People have many different styles and tastes when it comes to money, but making your money grow is typically considered the most fundamental investment objective. The best way to accomplish this goal will vary according to factors such as the investor's risk tolerance and time horizon. However, there are some key principles☂ and techniques that are applicable to many different types of investors and growth strategies.

What Is Growth Investing?

Although you can grow your money through receiving any type of 澳洲幸运5官方开奖结果体彩网:return on your capital, such as interest payments from a certificate of deposit (CD) or bond, a more specific definition of growth investing is the pursuit of increasing one's wealth through long- or short-term 澳洲幸运5官方开奖结果体彩网:capital appreciation. Growth investing is typically considered to be the "offensive" portion of an investment portfolio,꧋ with the "defensive" portion dedicated to income generation, tax reduction or capital preservatio🔥n.

When it comes to stocks, "growth" means that the company has substantial potential for capital appreciation, as opposed to 澳洲幸运5官方开奖结果体彩网:value investing, where analysts feel that the price of the company's stock is trading below where it should be for reasons that are likely to change in the foreseeable future. Independent investment research company Morningstar classifies all stocks and stock 澳洲幸运5官方开奖结果体彩网:mutual funds as either growth, value or blended (growth + value) investments.

Popular Types of Growth Investments

A few main categories of assets have historically shown the greatest growth potential. All of them involve equity in some for🌃m, and they usually come with a higher level of risk.

Types of growth investments include the followingജ:

Small-Cap Stocks

The size of a company is based on its 澳洲幸运5官方开奖结果体彩网:market capitalization or net worth. There is no exact, universal definition of what is considered to be "澳洲幸运5官方开奖结果体彩网:small-cap" compared to micro, mid or large-cap, but most analysts classify any🔯 company with a capitalization of between $300 million aꦆnd $2 billion as a small-cap firm.

Companies in this category are usually still in their initial phase of growth and their stocks have the potential for substantial appreciation in price. Small-cap stocks have historically posted higher returns than their 澳洲幸运5官方开奖结果体彩网:blue-chip cousins, but they are also considerabl𝓀y more volatile and ca♈rry a higher degree of risk. Small-cap stocks have also often outperformed large-cap stocks during periods of recovery from recessions.

Technology and Healthcare Stocks

Companies that develop new technologies or offer innovations in healthcare can be excellent choices for investors who are looking for a home-run play in their portfolios. The sto༺cks of companies that develop popular or revolutionary products can rise exponentially in price in a relatively short period of time.

For example, the price of Pfizer (PFE) was just under $5 a share in 1994 before Viagra was released. This blockbuster drug took the company's stock price to above $30 a share over the next five years, thanks to FDA approval of the drug in 1998. On occasion, a growth stock can go on a wild ride. Streaming media company Roku (ROKU) surged in the months after its initial public offering (IPO) in the fall of 2017, only to retreat towards the closing price from its first day of trading just a few short months later. 

Speculative Investments

Thrill-seekers and 澳洲幸运5官方开奖结果体彩网:speculators look to high-risk growth instruments such as 澳洲幸运5官方开奖结果体彩网:penny stocks, futures and options contracts, foreign currency and speculative real estate such as undeveloped land. There are also oil and gas ♒drilling partnerships and private equity for aggressive investors in high-income brackets. Those who pick the right choices in this arena can see a return on capital of many times their initial investment, but they can also often lose every cent of their principal.

Researching Growth Stocks

There are several key factors that must be considered when evaluating investment growth. The rate of growth, the amount and type of risk and other e🍨lements of investing𓃲 play a substantial role in the amount of money that investors walk away with.

When it comes to stocks, some of the data that growth investors and analysts examine include 𓄧the followinওg:

Return on Equity (ROE)

ROE is a mathematical expression of how efficiently a corporation can make a profit. It is quantified as a percentage that represents the company's 澳洲幸运5官方开奖结果体彩网:net income (which in this c🅰ase means the income rem𒉰aining after the preferred stockholders have been paid but before the common stock dividends are paid) divided by the total equity of the shareholders.

For example, if one corporation has total 澳洲幸运5官方开奖结果体彩网:shareholder equity of $100 million while another company has shareholder equity of $300 million and both companies have net income for the ye🐓ar of $75 million, then the company with the smaller shareholder equity is providing a greater return on equity because it is earning the same net income with less equity.

Increasing Earnings Per Share (EPS)

Although there are several types of EPS and the amount of money earned on a per-share basis does not tell the whole story about how a business is run, a company whose earnings per share are increasing over time is probably doing something right. Investors often seek companies that have an increasing EPS, but further research should be done to ensure that the EPS numbers are the result of genuine 澳洲幸运5官方开奖结果体彩网:cash flow from legitimate business dealings.

Projected Earnings

Many day traders and short-term investors pay close attention to projected 澳洲幸运5官方开奖结果体彩网:earnings announcements because they can have both immediate and future effects on a company's stock price. In fact, many investors 澳洲幸运5官方开奖结果体彩网:make money trad🐟ing earnings announc🍷ements.

For example, when a company's projected earnings come in higher than expected, the stock price will often rise quickly and then trend back down in the following days. But consistent positive projected earnings reports will help the stock to rise over time.

The Bottom Line

Growth investing is a complex subject that is often closely coupled with other subjects such as 澳洲幸运5官方开奖结果体彩网:fundamental analysis, 澳洲幸运5官方开奖结果体彩网:technical analysis, and market research. There are many more growth strategies used by individual and institutional investors, and a complete listing of them is far beyond the scope of this article. For more information on growth strategies ᩚᩚᩚᩚᩚᩚ⁤⁤⁤⁤ᩚ⁤⁤⁤⁤ᩚ⁤⁤⁤⁤ᩚ𒀱ᩚᩚᩚfor your investments, consult your broker or financial advisor.