Either strategy could bring you higher returns and faster growth over time but without unnecessary risk taking.
2. Risk and reward go together
That said, there’s no way to invest more aggressively without taking on more risk. Before you decide to pursue higher returns in your retirement account, consider what that means for your risk level.
In practice, adding risk to your portfolio usually opens you up to more volatility. A riskier portfolio will reflect the stock market’s usual ups and downs to a greater degree. Think carefully about whether you can handle that, because not every investor can.
The danger is a big market correction might push you to sell your investments and hide out in cash. In the moment when the market’s crashing, cutting your losses might seem like the right move. But longer term, that strategy usually backfires. You end up selling when share prices are low and buying later when share prices have recovered. You’re bound to lose money following that course of action.
If volatility might push you to respond in such a manner, you’re better off with a more conservative portfolio.
3. Your age matters
The younger you are, the more aggressive you can afford to be in your portfolio. This is because you don’t need any cash from your retirement account until you retire. And if you don’t have to sell your stocks for 20 or 30 years, you can stay invested and ride out whatever short-term volatility comes your way.