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Buy Penny Shares for Your Portfolio

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Why You Should Buy Penny Shares

Buy Penny Shares If you are looking for an investment to shake things up in your portfolio, then you should buy penny shares. The old maxim is that you should put so much of your money into conservative investments and another portion into riskier, more aggressive stocks. Buy penny shares and let them serve as the risky, aggressive portion of your portfolio.

Penny shares are issued by companies that are not usually traded on the major exchanges. This often has to do with the size of the issuing company or with its inability to meet SEC requirements. These stocks are incredibly cheap, as their name suggests. Most are worth less than a dollar per share. Some are literally worth just a few pennies.

Many investors are eager to buy penny shares because they can acquire so many of them all at once. This also makes them uniquely capable of returning great profits to you. If you spend $5,000 on a mid cap stock that is worth $50 per share, you can only buy 100 shares. With the same investment, you could buy 100,000 shares of a five-cent stock. If that five-cent stock experiences just a one cent rise in price, you will earn a 20% return. That turns into $1,000. The same rise in value for the mid cap stock would not even pay for a commission on the trade.

How to Buy Penny Shares

 You cannot normally buy penny shares on the stock exchange. You will have to seek these stocks in the over-the-counter market. You buy them direct from their holders and not through a broker.

There is little oversight in these matters. You must be very careful when you make your purchases. When you buy penny shares, you are the only person protecting yourself from fraud.

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