The Three Main Stages Of Investing

Wesley George
Feb 13, 2017 · 3 min read

As a child, unless you’re ridiculously motivated, you probably weren’t thinking a whole about future investments, or how you’d invest your money in the future. However, as you got older and graduated college, you become more of aware of different opportunities out there. And you probably started to look into those options. What you may not have realized is that you were about to embark on the first of three stages in a life long pursuit of investing.

In this article we will go over these three stages of investing, and the typical journey one will take walking through these three stages.

Stage One

The first stage many will start off in investing is called Traditional Investing. Traditional Investing tends to be the place most people start, because this is probably the most typical type of investing. It involves investing in things like stocks and bonds, which tend to be, hit the hardest in the investment world, or rather is the most popular. This is probably because it is very hands off (unless you’re the stock broker) and doesn’t take a ton of effort of the part of the investor. Plus, you don’t need a ton of capital to become involved with the more traditional types of investing. Which is why a lot of young investors will start here. That and most of them haven’t even probably dreamed of entering in the world of alternative investing. However, at some point, an individual who’s serious about building their investment portfolio will eventually go on to the next stage.

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Stage Two

This brings us to stage two. Stage two is Alternative Investing. This type of investing is far more risky and an often times take a lot more initial overhead capital to get involved. The most popular types of Alternative Investing are real estate and notes. However, alternative investing can also include things like gold, silver, currency, mortgages, tax liens, etc. Unlike Traditional Investing, Alternative Investing requires a lot more hands on, and as we said far more risk. However, you also have a lot more control of your investments. Because unlike stocks and bonds where its dependent upon the market and a reliable stock broker. Real estate in an investment that will rely primarily on you weather or not you succeed or fail. For instance, let’s say you decide to go big and invest in a multifamily unit. You are solely responsible for making it work. That means you need to hire the proper team to help manage such a property, as well as purchase the necessary multifamily leasing technology to get the job done. Plus, not to mention dealing with the tenants, that’s a whole other responsibility load.

But just like with traditional investing, as time goes on, you may decide that you’re getting too old for taking big risks anymore. And would much prefer to go back to where it all started for you. Which leads us into stage three.

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Stage Three

Stage three is Alternative Investing + Traditional Investing combined. This stage characterizes a mature investor. Someone who’s gone through the ups and downs of all forms of investing, has experienced big losses and big rewards, and is ready to slow down, while still adding to their portfolio. Typically in this stage you’ll see an investor pick back up some stocks and bonds, and change his focus from real estate to far less risky alternative investments such as precious metals, currency, and mortgages.

These three stags aren’t necessarily concrete. And a person can reach any stage at any point in their life. But regardless, if you’re an investor and you’re in one of these stages, we encourage you to continue to strive for the next stage, and help bring others along the way with you. After all, this world could use more investors like you!

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