1) Not at all. Penny stocks are weak, near-bankrupt companies that are a ticking time bomb. Investing in these stocks is not recommended for anybody, especially someone just starting out. Stick with fundamental analysis and identify the strong, undervalued companies.
2) Most people that self-trade, do it themselves through online brokers. They'll usually charge ~$7 per trade.
3) Google "online stock brokers" and you'll find many out there. I personally use Scottrade and don't have any complaints. Others may use E-Trade or TD Ameritrade. You can signup at any one of their websites.
4) By hot, I assume you mean volatile (since no one can predict short-term price movements). Biotech, 3D printer, and gold mining companies are somewhat volatile right now. Not that I recommend investing in any of these industries - usually the stocks trading within these industries are very overvalued.
Don't listen to peter, $500 is a great start. Warren Buffett started by buying 3 shares of Cities Services preferred for $38 per share.
I'd recommend reading about investing before you start. Good books to start are "One Up On Wall Street" and "Common Stocks and Uncommon Profits", they're easier to read because they don't use and focus of heavy investment lingo. There are many other books you can read from there.
As for your questions:
1) Stay away from penny stocks. They're penny stocks for a reason, the companies don't have much value, and (for the most part) aren't profitable. You've probably read about people making multiple times their initial investment in penny stocks, but you don't read about the thousands of penny stocks that have emptied pockets as well.
2/3) If you consult a broker, things can start getting expensive, quickly. I'd recommend using an online broker like Scottrade. If you do you own research and only use it to place trades, you can do it for much cheaper. Scottrade has $7 trades, which is pretty low for quality brokers. You can find online brokers for cheaper but don't expect great services. If you do end up choosing Scottrade, you can use the referral code WRBB1235 for 3 free trades.
4) You can use Yahoo Finance, Google Finance, Morningstar.com etc. to see what stocks are up or down during the day or the week. Hot stocks aren't always a good investment; by the time you hear a stock is up 10 or 15%, you've already missed out on the main opportunity.
Good luck!
Penny stocks are super risky. Be prepared to see all your money disappear, or double overnight randomly.
No human broker will talk to you until you can tag on a couple zeros there.
Your cheapest and safest options might be discount brokerages online (e.g., Etrade, Scotttrade, etc. ) or mutual funds at your bank.
Do note - every time you buy/sell stocks, there's a fee. If it costs you $10 to buy and another $10 to sell, you're already down 4% on the investment.
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I would echo exactly what Philip said with a couple additions. As for penny stocks, they have very little reporting requirements and are often the target of fraudulent "pump and dump" schemes. They also tend to have little liquidity which means you could have problems selling out of the investment. There may be no one willing to buy your shares from you when you're ready to get out. Research all those brokerages he mentioned. I personally use TD Ameritrade. They have a list of no transaction fee ETF's and no load no transaction fee mutual funds so if you're investing a small amount of $ (500) this will save you from losing a significant percentage up front to fees. They also have 24hr customer service and a lot of free education. Education is key to investing. Make sure you're getting education from a reputable source and make sure you understand what you're investing in, the possible risks, and the possible benefits of that particular investment. Also I recommend determining your investment timeframe, goals, and risk tolerance to make sure that investment fits with your overall plan.
Hello so I'm wondering How should i invest my 500$. I'm currently learning how to invest in the stock market and need a little help on how should i start my investing career i guess i can say haha but will anyone answer these questions for me
1) should i start on Penny Stocks first before i go straight in with the big dogs at Nasdaq/Dow jones
2) How expensive will hiring a broker will be
3) how can i get around getting a broker
4) what stocks are hot right now?
