Making Your First Investment Decision

Where to Find Low-Priced Stocks

Low-priced stocks can be found on any regulated stock exchange. Regulated stock exchanges throughout the world number close to 100. In the United States, there are six: Chicago Stock Exchange, NASDAQ Capital Market, NASDAQ Global Market, New York Stock Exchange, NYSE Arca, NYSE Market. You can find low-priced stocks in these exchanges, but you need to go through a stockbroker or have an account with a major stockbroker to trade in these stocks. On the other hand, there are stocks called penny stocks which are traded Over the Counter (OTC), which means they are bought and sold on bulletin boards. The difference in both is in their capitalization.

Low-Cap and Penny Stocks

A low costing stock called low-cap, listed on one of the major stock exchanges, has a capitalization between $300 million and $2 billion. The capitalization of a small-cap stock is calculated by taking the number of share outstanding multiplied by the cost per share. For example, if company ZYX costs $3 per share and there are 150,000,000 shares outstanding, the capitalization of company ZYX is worth $3 x 150,000,000 = $450,000,000.00. All low price stocks are measured not by the company capitalization’s worth, but according to the dollar amount in which the stock is traded. A penny stock doesn’t follow the protocol that allows it to be listed on a major stock exchange and usually will trade between a few cents to a dollar. Penny stocks are traded on what is called pink sheets. Penny stocks are governed by a different organization than the major stock exchanges.

Why Buy Low-Priced Stocks?

Using low-priced stocks listed on a major stock exchange is a way to own part of a publically traded company and allows someone an opportunity to make their money work for a profit. Low-priced stocks are a training ground for more serious investing. When shares are traded for less than $5, it also assures the investor that their investment is considered to be low risk. While they are only investing in a small number of stocks, the investor can learn the basics of investing and test their risk tolerance level for investing.

Use Social Media Connections

Some small businesses forget about the importance of using social media to connect with customers. Either the marketing team overlooks the importance of using social media to engage consumers or has placed all their marketing dollars in different marketing tools. Making the decision not to use social media is considered a business mistake to avoid.

Have a Mobile Presence

An equally kindred business mistake to avoid is not having a mobile presence designed for mobile users. Because the mobile platform is so prevalent today, every company should have a mobile platform for its users. If a mobile platform were not as important as it is today, then not having a mobile platform for users would be excusable.

Try Bond Investing—Good For Long Term Investing

Bonds are considered safe investments only when individual bonds are being traded. For example, United States savings bonds have a fixed return on the investment. Some relationships have higher risks associated with them as junk bonds, which are based on a higher yield on the bond but usually carry a lesser grade return. A more top-grade and lower grade of the relationship is measured along an axis where the bond maker will pay the bond within the time in which the warrant was sold. Purchasing a higher grade bond with a more top-grade bond maker has a higher credit rating and that is considered good bond investing.

Market Fluctuations Are Small

A bond that is sold at a fixed rate is a good investment, but if the FTC changes the standards while the bond is maturing, it may affect the bond’s overall maturity value. Bond investors prefer to purchase a relationship that will have a higher yield at a fixed rate of return. It is difficult to predict what the standards of the bond will mature at over a longer time for its maturity. If a person is serious about considering investing in bonds, it is recommended they get a portfolio manager who specializes in relationship financing since it is a challenging world to overcome as a person starts investing.

Author: Eddy

Eddy is the editorial columnist in Business Fundas, and oversees partner relationships. He posts articles of partners on various topics related to strategy, marketing, supply chain, technology management, social media, e-business, finance, economics and operations management. The articles posted are copyrighted under a Creative Commons unported license 4.0. To contact him, please direct your emails to editor.webposts@gmail.com.