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Small Company Stocks

Often these are called small cap stocks, because their capitalization is typically a few million dollars or less. Usually these companies are the exact opposite of blue chips, and are not diversified, and are particularly focused in a single industry, or even a single part of an industry. While returns in this area can be significant, so can the downturns. It is more risk associated small cap and consequently, the returns may be greater. It is advisable for young investors with long-term goals, to have a certain percentage of their portfolio in well-researched small cap stocks. However, the young investor should have quit the temptation for this search for high returns, in the temptation to avoid their original financial planning goals. The financial planning goals should always be the cornerstone of the investment strategy.

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