[Deep Dive] Why Penny Stocks Often Fail: Tips for Beginners

Why small stocks can be a beginner investor's biggest risk. Here's what to do instead...

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When I was a beginner investor in my early 20s, I looked at the stock prices of my favorite companies, compared them to the money in my bank account, and immediately shut my computer off.

Many beginner investors with limited funds experience some form of price shock and disappointment, which might cause them to avoid investing entirely. JPMorgan Chase surveyed 1,200 investors and non-investors, and 42% said they weren’t invested in the stock market because they didn’t have enough money.

However, limited funds aren’t a deal-breaker for other beginners. They’ll try to find clever ways to invest their money and get the most bang for their buck. Usually, they take the same route I took in my early 20s, and 90% end up on the same road—financial ruin. I don’t want that for you.

Here are the investments you should never buy as a beginner investor…