Investing can be very simple and straightforward, or it can be extremely complicated and convoluted. What makes investing complicated are the strategies you implement. Once you establish a strategy that you can commit to, your money will grow effortlessly.
There are two types of investors: The Active Investor and The Sheep Investor.
THE ACTIVE INVESTOR
As an Active Investor, you become the manager of your money. You are detail-oriented and are interested in both long-term and short-term investment strategies. You decide exactly where your money goes, how often to invest, and how much to contribute. You want to be the one to click the buy and sell button. The benefit of being an active investor is you are able to closely monitor how your money is affected by the markets, thus knowing when to buy low and when to sell high. A major disadvantage, however, is becoming overly obsessive with your decisions and losing sight of your investment plan. This can be detrimental to your account and you could lose more than what you’ve gained.
THE PASSIVE INVESTOR
If you are a Sheep Investor, your objective is to set it and forget it! You like simple strategies that don’t require babysitting your money and are proven to work well for the long-term. One downside to this is not being able to take advantage of the market when the prices are right. However, your investing system is way more automated, thus decreasing emotional involvement, avoiding overtrading, and optimizing your returns.
Each style has its advantages and disadvantages. In this blog, I focus on strategies that are easy and don’t require a lot of time to setup. It’s important that you spend time doing things you enjoy and not become over-obsessed with organizing your finances.
– The Wealthy Sheep
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