Do you like to see aggressive growth in your portfolio? Do you mind a little risk? You may be an aggressive investor. If you’re just getting use to this type of investing, you might wonder what your options are. If you have a high risk tolerance, here are a few aggressive investment strategies to consider.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Aggressive Investor Defined
” data-reactid=”33″>Aggressive Investor Defined
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="An aggressive investor wants to maximize returns by taking on a relatively high exposure to risk. As a result, an aggressive investor focuses on capital appreciation instead of creating a stream of income or a financial safety net. Therefore, a portfolio using this model would have a higher weight of stocks and equities. Meanwhile, a minimal percentage of the portfolio may containbonds, cash or other fixed-income assets.” data-reactid=”34″>An aggressive investor wants to maximize returns by taking on a relatively high exposure to risk. As a result, an aggressive investor focuses on capital appreciation instead of creating a stream of income or a financial safety net. Therefore, a portfolio using this model would have a higher weight of stocks and equities. Meanwhile, a minimal percentage of the portfolio may containbonds, cash or other fixed-income assets.
Usually, an aggressive investor works with longer time horizons and a high level of risk tolerance. For example, a young investor with small portfolios and longer time horizons is typically an aggressive investor. A longer time horizon allows the portfolio to recover from potential fluctuations within the market.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Financial professionals usually don’t recommend aggressive investing for anything bu a small portion of a nest egg. But, regardless of an investor’s age, their risk tolerance will determine if they become an aggressive investor.” data-reactid=”36″>Financial professionals usually don’t recommend aggressive investing for anything bu a small portion of a nest egg. But, regardless of an investor’s age, their risk tolerance will determine if they become an aggressive investor.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Types of Aggressive Investment Strategies” data-reactid=”37″>Types of Aggressive Investment Strategies
Not everyone is an aggressive investor. However, it’s still wise to understand aggressive strategies and how you might apply them. Here are some strategies for an aggressive investor with a higher risk tolerance than most.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Small and Micro-Cap Stock Investing” data-reactid=”39″>Small and Micro-Cap Stock Investing
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="A portfolio’s weight of high-risk asset classes such as stocks and equities tend to determine if it’s an aggressive portfolio. Even within the equity element of a portfolio, the composition of stocks can have a substantial impact on the amount of risk exposure. For example, a portfolio with an equity component solely made up of blue-chip stocks might have less risk than one made up of small-cap and micro-cap stocks.” data-reactid=”40″>A portfolio’s weight of high-risk asset classes such as stocks and equities tend to determine if it’s an aggressive portfolio. Even within the equity element of a portfolio, the composition of stocks can have a substantial impact on the amount of risk exposure. For example, a portfolio with an equity component solely made up of blue-chip stocks might have less risk than one made up of small-cap and micro-cap stocks.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Small-cap stocks are companies below $1 billion market value. Small-cap stock funds are made up of companies that investment managers predict will yield significant returns. Usually, these companies haven’t proven themselves and are relatively new. For example, they might be developing a new product or taking on a new growing market sector. Investment managers may also seek out companies with low market value or share prices due to a dip in the market.” data-reactid=”41″>Small-cap stocks are companies below $1 billion market value. Small-cap stock funds are made up of companies that investment managers predict will yield significant returns. Usually, these companies haven’t proven themselves and are relatively new. For example, they might be developing a new product or taking on a new growing market sector. Investment managers may also seek out companies with low market value or share prices due to a dip in the market.
Micro-cap stocks are companies that are smaller than small-cap stocks, with below $250 million to $500 million market value. While micro-cap stocks tend to be viewed as riskier investments than small-cap stocks, they are cheaper and may have an unlimited payout if investors select the right one. It’s important to point out that if a micro-cap stock outgrows these parameters, it might move up to a small-cap stock. This means that the fund manager would have to sell the share of the micro-cap stock.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Options are contracts that allow investors to buy or sell a security for a certain price during a set period. These contracts are often used to hedge against a decline in the stock market, to minimize the losses of the downside of the drop, create recurring income or for speculative purposes.” data-reactid=”44″>Options are contracts that allow investors to buy or sell a security for a certain price during a set period. These contracts are often used to hedge against a decline in the stock market, to minimize the losses of the downside of the drop, create recurring income or for speculative purposes.
