Understanding what your risk ceiling and investment approach are will allow you to choose investments more wisely. Although there are many different kinds of investments that one could make, there are really just three distinct investment approaches and those three approaches correspond with your risk ceiling. The three investment approaches are conservative, moderate, and aggressive.
Naturally, if you happen to discover that you have a low ceiling for risk, your investment style will most likely be conservative or moderate at best. When you've got a high ceiling for risk, you'll most likely be a moderate or aggressive investor. Simultaneously, your monetary objectives may also decide what approach of investing you implement.
If you're saving for retirement in your early twenties, it is best to implement a conservative or average approach of investing. However if you are trying to get together the finances to purchase a house in the next year or two, you'd need to use an aggressive approach.
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