Complete newbie to Shares, Penny Shares - Thoughts?

tommysaver

Hi all.

With the dwindling interest rates and my money pretty tied up in accounts getting me frankly pennies, I've a good chunk of it in premium bonds too as I quite enjoy the risk of being able to win big.


Anyway, I'm looking to start putting some money into shares / or penny shares.

I am not looking to get rich. More, to slowly get an understanding of the stockmarket and enjoy/learn what I'm doing.

I've bought a book and plan to read that.

But my first questions are, is anyone else new to this - what websites have you found good for shares etc?

I see interactive investor charges like £11.95 per trade. So only worth doing if you are putting 4 figures in. I'm a bit dubious to put larger chunks of money in being completely new.

What is a good amount to start with if I research and really like the look of a company? £500?

Are penny shares based on the same principle? I'd like to have a flutter on these as a learning curve more than anything... any good websites to do this on? With minimal charges?

Thanks guys!

:beer:

jimjames

tommysaver wrote: »

Anyway, I'm looking to start putting some money into shares / or penny shares.

I am not looking to get rich.

That's good. Because it's very unlikely to happen if you're buying penny shares. Or even small amounts of any shares for that matter.

For smaller amounts you're best off using funds rather than buying shares directly. Definitely worth doing your research but if you don't want to make money then penny shares might be fine. If you want to make money and get rich long term - not get rich quick - then equity investment is a good place to begin.

A good website to start about investing is https://www.monevator.com Decide from there if you really want to do the strategy you planned

ColdIron

Perhaps have a look at this thread, you should be aware of the possible effects of fees

System

Buy &hold an index tracking fund so you have exposure to many sectors and don't have to do research (but will still beat most active stock pickers). Don't try to time the market, don't sell in a crash, wait it out.

I track the msci world small cap index - small companies have more room to grow and don't have so many institutional pensions buying them and pushing up the price. Compounding is the most powerful force in the universe and long term its worth going high risk for the extra compounding

Don't worry about bonds till you're near sale time, they distract you from the compounding you could otherwise have and trying to use them to time the market would work out worse for all the compounding you'd be missing

System

Value stock tends to outdo growth stock generally, so you want low p/e

AnotherJoe

It's a classic beginners mistake. Terrible idea. Penny shares are penny shares for a reason.

If you are just looking to learn, there are some websites (you'll have to google) which let you trade as if for real, with pretend money.

The risk of winning big with PBS is microscopic, you are fooling yourself if you think it's exciting, but PBS and penny shares are at utterly different ends of the risk spectrum. If you think PB's are exciting you'll have a heart attack with penny shares .

Try reading Moneyvator as a start. You say you dont want to get rich, but why not ? The journey of a thousand miles, etc. Except it doesn't start with penny shares but unexciting pooled investments like trackers and low cost index funds. And saving and gaining ffrom compounding effects over years. Very dull.

FWIW I say this as someone who has made and lost a lot with "exciting" shares. I've come out on top possibly as much due to luck as skill (ok some skill but some expensive self taught lessons also)

. I wouldn't recommend it to my younger self of 30 years ago.

Malthusian

Penny shares are not a learning curve, they're a cliff. If you want to find out what it's like to lose money, go to a dog track, it's more fun.

Investing is very very simple. It is not necessary to lose lots of money in individual shares to learn how to do it. When you go to learn karate or boxing, the instructor does not start off by inviting you to stand there with your hands at your sides, then repeatedly punch you in your unprotected face so you can get an understanding of how not to do it. The first thing he will do is show you how to hold your hands so you don't get punched in the face, and then build your understanding up from there. Likewise rule no. 1 in investing is - don't lose money.

steampowered

As you are just starting out, I would suggest sticking to large blue-chip companies.

Choose a couple of different FTSE100 or S&P500 companies across a few different sectors. Some of them will gain you money, some will lose money, and some will stay roughly the same while paying a dividend.

In researching a few blue-chip companies you will learn about the fundamentals of investing, and as long as you have a reasonably balanced portfolio you are unlikely to get badly burnt.

The trading fees do mean that it probably best to put at least a £1,000 in rather than just a couple hundred quid.

You shouldn't buy penny shares unless you actually know what you are doing. It takes a bit of knowledge (and a lot of luck) to be able to separate the lemons from the gems.

martinsurrey

steampowered wrote: »

As you are just starting out, I would suggest sticking to large blue-chip companies.

Choose a couple of different FTSE100 or S&P500 companies across a few different sectors. Some of them will gain you money, some will lose money, and some will stay roughly the same while paying a dividend.

In researching a few blue-chip companies you will learn about the fundamentals of investing, and as long as you have a reasonably balanced portfolio you are unlikely to get badly burnt.

The trading fees do mean that it probably best to put at least a £1,000 in rather than just a couple hundred quid.

You shouldn't buy penny shares unless you actually know what you are doing. It takes a bit of knowledge (and a lot of luck) to be able to separate the lemons from the gems.

The best thing IMO, and the general gist of this thread is that the OP shouldn't buy a single share in a company.

Put the money in a stocks and shares ISA (if you have room), and put it in a low fee index tracker (I use a FTSE 250 reinvest fund a fair bit).

Then the OP should pick a few companies in the index they choose and learn about them, make an excel spreadsheet, and make theoretical investments in the companies they think are good. Follow these investments and see how they do against yuor real investment in the index, play around with imaginary selling and buying orders, you'll get all the experience without any of the fees or risk of pooling your cash in a few companies.

years down the line when you've got a good handle on it, and a bit more pooled funds, you can dip your toe into self picks.

p00hsticks

steampowered wrote: »

As you are just starting out, I would suggest sticking to large blue-chip companies.

I really wouldn't be advising the OP to invest in any individual companies at this stage, blue-chip or not.

If you arbitrarily take 'blue-chip' to be the FTSE 100 companies, there's still been plenty of scope to lose a packet over the years on companies like lloyds, RBS, Marks and Spencer, BP etc etc

martinsurrey

p00hsticks wrote: »

I really wouldn't be advising the OP to invest in any individual companies at this stage, blue-chip or not.

If you arbitrarily take 'blue-chip' to be the FTSE 100 companies, there's still been plenty of scope to lose a packet over the years on companies like lloyds, RBS, Marks and Spencer, BP etc etc

add the big one to the looser list Woolworths Group plc.

100% loss.