When it comes to growth, small-cap stocks take the cake. The asset class has managed to outperform their larger brethren over the long haul.
According to studies conducted by famous economists Eugene Fama and Kenneth French from 1926 to 2012, small-cap stocks managed to outperform large-caps by a cumulative extra return of 253%. That’s an extra 253%.
The crux in those extra returns is that the period is over the long haul and it came with an extra big dose of volatility.
For many investors in retirement, the extra volatility and time needed to really capture the best of what small-cap stocks have to offer is too much. So many older investors ignore them and limit their exposure to small caps.
However, this is poppycock. The truth is investors in retirement are long-term investors. With retirements lasting 30 years or more, investors still need plenty of growth to get them through their golden years.
And small-cap stocks still are one of the most powerful ways to get that growth. Older investors nearing or in retirement need them just as much as someone younger.
With that in mind, here’s one stock, one exchange-traded fund and one mutual fund that makes it easy to add a dose of small-cap stocks to your portfolio.