Tuesday 28 June 2016

Investment Growth

Growth investing is a style of investment strategy focused on capital appreciation. Those who follow this style, known as growth investors, invest in companies that exhibit signs of above-average growth, even if the share price appears expensive in terms of metrics such as price-to-earnings or price-to-book ratios. In typical usage, the term "growth investing" contrasts with the strategy known as value investing. 

However, some notable investors such as Warren Buffett have stated that there is no theoretical difference between the concepts of value and growth ("Growth and Value Investing are joined at the hip"), as growth is always a component in the calculation of value, constituting a variable whose importance can range from negligible to enormous and whose impact can be negative as well as positive. Buffet has recognized the influence of his business partner Charly Munger on this view, which is best expressed by the famous Buffett saying "It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price".

The valuation of the investment is pegged to the current valuation of the ward bed (please refer to the current valuation entry).

If nothing special happens, the investment is expected to grow by 2-5% per year. It is therefore not unexpected that the investment value may hit 2 times its original investment in 20 years' period.

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