Investment Pyramid

DEFINITION of 'Investment Pyramid'

A portfolio strategy that allocates assets according to the relative safety and soundness of investments. The bottom of the pyramid is comprised of low-risk investments, the mid-portion is composed of growth investments and the top is speculative investments.

BREAKING DOWN 'Investment Pyramid'

The base (the widest part of the pyramid) would contain government bonds and money market securities, stocks would make up the middle of pyramid and then the top would be options and futures. Thus, the higher you go up the pyramid, the greater the risk and the potential return.

RELATED TERMS
  1. Pyramiding

    A method of increasing a position size by using unrealized profits ...
  2. Portfolio Investment

    A holding of an asset in a portfolio. A portfolio investment ...
  3. Aggressive Investment Strategy

    A portfolio management strategy that attempts to maximize returns ...
  4. Conservative Growth

    An investment strategy that aims to grow invested capital over ...
  5. Strategic Asset Allocation

    A portfolio strategy that involves setting target allocations ...
  6. Asset Allocation

    An investment strategy that aims to balance risk and reward by ...
Related Articles
  1. Investing Basics

    Determining Risk And The Risk Pyramid

    Many investors do not understand how to determine the risk level their individual portfolios should bear.
  2. Active Trading Fundamentals

    Pyramid Your Way To Profits

    This strategy involves scaling into profitable investments as they continue to rise.
  3. Investing

    What Is A Pyramid Scheme?

    Find out how this financial scam works and why you should watch out.
  4. Investing Basics

    How Much Investment Risk Can You Handle?

    When determining the amount of investment risk you can handle, consider your time horizon and bankroll.
  5. Entrepreneurship

    9 Signs That Business ‘Opportunity’ May Be a Scam

    There can be a fine line between a legitimate multi-level marketing opportunity and a pyramid scheme. Here are 9 warning signs.
  6. Retirement

    Risk And Diversification

    Safeguarding your portfolio involves a few simple steps.
  7. Retirement

    Are You A Disciplined Investor?

    Don't let "financial porn" steer you away from a sensible, long-term approach to investing.
  8. Personal Finance

    How Risky Is Your Portfolio?

    Find out how you could be subject to larger losses than you think.
  9. Term

    Understanding Portfolio Investment

    Portfolio investment involves buying securities with the expectation of earning a return on them.
  10. Entrepreneurship

    Multilevel Marketing Isn't Always A Scam, But It Often Is

    Nerium and Amway are popular direct sales companies that recruit new buyers and sellers to make a profit. Sadly, many direct sales firms are scams.
RELATED FAQS
  1. What is the difference between a Ponzi and a pyramid scheme?

    Pyramid schemes and Ponzi schemes share many similar characteristics in which unsuspecting individuals are fooled by unscrupulous ... Read Answer >>
  2. How do I find out my own risk tolerance?

    Learn why risking capital can be risky business, how much risk can you afford and how to determine the right amount of risk ... Read Answer >>
  3. How do I calculate a bond's modified duration using Excel?

    Understand the benefits of investing in a money market mutual fund, and learn why investors use this type of account in volatile ... Read Answer >>
  4. Why should investors pick less risky investments as they approach retirement?

    Investors must decide for themselves what the term "risky investment" means to them. At age 25, you may feel comfortable ... Read Answer >>
  5. What are the differences between debt and equity markets?

    Understand the basic, fundamental differences between the two primary investment markets of debt securities and equity investments. Read Answer >>
  6. I am going to retire soon! How do I invest 1 million for fixed income and safety?

Hot Definitions
  1. White Squire

    Very similar to a "white knight", but instead of purchasing a majority interest, the squire purchases a lesser interest in ...
  2. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
  3. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  4. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
  5. Weighted Average Cost Of Capital - WACC

    Weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is ...
  6. Basis Point (BPS)

    A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly ...
Trading Center