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Growth or Value?

julyWhat’s the difference between a growth stock and a value stock? Common shares of Apple and Google are examples of growth stocks: most investors want to trade in them today because the companies are doing well and boast strong earnings. By contrast, in 2011 Bank of America was facing serious legal issues that clouded its prospects for the foreseeable future, and its common stock fell to as low as $5 a share. 6 years later the company is thriving, earnings and dividends have increased, and those shares now trade for $24 a share …a pleasant outcome for those investors who accepted the risk back in 2011. This describes a value situation. So, which is better, growth stocks or value stocks? Both. Not all value situations have happy outcomes, and not all growth stocks continue to grow, so buying several different company stocks in each of these two asset classes makes sense. Look for index-fund-like, asset-class-specific, no-load mutual funds available in a few fund companies, such as Dimensional Funds and Vanguard. If you like the idea but would appreciate guidance to get started, there is value in locating a licensed advisor who can help you grow your portfolio.

* Image courtesy Yahoo Finance