Why You Should Invest in Penny Stocks

To those on the outside, the world of investing can seem impenetrable. Particularly, when you see the starting price for many stocks. 

It’s hard to believe that this is something ordinary people can do to make money. Well, there is a secret to getting your foot in the door of this industry… Penny Stocks. 

Starting at $5 per stock and offering huge rewards, these investments could earn you more than a pretty penny. 

In this article, we’re going to talk you through why investing in Penny Stocks is a great addition or starting point for your investment portfolio. 

What are Penny Stocks?

Penny stocks are common stocks of small companies (capped at $300 million in the US) whose trade prices are below $5. 

Their trading prices are so low because they are low valued businesses. However, investing in these businesses can lead to high rewards. 

Many of these companies haven’t launched their first product yet, or are still in the testing phase and need to get off the ground. These types of companies could be pharmaceuticals testing new drugs, or even mining companies looking to set up a new location. The drug might not get approved, the mine might be long dried out. But, if they strike gold (pun intended) then the value of your shares has just shot up tenfold. 

Penny Stocks are generally considered ‘speculative investments’, however, if you’ve got a good eye for the next big thing, or you wear the experience needed to identify the best stocks in the penny market, you could see some serious returns. They fall into the classic high risk, high reward category of stocks as they are geared for vast growth. Compared to the steady growth of bigger businesses. 

Why should you invest in Penny Stocks? 

We’d like you to imagine that you were someone who brought Penny Stocks in a little motoring company called Ford General Motors, or perhaps you invested in the Penny Stocks of a man called Jeff selling stuff out of his garage (we’re talking about Jeff Bezos by the way)! 

Many of the biggest companies in the world right now started out as Penny Stock companies. Buying Penny Stocks offer you a great opportunity to support fledgeling businesses, and watch them grow. Every one of their successes is one of yours.

Not every Penny Stock is a success story, but if there was no risk, there’d be no way to make profits.  

Think about all those people who invested in PPE (personal protective equipment) in 2019… 

Case Study: 

Let’s look at a Penny Stock company that made its investors a huge return last year. 

Galantas Gold Corp is a gold mining company whose share values increased by 1100% last year. 

This company based in Northern Island put up stocks in Toronto and London early last year to raise money to mine 1KM deeper into the ground. 

When they did this they found veins of gold, silver, and lead. This led to the company’s huge turnover in 2020. And the astonishing 1100% increase of their share prices.  

Which Penny Stocks should you invest in? 

So now we understand what Penny Stocks are and why they can be so good for your portfolio, all that’s left to do is to start investing. 

But how do you know what stocks are worth investing in? How do you know who is going to be the next Apple (who also started as a Penny Stocks company)? 

It can be hard to find any useful information on these types of stocks as the companies are either really new or too small for news outlets to bother covering them. This is not always a bad thing. It means there are still some diamonds out there waiting to be discovered. 

When you’re new to the scene it can be hard to pick the good advice from the bad. Whilst there is no surefire way to pick winning Penny Stocks there are a lot of experts out there. These guys spend hours a day researching new Penny Stocks that have great potential. Getting this advice off-line can be very expensive. 

However, there are some great places online that can point you in the right direction. But, who do you trust? 

Well, a great place to start is to check out this Stock Dork guide when you’re looking to start trading Pennies. This article alone has a guide to 8 of the hottest stocks right now. 

So, what are you waiting for? It’s time to get out there and start trading Penny Stocks! The next success story is just waiting for you to find it… 

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