Two reasons why you should invest in penny shares

Julie Brownlee, Fsp Invest, 29 Apr. 2015

Tags: penny shares, investing in penny shares, why invest in penny shares, penny stocks, investing,



Many investors may avoid investing in penny shares as they view them as high risk, speculative investments.

There are risks investing in penny shares, but the potential reward of putting some of your money to work in these stocks can make it very worthwhile.

So why should you consider investing in penny shares?

Read on to find out…



#1: Research proves that penny shares can deliver impressive profits


Penny shares, which tend to be smaller, younger, high growth companies, have the potential to deliver rapid profits over the longer term.

Research conducted by the London Business School showed that smaller companies outperform their larger counterparts apart from during recessionary times.

A lot of this comes down to these companies being much more focused and efficient than larger businesses. These companies can make decisions and implement changes quickly.


#2: Many professional investors ignore penny shares


In many instances, fund managers and institutional investors don’t look to invest in penny shares. Their investing mandate requires them to invest in larger companies which can absorb the millions of rands they have to invest.

This can lead many penny shares that have amazing potential to hover under the radar. As a private investor, you can take advantage of this.

Of course, making money from penny shares isn’t easy. But if you can commit the time and research to them, you might just uncover a penny share that outperforms over time and makes you richer in the process.

So there you have it. Two reasons why you should invest in penny shares.

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