Article by Greg Perkins
Investing your money wisely is something we all aspire to do, but often times it is difficult to know exactly what the right move we should be making is. For people with smaller nest eggs it can be even more difficult because the potential investment options are more limited.
If you’re starting off with 0,000 to invest there are many directions you can go and it’s not that difficult to find a financial adviser who can help you for a reasonable fee. If you’re just trying to get your feet beneath you though and you’ve got just ,000 to start with there’s seemingly nowhere to turn.
People find penny stock investing to be somewhat attractive because of the low price per share, but there is also the higher risk factors and the lower level of information on companies you might be investing in. So, yes you can easily pick up several thousand shares of ownership in a small business but that doesn’t mean it’s the right move or that it will be the move that makes you some money.
Luckily there are a lot of resources online to help people who are looking to get started investing in penny stocks. The online world of penny stock information is littered with pitfalls to, but it’s not too hard to navigate as long as you keep a sharp eye out and follow a couple of basic rules.
The first basic rule is to ignore any free tips you come across. This may seem counter-intuitive but it goes to the old saying: There’s no such thing as a free lunch. In this case, most free penny stock tips found (usually on forums or received through spam emails) on the internet are part of what’s called a “Pump and Dump” scam.
A “Pump and Dump” scam is when someone buys a huge number of shares in a mostly worthless company, then does their best to try and stir excitement to get other people to frenzy and jump on board. Once they do the price will start going up, which will convince other people the tip is real so they will buy and drive the price up even further at which point the scam artist will sell his huge number of shares and the price will bottom out like nobody’s business, leaving all the poor people who bought into the tip that much poorer.
Free newsletters also tend to be bad news. If you’re not paying the guy giving the stock tips out, someone else probably is. My money is on the companies he’s recommending that you buy, which kind of calls into question whether or not they’re actually worth buying.
There are pay newsletters too, but not all of them are good. It’s entirely possible for the editor of a pay newsletter to be even slimier by charging his readers up front and STILL taking money from companies on the back end to promote their stocks. On the other hand, it’s also possible for a newsletter to be entirely on the level, and their stock picker might just be awful at his job.So here are some things to look for:
EXPERIENCE – You want to see a long history of successful stock picks, along with unsolicited testimonials on forums and such. Basically, you want to have a sense that these guys have been consistently doing a good job for their readers for a decent amount of time.
SIZE MATTERS – You don’t want to subscribe to advice from a one man show, even if he’s really good. If the guy who owns the newsletter or website is the same as the guy who picks the stocks then if he falls off his game next week and has a terrible next year he’s still not very likely to fire himself.
BACK TO SCHOOL – A stock picking service that helps you learn as you go by explaining why stocks have been chosen is really good because it helps you understand the market a little bit at a time, and after a while you might just find yourself capable of some pretty good picks of your own! Services that include an occasional article or other educational material are great too.
CONTACT US – You want a stock picking service you can get hold of and ask questions. Why not find out up front where they’re at by sending some emails to a bunch of services that look good (with genuine questions you have about their service) and seeing how they respond and how long it takes them?
About the Author
Greg Perkins is a fellow Stock Market Investor who provides information for those who would like to get started. For more great information on how you can find penny stock worth investing in, visit http://www.PennyStockAnswers.com
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