Should You Invest In Penny Stocks When Money Is Tight? | Personal finance


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?

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