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What’s a 5-10% Return Going to Do For You If You Only Have $1,000?

March 6, 2017 By Matt Thomas 1 Comment


Short-Term Trading vs. Long-Term Investing:

It can be discouraging to think that you need hundreds of thousands of dollars to be able to generate substantial returns in the market. The S&P 500 only returns about 5-10% per year on average. If you can match the upper range of that (10%) with a $100,000 portfolio, for example, you’ll see a $10,000 return. Now that’s a large chunk of money – sure, but certainly not a full-time income. And on top of that, it took a huge $100,000 lump sum and a full year’s worth of time to earn it. So it begs the question: are there better ways to earn substantial returns in the market with a more limited starting portfolio?

Long-term investors are typically caught up in blue-chip, dividend-generating stocks. And it makes sense because these companies have proven track records: solid revenues, profits, and cash in their bank accounts. There’s tons of publicly available information  on them, so researching opportunities is somewhat simple – at least compared to the lesser-known penny stocks out there. But in the short-term, penny stocks can provide much higher profit-potential – there’s no doubt about it. Blue-chips inherently don’t provide the same volatility as penny stocks. It would be out of character for well-known stocks like Apple, Microsoft, and IBM to move over 5% (in either direction) on any given day, but it’s not out of the ordinary to see penny stocks soar 50-100%+ on rumors, news, deals, etc. If approached correctly, penny stocks can result in substantial returns on even small 500-$1,000 portfolios.

Related Post: What is a Day Trading System? Establish Structure in Your Approach

Filed Under: The Daily Dose: Questions For Stock Traders

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Comments

  1. Derick says

    March 8, 2017 at 4:05 pm

    Thanks for the info! I’ve been looking all over the Internet for good information on penny stocks, As I’ve been a longer term investor for a long time.

    Recently came into a little bit of money after the company I worked for started laying people off. Your Ebook is exactly what I’m looking for.

    Thanks.

    Reply

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