Are Penny Stocks For You?

Investors who enjoy skydiving, skinny-dipping, and bungee jumping will find penny stocks right up their alley. However, even conservative investors find the low risk promise of large payouts quite attractive in penny stocks. Most people who invest in penny stocks are hoping to find the “big one” that will yield a tremendous profit at bargain prices. The fact of the matter is that small companies grow into large companies daily. It is disappointing that the number of people who arrive at the big leagues are very few compared to the people who don’t make it.

Penny stocks are a great method for small companies to finance spikes in growth, iron out rough spots, and manage to make themselves even better. This also gives companies an opportunity to restructure, and by letting their stocks trade as penny stocks, they’re creating revenue that can have a sizable impact by being reinvested into the company. This is a venture that can be frequently successful for the company, but oftentimes is not. This is part of the risk that’s incurred when making investments in penny stocks. When the companies manage to stabilize themselves, grow at a phenomenal pace, and turn into the company you’re hoping they can become, the payouts are astonishing. You cannot think that you will get results right away from your penny stock investment, however.

You should also know that a significant amount of companies use penny stocks as a means of scamming unwary investors. It is not possible to obtain a great deal of information about penny stock companies because, unlike companies that trade their stocks on the big exchanges (NYSE, NASDAQ, etc.), these companies are not obligated to reveal their financial information to potential investors and are not scrutinized to the same extent either.

But the question as to whether trading in penny stocks is for you or not will be almost wholly dependent on your personal sense of adventure, and whether you are willing to incur financial risks. Many are out there who have the firm belief that to achieve a sizable gain, you also have to be willing to take a sizable risk. For many, this applies to love, life and money, and for them it is a way of life. These people act much more impulsively with their money, and willingly accept the risk with no reservation, and without fearing a negative result. These are the people who get along just splendidly, whether winning or losing while investing in penny stocks.

At the opposite end of the spectrum are people that guard their nest eggs jealously, and count on the funds being put into that basket for their retirement security. These are people who, for many reasons, are quite apt to find themselves in a panic throughout a penny stock investment. You can’t actually investigate the companies (a disaster for people who like to plan every detail) and you will have a hard time getting your hands on your money after you invest it. This eliminates some sense of control over the health of your finances, and for investors who like to feel that they’re in control, it’s an uncomfortable feeling. I can understand people who are in no condition to purchase penny stocks. It is a scary way to go about investing when homes, college educations, braces, and retirements hang in the balance.

If your are the sort of person to invest in penny stocks without having to carry along the weighty burden of anxiety, stress, and nervous sweats with you, then you just might discover that you are in the position to change your level of wealth. Even if you step outside your “comfort zone” and make the investment, there’s a lot to be gained. The high level of risk associated with this type of investment should not be discounted. Ultimately, your own individual outlook is the factor to consider. How do you picture penny stocks fitting into your personal portfolio? Such a personal decision must be yours alone.

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