Before you ever buy your first stock or bond, it's important to understand what type of investor you are. This depends on a number of factors, including your investment objectives, your time horizon, your tolerance for risk, your personal investment experience, and your overall financial situation. There are three general categories of investors: The conservative investor values protecting principal over seeking capital appreciation. This investor is comfortable accepting lower returns for a higher degree of stability and/or liquidity. The conservative investor wants to minimize risk and loss of principal. The moderate investor values reducing risks and enhancing returns equally. This investor is willing to accept modest risks to seek higher long-term returns. A moderate investor may endure short-term loss of principal and a lower degree of liquidity in exchange for long-term capital appreciation. The aggressive investor values maximizing returns and is willing to accept substantial risk. This investor believes that maximizing long-term returns is more important than protecting principal in the short term and understands that this may mean enduring volatility and significant losses. Liquidity generally isn't a consideration for the aggressive investor. Which of these categories best describes you?