How You Can Make Money from the Future of Growth

Last week I showed just how easily you can make big money investing in small-cap stocks.

The small end of the stock market is chock-full of fascinating businesses.

And if you want to profit from the most exciting trends sweeping the economy, there’s no question…small-caps are the place to be.

Whether it’s keeping China’s middle class fed and entertained, or developing the tech to serve Australia’s ageing population…if there’s an economic shift in the works, you can bet there’s an Aussie small-cap stock out there working hard to profit from it.

Stockbrokers at the top end of town would prefer that you didn’t know this…but the large-cap stocks they love to funnel you into just don’t expose you to those exciting themes.

These ‘big name’, lumbering companies clutter far too many portfolios. They might even be cluttering up yours.

Companies like this are a stockbroker’s dream. They’re dull as dishwater, and their stock prices tend not to move around much.

That means the broker runs less risk of actually helping you make any profit. Remember, your broker doesn’t get rich when your shares go up in value. He only earns money if he can convince you to buy and sell stocks.

I should know. I used to work with these clowns in London, Sydney and Melbourne. They love to churn through large-cap stocks. It’s the same story everywhere.

Remember: the fat cats on Collins St and Martin Place just want control of your money. They want you to leave it with them and forget it.

And if you fall for their flim-flam, it will keep you at the bottom of the financial food chain for the rest of your life.

I want you to avoid that dangerous trap. ‘Big name’ stocks stunt your portfolio’s growth. And mark my words…you’ll never get rich investing in companies like that.

So if not the big, boring large-caps, what kind of companies can make you rich?

Well, locking onto the big trends reshaping our economy is a good start.

But even though you might seek fortune in the small-cap sector, it pays to think big — beyond those economic trends, to an even higher level.

I’m talking about riding a wave of investment not just in a company, but in an entire asset class.

I got a valuable reminder of this just a few days ago.

You can improve your decision-making by keeping an eye on where the big fund managers are moving their bets.

And Australian fund managers don’t come any bigger than the $101 billion Future Fund.

The Future Fund gave you a rare hint last week about where it will direct its fund flows. And the hint came from no less an authority than the fund’s chairman, Peter Costello.

The former federal treasurer gave an interview to the Australian Financial Review. He said the Future Fund is looking to its alternative asset holdings to drive returns.

By the way, an alternative asset is anything that lies outside of the traditional cash, bonds and shares. It includes assets like farms, commodities, real estate, private equity and venture capital.

Read the rest of this article at Money Morning