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Penny Stocks: How to Become a Millionaire on a $100 Investment

Today, in my opinion, other than the lottery -- there is no other investment that provides the potential to become a millionaire faster or for as little money as buying penny stocks.



NOTE: Be sure to read my companion blog here on SeekingAlpha: "Penny Stock Landmines to Watch Out For".


What is a Penny Stock?

In layman's terms, this is a common stock that trades for less than $5 per share and typically is traded on the 'over the counter' (OTC) or outside of the major stock exchanges such as the NYSE or NASDAQ. A great number of penny stocks trade for well under $1 and quite a few actually trade for fractions of one cent!

Many new businesses get their start: as 'penny stock companies'.

In order to raise capital to get their business off the ground, a new company will offer common shares of stock in their business. Because they are unknown and unproven, they are usually viewed by investors as being very risky. So, their initial offering can literally be valued at well under one penny per share.



How to Become a Millionaire on a $100 Investment - Buying Penny Stocks

1. Buy one million shares of penny stocks at $0.0001 per share. (Cost = $100)

2. The company really takes off and their stock price increases to $1 per share.

3. Your one million shares is now worth ONE MILLION DOLLARS!

Getting Started Buying Penny Stocks:

First of all, besides some money to invest, you're going to need either a stock broker or an online trading account. I use Scottrade.com  but there are many others to choose from like E*Trade, Charles Schwab, etc.

These online traders will require a minimum deposit
to get started and will charge you a small commission when you trade stocks (either buying or selling).

Once your account is set up and you've deposited some money, you next need to decide what stocks you want to buy.

All you need to do to find ideas on stocks to buy is to Google the terms "penny stocks" or "hot penny stocks" and you'll find dozens of sites providing penny stock tips. Here's a link that I use frequently: http://www.thehotpennystocks.com/

Once you've picked a penny stock or two to buy, you're all set.

The online trading system will ask you for the company name or its stock symbol. Then, you need to decide how many shares you wish to buy, etc. Basically, they lead you right through it.

Those are the basics!

Personally, I didn't read any books beforehand -- I just waded in and learned as I went. I didn't even have the weak advice that I'm providing you with!

If you would like to learn more, here's a link to a FREE online book by penny stocks guru Peter Leeds titled "Understanding Penny Stocks":  http://www.pennystocks.org/



I should caution you on a couple of things:


1. This is like Vegas or Atlantic City -- unless you can afford to lose the money, don't play the game.


2. This can be addicting! Like I said, it's basically gambling.

Good luck!

AUTHOR'S BIO:
John Hanlin is an Independent Investment Consultant specializing in high yield, low risk investments secured by real estate and is a seasoned investor of over 25 years. John is the owner of the investors' website www.JohnHanlin.com & author of "The 7-Step Retirement Investments Planning Guide" (available at www.LazymanCompany.com)


 


Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Additional disclosure: John Hanlin is an active penny stock investor.