Aggressive Versus Conservative Levels of Stock Purchasing

Stocks are a representation of the ownership of a company

. Buying stocks of a company makes you a shareholder in that company. Usually companies sell stocks in order to raise additional capital to be used for expanding its holdings or for assisting in the daily running of the company. However, people buy stocks for various reasons. These reasons include, looking for an alternative or extra form of income, saving for retirement or other long term goals such as college education. All types of stocks have a certain level of risk involved and one needs to establish just how much they can tolerate.

There are two ways that you can invest, that is the aggressive or the conservative way. The aggressive way of investing involves buying stocks which have a high potential for growth. These are usually from small companies that deal with innovation. However, these companies do not need to be established but could be up-coming, small holdings. They could be companies that are involved in science, technology or research. These are usually companies that have the potential to become leaders in their specific fields of interest. In addition, these companies form a high risk because, there are no guarantees as to whether they will make it or fail.

Conservative stock purchasing requires an investor to be more vigilant about the kind of interests that they keep in their portfolio. These interests need to be those that are considered safe. They are usually from companies that have shown over a period of time that they are stable and reliable. The stocks themselves should also show steady growth over a period of time. This means that when purchasing, you not only look at the performance of the company in general but also that of the stocks that it has issued.

Conservative purchasing requires that you choose stocks from companies that are leaders in the market. These are usually well established companies that are financially stable and can withstand normal upheavals in the economic environment without closing down. The best types of stocks for this are utility stocks. This is because they are from companies that deal in consumer goods, which will always be in demand despite changes in the economic environment. In addition, these stocks are also not adversely affected by the political factors of a given country. Examples of these stocks are those issued by companies selling food items or gas for domestic use.

Aggressive Versus Conservative Levels of Stock Purchasing

By: Peter Gitundu

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