Investors keep on finding opportunities in the stock market to grow their money. The stock market, however, comes with investment associated risks and therefore long term investments are generally advised by experts. But some investors are ready to play on market risks and exploit the high return offering potential of the stock market with their knowledge and skills. One such arena that offers substantially higher returns in the short term and with very low investment is penny stocks or shares between 1 to 10 Rupees.
Shares between 1 to 10 Rupees are generally known as penny stocks. These stocks are usually of smaller companies or startups that have very low market capitalization. However, such penny stocks can prove to be very beneficial for investors as they offer the opportunity to grow money quickly. In this article, we will go through the top reason why you, as an investor, should buy shares between 1 to 10 Rupees today.
Table Of Contents
Low Capital Requirement
People often avoid investing a lot of money in high risk-bearing investment instruments. However, with shares between 1 to 10 Rupees, you do not need to invest a lot of money to buy them. You can buy a sufficient quantity of such penny stocks even with very low capital. For example, if a penny stock has a price of Rs 5, you can buy 1000 units of it only with Rs 5,000. Regular investors in the stock market do not bother investing Rs 5,000 or Rs 10,000 for buying such stocks as these give the investors a chance to multiply their returns quickly.
The best way to reduce the risk associated with penny stocks is to invest in multiple such stocks. By investing in multiple penny stocks, you increase your chances of gaining higher returns. You do not need all the penny stocks to perform. Even if only one of the stocks in your portfolio performs as much as penny stocks are known for, it will compensate for the loss that happened from all other penny stocks. For example, if you have selected 5 penny stocks to invest in, and the average price of these stocks comes around Rs 4, you need only Rs 20,000 to buy 1000 units of each of the stocks.
Negligible Capital Loss
Although investing in shares between 1 to 10 Rupees is generally considered to be risky, the capital loss an investor will suffer in the worst case is almost negligible. For example, if you have Rs 4 lakh to invest in the stock market, you can use 1% of it, i.e; Rs 4,000 to buy 250 units of 4 different penny stocks of Rs 4. Even if all the stocks fail, the maximum capital loss you have to suffer is Rs 4,000, which is completely bearable if you are a long term investor.
Can Turn into Multibagger
Penny stocks are known for their high return offering potential. If you are ready to bear the risks associated with penny stocks investment, you also get the chance to earn substantial returns with very low capital. In the year 2021, some penny stocks have offered over 1000% returns within a year. These multibagger stocks stories surface every year and many investors successfully become rich through such investments. You can also invest in shares between 1 to 10 Rs and stand a chance to grow your money manifold within a very short period.
Invest in Startups
As said, penny stocks or shares between 1 to 10 Rupees are generally of startups with very low market capitalization. So by investing in penny stocks, you can invest in high-quality startups that have the potential to turn into a big company in the future. There are many success stories of such startups that have gained investors’ confidence and increased their market capitalization in the long run. You can also find such companies and become a value investor of a startup that along with being successful someday in the future, also rewards you with higher returns.
Better than Other Speculative Investment Instruments
Many investors often lose their money by investing and trading in very risky speculative instruments. One such example can be given of the option traders who risk a lot of money now and then. Trading instruments such as option chain trading or intraday trading are very risky, as either you have to square off your positions before the closing of the intraday session or withdraw your money before the expiry of the option. Penny stocks, on the other hand, are simple equity investments that you can hold for as long as you want. If you are suffering loss today, you do not need to sell them immediately, instead, you can keep such stocks in your portfolio and wait for them to turn profitable.
Calculate your risk appetite before investing in penny stocks
Now that you have learned the reasons to invest in penny stocks, let’s have a quick look at the best penny stocks that you can consider to include in your portfolio in 2022.
Top Penny Stocks of 2022
|Eastern Silk Industries Ltd||Rs 5.3|
|Pil Italica Lifestyle Ltd||Rs 7.6|
|Bhandari Hosiery Exports Ltd||Rs 5.6|
|Tirupati Forge Ltd||Rs 9.8|
|Vasa Retail and Overseas Ltd||Rs 5.1|
|Kanani Industries Ltd||Rs 8.9|
|Visagar Polytex Ltd||Rs 1.1|
|Mittal Life Style Ltd||Rs 10|
|Usha Martin Education And Solutions Ltd||Rs 5.2|
(Note: The prices are as of July 22, 2021)
So we have learned the best reasons to buy shares between 1 to 10 Rupees. However, while investing in penny stocks, make sure you have done proper research about the stock/company in which you are going to invest. Also, calculate the risks associated with the investment and put money in such stocks as per your risk appetite. Only through proper knowledge and fundamental research can you increase your chances of capitalizing on the high return offering potential of the penny stocks.