What is Growth Shares?
These are portions of companies listed on the Stock Exchange that are bought by investors anticipating that they will show good growth in earnings. This in turn will lead to the shares going up, ie, capital appreciation of the shares. Because they are much very fastgrowing businesses, they rarely offer much income by way of dividends as the company leans to plough profits back into itself in order to keep growing at the same rate. It’s important to note that this type of share trades at very toppy valuations because investor expectations are so high. Consequently there is little room for maneuver. If the company fails to accomplish growth expectations, stockholders are liable to dump the shares. The reason is that an awful lot of nice news is predicted and included in the share price in advance. The City says, ‘It is better to travel than to arrive.’ Of course, good growth shares just keep on travelling but those that disappoint tend to arrive at their destination rather of a sudden and viciously!