Financial Word of the Day: Growth Stock

Larry Jones
Aug 7
2 min read

Definition of Growth Stock

A growth stock is a publicly traded company that is expected to grow at a rate significantly above the average for the overall market. These are the kinds of companies reinvesting their earnings back into the business instead of paying dividends, with the goal of expanding fast—think rocket fuel, not steady cruise.

In other words, you don’t buy a growth stock for the paycheck (dividends); you buy it for the potential payday (capital appreciation).

Real-World Example

Imagine you invested in Amazon in the early 2000s. It wasn’t paying you any dividends. But it was growing—fast. If you held onto those shares, that growth turned into serious gains. That's the growth stock play: you're in it for the long haul and the big jump, not for the small monthly check.

How Growth Stocks Work In Your Portfolio

Growth stocks are typically found in industries like tech, healthcare innovation, renewable energy, or AI—sectors where the sky isn’t even the limit. These companies are often newer or rapidly expanding, and their stock prices can climb quickly if they hit their stride.

Of course, with potential comes risk. Growth stocks tend to be more volatile—meaning their prices swing up and down more often than more established companies (like blue-chip stocks). So you’ll want to buckle up and ride it out if you're going the growth route.

How to Use Growth Stock In a Conversation

"I’ve got a few growth stocks in my portfolio—mostly tech companies that are reinvesting everything into expansion. No dividends now, but if they scale like I think they will, the long-term upside could be huge."

Why This Matters to Your Money

If you’re in your 20s, 30s, or even 40s and have time on your side, growth stocks can be powerful wealth-building tools. They’re not about playing it safe; they’re about betting smart on future potential.

Growth stocks challenge you to think beyond today. It’s not about what a company is currently paying you—it’s about where it could go and what that might be worth one day.

Bottom Line

A growth stock is like planting an acorn. It won’t give you shade tomorrow, but if you’re patient and let it grow, it could turn into an oak tree that provides value for decades.

Don’t just invest in what’s safe. Invest in what has the potential to grow.