Purchase Penny Stock Cheap, Should You?

You have probably heard that you can purchase penny stock cheap and are wondering, should I buy penny stocks? It does make sense, if you can trade penny stocks by buying them for pennies and selling them for dollars you can make a lot of money. Now you just have to find the best penny stocks to buy today and make a killing, right? Well, not so fast.

Unfortunately the first thing that comes through someone’s mind is to find the best penny stocks to buy today and then go all in. On paper it makes sense, but in real life it doesn’t. There are just too many disadvantages to this strategy.

Penny Stocks Are Penny Stocks For a Reason

Most penny stocks trade for pennies because they are simply not worth it. Nobody wants to invest into a company that isn’t making money. Just because you can pick up an egg with a hole in it for cheap doesn’t change the fact that it is an egg with a hole in it.

Filled With Scams

Sure there are guru’s out there willing to help you pick the right penny stocks. But in an industry filled with so many scams and pump and dump schemes why risk it.

Will Probably Fail

If you are putting $50,000 into a $.03 stock you might be thinking about how much money you will have if it becomes a $1 stock, or even if it just moves up a few points. The only problem here is that it is way more likely to go to $0 than anything else. Bad companies don’t grow, but you didn’t think about that when you invested your life savings into it, did you?

Lottery Ticket Mentality

You know what else you can buy really cheap and have the potential to making a lot of money with? Lottery tickets! When you purchase penny stocks cheap you are basically buying a lottery ticket and hoping for the best.

Face it, penny stocks are a terrible way to grow money. You don’t become a millionaire overnight because of dumb luck. But you can become a millionaire after years of investing wisely and learning from your mistakes.

The whole penny stock mentality turns people into get rich quick maniacs which actually stops them from taking advantage of real opportunities in the market and getting rich slowly over the long term.

However …

I trade penny stocks here and there, if the odds are right and I’m feeling like a gambler. In fact, taking a little gamble when trading, can be interesting and can potentially increase your returns for the year.

So, should I buy penny stocks? Well it might be ok with your “risky” money.

But it should only be done if you can afford to lose whatever money you put into it (because that is the most likely outcome) and you actually have a reason to get into it. It is a bad idea to purchase penny stock cheap just because it is cheap.

But maybe if, say a major company just crashed, became a penny stock, and you believe that they will come out of it ok, it might be interesting to jump in. Just remember that any money you put into a penny stock is something you can afford to lose.

Don’t go overboard and create a penny stock portfolio that is when you can get in trouble. But if you purchase penny stock cheap because you feel like that company is unfairly priced and you only do something like this once a year, then it might be worth it.

Just remember that the real money isn’t made through the whole, purchase penny stock cheap and sell them higher ordeal, but rather through making consistent profits over the span of years.

Return From Purchase Penny Stock Cheap, Should You? to What Are Stocks