- Growth investing can be a really exciting strategy
to use with your investments, think high risk, high reward.
However, there are some considerations
that you should take into account
before you get started with growth investing.
So in this video, we are going to explain
exactly what growth investing is and how to get started.
(slow music)
Hey guys, it's Justine with The College Investor,
investing and personal finance for millennials.
So today we are talking about growth investing.
What exactly is growth investing?
So growth investing looks at companies
whose stocks are expected to rise faster
and above their competition.
And you'll wanna consider
a couple of different things and take a look
at a couple different factors in order to figure out
whether or not that company's stock
is on the fast track for growth investment.
You'll wanna take a look at things
like long-term increases in stock price, dividend payouts,
any business expansion plans.
So that goes along the lines with that growth factor
and other things to look at
are things like sales, proprietary processes,
any patents and their customer base.
Just really looking at those trend lines
within that particular company
to see how that aligns with your growth investment strategy.
So you might be asking yourself, what's the difference
between growth investing and value investing?
Growth investing really looks
at stocks that are on the rise.
Whereas value investing is looking at stocks
where the market has undervalued.
So you're looking at
kind of two different pieces right there.
The one thing about growth investments however,
is that they can come from
a variety of different industries.
However, you'll wanna pay attention
to different sectors like technology, healthcare,
small companies and speculative opportunities.
Now there's different ways to evaluate
a potential grow of stocks.
However, there's no universal formula.
There's not like a formula that you can just plug in
and figure out which ones are which
but there are a few things
that you'll wanna take a look at, when you're on the hunt
for good growth investment stocks.
You'll want to consider quantitative
and qualitative measures
including things like projected earnings growth,
historic earning increases, profit margins, return on equity
and then the price to earnings ratio.
So should you consider doing a growth investment strategy?
And it really depends on your investing objectives.
Is this just an experiment that you want to do on the side
or are you really banking
on this strategy to use for your account
and keep in mind, when you are doing growth investing
and looking at these types of stocks,
you are only investing in a single company.
Whereas if you were to invest
in mutual funds or index funds,
you're spreading out your investment
across a variety of companies which can help lower your risk
but you can also find good growth mutual funds
or good growth index funds as well,
and kind of get that strategy,
but using it across different companies.
Also, this is a high risk, high reward game.
So if you were willing to put in the research
and looking at particular companies that fit this mold
then it could pay off for you.
But remember, this is a longterm game,
don't expect overnight riches by using this strategy.
Now, obviously there are a ton
of different investment strategies to consider
when it comes to building wealth.
And if you are just getting started
with building out your investment portfolio,
we have a bunch of free tools and resources
for you to use using our investing tab
at thecollegeinvestor.com.