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.

Investopedia explains '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.



comments powered by Disqus
Hot Definitions
  1. Leased Bank Guarantee

    A bank guarantee that is leased to a third party for a specific fee. The issuing bank will conduct due diligence on the creditworthiness of the customer looking to secure a bank guarantee, then lease a guarantee to that customer for a set amount of money and over a set period of time, typically less than two years.
  2. Degree Of Financial Leverage - DFL

    A ratio that measures the sensitivity of a company’s earnings per share (EPS) to fluctuations in its operating income, as a result of changes in its capital structure. Degree of Financial Leverage (DFL) measures the percentage change in EPS for a unit change in earnings before interest and taxes (EBIT).
  3. Jeff Bezos

    Self-made billionaire Jeff Bezos is famous for founding online retail giant Amazon.com.
  4. Re-fracking

    Re-fracking is the practice of returning to older wells that had been fracked in the recent past to capitalize on newer, more effective extraction technology. Re-fracking can be effective on especially tight oil deposits – where the shale products low yields – to extend their productivity.
  5. TIMP (acronym)

    'TIMP' is an acronym that stands for 'Turkey, Indonesia, Mexico and Philippines.' Similar to BRIC (Brazil, Russia, India and China), the acronym was coined by and investor/economist to group fast-growing emerging market economies in similar states of economic development.
  6. Pension Risk Transfer

    When a defined benefit pension provider offloads some or all of the plan’s risk – e.g.: retirement payment liabilities to former employee beneficiaries. The plan sponsor can do this by offering vested plan participants a lump-sum payment to voluntarily leave the plan, or by negotiating with an insurance company to take on the responsibility for paying benefits.
Trading Center