People make millions of dollars in the stock market. The idea is that you can invest money in a share of stock or stocks in a company of your choosing. Keep your stock long enough for the company to grow and then sell your stock at a huge profit. In a perfect world and with lots of money to spare, this would be a nice way to get rich. But the world is not perfect and the average family doesn't have lots of extra money to spare. So how about investing in penny stocks?
Traditional stocks range in price from $3.00 to hundreds of dollars. Stocks can be purchased singly or in significant numbers. The purchaser of the shares of stock are in control of their own destiny. Essentially, the purchaser is on their own to pick and choose which stocks they want to purchase. But investing in stocks can be a very risky business.
Enter the penny stock. Penny stocks are those which are sold at less than $3.00 per share. Many, many of these stocks are truly sold for pennies. As such, it is not very costly to buy hundreds, if not thousands of shares in a large variety of companies.
I would be easy to surmise that stocks that sell for only a few cents could not ruin you financially. Unfortunately, this is not true. The opposite is actually true. Because of the lower price, investors tend to over purchase these penny stocks with the plan to "get rich quick". The idea is that when the stock increases in value, you will have many more stocks to sell at a huge profit
The facts are quite different than the fantasies, however. Stocks sold for pennies are typically companies headed for bankruptcy or companies that are newly formed with no history. These stocks do not meet the minimum standards for selling on the stock exchange so are traded on "pink sheets". Because of this, the likelihood of these stocks being great investments is marginal. Large amounts of money can be lost very quickly.
Having said the preceding, people still want to discover the "next big thing" in penny stocks. If this is your goal, it is well advised to do your homework before you spend even one penny. Check out trading bulletin boards and web sites focused on penny stocks. Read everything you can about penny stocks and particularly the company you choose to invest in. Know what you are doing because education is the key to your success.
Traditional stocks range in price from $3.00 to hundreds of dollars. Stocks can be purchased singly or in significant numbers. The purchaser of the shares of stock are in control of their own destiny. Essentially, the purchaser is on their own to pick and choose which stocks they want to purchase. But investing in stocks can be a very risky business.
Enter the penny stock. Penny stocks are those which are sold at less than $3.00 per share. Many, many of these stocks are truly sold for pennies. As such, it is not very costly to buy hundreds, if not thousands of shares in a large variety of companies.
I would be easy to surmise that stocks that sell for only a few cents could not ruin you financially. Unfortunately, this is not true. The opposite is actually true. Because of the lower price, investors tend to over purchase these penny stocks with the plan to "get rich quick". The idea is that when the stock increases in value, you will have many more stocks to sell at a huge profit
The facts are quite different than the fantasies, however. Stocks sold for pennies are typically companies headed for bankruptcy or companies that are newly formed with no history. These stocks do not meet the minimum standards for selling on the stock exchange so are traded on "pink sheets". Because of this, the likelihood of these stocks being great investments is marginal. Large amounts of money can be lost very quickly.
Having said the preceding, people still want to discover the "next big thing" in penny stocks. If this is your goal, it is well advised to do your homework before you spend even one penny. Check out trading bulletin boards and web sites focused on penny stocks. Read everything you can about penny stocks and particularly the company you choose to invest in. Know what you are doing because education is the key to your success.
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