# How's this for a newbie investment plan?



## Bananaman1983 (17 September 2008)

Hi

Thanks for checking out my post. Over the last few months, I've started thinking about finance & investments etc, doing research here and there, and starting to think about how I can start investing to make my money grow.

A brief background on myself: I'm 24 (going on 25 shortly), earn 60k a year (before tax), and have very few fixed expenses (being rent, food, and internet. Work pays for my car). I have about $14k in savings, and am planning on putting $5k of this into a Vanguard index fund soonish.

I also recently learnt about margin lending, and am considering taking up a $20,000 loan to re-invest. I know to some people $20k isn't much, but for me it feels like a lot of money, and I'm comfortable with this amount becuase I'm sure I could pay it back in about 2 years (i.e. not long). I also have some savings similar to this amount, which can provide me with a buffer from the risk. 

Also, regarding investing the $20k if i was to arrange a margin loan... I'm not an experienced stock trader at all, so I am assuming my best bet here is to take the advice of stockbrokers? I'm also considering putting a few grand into some of the banks at the moment, due to their bargain value at present and should rebound in 12-24 months......? 

Anyway... that's probably not the world's most sophisticated "investment plan" but I'm only young and figure getting started now is probably a good idea. I'd love to hear any feedback, comments and ideas you may have, they'll all be taken seriously.

Cheers.


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## aleckara (17 September 2008)

Bananaman1983 said:


> Hi
> 
> Thanks for checking out my post. Over the last few months, I've started thinking about finance & investments etc, doing research here and there, and starting to think about how I can start investing to make my money grow.
> 
> ...




With the current state of the market, and your little experience in trading or investing I would not get a margin loan. You are setting yourself up for failure.

http://www.theaustralian.news.com.au/story/0,25197,24335194-5001942,00.html

An article today talking about how even the best of traders are having issues. I would not risk someone else's capital.


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## brty (17 September 2008)

One huge error in that article is expecting markets to return to normality. 

When were markets ever normal?? Who claims that they should be 'normal'??

By the way Bananaman, your plan sucks. If you haven't learnt enough to not follow brokers tips, your not ready to invest in anything. Taking a margin loan just means you will lose other peoples money.

Chuck your money in a savings account, keep adding to it, and read read read, this forum and a few good books that are mentioned in many threads.

brty


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## AlterEgo (17 September 2008)

The last thing a beginner needs is a margin loan. That would be a recipe for disaster. I’ve often read that most successful traders took 5-10 years to become consistently profitable. You shouldn’t be even thinking about margin loans until you get a few years of experience first, and are producing consistent profits with your own money. Only then should you consider using leverage.



Bananaman1983 said:


> I'm not an experienced stock trader at all, so I am assuming my best bet here is to take the advice of stockbrokers?




No. That’s a sure way to lose money. Just think about it – if a person was successful at trading, why would he waste his time working for a stockbroking firm instead of putting his money where his mouth is and trading his own account?

The best thing you could do, in my opinion, is to read as many books on trading as you can get hold of first, before you invest any money in the market.


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## prawn_86 (17 September 2008)

If you dont know what your doing then dont take on debt. 

Learn first, and budget at least 2 years (maybe more in these conditions) of not being profitable, which you can put down to experience...


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## Trembling Hand (17 September 2008)

Nah mate dive in its all good in here. Everyone wins..... especially newbies with borrowed money........


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## It's Snake Pliskin (17 September 2008)

Margin lending is a double edged sword. People get cut for sure. 

Think about it. People have the cost of the loan to start with and then if it goes down, which is very likely for a beginner, the hassle of paying it back.


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## Gunlom (17 September 2008)

Before jumping in the deep end , work out for yourself if you want to be a trader or a long term investor or somewhere in between...

only then can you really work out what is best for you... 

If you want to be a long term investor than a limited margin loan may suit you , depending on how how set it up, or if you are a new to it and want to trade, don't touch it till you have a lot more experience.

The worst mistake you can make is to just jump into any investment/trade because it seems like a good idea. Have a plan about what you do... Thats the most important part!!!


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## jersey10 (17 September 2008)

Bananaman1983 said:


> I'm also considering putting a few grand into some of the banks at the moment, due to their bargain value at present and should rebound in 12-24 months......?
> 
> Cheers.




What if the banks are worth half of what they are worth now in 12 - 24 months? What if the banks don't exist in 12 - 24 months?

If you want to become a trader join the chartist.  As a new trader you get a proven positive expectancy system that you can start trading as soon as you organise your trading account.


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## Spanning Tree (17 September 2008)

If the market continues to fall and you have a margin loan, you can get major losses.

