Difference between growth and value investing

1. Growth investing and value investing are two distinct investment styles.

2. Growth investing is about finding companies that are expected to grow faster than the market while value investing is identifying companies whose stock prices are lower than their fundamental worth.

3. Growth stocks typically reinvest earnings to expand and hence do not give out dividends, whereas value stocks are big on dividends.

4. Growth stocks offer higher return potential and hence are riskier and more volatile than value stocks.

5. Growth stocks have higher PE ratio as compared to value stocks.

(Content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.)

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