Have you ever wanted to know why the rich continue to get richer?
It's probably simpler than you think but there's one strategy which investors, rich or poor, have been using for many years to grow their wealth substantially…
If you don't have a million dollar stock portfolio (I don't either), there's one way you can put the odds in your favour and achieve what so few people have.
For example, let's say you decide that this month you'll start putting aside some money for your share account. Based on what you can afford, you figure $1,000 is a good monthly deposit.
Now, armed with your long-term investment strategy you achieve what all of those "rich" people have achieved for so long. You generate a 10% annual return on your investment. Sounds simple enough.
It is.
Over a 25-year period, your regular monthly deposits would grow into a small fortune of $1.18 million. If you save $2,000 per month, you'll have the same amount in only 19 years.
"But how can I make 10% on my investments?" I hear you say.
The answer: In the Australian sharemarket.
Over the past 114 years, the sharemarket has returned, on average, 12% per annum. A spectacular return by anyone's measure. Obviously, the past is not the future and instead of looking for yesterday's market movers like Commonwealth Bank of Australia (ASX: CBA) and Telstra Corporation Ltd (ASX: TLS), we should instead be looking for smaller growth stocks. Which have a better chance of outperforming the market.
For example, I believe the following five stocks could help investors achieve a market-beating return over the long run.
1. Cash Converters International Ltd (ASX: CCV) – Our premier second-hand goods dealer, franchisor, payday loans experts and an all-in-one car finance provider.
2. Coca-Cola Amatil Ltd (ASX: CCL) – One of the world's largest Coca-Cola bottlers which has exclusive rights to distribute many well known brands throughout Australia and neighbouring countries.
3. Slater & Gordon Limited (ASX: SGH) – Already Australia's biggest personal injury law firm, it is now expanding its presence in the UK. A market five times bigger than ours.
4. M2 Group Ltd (ASX: MTU) – The owner of Dodo, Primus, Commander and Eftel brands. M2 is looking to become an all-in-one utility provider and is currently expanding its offering in gas and electricity.
5. Capitol Health Ltd (ASX: CAJ) – With an impressive track record of organic and acquisitive growth, it continues to be a solid long-term prospect.
Our BEST dividend stock idea – FREE!
It's never too late to start building your wealth and retiring rich or even early. With as little as $1,000 per month you can start trying to achieve a 10% annual return. Remember the market will continue to be volatile and rise and fall every day, but by adopting a long-term mindset and focusing solely on 'the big picture' you could achieve yearly returns in excess of what the markets dictates. Especially if you consider companies (like those above) which are not only likely to grow quickly but also pay out a big dividend.
