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. Interest

    1. The charge for the privilege of borrowing money, typically ...
  2. Investment

    An asset or item that is purchased with the hope that it will ...
  3. Precious Metals

    A classification of metals that are considered to be rare and/or ...
  4. Dividend

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

    A type of security that signifies ownership in a corporation ...
  6. Capital Appreciation

    A rise in the value of an asset based on a rise in market price. ...
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. What's a Marketable Security?
    Active Trading

    What's a Marketable Security?

    Marketable securities are financial instruments that can be readily bought and sold in a public market. The key feature is the ease with which it can be sold and converted into cash. Usually, ...
  7. Stock Analysis

    Buyinb Facebook Stock, A Beginner's Guide

    This straightforward guide helps the novice investor feel more adept at buying a stock, such as Facebook (FB).
  8. Trading Strategies

    How do technical analysts interpret the Average Directional Index (ADI)?

    Learn what the average directional index is and why technical analysts look towards ADX indicators to measure the strength of price trends.
  9. Investing News

    Alibaba's Top Competitors

    A look at Alibaba’s top competitors to understand perceived and real competitive threats to the Chinese ecommerce giant.
  10. Investing Basics

    Analysis of Companies with high goodwill

    High goodwill as a percentage of market cap can actually be a big red flag--it potentially means the company botched a major acquisition.

You May Also Like

Hot Definitions
  1. Santa Claus Rally

    A surge in the price of stocks that often occurs in the week between Christmas and New Year's Day. There are numerous explanations ...
  2. Commodity

    1. A basic good used in commerce that is interchangeable with other commodities of the same type. Commodities are most often ...
  3. Deferred Revenue

    Advance payments or unearned revenue, recorded on the recipient's balance sheet as a liability, until the services have been ...
  4. Multinational Corporation - MNC

    A corporation that has its facilities and other assets in at least one country other than its home country. Such companies ...
  5. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
  6. Simple Interest

    A quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the interest rate ...
Trading Center