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Investing in penny stocks versus bonds
Pros to Penny Stocks
Penny Stocks Cons Because penny stocks are the stocks of very new companies, it can be extremely difficult to predict which will grow quickly and which will fail quickly.With the stocks of mature companies it is easier to predict how a company will perform in the future because one can base predictions on past performance.However, with penny stocks there is very little to base a decision on.Investing lots of money on bundles of inexpensive stocks can result in a complete loss of investment capital. Pros to Bonds Bonds are basically small loans from an investor to a company.When an investor pays money to a company in the form of a bond, the investor can expect to receive a consistent payoff.The bond will return a small percentage to the investor, but the amount of risk involved is much lower than the risk involved with investing in penny stocks.Investors like bonds because they can usually invest in a mature company that is stable and has a history of earning a consistent profit. Cons to Bonds Investors who are looking for a quick return on their money will not be impressed with bonds.Bonds are known to be safe and stable, but low yielding.If a company is looking to gain capital quickly for an investment project, they will likely have to wait long periods of time to earn enough money for their projects solely on bonds.Whereas penny stocks may be able to provide that income in a timely manner. Penny Stocks and Bonds Companies that are looking to invest should consider placing their money in both penny stocks and bonds.Penny stocks have the potential to return a large percentage on a business's investment very quickly, but they also have the potential of going out of business and losing all of a business's investment in the process.By carefully investing part of their money in penny stocks, companies will maintain both the potential for high yield and still have money to place in bonds.Bonds will almost guarantee a return of some sort consistently over the term of the bond. Depending solely on penny stock or bonds could put a business in danger or keep it from earning its full investment potential.Overall, investing in both penny stocks and bonds at the same time will give a company balance.This will keep a business earning positively in its investment and safe from losing money in large amounts. |
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Good Post!As always, you ... (Below threshold)
louis:
February 27, 20098:48 PM | Score: 0
Good Post!As always, you need to diversify in everything, including pennies and bonds.I do a lot of penny stock trading because the reward is substantially more if you trade correctly.
I normally visit this
Penny Stocks Site to do research, a good source.
What I've learned is with penny stocks, you need to get out when you realize the return you are looking for, as they are not long term investments, at least... most are not.
Posted by louis| February 27, 20098:48 PM Score: Posted on February 27, 2009 20:48