Why People Invest in Penny Stocks: Understanding the Risks and Potential Rewards
by: Ivan Cavric Penny stocks are low-priced securities that are traded on over-the-counter (OTC) markets or on the pink sheets. These stocks are often considered to be high-risk investments due to their low trading volume and lack of financial transparency. Despite the risks, many investors are drawn to penny stocks due to their potential for high returns. In this article, we will explore some of the reasons why people buy penny stocks. High returns: One of the main reasons why people buy penny stocks is the potential for high returns. Because these stocks are often priced at a fraction of the cost of more established stocks, even a small increase in price can result in a significant return on investment. Small investment: Another reason why people buy penny stocks is that they can be purchased for a relatively small investment. This makes them accessible to investors with limited capital, who may not have the resources to buy more established stocks. Speculation: Some investors buy...