How to Buy Penny Stocks


Buying penny stocks is one of the fastest ways to potentially turn a relatively small amount of money into a relatively large amount of money – period.

If you invested just $1,000 in MNST (Monster Beverage Corp) when it was trading around $0.07 per share, you’d have well over $850,000 today. This is the power of penny stocks.

Quick Summary

  • You need an online low-cost broker to trade penny stocks
  • Ally Invest is the best broker overall broker in 2019
  • There are never any inactivity or market data fees with Ally
  • Check out Motley Fool Stock Advisor to find the hottest penny stocks to invest in
  • Never put all of your money into one penny stock, it’s just too risky
BUY PENNY STOCKSopen an account on Ally Invest’s secure Site

Why Buy Penny Stocks?

Investing in stocks is one of the ways the rich keep getting richer (it’s also a lot easier to invest in stocks than you might think. Regardless of the amount of cash you have saved, if you’re not putting your cash to work by investing it, history proves you will miss out over time.

Investing in stocks is how the rich keep getting richer. Long term capital gains rates for investment income is often as low as 15%. Taxes for wages and salaries can go as high as 40%.

To put it simply, investing in stocks offers a way to earn income without working. This concept sounds strange at first, but, when you think about it, money is a tool. At a certain point, when you accumulate enough money, you no longer have to trade your time for money. You can trade your money for more money.

This is the “secret” to building serious wealth. Don’t believe me? Just ask Warren Buffett, a man who has made $89 billion from investing his money over the course of his life. If you have patience and discipline, and aren’t worried about too much about short-term price fluctuations, investing enables you to grow your assets…sometimes exponentially. For example, if you buy $10,000 worth of a stock for $3.00 per share, the stock moves $40 per share, you’ll make $130,000 by being an investor.

Step #1: Opening an Account

The first thing you’ll have to do before you can invest in penny stocks is open an online brokerage account.

The best online broker that we have found is Ally Invest, not only because Ally is offering free trades for 90 days, but also because Ally’s normal commissions are among the lowest in the industry.

All stock and ETF trades start at just $3.95. Plus, every Ally client gets access to robust trading platforms and 24/7 customer service, and Ally never charges any inactivity or maintenance fees.

Step #2: Doing the Research

Once your Ally Invest Self-Directed Trading account is opened (takes 5 mins), the next step is to sign up for Motley Fool Stock Advisor to find the hottest penny stocks to invest in. Remember, the goal of investing is to make money. For over 25 years, Motley Fool has been successfully helping individual investors find winning stocks to buy.

Simply put, Motley Fool Stock Advisor helps take the guesswork out of penny stocks. It’s a great place to start and will help you find popular penny stocks that are likely to go up in value.

Once your Ally account is opened and funded, navigate to the “Trade” tab on Ally’s online trading platform. For this example, we’re going to use JC Penny (ticker symbol: JCP). JCP is a popular department store that has been struggling as of late, but there is chatter that their online sales channel is growing.

When you sign into your Ally Invest account, the page will look like this:

Enter the ticker symbol in the box on the left.

Step #3: Making the Trades

Once you’ve entered in the ticker symbol into the platform, real-time prices and buttons to buy and sell the stock will appear.

The next decision to make is the number of shares you want to buy. The exact number of shares to purchase is entirely up to you. You can buy 1 share or 1,000,000 shares. You’re only limited by the funds you have available. Ally’s system, thankfully, won’t let you accidentally purchase too many shares relative to your account value.

When it comes to placing orders, we always prefer to use limit orders, because you get to decide what price you want to buy or sell at. A market order will execute your order at the current market price. This is sort of like walking up to a house that’s for sale and buying it without looking at the offering price; for stocks, market orders are only useful if you don’t care about the short-term price movements and just want to own the stock. After submitting your order, you’ll receive a confirmation of your investment and you’ll officially be a penny stock investor!

If you want to sell your investment and close out your position, all you have to do is click on your position in your Ally Invest account and click “sell”. Of course, if you need help with anything in this process, Ally Invest customer service is ready to help you 24/7.

4 Popular Penny Stocks

Once your account is opened and funded, and you’re ready to trade, consider taking a look at some of these popular penny stocks in 2019.

Ticker Symbol Popular Because
AVGR Up 300% year-to-date, clinical stage medical device company
OSS Rapidly growing computer server company with solid financial results
GRPN Very popular online booking and discount coupon service with bullish analysts ratings
AVEO Biotechnology company focused on late stage oncology treatment solutions

About Opening a Brokerage Account

Opening an Account

It takes about 5 minutes to open an account with Ally Invest. There is no fee to open or maintain.

Verifying Yourself

You’ll probably have to some answer questions about your current income and employment status.

What You’ll Need

US licensed stock brokers are required to have each client’s Social Security Number for tax purposes.

Final Thoughts

In the world of investing, penny stocks are definitely risky but, they’re also highly lucrative. As the old saying goes, “fortunes favor the bold.” We can’t stress enough how risky penny stocks are, but if your timing is right, and your research is solid, you can turn a small amount of money into a much larger outsized stockpile of cash.

To recap, use Ally Invest to start trading today (Ally is the best overall broker of 2019), and use Motley Fool Stock Advisor to find the hottest penny stocks to buy in 2019.

At the end of the day, besides penny stocks, there are virtually no other types of investments in the stock market that can yield such impressive returns if you don’t want to wait 30 years for your investment to pan out.

BUY PENNY STOCKSopen an account on Ally Invest’s secure Site

What is OptionsBro? is an online financial information site dedicated to providing simple tutorials, reviews, and comparisons on all things finance.

Collectively, we’ve spent thousands of hours examining the most popular financial products and tools. Bottom line, we simplify and explain the myriad of consumer financial options available today, so you can make decisions with ease.

Updated: Jan 1, 2020

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