Penny stocks are highly low-priced shares available at a
rate of less than $5 per share and sometimes even less than $ 1 per share.
Penny stock investing is full of jeopardy which may or may
not bring returns. It is for people who are capable of tolerating risks and
downfall of money. Sometimes, the money invested can bring a good amount of
profit but it may turn out to be the reverse situation also. Awareness and
proper knowledge can help minimize the loss of money.
Just like, every coin has two faces, similarly, penny stock
investments have its own benefits and detriments. Only after keeping in mind
all the perspectives one should put their money into this business.
Pros and Cons of
investing in Penny Stocks
investment, more gain
Due to the low price of stocks, they
require very fewer assets and submissions of their documentation. They can
bring hefty profits to the shareholder within less time. There are fair chances
of becoming rich by putting money in these small-cap stocks.
Since the cost of the shares is less, the
losses incurred might be not too high. Lesser the loss, better chances are to
think about investing money again. The losses will be less only if the money
invested is restricted. Hefty investments could bring hefty losses.
are made on a rapid basis
These stocks function very quickly as they
are provided by developing companies which aspire to grow rapidly. So, with the
intensification of the company, the depositor can incur profits. One should
choose only those companies who have practically shown a fine growth in recent
times and their stocks are not listed among the Dark Market stocks.
There are many fraud companies offering
penny stocks at very low rates which look promising but selling their stocks
are a means of looting people’s bounty. Therefore, one should look for
certified companies to spend their money on.
stocks are highly volatile
Their rates change almost every day and if
one day these shares are showing a hike the next day they can collapse too.
Investing a large amount of money can bring large losses. It is advised to
invest less so that the loss if incurred is also less.
about the companies providing penny stocks is hard to find
The companies providing these stocks are low-profile
and expanding companies. They are not listed on the regular stock exchange
market. Finding a fair amount of information about them is not so easy to avoid
frauds. Staying aware, visiting their website and checking its progress
regularly for a well amount of time can help the investor invest in the right
- The ‘Pump
and Dump’ strategies
This is a scheme used by companies when they
purposely increase their profits which is actually fiction to attract
customers. After they have taken a good amount from their investors, the
customers come face to face with reality which leaves the investors in heavy
Researching and investing wisely should be the criteria of
every person who dreams of making money by investing in penny stocks.