If you’re new to investing, one of the most important questions you can ask yourself isn’t what should I invest in? — it’s what kind of investor am I?
Investors differ based on their strategy, time horizon, risk tolerance, and goals. Some focus on undervalued companies, others chase fast-growing industries, while some simply want steady income or long-term market returns.
Understanding the main types of investors will help you:
Choose strategies that fit your personality
Avoid copying approaches that don’t suit you
Build confidence and consistency over time
Let’s break it down in a beginner-friendly way.
Approach: Buy companies for less than they’re worth.
Value investors search for undervalued stocks—companies the market may be overlooking or mispricing.
They rely heavily on fundamental analysis, believing that price will eventually reflect true value.
What value investors look for:
Low price-to-earnings (P/E) ratio
Low price-to-book (P/B) ratio
Strong balance sheets and stable cash flows
This strategy is often described as “buying quality businesses on sale.”
Famous example: Warren Buffett
Best suited for: Patient investors with a long-term mindset.
Approach: Invest in companies with strong future potential
Growth investors focus on companies expected to grow faster than the overall market, often in innovative or emerging industries such as technology, AI, or biotech.
They are less concerned with current valuation and more focused on future earnings power.
What growth investors look for:
Revenue growth above ~10% annually
Earnings growth above ~15%
Expanding markets and competitive advantages
Growth investors are often willing to pay a premium today for higher returns tomorrow.
Famous example: Peter Lynch
Best suited for: Investors comfortable with volatility and higher risk.
Approach: A blend of value and growth
GARP investors look for companies with solid growth prospects but avoid paying excessive valuations.
This hybrid strategy aims to capture growth while maintaining valuation discipline, often using metrics like the PEG ratio (price/earnings to growth).
Best suited for: Investors who want balance between risk and valuation.
Approach: Invest based on economic trends
Macro investors analyse big-picture forces such as:
Interest rates
Inflation
Economic growth (GDP)
Central bank policy
They invest across asset classes including stocks, bonds, commodities, and currencies.
Best suited for: Experienced investors with a strong understanding of economics.
Approach: Follow the trend
Momentum investors believe that assets already moving in one direction are likely to continue in that direction.
They rely heavily on technical analysis, not company fundamentals.
Common tools:
Price trends
Volume
Moving averages
The guiding principle is simple: “The trend is your friend.”
Best suited for: Active investors comfortable with frequent decision-making.
Approach: Short-term price movements
Traders aim to profit from short-term fluctuations, sometimes holding positions for minutes, days, or weeks.
They focus on charts and patterns rather than business fundamentals.
What traders look for:
Support and resistance levels
Moving average crossovers
Volatility and volume
Best suited for: Highly active investors with time, discipline, and risk control.
Crypto Investors: Invest in digital assets and cryptocurrencies.
Real Estate Investors / REIT Investors: Focus on property income or appreciation.
ESG Investors: Prioritise Environmental, Social, and Governance factors.
Research and select individual stocks
Aim to outperform the market
Require time, skill, and emotional discipline
Buy and hold ETFs or index funds
Aim to match market performance
Focus on low costs and long-term growth
Ideal for beginners and long-term wealth builders.
Approach: Generate steady cash flow
Dividend investors focus on reliable, dividend-paying companies, often well-established businesses.
What they look for:
Consistent dividend history
Sustainable pay-out ratio
Attractive dividend yield
This strategy suits conservative investors who prioritise income and stability over rapid growth.
Approach: Go against the crowd
Contrarian investors buy when sentiment is negative and sell when optimism is extreme.
This strategy requires patience and confidence, as it often feels uncomfortable in the moment.
Retail Investors: Individuals investing their own money.
Institutional Investors: Pension funds, insurance companies, asset managers.
Angel Investors: Early-stage startup backers.
Venture Capitalists (VCs): Invest pooled funds into high-growth startups.
Private Equity (PE): Buy and restructure established companies.
Hedge Funds: Use complex strategies and leverage to pursue high returns.
There’s no single “best” investor type—only the one that fits your goals, risk tolerance, and personality.
Many investors evolve over time or combine multiple styles. You might start as a passive index investor, then gradually explore dividends, growth stocks, or active strategies as your confidence grows.
The key takeaway for beginners: "Know yourself first. The right strategy is the one you can stick with through good markets and bad."