Most people are always confused with where to invest their hard earned money and where not to. Everyone cares about his/her money, because its hard to earn money in this money-tight economy. But everyone also wants to invest his/her money without taking too much risk. The investing money in right place is an art and not every individual is good in it. The basic mistakes young investors commit is that they take emotional decisions and put their money in wrong companies. Here are some directions to make smart investment decisions.
Never Buy Unlisted Shares
There are thousands of companies listed in Stocks Exchange of USA and there are thousands of unlisted companies as well. The companies listed and approved by stock exchange are listed companies and the companies other than listed are unlisted companies. Buying unlisted shares means you taking too much risk. Yes some times returns of unlisted companies are high they are not backed by any stock exchange authority and they can be black listed or bankrupt at any moment. Another reason to avoid unlisted trade is that you would not be able to asses the share prices, volatility of the stocks and you would not be able to hire any stock broker because stocks exchanges do not allow their members to trade with unlisted investors. To avoid risk always go for listed companies.
Always Buy Active Shares
Always try to buy active shares and active shares are those which transactions take place almost daily, and inactive are those which transactions takes place twice a month or less. These shares are those shares, which are not sold to any one or belong to those companies whose performance is inconsistent or poor. So they will never give you good return so no need to stuck your money in those shares.
Avoid Closely Held Companies
Every stock exchange has its own criteria of deciding the limit of shareholders to declare company as a closely held company, for example some stocks exchange says; any company with less than 5000 shareholders considered as closely held company. Reason to avoid such companies are, there prices are very volatile because there shares are inactive and brokers avoid these companies too. Another reason is they fall rapidly and stay at very low level. They also possess insufficient price support. These are the reasons to avoid such shares; you can make your investment safe by following these directions
by: Ayaz Haider
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