Who Buys Growth Stocks?
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Who Buys Growth Stocks?
Growth stocks are especially suited to investors who can forgo current income. Retirees and others seeking investments that provide current income commonly avoid them entirely or at least minimize them in their portfolios.
Things To Know
- Speculators and buy-and-holders are attracted to growth stocks.
- Those who can forgo current income may find growth stocks suitable.
Two types of investors like growth stocks
Growth stocks are particularly attractive to two different types of investors—each with a different time horizon, goal, and risk tolerance. Speculators may purchase these stocks in the hopes of receiving high returns during a period of especially high growth. They may hope to sell the stock later for a large profit at the end of the growth spurt. Other investors may purchase growth stocks in the expectation of holding them for a long period and profiting from their better-than-average returns over time. These latter investors are likely to be fairly young and have a long investment time horizon.
If you are seeking to defer some of your taxes, you also may want to consider investing in growth stocks. Since your returns are more likely to be in the form of appreciated stock value than current dividends, you can defer taxes on your earnings until you sell the stock.
