Aggressive Growth portfolio

[Anonymous]

Does anybody have an aggressive risky growth portfolio? It's pretty ballsy and scary to do, even though I know that long term it probably would be lucrative. Just looking for somebody to say "Yes I have done it and I'm not living in a box". I have a roth ira i want to do this to since I'm pretty young and have a high risk tolerance. I have other assets too.

[Anonymous]

Of course, plenty of people do. I've got my 401k in a target date so all of my other investments are in high risk/growth-oriented funds. I keep a healthy cash balance as well. I'll rebalance to something safer when I get older.

[Anonymous]

My assets (discounting my residence) are about 90-95% equities, so that's pretty aggressive, but I don't do individual company stocks or anything, so I'm not super aggressive. I'm in my early 30s and feel I can afford to take risks.

[Anonymous]

Yes I do. I think for a retirement portfolio -- why wouldn't you?? Esp. if you're young -- esp below age 40. You wouldn't keep it in aggressive growth forever bc you have to think about -- what if we hit another 2008 and the market doesn't recover fully until 2013. Now if you're 35 and that happens and recovery happens by age 40-42, no sweat bc you didn't have access to those funds anyway. But if you're 50 and that happens, you're sweating bullets. If you're 60 and that happens, you're delaying retirement.

Take advantage of your youth (you don't say how old you are) and put your money into aggressive growth funds for a while, earn the returns, and then start switching them over as you get older (sequentially not all at once) to more regular growth (as opposed to aggressive) funds and then from those to balanced funds.

[Anonymous]

Yes, all my long term investments are in portfolios that would be labelled aggressive.

Although I can understand why you are scared, I don't agree its a "ballsy" thing to do. "Aggressive" means that it can be volatile on a year-to-year basis. But its nearly a mathematical certainty that over a long enough time horizon, you will have more money in an "aggressive" portfolio.

Here is an experiment you can do if you want to calm yourself down:

In one container, put two $5 bills. This is your "conservative" investment pool.

In a second container, put in one $1 bill and one $20 bill. This is your "aggressive" investment pool.

Now figure out how many years you have until retirement. Let's say it is 30.

Reach into the "aggressive" container and pull out a bill. Write the value down. Put the bill back in, and repeated 29 times. Take the average of your 29 pulls.

Note that after the first few pulls, there's a chance your average will be below $5, which means you would have made a bad investment by putting the money in an aggressive portfolio if you were to pull it after only a few years.

But the average after 20 pulls and after 30 pulls will be very similar, and both will be higher than $5, showing that the aggressive option both has a higher average return and is not really so volatile at all.

[Anonymous]

Age 36. 100% equities. 6.1% of that is in balanced funds. 93.9% in growth funds. I don't expect to keep this allocation forever but I can't imagine making significantly conservative moves before age 40. And honestly I just went to the 6% balanced funds at age 34-35; before that it was all high growth.

[Anonymous]

My IRA is extremely risky (mid 30s). On any given day it'll be up / down 5 figures.

[Anonymous]

Does the old rule (I think it was something like 110 - age = % you put in stocks) still apply? Somehow with bond rates being so low and with people working longer, I just done see how a 35 yr old can only be 75% in stocks. At 35 most people still have 30 working yrs left, at least. I know for me, I'm all in stocks -- and the vast majority of that is in growth funds/S&P ETFs -- not the balanced funds or retirement target date funds since they often use that stock/bond % rule

[Anonymous]

Anonymous wrote:Does anybody have an aggressive risky growth portfolio? It's pretty ballsy and scary to do, even though I know that long term it probably would be lucrative. Just looking for somebody to say "Yes I have done it and I'm not living in a box". I have a roth ira i want to do this to since I'm pretty young and have a high risk tolerance. I have other assets too.

Are you talking about public equities or alternative investments like venture capital? Most of the replies refer to investing in aggressive growth mutual funds, which I don't find "extremely risky." Higher on the risk tolerance curve for sure, but if you want real diversification and possibility for much higher returns, then venture capital/growth equity is the way to go. Within that small asset class, you still have angel investing (riskiest), early-stage venture, late stage VC, etc... For exposure to some parts of this asset class, you would need to be an LP (limited partner) in a fund. The whole idea of investing in these alternative asset classes is diversification, but alternatives encompasses hedge funds, venture, private equity, real estate, estate...

Bottom line, how "risky" are you thinking?

[Anonymous]

Yes, my roth is super risky. I don't advise others as I don't want to be blamed for the mini crashes. I am heavily invested in an electric energy stock.

[Anonymous]

Mine is invested as aggressive as I can. I am 38 and keep readjusting to the age adjusted fund for 18-25 year olds (99% equities).

[Anonymous]

Anonymous wrote:
In a second container, put in one $1 bill and one $20 bill. This is your "aggressive" investment pool.

So a 1% annual return is the worst-case scenario in this exercise? What about a 30% loss when rather than adding $1 and $20 bills you'd need to subtract 30 for a few years?

[Anonymous]

Anonymous wrote:

Anonymous wrote:
In a second container, put in one $1 bill and one $20 bill. This is your "aggressive" investment pool.

So a 1% annual return is the worst-case scenario in this exercise? What about a 30% loss when rather than adding $1 and $20 bills you'd need to subtract 30 for a few years?

It doesn't make a difference if there are no negative numbers in the hat because the spread is what is relevant for purposes of comparing returns. Arbitrarily reduce the value of each bill, including to negative numbers, and you get the same result. The only thing you need for the math to work in the real world is for the market to trend up over a long enough period of time, because then the average increase in an aggressive portfolio will definitionally outperform the average return in the conservative portfolio given a large enough sample size.

Put simply, if you have thirty years to invest and you believe the market will be higher after thirty years than it is now, the "aggressive" portfolio is easily the not a high risk option.

[Anonymous]

Yes we are (mid thirties) and we do not live in a box (yet). I though I was aggressive by placing my 401K in a target fund for people who are 10 years my junior and Roth IRA in growth fund. Then I met my husband who places his entire 401K on 30 individual stocks and churn them every year. So far his account make the most money so there must be a method to his madness and I leave it be. I will not advise anyone to do what we are doing since we are clearly way too comfortable with high risk. But please take some calculated risk if you ever want to retire comfortably.