New Project: How Many Shares is Worthwhile?

Twointhebush

A friend of mine was pointing out that a company with a huge forthcoming project, has shares priced at a few pence. In a few years once the project is off the ground it could be something.

My question is how many shares should I buy to make it worthwhile buying them? I understand this is gambling but I'm willing to gamble a bit. But what would be a worthwhile investment?

ColdIron

Impossible to say without context, name the company

msallen

107 of course. I'm surprised you needed to ask.

HappyHarry

msallen wrote: »

107 of course. I'm surprised you needed to ask.

That's an outdated figure, that needs adjusting for inflation. It should be 113 now.

MaxiRobriguez

Price of the share is irrelevant. Shares for a few pence aren't going to turn into pounds if there's 100 billion other shares about.

You should be looking to analyze what the project is going to do for the company - what revenue streams will it open? Productivity gains? Will it cut costs/improve margin?

You're probably better just sticking your money into a equity tracker fund though.

Old_Lifer

Possibly SXX?

Linton

More important questions for high risk investments than how much is worthwhile include "how much can I afford to lose?" snd "would I be better off in the long run investing elsewhere for lower potential gain at lower risk?"

lpgm

Twointhebush wrote: »

I understand this is gambling but I'm willing to gamble a bit. But what would be a worthwhile investment?

It's exactly the same as the total amount you'd be prepared to lose if things don't work out.

Reaper

What you can do is decide a proportion of your available money can be allocated to high risk investments, for example 5%

BUT the nature of high risk investments is most will not pay off, so that doesn't mean put all 5% into this one investment. So next decide how many ways you want to split it. So for example you might decide 10% into each venture. I plucked those figures out of the air. Pick figures you are comfortable with.

Realistically if your company has fallen to penny share level and is now going to splash out spending money they don't have on a big project there is a good chance this will hasten their end. So while hoping for the best be prepared for the worst.

seacaitch

Twointhebush wrote: »

A friend of mine was pointing out that a company with a huge forthcoming project, has shares priced at a few pence. In a few years once the project is off the ground it could be something.

My question is how many shares should I buy to make it worthwhile buying them? I understand this is gambling but I'm willing to gamble a bit. But what would be a worthwhile investment?

STOP.

Your question very clearly illustrates that you're an inexperienced investor. That's fine, we all start off with no or limited knowledge, but as a novice investor you should recognise that you're a danger to yourself. I'm not being personal - every investor is a danger to themselves, but novices are particularly so.

On another thread you've just asked about buying shares in a SIPP. Presumably, this is you enquiring about buying these speculative penny shares in your SIPP. Unless you are a skilled, very experienced investor, accustomed to investing in small-cap stocks with a full grasp of the risks involved, then this is almost certainly not a wise thing for you to be considering doing.

If you were to go ahead with this speculative gamble, then if you're "lucky" you'll lose the money and learn a valuable lesson about what's sensible investing and what isn't, and lesson learnt never attempt this sort of thing again.

But if you're "unlucky" and this gamble actually makes you money, there's a danger (likelihood) you may attempt more of this behaviour in future, but using larger sums of money next time due to becoming overconfident and emboldened. SIPP money that's supposed to be prudently and sensible managed for your future retirement, not punted on the equivalent to "the geegees". Eventually - and much sooner rather than later - you'll come badly unstuck and lose the lot.

It's possible to make money investing/trading in illiquid small-cap stocks, but it is extremely dangerous/risky territory, and there's almost zero chance that you have the skillset to succeed at it.

Pass up this "opportunity" and stick to doing sensible investing, particularly in your SIPP. Your future self will be extremely grateful!