Penny stocks: Sounds like pocket change investments leading to penthouse suites, right? Think again! Penny stocks are the Wild West of the stock market – cheap shares of tiny companies, promising HUGE gains… or total wipeouts. Imagine gambling your lunch money on a lottery ticket, except the lottery ticket is a tiny piece of a company you’ve (maybe) heard of.
Penny stocks are highly speculative and volatile. Think rollercoaster-on-fire volatile. Pump-and-dump schemes are rampant – be wary of hype and “get rich quick” promises. Brokerage accounts that allow penny stock trading are essential (not all do). Research, research, research – understand the company (if you can find any real info), the risks, and the potential for… well, mostly losses.
Start with tiny amounts – money you’re fully prepared to lose. Consider it tuition for a very expensive (and potentially painful) investing lesson. Penny stocks: High risk, extremely high risk, proceed with more caution than defusing a bomb. Penny stocks: Penny for your thoughts? More like penny for your potential losses.