Sterile Investment

AAA

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.

RELATED TERMS
  1. Dividend

    1. A distribution of a portion of a company's earnings, decided ...
  2. Stock

    A type of security that signifies ownership in a corporation ...
  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. Interest

    1. The charge for the privilege of borrowing money, typically ...
Related Articles
  1. A Forex Trader's View Of The Aussie/Gold ...
    Forex Education

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

  2. A Beginner's Guide To Precious Metals
    Options & Futures

    A Beginner's Guide To Precious Metals

  3. Trading The Gold-Silver Ratio
    Options & Futures

    Trading The Gold-Silver Ratio

  4. Commodity Funds 101
    Mutual Funds & ETFs

    Commodity Funds 101

comments powered by Disqus
Hot Definitions
  1. Takeover

    A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the ...
  2. Harvest Strategy

    A strategy in which investment in a particular line of business is reduced or eliminated because the revenue brought in by ...
  3. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  4. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The ...
  5. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The ...
  6. Budget Deficit

    A status of financial health in which expenditures exceed revenue. The term "budget deficit" is most commonly used to refer ...
Trading Center