Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Aggressive Investment Strategy

What it is:

An aggressive investment strategy emphasizes a substantially higher portfolio allocation of high-return equity over debt in order to generate high returns through exposure to high risk.

How it works (Example):

An aggressive investment strategy weights a portfolio's composition primarily on a combination of moderate- to high-growth stocks with much smaller portions of bonds and commercial paper. This arrangement involves a higher-than-average level of risk and price volatility, which investors accept prior to implementation. Often, investors will include options as part of the portfolio in an effort to reduce some of the risk associated with this strategy.

Why it Matters:

The high-risk/high-return nature of an aggressive investment strategy should be carefully considered by investors prior to implementation. Unless investors believe they can afford possibly significant losses and/or are very confident in their assessment of market trends, this strategy should be avoided -- particularly by the more risk-averse.