There are two ways to make money from stocks, through dividends and share price increase. If a stock is providing dividends then you are making money while you still own the share. If a stock price has gone up since you bought it, you can also make money by selling it and letting go of your ownership of that share. There are stocks that provide dividend but their price is not increasing as much as other stocks that provide less or no dividend.

If you can live with the dividends that you get from the stocks that you own then you don’t really need to sell them and you can just maintain them for a long time. For example, if a stock is providing you with 5% dividend then you can recover all your investment in 20 years without selling the stock provided the company still exists and is still strong at that time. There are many companies that have survived more than 20 years so it’s not impossible to have this scenario. The share price of dividend providing companies that are solid usually go up over time also. So after several years you will have recovered your initial investment plus you also get the appreciation in its price.

Growth stocks appreciate in price faster than dividend oriented stocks with a few exceptions. You will see some stocks or index doubling in price in a matter of a five years or less. This means that you don’t have to wait that long to have as much profit compared to dividend investing. However, investing for fast growth has higher risk than investing for dividends since you could also lose more money if it didn’t go well. If you are young and knowledgeable about investing and can take risk then aiming for growth can be a good option since you have decades in front of you to recover but if you are nearing your retirement then dividend based and fixed income investing make more sense.

Don’t forget to diversify when you are investing for growth or dividend since putting all your money in one or just a few stocks is extremely risky.