Chapter 2: Your Risk Tolerance and Penny Stock Investing - Not the Same Risk?
If you know anything about the standard stock market, then you know that the amount of risk that something carries is something that is defined by several things. In fact, each stock can be seen from a different risk vantage point from one lender to the next. Which type of investor are you? In any case, what you need to consider is the fact that no two stocks are the same.
With that said, you can assume that there are some penny stocks that are less risky than others. You can also assume that there are things including steps that you can take to insure that the penny stocks that you are investing in are the safest types of penny stocks available. In short, you need to insure that what you invest in has the risk tolerance that you need.
The good news is that penny stocks do offer some flexibility in what risk that they provide. You will learn in the next chapters more about how to learn more about the stock so that you personally can judge the amount of risk that plays a role in that stock.
So, to sum up, here is what you need to do to determine just what your level of risk tolerance is.
1. Determine the amount of funds you plan to invest in penny stocks or other stocks for that matter.
2. Determine just how important it is to your financial security to have those funds.
3. Determine the amount of risk that you are personally okay with having in stocks.
4. Work with your financial planner or advisor to determine if the amount of risk is a wise decision for your own financial goals in the long term and short term.
5. Determine what risk level you are comfortable with and the type of penny stocks that fits those needs.
When you take the time to really work out what you financial risk tolerance is, you will be better suited to selecting the right type of stocks, penny stocks or otherwise, for you to invest in. There is no wrong answer. Remember, everyones life and their financial abilities are different than the next. Going broke will not help you financially.
The fact is that having the right combination of safety and risk is the biggest factor in investing in penny stocks. You have to determine what that combination is for you personally.
Although there is only two holders of the stock, it is likely that they will decide to sell their shares of the stock and, in the end, your stock value drops a considerable amount.
Chinese Penny Stocks
Dont settle for just any stock broker.
Therefore, it is not well known. He sells all of his penny stock sales to those investors that have fallen for his sales hype leaving him with a nice penny to call his own of course. Determine if the penny stock has had several worrisome reverse mergers as well. The broker that you need is one that is going to be there for you.
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