Got any Penny Stocks in Your Portfolio?

Image via Wikipedia United States penny, 2002, Obverseby Malinda Winkle

Penny stocks typically sell for less than $1.00 per share because they are extremely high-risk investments. But, if, by some stroke of luck, your stock thrives, you stand to earn incredible returns on a penny stock.

For instance, a simple $100 investment buys 200 shares of a penny stock selling at fifty cents per share. If the price rises fifty cents per share to $1.00 per share, you just doubled your investment, earning a 100% return. Your $100 investment is now worth $200. Where else could you do that?

If the stock continues to prosper, you may someday get a stock split which double the number of shares you own while cutting the price per share in half. Then, every fifty cent increase you gain on your (now) 400 shares, earn you $200 in profit rather than the $100 profit you earned on the first 200 shares. While stock splits are not a given, when they occur, they tend to increase your overall profits significantly if you continue to hold the stock you owned before the split.

The buypennystocks.com website is offering the #1 rated penny stock newsletter for a limited time. Check out their site if you want to learn more about penny stock investments. This site suggests which penny stocks it feels you should watch, names what it considers hot penny stocks and the best penny stocks.

Many people reserve ten percent of their investment portfolio for riskier investments such as penny stocks. Create a more aggressive investment approach by buying some penny stocks. The best advice in investing in penny stocks is not to invest any money you cannot afford to lose.

Educate yourself. Do your due diligence. As with any investment, proceed with caution. Understand that you risk losing your entire investment when you buy penny stocks. That is the risk you take for creating the possibility of incredibly high returns.

Disclosure: The author is not proposing any particular stocks for purchase and is not suggesting that investing in penny stocks is the right move for all investors. You and you alone are solely responsible for the choices you make when investing your portfolio. Penny stocks are just one of many options, and it falls on the extremely high risk end as investments go.