4 Investing Strategies to Grow Your Money Like Magic

Growth is the most important thing on the minds of many stock market investors, but not all strategies are equal. Most people’s returns don’t match whatever number is published for the S&P 500 or NASDAQ over certain periods. You should also be able to beat the market indexes over the long-term in your 401(k) or IRA. If you want to stimulate growth and unlock the magic of the market, consider these four investment approaches.

1. Hold for the long term

Too many investors are their own worst enemy. People get nervous when the market falls, so they sell stocks that have already lost value. That’s exactly how you lock in your losses and miss out on the eventual bull market recovery. Over the entire history of capital markets, equities have always returned to long-term growth as the global economy expands. That’s no guarantee of future performance, but it’s a strong fundamental indicator.

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It’s fine to make some modest adjustments to your allocation as market conditions change. Those adjustments could include rebalancing or a slight rotation based changing valuations. For the most part, though, you want to come up with a long-term plan and stick to your guns. Let your winners keep winning.

Volatility is a necessary evil in stock market investing, and the stocks that deliver the most growth tend to endure more volatility along the way. It’s impossible to know exactly which days a stock will rise and fall, but the gains are going to outweigh the losses for a well-allocated portfolio. The best way to unlock returns is to stay invested for all the days that your stocks grow.

2. Go beyond index investing

Index investing is great for most people, and it’s only a good idea to embrace a more active strategy if you do so responsibly. That said, you can’t beat the market if you only hold index funds. Technically, you can’t even quite match the market with index funds, because you incur taxes, fees, and trading costs, even if they’re minuscule.

Over the long run, the average rate of return for index funds has been around 8% to 10%. There’s nothing wrong with that return, but if you want to get more out of the hard-earned savings that you put to work, you have to go beyond indexes and stay disciplined with stock picking.

3. Invest in megatrends

Exposing your investments to emerging high-growth economic trends is a great way to deliver spectacular returns. Some industries are going to expand rapidly, and some geographic regions are going to outpace others. The companies spearheading those trends are going to benefit with higher revenues and profits, and that should drive the value of their stocks higher over the long term.

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