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Preetesh Ghatke
New to stock market.
Asked a question 9 months ago

Do you think Investing in penny stocks is risky? Why?

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Investing in Penny stocks depend on the individual to individual. If you have good knowledge of the company fundamentals and you think that that it will give high return then it is good to invest in!


There is a reason why penny stocks are priced in single digits, reason is clearly 'company's fundamental profile'. In bullish market penny stocks can provide handsome returns whereas if you are planning in creating position or holding them for a long period of time, you should study that specific company's overall profile thoroughly, volatility and return in long term could be very low or near to zero. 

Penny stocks plays an important role in equalizing the portfolio balance. One should invest some percent of the amount in penny stocks. Just because the stock is undervalued or underrated, that does not mean that the stock will not grow. Understanding the fundamentals of the company and investing in penny stocks will surely give you returns one day!

Note: Don't put all your hard-earned money in a penny stock where you think that it will give you high return then the liquid stocks. Invest 1-2% of your total investment in penny stocks where you can accept less risk and high returns.