1384574883041

No, you are not required to invest only in penny stocks – investors are generally not restricted to a certain kind of stock based on the amount of money they have. That is, a $500 investment is a $500 investment no matter how many shares you purchase or how high the share price. For example, if you invest in a company that is trading at $0.10, you can buy 5,000 shares, but you can also invest in a company trading at $100 and buy only five shares. Although there are fewer shares in the second case, the total value of the investment is the same.

But, regardless of how much money you have available to invest, it is very important to understand that penny stocks are generally of highest-risk stocks in the market. They may seem attractive since a rise from $0.10 to $0.15 represents a 50% increase, but penny stocks have also a high chance of generating large losses. As such, especially if you are a new investor, you might instead want to consider, for instance, blue-chip companies – such as General Electric or Microsoft – which tend to have long-established track records of operations and trade on exchanges that are closely regulated by the SEC. These characteristics are not found where penny stocks are traded – in the over-the-counter markets. That said, however, remember investing in stocks involves some level of risk, even if you invest in big players.

If you want to invest in stocks with relatively little money, it is especially important that you take into account trading commissions and the minimum-deposit requirements imposed by some brokerage accounts. (Before investing in the stock market, you might find that it is better to put the $500 into something with less fees and restrictions, such as a savings account, until you can save up more to invest in stocks.) Consider using an online discount broker, which tends to have the lowest fees (under $10 per trade).

But even though you use a discount broker, remember commission fees act as negative returns, so do try to minimize them as much as possible. For example, if the commission is $10 per trade, after making one trade with your $500, you have only $490 to invest – in other words, you have already lost 2% on your investment. This means that to break even, your stock will need to go up by roughly 2%. (Some full-service brokerage firms charge $250 per trade, which would represent a 50% loss, so you would need a 100% gain to break even.)

Because you are dealing with such a small amount of money, consider limiting the number of different stocks you buy to minimize the commission. If you were to split your $500 into five stocks and the commission is $10 per trade, you would be faced with $50 in fees instead of $10 or $20 if you bought only one or two different stocks.

Read more: I have only $500 to invest, am I limited to buying only penny stocks? | Investopedia http://www.investopedia.com/ask/answers/05/limitedamountinvest.asp#ixzz4JKv336WV
Follow us: Investopedia on Facebook

UWSJ Newspaper, Publisher

Ms. Lawrence takes pride in delivering high quality presentations that have a lasting impact. She has received enthusiastic testimonials for her presentations throughout the United States. She also serves as the Director of Communication for ROTH & LAWRENCE, LLC. In 2013, Lawrence founded Exposure Magazine, a publication expanding over 200 countries and translated in three languages. Since, she has published another amazing publication Urban Wall Street Journal Newspaper promoting financial literacy, current events, and small businesses around the world. Operating two humanitarian projects demonstrating world change “Soar Women’s Empowerment Summit” and “Paper Bag Book Society,” both are uplifting and rewarding projects. Her most recent accomplishment, after pitching networks for over 4-years the talk show ALL MEN ROCK created by Lawrence will air on CBS 58 in 2017. Lawrence is eager to share her 15yrs of experience working in public relations for celebrities, pro athletes, BRAVO, politicians, and other prestigious brands. Along with 22yrs as an entrepreneur; her ability to overcome obstacles is just a mere glimpse of her story. “I believe my struggles have all been a manifestation-- of my purpose,” said, Lawrence. As a publicist she has galvanized the growth of hundreds of brands. In 2017, she will be publishing her first book titled How Cook Up a PR Plan: a recipe for the right response. The book outlines techniques used by experts in public relations, providing insight into how to cultivate relationships in the real world and online that lead to brand visibility. Lawrence earned an BA in communication from Marquette University, one of the world's top-ranked universities. After graduating, she worked for the Democratic National Convention in Charlotte, North Carolina, NBA player Jeff McInnis, film producer Cedric Nettles and others.

Leave a Reply

You must be logged in to post a comment.