What it is:
Growth companies are fast-growing, higher-risk companies. They tend to be young. Their a higher chance of higher returns and a higher chance of losses.
How it works (Example):
The nature of a company's business determines many of the characteristics of its growth companies. For example, blue-chip are stocks issued by high-quality, large companies and generally have steady dividend payments. Their values don't "jump around" as much as of smaller, riskier companies like growth companies, generally speaking, and so conservative investors who like dividend payments and not much risk tend to avoid growth companies., especially for
Growth companies are generally riskier than other types of companies, but their stocks also
Why it Matters:
Deciding whether to buy growth companies, or which to buy requires you to consider your goals in life, your age, your needs, future cash needs you might have (retirement, college, etc.), your tax situation, the nature of your other , and how much risk you're willing to take. For those willing to tolerate the risk, the rewards can be quite large (and the losses can be quite large).