![]() ![]() At the same time, AIM companies are more likely to be in growth mode than those found on the Main Market. That makes AIM-listed companies less regulated and higher risk than Main Market-listed companies. Must be willing to float at least 25% of its share capitalĪIM, on the other hand, doesn’t have any of these requirements.Must have enough working capital for at least one year’s trading.Must have a market cap of at least £700,000.Must have existed for at least three years.The Main Market requires the following of any company looking to float: That enables smaller firms to access capital with greater ease than if they were to try and list on the LSE Main Market. AIM is a sub-market of the (LSE) London Stock Exchange with fewer regulatory and listing requirements. In the UK, penny stocks are usually found on the AIM (Alternative Investment Market) index. You can buy penny stocks on most stock exchanges but the most popular shares tend to trade on UK and US exchanges. At the same time, they’re significantly more volatile and tend to carry a lot more risk. There are thousands of firms listed on exchanges across the world and many of them fulfil this definition.Īnd while the most commonly bought stocks on Freetrade tend to be larger companies, smaller companies can be hidden gems if you know where to look and what to look for. So smaller, lesser known companies are sometimes dubbed penny stocks even if their share price is above £1 or $5. These companies tend to have market caps below £100m in the UK or $300m in the US. Contrary to their name, a penny stock won’t always cost just a penny.Ī share is usually classified as a penny stock if it costs less than £1 in the UK or $5 in the US. It’s not exactly what it says on the tin. Let’s start with the basics: what is a penny stock or penny share? And if you are still unsure of how to pick investments, speak to a qualified financial advisor. Our resource hub for investing in the stock market might be able to help make that blend a bit clearer for you and our guide on how to invest in stocks is a great start for first-time investors. These, along with your tolerance for investment risk and time horizon, should inform the mix of assets in your portfolio. Remember that everyone has their own goals and unique financial circumstances. ![]() ![]() So they’re not as closely monitored as other, larger firms.īefore we get stuck into all things penny-wise, it’s important to highlight that this is not a suggestion or recommendation that you buy or sell any of the penny stocks mentioned. That’s because penny shares tend to represent small companies that have fewer regulations and reporting requirements. And if anything, they require an extra layer of scrutiny before you invest in them rather than other shares. Penny stocks are not a get rich quick scheme. Likewise, with penny stocks, you might be getting what you paid for: nothing all too good. Just because one share is cheaper than others doesn’t mean it has a better opportunity for growth.Ī meal deal is great and all, but if the chicken salad’s gone off, it won’t make for a great lunch. It’s important to remember that price does not equate to value. In this guide, we’ll run through how to identify good value when investing in penny stocks so you can decide whether these stocks are right for you or not. Key to that is avoiding getting sucked into what looks like a deal but is actually just a dud hiding behind a cheap price. There are still penny stocks to buy that can offer good value for an investor. It doesn’t help that many of the penny shares UK investors buy are often treated like racehorses at a bookies’ office.īut, as tends to be the case with stereotypes, the idea that all penny stocks and shares are for speculative punts or Wolf of Wall Street scammers isn’t true. They may be cheap but they’re often volatile, which makes it especially hard to predict what their price is going to do. Penny stocks don’t have the best reputation. ![]()
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