Acron's Aggressive Portfolio: High-Risk, High-Reward Strategy

An aggressive portfolio is a type of investment strategy that focuses on maximising growth. This strategy is ideal for those who are just starting out and are looking to build their savings over time. Aggressive portfolios are characterised by a high tolerance for risk and market fluctuations, with the expectation that what goes down will eventually go back up. This strategy is recommended for young investors who are willing to take on more risk in exchange for potentially higher returns. Acorns, a popular investment app, offers aggressive portfolios as an option for its users, recommending portfolios based on factors such as age, income, goals, time horizon, and risk tolerance.

Aggressive portfolios are ideal for those with a higher risk tolerance

An aggressive portfolio is ideal for those with a higher risk tolerance. This type of investor demonstrates a high risk tolerance: they are not afraid of market fluctuations because they are confident that what goes down will eventually go up, helping them realise new gains during the upswing. The keyword here is "eventually", as a down market can take a while to recover, which can be a disaster for someone who needs their money right away. That's why an aggressive portfolio requires a longer time horizon, or the investor will not have enough time to accommodate the dips.

Aggressive portfolios are ideal for those who are just starting out and want to build their nest egg over time. By beginning with a more aggressive outlook, they are more likely to realise larger gains and thus have more time for compounding to work. Over time, this phenomenon can greatly bolster your portfolio. An aggressive portfolio is more likely to include newer or less-proven companies or industries, which have the capacity to realise large gains but also potentially commensurate losses.

For example, here is what you will find in the Acorns aggressive portfolio:

• 40% large company stocks
• 20% small company stocks
• 10% emerging market stocks
• 10% real estate stocks
• 20% international large company stocks

Acorns' moderately aggressive portfolio includes:

• 38% large company stocks
• 14% small company stocks
• 4% emerging market stocks
• 8% real estate stocks
• 10% government bonds
• 16% international large company stocks

Aggressive portfolios are also ideal for teens and young adults who are most likely to stomach the risk, as opposed to someone older who has invested all their life.

Aggressive portfolios are recommended for teens and young adults

An aggressive portfolio is ideal for someone who is just starting out and wants to build their nest egg over time. It is recommended for teens and young adults because they are most likely to stomach the risk compared to older individuals. Aggressive portfolios are focused on growth and are apt to experience a rollercoaster effect, with higher highs and potentially lower lows. This type of portfolio demonstrates a high-risk tolerance and is not afraid of market fluctuations, as they are confident that what goes down will eventually go up, realising new gains during the upswing.

An aggressive portfolio is more likely to include newer or less proven companies or industries that have the capacity to realise large gains but also potentially commensurate losses. This type of portfolio is more liable to need regular rebalancing as high growth in one area can knock other areas out of balance.

Acorns determines an asset allocation for you, based on your income, age, time horizon, risk tolerance, and goals. They then automatically rebalance your portfolio to maintain that carefully chosen allocation. When you add money to your account, Acorns distributes it across all the exchange-traded funds (ETFs) you own to keep your asset balance steady.

Rebalancing can be an important investment strategy to help you stay on track with your financial goals. It works by buying and selling investments to recapture the initial asset allocation you wanted. The market's natural ups and downs can alter your portfolio and your asset allocation, so regular portfolio rebalancing is a good idea.

If you opt to manage it yourself, some experts recommend checking in at least annually, while others suggest doing it more frequently, like every six months or every quarter. However, rebalancing more often could cost you more in trading fees and taxes, depending on your account type and broker.

Aggressive portfolios are focused on growth

An aggressive portfolio is ideal for someone who is just starting out and wants to build their nest egg over time. This type of portfolio is focused on growth and is suited to those with a high-risk tolerance. Aggressive portfolios are typically comprised of stocks, with the Acorns aggressive portfolio including 40% large company stocks, 20% small company stocks, 10% emerging market stocks, 10% real estate stocks, and 20% international large company stocks.

The key characteristic of an aggressive portfolio is the focus on growth. This strategy is ideal for investors who are comfortable with market fluctuations and are confident that what goes down will eventually go up, allowing them to realise new gains during the upswing. This approach is often recommended for younger investors, such as teens and young adults, as they are more likely to be able to stomach the risk compared to older individuals.

