Investing for GrowthInvesting 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?
- 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 well suited for long-term growth include the following:
- Common stocks, including those of smaller and newer companies
- Growth mutual funds
- Real estate
- Collectibles
Because of the higher volatility of growth investments, there is a higher reward for those who take that risk. 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.