# Advice about getting advice



## d101 (16 September 2014)

I am a novice investor and am looking to put some money into share to hold for the medium to long term (5+ years).  I accumulate enough money (perhaps on a yearly basis) to invest.  I was wondering what would be the best way to obtain advice regarding which stock to buy?  I have looked at some reports but I don’t need advice on multiple stocks (as I just want to buy one stock on each occasion and hold onto it), and I only need the advice on a yearly basis (and so receiving advice for the other 11 months is redundant).  Any suggestions?


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## burglar (16 September 2014)

d101 said:


> ... Any suggestions?




"Buy and hold" doesn't work as well as it used to.

Best chance of survival is to take your pick from the ASX20
Australia's top 20 companies by market capitalisation.

Click here: asx20


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## Smurf1976 (16 September 2014)

The first and most obvious = spend as much time as you can reading stock and other investment threads on this forum! There's a lot of good knowledge here, and it's free.

So far as paying for advice is concerned, always exercise a degree of caution and in particular steer clear of anyone "spruiking" any particular investment. Also be aware that anyone who is paid by commission has a conflict of interest - what pays them the most commission might not be the best investment for you. If you're going to pay for advice, then pay the adviser directly for their advice or at least pick someone who isn't influenced by what you invest in. Eg a full service stockbroker (as distinct from an online broker, eg Commsec or Etrade, that does not provide advice just a means of buying and selling shares) earns money by you buying shares through them, but if they're earning the same $ regardless of what shares you buy then that's not really a conflict of interest beyond the point that they'll obviously encourage you to buy shares in something. In contrast, if the adivser is basically selling managed funds then no surprises that they'll recommend you invest in the funds they are selling - that's biased "advice" at best and not what you want.

And start small. The market WILL still be there tomorrow, next week and next year. There's no reason to rush in and invest every cent you have straight away. Start small, gain some experience, then invest more. Keep most of your money in the bank in the meantime and move it gradually into other investments.

As for what to invest in, well that's the hard part. But as a general rule, big, established companies in the top 20 (or at least the top 200) are far less likely to go broke than some unheard of mineral exploration company whose future depends absolutely on what they do or don't find in a hole in the ground. Sure, you could make a fortune with some tiny company that literally finds gold or oil, but they could also end up broke and the shares worthless. In contrast, companies like WOW (Woolworths), TLS (Telstra), BHP (BHP) or CTX (Caltex) just keep plodding along. They're not going to make you 100% in six months, but they're not likely to go out of business either. 

My personal opinion is start with the bigger companies and leave the rest until you've gained some more knowledge and experience.  They won't turn $5000 in to $5 million, but they won't likely turn it into $0 either.


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## Julia (16 September 2014)

d101 said:


> I have looked at some reports but I don’t need advice on multiple stocks (as I just want to buy one stock on each occasion and hold onto it), and I only need the advice on a yearly basis (and so receiving advice for the other 11 months is redundant).



So are you saying that if you buy your one stock in September, regardless of what the market is doing at that time, then totally ignore what opportunities might arise in the next eleven months, you will nonetheless again buy another stock in the following September?
If so, you could be buying at a market high, then watch your stock trend down, then up again, to for the second time buy at a market high.

What would be your plan if your stock bought in September a few months later receives an adverse forecast and drops 30%?  Are you still going to hold it?   How will you evaluate the likelihood of its recovery?
Wouldn't it make more sense to time your entry for a position where growth is more likely?



Smurf1976 said:


> If you're going to pay for advice, then pay the adviser directly for their advice or at least pick someone who isn't influenced by what you invest in. Eg a full service stockbroker



I don't think a full service broker is necessarily any guarantee of unbiased advice.  If they have a big client who wants to move a large amount of stock, they don't at all mind issuing a "research note" which goes to small retail investors advising them of the wonderful opportunity to be had in buying XYZ.

A long time ago when I first started I made the naive assumption that a full service broker would have my interests at heart and be expert in their advice.
At the end of 12 months with them, I'd paid a fortune in brokerage (average $150 per contract) and all but three out of twelve of their recommendations lost me money.

I'd suggest instead acquiring your own financial literacy so you can research stocks for yourself if you want to proceed on a fundamental basis, and/or get some understanding of technical/trend analysis to help you with entry and exit points.

Start with the Education section on the ASX website.


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## systematic (17 September 2014)

Perhaps I have read between the lines incorrectly, but I took the poster to mean that they will save up enough during 12 months to justify the purchase of one stock.  e.g. perhaps they are saving 5k a year or something and are wondering how to go about it. d101 - is that correct?

If that is correct, then I'd simply encourage you to consider saving those funds outside of purchasing individual stocks.  You should certainly take the time to read up on the basics of the sharemarket etc...but remember there are a world of funds and ETF's out there that you save up those sorts of funds.  Some of them will let you contribute small amounts during the year so you don't have to wait for your once a year purchase as well.

That's what I'd suggest you at least look into (to start).  But is that what you meant, d101?


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## d101 (17 September 2014)

Yeah, I meant that it takes us that much time to save up in order to make a purchase worthwhile.  Also I think that timing the market (as is indicated above) is very difficult, and being a novice I suspect that I would be inherently less skilled at it (than the majority of investors) and so would likely make a loss.  Much more comfortable in buying decent stocks and holding them (regardless of where they are trading at on a daily/monthly basis).


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## So_Cynical (17 September 2014)

d101 said:


> Much more* comfortable* in buying decent stocks and holding them (regardless of where they are trading at on a daily/monthly basis).




Comfortable is the key word here, a word that doesn't get anywhere near the attention it deserves, please consider that your comfort level may or may not suit buying "decent" stocks and holding them.


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