I asked myself what sort of investor am I?
When I initially started investing, I was an untrained value investor. I had a general idea that I was looking for undervalued companies, not stocks, but I had no
idea how to really pick a stock. I ended up relying on morningstar.com to help me figure out what was undervalued and to shop for businesses. I found that value investing took a lot of time, and as my work (investing in myself) took off, I found myself with less time. I shifted over to primarily index fund investing and just paying myself first with a set it and forget it rule.
I have to admit that I do play with the numbers a bit and try to buy some stocks/funds at a discount when the price drops. The more this market volatility increases, I now understand that it really is a mental game since you really don’t know how much a stock or fund will drop or go up. I find that if you are going to purchase at a discount you have to be prepared for that investment to drop further, much like what happened when I purchased last week to see my investment drop another 3%. It definitely is tempting to want to recoup this “loss” but it is important to stay strong and remember that if you really did buy a good investment the stock should go up, and in the case of index investors the general growth of the market should also go up so just ride the course, and if it agonizes you to see the fluctuations get off the computer, turn off your TV, and get outside and invest in your health.
Also, here is a useful link to help you figure out your risk tolerance.
I got a 31 which put me at above average risk tolerance which fell in line with most of the recommended investments I make, though, I think I am slightly skewed to high risk tolerance with my international/emerging market funds and my relatively low amount of bonds.