The Dangers of an Aggressive Investing Strategy for Your IRA

The investing strategy that you employ will make a huge difference in how much money you make in the long run. Many investors choose an aggressive investing strategy for their IRAs. However, using this type of strategy can be very dangerous and carries with it a lot of risk. Here are a few of the dangers associated with an aggressive investing strategy for your IRA.

More Exposure

Everyone wants to be able to make a great return on their investment. There are so many different investment strategies out there that have brought astounding returns over the short-term. These types of investments tend to attract many investors as a shortcut to wealth. While it can work in some situations, many times this leaves investors dangerously exposed to the market. Many of these strategies do not take into consideration the total value of an investor's account. They do not use money management and might risk astounding amount of money compared to the size of their investment capital. In order to get these huge gains, you have to expose yourself in a big way to the market. This could result in losing your entire account because of one miscalculated investment decision.

Gamblers Mentality

Another big problem that comes with using an aggressive investment strategy is that it encourages a gamblers mentality. Many people develop this mentality after a series of wins in the market. This is a very similar feeling that one experiences after winning at a casino a few times. The investor starts to feel like they are invincible and that they can consistently beat the market in this fashion. They start to imagine how great it will be to make as much money as they just made on a regular basis.

Many times, this results in the investor increasing the size of their investment because of their newfound confidence. More times than not, the market will change in the investment strategy will result in huge losses. As an investor, you should always expect there to be some losses involved. Many investors are surprised whenever they lose a trade. If you learn to manage losses appropriately, you will be much more successful in the market overall.

Lose Your Retirement


By employing an aggressive investment strategy for your IRA, you are risking your level of comfort in your retirement years. Everyone dreams of being able to retire someday and live comfortably. No one wants to have to work their entire lives and not have any time to enjoy themselves. However, when you use a very aggressive investment strategy, you are potentially risking this situation in the future. If you use an aggressive strategy, you could potentially devastate your retirement account and not have enough time to build it back up again. This could result in you working much longer than you should have to and not being able to enjoy life to the fullest. This is why you see many people still working a job at the age of 70 and 80 years old.

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