There is a very simple question, why do we invest in an asset?
The answer is even simpler - “Growth”. This is first word that comes into our mind. After all growth is what we all desire and especially, when it comes to money.
Growth Assets
The assets that give us the continuous growth are called the Growth Assets. These assets carry high risk but have the potential to deliver very high rate of return and capital gain and that’s too for a longer period of time.
When you are a shareholder you get return in form of a dividend but in case of investing in a growth asset, the major return come in form of capital gain and from the fluctuation in the value of the asset over the time.
You must be familiar with the terms- capital gain and capital loss. The increase in the value of the company or asset leads to capital gain whereas decrease in the value causes capital loss.
Conclusion
The frequent changes in the value of a company is the reason why the growth assets are at higher risk, especially over short time periods of one to three years.
Remember, “There is no growth without some risk”.
