Wise Investment.. or Not?
Penny shares can be good investments or bad investments - it really depends on the individual investor, their aims, and the amount of research and planning they have put into their portfolio.
As with any type of investment, without proper preparation and forethought the entire project could fall through or turn sour.
It is absolutely vital that individual investors have the time and perseverance required to trade penny shares if they want to make the most of their investment, and to turn a profit.
Most brokers and investment guides suggest that penny shares can be a worthy area of investment, providing it does not make up the entire portfolio of an individual. The recommended percentage to allot to penny shares is usually between 15 and 20% of the total value of a portfolio, though this of course depends on the goals of the individual involved.
Ultimately the investor has to ask themselves - is the investment in penny shares a hobby, or a serious profit-raising venture? Are they taking too many risks or injecting too much money into the investment? Would it be wiser to invest in a stable, blue-chip company, or is the thrill of taking a risk with the potential of making a big profit the reason the investment is being made in the first place?
Certainly profits can be made from penny shares, and many investors and firms have made large amounts of money from their trade. That is not to say that every penny share company is a sound investment in the long term, in fact it is the very nature of penny shares that their turnover is fast and frequent.