There’s a lot of attraction in the world of penny stock investing – and it’s easy to see why!
Penny stocks can be gobbled up in gigantic quantities for next to nothing (a $500 investment in penny stocks that take off can pay big time), but there’s also a lot of volatility and a lot of speculation in this sort of investment arena that makes investing into penny stocks a bit of a roller coaster.
But for a certain segment of the investing population that’s a big part of allure and the excitement.
If you’re thinking about investing into penny stocks but want to be sure that you know exactly what you are getting into a you’ll want to check out the inside info we highlight below.
Penny Stocks 101
While there are a bunch of different ways to define or describe penny stocks, the SEC legally defines penny stocks as any stock or security share for less than five dollars in total value.
These are the kinds of stocks that traditionally are traded on the Pink Sheets or over the OTC Bulletin Board, the kinds of exchanges that have a bit of a mixed bag reputation – particularly the Pink Sheets, especially since the kinds of companies list down these exchanges do not have to file directly with the SEC.
Because penny stocks don’t have to worry about the SEC as much as the kinds of securities traded on the NASDAQ or the NYSE, for example, there’s increase potential for fraud and scams. It’s definitely something you’ll want to be on the lookout for.
Making the Most of Penny Stocks
Not every penny stock opportunity is a get rich quick scheme, a pump and dump scheme, or a short and distort scheme designed to separate “suckers” from their hard earned cash just as quickly as humanly possible, though.
There are plenty of red-hot opportunities out there in the world of investing into penny stocks if you know where to look and what to look out for. Best of all, you can get into these kinds of investments without having to have access to a mountain of cash and capital to bankroll your investment nest egg, either.
You do, of course, have to really focus on your research and due diligence.
You’ll need to be careful about the kind of information you consume regarding specific penny stock opportunities, verifying independently that the research you are reading is unbiased and not marketing masquerading as market data.
It’s also important that you look at the quality of the management team behind the penny stock companies you’re thinking about diving into.
It isn’t that you necessarily need to find the penny stock version of Bill Gates before you can comfortably sink your money into a penny stock opportunity, but you do need to know that the company is legitimate, that it’s going to be around long enough for you to capitalize on your investment, and that you have every opportunity to see an outsized return on your investment moving forward.