Dealing in penny shares

marathon_man_3

Apart from the odd topical shares, such as BT & British Gas sold way back, the only other shares I have ever owned have been those arising from building society demutualisations. These were also sold many years back. I own no shares in any company at the moment.

I am thinking of dabbling a small amount, just £100 on buying some "penny shares" to see if I can make a few bob but also to give me an additional interest in my retirement years. The £100 would include any charges & commission in buying the shares as that is the maximum amount that I would be willing to spend and could afford to lose in this hobby/venture.

I have absolutely no idea as to how to find out about "penny shares" available, how to deal in them and what charges I may have to pay in acquiring them and disposing of them en route towards my inevitable fortune.

Can someone please give me advise as to where to find out about them and where to go to get the cheapest administration costs in dealing in them?

Thanks.

CLAPTON

marathon_man wrote: »

Apart from the odd topical shares, such as BT & British Gas sold way back, the only other shares I have ever owned have been those arising from building society demutualisations. These were also sold many years back. I own no shares in any company at the moment.

I am thinking of dabbling a small amount, just £100 on buying some "penny shares" to see if I can make a few bob but also to give me an additional interest in my retirement years. The £100 would include any charges & commission in buying the shares as that is the maximum amount that I would be willing to spend and could afford to lose in this hobby/venture.

I have absolutely no idea as to how to find out about "penny shares" available, how to deal in them and what charges I may have to pay in acquiring them and disposing of them en route towards my inevitable fortune.

Can someone please give me advise as to where to find out about them and where to go to get the cheapest administration costs in dealing in them?

Thanks.

a complete wast of time even as a retirement hobby

why are 10,000 shares at 1p better than 5,0000 shares at 2p or 2,500 shares at 4p or
100 shares at £1 ?

typical dealing chrges are about £10 and penny shares tend to large spreads


if you want a hobby to do with shares then set up a fantasy portfolio of shares and see how you get on.

marathon_man_3

I have too many fantasies in my life already.
I wanted to live one out for real !

If a share costing 5p goes up just 2p, that is a 40% gain.
I would be fine with that for starters.

Linton

To dabble in shares you need to be working with very much more than £100 as fixed charges for buying and selling will rapidly eat into your money. Perhaps £500 would be a minimum for an individual transaction and a pot of several times that as you dont want to be wiped out on your first ill-judged purchase.

Several problems with penny shares, which is a term used to refer to very risky investments in typically very small companies...

1) There is often a significant difference between buy and sell prices, so for example you may have to make a gain of 10% + charges just to break even.

2) Penny shares can be illiquid. eg when you decide that you want to sell you may find that there is no-one around who wants to buy, certainly at the quoted price.

Jegersmart

marathon_man wrote: »

I have too many fantasies in my life already.
I wanted to live one out for real !

If a share costing 5p goes up just 2p, that is a 40% gain.
I would be fine with that for starters.

40% is 40% regardless of whether it is "just 2p" or £1000's.

It is true though in my experience that "penny shares" do experience larger than normal price movements (in either direction) and as others have pointed out this is usually down to lack of liquidity.

Others have pointed out that your trading cost will make this difficult. I use X-O's online execution service for certain types of transactions, and I pay £5.95 per trade plus the usual stamp duty when buying only. This means that if you want to trade for £100, it would cost you around 12% without taking into account the spread. Let us say that some shares will have a 10% spread (between the bid and ask) that would mean that you would need the share to go up by 22% odd before even breaking even.....

If you are set on this I would save up at least £1000 before starting, preferably £5000 minimum if possible and you would still need to be prepared to lose all of it.

Good luck!

J

Glen_Clark

fools rush in where wise men fear to tread

sabretoothtigger

Nothing wrong with wanting to learn, keeps the mind young.

Here is a penny share I bought, it only went and became a decimal penny share :laugh:



How much is that in old money ha penny and farthing or something

Look at market cap for a price tag. Then the job is to figure out the worth of the company vs the shares, if we can see any difference that is the profit and the reason to invest.

Try reading Robbie Burn's book who is a journalist. Also Questor and the cheapest way to deal a share is with no commission via spreadbets. Actual shares you could look at regular investing not realtime, 100 wont cut it really

Today the buy price for HER is 0.73p and the sell price is 0.68p which means it 'costs' 6.8% to buy this share

Very very expensive really but the market cap is only 11m which makes its cheaper then Fred Goodwins Pension and they have some nice mining assets *but no production or profit*

Jegersmart

CLAPTON wrote: »

a complete wast of time even as a retirement hobby

why are 10,000 shares at 1p better than 5,0000 shares at 2p or 2,500 shares at 4p or
100 shares at £1 ?

typical dealing chrges are about £10 and penny shares tend to large spreads


if you want a hobby to do with shares then set up a fantasy portfolio of shares and see how you get on.

A nice balanced post with not a hint of hostility or derision.......

Are you always angry?

J

marathon_man_3

Thanks for the responses.

In response to a suggestion above, I don't need to save up to £1,000 or £5,000 as we have far more than that in our savings now if I wanted to raid them for investing. However, I do not want to do so; merely have a dabble for a bit of fun and it is an amount that I would not be too upset if I were to lose it all as I would get some enjoyment and interest in the meantime.

Sabretoothtigger - where do you go to find out about these shares that you might want to buy? When I google "penny shares", a load of different websites come up and I don't know where to look, really.

Jegersmart - I have no problem coping with such responses although the tone used was certainly unwarranted.

grey_gym_sock

well, you could get of copy of the FT (because it has all the shares you can buy on the stock exchange in it - most papers just have a selection) and stick a pin in it to pick 1

obviously, this is not very good advice, but you said it's for fun, so it depends what you find fun ... and you could always research the company after picking it at random.

it's also not the worst available method. there's a danger if you look for "tips" of shares to buy that you'll find the ones that everybody has been tipping recently, and as a result where the price has already shot up, and is now more likely to fall back.

N1AK

CLAPTON wrote: »

why are 10,000 shares at 1p better than 5,0000 shares at 2p or 2,500 shares at 4p or
100 shares at £1 ?

Penny shares are the only way to 'get rich quick' by share dealing because you won't see a FTSE 100 company increasing in value by a couple of orders of magnitude in a few years.

That said the odds of striking it rich are low and the risk of losing the investment is high (comparatively). Personally I'd never suggest penny share trading but if you get enjoyment out of it then I suppose it's no worse (and probably better) than enjoying horse racing etc.