Experienced investors will tell you that you will get the highest returns on the riskiest investments. That is not to say that you should look for the most cutting edge, wildcat investments available; simply, that it is like a betting game.
The greater the odds, the better the returns on your bet. But investing isn’t quite like going to the races, or sitting in on a poker game. While there are some similarities there are many differences.
If you are a beginning entrepreneur who wishes to build a profitable young investor portfolio there are some things to consider.
Low-Risk, Long-Term Investments
Almost no one has gotten rich off low-risk, long-term investments. That doesn’t mean that you shouldn’t have some low-risk investments as part of your portfolio.
These are your bread-and-butter, backbone investments that can see you through the times when your dicier investments are not doing as well as you hoped. But keep a close eye on them. What seems low-risk can sometimes flip and become high-risk. Very few investments are a sure thing.
Some examples of low-risk investments include savings bonds, certificates of deposit, and similar items. Your ordinary savings account at your local bank is emergency money, not an investment.
Medium and High-Risk Investments
Stocks are usually your medium to high-risk investments. The key to building a good stock portfolio is diversification.
If you successfully diversify, even if one or two investments go under, you will have several others to carry you through the slump.
Educate Yourself About Stocks
There are a variety of resources online and off that will help you learn more about the various types of investments. The more you know and understand, the better your chances of making good choices.
Should High-Risk Stocks Be Part of a Young Investor Portfolio?
In point of fact, they should be part of anyone’s portfolio; but young investors have more time to recoup losses if their high-risk investments do not turn out.
Some kinds of high-risk portfolios include:
Concentrated Investments
As previously mentioned, putting all your money in one type of investment or one area increases the risk of your portfolio collapsing.
Currencies, Futures, and Options
These are the kinds of investments where you acquire the asset, then wait. It can be nerve-racking to buy one of these, and then watch it slowly lose value or even plummet after purchasing. But it feels great when you have purchased one or more of these types of investments and then watch them soar.
Entrepreneurs and Emerging Ideas
This could be an investment that will take a long while to give a return. Some might not give a return at all. But hit the right one, and you can watch your investments rapidly grow.
Penny Stocks
Some are good, some are extremely risky. The key with these little guys is to move them quickly.
Final Thoughts
Something to remember when building your adventurous young investor portfolio is to remember to keep moving. While you might want to patiently wait on some investments, other parts of your portfolio need to keep moving.
It is like a big snowball: It might roll slowly, but it needs to keep rolling. The bigger it gets, the faster it can roll.
