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Invest In Low Cost Stocks

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Why Look At Low Cost Stocks?

low cost stocks

The present volatility in the market is nerve-wracking for most investors but you can turn it to your advantage with low cost stocks. The hidden advantage to these sorts of equities is in their low price. If you own a large cap stock and it gains a dollar in value, it may turn out to be of little significance for you, especially if you only owned a few hundred shares. With low cost stocks, such a gain can turn into a real windfall.

Imagine putting $50,000 into some low cost stocks that are worth only five dollars per share. You now own ten thousand shares of that stock. If this stock experiences even a small increase in price, you will be able to reap gains that are proportionately much higher. When that stock momentarily goes up by 25 cents, you will be in a position to make $2,500 if you sell the stock.  If you had invested in a large cap stock and you were only able to purchase one hundred shares, then the 25-cent increase would have only made possible a return of $25.

How to Invest In Low Cost Stocks

•             Open an online account with a discount broker. You want to make sure that you are not going to pay a lot per commission. Since you may be trading low cost stocks more often than you would with higher-priced stocks, you do not want high trading fees eating into your profits.

•             Fund your account. Many brokers will have a minimum amount of funding required. Find the broker with the funding level that suits your needs.

•             Carefully review any data you can find about the stocks in which you are interested. Invest in low cost stocks that suggest they are capable of experiencing an increase in value.

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