There are many different investment styles but the first two I am going to discuss are Growth and Value investment styles. First off, what is an investment style? Investment style refers to different style characteristics of equities, bonds or financial derivatives within a given investment philosophy (Investment Style, 2018). Everyone has their own investment style they prefer. The style an investor chooses to use typically depends on what the investor is wanting to accomplish, their risk tolerance, and their investment timeline.
You may or may not have heard about www.betterment.com. If you have, bear with me as I give a little background to the amateurs reading this. Betterment is a fairly new investment platform, kind of like Vanguard or Ameritrade. What makes it so unique is the methodologies they use to invest your portfolio. They use science and math and statistics and have developed very sophisticated algorithms for investing. They claim they can make an additional 2.66% return per year than someone doing it on their own (Betterment.com, 2018). According to Betterment.com that figure (2.66%) is after their management fee which is 0.25% for most accounts (Betterment.com, 2018).
What do I think about this claim? I personally think if you do not know how to analysis companies and do not how to diversify your own portfolio with different stocks then you should buy into mutual funds. Mutual funds are a super simple way for anyone to automatically diversify their portfolio. So, if you do not know what you are doing when it comes to investing and picking and choosing stocks/companies you want to purchase then buy a mutual fund. If you know how to analysis stocks/companies and know how to diversify with stocks on your own, then do not buy mutual funds. It is really that simple.
Like most of you I had no idea what I was doing when it came to, well, pretty much everything regarding retirement planning and investing. I didn't know anything about the different IRAs available let alone their different tax benefits, mutuals fund/ETFs, what is an acceptable emergency fund, or when to purchase stocks, mutual funds, ETFs, index, or bonds. Did you know when you are investing for retirement you WANT the stock market to DECREASE? I didn't either. Things like this are all within this book. It will provide you with a lot of information and tips which will help you start to build your portfolio.