Aggressive portfolios are designed to deliver larger gains over time, taking advantage of compounding effects. Compounding occurs when investments generate returns and dividends, resulting in a higher amount that then has the potential to earn even more returns. This phenomenon can significantly bolster an investor's portfolio over the long term.

It is important to note that aggressive portfolios are subject to higher highs and potentially lower lows, creating a rollercoaster effect. This means that investors opting for an aggressive portfolio should have a longer time horizon, giving their investments sufficient time to recover from any downturns.

To maintain the desired asset allocation, aggressive portfolios may require regular rebalancing. This involves buying and selling investments to return to the original allocation percentage. Acorns offers automatic rebalancing, determining an asset allocation based on factors such as income, age, time horizon, risk tolerance, and goals, and then periodically adjusting the portfolio to match this allocation.

Aggressive portfolios are recommended for those with a longer time horizon

An aggressive portfolio is ideal for those who are just starting out and want to build their savings over time. It is also suitable for those with a higher risk tolerance, a longer time horizon, and a desire for higher returns. The longer time horizon is crucial as it provides ample time for the portfolio to recover from potential losses and market fluctuations.

Aggressive portfolios are characterized by their focus on growth and higher risk tolerance. They are designed for investors who are confident in their ability to weather market fluctuations and are willing to accept the potential for higher gains. This type of portfolio typically includes newer or less proven companies or industries, which have the capacity for large gains but also come with a higher risk of loss.

When it comes to time horizons, aggressive portfolios require a longer-term perspective. This is because aggressive portfolios are prone to experiencing a "roller coaster effect," with higher highs and potentially lower lows. By having a longer time horizon, investors can accommodate these dips and allow their investments to recover.

For example, consider an investor with a 35-year timeframe until retirement. Due to their long timeframe and comfort with volatility, they opt for an aggressive investing approach with a 90% stocks and 10% bonds allocation. However, due to market movements, their portfolio might shift to 95% stocks and 5% bonds. To maintain their original allocation, they would need to sell some stocks and buy more bonds, a process known as portfolio rebalancing.

Portfolio rebalancing is an important strategy to ensure an investor's portfolio aligns with their financial goals and risk tolerance. It involves buying and selling investments to return to the initial asset allocation. While some experts recommend checking and rebalancing annually, others suggest doing so more frequently, like every six months or quarter.

In summary, aggressive portfolios are well-suited for those with a longer time horizon as it provides the necessary time buffer to navigate market fluctuations and potential losses. This allows investors to focus on growth and take advantage of compounding returns, ultimately bolstering their portfolio over the long term.

Aggressive portfolios are recommended for those with an appetite for higher returns

An aggressive portfolio is ideal for those who are just starting out and want to build their savings over time. Aggressive portfolios are recommended for those with an appetite for higher returns and a higher risk tolerance. This type of investor demonstrates confidence in the face of market fluctuations, knowing that what goes down will eventually go back up, allowing them to realise new gains during the upswing.

Aggressive portfolios are focused on growth and are more likely to include newer or less proven companies or industries, which have the capacity for large gains but also potentially significant losses. This approach is often recommended for younger investors, such as teens and young adults, who are willing to take on more risk and have a longer time horizon to accommodate market dips.

When it comes to Acorns' aggressive portfolio, it includes 40% large company stocks, 20% small company stocks, 10% emerging market stocks, 10% real estate stocks, and 20% international large company stocks. The moderately aggressive portfolio has a slightly different composition, with 38% large company stocks, 14% small company stocks, 4% emerging market stocks, 8% real estate stocks, 10% government bonds, and 16% international large company stocks.

It is important to note that aggressive portfolios may require regular rebalancing as high growth in one area can affect the overall balance. Acorns offers a "robo-advisor" service, where they will automatically check and adjust your portfolio to maintain the initial allocation.

While aggressive portfolios offer the potential for higher returns, it is essential to consider your risk tolerance, time horizon, and financial goals when deciding on an investment strategy.

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