America is still a capitalist society. There’s no avoiding that. Your company could always use more money, even if it’s already profitable.
That’s where capital growth comes in. In the wake of the coronavirus, businesses need money now more than ever. Get the ultimate guide to capital growth by reading on.
Maximizing Capital Growth
Let’s start with the basics: What’s capital growth? It’s an increase in the value of an investment or asset over time.
It’s measured by the difference between an investment or asset’s market value and its purchase price. The latter refers to the asset’s value when it was acquired.
Now let’s talk strategy. A capital growth strategy is designed to maximize an investment portfolio’s capital appreciation over the long term. It does so by way of an asset allocation focused on securities with high projected returns.
Portfolios with a capital growth strategy mostly have equities or stocks. Equities’ share of the total portfolio varies by the individual investor’s financial limitations, investment horizon, risk tolerance, and investment goals. That’s known as equity financing.
A capital growth portfolio generally has about 65% to 70% equities, 20% to 25% fixed-income securities, and the rest consists of money market securities or cash.
Capital growth investors choose between moderate and high growth objectives. Moderate growth investors would buy, for example, blue-chip companies’ stocks.
High growth investors purchase more speculative assets, like growth stocks from low-profit, high-potential companies. It’s all a part of business acquisition financing.
Strategic Growth Capital
A capital growth strategy works for most investors who have a long-term timeline of 10 years or more.
Sophisticated investors can build a portfolio of individual stocks. They can balance that with cash and fixed income or hedging strategies that leverage futures and options.
If an investor prefers not to have to manage a portfolio of individual securities, they can choose a packaged product. Such products include exchange-traded funds (ETFs) and mutual funds. They come in dozens and sometimes hundreds of various categories.
An investor should own ETFs or funds that offer diversified exposure to stocks with growth and value characteristics. Stocks should also have different geographies and market capitalizations.
A general approach is to choose a target-date fund that has bonds, stocks, and cash that become more conservative as the target date draws near. Or you could choose a lifestyle fund. This keeps a static allocation according to a choice of risk levels.
An investor should choose a moderate or aggressive allocation for capital growth.
Weightlifters say that it’s all about the gains. In that context, gains refer to the gains in muscle mass that they make.
They lift weights to make and keep their gains. The more they lift, the more muscle mass they gain.
Finance is similar to lifting. The more aggressively your company invests, the greater its capital growth will be. Your business needs the financial version of a personal trainer to whip it into shape. A business financial consultant who can double as an IPO/DPO consultant to help it make a direct public offering. Schedule a consultation for business consulting services with us today.