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.

  1. Interest

    The charge for the privilege of borrowing money, typically expressed ...
  2. Dividend

    A distribution of a portion of a company's earnings, decided ...
  3. Capital Appreciation

    A rise in the value of an asset based on a rise in market price. ...
  4. Commodity

    1. A basic good used in commerce that is interchangeable with ...
  5. Appreciation

    An increase in the value of an asset over time. The increase ...
  6. Investment

    An asset or item that is purchased with the hope that it will ...
Related Articles
  1. Forex Education

    A Forex Trader's View Of The Aussie/Gold Relationship

    We look at why this relationship exists and how you can use it to produce solid gold returns.
  2. Options & Futures

    A Beginner's Guide To Precious Metals

    All that glitters isn't gold. Find out how to get started on your treasure hunt.
  3. Options & Futures

    Trading The Gold-Silver Ratio

    This method may seem arcane, but many well-established strategies rely on it.
  4. Mutual Funds & ETFs

    Commodity Funds 101

    These funds make investing in gold, oil or grain an easier prospect.
  5. Mutual Funds & ETFs

    The Midas Touch For Gold Investors

    Find some golden opportunities by investing in gold commodities or futures contracts.
  6. Investing

    Where the Price is Right for Dividends

    There are two broad schools of thought for equity income investing: The first pays the highest dividend yields and the second focuses on healthy yields.
  7. Professionals

    Top 3 Misconceptions About Financial Analysts

    Learn misconceptions about financial analysts, such as they exclusively study the stock market, they are the same as financial advisors and they are all rich.
  8. Investing Basics

    What is Equity?

    Think of equity as ownership in any asset after all debts stemming from that asset are paid.
  9. Investing Basics

    The Dangers Of Share Dilution

    Share dilution reduces the value of an individual investment and can drastically impact a portfolio.
  10. Investing Basics

    Valuation Of A Preferred Stock

    To find the value of the preferred stock, each future dividend payment needs to be discounted back to the present, and then added together.
  1. Where do penny stocks trade?

    Generally, penny stocks are traded through the use of the Over the Counter Bulletin Board (OTCBB) and through pink sheets. ... Read Full Answer >>
  2. Where can I buy penny stocks?

    Some penny stocks, those using the definition of trading for less than $5 per share, are traded on regular exchanges such ... Read Full Answer >>
  3. How does the stock market react to changes in the Federal Funds Rate?

    The stock market reacts to changes in the federal funds rate in various ways depending on where it is in the business cycle. ... Read Full Answer >>
  4. What are the requirements for being a Public Limited Company?

    The requirements for an entity to be considered a public limited company (PLC) include registration requirements, establishing ... Read Full Answer >>
  5. How do I place an order to buy or sell shares?

    It is easy to get started buying and selling stocks, especially with the advancements in online trading since the turn of ... Read Full Answer >>
  6. Is there a difference between financial spread betting and arbitrage?

    Financial spread betting is a type of speculation that involves a highly leveraged derivative product, whereas arbitrage ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Black Friday

    1. A day of stock market catastrophe. Originally, September 24, 1869, was deemed Black Friday. The crash was sparked by gold ...
  2. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  3. Barefoot Pilgrim

    A slang term for an unsophisticated investor who loses all of his or her wealth by trading equities in the stock market. ...
  4. Quick Ratio

    The quick ratio is an indicator of a company’s short-term liquidity. The quick ratio measures a company’s ability to meet ...
  5. Black Tuesday

    October 29, 1929, when the DJIA fell 12% - one of the largest one-day drops in stock market history. More than 16 million ...
  6. Black Monday

    October 19, 1987, when the Dow Jones Industrial Average (DJIA) lost almost 22% in a single day. That event marked the beginning ...
Trading Center