Investor Types

There are many kinds of investors - see which one (or more) of the types below fits you.

• Value investors: These folks focus on fundamentals of companies, such as cash flow and expected earnings, aiming to buy stocks for significantly less than their estimated worth. They're bargain hunters, seeking a sizable margin of safety in their investments. They want to buy a dollar for 50 cents.

• Growth investors: These investors seek rapidly growing companies. They're frequently ready to pay top dollar for such firms, forgoing a margin of safety and expecting stock values to keep rising as the companies grow. In the past, stocks such as eBay, Amazon. com and Starbucks have made growth investors happy. They sometimes pull back sharply, though.

• High-yield investors: These folks are primarily seeking cash-generating holdings that offer modest risk. They tend to focus on bonds and stocks with high dividend yields, such as real estate investment trusts (REITs) and preferred stocks.

• Large-cap and blue chip investors: These investors prefer large, established companies with proven track records of profitability. (Examples: Procter & Gamble, IBM, General Electric, ExxonMobil, Coca-Cola.) These firms are often good dividend payers, too.

• Small-cap investors: These sorts are drawn to smaller, younger firms, which can be risky, but can offer the chance of greater reward, as they can grow quickly. Smallcap companies can be more obscure and harder to find information on, but as they're often more focused than bigger, older firms, they're sometimes easier to understand.

• Mutual fund investors: These people favor mutual funds, where their money either keeps pace with a particular stock index or is invested in holdings selected by professional money managers. Many funds feature outlandish fees and subpar performance, but other funds can serve you well. Learn more at www.fool.com/ mutualfunds/mutualfunds.htm.

These styles are not mutually exclusive. You may look for large-cap companies that are good values, for example, or high-yielding mutual funds.

Learn more at Morningstar.com and www. investopedia.com.