Aggressive Portfolios

When it comes to aggressive portfolios, being a millennial with time to spare is your greatest asset. The key to aggressive investments is having the time and patience to ride the financial rollercoaster with your investments. Now, let’s talk portfolios.

Mountain ClimbingBeginning with the basics, a portfolio is a combination of various assets that are chosen to match your investing goals. Assets range from real estate, equities, stocks, bonds, and fixed-income instruments. As with many things in life, there are conservative portfolios, moderate portfolios, and aggressive portfolios, along with everything between. Aggressive portfolios shoot for the highest possible return. Due to the high risk of shooting for the highest possible return, aggressive portfolios are best suited for investors who have a higher risk tolerance or the time to ride out the fluctuations among their investments.

The average time invested in an aggressive portfolio should be no less than 15 years. Having a high tolerance for risk and having little to no need of the investment income is also ideal. To utilize an aggressive portfolio properly, allowing your investments time to fluctuate and wait out the risks is essential for your potential gain. The average annual return among aggressive portfolios is 10.3% with fluctuations as low as -36.0% or as high as 39.9%. With such drastic fluctuations, it is imperative to have the time to sit and wait out the highs and lows that come with an aggressive portfolio. 

Despite that playing it safe is often the practical option in finances, millennials are at a point in their lives when now is the time to take a risk. The closer you get to retirement, the fewer risks you can afford to take. In most stable value funds, the money increases nominally. When you compare the nominal interest to inflation, you might as well have hidden your money under the couch. Although aggressive portfolio equities typically have more risk, the potential to gain is higher when you add in having time on your side, the risks become more practical than playing it safe. 

Now, the best starting point for cultivating an efficient aggressive portfolio is seeking a financial advisor who can assist in sorting out which equities are worth the risk. The basics among aggressive portfolios are fairly universal. Investing in small capitalization stocks is an essential part of aggressive portfolios. The obscure businesses associated with these stocks have the time and usually the potential to become more prevalent in the market and potentially become market leaders. You want to spread your investments predominantly among large and small company leaders and minimally on cash investments. Your investments in companies should reflect the potential for growth, capital gains possibilities, and innovation.

An aggressive portfolio may not be right for everyone. Despite the high potential return, the high risk and lack of potential income can be problematic. If you have time on your side, it may be time to consider a more aggressive portfolio. Wasted time is often as problematic as wasted money. When your time can be as valuable as your money, an aggressive portfolio might be the answer.