The stock market is the biggest market similar to the forex market that is making many people rich over a long term investment period. In as much it makes people rich and richer, others fall from grace to grass. Sometimes, these riches in stock are not achieved by luck, but rather with strategies which are carefully observed before implementing.
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In this blog, I will be discussing How to become wealthy in the stock market using the GVD 123 tactic. Have you been practising your stocks trading skills, but profits are too light to boast about them? If this is you, the GVD 123 strategy is what you need to follow. As usual, I do not offer to get rich soon advice. Instead, this strategy will make you wealthy in the long run. Let’s get to.
Growth, Value, and Dividends Stocks
GVD 123 Strategy– GVD stands for Growth, Value, and Dividend. Each of these is the strategy that you must implement. This means that you have to look for the Growth stock, Value stock, and Dividend Stock when investing.
Growth stocks are the kind of stocks that grow at a rate of 10% plus per annual. These stocks can continue growing for years and earn a good profit. It is quite simple to determine which company or institution has a growth stock. This is because such information can be found in conferences, seminars, or even the national news television network. Moreover, this is free information you can find on the internet.
All you have to do is type the company name and read all about the company to find out about the type of stocks they possess. It is crucial to research the company before venturing into any business with them. Investing in a growth stock company that yields 10% plus is a perfect idea, but the real growth stock company we should be looking at is one that gives 20% plus interest per annum.
Value stock concentrate on valuation and you have to be compelling with valuation. When you talk about this type of stock, they fall under risk versus rewards. You have to be more selective with prices, as compared to growth stock which is not fussy with prices margin. This means that you need to find that stocks that in the next five years will still be in the appreciation game. If that stock doesn’t double your money, then it doesn’t fit into the criteria of the strategy.
You also have to look for companies that pay out dividends regularly. You must research on well-established companies with a good reputation of sharing or distributing interests back to shareholders.
The 123 of this strategy
Essentially this means that the stock you plan to invest focuses on all three strategies. You must acknowledge that your money 50 to 70% will be invested in all three groups (GVD). This might be risky for pensioners but a great strategy for young ones who can invest and implement all three of them. You can be an investor and focus on only Growth stocks, and you can be an investor and only trade on Value or Dividends only.
Still, if you want to be an apex investor, then you must be able to implement all three of them (GVD) simultaneously. You might have a few companies in mind, like Skyworks, Facebook, and Tesla. Looking at the three, you can group them into three categories.
Tesla is a growing company; therefore, the interest revenue from Tesla will continue to grow and grow annually. And you check the valuation of Tesla; a few years ago the market cap was well under $100 billion, and as of 26th of August the market cap is over $400 billion. This is a growing stock.
Skyworks Solutions, on the other hand, represents the dividends stocks. Moreover, Skyworks was paying as low as 2% plus on dividends stocks a few years ago. But then they had an interest in 5G network solutions which showed a big future for them. And it might end up being a growth stock when the 5G network starts functioning. So it is a perfect stock because it represents all three elements of our strategy, which is the Growth, Value, and Dividends.
Facebook represents a value stock; this is incredible to think of. Facebook had a Forward PE of under 20 a few years ago. But there is so much to happen in this company that it seems impossible now and in the next few years to see this company losing its value. The diversification and constant acquisition are a big up for the company and its stock. In the end, you should always think of the risk versus reward when investing in any stock.
Why you need to have more stocks on your portfolio than just those top stock market that satisfy the GVD strategy
The first thing to note is that you cannot have just three big, game-changing stocks. In the same way, you cannot have 30 or 40 stocks in your portfolio. These two scenarios are either too undiversified or too over diversified, and you end up not gaining the maximum benefit of this strategy.
In my opinion, the best amount of stocks to hold would be around 8 to 15 stocks. No more should be held for an everyday small-time investor. Now if you are an investor with over $500,000 then maybe you can buy into more. Now, why do I say you shouldn’t have only 3 or 4 stocks, and why do I say you shouldn’t have more than 15 stocks? Here are my reasons
Generally having more than 15 stocks means that you have to be up to date with researching and finding out why a company should be worthy of your portfolio. When you have so many at once, you lose sight of the big picture, and you get clouded with a lot of junk. Now when you have less than 4 or 3, you become lazy in terms of researching for more worthy stocks.
I mean, let’s be honest there are dozens of stocks out in the market that are doing tremendously well. There are dozens more who are growing each day and surpassing the expectation of analysts. If you decide to remain so quiet and content with 2 or 4, you become lazy and fall behind on making more.
No spare cash:
Another reason I do not support having lots of stocks or investing everything into a hand full of big-name stocks is because of having some extra cash saved. Let me explain. First, I always advise having a small amount stashed away for an emergency.
Now, in the same way, you have an emergency fund for your everyday lives is the same way you need an emergency fund for the stock market. Take a look at the pandemic crash of the stock market; it was a great opportunity to invest in more stocks. If you’ve spent all your cash on little stocks here and there, you would have lost the chance to get big discounts on some outstanding stocks.
I see no reason why people get afraid when the stock market dips; it’s not a bad thing; it is a good thing. But many people only keep their stock in a few big ones or many little ones because they are afraid of a dip. The truth is every stock experiences a dip every once in a while but don’t get yourself worked up about it, focus on the GVD of stock and invest.
This isn’t something that I can help with/. If you are lazy to do the work it takes to invest wisely and decide to get 30 different stocks or decide to have 2 or 3 stocks, then you shouldn’t even be listening to this.
The worst thing you should be worried about when getting a stock is no growth. If you can’t see a profit in the stock value in the next five or ten years, then it’s not worth it. Now you understand the benefit of this strategy, and you understand how to use it, you can be on your way to wealth and financial freedom.
Do you have any questions on the topic? Then you need to leave a comment on the section provided below. Also, support me and my work by liking and sharing my posts.
© Lifestyle Tips by Antoaneta
Recommended for further reading:
- Secrets of the Millionaire Mind
- The Millionaire Fastlane
- The Automatic Millionaire
- The Wealthy Barber
- The 4-Hour WorkWeek