need help

by **terryvanman** on Sat Nov 12, 2011 10:14 am

Hello,
Can someone please help. as I said in my one and only last thread,

I have now retired and have sold the flat and after buying a cottage, have some money left over. A friend of mine has asked if I would like to invest in his company, the only trouble is, I have checked on the Webb and it's saying "his company has £1000 in the bank, and the Last filed accounts: 22/08/2011
Category: Dormant.
Can you tell me what Dormant means please

Thanks

Terry

by **mullet** on Sat Nov 12, 2011 11:34 am

Dormant effectively means inactive, which should make you wonder what this is all about. Investing in small private companies is notoriously risky. Worst case scenario (a simplistic example) - you invest, your friend draws the money out as salary (for himself) and then dissolves a dormant company with no assets. You lose your investment.

Personally, I would go for premium bonds, a high-interest investment account with a building society, a shoebox under my bed or my gran's tea-caddy. I suspect that all are safer than your friend's company.

A question for all would-be investors to ask the principle person - if the company is such a good prospect for investment, is that person also investing and experiencing/sharing the risk?