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Blue Chip vs Penny Stocks.Which is better for low income people?

pennyWhile comparing different types ;of stock, no one can be particular that which stock would be profitable. Blue chips stock and penny stock are almost opposite type of securities. Blue chip stock is high priced stock, they are sold on higher prices and hence higher profit is attached to it. These securities are offered by large companies that have sound and strong background in the market. Because of the company’s stronger base these securities are more reliable and good reputed. Profit related to the blue chips stock is steady but the amount is not too high. Household names like McDonald’s, IKEA, nokia, etc, are more often owners of the blue chip stocks therefore their repute and the performance of the stock make them highly liquid. Even when the market is facing the downfall, these securities are considered as the safe play to opt.

While on the other hand penny stock is a cheaper security, its actual price is too nominal. And the returns attached to this stock are most of the times uncertain and if you have got good luck you may be able to get higher returns on it. These securities are offered by the companies which are going to start their business in the market or have short operating history. These stocks are not floated in the stock exchange because of the uncertainty and the price of the stock. They are traded in private markets or over the counter. Their price is as low as few cents or a dollar. Due to the uncertainty attached to the stocks their liquidity is too low.

As an investor, if you have less money and you risk avoider  then you must go with the blue chips stock. Although it would be difficult for you to buy the stock at that time but in long run your investment would be secure, moreover you would be getting some benefit on your investment also. There would be no risk attached to the investment and you can liquidate it at any time you want to get your principle amount back. But if you are a risk taker then you can bound your money by buying penny stocks and wait for your luck to do work for you.

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About Emaad Qureshi