Investing for growth is a high-risk but high-return strategy that targets fast-growing stocks.
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Growth investing focuses on buying stocks expected to rise at a faster rate than the market overall.
Growth stocks tend to represent new companies in emerging markets and innovative industries, like high-tech.
Growth stocks offer high returns but are risky, making careful research a company’s fundamentals and competitiveness key.
Growth investing is an strategy that targets stocks providing a significantly higher average rate of return than the market in general.
Now, your gut reaction to the above might be, “Hm, isn’t that the point of investing in general?”
In a way, yes. But growth investing is distinct in that it focuses almost exclusively on companies and sectors that are quickly rising.
“Growth investing refers to investing in those parts of the market which can offer above average rates of return and therefore provide an opportunity for investors to grow (sometimes significantly) their capital,” says Niladri Mukherjee, the head of CIO portfolio strategy for Bank of America Merrill Lynch. “Broadly, it can refer to investing in asset classes like equities or in early-stage companies in the private markets.”
The focus on early-stage or high-growth companies does carry its own risks. But when combined with diversification, growth investing can become a key part of an investor’s overall strategy.
Growth investing basics
While some investors mainly seek income from their financial holdings, most invest for appreciation — an increase in their money. Growth investing is one of the key ways to accomplish this goal.
“Growth investing is the search for companies that are growing quickly and more than the market in general. As an example, a company that earned $0.50 per share last year but will earn $1 this year is growing rapidly and would therefore tend to sell at …read more
Source:: Business Insider