Investing for growth - the high risk option

Investing for growth is certainly not a strategy for the faint-hearted, but as a way to potentially generate high returns (in exchange for taking a relatively high risk) it can be an exciting prospect.

The idea behind growth investing is fairly simple.

You buy into a company whose profits and share price are likely to dramatically outperform the stock market over the next few years, then sit back and reap the rewards. This type of investment usually doesn't look particularly cheap but it's one that you believe will grow quickly over the next couple of years and trigger a substantial hike in the share price.

Good returns can be made, and you could enjoy the excitement of being in a fast-growing area, however, returns are volatile and there's a strong chance of losing your money.

You can, of course, balance riskier growth stocks with more stable names - it's all about diversification and striking the right balance for your individual needs.