Monday, June 7, 2021

Should I as a New Investor Buy Cheap Stocks?

 Should a new investor buy cheap stock?

 The straightforward answer is no. It is just a false economy to think of cheap stocks as a good investment.

I want to have lots of stock quickly. So I make lots of profit!

Believe me, it is normal to want lots of stock quickly. I have been in your shoes, not much cash to buy stock, so buying cheap stocks, also known as "Penny Stocks" looks like the right thing to do. They are cheap, you don't have much money, and buying them gives you lots of stock, quickly so you can say that you own dozens of shares in Junk Corporation.
Cash and a stock graph, why new investors should not buy cheap stocks

Who wants to own Just one share of Amazon or Tesla?

Ok just owning one stock of a good company may not seem impressive.

But you are just beginning to own stock. Time is on your side and what you want to do is to use time to accumulate good stocks not waste valuable time and money  on buying cheap worthless stocks that will take you nowhere.

Today you don't have to invest a lot of money. Consider Fractional Shares.


When you buy fractional shares you get all the benefits of owning a stock. When the price goes up and down, so does the price of your fractional shares. You can put in as little as $1.00, and use dollar cost averaging to build a position.
I have used M1 Finance to build some high value positions over the last year or so. I began with an initial investment of just $100 in January 2020. Now in June 2021 my portfolio is worth over $3,000.
You can open an account with M1 Finance with just $100 yourself and when you fund your account for the first time you will receive an additional $30, just for opening a new account. here.
When you open your new account with M1 Finance, you will be able to choose to buy fractional shares in hundreds of different, top notch companies, exchange traded funds (ETF) and Fund companies like Vanguard and iShares.

I personally own a mixture of growth stocks Apple, Amazon and Google. Vanguard funds like their total stockmarket fund and also steady dividend payers like Johnson & Johnson, Verizon and Union Pacific Railroad.

M1 allows me to build my position a few hundredths of a share at a time. Collect the dividends and re-invest those dividends in other stocks over time.

I add just $15 per week, which re-invests when my cash balance goes over $25. All invested in preset proportions across my whole portfolio.

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Read as much as you can about investing. 

Nothing pays you back as much as learning from books. Books on investing will teach you about how to read financial pages. How to read a profit and loss statement.

Read about financial crashes of the past. Read about how top ranked investors have invested their and other peoples money.

If you want to learn about Foreign Exchange markets, read about those. If you want to learn about options trading, read about them. Learn the language of those markets.

Gather all of the knowledge you can. It will pay you dividends later.

The more you know now the better.

Take a look at Amazon for some books to start with.

Always Buy Quality Stocks.

Always follow the rule to buy quality stocks.

If you buy quality, you will prosper. 

Learn to find quality stocks, you can learning by reading lots of books. 

Cheap stocks are not neccessarily bad stocks, they may just be out of favor with Wall Street. But as a beginner, you need to recognize your limitations. Beginning with fractional shares, lets you buy quality stock for a lower price, a price that you can afford.

Take advantage of the power of fractional shares to build a quality portfolio.

Take care. 

I wish you all the best with your investing.

Be sure to like and share this post with your friends on your favorite social media.

Thank you.

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