Your Questions About How To Invest In Penny Stocks

Michael asks…

I want to start investing in Stocks?

How do I start? What website do I go on? I want to invest alot in penny stocks. I am 15 years old.

John answers:

You will need at least $500 and a guardian to open a custodial account. You do realize that most penny stocks are inexpensive for a reason – the reason being that they are bad investments and you can lose all the money you invest. Penny stocks are also rife with pump-and-dump scams since it is easy to get the price to temporarily double or triple.

Before investing, educate yourself on how the market works and how to analyze companies.

Linda asks…

What would be an average weekly ROI in penny-stock investing?

I’m trying to get a realistic/conservative assessment. Let’s say I am dedicated and willing to spend about 40hrs per week investing, initially starting with $5,000.
How realistic would be to reach a weekly target of $150-200?

John answers:

Lis, the penny stock arena is rife with fraud and manipulation. You are likely to make a few little wins and then get hit with a huge loss that will deplete your money faster than a snowball in h-e-double hockey sticks. Stay away. Learn about real companies with real products and management.

Ken asks…

How to invest in the stock market?

First time using the stock market. What should I invest in? How do penny stocks work? Is investing in penny stock worth it? How can I invest the least and gain the most? What would be good for my 1st investment?

John answers:

Do some research on investing first, before doing anything else.

Start with some basic books to teach you the fundamentals. Two excellent reads are The Complete Idiot’s Guide to Investing and Investing for Dummies. Before doing anything, make sure you have enough in savings in case things go south for at least 6 months.
You need to learn also some important concepts in investing, such as dollar-cost averaging and compound interest – two of your best friends to make money for the future.
Also you need to think of what you are investing for exactly.
You first need to pick a company to invest through. Some of the best are Vanguard, T. Rowe Price, Fidelity, and Schwab. Avoid the big banks like the plague. Don’t let them rip you off with loads (sales charges) and fees. Check how much the company charges you as an expense ratio. A good one might charge you 0.2-0.8 %. If they charge more than 1% than go somewhere else. And if they charge any kind of 12b-1 fee, hold on to your wallet and RUN.

The question you need to answer is WHY you are investing. Different people have different goals. Is it for more income? For retirement? For someone’s education? Plus how old are you and how long do you want to invest? How much risk are you willing to assume?

These are all very critical questions and they will determine what kind of investments are right for you. Don’t believe anyone who has a “one size fits all” kind of investment. For stocks typically you are talking about at least a 5 year investment period. If less, consider getting into bonds or a bond fund instead. Many people choose an appropriate mix of the two.

If you want to get into the market but don’t know what stock to pick, consider an index fund. Instead of throwing all your eggs into one basket (one company), index funds can invest you in dozens, hundreds, or thousands of companies all at once and so there is less risk. This protects you if any one company or industry runs into trouble. For bonds, the returns are less, but more solid.

If you are thinking of retirement, consider a Roth IRA. Your money grows tax free, and when you retire you can withdraw it tax free as well.

Getting individual stocks make more sense if you really want to buy stock at a place you work at, or want to really get involved and are the hands-on investor type.
Penny stocks are really the sewers and ‘hoods of the internet – few people make a lot of money there, and even fewer newbies.
If you want to be more passive and have things grow over time, index funds make more sense. If you want to see some of the variety out there, for more information, try looking at
https://personal.vanguard.com/us/funds/vanguard/all?sort=name&sortorder=asc
and play with it, comparing funds with more or less risk.

Do some reading online such as
http://www.vanguard.com/us/insights for some important investment truths.

William asks…

How much should I set my limit price on penny stocks?

I am brand new to penny stocks. I’m trying to invest $100 in a penny stock at .0003 cents per share. It requires that I set a limit price though. What is a reasonable limit price for this situation?

More information on penny stocks and limit prices would be appreciated too. Thanks.

John answers:

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Penny stocks are thinly traded. Imagine going to a swap meet where you’re the only one that shows up, how successful will your trades be? If you start trading penny stocks you’ll often find that you won’t be able to sell the stocks when you want to. There’s also a lot of manipulation that’s possible because it’s so thinly traded and you’ll be on the short end of those trades. People are attracted to penny stocks because they think that the lower share prices makes them more affordable but the commissions are per trade so you actually incur a larger overhead. Save up your money till you can play with real stocks.

Besides it’s clear you don’t comprehend what a stock price is. There are three prices quoted, the price of the last trade, that’s the one most often referred to as the stock price but that trade is gone, a done deal, then there’s the highest bid price on the order book which is someone’s limit order to buy and the lowest ask price which is someone’s limit order to sell on the order book. These orders are on the order books cause no one was willing to buy at the ask prices yet and no one was willing to sell at the bid prices yet. If you want to invest in the stock, look at the ask price, there’s someone willing to sell stocks at that price, you can put your order in at that price to try and snag it or you can put your order to buy at a lower price and wait for someone to settle for your bid.

Penny stocks are dangerous waters and you’re wading in before you even know what water is.

James asks…

Looking to get into penny stocks!!?

Just want so basic info on how to invest in penny stocks and who to talk to about investing and who to invest with. Just want as much info as possible.

John answers:

Invest in ACUR stock is a great place to invest because the stock it blow 52week average so in the short term it will increase really fast when it in the market earning again.

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