This article will hopefully be helpful for people who’re just getting into investment and don’t want to risk a lot of money or are generally small investors with investment as a side business. Private investors usually do not have, or even want to, invest big amounts because this means you’re risking too much if you’re research isn’t accurate enough.
-Penny Stocks and it’s Disadvantages:
Many people with small investments often choose Penny stocks, also known as small cap stocks or OCT stocks. They are the ones that require very low investment (a penny stock would be $5 or less!) and in turn, give you good amounts of profit in a very short time period. However, they are volatile and are more harmful than less as there is a very high risk factor involved as most of the times, companies near to bankruptcy aften sell penny stocks and chances of it going up are almost none. It attracts small investors as they get many stocks in return of a small amount and so, this excites them. Other than the high risk factor of losing all your money, it is also very difficult to sell the stocks back, that is, very low liquidity. Most people end up losing their money due to unprofessional research and lack of knowledge.
-High Yield Investment Programs (HYIPs) and Disadvantages
These types of programs also have stocks selling at around 5 dollars and are very easily accessible to public but the only difference between HYIPs and Penny stocks lies in the risk factor.
HYIPs are of two types:
2- Private HYIPs
However, these are often categorized under the fraudulent umbrella as they use a scheme known as Ponzi Scheme in which the people who’ve already invested, are paid by the new investors’ money. And this is at times, considered illegal as they’re unregistered and use schemes that often lure in investors and steal their money. So make sure about it before investing in any money as it may be a fraud and you wouldn’t get them back.