The turbulent economic times has prompted many individuals to “test the waters”, so to speak, of the major stock exchanges and the smaller over the counter (OTC) markets. What has specifically captured their interest is the potential for substantial returns promised by penny stocks.
It certainly is no surprise that first-time investors are interested in these stocks because of some key advantages in investing in them.
Undeniably, the main advantage of this type of investment is its very low cost. All stocks of this kind are being traded in the money market today cost less than $5. You even have genuine penny stocks with a price of 1 to 2 cents only.
The low cost of penny stocks is also advantageous because the investor can purchase the number of shares that he or she can afford. For penny stocks costing between a penny to 5 cents, purchasing 1,00 shares will only cost between $100 and $500, a small amount compared to the thousands being spent on the stocks of major players. You can get to know all when you compare Zerodha vs 5paisa. Aside from this, there is very little chance for the stock price to drop even further because it only costs a few pennies.
For first-time investors, these can give them an idea on how stock market trading is conducted. In the process of finding good penny stocks to invest in, they learn the value of researching on the financial statuses of the companies, as well as reading and interpreting the data on balance sheets and similar documents. It also enables them to monitor the progress of their stocks via tickers online or on business channels on television. Not only that, as they come to understand how the penny stocks move, they will be able to read trends and determine which stocks are the best to invest in during specific global events.
Some newbie investors with a tight budget have taken the wise course of spreading out their investments in pink stocks. Rather than just put their money in one company stock, they invest in a variety of stocks. This practice enables them to reap gains from one set of stocks even if another set flounders in the exchange.
Like major stocks, even pink stocks come with a number of risks. However, you can take steps to minimize losses. Obviously, don’t invest too much if you have little money to begin with. There are sites that will help you to compute how much money from your savings you should invest in penny stocks.
For starters, invest in no more than 3 company stocks. Again, monitor the movement of these stocks on the tickers as you take the help from zerodha brokerage. Sell them when prices are high and buy new stocks when prices are low. Once you have accumulated sizeable returns, you can invest in other penny stocks and/or drop the shares from your portfolio that are not making money for you. Of course, always set aside a certain amount of returns in your savings account.
Discover other advantages of trading in penny stocks today!