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.
Growth Investment Style: A growth investment style focuses on capital appreciation. A growth investor typically seeks to buy stock or other securities they expect to have earnings growths of 15% to 25%. For example, a growth stock is Apple (AAPL).
Value Investment Style: A value investment style focuses on buying stocks or other securities which are trading under their current intrinsic value or in other words stocks which are under-valued by the market. A value investor is looking "shopping" around for bargain stocks or other securities. For example, a value stock is Kraft Heinz (KHC).
No matter which investment style you use if you learn to master it and follow it like it is the essence of life then you can expect to be successful over a lifetime.
Which type of investor am I? I am a value investor as my primary means of investment style, but I have tendencies to purchase growth stocks on occasions. Usually the growth stocks I buy are ones I really like the company such as Apple Inc..
In the long run as long as you purchase stock or other securities in companies you like and you know how their business works you will do perfectly fine. Also, do not worry about being exactly one style or the other. Most people are a blend of the two styles. If you do not know what you are a lot of the investment companies out there give you a breakdown of the type of securities you own. Like Vanguard gives me a nice like meter that has "Value" on one side "Blend" in the middle and "Growth" on the other side.
Update on "The Betterment.com Experiment": One week has currently passed. My Betterment portfolio is currently up 1.4% (Not including the Betterment management fee, when fee-adjusted it is up 1.15%) and my Vanguard account is up 1.386%. So far the experiment is working as expected! Subscribe for continued updates.
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Investment Style. (2018, May). Retrieved from Wikipedia: https://en.wikipedia.org/wiki/investment_style