Should I take a Defensive or Aggressive approach when it comes to investment
When it comes to investment the defensive approach is always suitable for everyone and one must have a defensive strategy before learning how to aggressively trade your account for higher gain. This way one can ensure in the long term you will have an account that is growing slowly.
When we are looking at the bigger picture look into personal finance, some will have their funds in fix deposit, or owning properties or cash for running a business and etc. There are many reasons why someone is putting their cash into fix deposit or in cash term, if you have planned well then it is certainly not a bad decision, but rather a strategic decision.
It is encouraged to do the same in trading where a trader to have some defensive approach and aggressive approach to grow their account. However many people when it comes to trading only have a goal in mind which is aggressively building their trading account, their focus is to keep looking for the best and highest return which often leads them to lose all their money at the end of the day.
One of the ways to combine both aggressive and defensive approaches is that if you have a large account and consistently growing 7% per year, for example, a US$100,000 capital and US$7,000 per year. You may allocate US$1,000 into aggressive trading. You may even further slip the US$1,000 into multiple smaller accounts. After the small accounts grow to a decent amount you can transfer back to the large account.
The idea sounds simple but many people because of greed they will not practice this approach. They will go all into the market and even some even borrow money to trade. On the opposite side, the defensive will stay too defensive by continuing to roll their 7% return annually all back into your investment account. Unless your large account has a substantial amount, otherwise a combination will serve you the purpose of growing your account in the long term and generate a higher return at the same time.
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