By Irshad Mushtaq
Investing in penny shares( low value shares) can be a risky venture for first-time investors. It’s important to do your own research and consider other options like blue-chip stocks, ETFs or mutual funds through SIP.
Low-priced value shares may be attractive at first, with high returns due to low prices like Rs. 2, 5, 10, and 20, and getting a huge quantity for a small amount. However, there are several reasons why investing in penny stocks may not be the best option for beginners or putting all amounts. One key reason for penny shares is that the company’s business may not be strong or its valuation may be low. It is important for investors to do their research and analysis before investing in any stock, especially penny stocks.
Furthermore, penny stocks may be more susceptible to manipulation by stock market operators due to low volume. They may promote these stocks through social media or other channels, making it difficult for investors to make attractive , but informed decisions and protect their investments is very important Instead of focusing on penny stocks, first-time investors may want to consider investing in ETFs ( exchange traded funds) and portfolios of blue-chip companies as well-established companies and focus on mutual funds through SIP, reducing risk and providing more stability to the investment portfolio.
However Diversifying your portfolio across different sectors and industries is also important to minimize risk and maximize returns.Remember over diversification does not make any sense , it leads to compromise on less returns , consult trusted services for portfolio creation. conclusion, while penny stocks may look good, it is important for first-time investors to exercise caution and choose their investments wisely. Investing in quality shares from strong companies, such as blue-chip stocks, and utilizing SIPs in mutual funds can be safer and more reliable ways to build wealth over time. By taking the time to research and evaluate potential investments carefully, investors can avoid the pitfalls of penny stocks and make more informed decisions about where to put their hard-earned money,as money is working for you in investment so putting money wisely is more important.
- Learn from the insights of writer and investor, founder of MI Securities and Business Partner at Sharekhan! Reach out to him at [email protected] for valuable knowledge on financial matters.
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