Buy penny stock to avoid odd lot? or no need?

Buy penny stock to avoid odd lot? or no need?

There are many advantages in buying penny stock. Example volatide and fast money, realative cheap, higher voloume, etc.

What i want to share is, another advantage of buying penny stock is it can minimise odd lot.

If you have limited money and you normally invest in small amount, then you should consider buying penny stock.

Example you have RM3000, you buy a stock 1000 shares @ RM3.00.
If they have bonus issue 1 for every 3, then you end up having lot odd 1333 shares. The 33 shares are very difficult to sell, may sell at lower price, and higher cost.

Examples of othe corporate exercise that may result you having odd lot:
Share dividend 1 for every 25
Free warrant 1 for every 6
etc


If you buy penny stock, you can buy more shares and can minimise the odd lot.
If you have 3000 shares, then bonus issue 1 for 3 you will end up having 4000 shares.


Few things that you need to consider:
Long term or short term or medium term. If short term, don't bother. If you buy and keep for very long term, then odd lot is not a problem. You are not selling and the losses from odd lot is spread out for many years and not much impact. Odd lot still pay you dividend.

Valuation. If you could not find any good penny stock, then buy other good non-penny stock. Don't force yourself buying penny stock.

Anyway, if you think the stock is very good, just buy it. Odd lot losses is just about few percent, very little. The company may not have bonus issue or other corporate action before you sell it. Furthermore, if the company have rights issue, odd lot can apply excess.