Value to Growth, Rational Investment Strategy

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A novel investment strategy was developed by the author, after analysing the existing investment profiles of the then two senior investment strategists of Motley Fool Premium, specifically, from the website, https://www.fool.com. David's returns represented more conservative investment with returns reflective of value investing. Andrew's returns were consistent with investment high growth investment returns.

When considering whether an investor may ever use both strategies, over the course of their investing life, it occurred to me that it may be necessary to do precisely that.

For the early stage of investment life, when an investor may be a moderate to high earner with sustainable disposable income, growth investment would mostly suit that condition.

For latter years, when working income is no longer able to support the investor, is more prudent to pursue value investment (predominantly equities) - also understood as conservative investment. (The term value investment was derived from the author's cover-to-cover reading of the book, The Warren Buffett Way: Investment Strategies of the World's Greatest Investor, Robert G. Hagstrom, 1st Edition 1994/1995. The book was read by the author, in 1997.)

Wealthy investors may conserve or 'bank' the wealth on conservative investment, under the model. Their disposable savings will be of a much higher ratio than less affluent investors or those who are physically advanced in their maturity. That disposable portion of wealth is best invested into a growth portfolio strategy, while the more at risk wealth is allotted into a conservative, value investment.

Example 1

A middle income earner of 30 years with no children may invest one third of dollar cash averaging investment income or hereditary funds into value investment. The remaining two thirds of the income would be invested into growth investment. All of this investment is best placed in a managed portfolio, for the average investor, with the fund manager selected as 'Sponsor', for investor security. The ration would be 1:1 for latter middle age, around 45 years of age to 55 years age. At retirement age the ratio would be no less than 1:2 for a mid-wealth investor, respectively. For a wealthier investor the ration should be 100% value, for the rest of the investor's life, returning income via dividends. All growth dividends should be treated as reinvestment reserves, by the investor, to drive a higher pace of growth than would occur if they accepted the call on dividends.

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