Penny stocks became really famous for me when I saw the movie The Wolf of Wall Street. I thought, “If I could learn how he did it I would be rich!”. Turns out, there is no get rich quick scheme with penny stocks unless you know insider information and that is illegal my friends. Watching that movie however gave me such a thrill and that is how I found my love for the stock market.
Penny stocks are usually classified as any stock under $5 and generally are the most volatile investments. Although penny stocks are typically poor long-term investments, they can produce extremely high short-term gains. Scams and deception are made possible by the lack of regulatory control and the lax financial disclosure standards. You can lose a lot of money playing around with these kinds of stocks.
I remember wasting $500 on trying these out. I would buy and sell daily and after a month I was only able to withdraw $300-ish back. Not my proudest moment but we all make mistakes. I’ve learned that regular trading with safe stocks, especially those that pay dividends is the way to go. Unlike penny stocks that could literally disappear overnight and or collapse in the same fashion, safe dividend stocks will be a solid long term investment.
To make it plain and simple, I would avoid penny stocks. If you are serious about investing and want your money to grow effectively and safely then dividend stocks is the way to go.