Penny Stocks Compare

Additional Useful Information

• An investor can buy “Shares” of these stocks. These shares can be purchased at a price which is called the “Share Price”. The price of these shares keeps changing daily.

• The investor can sell these shares anytime at the share price prevailing on the day of the sale.

• Total Purchase Amount	=	Number of Units X NAV as on the day of purchase
  Total Sale Amount	=	Number of Units X NAV as on the day of sale
  Total Gain	=	Total Sale Amount – Total Purchase Amount

• Penny Stocks are considered a good investment option for a short-term outlook. However, they could potentially turn out to be strong long-term investments if they grow well.

Returns *

• Penny Cap Stocks do not guarantee any returns. They are subject to market risks.

• Investment in stocks can generate returns for the investors in two forms -
• The first source - When investors sell their securities, the difference between the Sale Amount and Purchase Amount is typically called “Capital Gain” or “Capital Loss” (if sale amount is lesser than the purchase amount).
• The second source - Dividend payments.

• Penny Cap Stocks have the potential to generate above average returns over a long holding period.

• Returns depend on and vary between individual stocks and can be potentially higher than Large, Small and Mid – Cap Stocks.

Risk Level

• Penny Stocks are categorized as high-risk investments since they invest in the equity stock market.

• They may even be riskier than Small Cap Stocks at times.

Liquidity

• When an investor sells shares of these stocks, the sale amount will be paid to the investor in 2 working days.

• Relatively less liquid as compared to Large Cap Stocks, Mid Cap Stocks and Small Cap Stocks.

Interesting Facts

• Due to its low trading volume, even a slight above average trading volume will cause the stock price of penny stocks to fluctuate heavily.

• Several companies have started as penny stocks and have turned into blue chip stocks.  

Tax Implications

• Earnings received from Penny Stocks are taxable.

• When investors sell their Penny Stock Shares, the difference between the Sale Amount and Purchase Amount is typically called “Capital Gain” or “Capital Loss” (if sale amount is lesser than the purchase amount).

• The tax that the investor must pay on Capital Gain is –
• Situation 1 – If the Penny Stocks are sold within a period of 1 year from investment, the Capital Gains earned (called Short Term Capital Gains) are taxed at 20% of the gain.
• Situation 2 - If the Penny Stocks are sold after a period of 1 year from investment, the Capital Gains earned (called Long Term Capital Gains) are taxed at 12.5% of the gain.

• There is no tax in case of “Capital Loss”.

• For any dividend received by investors from Penny Stocks, these amounts are added to their total taxable income and tax is required to be paid as per the income tax slab.

Where To Invest

• https://www.5paisa.com/share-market-today/penny-stocks

• https://www.angelone.in/blog/best-penny-stocks-to-buy-in-india