Investing for Growth

(5 of 8)

Investing for Growth

Investing for long-term growth is one goal to consider when investing your money. Growth comes from an investment’s price appreciation over time. Growth-oriented investments pay little, if any, income, but the increase in their value can outpace inflation. Why would someone want to invest for growth?

Things To Know

  • Growth investing can be effective for certain long-term needs.
  • Certain investments can be generally more effective than others for growth.

Reasons for investing for growth

  • To save for retirement
  • To save for college education
  • To buy a house
  • To provide long-term care for his or her parents

These goals are long-term in nature. Types of investments that are traditionally well suited for long-term growth include the following:

Growth investments

  • Common stocks, including those of smaller and newer companies
  • Growth mutual funds. Understand the risks of growth mutual funds.
  • Real estate
  • Collectibles

Things to remember about growth investments

Because of the higher volatility of growth investments, there is potential for a higher reward for those who take that risk. This volatility and potential loss of principal needs to be considered prior to investing. However, to overcome the possibility of short-term losses, you might have to hold these investments for a longer period of time, and you only realize your profits when you sell them. You will need to balance your growth goals against your need to be able to liquidate your investment—that is, to turn it into cash without a loss.

Learn more about the risks involved with stocks and mutual funds.