5 Type of Investors (According to Risk Level)

With so many choices of investment options available for investors today, a new investor would not know where to start.

So, if you are a new investor, know yourself first. That way, you will know what type of investments that are suitable for you. 

While many would just categorise the risk into 3-level, I felt that 5-level risk categories will give a better idea. 

Low-risk 

This is what most people are doing right now. Just keep it there and hope that your money will grow. Example of low-risk investments is Bank Saving Account and Fixed Deposit. Given the current interest rate (current at about 0.25 - 0.45%), saving your money in a savings account is basically killing your money. Fixed deposit perform slightly better than a savings account as the interest rate is around 2.95 - 3.40%. So, if you don't know how to invest, keep some of your money in a fixed deposit. 

Medium-low risk 

Medium-low risk investments are slightly more risking compare to a savings account and FD. For me, government-linked unit trust funds are in this category. There are a total of 12 unit trusts by the government: 

• Amanah Saham Bumiputera 
• Amanah Saham Wawasan 2020 
• Amanah Saham Malaysia 
• Amanah Saham Didik 
• Amanah Saham 1Malaysia 
• Amanah Saham Bumiputera 2 
• Amanah Saham Nasional 
• Amanah Saham Nasional 2 
• Amanah Saham Nasional 3 Imbang 
• ASG - Pendidikan 
• ASG - Kesihatan 
• ASG - Persaraan 

Medium risk 

A more popular investment option is to invest in private unit trusts or buying shares on your own. Younger investors prefer buying the shares on their own and popular shares are such as blue-chip companies. Real Estate Investment Trust (REIT) is just as good but may not be that popular yet. For the older investor or just people who don't have the luxury of doing homework to determine the right shares to buy, they would buy into unit trusts that have good performance. Blue-chip companies, REITs and Unit Trusts are considered as medium risk investment due to the risk that involved (in case of an economic downturn). 

Medium-high risk

The new generation of investors is more likely to take a higher risk with newer investment options. While trading in Fiat currency, cryptocurrencies and commodities are considered medium-high risk, the possible returns are also higher. And for those with money, investing in property involve the similar level of risk. If the property does not perform as projected, there is a high chance the investor may lose the invested money one way or another. P2P lending is also part of this medium-high risk level. By doing P2P lending, there is a risk of the borrower defaulting and the investor would get nothing in return.

High-risk 

If there is an investment opportunity that is screaming at you to tell you that you could double and triple your money in a month or two, most probably it is a scam or something that is out to cheat your money. I would say that 99%, you would lose all your money. For me, investing in MLM is a very high-risk investment. I got fooled twice, I won't go through it again. 

So, what are your investment risk level? I consider myself to be a medium to medium-high risk investor.

Do you have any investment options that you want me to include into this post?