Due to options’ leverage component, they may have a higher risk level. Therefore, when investors purchase options, they must be sure of the direction the security will go. Essentially, investors need to properly predict if the security will go up or down, how much the price will vary and the timeframe in which it will happen.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Foreign Stocks and Global Funds” data-reactid=”46″>Foreign Stocks and Global Funds
Although developing countries and emerging economies may offer higher returns they can also come with higher risk due to political turmoil. It’s possible to choose countries with stable financial systems but investors may still face the risk of currency fluctuations.
For example, let’s say you purchase German stock and the Euro increases in value against the dollar, your investment will then increase in value as well. Conversely, if it dips relative to the dollar, your investment will decrease in value.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="For high-net-worth investors who want to gamble with a high percentage of their portfolio, say $250,000 or more, they may consider private equity investments. This aggressive investment strategy allows investors to invest directly in start-ups or growing companies.” data-reactid=”74″>For high-net-worth investors who want to gamble with a high percentage of their portfolio, say $250,000 or more, they may consider private equity investments. This aggressive investment strategy allows investors to invest directly in start-ups or growing companies.
Usually, private equity investors take a more long-term approach to this strategy. They do this by investing while they financially stabilize, bring a new product to market or launch new technology. If the business endeavor fails, so will the investment. However, sometimes investors can negotiate favorable terms which may put them in a good position to reap high cash returns.
Aggressive growth funds are mutual funds that fund managers professionally manage. These funds invest in multiple stocks as well as a variety of other assets that tend to deliver high returns.
Like other investments, the goal of this fund is to yield high returns. However, its returns can vary from year to year. For instance, a growth fund may yield a 21% return one year, it may lose 5% the next year and then yield a 7% return the next year. Usually, the performance of these funds is determined by a 5-year or 10-year analysis. Therefore, investors who invest in these funds must have more of a long-term investment plan.
It’s important to note that aggressive growth funds may not have as much risk as some other aggressive investments. This is because these funds tend to be well-diversified, which means they invest in a variety of assets in different industries. Therefore, if one asset drops in value the other may make up for the losses.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Whether you’re a DIY investor or want to work with an investment manager, aggressive investing strategies require a more hands-on approach. These strategies require more active management than conservative buy-hold investment methods. Because these investments are more likely to be volatile, investors need to make more adjustments depending on the market condition. Additionally, investors will need to rebalance more often to bring asset allocation back to the targets.” data-reactid=”81″>Whether you’re a DIY investor or want to work with an investment manager, aggressive investing strategies require a more hands-on approach. These strategies require more active management than conservative buy-hold investment methods. Because these investments are more likely to be volatile, investors need to make more adjustments depending on the market condition. Additionally, investors will need to rebalance more often to bring asset allocation back to the targets.
If you work with an investment manager, they may require higher fees for their services since they are more hands-on with the portfolio as a whole. So, when you’re considering if these investments are right for you, you’ll not only need to factor in the risk you’re taking on but the cost as well.
Being an aggressive investor isn’t for everyone. Aggressive strategies require investors to have a high risk tolerance and potentially a longer time horizon. But, if you’re willing to take on additional risk to potentially receive a higher payoff, you may consider an aggressive investment strategy.
Looking for a financial advisor to help you select an aggressive investment strategy but not sure where to start your search? Finding the right financial advisor that fits your needs doesn’t have to be hard. SmartAsset’s free tool matches you with financial advisors in your area in 5 minutes. If you’re ready to be matched with local advisors that will help you achieve your financial goals, get started now. We’ve fully vetted all the advisors on our platform and ensured they don’t have any relevant disclosures. Your matches will then reach out to you to talk about working together and answer any questions you may have.
Consider capital gains taxes when you’re thinking about how much money you’ll make off your investments. SmartAsset’s capital gains tax calculator can help you figure out how taxes will impact the money you make from selling stocks.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
