If I may give one word of advice since you're new to stocks, please don't throw away your money in penny stocks. Mind as well just go to the casino and gamble your money away. Recommend doing some research on how the market works, then begin investing in fundamentally strong companies. Bufffett didn't become rich in penny stocks :)
Since you are new to stocks my first suggestion would be DO NOT BUY PENNY STOCKS!
But to get to your question - let's say you have $100 in a trading account and you buy $30 worth of XYZ stock plus pay $5 in commission. So you now have $65 left in your account and $30 in the stock. XYZ stock tanks and goes all the way to zero. You are out the $35. You still have $65 left in your account to go and buy ABC stock.
Yes, you lose all of the money you gave to the previous holder of the stock, because no one will now buy it from you. The company owes you nothing. You cannot put any legal claim against the remaining assets of the company because stock is unsecured.
However, you might get a small tax write-off.
Which is the same deal you get when you put all of your money on red in Las Vegas.
You are protected when you own stock. For instance, if your company gets sued and loses more than it can pay, the law cannot come to you, one of the owners, and confiscate your house or other property. The shares may become worthless, but that is all you can lose.
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This is not a stupid question; rather an intelligent one.
IF the price of the share were to touch $ 0.00, you would lose ONLY the money you invested in that company.
You would only lose the money you invested in that particular stock. It would not affect your entire account.
Hi there,
I am pretty new to trading stocks, and just have a basic question but I can't find the answer anywhere. If a stock tanks and goes all the way to $0.00, do you lose only the money you invested in the stock? Is there a way your entire account may be affected by this? I know it may be a stupid question, but please try to keep the answers non-deragotory, for I am new to trading stocks. Thanks!
