The views of this article are the perspective of the author and may not be reflective of Confessions of the Professions.
Would you like to maximize your returns within the shortest time possible?
If so, you should consider aggressive investing.
This type of investing utilizes strategies that are meant to provide higher than average returns within the shortest amount of time. It emphasizes capital appreciation over all other factors.
Although aggressive investing requires a large stomach for risk, when done well, you can protect your portfolio while ensuring continuous capital appreciation over a long period of time.
Let’s look at the top tips for ensuring long-term, profitable aggressive investing.
Companies with a market value of below $1 billion are referred to as small-cap stocks. These companies are usually relatively new to the market, and investment managers predict that they may have significant returns in the future. For instance, a company that is trying out a new market, still developing their product, or companies with small share prizes, can all be considered small-cap stocks.
Micro-cap stocks are companies with a market value lower than $500 million or, sometimes, $250 million. Since these companies are still very small, many investment managers view them as high-risk investments. As they grow, they become small-cap stocks and eventually become well-performing companies.
Investing in small and micro-cap companies are considered an aggressive investment. This is because no one knows if they will become profitable or unsuccessful. But, when they do become successful, the return on investment is huge. The prices can compound to even more than ten times in a very short amount of time.
If you decide to invest in these companies, try to conduct some rigorous due diligence before you begin. Some of them may be fraudulent while others have a higher tendency of failing. As much as it is a risk, you should at least know what you are getting into.
Developing countries and emerging economies also have the potential of producing great profits. Most economies that people usually invest in include Asia and parts of Eastern Europe and Africa.
Most of these countries have been seen to have a great potential for economic growth. Therefore, your money can quickly compound as their economies grow. Some investors consider them a robust form of investment.
However, they also come with some level of high risks. For one, most of these developing countries lack high-quality institutions, and secondly, they are prone to political turmoil.
If you are to invest in any of these countries, consider economies with stable financial systems – countries with lower risks of currency fluctuations.
Options are contracts that are used to hedge against the movement of stock prices for a certain period of time. If you look at the price chart of any company, you will notice that the prices sometimes drop, and then raise back up at a much higher value. It’s more like a zigzag movement, but one that goes up.
While history has proven that good stock prices always go up, it reaches a point where the prizes drop. So, if you can properly predict when the price will go down and recover, and the duration within which this will happen, you can sell options to enjoy a premium. This strategy often provides high returns for investors.
The only risk here is when the market moves against you. However, the most profitable options strategy that many aggressive investors use is known as a married put. This is where you buy shares of a stock, and at the same time, also buy enough put options to cover the stock that you bought. The put option gives you a right, but not an obligation, to sell the shares of the stock that you bought at a specified price, and at a specified date to the writer of the put, the person you bought those shares from.
You can also aggressively trade the forex market for high returns. Since forex is the highest traded market with a cap of around $2409 trillion, of which over $6.6 trillion is traded daily, it provides the best opportunity of potentially making the highest returns on investment. Nevertheless, it is equally the riskiest investment method.
Therefore, before you start trading forex, make sure you enroll in a forex trading course to acquaint yourself with all the trading and money management strategies to avoid making costly errors. Most courses are now provided online. One of the websites that provide online trading course is Traders4Traders.
When making aggressive investments, it is always wise to work with an investment manager. They can help you make the right decisions that can help minimize losses. Remember, with great returns come great risks.