Despite the market turmoil that started in 2007 and dragged into early 2009, there is a lot to be said about the importance of holding growth funds in your portfolio, regardless of the stage of your savings. In fact, even retired investors who are drawing on their investments should still consider holding growth oriented investments in their portfolio. And, of course, it goes without saying that younger investors with plenty of time to their target date should be more heavily involved with growth investments than any other asset class.

Here are three reasons why all investors need to hold growth assets in their investment portfolio:

1. Low Interest Rates. While there is definitely a lot of merit in the argument that people should not carry more risk than they need, with interest rates as low as they have been, growth investments provide investors, and retired investors who draw on their investments to survive in particular, with the ability to offset capital erosion. With markets clearly on the rebound, growth rates are far exceeding interest rates. And if people are drawing on their investments, the capital erosion they are causing to their portfolio will be offset by this growth.

2. Diversification. Even the most conservative investors need to diversify their portfolio. While high yield investments were a smart move in 2009, many of them pose tremendous risks in the years to come as rates start climbing. To offset the interest rate risks associated income producing investments, investors should load up on growth assets, even if they contribute just a small portion to the overall portfolio. The reason this makes sense is that rates typically increase when the economy is doing well; growth assets flourish when the economy is doing well.

3. Choice and Availability. The growth asset class provides one of the most diverse and abundant asset classes in the investment world. Whether investors want higher risk with potentially higher returns, such as the case of small cap stocks and investments, or lower risk but steady growth investments that pay steady dividends, such as large cap mutual funds and dividend funds. Regardless of the investor’s need, there are growth focused investments available for everyone.

Of course, given the amount of growth assets available, it is recommended that investors incorporate just as much as risk as needed to maintain their investment objectives. This often means relying heavily on an asset allocation model that is best suited for the investor. However, since there are so many growth assets available - from higher risk options to lower risk, income-paying options - it goes without saying that they are virtually mandatory in today’s climate.

–> Learn more about Growth Funds at MutualFundSite.org.

Chris has more than 17 years of financial services experience. He currently manages a small portfolio of websites including one about Class B CDL Jobs at Class-B-CDL-Jobs.com.