What is the growth Strategy of the capital
Growth strategies, capital seeks to maximize capital growth of the investment portfolio in the long term through the allocation of assets to securities with high expected returns.
Strategy breakdown capital growth
Portfolios with the strategy of capital growth consist mainly of securities also known as stocks. The exact proportion of the shares in the total portfolio will vary depending on the investments of individual investors, financial constraints, investment goals and risk tolerance.
Overall, the growth of the portfolio capital will contain approximately 65-70% of the shares 20-25% of the value of fixed-income securities and the remainder in cash on the securities market. In search of high returns, this mixture is still somewhat protects the investor from serious losses in portfolio value if increased risk the proportion of assets in the portfolio will fall sharply. Please note that the aggressive portfolio strategy is also aimed at maximizing capital growth, but these strategies have a significantly higher risk, sometimes composed entirely of shares.
Strategy capital growth suitable for most investors with a long time horizon, typically 10 years or more. The most common goal of the growth strategy of the capital to save for retirement while funding education or building a legacy for future generations is also popular goals. Long-term investors may take on higher risk investments in shares when they have more time to recover from its sharp decline. During the rental period for 15 years or more, since 1973, the S&P 500 index has not suffered average annual income. In fact, in the worst 15-year period from 1973 to 2016, the index delivered an annual income of 3.7%, whereas in their best 15 years he made a return of 20%.
Building a strategy for capital growth
Investors have many options when building the distribution, which is conducting the capital increase. More experienced investors may choose to build a portfolio of individual stocks, which can be balanced in fixed income and cash or through hedging strategies options and futures leverage.
Investors do not have the time or knowledge to manage a portfolio of individual securities can choose from packaged products, including mutual funds and exchange-traded funds. They are available in dozens, if not hundreds of different categories. For capital growth, investors can own funds or etfs that provide diversified exposure to stocks with value and growth characteristics, as well as various market capitalizations and regions.
For one size fits all approach, investors can choose a target-date Fund’s allocation of stocks, bonds and cash, which becomes more conservative as the target-date approaches. Other pre-installed choice of the distribution of means of life, which support static allocation is based on the choice of risk level. For capital growth, the investor can choose moderate or aggressive allocation.