Investing for growth involves purchasing something that will appreciate in value. Real estate and stocks are the two most common forms of growth investments.
No matter what your age, part of your portfolio should be allocated toward investment growth. For those within five years of retirement, the right amount would be somewhere between 60% - 80% of your portfolio
To have a successful experience investing for growth, follow these three rules.
Three Rules to Help You Achieve Investment Growth
1. Investment Growth Takes Time: Invest for the Long Term
Long term means when you buy something for the purpose of investment growth, you need to plan on owning it for at least ten years.
Statistics tell us that 70% of the time, the stock market will have a positive calendar year return; 30% of the time it will be negative. Pretty good odds!
Stay invested, and the investment growth that occurs in the positive years will outweigh the investment loss that happens in the negative years.
2. Invest. Don’t Speculate.
People lose money in the markets every day. Why? They are speculating; not investing.
Speculators try to time the markets to make a quick profit. They may win big; or they may lose big. This is not the strategy to take with your retirement money.
Investment growth does not occur from speculation; it occurs from buying an asset that, over time, will appreciate in value.
Take the time to learn how the investment will grow. This means you must understand what you own.
3. Diversify
If you put your assets in a single stock, or a single piece of property, you mind as well go to Vegas.
Long term investment growth is achieved by setting up a disciplined approach to invest systematically across stocks and real estate.
If you’re investing in stocks, use index funds.
If you’re buying real estate, set up plan to buy smaller, affordable investment properties, rather than putting all your money into one large piece of property.
You will achieve long term investment growth if you consistently invest for the long term, avoid the temptation to speculate, and diversify your investments.
