If you’ve been thinking of growing your wealth by getting involved with equities, shares, and securities, you’ve likely looked into the concept of stocks before. One of the most common tools for building wealth, these solutions are essentially securities which allow people to take ownership over a very small portion of a business. While common, these tools in the money-making landscape are often misunderstood. This is because there are so many different kinds of stocks and shares you can potentially invest in. Each option comes with its own pros and cons to consider, from preferred and dividend stocks to safe securities and blue-chip investments. Today, we’re going to be looking at two very different kinds of stocks you may need to be aware of when you’re building your own portfolio.
What Are Blue Chip Stocks?
When you buy a stock, you’re essentially betting on the fact that a company will grow in size and value, making your investment in it more valuable too. While there are many ways to evaluate potential securities you may want to spend your money on, one of the most common options is to look at the history of the organization, its reputation, and background. Blue chip equities refer to the cream of the crop in the business landscape, often featuring companies which are well-known in their sector, and almost guaranteed to do well. While they might not provide the highest returns, they’re more likely to deliver the kind of stability many investors are looking for when they’re trying to grow their wealth without taking on much risk.
What Are Penny Stocks?
Almost the exact opposite to a blue chip, a penny equity is a low-cost solution in the market which you can buy for a very small price – often less than $5 per share. These investments are easy to get involved with, but they’re often considered somewhat dangerous because they build on speculative business models, and rarely have information to offer about the background company. These types of shares can give you a much faster level of growth, if you happen to have access to a list of the best penny stocks on the market with a stock watch list. However, you’ll need to be prepared to take on a higher level of risk with this kind of spending.
Which Option is Best?
As with most things, there’s no one-size-fits-all method to buying the best equities for your investment portfolio. The right securities for you will depend on a number of factors, including how much risk you’re willing to take on. Notably, while blue chip options are often perceived as safer than their penny alternatives, this doesn’t guarantee you an increase in value for your securities either. With any kind of stock, you can just as easily lose or gain money, which is why it’s so important to have a diversified portfolio to help spread your risk. Making sure you consider all of your options carefully, and use your money intelligently will give you the best chance of success.