Here’s why you should step out of your comfort zone and start investing in penny shares

Simangele Mzizi, 29 Jan. 2013

Tags: penny shares, small companies, red hot penny shares, shares,

They say dynamite comes in small packages. That’s the case when investing in small companies. They have a great potential to grow and this means quick and rewarding gains. But are you willing to take risks involved to make big profits? Here are the pros and cons of investing in penny shares to help you make the right investment decision.

“The simplest definition of a penny share is a share that can be bought for pennies. In other words, it’s a share that costs less than a pound or a dollar but, in South Africa, we regard a penny share as a share trading under R10,” this is according to investment site
The important aspect with penny shares is the size of the company, because it’s easier for a small company to grow compared to a bigger one. As an investor, this is where the opportunity to make big profits lies.
“As these small companies grow, we reap the rewards,” explains
As an investor you must know that penny shares by their nature are risky. But, the risks are worth it if you consider the potential returns.
Discover the risks and potential gains and step out of your comfort zone
Prices for penny shares can be very volatile, but if your penny shares are part of a balanced portfolio, this can mean significant financial gains.
“Let me just emphasise that penny shares are the most risky part of any stock market. If you invest in small companies without watching their progress, you’ll more than likely suffer losses,” says Francois Joubert, editor of the Investment Newsletter Red Hot Penny Shares
But as an investor you shouldn’t invest more than you can afford to lose.
“You only need one good share-pick to make a fortune. This is a key principle to successful penny share investing,” continues Francois Joubert. 
Here’s where you can buy and sell penny shares.
Contrary to popular belief that investing in shares is only for high powered executives and affluent people, anyone can invest in penny shares.
“All you need is access to the Internet and an email address, some spare cash you're willing to invest, whether it be R5,000, R10,000, or even R100,000, whatever you're comfortable with and most importantly,” adds Francois Joubert.
You can invest penny shares in all companies whose shares are available to be bought and sold on the Johannesburg Stock Exchange (JSE). Buying a share is an easy process. You just have to contact your stock broker and give him the name of the company and he’ll then do the rest.
“All independent long-term studies have shown that stock market investment beats the return on cash and bonds by a wide margin and that overall shares of small companies beat those of large ones,” writes Tom Bullford, Penny Share Analyst in an article on

Related QA

jchiosa asked:
hey guys, i am subscribed to pennyshares. end of last month, didn't receive any communication from you guys. login at does not [read more]
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Is Francois out of the office / overloaded or simply not interested as he does not answer the questions that I have put to him on 13/6/2017 and my [read more]
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vmtimde asked:
HI Francois Please assist me in cancelling my subscription to pay monthly for red hot penny shares. I am not interested anymore. Kind [read more]
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