How does growth investing work?

Growth investing is a type of investing that prioritises building up an investor's money

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Growth investing is also frequently referred to as a capital growth strategy or a capital appreciation approach

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Growth stocks are typically issued by new or tiny businesses whose earnings are anticipated to increase faster than the market or similarly situated businesses.

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Rather than considering the income they might receive from owning shares, growth investors consider the profit they could make when they sell the stock

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When determining whether a stock is worthwhile, growth investors look out for a few specific criteria

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They examine the company's track record of earnings growth to gauge its strength, as well as its future earnings projections, great return on equity, healthy profit margins

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Value investing, or "bargain-hunting" investment, buys companies when they are trading for less than analysts estimate they are worth

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Growth investment looks at the company's future potential and pays far less attention to its current stock price

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growth investors may even buy a stock that is selling over its current intrinsic value because they think the value of the company will increase

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There are risks even though growth investment can be quite alluring due to the promise of spectacular profits

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