Are you ready to be an investor? Well, don’t get excited. Investing is something many should research over and over. When investing in the stock market, do not overlook penny stocks. There are many reasons to purchase penny stocks such as easy return on investment, share availability and low start up stocks.
Return on investment
The most important aspect of investing in the stock market is return on investment. Most people overlook the return on invest due to wanting to fit in. The best time to invest is when no one wants to invest. Then you will see what is available and how much you can buy. When gauging the return on investmen,t understanding how returns are calculated is important to minimizing loss. For example, if you purchase stocks at $.50 a share and the price drops to $.45, technically you lost a lot of money, but you can invest when the price drops to lower the average. The average between $.50 and $.45 amounts to $.475 so if you reinvest, you can double your money before it reaches a $1.00. When you gauge your return on investment, the most important factor is not the cost, but rather the percentage that your stocks increase. To illustrate, if Company A issues stock at $.01 per share it takes $.01 in share price increase for you to double your money. However, if Company B issues stock for $1.00 per share, it takes $1.00 in share price instead of $.01 for you to double your money.
Share availability
Share availability are usually available with stocks with lower share price. You may run into companies that offer a high volume, but usually stock availability is limited. Share availability should be gauged on a day to day basis you want to see the weekly average. Monitor big acquisitions since they dictate the share price. When purchasing stock that has low volume, investors experience orders that are partially filled prompting commission charges per transaction. If you are willing to wait, you should be able to acquire to stocks in one order. Stock that offer the most availability are usually necessity stocks like energy, food, water and banking related. Finding the right company is most important since you need to understand what dictates their success.
Low start up costs
When investing with penny stocks you guarantee low start up costs and increase return on investment. Most people fall victim to the average 8 percent return on investment, but penny stocks can go up 30 percent to 1,000 percent. It is wise to start up with Sharebuilder since their isn’t any upfront cost like its competitors. Purchasing penny stocks is laughable until you see the results. When investing, do not get discouraged treat it like a home and your portfolio will grow. The stock market is not a gambling market if you treat like a business. Low start up costs should be the selling point. Investing large sums of money does not dictate your success if you do not know how to properly invest.
There are many reasons to invest into penny stocks. Most people are afraid, but do not realize stock is stock. Consult a professional if you invest directly. Good luck!