A critical aspect of portfolio management is generating growth. While dividends play an important role in investing, this discussion is about something different: pure, unadulterated growth.
It’s about the kind of growth that transforms a $100,000 investment today into a substantially larger sum through double-digit compound growth over the next two decades.
Allocating a portion of one’s portfolio to growth is a fundamental principle that every investor should consider. This principle goes beyond avoiding missed opportunities for significant long-term wealth creation.
While dividends have their merits, concentrating solely on them could lead investors to overlook the potential benefits of capital appreciation. By not incorporating growth-oriented stocks and funds, they might inadvertently limit the potential for a well-rounded and potentially higher performing portfolio.
The extent of allocation to growth, however, is influenced by factors such as the investor’s risk appetite and how long they plan to hold their investments.
A successful investor isn’t merely content with having a growth allocation; they understand precisely how they’re harnessing growth in their portfolio. This understanding goes beyond surface-level comprehension – it delves into grasping the driving forces behind growth themes and identifying the stocks and funds that hook into those themes.
Forget the quick riches
Esta historia es de la edición October 2023 de Money Magazine Australia.
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