Constant-dollar plan would be most suitable for
Alex as Alex being a high risk tolerant investor.
- Dollar-cost averaging is an investment strategy in which an
investor plans to invest a total sum of money by dividing the total
money across periodic purchases of a target asset so as to reduce
the impact of volatility (risk) on the overall purchase. This is
suitable a suitable strategy for a low risk tolerant investor
whereas not so suitable for high risk tolerant investors.
- Constant-dollar plan is an investment strategy for investing in
which a constant dollar amount in stocks, with other investments in
bonds or short-term securities. In effect, this plan forces the
investor to sell stocks in rising markets and purchase them in
falling markets, thus making it a aggresive strategy making it
suitable for high risk tolerant investors like Alex. This strategy
possess high risk with high rewards.
- A constant ratio plan is an investment strategy, which keeps
the aggressive (high risk) and conservative portions (low risk) of
a portfolio set at a fixed ratio. When this ratio differs for the
desired value, investor is required to make active changes in the
portfolio to make the ratio close to desired value. This strategy
is more suitable for less risk tolerant investors and less suitable
for high risk tolerant investors.
- The variable-ratio plan is an investment strategy which uses a
variable proportion of risky investments to safer investments, such
that when the prices of the risky securities are low, more money is
invested in them, but when they are high, they are sold, placing
the proceeds in conservative investments. These strategy also
involves active portfolio management by changing the ratio. This
strategy is for low to medium risk tolerant investors.
Please do rate me and mention doubts, if any, in the comments
section.