Features Of Penny Stocks - Deepstash
Features Of Penny Stocks

Features Of Penny Stocks

  • High-returns: These stocks provide much higher returns compared to other forms of securities. As such shares are issued by small and micro-cap companies, they have vast potential for growth.
  • Illiquid: Penny stocks in India are illiquid in nature, given the fact that the companies issuing them are relatively unpopular.
  • Low-cost: In India, penny stocks are usually priced lower than Rs. 10. Therefore, you could purchase a substantial amount of stock units from penny stock list with a small scale investment.
  • Unpredictable pricing: Penny stocks might not attract adequate pricing during the sale.

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MORE IDEAS FROM Penny Stocks - Definition, Features & Investment Options

What are the Risks Associated with Penny Stocks?
  • Limited information: Given the fact that companies issuing penny stocks are start-ups, there exists a dearth of information on their financial soundness, past performance, growth prospects, etc.
  • Scams: Penny stock scams are commonplace in international financial history. One such popular method is “Pump and Dump”. Companies and scammers purchase a considerable amount of penny stocks resulting in value inflation which attracts other investors to follow the hype.

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Why Should You Invest in Penny Stocks?
  • Multibagger: Some of these stocks have the potential to evolve into multi-baggers. It means shares which yield in multiples of the investment amount. If specific security reaps double its investment amount, it is called a double-bagger, and if it returns ten times its investment value, it is considered a ten-bagger.
  • Inexpensive:  Investing in these stocks is comparatively cheaper. Hence, you can invest in them without losing any significant portion of your investment finances. 

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Penny Stocks

Penny stocks are a form of market traded security which attracts minimal pricing. These securities are mostly offered by companies with lower market capitalisation rates. Therefore, these are also called nano-cap stocks, micro-cap stocks, and small-cap stocks, depending on the company’s market capitalisation.

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Investment Tips
  • Set Your Objectives. (setting long-term objectives can be of great benefit.)
  • Level of Risk. (The level of risk associated with the investment option you choose must be carefully analysed before you put your money into something.)
  • Control Over Emotions. (One of the primary requisites of investing in the stock market involves controlling your emotions.)
  • Study the Stock Market. (Order types, financial definitions and metrics, various kinds of investment accounts, timing of investment, methods of selecting stock, etc.)

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Personal Finance: Investment: Why?

Why is it important that you invest?

  1. Value of money is decreasing due to inflation,
  2. Post-retirement funds if you wouldn't want to work your entire life,
  3. Build on your pre-taxable income & reduce your taxes.

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[3/4] Personal Finance is a very crucial concept that is often ignored. This is an attempt to spread awareness related to personal finance.

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 Investing defined

Investing is about laying out cash or assets now, in the hope of more cash or assets returning to you tomorrow, or next year, or next decade.

Most of the time, this is best achieved through the acquisition of productive assets.

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