Evaluating Your Investment Options Be Daunting On Its Own Essay

715 Words Oct 6th, 2015 3 Pages
Choosing to participate in the market can be daunting on its own. Prior to evaluating your investment options, you should first determine your investment horizon, investable assets, risk tolerance and financial goals. Clearly defining your investment goals will help you determine an investment strategy best suited for you, and sometimes steer you to certain assets. When building your portfolio, you have likely run a cross two popularly referenced labels; growth stocks and dividend stocks. While both options seek to increase your future returns, dividend stocks are more commonly associated with large established companies while growth stocks are typically of high growth companies.
Growth Stocks With the emergence of many new tech companies, you have likely become more aware of growth stocks over the past 10 years. By definition, growth stocks are shares in a company whose earnings, revenue or cash flow are expected to grow faster than the market average. These high growth companies are typically more apt to reinvest profits in expansions projects rather than pay out dividends to shareholders. They are still in the early stages of its life cycle and their focus remains on top-line growth. When choosing a growth stock, the two most important factors to be considered are revenue growth and economic moat. Over the past 10 years, Google has been one of the most successful growth stocks, growing from $54 at the time of its IPO in 2004 to $641 today; over a 1000% increase.…

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