What are Growth Stocks?
Growth stocks are those expected to grow in value at a rate higher than what the average market is doing. Many times, growth stocks may not come with a dividend payment simply because the entire focus of the stock is in growing its net worth. While they can be a very important part of an investor’s portfolio, there are also some things to keep in mind about growth stocks. First, the decision to invest in a growth stock or a growth stock fund should not be taken lightly. As with any type of investment, it is possible that the return on investment will not be positive with a growth stock. In reality, investment in these types of stocks is going to be riskier than investment in other products. While it may make sense, given the individual investor’s goals, in others it may not make much sense at all. Those who are investing in a growth stock should look at two different approaches. The first involves a long-term financial investment package that will look toward the future, slowly moving
Exploring the benefits of growth stocks means learning what growth stocks are. Growth stocks in finance are stocks issued by new companies that need to reinvest most or all profits back to the business. Growth stocks pay small dividends or no dividends at all now, with hopes of greater future growth. The prices of these stocks reflect the investor’s belief in their future earnings in growth. The growth stock of a company is the growing earnings and/or revenue faster than its industry or the overall market. Such companies usually pay little or no real dividends preferring to use the income instead to finance further expansion.
