The ability of the stock market to grow your wealth is amazing. Consider this, if you had invested $100,000 in the All Ordinaries index and reinvested all dividends (accumulation) just four-and-a-half-years ago, your investment would be up over 50%. That's a $50,000 profit just from holding the broad market index!
The longer term returns are even more impressive. Over the last 30 years an investment of $100,000 in the All Ordinaries Accumulation Index would have resulted in a portfolio valued at over $1.5 million today!
These outstanding gains in wealth show what a compound return of approximately 9.5% per annum can deliver.
However, while a return of 9.5% is obviously enough to produce significant wealth accumulation over the long term many investors want even more. That's why investors choose to pick stocks in the hope of outperforming the market.
If that's your goal, here are a few stock ideas that might help you on your path to greater wealth.
Macquarie Group Ltd (ASX: MQG) appears to be going from strength to strength with the investment bank's share price at a five-year high and with the bank forecasting stellar upcoming results. With a business model that is heavily skewed to 'annuity-type' revenues rather than the vagaries of the market, coupled with over half of its earnings coming from offshore, the future outlook for Macquarie remains solid.
Cochlear Limited's (ASX: COH) position as a leading manufacturer of cochlear hearing device implants provides the group with a solid outlook for continued growth over the foreseeable future. This as the company launches new models thanks to its significant research and development spend. Importantly, from an investor's perspective the group enjoys high levels of operating leverage which means an increasing percentage of higher sales should drop through to the bottom line.
Greencross Limited (ASX: GXL) is still a small company compared to the two above with a market capitalisation of less than $1 billion. Its growth potential however is equally exciting as this leading veterinary group continues to consolidate the sector. With the veterinary market still highly fragmented, Greencross' growth profile remains highly appealing.