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Those who invest for growth are typically people who are prepared to take a little more risk with their money. Exactly how much risk will depend on your personal comfort level and your time horizon (e.g. are you allowing long enough for the ups and downs of the stock market to smooth themselves out?)
Unlike income-paying investments that throw off a helpful dividend every so often, investing for growth is all about capital returns. In order to realize your profits you have to sell out of your position, making this form of investing all the more risky on the whole.
Our model portfolio and goal-based fund selections have time horizon and risk level guides to help you choose the right investments for you.
The most popular form of growth investing is equities – the shares of companies. History has proven that if you hold a collection of equities over a substantial period of time then the chances are that you will make a profit.
Shares of large developed world companies are generally seen as the safest form of equity investment, as are often established market leaders with predictable earnings growth. That’s not to say that you won’t lose you money if you just bought shares in a multi-billion pound company of course; just ask BP investors in 2011 after a big oil spill!
Our regular investing selections have time horizon and risk level guides to help you choose the right investments for you.
If you’re not planning on touching your capital for a long period of time then you can allow yourself to dip into more volatile areas of the market. Riskier areas such as smaller companies and emerging markets have proven very popular in the past for those with a 10, 20 or 30 year time horizon.
While there is the chance that these areas can make you a great deal of money over the long run, they are generally more volatile and tend to be hit particularly hard during general market sell offs. They’re not for the faint-hearted, therefore.
You could buy direct equities yourself, but while this way of investing can make you a lot of money, the risk of putting all your eggs in one basket is not for the mainstream investor. Collective investment vehicles such as funds and investment trusts can offer investors more diversified exposure to equity markets, but because they are actively managed, investors have to pay up for their services. A cheaper option is to use passive funds or ETFs (exchange traded funds). These vehicles track the index they are investing in, giving investors low cost exposure to the markets.
We have assembled some links around this page that are relevant to investors looking for solutions to their growth needs, whether they be ready made solutions or ‘pick your own’ investments.