Are You Using This ‘Master Plan’ To Build Your Wealth?
If you’re like most investors, you have some kind of goal in mind. And while there are many specific goals and plans to reach them, at the end of the day, I’m willing to bet that the ultimate goal is long-term wealth.
Specifically, you want to be a millionaire.
If that’s your goal, then it simply can’t happen without dedicating a portion of your portfolio to aggressive growth stocks.
Now don’t get me wrong. You should invest in stable, reliable assets like dividend-paying stocks, blue chips, index funds, and the like. In fact, most of your portfolio — let’s say 80% — should go into these types of investments.
But the other 20%? That’s different.
Invest that other 20% of your money into big ideas that are changing the world.
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Why? Well, to put it simply, these are the companies that stand the best chance of dramatically increasing your profit potential.
That special 20% is important. In fact, it’s the entire focus of y premium newsletter, Game-Changing Stocks. In my newsletter, my subscribers and I define “Game-Changers” as the types of companies whose products have the potential to change the way we live our everyday lives… and dramatically move the needle on our investment portfolio.
Here’s how the 20% solution works…
Assume you start with a $25,000 portfolio that tracks the S&P 500. The average annual return from 2004 through 2013 for the S&P was a measly 5%. That means $25,000 turns into a little over $40,000 in 10 years.
#-ad_banner-#But things can change dramatically when you add in the potential for just a few big winners.
Let’s say you invest 80% of your $25,000 portfolio, or $20,000, in the S&P to achieve that 5% return. Then you allocate the remaining 20%, or $5,000, to a collection of “game-changing” picks — stocks with the potential to skyrocket.
Now, among that 20%, assuming you do your research and find some real winners, it’s safe to say you’ll have a handful of triple-digit winners over time. But, hey, let’s be realistic — you’re not always going to hit. So let’s say this part of the portfolio averages 25% a year overall. That means the initial $5,000 grows into just over $46,000 in 10 years.
Add in the return from the other 80% of your portfolio, which has grown to almost $33,000 and you’ve got a pretty nice nest egg of about $80,000 — two times what you would have had if you didn’t use this 20% solution.
$25,000 is a modest portfolio amount, but the results are fully scalable. Under this example, $250,000 could turn it into nearly $800,000.
Take a look at the comparison in this chart. It’s startling to see the huge difference a small investment in game-changing stocks can have on your wealth.
Now you may be asking, if the 20% solution seems to work so well, why not dedicate 50% or 100% of your portfolio to it?
Simple answer: It’s always important to be diversified, so putting all of one’s eggs into a single basket is never a good idea, no matter how spectacular the potential returns are.
An average investor can sleep at night knowing that most of his money — the majority of the equity portfolio — is invested in safe, reliable assets.
Think about it this way: If you allocate just 20% of your money to game-changing plays with triple-digit growth potential, it’s enough to make a big difference to your wealth, but not enough to keep you up at night.
Don’t get me wrong. I’m not guaranteeing this “master plan” will make you a millionaire. There are no guarantees when it comes to investing. But if you want to maximize your earning potential, then you owe it to yourself to put a portion of your portfolio into investments that “swing for the fences.”
The nice thing is that this simple illustration can be used by anyone. As I mentioned, it’s fully saleable. All it takes is the right mindset and the proper approach to finding winners for that 20% of your portfolio.
But if you find yourself thinking, “That’s all well and good, but what stocks should I start with?” — then I invite you to check out my premium newsletter, Game-Changing Stocks. As I mentioned earlier, the entire newsletter is dedicated to researching the ground-breaking trends that will change the way companies do business and how we live our everyday lives. We’re talking about companies with serious potential for savvy investors. If you’d like to learn more about my latest research, follow this link.