First time Share Buyer - into a growing business

PinkButterfly_2

Hmm but how do rich people become rich?

I know it is a risk but I really see potential in this business. It started off with one office and have several others in Central London and would like to open more branches and has some brilliant ideas. I may not invest in the end - as maybe how much I can afford is too small for them and maybe they will not be able to answer my questions - but I would like to know what questions to ask. Obviously my main questions will be:

* Where does the money come from after investing - increase in share price or percentage of profits.

* What is the expected income per share if the forecast is correct.

* Why are they looking for Private Investment.

brendon

If you are buying Ordinary Shares, you only get paid if there is a dividend payment made. And that's up to "them" (the majority shareholders) -- they do not have to pay any dividend whatsoever.

Shares don't have a price in the same way that market-traded shares do. Shares are worth whatever somebody else is willing to pay for them. The majority shareholders are (generally) under no obligation to buy the shares back.

Private Investment is normal (they are too small to trade on a market), but you should either (a) know what you are doing or (b) seek professional advice from someone who does.

PinkButterfly_2

From whom do I seek professional advice from - lawyers? Sorry - it is just I have a good feeling about this but obviously do want to do my research properly, am new to this type of thing and don't want to enter anything blindly!

mjdh1957

PinkButterfly wrote: »

Hmm but how do rich people become rich?

They mostly inherit money from their rich parents.

jimjames

PinkButterfly wrote: »

Hmm but how do rich people become rich?
.

Depends on your definition of rich.

You can become comfortably off over a period of time by spending less than you earn and by investing regularly. Most people want to get rich quick rather than over time hence the number of schemes that appear to tempt them in to rip them off.

Invest for a long time and the power of compounding will build a healthy investment pot. There is no guaranteed surefire no risk investment although installing solar panels was very close. As a minority shareholder in the company you have very few, if any, rights and the other shareholders can make decisions to suit them not you. An expanded business may not do as well as a smaller one and the increased costs my make them uncompetitive.

Lots of things to consider and if you have never invested before in my view you would be better off starting with share based funds inside an ISA.