Before you invest in anything, you must understand your tolerance level and how much you are willing to invest. In addition to this, you will need to choose your investment style so you can be sure to know how much you are willing to invest and how soon you need this investment.
If you are the type who do not wish to take much risk, then you will more than likely invest with a conservative approach. If you are a more aggressive type of investor, then you will more than likely take a very aggressive approach in your investing. Ultimately, your budget and financial will help you find out if you are a more aggressive, moderate, or conservative investor.
If you are in your early twenties and you are trying to build a retirement fund, then you will most definitely want to take a more conservative approach to investing. However, if you are trying to buy a home, or help your child through college or prepare for college, then you will want to step it up just a little more.
Most conservative investors just want to maintain what they originally invested. Meaning that if they invest $1000 into a vehicle, then they at least want to get that back in return so that they can break even and start all over again. The typical strategy for this is usually stocks and bonds and options.
Most common returns that conservative investors make are usually interest earning savings accounts. A more moderate investor will diversify their funds a little more than the conservative investor. They will put a portion of their funds in one vehicle and then put the rest into a more aggressive investments that will help bring in money that will yield them higher returns in a short amount of time.
A more aggressive investor is going to take much more risky attempts than both a conservative and moderate investors. They are going to take higher amounts of money in riskier accounts because these accounts usually bring back higher yields of return. This is either over a long period of time or a short period of time. Either way they are going to be aggressive about it.
What you will ultimately want to do is make sure that you have a plan of action as well as a nice budget to determine whether you are going to invest conservatively, moderately, or aggressively. Your goals will give you a good idea of what means you should take.