Reasons to Opt for Growth Investing Strategy

Growth investing is an investing strategy in which the investor puts his funds in high-growth stocks.

Investing is the lifestyle of the wealthy and because wealth does not happen overnight, investing for the future is always the way forward.

Your investment is your seed and it is what grows into an amazing tree producing wonderful fruits. As an investor, you can either choose to stop at having a tree producing food for you to eat daily, or you can plant with the plan of owning your very own garden.

Growth investing, which is also known as value investing, is generally concerned with the appreciation of an investor’s capital over a period of time. While all companies want their stocks to grow, some have better chances and better measures in place to facilitate growth.

Hence, an investor interested in capital appreciation would find those stocks that perform at an above-average rate compared to its industry or the overall market as they grow their earnings faster.

The trade-off is that because they are concerned with growth, they deploy all their resources, including dividends that could have been paid out, into taking opportunities and expanding the company’s market share.

It is a typical case of delayed gratification – and like most cases of delayed gratification, the result is always worth the wait. In our last post, we highlighted the reasons to consider investing in stocks or portfolios that sacrifice fast-paced growth to provide consistent income by way of dividends or interests.

While the simple reason to opt for growth investing is that you do not fall into any of the highlighted categories that should invest for consistent income, here are specific reasons why:

Where You Want To Build Wealth

It might seem like this is the goal of every investor but it isn’t. As revealed in our last post, some investors simply want an alternate source of income. Growth investing means an increase in the value of the company.

Rapid growth also means a fast and sustained increase in stock price which leads to faster wealth accumulation. For example, if you had bought the shares of a high-growth stock at N5 each some ten years ago and the new stock price is N50, the value of your investments has increased tenfold!

This is also why investors are encouraged to hold. While holding in a slow-growth, high interest yielding asset would only mean more dividends assuming the regular course of business takes place, growth stocks can increase your overall net worth.

Where You Can Afford A Little More Risk

Investing is a risky affair and the higher the expected gains from it, the higher the risk you have to take. Where you can take on financial risks without jeopardizing your operational finances, then you can find the hottest growth stocks in the market and invest in them.

Where You Want To Enjoy The Amazing Benefits Of Compounding

The reason growth companies are not big on paying dividends is that they understand the benefits that come with reinvesting profits. That is, the compound factor that is responsible for multiplying income.

Where You Are Willing To Wait

Investing in a growth asset and simply pulling out your funds or disposing your stocks after a year or after a slight jump in share price, is a waste of time. If you are willing to spend the time to build a fortune, growth investing will pay off.

Ideally, every investor should focus on growth investing strategies. Not only is it the ideal investing goal, it is one sure key to financial freedom.

Written by Lawretta Egba.