Buying growth stocks is one of the best ways to beat inflation and grow your retirement pot of gold.
Long-term compounding, done over years and decades, can help you multiply your wealth effectively.
But why stop there?
Remember that stocks can be passed down as valuable assets to your children, and they can continue to enjoy this compounding as well.
For this compounding to happen, you need to invest your money in strong companies with bright long-term futures.
Let’s explore several types of stocks that will make you feel comfortable gifting to the next generation.
Technology that powers the future
The introduction of artificial intelligence (AI) has opened up a whole new world of possibilities.
AI is now embedded in everything from browser search results to powering graphics and video production on software platforms.
The pandemic years caused a surge in digitalisation as more people turned to the internet, while more corporations adopted cloud computing to improve efficiency and streamline their workflows.
AI promises to power the future, and companies such as Meta Platforms (NASDAQ: META), Microsoft (NASDAQ: MSFT) and Palantir (NASDAQ: PLTR) can give you front row seats to watch the action unfold.
Even Apple (NASDAQ: AAPL) has jumped on the AI bandwagon with the release of Apple Intelligence into its iPhones, iPads and Macs last year.
Meanwhile, Swiss bank UBS projected that AI spending will rise significantly in the coming years, with a 60% year-on-year increase expected for this year to US$360 billion.
For 2026, the bank expects a further 33% year-on-year jump to US$480 billion.
Apart from the companies mentioned above, Alphabet (NASDAQ: GOOGL), the parent company of Google, and Amazon (NASDAQ: AMZN) are also expected to contribute to this increase.
Sticky subscription software
In this era of cloud computing, companies are now offering their software via cloud platforms for a fee.
Known as “software-as-a-service” or SaaS companies, these businesses lock in their customer with high switching costs, making their revenue “sticky”.
A host of SaaS companies have sprouted in the last decade, demonstrating healthy growth in both revenue and free cash flow.
Some examples include Adobe (NASDAQ: ADBE) with its text, image and video-generation software via its Document and Creative Clouds.
There’s also Salesforce.com (NYSE: CRM) which provides customer relationship management software to help organisations to follow-up on sales leads and manage their customers better.
Other well-known SaaS companies include Snowflake (NYSE: SNOW), Datadog (NASDAQ: DDOG), and DocuSign (NASDAQ: DOCU).
These companies offer services ranging from data storage, monitoring and analytics to digital signatures.
Recession-resistant businesses
Another attractive category of growth stocks are those that can continue to do well during downturns.
Healthcare stocks belong in this category and some examples include Stryker (NYSE: SYK), Resmed (NYSE: RMD), and DexCom (NASDAQ: DXCM).
Stryker is a medical device and equipment company specialising in orthopaedic, spine, surgical, and neurotechnology products.
Resmed manufactures products to help people suffering from sleep apnea or COPD (chronic obstructive pulmonary disorder) while DexCom produces continuous glucose monitoring (CGM) devices to assist diabetes patients to track their blood glucose levels.
The beauty of such stocks is that they take care of unmet needs and help to improve the lives of sufferers of diabetes or sleep apnea, thereby enjoying a long growth runway and a large total addressable market.
The promise of e-commerce
Finally, let’s not forget the consumers of the world.
Consumption-based companies can also offer a long growth runway if they enjoy strong branding and a good reputation.
Many people enjoy eating Oreo snacks from snack-food company Mondelez (NASDAQ: MDLZ) or relish drinking a bottle of Pepsi-Cola from PepsiCo (NASDAQ: PEP).
E-commerce companies such as Coupang (NYSE: CPNG) and Etsy (NASDAQ: ETSY) allow you to purchase daily necessities and personalised gifts.
Then there’s ride-hailing and food delivery company Grab (NASDAQ: GRAB) and gaming and e-commerce company Sea Limited (NYSE: SE).
These businesses lay the foundation for millions of transactions as consumers purchase their products and services, allowing them to grow in line with the increase in consumption demand over the years.
Get Smart: Building a diversified growth portfolio
There’s a whole plethora of growth stocks out there for the picking.
The above are just some examples of growth stocks you can find to add to your multi-generational investment portfolio.
Our flagship US growth stock service, the Smart All Stars Portfolio, has a curated list of XX stocks that will give you ideas of what to add.
These stocks have the potential to post steady growth in the coming years that will allow your portfolio to enjoy healthy capital appreciation.
Boost your portfolio’s returns with 5 SGX stocks that promise both stability and steady growth. We bring you the names of these rock-solid stocks, including why they could drive massive dividends over the next few years. If you’re looking to invest for retirement, this guide is a must-read. Click HERE to download now.
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Disclosure: Royston Yang owns shares of Apple, Alphabet, Meta Platforms and Adobe.
