Blue Chips or Penny Stocks? Which is better?

Wed, Apr 9, 2008

Investment

I have clients who tell me,it is better to buy a penny stock than a blue chip because it is CHEAPER.

Example you have $1000 to invest.

The penny stock you have been eyeing cost $0.10 each.

…. and another one, a blue chip cost $50 each.

With $1000, you can buy 10,000 penny stocks.

With $1000, you can buy ONLY 20 blue chips.

So their rationale is its better to buy penny stocks, because it is CHEAP and you can buy more because of that.

Blue chips are too EXPENSIVE.

So….Which is better, blue chip or penny stock?

The holistic truth is that the price of the shares DOES NOT matter.

What really matters is the potential percentage increase in the price, which depends on variables like
-the profits that the company makes
-market sentiments of the development of the company etc2.

Lets assume the above example again.

Assuming both companies are equally strong and enjoy 20% increase in price.

The total value of the PENNY STOCKS will increase to (10,000 X $0.12) =$1200
whereas the total value of the BLUE CHIPS will also increase to (20 X $60) = $1200

So you see… The price of the stocks doesnt makes the difference.

Both investments make the profit! 🙂

 

p.s. By the way, if you wish to discover a simple & halal way to create a positive monthly cashflow and calculate your net worth for FREE, then please click here…

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This post was written by:

- who has written 440 posts on The Official Helmi Hakim Website.

A certified financial consultant, Helmi Hakim has won praise for his patience, perseverance and practicality when solving his clients' financial concerns. For more information on how you can manage your finances better, contact Helmi Hakim at 96520134.

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  1. […] Blue Chips or Penny Stocks? Which is better? I have clients who tell me,it is better to buy a penny stock than a blue chip because it is CHEAPER. Example you have $1000 to invest. The penny stock you have been eyeing cost $0.10 each. …. and another one, a blue chip cost $50 each. With $1000, you can buy 10,000 penny stocks. With $1000, you can buy ONLY 20 blue chips. So their rationale is its better to buy penny stocks, because it is CHEAP and you can buy more because of that. Blue chips are too EXPENSIVE. So….Which is better, bl […]

  2. […] Blue Chips or Penny Stocks? Which is better? I have clients who tell me,it is better to buy a penny stock than a blue chip because it is CHEAPER. Example you have $1000 to invest. The penny stock you have been eyeing cost $0.10 each. …. and another one, a blue chip cost $50 each. With $1000, you can buy 10,000 penny stocks. With $1000, you can buy ONLY 20 blue chips. So their rationale is its better to buy penny stocks, because it is CHEAP and you can buy more because of that. Blue chips are too EXPENSIVE. So….Which is better, bl […]

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