5 Ways Cheap Preferred Stocks Boost Investment Gains

Preferred stocks are some of the most desirable investments available, particularly for retirement investing. Unfortunately, many investors may think they lack the capital necessary to invest in preferred stocks from some of the top publicly-traded companies. However, cheap preferred stocks do exist. And, they can greatly benefit beginner investor performance and increase stock market gains. There are many reasons to invest in preferred stocks to help you achieve your investing goals as a beginner. Find out why you should start looking for cheap preferred stocks to improve your portfolio management strategies in the post below.

Preferred Stock Is Hybrid

Preferred stock is a hybrid investment product. Preferred stock shares are a cross between traditional stocks and low risk bonds. This allows investors like you to benefit from the advantages of both of these unique types of investment products. These hybrid stocks can be a great addition to any investment portfolio. They allow you to diversify your portfolio easily with a single hybrid investment product that acts with a dual purpose. For beginner investors like you, investing in preferred stocks is one of the best foundations you can set for a strong, well-balanced portfolio.

Reduced Risks

Cheap preferred stocks are safer for investors of all levels of expertise. When you own preferred shares, you are guaranteed to earn fixed dividends. Even if stock performance is lackluster, as a preferred stockholder you are the first shareholders to be paid out. That can help to balance out higher risk stocks in your portfolio. It also means far less risk that you will lose money with these types of stock holdings. Ultimately, that can greatly improve your stock market gains. That is why these low-cost preferred stock options are so advantageous for beginner investors like yourself.

Bankruptcy Protection

Preferred stocks also provide investors protection from company bankruptcy. These types of bankruptcy protections are not provided by traditional stocks. When you own preferred shares in a company, you are the first investors to be paid out after a company goes bankrupt. That means you will have access to the company’s remaining cash assets before they run out of money. It makes it next to impossible for you to lose big money on the stock market when you are a preferred shareholder. Obviously, this is a quite a benefit for beginner investors who often make risky stock market moves and wind up going for broke. If you want to mitigate stock market risk, consider investing in affordable preferred stocks.

Par Value

Typically, preferred stocks have a par value of about $25. That makes them low cost investments for beginners to consider when they need to improve yield maintenance. If you are a beginner investor on a budget, the cost of preferred stocks can be a hugely determining factor in whether or not you can invest. Thankfully, cheap preferred stocks abound. You just have to look around for those preferred stocks with a par value of $25 and a sell price to match. For $25 a share, you can benefit from reduced risk and increased return potential. This is a benefit that no investor, beginner or otherwise, should turn down. Consider investing in cheap preferred stock options to make money without putting too much of your own money on the line.

High Dividends

Preferred stocks offer investors high dividends. That is important to any investor. Dividends are what makes you money. Even though preferred stock holdings are considered low-risk investment opportunities, they still provide high dividends to investors. These high dividends are similar to those you could expect to gain from high risk investment options, without all the additional risk. That is something that is particularly useful for beginner investors, who are traditionally a bit more risk-averse at the start of their investing career. If you want to benefit from low-risk high yield investment opportunities, start looking to invest in preferred stocks for cheap.

All investors could benefit from options strategies that include investing in preferred stock. Cheap preferred stocks afford a number of advantages to any investment portfolio. First, preferred stock holdings are a hybrid investment product, meaning you benefit from the best of two separate investment options, with fewer downsides. Secondly, affordable preferred stocks also provide you low risk investment opportunities with high return potential thanks to par value and the bankruptcy protections intrinsic to these types of stocks. Consider these advantages of preferred stock options when figuring out how to balance your investing portfolio as a beginner investor. It is sure to improve your stock market performance as a beginner and beyond.