The Money Coach
  • About
    • Meet Lynnette
    • Media Kit
  • Get Help
    • Money Coach University™
    • Books
    • Financial Coaching
    • Speaking
    • The Money Coach Recommends™
  • Contact
  • Building Wealth
  • Investing
  • Credit Scores
  • Student Loans
  • Paying for College
  • Saving Money
  • Real Estate
  • Credit Card Debt
No Result
View All Result
The Money Coach
  • About
    • Meet Lynnette
    • Media Kit
  • Get Help
    • Money Coach University™
    • Books
    • Financial Coaching
    • Speaking
    • The Money Coach Recommends™
  • Contact
No Result
View All Result
The Money Coach
No Result
View All Result

Should I Invest In Penny Stocks With The Little Money That I Have?

Lynnette Khalfani-Cox, The Money Coach by Lynnette Khalfani-Cox, The Money Coach
in Investing
Reading Time: 3 mins read
Should I Invest in Penny Stocks
12
SHARES
192
VIEWS
Share on FacebookShare on Twitter

Should I Invest in Penny Stocks

A reader sent me the following question via Facebook wanting to know my opinion of investing in penny stocks. Here’s her question and my reply.

Q: I know you are extremely busy and you not get to this message. I am unemployed but searching. The little that I have, I want to invest. I don’t know anything about the stock market but I came across an article concerning penny stocks. Do you have any input or this? Thank you for your time.

A: Thanks for reaching out. Sorry to hear about your unemployment status, but glad to know you’ve not given up the search. I’m sure the right opportunity will eventually come along.

Meantime, re: investing in penny stocks, I would NOT recommend that at all – for several reasons. Penny stocks are not for everyone, but if you plan on investing, this penny stock list is a great resource to get you started.

1) It’s just way too risky, especially for someone inexperienced with investing. And you’ve said you “don’t know anything about the stock market.”

For penny stocks, or any stocks (or bonds) you might consider buying, it’s best to be an informed investor. You should take the time to educate yourself about investing and specific investments before putting your hard-earned money at risk.

2) You’ve indicated you don’t have much money. I know penny stocks might sound like a cheaper way to invest when you only have a little bit of funds on hand, but that’s a one-sided view of things.

You could actually take the same amount of money and buy shares (later, when you’re truly ready) in traditional stocks (i.e. like those listed on the S&P 500 Index). Granted, it would be fewer shares – but your investment would likely be much safer (in relative terms, since all stocks have risk) and in less volatile investments.

3) Given your current unemployed status, it’s not prudent to throw money into penny stocks (or frankly any stocks at all) if you haven’t set aside substantial money to cover your bills and provide for your financial security during this period of unemployment.

I’m making an assumption here that you don’t have, say, a 6-month emergency cash cushion (i.e. money set aside to cover ALL your monthly bills for 6 months). My assumption is on the basis of you saying “The little money I do have, I want to invest.”

Even if you do happen to have some savings, I tell people that it’s advisable to cover the “financial basics” first before investing.

What are the financial basics?

It boils down to five things: reduce debt; establish a cash cushion of at least 3 to 6 months; get adequate life insurance; buy disability protection; and create a last will and testament. After you do all these things, and educate yourself about investing, then you’re ready to invest.

4) Finally, I think novice investors should stick to mutual funds, not individual stocks. Buying mutual funds offers a host of benefits and advantages compared with selecting individual equities.

Some of these advantages include greater diversification of your investments and pre-selected stocks, which takes the responsibility of choosing the stocks off your shoulders. (You get the stock-picking choices/guidance from professionals when you buy actively managed mutual funds; and when you buy index mutual funds, the stocks are also chosen based on the securities that are already in a given index).

As you can see, I’m not a fan of beginning investors getting involved with penny stocks. For people who are very seasoned investors, and those who truly have the money to risk, penny stocks might be an option worth considering. But even most experienced investors don’t usually make penny stocks a big part of their investing strategy.

Hope this info helps. Good luck with your job search and your overall finances!

Tags: penny stocks
Previous Post

3 Ways College Visits Help With Admissions, College Selection and Finances

Next Post

The Crazy Ways Holiday Shopping is Ruining Thanksgiving

Related Articles

Understanding the Hype About SPACs on This Episode of ‘Make It Make Cents’
Investing

Understanding the Hype About SPACs on This Episode of ‘Make It Make Cents’

by Lynnette Khalfani-Cox, The Money Coach
cryptocurrency definitions AskTheMoneyCoach
Crypto

Cryptocurrency Cheat Sheet: A Glossary of 30 Crypto Terms You Should Know

by Lynnette Khalfani-Cox, The Money Coach
A Beginner’s Guide to Understanding and Investing in Cryptocurrency
Investing

A Beginner’s Guide to Understanding and Investing in Cryptocurrency

by Lynnette Khalfani-Cox, The Money Coach
Bitcoin
Investing

5 Reasons I Love Cryptocurrency

by Lynnette Khalfani-Cox, The Money Coach
Teri Ijeoma
Investing

Investing During COVID-19: Tips from TradeandTravel.com CEO Teri Ijeoma

by Lynnette Khalfani-Cox, The Money Coach
Saving and Investing - One Won't Make You Wealthy
Investing

Saving and Investing – One Won’t Make You Rich

by Guest Blogger
Teri Ijeoma
Investing

An Important Financial Update …

by Lynnette Khalfani-Cox, The Money Coach
Is Trading Stocks the Side Hustle You’re Missing Out On?
Investing

Is Trading Stocks the Side Hustle You’re Missing Out On?

by Lynnette Khalfani-Cox, The Money Coach
money apps
Investing

Five Money Apps That Will Help You Start Investing

by Guest Blogger
Next Post
Black Friday

The Crazy Ways Holiday Shopping is Ruining Thanksgiving

About

Lynnette Khalfani-Cox, The Money Coach®, is a personal finance expert, speaker, and author of 15 money-management books, including the New York Times bestseller Zero Debt: The Ultimate Guide to Financial Freedom.

Lynnette has been seen on more than 1,000 TV segments nationwide, including television appearances on Oprah, Dr. Phil, The Dr. Oz Show, The Steve Harvey Show, Good Morning America, The TODAY Show and many more.

Quick Links

  • Money Coach University
  • Lynnette's Personal Site
  • The Money Coach Corporate Site
  • Video Portfolio
  • Privacy Policy

All information on this blog is for educational purposes only. Lynnette Khalfani-Cox, The Money Coach, is not a certified financial planner, registered investment adviser, or attorney. If you need specialty financial, investment or legal advice, please consult the appropriate professional. Advertising Disclosure: This site may accept advertising, affiliate payments or other forms of compensation from companies mentioned in articles. This compensation may impact how and where products and companies appear on this site. AskTheMoneyCoach™ and Lynnette Khalfani-Cox, The Money Coach® are trademarks of TheMoneyCoach.net, LLC.

©2009-2022 TheMoneyCoach.net, LLC. All Rights Reserved.

No Result
View All Result
  • Meet Lynnette
  • Money Coach University™
  • Books
  • Financial Coaching
  • Speaking
  • The Money Coach Recommends™
  • Media Kit
  • Contact

©2009-2021 TheMoneyCoach.net, LLC. All Rights Reserved.

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In

Add New Playlist