Special to the Village News
What kind of real estate investor are you: active or passive?
Active investors are generally entrepreneurs or business owners. They like control of their professional lives and investment lives. They are accustomed to risk.
Passive investors usually fit one of two types – inherited wealth or professionals working in a large firm environment. The passive investor prefers security over risk, and they achieve this security through diversified portfolios usually managed by investment firms.
Included in both categories are a number of styles. Here are some of the most common styles to consider.
First, consider the busy investor. They are obsessed with the market, spending great amounts of time and energy following the ups and downs and watching what others are doing. They are not the leaders of the market; a type of this style was the day traders from a few years back. They are willing to take a chance on the market.
Next is the casual investor. They are the exact opposite of the busy investor. They prefer safe investments, place their trust in their financial advisors and like investments similar to those they have done previously. The belief is that everything will work out in the end and besides there are better things to do than worry about investing.
The cautious investor is risk adverse, highly security minded and afraid of making mistakes. Often the fear of making a decision makes no decision at all. Generally passive or older investors are interested in safeguarding their existing assets rather than taking a growth position as they have a shorter horizon to correct any losses.
The emotional investor puts their heart into their decisions, investing in companies that make products they like or holding onto the old homestead way past its useful life. They can be either active or passive, but they are unwilling to let go of things they like or that have sentimental value even though they may have outlived their useful value.
The informed investor stays up to date with good solid current information, using a variety of sources. They are willing to listen to expert advice and implement it. They are involved in the management and choice of their investments and often times will spot a trend before anyone else.
Last, the technical investor spends a lot of time in front of the computer gathering data and is actively involved in their investment choices. They feel rewarded when their diligence pays off with a good investment.
How does this translate? Investors should be aware of their decision making style and work with a good broker agent, unless of course you are one. Agents should know their due diligence in real estate and how it affects the value and market of the properties they are considering personally or for clients. Know and understand your investing type and adjust it to make it work for you.