Buying penny stocks is one of the fastest ways to 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.
- You need an online low-cost broker to buy penny stocks that permits OTC trading
- Most penny stocks trade on the OTC exchange
- There are never any inactivity or market data fees with Ally
- Consider diversifying and buying multiple penny stocks
- Never put all of your money into one penny stock, it’s just too risky
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%.
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 a long-term time horizon, and aren’t worried about short-term price fluctuations, investing enables you to grow your assets…sometimes exponentially. For example, if you buy $10,000 worth of Starbucks stock, and Starbucks moves 30% higher, you’ll make $3,000 by doing nothing.
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.
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 account is opened (takes 5 mins), the next step is to 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:
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 buying a house 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 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, 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
What You’ll Need
In the world of investing, penny stocks are risky but lucrative. As the old saying goes, “fortunes favor the bold.” We can’t stress enough how risky penny stocks are, but if you’re timing is right, and your research is solid, you can turn a very small amount of money into a very large amount of money.
There are tons of “penny stock success stories” on the Internet, but everyone with a story of how they turned a few thousand into a few million with penny stocks is trying to sell you their “trading secrets” for a recurring monthly fee. Trust us, you don’t need to pay money to learn how to trade penny stocks.
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 in such a short amount of time.
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Updated: July 18, 2019