Wanna start buying shares with £1000 we have saved. Where do I start?

lancslass2008

Hi all

Before I go any further, I am aware share dealing is a form of gambling. I also understand I could lose my £1,000 in total.

Ok. I have saved up £1,000 from a 'Penny Jar' and with small selective betting on football. I would like to venture into buying cheap shares, but I don't have a clue where to start... I know I could lose, but I'm inspired by a close friend of mine who bought a lot of "Very cheap" shares in a company called Dragon Oil. Those shares are now worth over 1000% more. My friend paid less than £1 per share and they're now worth lots more. I undestand that this friend has probably struck lucky and is unique. I suspect it's like picking the 100/1 winner of The Grand National, However I'd love to try my hand at buying & selling shares. You never know, I may get lucky. So, with my £1,000 at hand where do I start? What publications do I need to buy? Should I consult a broker or my bank?

I can't allot the time to sit at my P.c all day, so would want to buy cheap shares and let them sit for weeks/months. I'm not seeking an overnight return.

Any help????? Thanks all

ses6jwg

If it was that easy, everyone would be doing it...

Tiddler AIM-listed oil and gas exploration companies are probably your best bet, if you determined to have a "punt", the likes of EME, PCI, GKP (not such a tiddler now). However for every Gulf Keystone, Heritage Oil and Dragon Oil there will be 100 Braemore Resources or Rheochems.

But ultimately in my honest opinion, £1000 is not really enough capital to be investing if you want to make serious returns.

BUT - dont let people tell you it can't be done because it can, but it takes plenty of research and sometimes sheer luck. For example I bought 4500 shares in Gulf Keystone at 34p based on an RNS stating they had commenced drilling in Kurdistan, then an RNS was released saying they estimated oil levels to be in excess of expecations. I then sold these a while back for 78p. Ok, I should have held, but the opportunity to bank £1,800 profit in 2 weeks was too tempting. I bought some more then at 70p for the longer term.

Use an online broker, there are plenty about with various charges. Aim for £12 or less per trade and no "inactivity fees". I use interactive investor personally. But a lot use Selftrade.

One problem is that these small stocks lack liquidity, so it can be difficult to buy and sell when you want to.

lancslass2008

Hi hun

Some great advice there. However, just a couple of questions

What does RNS stand for? I gather it's a company annoncement.
What do you mean some companies lack liquidity?? I assumed that shares were availble to trade from start to finish every day the market is trading???

x

stogiebear

Just because shares are available to buy and sell doesn't mean it's a good idea to do so.

Penny shares may not turn over much volume and the 'spread' (cost of buyung or selling) would be quite wide.

For example - Check out SEO (LSE) I made an easy 1,300 pounds here a few weeks ago. The shares were half a penny and they rose on expectations of earnings and I sold at .63 of a penny. Even though the share was priced at .68p when I sold!

But these Stanelco shares don't trade much so you have to get in at the right time.

sabretoothtigger

rns is like a press statement from the company

1000 is only enough to buy shares if you used something like a sharebuilder to buy small amounts. Its very easy for you lose all your money and dealing smaller amounts will help you learn without getting your wings burnt by the bright lights before you can develop a personal view


http://www.londonstockexchange.com/global/glossary/r.htm

gary_oleary

Just to add on to this discussion.

What stockbroker/website do you use buy your shares? Im looking into investing into penny shares.

Thanks

uk_steve

I do honesly think you have it against you at £1000 stake

example if you had x4 that amount then you have a better chance to spread your stakes @ £1000 per company

if 1 company goes pop and for example you made 50% on the other 3 companys you be in profit still



its really not worth it at £1000 stake


but saying that really it should be @ least 2k per company to take into account of fees and stamp duty so x4 = 8k

thats just my view



all the best

forgery

I'm not sure what the community reaction would be to this but with £1000 have you not considered something like spread betting? http://www.paddypowertrader.com/

Not sure on the standing of this sort of thing on this forum so sorry if I said something wrong.

Aegis

forgery wrote: »

I'm not sure what the community reaction would be to this but with £1000 have you not considered something like spread betting? http://www.paddypowertrader.com/

Not sure on the standing of this sort of thing on this forum so sorry if I said something wrong.

Generally speaking spreadbetting is much higher risk than normal investing, so it might be a very quick road into the red. Especially when you take into account the leveraged position which can result in losses greater than the amount deposited!

GH

Aegis wrote: »

Generally speaking spreadbetting is much higher risk than normal investing, so it might be a very quick road into the red. Especially when you take into account the leveraged position which can result in losses greater than the amount deposited!

Not necessarily. Open a Spreadbetting or CFD account with £1000 and through leveraging you can get exposure to £20000 worth of shares and IF you make a profit the profit is the same as if you'd bought £20k worth. Losses? Sure you can make losses but you can set a stop loss of (typically) 10% below the share price. So if you buy a share a £1 and the price drops to 90p the trade is automatically closed and you lose no more money. So with your £1000 you can do 10 spreadbets (or CFD trades) setting your stop loss at £100 per trade. 10 bets , provided you do your research properly , should yield you more winners than losers. Your profits , if any , will be extremely modest but you'll get a lot more fun out of it than investing £1000 in shares directly.

If all of the above is gobbledygook do a google search for a book called The Naked Trader.

purch

buying cheap shares

Do you mean 'cheap' in terms of how much each share costs, or cheap in terms of the value of the share.

A share that is priced at £1,000 could be 'cheap' if it's value should be £5K, just as a share priced at 0.01p could be expensive if the company is worthless.