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Finance For Dummies

Finance For Dummies offers personal finance information on investing, retirement investing, finance, insurance, credit cards, loans and more. Personal finance education is our goal.

Wednesday, September 20, 2006

Domestic Small Company Stocks

Investing in U.S. small companies stocks is another asset class that goes along with a diversified portfolio. We will look at the essential characteristics of small company stock.

  1. Investment objectives are growth and diversification
  2. High to low liquidity depending much on the volume of stock trades
  3. Expect high levels of fluctuation in pricipal and return because smaller companies tend to go under more than really big ones.
  4. Capital gains and dividends taxed in year you received.
  5. More volatile and risky than large cap stocks. Huge price changes can occur very quickly.

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