Earning Growth and Earning Value

One of the most important Ideas in investing is diversification. one should have balance between a growth stocks and value stocks. I mean a balance of different types of investments, as well as investments in different types of sectors and companies. In order to have a diversified investment portfolio, it is important to have a mix of growth stocks and value stocks. This is also true if you include stock investments in your retirement plan. Growth stocks and value stocks differ, and so it is a good idea to understand the basic differences between the two.

Growth stocks

Growth stocks are those that represent rapid growth . They generally offer higher returns on the stock investments made. However, with those higher returns also come higher risks. A stock's value with growth stocks is usually determined on potential. Growth for small companies is general a yearly return of at least 10%, and for larger companies, it should be around 7%. Some stocks have even higher returns in sectors that have higher potential. When incorporating growth stocks in your portfolio, it might be a good idea to set a reasonable level at which you will sell. This can help you earn a profit and get out before a bear market destroys the value of the stock.