The idea of investing to grow your wealth may seem obvious. After all, few of us would welcome a portfolio strategy that actively sought to do the opposite. However, growth investing is just one of several specific investment strategies designed to fulfil particular needs. In this case, your growth strategy aims to build your wealth over the long term and maximise your options in life.

If you’re looking to build up a substantial retirement pot, buy a second home, or pay for the best education for your children, grandchildren or other dependants, then you might want to consider investing in a growth portfolio.

Once we’ve understood your requirements, including your timeframes, the amount of risk that you are comfortable with and how much loss you can bear, we’ll tailor an investment portfolio to meet these objectives. If you don’t know the answers to some or all of these questions currently, our Investment Managers can also help you understand your options and guide you with these decisions.

Brits who took professional financial advice for 5 years between 2001-06 enjoyed an average increase in their assets of nearly £48,000 after 10 years

compared to those who took no advice.

* International Longevity Centre UK, 2019

Seagulls perched on wooden posts by the sea

Want to increase your wealth? This is what you need to know.

Is investing for growth the right strategy for me?

The decision to follow a growth investment strategy depends on several factors such as your age, timescale, attitude to risk, and your life goals. Given the longer-term timeframe, growth investing would work well for younger investors – those in their 20s, 30s or 40s – who are keen to maximise their investments by focusing on the higher returns that growth portfolios aim to generate.

 

But a growth strategy isn’t just for the youngsters. It can also be a very attractive approach for more mature investors who see their capital, first and foremost, as an asset to be built up for the benefit of future generations within the family.

What are the characteristics of a growth portfolio?

Growth portfolios favour those asset classes, such as equities and multi-asset funds that offer the greatest potential for generating higher, long-term capital returns. Within those asset classes and funds, growth investors seek increased exposure to sectors and territories that are forecast to see above-average long-term growth, based on careful analysis and strict investment criteria. These could include carefully managed investments in emerging markets or technology stocks, for example.

 

Our dedicated Research Team provides expert analysis and insight across all investment sectors and asset classes.

Should growth portfolios be invested heavily in individual stocks?

Stock-picking has its undeniable attractions but the old saying about not putting all your eggs in one basket is proven investment wisdom. Anyone whose portfolio was heavily overweight in dot.com stocks in 2000 will vouch for that. Committing all your funds to one particular stock, or even sector, could make you rich but it could also leave you broke. It is more like gambling than investing.

 

We use proven long-term strategies, backed by specialist research, to make sure your portfolio is diversified and effectively allocated to get the right balance between risk and return.

Why does growth investing focus so much on equities?

Over the last 120 years the average annual real return on global equities has been 5.2% compared to 2.0% for bonds and 0.8% for cash¹.

 

Equities are consistently the best performing asset class over the long term, although they can be affected by short-term losses during stock market downturns.

 

Your Investment Manager will take the time to understand the level of risk that you are comfortable with and structure your portfolio strategy in line with your objectives.

 

¹ Credit Suisse/London Business School, 2020

Should I be re-investing to maximise my growth portfolio returns?

By reinvesting capital and dividends, growth strategies take advantage of the power of compounding.

 

In the 35 years up to 2019, the FTSE All Share Index delivered a cumulative return (excluding dividends) of 479%. But investors who held their shares and reinvested their dividends would have seen their portfolios grow by an incredible 1,888%, nearly four times as much2. It’s important to remember however, that past performance is not an indicator of future performance, and whilst this figure is not indicative of future returns, it shows the benefits of reinvesting.

 

2 Bloomberg, 2019

Is it wise to invest in high-risk or speculative investments?

The best advice here is buyer beware. Sophisticated investors, who can afford to risk substantial losses, may wish to engage in such risky vehicles as futures, options, penny shares and investments that are financed with very high levels of borrowing.

 

However, while these investments may sometimes generate much larger returns there is also a stronger risk that you could lose everything. Having your investment portfolio managed by an experienced, professional Investment Manager means you can relax in the knowledge that your wealth is being looked after, and in line with the level of risk you are comfortable with.

Middle-aged man sitting in a rocking chair at his window petting a cat
Grant, Scotland (name changed to protect anonymity)

They have been there for us and our family for a while now, providing advice and guidance in a number of areas.

Your next steps

Investing for income

You may have reached a point where you’d like to generate regular payments from your assets that enable you to live comfortably or allow you to afford the nicer things in life.

Want to learn more?

We can help you on the next exciting stage of your financial journey.

Our Investment Managers are ready to help you

Let us create the right portfolio to meet your personal goals.

Investec Wealth & Investment (UK) is a trading name of Investec Wealth & Investment Limited which is a subsidiary of Rathbones Group Plc. Investec Wealth & Investment Limited is authorised and regulated by the Financial Conduct Authority and is registered in England. Registered No. 2122340. Registered Office: 30 Gresham Street. London. EC2V 7QN.