Should You Invest More in Penny Stocks While You’re Young?

Most investors have heard the horror stories of retirees losing it all in the stock market,
leaving many investors wondering, should you invest more in penny stocks while you’re
young?

A penny stock is typically a stock valued at less than $1 per share, typically struggling
companies or companies who have just entered the market. So by the simple definition,
investing in penny stocks are much riskier than investing in more expensive, proven,
reliable stocks. But that is also the point in investing in these penny stocks. If you invest
at the right time with the right stock, you can make a killing, and also, the investor may
not want to spend a ton on a specific stock, they may just be playing the market and
hoping to get something for a steal.

Any seasoned investor or knowledgeable investment representative will tell you that
evaluating your needs is the most important part of choosing what direction you want to
go in with your stock choices. It is important for any individual to diversify your
portfolio, but your age and financial status also play a large determining factor in what
you may choose to invest in. If you are readying for retirement, you are probably not
going to make the same portfolio decisions as a 20 something kid testing out the market
for the first time. An older investor doesn’t necessarily have the ability to throw caution
to the wind and risk it all to make a killing on a new unknown stock.

As an investor ages, they typically become more conservative with their choices,
diversifying not only between stocks that are traditionally seen as “safer” but also
investing in things like bonds, gold and silver, and real estate.

The younger investor, on the other hand, has time on his side. He may be able to make
riskier decisions because he has the time to recover from them. Younger investors will be
much more apt to jump on a risky stock and will not feel the consequences as hard as an
older investor.

Especially in a difficult market like we’ve been seeing in the recent years, it is important
for an older investor who needs to protect their retirement assets to pare down the risk in
their portfolio. You should only risk what you can afford to lose, so an older investor
should take a much more serious look at their investments to make sure they are not
making bad decisions. When questioning should you invest more in penny stocks while
you’re young, for the most part, the answer is a definite yes, because older investors need
to protect their assets more than a younger investor.

Next, check out The Dean's list of free penny stock picks that have made huge gains.