How to Buy Marginal Penny Stock

by Cindy Quarters

A marginal penny stock is a stock that is offered for a very low selling price, generally from a company that barely, or marginally, meets the requirements for a publicly traded company. While the price may literally be just a few pennies, it can also be as much as $4 or $5 a share. Such stocks are not commonly available through many conventional stock brokers, though each firm has its own rules regarding transactions involving penny stocks.

Locate a broker or a company that deals in penny stocks. If you want to deal with someone local, call various brokers in your area to see if you can find one that handles penny stocks. If so, you can work with her. If not, you can try an online company, as many of them handle marginal penny stocks.

Set up an account with the company of your choice. Whether contacted in person, over the phone or online, most of them will require such information as your name and address, date of birth, Social Security number and the name and address of your employer. They will also require a method of payment, either a valid credit card number or funds deposited with them in advance before you can establish an account.

Choose the penny stocks you are interested in buying. Marginal penny stocks are often offered for just a few cents, sometimes for even a fraction of a penny per share. These are also sometimes called micro penny stocks.

Place a buy order for the stock you want. Specify how much stock you want. You may also want to specify a maximum price. If you are working with a stockbroker, you can tell him the details of your purchase. If you are buying your stock through an online company you will need to include all applicable details in your buy order.

Keep all the information on your stock purchase, such as the original receipt and transaction number. You will need this when you file your taxes as well as when you decide to resell the stock. If the transaction is handled electronically be sure to make a backup copy of the information.

Tip

  • When investing in marginal stocks, don’t invest any more money than you can afford to lose. This way you can speculate on the stocks but won’t be seriously harmed if the marginal stocks fail. There are many different sources of advice to help you choose marginal penny stocks. Look past any hype to see if the stocks they are touting are right for you.

Warning

  • Penny stocks are generally considered to be a very risky investment. The companies that sell them are typically small, new and sometimes exist only on paper. Carefully check the stability and background of any company before investing in its stock.

Photo Credits

  • Thinkstock/Comstock/Getty Images