7 Growth Investing Tips That Could Earn You Thousands

By MarketsFool.com

Image source: Getty Images.

Continue Reading Below

Successful growth investing entails identifying those elite businesses that are poised to deliver many years of consistently strong increases in revenue and profits. Companies that do tend to reward their shareholders with market-crushing returns.

The tips that follow were derived from lessons from several investing legends. They can help you find the next great growth stocks, and earn you a fortune along the way.

1. Quality matters.

More From Fool.com

The best businesses often turn out to be the best investments. Here's what Motley Fool co-founder and legendary investor David Gardner has to say on the subject:

These best growth companies are those with the strongest competitive advantages, largest market opportunities, and best management. They are the innovators, disruptors, and best of breed. And they tend to create tremendous wealth for their shareholders as they lead the world forward.

2 & 3. Get in early, and don't hold out for a bargain-price moment.

The earlier you invest in a great business, the more you can profit as other investors catch on to the company's success. This is where fortunes are made, where the 10- and even100-baggersare found, and how truly life-changing returns can be achieved.

However, investors often miss out on these opportunities because the stocks of the best early-stage growth companies almost always look expensive, except in the rear-view mirror. And so while we can certainly attempt to buy stock in these businesses at great prices, we should also be willing to pay a premium for quality. The last thing we want to do is miss out on a multi-bagger because we set our buy price just a few percentage points too low.

4. Buy stocks with the intent of holding them for as long as you possibly can.

Warren Buffett has said his "favorite holding period is forever." Here at the Motley Fool, our CEO and master investor Tom Gardner has implemented a minimum five-year holding period requirement in his Everlasting Portfolio, because he, too, is a big believer in the power of long-term stock ownership. And David Gardner -- who leads one of the best-performing high-growth investment-advisory services in the world -- recently described a core aspect of his philosophy this way:

By striving to purchase stocks in businesses that we're willing to hold for years -- and potentially even decades -- we allow the magic of tax-deferred compound growth to work in our favor.

5. Winners tend to keep on winning.

This is another valuable lesson I learned from Tom and David Gardner. I like to invest in companies and management teams with proven track records of success. That's because I, too, believe the idea David expressed so well in the following tweet.

It certainly is no guarantee, but I believe winning is a habit. The confidence and momentum achieved from past wins tends to pave the way for further risk-taking. Not blind risk-taking predicated on arrogance, but prudent, calculated bets based on optimistic and opportunistic views of a brighter future.

6. Make your portfolio your best expression of the world.

David Gardner once urged me to "Find out where the world is going, and get there as soon as possible." Your portfolio should reflect your passions, interests, field of study, and profession -- this is where your edge lies. But most of all, your portfolio should be positioned according to your vision of the future -- andthe more optimistic, the better.

7. Never quit.

There will be times when you throw up your hands in frustration and question whether growth investing is worth all the trouble. Seemingly irrational short-term volatility and vicious bear market declines tend to be brutal on high-quality yet often premium-priced growth stocks. These difficult market periods can wreak havoc on your emotions. However, the only way to win is to stay the course through the inevitable downturns.

Steel yourself with the knowledge that this, too, shall pass, and that your best-of-breed businesses will likely emerge from the rubble even stronger as they take market share from their weaker rivals. That will help you learn to look at these sell-offs as opportunities to add to your positions at even better prices, and magnify your long-term gains.

How to simplify investing -- in just 30 minutes a dayIt's roughly the same amount of time it takes to walk a quarter-mile on a treadmill... whip up dinner... read your children a bedtime story. And it's how little time it takes to learn everything you need to know to begin investing in the stock market. (Which -- if you're like most of us -- is something you know youshoulddo... but keep putting off.) The Motley Fool's Director of Investor Learning is eager to help you start down that venture -- absolutely FREE -- in just 30 minutes a day, for 13 days.

Simply click here to get started.

The Motley Fool has a disclosure policy.