Growth investing focuses on companies that are expected to grow faster than the average. These are often newer, innovative companies in industries like technology, healthcare, or renewable energy. Investors who follow this strategy are looking for companies that can grow their profits quickly, which usually means their stock prices will rise too.
Unlike value investors who look for bargains, growth investors don’t mind paying a higher price for a stock. They believe the company’s future success will make it worth it. Think of companies like Amazon, Tesla, or Zoom. They might have seemed expensive at first, but investors believed in their potential, and those bets paid off.
The main goal with growth investing is capital appreciation, which means your investment increases in value. These companies usually reinvest their profits to keep expanding, so they don’t always pay dividends. Instead, the return comes from the stock price going up as the company grows.
This strategy can bring high rewards, but it also comes with higher risk. If the company doesn’t grow as expected, the stock price can drop fast. That’s why growth investing works best for people who can handle ups and downs and are willing to do research to pick the right companies.
