If you’re looking for a bargain on the stock market, or you have little money to invest, penny stocks can be a tempting venture. After all, with a low barrier to entry — by definition, $5 or less per share — penny stocks may seem like a safe way to invest your money.
But don’t be fooled. When it comes to penny stocks, the old saying couldn’t be more true: you get what you pay for. Cheap as they are, penny stocks have dubious prospects for growth, not to mention low market valuations, and if you’re looking to build wealth, penny stocks aren’t the “rags-to-riches” venture many make them out to be.
So, before you start adding penny stocks to your portfolio, let’s take a step back. What are penny stocks, and are they truly worth the money? Let’s look closely and see.
What are penny stocks?
Penny stocks are small companies whose market capitalizations are between $50 and $300 million (also known as a
