Pyramiding

Posted in Finance, Accounting and Economics Terms, Total Reads: 288
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Definition: Pyramiding

In Finance, Pyramiding is a strategy to use unrealized profits to buy more shares to increase the size of the investment portfolio. This is a risky prospective. It takes profit which are yet to be realized to increase the portfolio size.

It is risky because the unrealized profits and actual profits might not match up. This risk in comparison when compared to increasing portfolio with cash or actual realized asset.

That is the reason that Pyramiding is a slow method of growing the portfolio as the process requires small purchases through small profits.


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