# First investments 20k



## Ken (22 August 2005)

hi,

I currently have around 20 k to invest in the stock market.  I am wondering whats the best way of going about it.  It seems a very positive time in the Australian stock market from what i have noticed over the past month i have been following it.

I am wondering whats my best option to invest in.  Is it best to split up my investment so that if one company falls the other can cover its loss.  It just seems safer.  rather than putting all eggs in 1 basket....  Also how long do you have to have your shares in a company to reap the rewards of a dividend..... Does it have to be a complete year.... or is there a cut off point. was thinking put it in for a few months get dividend then move to next....  (ideal situation if stock doesn't drop) better than interest at the bank...

Am pretty roar at this.  But i am currently 65th in the ASX.com.au share game so would like to get involved with it now.


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## pokerset (22 August 2005)

welcome Ken.
before you invest in anything i suggest you do a lot of reading up, learning and asking questions. your overall attitude and plan for investing will be more important than the stock you invest in. Nobody will pick a foolproof stock, or no 1 tip will make you a winner, rather a balanced investment system that will balance growth with security.


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## Ken (22 August 2005)

I know more research needed, but to me it seems a little bit of luck.. I have had no share experience before and am coming 65th out of 15,000 people in that game...there would be traders in there who probly have had years of experience that I am doing much better than.

But I guess its not really a game when it comes to your own cash....  when you see big dips obviously from big fish pulling all there stocks out... it does get you worried a tad.....

From my understanding its basically about picking shares you think other people are going to buy.... finding the reasons seems the hardest...


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## It's Snake Pliskin (22 August 2005)

Ken said:
			
		

> hi,
> 
> I currently have around 20 k to invest in the stock market.  I am wondering whats the best way of going about it.  It seems a very positive time in the Australian stock market from what i have noticed over the past month i have been following it.
> 
> ...




Hello Ken,

This is not advice, but look at the potential downside of the stocks you may be interested in. $20,000 invested today could be $15,000 in 2 months, even by choosing good quality stocks.

I've just offloaded most of my portfolio and plan to sit and watch for a while. "If in doubt, stand aside" to quote Alexander Elder, Trading for a Living.
I see reporting season as a great time to make money, but also a great time to lose it. 

Be careful with what you do, and get some research done, and educate yourself. It's dangerous to accept tips, reccommendations and to buy when most people have made money - unless some sort of supercycle is present.

Snake Pliskin


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## GreatPig (22 August 2005)

Ken said:
			
		

> Is it best to split up my investment so that if one company falls the other can cover its loss.



Yes, I think that is best. Personally I'd probably go for 3 or 4 stocks if I wanted to invest all of that amount.




> how long do you have to have your shares in a company to reap the rewards of a dividend



You just have to hold the stock on the ex-div date, so that you're recorded on the record date a few days later. I have seen one trading strategy that just trades dividends (ie. buys just before a dividend and then sells shortly after), but be aware that many stocks will drop around the ex-div date to compensate for the dividend payout, sometimes falling more in price than the amount of the dividend. A good example is GUD that went ex-div today. The dividend is 27 cents per share, while the price dropped 36 cents. PRY on the other hand went ex-div for a 13 cent dividend but the price only dropped one cent.

GP


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## Julia (22 August 2005)

Hello Ken

My suggestion would be to thoroughly familiarise yourself with the ASX website and all the educational links on it before you actually start investing real money.  When you do decide what companies you want, have a look at their 12 month charts and place a limit order for a price below the current highs and be prepared to wait for a downturn to that price.  I've made the mistake of getting enthusiastic about a stock and buying it without the historical picture, and regretted it, on the basis that had I waited until the market did a general drop off, or that particular stock slumped for some reason I could have bought in at a lower price.  Be patient for what you want.
Good luck.

Julia


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## pokerset (22 August 2005)

ken well done on your standings in the comp so far. while not trying to discount your success so far in the competition, it works with the law of averages, over time, and multiple trades - the more experienced trader will outperform. this is why it pays to constanty improve. The learning is a journey, and not about reaching an end.


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## tech/a (22 August 2005)

Ken.

On Dividend stripping see Rosella's trading method here on this forum--he also posts on Reefcap.
Best Ive seen on this way of trading.

Have you considered trading Margin?
I concur with GP.

I'd also set myself a portfolio stop.
IE if you lose 20% of starting capital--- then close ALL positions and revisit the way you trade.

I presume your a discretionary position trader.

*Remember.
Losers hang on to losing trades
Winners hang on to winning trades*


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