The only real statistic that's important to shareholders for the growth of a portfolio is the total shareholder return, which is the return of dividends and share price growth combined.
Owning shares like Challenger Ltd (ASX: CGF), a2 Milk Company Ltd (ASX: A2M) and NIB Holdings Limited (ASX: NHF) has been great for shareholders over the last 12 months, giving total shareholder returns of 30%, 36.6% and 37.9% respectively. They could all continue to be good investments for years to come.
If you hold a portfolio of nicely performing companies like the ones above and avoid underperforming companies such as Nine Entertainment Co Holdings Ltd (ASX: NEC), Platinum Asset Management Limited (ASX: PTM) and Estia Health Ltd (ASX: EHE), then you'll have a great portfolio.
Therefore, if two investors both start with a portfolio worth $10,000 and one portfolio grows by 20% and the other grows by 10% it's clear the 20% growth investor will be ahead. But the overall size of your portfolio and wealth is determined by the returns and how much capital you put to work in it.
For example, a family who contributes $10,000 a year to their portfolio and achieves 15% returns per year will have a portfolio worth around $77,000 after five years.
A family who contributes $20,000 a year to their portfolio and achieves only 10% returns per year will have a portfolio worth around $134,000 after five years.
So even though the first family achieved 5% higher returns each year than the second family, the amount of contributions to their portfolio made a huge difference.
So how can a Fool put more money into the stock market? Well, take a look at this advice from our very own Bruce Jackson almost six years ago. The advice is as relevant today as it was in 2011 and is worth a read.
Simply, it's about getting control of your money and trying to make it work as hard as it can. If you manage to turbo charge your savings to over 50% of your income, you could find yourself rich in no time like Chris Reining who became a millionaire in six years.
Foolish takeaway
Once you're saving a large percentage of your income and you combine that with investing in great companies like Challenger and NIB Holdings becoming wealthy will be almost unavoidable.
But those two companies aren't the only two that could help you grow your wealth. Foolish investors should look at these three stocks for a great and profitable 2017.
