Growth Investing: What Does It Mean?

Growth investing is an investment strategy focused on buying shares in companies expected to grow revenues, earnings, or market share at an above-average rate compared to the broader market. Growth stocks typically reinvest profits back into the business rather than paying dividends, and they often trade at high price-to-earnings ratios because investors are paying for future potential. Technology companies are classic growth stocks. The strategy can generate outsized returns in bull markets but tends to underperform during economic downturns or rising interest rate environments.