Last quarter we had a look at conservative investors, noting that although many investors proclaim to be conservative, many of their portfolios are anything but. Many who would consider themselves conservative, actually have portfolios that fall towards the aggressive end of the risk spectrum.
An aggressive investor has the asset allocation outlined below. They accept that there will be ‘extreme’ variation in their returns, but expect to achieve greater returns over the long term. An aggressive portfolio may have dropped 30%, or more, during the global financial Crisis of 2008/2009, but would likely have made that back and then some in the subsequent years.
The long term outlook is the key aspect of an Aggressive investor. An aggressive investor should be prepared to hold their investment for ten years at an absolute minimum, which is why it is usually younger investors who fall into this category.
We recommend that every investor go through the process of placing their portfolio within the risk spectrum above and think about whether they consider this to be appropriate.
We also recommend investors complete a comprehensive risk profile assessment, as it will help analyse your own motivations in a structured and methodical format, and may allow you to better evaluate your current situation. It is also a useful tool in communicating your financial circumstances and goals to your advisor.