Growth companies are good investments

q If you want big payoffs, buy growth stocks: If you want cash flows today, buy bonds. The allure of equity is that companies can grow over time, doubling or tripling revenues and earnings. While you may not receive an immediate payoff in the form of dividends from such growth, you will share in the success as the value of your stockholding increases. For the high returns that can make your small portfolio into a large one and you from a poor to a wealthy individual, you should be buying growth companies.

q If you buy the right growth companies, there is no additional risk: Anticipating your concerns that growth companies are riskier than mature companies, proponents of growth stocks will argue that there is no additional risk if you pick the right growth companies to put your money in. After all, you can look at examples of success from the past – IBM, Coca Cola and Microsoft – and find common patterns or themes. Once you do, you can look for them in the younger growth companies of today. But that’s not all. Since price appreciation is not taxed and dividends are, you can delay paying taxes and when you do, you will pay less.