Hortense Bioy: Growth investing is an investment strategy that focuses on companies with a lot of potential to grow in the future and make a lot of money, even if these companies are already expensive.
Technology companies like Apple, Amazon and Google are well-known examples of growth stocks. However, while these companies have been hugely successful, many growth stocks go down in value. Growth stocks are riskier investments than others, certainly riskier than stocks that have been paying dividends for years.
Growth stocks typically don’t pay dividends as they prefer to reinvest the money back into the business to finance further expansion. One way to minimise the impact of that risk on a portfolio is to buy a diversified strategic-beta growth ETF.
Growth stocks have outperformed value stocks in recent years, which many see as an anomaly. In the long run, it is commonly expected for growth stocks to underperform value stocks.
The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.