Question: Is there serious money to be made in penny stocks, and if so how? Also, is there any scams to watch out for?   Thanks

Answer: There can be serious money to be made if you research everything carefully (remember, some of the biggest names on the stockmarket were penny stocks at one point).... however there can also be serious money LOST too.\n\nHere's a typical example of how it COULD work if your lucky, using my Halifax Sharedealer trading account + the shares in my ISP as an example:\nPipex Communications (PXC.L) - I stuck £5 on them in April 2005 when they were valued @ 7.75pence\nWith sharebuilder, that was £3.48 worth of shares, and £1.52 in commission & Stamp Duty. It bagged me 44.897433 shares in them.\n\nNow, imagine you hold onto them shares for bloody ages, so they rise in value to say 50pence a share.\n\n£0.50 x 44.897433 = £22.45 (or £22.4487165 if you don't round that figure up).\n\nThen of course with Penny stocks they don't usually pay out any dividend...... but imagine how much you can earn with that many shares picked up on the cheap once they've matured enough to pay a dividend to re-invest.\n\nLet's say 10pence a share (just to make it easy to work out)\n£0.10 x 44.897433 shares = £4.49 (practically a refund of your initial investment).\n\nBut you've also gotta remember that as there's so many of them for your money... and you've put a fair bit of money on them (and got bloody loads of shares in them as a result), if they go down in value on you, they can give your portfolio's value a right good kicking... so are as risky as trying to get a bj off an Alligator with toothache.
This question from the Yahoo Q&A forum is categorized in the topic: Entertainment & Music