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Variable Investment Definition and Quiz

Like empty land and a non-dividend paying stock, this investment relies on potential capital gains only.

Define - Learn about variable investments.
Context - Use variable investments in a sentence.
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Published: October 13, 2016

Updated: February 18, 2021

At least for stocks, those that don't pay dividends retain all profits when their growth prospects are high. Learn more below.

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The Meaning of Variable Investment Vehicles

Beginner

Variable Investment is an investment with a return comprised exclusively of changes in the value of the asset. This subjects owners to capital gains and losses and principal is not guaranteed. All other things being equal, an investor would expect a higher rate of return as a trade-off for accepting greater risk.

Synonyms: variable investment vehicle

For context, zero-coupon bonds, non-dividend paying stocks, collectibles and holdings of raw land all are examples of variable investments. The incidence of companies that pay no dividends is higher than one might expect, particularly for small public companies.

Many buy-and-hold investors elect to own variable investent vehicles for the tax advantage of not paying incremental taxes on dividends and interest.

In a Sentence

Doc: A variable investment is generally best suited for? . . ...Class?
Lia: Investors with a high tolerance for risk.

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Quiz

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An example of a variable investment is a non-dividend paying biotechnology stock. | True or False?

True

Variable investments held for the long-term provide the advantage of lower near-term taxation because of non-existent dividends or interest. | True or False?

True

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