CandleFocus

Long-Term Growth (LTG)

Candlefocus Editor
Long-term growth (LTG) describes an investment strategy that attempts to maximize portfolio growth over an extended period of time. This could range from three to five years for some investors, to ten years or more for others. For example, a retirement investor may have a ten-year time horizon, while a more short-term investor might have a three-year time horizon. The strategy involves investing primarily in stocks (both blue-chip stocks and high-growth companies) in order to capture any long-term market trends while limiting exposure to the risks of short-term volatility.

The LTG strategy can be applied to a range of objectives with different answers. For example, a conservative investor looking for growth might consider a portfolio that contains primarily high-quality blue-chip stocks with a preferred dividend policy. Meanwhile, an aggressive investor might consider a portfolio of young, high-growth companies, with a higher chance of volatility and greater risk-reward potential.

In either case, it is important to carefully consider the asset allocation within your portfolio. Generally speaking, an LTG portfolio should have a higher ratio of stocks (80%) to bonds (20%) to capture any potential upturn in the stock market. Moreover, when building the portfolio, prioritize companies with solid fundamentals, strong competitive advantages, and good management teams. This will enhance the chances of outpacing the growth of the broad market over time.

The success of an LTG portfolio also depends on an investor’s ability and willingness to stay the course. This means holding a portfolio for the long-term, avoiding trying to “time” the market, being disciplined with investments and rebalancing your portfolio periodically.

Overall, long-term growth is an investment strategy that can yield significant rewards over time when executed properly. By taking a conservative yet aggressive approach to adding and removing stocks, LTG investors can take advantage of the markets long-term growth with a well-constructed portfolio.

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