Risks& Rewards involved in penny stocks, Are penny stocks is a good investment?

Risks of Penny Stocks: If you invest Rs 1 lakh, make a profit of Rs 1 crore in six months. Do not be fooled by the stories. This is the real story

Are you wondering if they would have become billionaires if they had invested in this stock thinking that one lakh is not ours … but find out the real story …

What is the Risks and Rewards of Penny Stocks: The dream of every single investor these days is to have Multibagger Stocks in their portfolio. Recommendations for this will be taken along.

In addition to that, in the news media, the stock that has converted lakhs of investment into crores within a month is being misrepresented.

But all these are just miracles … Similar miracles happen every day in the stock market. Who can not recognize when a miracle happens like a poet, does not need to recognize after it has happened. Some penny stocks like that stand out as multi baggers.

And let's see what the experts have to say about penny stocks …. In fact investing money in penny stocks means being very careful.

What is Penny Stocks?

The market cap on penny stocks is very low. These are also known as nano or micro-cap stocks. You will not get much information about these stocks as compared to large cap companies. Liquidity in these stocks is very low.

If a stock is less than $ 5 on the US Stock Exchange it is considered a penny stock. On the Bombay Stock Exchange, the stock is trading at less than Rs. 10, In addition to being their market cap is also very low.

The price of penny stock's is in the very low range. So these are operated by some people. That is, trying to artificially inflate their price. Let's understand some of the magic in this.

Also Read : Penny stocks that have given over 1000% returns this year?

Before operating such penny stocks, some people would abruptly increase its price by investing money in selected penny stocks. However, in view of the rapidly rising stock price, buyers are investing heavily in these stocks.

After a sudden stock price rise. Stock operators sell stocks in installments and exit with a profit margin. Those who are stuck with the maximum amount of money are left with nothing .

Penny stock means, do not invest in looking at the price that will get more shares in less. Invest in stocks with good returns and fundamentals, even if the stock price alone is tens of thousands. Regulators have also banned trading of such penny stocks if they come into play.

Invest only when you know the full details.

But here's the thing to keep in mind … Before investing in penny stocks, find out more about the company, what its business is, what its future plans are, what its market cap is, its technicalities, fundamentals and how it is.

If you have full confidence in the future of that company then invest money in it. This is because Bajaj Finance, which has a market cap of Rs 4 lakh crore in the market today, started out as a penny stock. In 2001 the stock price was Rs.2.40 paise per letter but now it is Rs. 7000 is in the range.