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What are Growth Stocks and Growth Investing? A Simple Explanation for Kids

What are Growth Stocks & Growth Investing? Stock Market 101: Easy Peasy Finance for Kids & Beginners

Introduction to Growth Stocks and Growth Investing for Kids and Teens

This video explains the concept of Growth Stocks and Growth Investing in a simple, concise way for kids and beginners. It could be used by kids & teens to learn about it, or used as a money & personal finance resource by parents and teachers as part of a Financial Literacy course or K-12 curriculum.

What are Growth Stocks and Growth Investing - A Simple Explanation for Kids Teens and Beginners
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Suitable for students from grade levels:

  • Kindergarten
  • Elementary School
  • Middle School
  • High School

The topics covered are:

What are growth stocks?

Growth stocks are companies that are expected to grow their sales and profits at a much faster rate than the market average. This high rate of growth in turn results in increased stock price.

Some examples of growth stocks are Amazon, Facebook, Netflix, and Alphabet.

What is growth investing?

Growth investing is an investment strategy where people invest in stocks they believe will give much higher returns than the average stock market.

Typically these stocks are expensive but the potential for high growth is what makes them attractive to growth investors, whose focus is to make money through capital gains when they sell them in the future.

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What are some characteristics of growth stocks? How do I know if a stock is a growth stock?

Growth stocks are usually either young companies who are innovators in their field, or technology companies that have a big market share due to their unique offerings.

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Many times, growth stocks might seem overpriced as they usually have a high P/E ratio (Price to Earnings Ratio).

They could also have low revenue, but show a potential to grow rapidly in the future.

Growth Investing for Kids Teens and Beginners - Growth Stocks
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Growth stocks typically do not pay dividends as they try to reinvest their profits to accelerate their growth. 

When does growth investing make sense?

Growth stocks are considered to be risky investments – they can provide high returns, but can also result in a huge loss.

Therefore in a bear market, growth investing is not very profitable. But, in a bull market where the economy and many industries are booming, growth investing can yield high returns.

Is growth investing a good strategy for me? How can I become a growth investor?

Finding growth stocks that are likely to give good returns is very difficult.

Growth Stocks for Kids Teens and Beginners - How to Become a Growth Investor
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And so, when investing in growth stocks, it’s best to invest using a Mutual Fund that focuses on growth investing. That way, the fund manager will do the hard work of picking stocks. 

Having said that, actively managed mutual funds can charge high fees which significantly eat into your returns.

Because of this, investing using a different strategy – like Dollar Cost Averaging with an S&P 500 based index fund – is usually better than growth investing through a mutual fund.

Download Transcript: Ideal for Use by Teachers in their Lesson Plan to Teach Kids & Teens

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Podcast: What are Growth Stocks and Growth Investing

What Are Growth Stocks and Growth Investing
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