the richest man in atherstone

I've been thinking about investing on the stock market for about 12 months now. It's one of those things I've always wanted to do but felt I didn't have enough wisdom to go ahead with. Well, today I've finally decided to give it a try. I'd be lying if I said I knew exactly what I was doing but I think that even if I make a complete balls up of it, at least I'll have gained some experience.

Finding a stockbroker

Shares are bought and sold by stockbrokers. Some offer advice, others just do as they're told (execution-only). It is the latter I'm interested in. The fact is that if I want advice, I have to pay for it and I'm too dumb to know if they're doing a good job or not. Therefore, I'll pay the broker to do the transaction and nothing more. The research I'll do manually. Following a bit of investigation, I've found the company Hoodless Brennan. They provide an 'execution-only' service for a flat fee of £7 per buy or sell. Most other stockbrokers charge more than that plus an annual subscription fee, so in my opinion they are the best bet. On top of that, they provide online services, which means I can buy and sell from the comfort of my own home and trading for the first month is free. Great to experiment with the stock market game.

Finding a stock

There are loads of stocks to choose from! I have a couple of books about investing in the stock market but haven't gotten around to reading them yet so, I guess I'll be playing it by ear.
I've saved a fair amount of money over the last 12 months or so and I've decided to dedicate £500 of that money learning about stocks and shares. Trial and error is a far better investment than any training course in my opinion.

Trying to find a stock to invest in is very difficult. In the end, I decided to invest in a company that I know and use the services of. My first share investment will be with my ISP, PlusNet.

This company floated on the AIM market on the London Stock Exchange a few years ago. Since then, there share price has increase rapidly, month-by-month. Details of their progress can be found here.

I decided to invest in this company because they have been improving constantly, since their floatation. Recently, they admitted responsibility for outages and explained how they were going to correct the problem in the future. I don't know of any other ISP that would do this. They have always provided an excellent service to myself (never suffered an outage and always fast speeds) and on top of that, their customer service is the best I've come across. They also have their own proprietary operating system called 'Workplace' which, I believe automates the selling and accounting side of the business. This alone must increase the value of the company. They are on the AIM index. This is an exchange for smaller businesses with high growth potential. That is the main reason I am buying. They have never paid out dividends to shareholders, but I expect their stock price to increase quite rapidly over the next 12 months. I should be able to sell at a profit.

Basically, as I understand it, there are two ways of making money from stock. Either it is an income stock (the company pays good dividends bi-yearly) or it is a growth stock (the share price increases rapidly over a period of time). I do not expect dividends from PlusNet. I expect the share price to increase over the next year (or maybe few years) so that I can sell the stock at a profit.

Over the last month or so, there has been a slump in PlusNet's share price. This is because the company TalkTalk has launched a telephone service that offers free broadband. In PlusNet's defence, they have countered this offer with one of their own that offers similar services. Time will tell who wins the battle.

In all honesty, I expect either TalkTalk or another large telephone/internet provider to buy PlusNet in the next 12 months or so. This is a credit to what PlusNet have achieved and their future outlook. Having a buyer lined up tends to push up share price and, for me, this will be the time to sell.

I know I'm an amateur and I'm prepared to lose my money if it all goes tits up but I feel that no matter what happens, what I learn about the stock market will pay dividends (pun intended).

The market is closed now, but I've opened an account with Hoodless Brennan and plan to buy shares in PlusNet in the morning.