Penny Stocks - A Valuable Tool in Your Investment Toolkit

Google, Microsoft, Coca Cola, General Electric - The financial news is all about large companies.

Patient, value investing has never gone out of style. It is still the key component for building long term wealth. Holding a long term portfolio and living off the interest remains a sound retirement plan.

Building the wealth portfolio, however, takes some doing. The fundamentals are the same - spend less than you earn, invest a fixed amount. Increasing the amount you can invest while not reducing your standard of living requires a stream of additional income.

Penny stock trading can be one of the key weapons in your investment arsenal. Penny stocks are stocks that are usually out of the radar screen of most investment analysts, and stuff you don't hear on CNBC or Bloomberg. They usually trade for less than 5 dollars, sometimes even 20 or 50 cents a share.

And that's just one of the key reasons why penny stocks are so attractive. A significant development can cause the price of the stock to rise by a couple of dollars. For a stock trading at $1.50, a rise of $3 is a 200% gain. How likely is it that a stock like Google can go up by 200%?

The low price also means that one doesn't need to put a lot of capital at risk to get into the game. Have a few hundred bucks to spare? At $1 a share, all you need is$100 to start trading. What if you could double your money in a month? What if you could double your money every month?

If a penny stock hits a major discovery or development, you could be in for a 20 fold increase in price, more so if the company gets bought over in this day of incessant Merger and Acquisition activity.

Are penny stocks risky? You bet they are, if you're trading blindly without any guidance. Walking out of your bedroom without the lights on at night is also dangerous. Penny stocks are usually those with a short history, at the early stage of their existence. Which means that they could fold as easily too.

Here's where proper detailed analysis comes into the picture. You and I may not have the time to research any stock, let alone one which is hardly covered in the media. But we can rely on others to do it for us - full time analysts whose sole objective is to research those hard to find penny stocks. On the recommendation of this analyst, I have made 40% on one stock over 2 weeks, and am sitting on 55% returns of the next one.

If you're looking to make that extra buck, you'll probably have traded forex, futures, options and stocks. Trading penny stocks will give an extra edge to your trading arsenal, and the low startup cost is one that many will be able to afford.

I recommend the Penny Stock Picker from my own experience. I am currently practising trading options to make 200-400% returns with my own analysis and tools. The Penny Stock Picker lays it all out in a regular weekly email. All you have to do is read a bit on it, and get into your brokerage account. Its true you can start with a few hundred bucks.