What Are Penny Stocks And How It Can Be Better With ETFs

There are times when you are not sure if you need to Invest in ETF or penny stocks. A better understanding of it all will serve the purpose right. For the current lack of regulatory definition, penny stocks are mostly termed as trading below the margin of 10 rupees, and it comes with lower marketing capitalization of around 100 to 200 crore rupees. These listed firms are mainly characterized by lower share price. Most of the time, the shares from the penny stocks in India are considered to be illiquid and it means that there won’t be much transactions taking place. Therefore, it proves to be quite difficult to actually sell or buy shares. 

Why penny stocks are important:

People are mostly heading towards the world of Indian penny stocks with good fundamentals because of the lower downside risk. Not only that but it comes with higher upside potential. It means that returns get generated in case the value rises as the initial cost used for acquiring might be pretty low. The wealth is supposed to multiply, mainly over a smaller time frame. However, before you delve right into the world of penny stocks, it is better to check on the nuances of these companies before jumping straight into details.

ETF can be better option:

Whenever people are aiming for best penny stocks India, there’s a certain group dealing with ETF as better option. ETF is a form of pooled investment vehicle and the advantages will include ease of trading, tax efficiency and lower management fees. Unlike any of the traditional mutual funds with open end, investors can buy the ETF shares on exchange itself. Investors further have the right to sell the ETF on exchange. Later, ETF enjoys all possible convenience which trader has on the stock exchange.