Being in the investment world, most of you have perhaps heard the term “Penny stock” and some of you will be aware of this term as well. I am going to discuss what kind of investment return penny stocks can provide to you?
Being in the investment world most of you have perhaps heard the term “Penny stocks” and some of you will be aware of this term too. Well, I am going to discuss what kind of investment returns such stocks can give to you. But, before we dig more it’s equally important to know in brief that what actually they mean? Penny stocks are those types of common stocks which are relatively lower-priced usually less than $5. As these shares are as less precise as $5 so considered immensely hypothetical, full of risks and having lack of liquidity in cash flow.
Usually shares trading below $5 considered penny stocks, but many of the times it has seen that some large capitalized companies issue their share trading below $5 while those are not considered real as penny shares. Also, these are not traded within major stock exchanges. In-fact trading in such shares take place on the counters of pink sheets. Many of the investors do not consider investing in such shares really a good option while some investors who want to earn more dividends by trying their luck with growing companies use such shares.
Personally, I feel that don’t go for investment in such stocks until you are very sure that you will be getting something as returns and would not be losing the cash that you are going to invest. Also, one important thing which goes negative in-case of penny stocks that such shares are more susceptible to various kinds of market manipulation techniques, which is definitely a bad thing as it takes your money out of your control. Generally, such manipulating techniques couldn’t be implemented over major stock markets like LSE and NYSE.
There are some good reasons which could be given in favor of avoiding penny shares like companies which issue penny stocks to investors are relatively very small and eagerly looking to get profits in any situation. Now, it does not make sense to expect high dividend yield from such companies who are still waiting to get their own sales profits. Another reason is that they are not easily available as they are not listed over major share markets. You may have to cross many barricades to buy penny stocks even if you have a good online broker. Some people give such logic that a penny share having value of $1 has to gain just $1 to double the investment while a stock worth of $100 has to get $100 more to double the money. Some people believe in this simple math logic, but this is not completely worth to note. There is one secret that can make your money in the share market and that is have patience and values.
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