More people are getting aware that investing is an important part of being financially literate. That’s good news! Aside from realizing the value of budgeting and how our money should work for us, we have come to the point where we consider investing crucial to having a better life. And part of this is investing in stocks. But where should we put our money? In penny or blue chip stocks? Which is better?
Let’s define penny stocks first.
They are small capital stocks, usually from companies that are yet to earn public trust or reputation. Stocks in these companies are cheap and usually sold via bargain prices. And for this reason, it’s really tempting to buy penny stocks. The money we invest here can earn double or triple even in just a blink of an eye! But then again, we may also lose money in just a blink of an eye. It’s too risky, especially for newbies in the stock market. Its low liquidity may result to problems, especially if we wish to immediately convert our investment into cash.
Penny stocks shouldn’t be for newbies because they may have a traumatic experience if they choose penny over blue chip stocks. The first thing we must do is attend seminars to learn about the different types of stock investments.
And what are blue chip stocks?
Blue chip stocks are from companies with long standing reputation. These companies have stood the test of time that they are considered financially stable and that their products are doing well in the market. These stocks are profit-earning.
Why are they called blue chips?
They are actually called blue chips because they are somehow compared to poker with white, red and blue chips, and blue are considered having the highest value. So when it comes to stock investing, blue chip stocks have the highest and most trusted value.
But why are many people being attracted to penny stocks?
People who invest in penny stocks are those who wish to acquire lots of many in the shortest possible time, though the risk is too high.
So where should we go from here? Penny or blue chips stocks? Which should we prefer?
It’s really up to us, knowing how risky stock investing can be. But of course, the better choice would be the blue chip stocks because our funds are safer when we invest in them.
What are the best things to do before we invest in stocks and while we’re stock investing?
Attend seminars. There are lots of free seminars to consider. And keep on learning the different aspects of investing.
Seek the advice of families, friends and relatives who are in stock investing.
Choose the broker company with long standing or good reputation.
Think of investment scheme which suits our lifestyles. Choose between passive or active trading.
Diversify. Don’t just put the funds in one company.
Save. Always include funds for stock investing. It’s for our future use.
Don’t sell and convert into cash unless really, really needed. Let’s think of it as part of our retirement plans. It’s an option to what we can use when we’re already old.
Set up a micro-business if we have to withdraw some of our funds. This is to create multiple income streams.
Always add funds to our stock accounts. Then diversify again or add funds to our already chosen companies.
Encourage others to invest in stocks. It’s not just good for us, it’s definitely good for our country too.