The current economic conditions have encouraged me to invest in ASX shares at cheaper prices. I think this will help me accelerate my wealth-building.
I'd prefer that the national and global economic difficulties weren't happening.
But the main thing I can focus on is that share prices have fallen substantially over the past several weeks, and also compared to two years ago. Is it a good time to invest? I think so and have just done so. Indeed, I plan to invest more in the week(s) ahead.
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Why investing now in ASX shares could accelerate my wealth
Over the longer term, I believe that (ASX) growth shares will be able to deliver stronger returns because they (usually) deliver more operational and sales growth than slow-and-steady ASX blue chips.
Periods of heightened volatility typically see these ASX growth shares fall harder than blue chips, even if the long-term outlook hasn't changed. Therefore, I view any outsized declines for an ASX growth share as an opportunity to buy compelling businesses at a good price.
Imagine if we had a crystal ball that could tell us a company's share price would reach $20 in 2028. If it was sitting at $10 today, that would be a gain of 100% in five years. But, if that company's share price temporarily fell 20% to $8, reaching the $20 target would represent a rise of 150%. A decline of 30% to $7 would mean rising to $20 would be an increase of 186%.
By investing now at the lower prices we're seeing, I'm hoping that the businesses I select have a better chance of delivering strong outperformance.
The Motley Fool's trading rules mean that I can't write about what I invested in yet, but I'm planning to write soon about the specific ASX growth shares that I chose. Buying ASX growth shares is a departure from where I normally invest. I spend so much time writing about ideas that I thought I'd invest in some.
I have been looking at the ASX retail share space for a while. It's an industry that goes through cycles of stronger demand by households and then weaker demand. It's the moments of weakness that can prove to be an opportunistic time to buy for the medium-to-long-term, in my opinion.
Growth to play its part in my portfolio
A large majority of my invested wealth is allocated to ASX dividend shares that I could own forever.
But I think there's definitely a place in my portfolio for companies that deliver a lot of expansion.
Of course, growing businesses can also pay dividends as well. I've been very pleased with how much dividend income I'm now getting from my Altium Limited (ASX: ALU) shares that I bought roughly a decade ago.
I don't expect my new investments to go as well as Altium has, but it shows that a growing, dividend-paying ASX share can deliver plenty of wealth creation if it goes well.
I will periodically review how my ASX growth share investments have performed. I'm not necessarily planning to own every 'growth' name in my portfolio forever – it might just be for the recovery or a store rollout journey.
The most important thing for me is that the current period is offering much cheaper valuations, which I'm snapping up for my portfolio.
