Mar 12, 2012

Posted by in Penny Stock | 0 Comments

What Are The Top Small Investments?

The best small investments

small investmentsThere are many small investments out there, and these are something a lot of people are looking for. There are many things that could be considered a small investment. One of the best is putting money in stocks. Anybody can buy stocks, because there is usually a low minimum purchase amount, and you do not need a lot of money to get started. If you are looking for a quality investment, here are some guidelines:

Focus on quality companies for small investments

Many small investments investors just buy a stock based on a news report about the firm, or what a friend tells them about it. They generally treat the stock separate from the company itself. Instead, you want to focus on finding a stock of a company that is making money, and is a quality company. You want to think of buying the stock as if you are buying the firm itself.

How to tell if the company is quality

You want to make sure you analyze the firm’s financial statements. Be certain they are profitable and have potential for future growth. They should have been showing consistent profits for the past 10 years or more, as this is the best way to tell if they have future potential. Also, look at their long term debt levels. No matter how much money a company is making, if they have lots of long term debt this is a sign of future trouble.

Finally, look at the market capitalization. If it is significantly less than the intrinsic value of the company, you know you have a winner. Ideally, it should be 70% or less of what the firm itself is worth. If this is the case, than you can be confident the stock will go up in the future, and that it is one of the better small investments options.

Conclusion

The best investments are stocks of quality companies with undervalued shares. Most investors either are day traders, or invest looking for short term profits in a matter of days or weeks. Instead, you want to focus on finding quality companies. These small investments are the only ones that can make you money for the long term, and that can give you long term passive income.

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