Many people will warn you that penny stock investing is a bad investment. Many people will tell you that investing in penny stock is nothing more then speculation. Well the truth is that speculators make money or there would be no speculators for long. Yes penny stocks are not for everyone but they can be a viable investment strategy. Most of the time it is a good idea for new investors to avoid penny stocks but it can be a good option depending on your situation.
Many people spend a dollar or more a week buying a lottery ticket. They would be better served buying a penny stock instead. They would have a much better chance of hitting it big with a penny stock and would be more likely to not lose as much. You can also limit the risk by doing your own research.
Penny stocks are a good investment for someone who is new to investing if you do not invest a large amount. If you have only $500 to invest in stocks you would not want to invest all of that money in penny stocks. However you could fill free to spend some of it. Since penny stocks are so cheap they are an easier investment for new comers to get involved in. A novice investor with only $100 to spend in penny stocks can purchase many shares of a penny stocks but may only be able to buy one or two blue chip stocks.
Penny stocks are also more volatile so they could go up very fast. However that also means they could lose lots of value fast too. Just stepping into penny stocks inexperienced is like gambling but it is a safer bet then gambling and can offer the same thrill.
Investing n penny stocks can be a good investment in knowledge in the stock market. I would suggest that a new investor spend a little money even just $20 on investing in one or two penny stocks to get the experience of buying a stock and even possibly trying to day trade. As long as you can afford to lose $20 it is a good investment. It is better to mess up a $20 order learning how to buy stock then mess up an order for a $500 stock order. That $20 could save you a large sum later.
Because of the volatility of penny stocks if someone spends a few weeks playing the penny market they can get a lot of experience at a low cost.
Penny stock trading may not be the best long term safe growth strategy especially for beginners but it can be good for beginning traders and investors. Penny stocks can be a more productive form of gambling entertainment, or an inexpensive way to learn to trade stocks that could actually pay you back with both experience as well as cash.