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Aggressive growth funds explained

By Jakob Jelling
Cashbazar.com

If you're looking for a short-term investment that will give you larger capital gains, then aggressive growth funds are probably for you. These funds consist of stock and bonds in companies that are fairly volatile. The result is that you have a fund that can give very high returns in a short period of time - but it can also result in heavy losses as well. You should only consider investing in aggressive growth funds if you are not worried about high-risk investments.

Most of these aggressive funds will invest in new companies that have just gone public. This increases the chance that there will be a high return on that investment - but it also means that you might have to worry about these companies going under.

Aggressive growth funds can usually be predicted by the way in which the stock market and general economy are going at the time. For instance, most of these funds will show a lot of growth while the economy as a whole is going up, and do not do well at all if the rest of the economy is also struggling. As a result, you should look to buy from aggressive growth funds when the economy is on its way up.

This is due to the way in which the funds generally make money. Essentially, these are good short-term investments because they do not hold onto most stock for long periods of time. In fact, it is likely that the stock will be sold shortly after it is purchased. This is especially the case with companies that are just starting up, if it is likely that they will see a large increase in stock price during the first few days or weeks of public trading.

If you are interested in investing while the stock market seems to be in a down swing, then you should definitely look into contrarian funds instead. You should also not invest in these funds if there is any reason for you to worry about high risk investments, or if you're looking for a long-term investment strategy. For long-term investments, you should look into some of the less aggressive mutual funds.

About the author
Jakob Jelling is the founder of http://www.cashbazar.com. Visit his website for the latest on personal finance, debt elimination, budgeting, credit cards and real estate.

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