What is Growth Investing?

Growth investing is a strategy focused on finding companies whose revenues, earnings, or market share are expected to grow significantly faster than average. Growth investors are willing to pay a premium price today in anticipation of much higher returns in the future.

What kind of companies do growth investors look for?

Typically younger, innovative companies in expanding industries like technology, biotechnology, renewable energy, software. These companies often reinvest all their profits back into the business rather than paying dividends, prioritising expansion over current income. Think of companies like Amazon or Tesla in their earlier years.

How is it different from value investing?

Value investing looks for companies that are cheap relative to what they are worth today. Growth investing looks for companies that may be expensive today but are expected to become worth far more tomorrow. A value investor asks "is this a bargain?" A growth investor asks "how big can this become?"

What are the rewards?

When a growth investor identifies a genuinely exceptional company early, the returns can be extraordinary. Investors who bought Amazon, Apple, or Microsoft early and held them through periods of doubt were rewarded many times over.

What are the risks?

Growth stocks are often priced for perfection. If a company disappoints: slower growth, increased competition, a missed earnings target then the share price can fall sharply and quickly. Growth investing also requires accurate judgements about the future, which is inherently uncertain. Many companies that look like the next big thing turn out to be ordinary businesses at inflated prices.