Small-cap stocks have high growth potential due to their small size and agility. However, they also come with higher risks compared to large-cap stocks.
Risks to consider when investing in small-cap stocks include higher volatility, lower liquidity, and the potential for limited financial resources and track record.
Potential benefits of investing in small-cap stocks include the opportunity for significant capital appreciation and the ability to discover hidden gems in the market.
Investors should conduct thorough research and due diligence before investing in small-cap stocks to mitigate risks and maximize potential returns.
Diversification is key when investing in small-cap stocks to spread risk across different companies and industries, reducing the impact of any single stock's performance.
Despite the risks, investing in small-cap stocks can be rewarding for investors with a high risk tolerance and a long-term investment horizon seeking above-average returns.