Looking to begin your investment journey at minimal risk?
For a first time investor, penny stocks are a great way to get your feet wet without the risk of losing much.
Typically, penny stocks are traded outside major money exchanges. This includes on the OTC Bulletin board and on the pink sheets.
How You Can Benefit from Investing in Penny Stocks?
These stocks come with lots of perks. Here are some of them.
1. Low Purchase Price
Penny stocks are pegged at $5 and below, per share. This allows you to get in on the stock market without spending a lot of money.
For new entrants, this is a great way to learn how to navigate the stock market without suffering significant financial loss, in the event that stock prices drop.
Similarly, the low pricing of this investment option makes investing possible for most people including students.
Because of their low investment, penny stocks allow you to buy more shares.
Further, an investor can buy more than one kind of stock (diversify) because the cost is favorable.
3. Investing in Penny Stocks Is Easy
Penny stocks are commonly listed shares in the stock market. All you have to do is to make selections from available stocks.
Just as regular stocks, an investor has to evaluate what is available and carry out research to pick out stock from a reputable company.
Some investment publications can also make projections concerning stocks that are likely to do well in a given duration.
The penny stocks list they post can help you to make the right decisions.
4. You Get To Learn
Listed securities are more stable and don’t offer much in terms of investment lessons. Not so with penny stocks.
Due to their volatility, penny stock investments tend to teach you more investment lessons. Luckily, you can learn without burning your fingers.
With penny stocks, you will have access to a combination of several stock portfolios, faster price fluctuations and shorter periods between buying and selling.
5. Prices Changes Happen Much Faster
Whether the share price will move up or down, the movement in either direction happens a lot faster than in larger shares.
How to Find the Best Penny Stocks to Invest In
The listing on the OTCBB can get confusing when you have no idea what you’re looking for.
Here are a few tips to help you pick winning penny stocks.
- Do thorough internet research on the company and see if their information is readily available and what others are saying about them.
- Look for stocks that are rapidly spiking. There are numerous online tools to help you do this.
- Aside from volatility, find shares that are moving in large volumes.
- Check for companies with impending catalysts that could push the share price up. This could be opening new locations or new product lines.
- Look for companies with little or no debt. Too much debt indicates the company is struggling to stay afloat.
Ultimately, investing in penny stocks can be your entry into the big leagues in stock investments. As always, start small, with only what you can afford to lose and learn as much as you can while working your way up.
If you are looking for other investment ideas, you can find insights on this article.