Sterile Investment


DEFINITION of 'Sterile Investment'

An investment that does not provide dividends or interest to the investor. A sterile investment is one whose returns are generated completely by capital gains. Investors attempt to profit from sterile investments solely through the purchase and subsequent sale (or short sale and subsequent buying to cover) of the investment. Examples of sterile investments include precious metals, such as physical gold and silver, a stock that does not have a dividend, a bond that trades flat, commodities and collectibles, such as valuable art, antiques, stamps, coins and baseball cards.

BREAKING DOWN 'Sterile Investment'

Sterile investments are made with the intention of making a profit when the position is closed or the asset is sold. "Buy low and sell high" for a non-dividend stock is a sterile investment strategy; the investment generates earnings to the investment only through its sale.

For example, an investor might purchase 100 shares of a non-dividend stock at $50 per share. The investor is hopeful that the price of the stock will rise, since this is his or her only opportunity to profit from the investment. Another example would be collectible art. If an investor purchases a valuable painting for $10,000, the only opportunity for profiting from the investment would be to sell the painting for more money than its purchase price.

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