How to Manage an Aggressive Growth Fund

For investors who want rapid gains, there are few options more attractive than aggressive growth funds. However, these funds come with a high level of risk. They can also be difficult for investors to manage, especially novice investors. Find out exactly what aggressive growth funds are and why they can be good for your portfolio. You'll also discover common pitfalls of these funds as well as how to make a conscientious investment decisions.

Difficulty: Challenging

Instructions

Things You'll Need:

• Capital
• Solid financial plan
• Trusted financial advisor

Understand Your Aggressive Growth Fund

1. Learn about the goals of your fund. Aggressive growth funds aim to give the highest gains possible through high-risk investments with high profit potential.

2. Discover your options. The most typical types of investments involved in aggressive growth funds are high-risk stocks, such as initial public offerings (IPOs). Portfolio managers who deal with aggressive growth funds are attracted to these stocks because of their potential for fast growth.

Buy an Aggressive Growth Fund

3. Make an outline of your long- and short-term goals before you look at aggressive growth funds. This will help you determine whether the risk is worth your investment.

4. Consult with a financial professional before investing in an aggressive growth fund. An adviser with solid experience managing this type of fund will be in a good position to weigh the pros and cons of investing in a high-risk stock.

5. Compare several aggressive growth funds to see which one would be best for your retirement goals. You can find information about funds by visiting a financial Web site, like Moody's or Morningstar, or you can look through the financial section of your newspaper.

6. Look at the prospectus for every fund you may invest in. You'll find valuable information about the board of directors plans to manage the fund, how the fund has performed in the past and information about the distribution agreements.

7. Purchase your shares the least expensive way possible. When you buy directly from the fund, you'll save yourself a lot of money. You can also buy from a fund supermarket or a licensed broker.

Tips & Warnings

• If you're a first-time investor, it may be a good idea to consider investing your money in a less-risky mutual fund until you get the hang of buying and selling shares.
• Give yourself more stability by investing in other stocks and bonds in addition to an aggressive growth fund.
• Keep in mind that aggressive growth funds are among the riskiest and most volatile mutual funds. Although the potential for high returns is great, aggressive growth funds require consistent monitoring for the best results.