Personal Finance: my dimmest investment

Send us yours in 100 words or less and if we publish it, you'll get a free copy of the Motley Fool UK Investment Guide. E-mail to UKColumn@fool.com or snail mail to The Independent on Sunday, 1 Canada Square, Canary Wharf, London E14 5DL.

Penny share penury

I decided to follow the advice of a friend at work and invest in some penny shares. She said it was an easy way to make money. Luckily, I decided I was only going to commit a relatively small amount to the venture. After six months of roller-coaster nausea, I found I had reduced my capital by more than half - JS, Yorkshire

The Fool comments: Trading in penny shares is inherently a risky business, as any kind of bad news or rumour, can have a drastic effect on the share price. There are a number of problems. First, the share prices fluctuate wildly, often on little concrete information. The percentage change is the same, but it is somehow far easier for a share price to go from 5p to 2p, than from 500p to 200p. Secondly, when you do want to sell, often no buyers can be found, forcing you to sell at a very low price.

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