Noobie, Investing In Shares

Discussion in 'Stocks & Derivatives' started by GRETZKY427, Jan 4, 2019.

  1. GRETZKY427

    GRETZKY427 Active Member Silver Stacker

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    Hi Fellow Stackers :)

    Ive been reading into diversifying some of our money and looking at shares or managed funds as an option.

    For starting out, would I be best to hand pick say 10-20 different type of shares from a variety of sectors or go for a Managed Fund type where its hand picked for me and just slowly over time adding money to the share account to build up ?

    How about an ASX top 200 type of account ?

    Any help and/or tips would be appreciated :)

    We are looking over the long term (growth) as we are only in our early/mid 30's.

    Cheers, HAPPY STACKING :)
     
  2. ozcopper

    ozcopper Administrator Staff Member

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    I am also new to buying shares but have studied various companies for some years. I have so far bought two companies, but neither of them are in Australia and both are precious metal related. I personally would never let anyone else pick which companies I was going to invest in. You need to know why you are investing in those companies.
     
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  3. barneyrubble

    barneyrubble Active Member Silver Stacker

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    One thing to be cognisant about with managed funds are the fees. And agree with ozcopper, unless you are confident in analysis, I would steer clear of stock picking.

    For that reason, "ASX top 200 type of account" an ETF's such as A200 in my opinion, would be a good place to think about starting. That said, think about the mix that you want in your EFT, before clicking buy.

    Also, don't be putting money in shares that you need in the next 3-5 years. Investing in shares is a long term game. In the words of Warren Buffett: "The stock market is a device for transferring money from the impatient to the patient."
     
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  4. ozcopper

    ozcopper Administrator Staff Member

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    Just like precious metals :D
     
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  5. GoldenEye

    GoldenEye Active Member Silver Stacker

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    My favorite funds are AFI and MLT. They have very low fees and often do better than STW (ASX top 200 ETF). It's also much less complicated than owning 20 different companies. I normally keep the bulk of my money with these type of funds, and keep a little aside for one or two other favorite companies.
     
  6. alor

    alor Well-Known Member Silver Stacker

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    is there index income ETF ?
    should not buy something with no understanding or you will remain underwater
     
  7. SilverDJ

    SilverDJ Well-Known Member

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    Check out the Vanguard ETF's
    Just buy them like any other stock and you can invest in a mix of companies or indexes.
    I have VHY which is a high yielding investment stock mix, and I get a dividend every quarter (cash or re-investment option)
    Management fees are pretty low.
    https://www.vanguardinvestments.com.au/retail/ret/investments/product.html#/productType=etf

    And you can see what companies they have in the fund, VHY for example:
    https://www.vanguardinvestments.com...il/etf/portId=8210/assetCode=equity/?overview

    I don't particularly like the mix, but the dividend returns are certainly good.
     
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  8. SilverDJ

    SilverDJ Well-Known Member

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    Some things I've learned about investing in shares:
    a) Do it and hold for the long term
    b) Pick stocks that pay dividends. What's the point owning a company if you don't get a cut of the profits? Just gambling the share price will go up is a bit silly unless you have done your research and know the company and market.
    c) Take profits when they come up and be happy with the choice. Selling some and "free riding" the rest can be a nice strategy.
     
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  9. Grizzly

    Grizzly New Member

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    Historically shares have outperformed all other asset classes. As you said you are just starting out, I would suggest finding the lowest cost / fees possible index fund and start there.

    It is really hard when starting out to get enough companies in your portfolio to provide the diversification to prevent 1 company going broke from having a big negative impact on your return. Trading small parcels of 20 or so companies will cost too much in trading fees.

    So best place to start is a low fee index fund, add regularly to your position if you can, and be happy if the market goes down because that means you can buy more shares for the same money.
     
  10. SilverDJ

    SilverDJ Well-Known Member

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    It's not just going broke either, I had one in my super fund delist from the ASX, and whilst my money is not technically gone, it might as well be as it's not tradeable any more.
     
  11. SlyGuy

    SlyGuy Active Member

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    I agree that buying indexes of the market (or at least a major part of it) is a good way to get instant diversity when you're starting out. I would stay away from individual stocks until you begin to learn the game. Silver DJ advice of getting cheap indexes, dividend payers, and planning to hold long term is the ideal beginner (and possibly only) advice you need.

    Vanguard is very good generally; the main thing you want to look at for any company is expense ratio (aka management fee) on their index funds.
    That VHY looks like a pretty good one for the Aust market... fees a tad n the high end (I like 0.15% or less for indexes) but not unreasonable for an international. If you want US market, VOO (s&p 500 tracker, 500 biggest companies) and VTI (total nyse market) are good, popular, and very low cost with expense ratio of 0.04% each. SPY (0.09%) is another popular one for s&p 500, although not by Vanguard. VWO is Vanguard's popular emerging markets ETF (0.14%) and VEA is their developed markets (0.07%) one. I tend to prefer ETFs to mutual funds since mutual funds have more sneaky ways of hiding fees, but either can work.

    You can pretty much end the story right there is you want to... buy good index funds, add money periodically, reinvest dividends, and watch them grow. Done.

    If you enjoy the market and spend time learning about p/e, dividends, sectors, earnings announcements, etc... then you can take chances on individual stocks and be more aggressive. Stocks are nice in that they have zero ongoing fees (just any trading fee when you buy or sell). Your variability will go up due to more volatility, but so can your profits. Something is only "risky" if you don't understand it or don't have the money to potentially lose. It depends what you like, though.

    Driving 125mph (200km/h) is scary and dangerous as hell for most people, but for racing professionals, that's only the first warmup lap. The vast majority of people are best off staying in the shallow end of the swimming pool when it comes to stocks and markets. And frankly, with how cheap and easy indexing is now, you can get fine returns that way with very little time and moderate risk. There really is no reason for the middle or deeper end of the pool unless you really enjoy swimming as a hobby. Can you do better with more advanced stock picking and maybe covered calls or other options, even shorting? Sure, but it takes much more time to learn and adds much more risk. Unless you have experience, have money you are prepared to lose, and think stock-picking is a fun hobby... indexing is usually the way to go.

    If you do decide you enjoy it and want to start picking your own stocks/sectors, it is usually best to do that in your own country's market... and go slowly. Those companies are more familiar to you, easier to keep track of news on them, and usually lower trade fees. I own nothing but single stocks and a few small sectors in USA stocks... but conversely, I own nothing but almost total market indexes for my international stuff. I have the odd European or Canadian or etc single company stock, but those are usually large established companies that also do significant business in my own country. GL
     
    Last edited: Jan 7, 2019
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  12. trew

    trew Active Member Silver Stacker

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    Vanguard Australian index ETF: VAS

    (if you are looking to pretty much get a return equal to the stock market as a whole)
     
  13. sgbuyer

    sgbuyer Active Member

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    This is what everyone says but actually few stocks today can be held for long term if we define long term as more than 10 years. Warren Buffett has sold many stocks he bought just after a couple of years, e.g. psx, wfc, ibm, su, etc.

    No stock is safe, unlike silver where you can bury it and forget about it. 30 years later, it will still exist and still carry value. Accounting fraud, technological changes, too many things can happen to bring down a company.

    Agree with this, that's why FAANGS is out for now.

    Should have done that for my oil stock earlier on.
     

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