Best Penny Stocks to buy 2020 in India | Penny Stocks

What are Penny Stocks?

Penny stocks provided on the market are frequently producing corporations with limited cash and resources. Since these are mainly smaller corporations, penny stocks are most appropriate for investors who have a higher tolerance for risk. Typically, penny stocks have a higher degree of unpredictability, resulting in a higher possibility for the benefit, and therefore, a higher degree of intrinsic risk. Investors may put their full assets on penny stocks, or more than their assets if they get on profit. Purchasing on margin means that investors borrowed money from the bank or agent to buy the shares.

Generally, penny stocks in India generally trade at Rs 0.05 to Rs 10 per share.

Advantage of Investing in Penny Stocks

Penny stocks are generally not recognized by the investing public at large. Regular investors don't invest in such stocks due to a fear that the basics aren't known. Institutional investors also stand back from such stocks due to the low market capitalization.

However, this is often where the advantage arises to an investor who is ready to try to proper homework into the basics of the over the counter stock.

If the investor is in a position to seek out an over the counter stock with good fundamentals and is in a position to shop for the stock at extremely low valuations, he can make a huge fortune.

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Why should invest in these stocks?

Penny stocks are suitable for those investors who are able to take high risks in expectations to urge high returns. If you've got a low-risk appetite, don't invest in these stocks.

Here is Top 15 Penny Stocks List:

Image source - Google | Image by - getmoneyrich 

Rules of Investing in Penny Stocks

Investors meaning to invest in such stocks must do so with the subsequent rules in mind. These rules will make sure that even within the worst-case scenario, the investor won't be badly affected:

(i) Invest only petty amounts:

Ensure that only a little amount of the portfolio is invested in such stocks, not exceeding 10% of the portfolio.

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(ii) Diversify generally and have a basket of penny stocks:

It is always wise to treat penny stocks as a basket and spread the investment and risk across four or five stocks.

However, the downside of this strategy is that albeit one or two of the stocks become big winners, the impact on the portfolio is going to be reduced due to the opposite stocks within the portfolio.

(iii) Monitor the performance regularly:

Penny stocks aren't bought and forget stocks. By their very nature, they require to be watched correctly. At the slightest sign of trouble with reference to the basics, the investor must be prepared to sell his stocks.

Conclusion

While the Penny Stocks provide the chance for little companies to grow and maximize, transforming into mid-cap companies. They still have a group of downfall for investors.

It is considered, investors who have a greater tolerance for risk must invest in such stocks. As they are going on the contrary to the blue-chip companies, they need all the traits of failure. If investors are resistant to A level of loss, with the arrogance of high returns, they'll prefer to invest in such shares. There sure exist a couple of advantages, and that they can't be otherwise overlooked.

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