Basic Information on Growth Investment
Growth investment, a strategy to gain maximum capital appreciation by investing in underlying assets that shows above-average growth for the capital investment.
There are various ways of investing capital in today’s market to earn profitable returns. Some of the well-known trading markets are stock market, mutual funds, systematic investment plans, fixed income plans, gold investments, real estate investments to name a few. All these types of investments require the capital to be appreciated over a period of time considering various risk factors involved in the finance market. Each of these financial markets is defined by various types of investment strategies and plans that determine the investor’s returns. The key factors that are considered by the investor to invest in the finance market to get long-term and above-average growth benefits are:1. The emerging market in which the security can be traded at higher profits.
2. The size and stability factor of the company where the capital investment is made. For example, if the company ABC is earning gross profit year-over-year then the company can be considered as stable.
3. The sector in which the investment is made.
4. The risk taking capability of the investors for investing in the finance market.
The economy of certain countries is still emerging and the financial market in such emerging countries is considered to be more profitable for the capital investors with higher rate of risks expected. As the emerging countries are more open for integrating with the global market place for significantly increasing the economic freedom, improving standard of living, enhancing the social status with additional tolerance, there are more opportunities for gaining profits with the capital investment made in such emerging markets. Further, as the emerging markets are experiencing rapid informationalization, the community is willingly adopting the latest technology, products, and services in the market. Hence, the growth investment strategy can be easily implemented in the emerging markets.
Investors are required to analyze the financial capability of the company to determine the capital appreciation. Generally, a company that is considered as a start-up and is earning a steady financial growth year-over-year is capable of earning more capital appreciation as compared to other type of companies. Sometimes the capital appreciation of the start-up companies with steady growth can demonstrate high performance and outperforms other big companies during recession times. Hence, it is recommended to carefully analyze the historical data of the company’s performance in accordance with the financial market performance before choosing to invest in any specific company.
Technology and Innovation Sector:
The latest technology products including the innovative products associated with various sectors can earn high financial profits. For example, the innovative products that have an impact on the health care can gain maximum profits in the company’s stock gain. Hence, the investors can invest based on the analysis of the company’s portfolio, wherein the companies focused more on the latest technology, along with the innovations, are well poised to earn long-term profits.
Investor’s capital investment capability:
Generally, aggressive investors tend to invest high capital over high-risk and growth oriented investments, such as private equity, penny stocks, foreign currency, real estates, and so on. These investments require the investor to speculate the growth changes and the risks encountered in the volatile market.
In addition to considering the above factors in evaluating the growth investments, there are specific economic parameters that are applied in each of the finance marketing types the investor is intending to capitalize. For example, investors of the stock market can examine the company’s net profit (also known as Return on Equity), earnings per share (EPS), and short-terms earnings to determine the growth of the capital investment.
Based on the investor’s financial needs, investment objectives, and risk tolerance capability the finance market supports various types of investments for the investor. The types of investment include: individual stocks and bonds, closed-end mutual funds, exchange traded funds, and other alternative types of funds.
As evaluating growth investment in a finance market is considered to be a complex task, investors are advised to understand the growth strategies and the subjects that enable the investor to gain maximum benefit by adapting different investment styles.
Some of the basic topics that are covered in the following chapters to impart the growth investment knowledge for the investors include: fundamental analysis of the economic conditions at a macro and micro level, technical analysis to determine the price movement of the secured underlying asset, conducting market research to enable investors to invest in a stable and profitable sector to gain maximum profit, applying relevant investment style and strategy to gain high-profit with the capital investment.
Would you like to read more about this topic? This book might interest you: Growth Investment Crash Course.