There are plenty of stock investing ideas out there, but a lot depends on what I’m looking to achieve. For example, I could focus on ideas that build passive income up over time. Or if I think an impending stock market crash is coming, I’d look at ideas designed to protect myself. For this article, I want to look at ideas for high capital growth, with the aim of eventually turning a pot of £1,000 into a sum worth £10,000.
An example to show the possibility
To begin with, I want to say that this stock investing idea is entirely plausible. Of course, it’ll take a few years to achieve and isn’t guaranteed, but if I could generate that kind of return overnight, I’d be very suspicious!
Let’s say I took a timeframe of five years looking backwards. If I’d split my £1,000 into an equal mix of Ocado, Games Workshop, Future, Anglo American and Scottish Mortgage Investment Trust, I’d have turned my £1,000 into over £10,000. Looking at those stocks, it’s plausible for me to have picked those as well. They aren’t obscure AIM penny stocks that are hunting for gold in Africa.
Now I’ve shown an example of a portfolio that would have achieved my stock investing idea goal, let’s break it down further. Looking at that example from the past can help me to plan for the future.
To begin with, I need to diversify my £1,000. I don’t want to buy too many stocks, so maybe half a dozen is the maximum I’d look for. I also need to diversify the industries I invest in. For the above example, all the businesses operate in very different areas. They ranges from finance to commodities, food and gaming. After all, I’m not sure over the next five years which industry is going to be super hot. So spreading my risk should help in this regard.
Patience needed
Another element to my stock investing idea is the patience needed. It’s very tempting to want to take profit and sell a stock when I’ve made 10% or so. Even if I’m up 100%, I need to be patient and let the stocks play out over time. This is because of my goal of trying to turn the £1,000 into £10,000.
Patience is also needed when the stocks I buy have negative days. Even the stocks mentioned in the example portfolio didn’t go in a perfect straight line higher. There will be days when my portfolio will be in the red, and I need to resist the urge to sell. It’s all about having the right vision of holding the stocks as long as is needed, given that I believe in their potential.
Don’t get me wrong, this idea is ambitious. There are plenty of other stock investing ideas out there that look to set goals that are more conservative. But if I want to try and get my lump sum up to £10,000, I need to have the mindset of thinking big.