It is for these reasons that penny stocks are generally considered quite risky despite their relatively low price. And so, if you’re short on cash but want to diversify your portfolio, here’s a better way to go.
Spend less for established businesses
You may not be able to afford to invest hundreds of dollars in a single stock of a particular company’s stock. If so, you may want to consider buying fractional shares instead.
With split investing, you can buy part of a stock if an entire stock is out of reach financially (or you just don’t want to put that much money into a single stock). If a company on your wishlist is trading for $ 400 a share and you only have $ 100 to invest, rather than buying a bunch of penny stocks, you can buy a quarter of a company share. that interests you .
While there is no rule that established, well-known companies won’t have a hard time, the reality is that well-known companies are generally less risky than the companies behind the penny stocks. Or, to put it another way, if a business has been successful at thriving for 100 years, doesn’t that make you feel more secure than a business that has been around for less than a year?