After you get your feet wet in the world of the stock market, you will probably start to form a strategy. Two of the more polarizing strategies I have seen online are growth investing and value investing. I will quickly summarize each to get you started on your journey of information. These topics could each have their own daily blog. That is how complex they are.
Growth Investing: This method is also called capital appreciation. Here the goal is to invest in a stock and let the price multiply in value from there. For example, if I would have invested in Amazon (AMAZ) the day I came into boot camp, it would have cost me $62. Today is worth $3099. I did not get paid any dividends. For retirement under the growth method, I would sell shares of my stocks in order to pay bills and live off of.
Value Investing: Sometimes called Dividend Growth Investing. Here you pick a solid company and let their profits pay off in the form of dividend payments. If had bought one share of AT&T (T) on the day I went to boot camp, it would have cost me $56. Today it is worth $30. However, overall the years T would have paid that one stock $33 worth of dividends. T is still in great shape and hopefully, I would still be collecting more dividends for the foreseeable future. For retirement under value investing, you would live off of the dividends, you would not sell the actual shares.
You can now see the difference between the two strategies. Remember, we have not made one penny off of Amazon, you can only make money when you sell. What if you only needed a $1000? You would still need to sell the whole share. For this reason, I believe a portfolio can support both methods. I tend to look at my overall portfolio considering savings, bonds, growth stocks, value stocks, real estate, rental income, and military retirement. The more overall diversified I am, the more ways I can be successful in retirement.
Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
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