5 Reasons to Buy Penny Stocks

Penny stock investing involves significant risks but many people prefer to trade penny stock because of its many advantages over other types of investment.

Following are the main reasons why you should buy penny stocks:

1) Penny stock investing is affordable and easy. It does not require a large initial capital investment, meaning that you can buy more shares with little money invested. For example, if you want to purchase 5,000 shares in a public listed company with the price $0.20 each, you will require an investment of $1,000 (5000 x $0.20) only.

2) One of the primary reasons that investors get involved with penny stocks is because of the high earning potential they carry. You can make a huge profit even with a few cents movement. For example, when you bought 100,000 x 80 cents of shares for $80,000. If they were to rise by just 10 cents, you would have made $10,000 (100,000 shares * $0.10).

3) Buying penny stocks can be an excellent investment because the highly ranked penny stock company may one day become a blue chip.

4) Investing in penny shares can be a great way to diversify your portfolio and hence minimize the risks.

5) Trading penny stocks is a great way for new beginners to learn about the markets without risking a lot of capital.

* Next: Advantages and Disadvantages of Penny Stocks