What do General Motors, Pier 1 Imports, and Monster Beverage Company all have in common?
Besides all being hugely successful companies, these three businesses share another commonality: At one time or another, they have all been traded as penny stocks.
Penny stocks might not be the flashiest investment option, but they are a good way to potentially get a lot for your money, and make investments without risking too much.
But before you jump into the penny-trading pool, it’s important you understand how to buy penny stocks. Here are a few tips to help get you started.
Are Penny Stocks Correct For You?
Penny stocks are a smart option for a lot of investors, but they aren’t necessarily right for everyone.
The hard truth is that while some penny stocks can yield unexpectedly strong returns, the majority of penny stocks will lose money every time. If you have a limited investment budget, you might be better off investing in a conservative portfolio that will protect your money.
But if you have a little extra cash to play around with, and you want to take a bet on an upstart company that may be worth billions one day, penny stocks are the way to go.
Low-Stakes Learning
If you want to know how to buy penny stocks, then you should spend some time getting hands-on experience without spending a single cent.
You can do this by picking a few penny stocks and tracking them over time with pen and paper, seeing how your imaginary investments fair. Doing this for a month or two will give you a better idea of how the penny stock market ebbs and flows.
Invest What You Know
Companies from virtually every industry are available on the penny stock market, but that doesn’t mean you should be investing in all of them. When starting out, you should pick industries that you have personally worked in, or have a lot of experience with.
If you’re an avid tennis player, for example, then you have some insight into whether a new tennis racket company will actually do well on the market. And if you’ve worked in interior design for 20 years, then you know if a new home goods business makes products people are likely to buy.
Be cautious of investing in whatever the trendy, supposedly get-rich-quick industries are at the moment. Many of these penny stocks get an initial bump because they’re buzzy, then quickly peter out.
Learn How to Buy Penny Stocks From the Experts
These tips should help get you started as a casual penny stock investor. But if you want to take your skills to the next level, you should spend more time learning from the experts.
Turn to the experts to learn more about penny stocks and take your investing to the next level.
Time to Get Investing!
With low stakes and nearly infinite possibilities, penny stocks are both a smart investment strategy and a fun hobby.
Now that you’ve gone over the basics, it’s time to begin your own penny stock journey.
