21 Jul Investment Levels that Benchmark Profitable Investing

Profitable investing is something that is a bit of a learning process. While drawing up the investment strategy that works best for you, the process will follow these stages by and large.

Level 1

You start with dipping your toe in the water with small investments. At this stage, you may experience much anxiety and face risks primarily because you are yet to discover what the best mix is for you.

As a beginner, you would usually rely on the investment advice from others with more experience. Basically right now you have no investment plan, unpredictable profits (or maybe losses), and no understanding of financial risk management.

Level 2

Here, you have moved on to learning a little from your experiences. Though you have saved and made passive investments, you know that you are a long way from profitable investing.

You want to indulge in financial investing that builds wealth, but you are yet to develop the skills for active investing and start to understand the principles of investment risk management.

At this stage, even if you are profitable you cannot predict when and why you could be unprofitable. You attribute losses to things like harsh market conditions, the Federal Reserve, your broker’s investment advice, or other such causes.

Level 3

This is where you are beginning to comfortably settle into the investing game. You aren’t an expert by any means, but you know what you are doing.

By now you have a robust investment plan and have figured out what you can do to continue to make profits. Though you are mostly profitable, sometimes you suffer large losses.

You haven’t locked down on your investment approach and you are yet to make inroads into lowering risks with the right risk management techniques.

Level 4

This is the final stage where investing has become an automatic administrative task for you. You only seek investment advice for fact finding purposes. At this stage, you have mastered risk management so you are well aware of various non-correlated investment strategies for a diversified portfolio.

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