Penny Stocks 101Posted: January 28, 2011
The name sounds simple, stocks that you buy for a penny. But penny stocks are a valuable investment if you know what you are doing. Many new investors playing the stock market are tricked into the appeal of penny stocks because of the low price and a promised potential for quick growth. Unfortunately, major losses can happen and many penny stocks have been known to lose their value over a long term period. The SEC has warned that penny stocks are high risk investments and chance of price skyrocketing or bottoming out quickly makes them increasingly difficult to select with confidence.
However, with understanding and the right choice, big money may be made. This article will outline the initial information about penny stock tips, and future blogs will bring more information and penny stock tips.
The first step in the process of investing in penny stocks is to open a broker account. Once this is done, it is highly recommended to seek the advice of a financial adviser. A financial adviser can aid in the recommendation of which penny stocks to avoid and which to invest in. Advisers can provide you with budget and investment advice, but don’t rely on them solely. Do your own research and find out as much information about the company and the stocks you are planning to invest in.
Only with this research will you be able to understand which companies are best to invest in and when the best time to buy and sell will be. It may take years to understand the fine art of penny stock investments, but the rewards will be great.
One important thing to be careful about with penny stocks is scamming. Like other stock markets, there are scammers who try to control or change stock prices. Be wary about people who make promises or promote “get rich quick” schemes. Try to put your blinders on and avoid the lure that comes from the get rich quick promise. With the right advice, research and diligence you will be well on your way to enjoy penny stocks.