Value vs growth stocks: What should investors prefer amid Indian stock market optimism? Here's what experts say

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5 key money lessons on value investing one can learn from Warren BuffettExperts point out that growth and value are two distinct investment philosophies that represent contrasting approaches, each with its own set of merits and risks.Value stocks are shares of companies that appear to be priced lower than their true worth. These companies usually have stable finances, steady earnings, and low valuation measures. Investors in value stocks look for bargains—stocks that are temporarily unpopular or ignored by the market, hoping their true value will eventually be recognised, leading to price increases.

These investors are often conservative and prefer stable investments.Also Read: The perennial debate in factor investing: Quality versus valueOn the other hand, growth stocks are shares of companies expected to grow faster than average in the future. These companies reinvest their profits into things like research, market expansion, or acquisitions instead of paying dividends. Growth stocks usually have higher price-to-earnings (P/E) ratios because investors are willing to pay more for the promise of future growth.

These investors are typically more willing to take risks for the chance of higher returns. Growth stocks can provide significant returns during strong market periods but may be more volatile.Many investors use a mixed strategy, combining both value and growth stocks in their portfolios for diversification. This ensures the stability and income from value stocks and also helps them get high returns from growth stocks.