I suggest you start up an account with, say, Commsec and buy a variety of shares. A mutual fund can be a good idea but remember you'll be paying fees to managers every single year. If you buy shares directly you pay brokerage fees once ($20) and then it costs you nothing to hold onto those shares.


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## Ageo (17 September 2008)

Growth funds are always good for long term, also you could look at the protective put strategy over shares.


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## cuttlefish (17 September 2008)

Bananaman1983 said:


> I'm also considering putting a few grand into some of the banks at the moment, due to their bargain value at present and should rebound in 12-24 months......?





Why are the banks 'bargain value'?    Is it because:

a) The property market is looking shaky and banks do well when people aren't buying houses and LVR's are being eroded?

b) The economy is looking shaky and banks do well when people lose jobs and can't afford to pay back their loans?

c) There is a global credit criss and banks do well when they can't access cheap funds?

d) The price of bank shares have fallen and they are now trading on low historical PE's so they must be 'bargain value'


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## finnsk (17 September 2008)

I opened a CFD account 2 years ago, boy that has been expensive especially in the beginning, back then the share market was going op, now it is all over the place
I am not losing money at the moment, but I am learning so when the market gets more consistent or trending hopefully I will be in a better position that I was 2 years ago, but I do not expect any big improvement for the next 2 - 4 years but that is ok with me I am here to learn


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## jonnycage (17 September 2008)

at the end of the day up to you what you wish to do mate,
sure its not pretty at the moment, but there is some opportunity about.

cheers

jonny


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## N1Spec (17 September 2008)

CFD is a definite NO NO, dont even go there unless your a seasoned pro.

Your plan may work bannaman only if you dont excessively gear your margin account but you will also have to keep paying down the margin loan by topping it up every month. Keep your margin to say something managable like 25-30%... this should give you plenty of buffer. Topup the account with $1000 a month to pay it down and also reduce your margin, over time your equity will grow and as the market recovers your available funds will also grow.

please DYOR, im not a financial planner.

Cheers


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## prawn_86 (17 September 2008)

N1Spec said:


> CFD is a definite NO NO, dont even go there unless your a seasoned pro.




Whats the difference between CFDs and margin lending? Its all gearing.

If you have safe risk management then it seems the same to me...


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## foofighta (17 September 2008)

Bananaman1983 said:


> Hi
> 
> Thanks for checking out my post. Over the last few months, I've started thinking about finance & investments etc, doing research here and there, and starting to think about how I can start investing to make my money grow.
> 
> ...




Bananaman, 

I am in a very simlar position to yourself. After spending many hours reading posts here in ASF I came to the conclusion that trying to go it alone with a rough plan that will probably lose all my hard earned money is not a good way to start out. Two of the most important things I learned here was to always protect your captial, and only invest what you can afford to lose. As for the margin loan, forget it until you are more experinced, even then I would suggest you think about it long and hard.

I suggest that you take a look at the Chartist run by Nick Radge, it costs around $70 a month to subscribe, which by the way is very cheap! He advice is priceless! You will be much better off starting out like this rather than throwing your money into the market blindly.

Good luck


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## Sir Osisofliver (17 September 2008)

Bananaman,

Ready? Here goes.:bananasmi

I'm not allowed to give you advice on these boards, please don't take what I say as advice, I will not held responsible..yadda yadda yadda...

Now that is out of the way...

1) With no plan....you plan to fail. - Speak to as many people as possible - but be aware of what their background is - that goes for these boards as well. Would you _really_ listen to what some guy down the pub says you should do?  Do your homework and decide yourself and formulate a plan after investigating well. Part of this is also KNOWING how much you have to invest...so learn to budget and find out exactly what your disposable income is and make a provision for investment in your budget.

2) Are you trading....or investing? They are very different animals. If you are trading.....I would add my voice to the others I see here and say that you are not experienced enough...Sorry. Trading is an art form and just like any artform takes time and effort to become good at. Enjoy the Journey however. Investing however is something that the earlier you start the better off you are...because of the compounding effects of your passive investments over time. But investing basically means picking some good quality stocks, keeping an eye on the news occasionally and maybe checking things over every six months or so, rather than being glued to your etrade screen feeling your blood pressure rise because a stock isn't doing what you expected in the next six hours.

3) Margin Lending... Would be applicable if you are investing...but probably not if you are trading. Just remember the following lesson...you can be OVER LEVERAGED. Play it safe for the next 12 months and only borrow a third to a half of what you are capable of. Here I will whisper in your ear something very important for you to consider...Structure. You can save yourself literally tens of thousands of dollars over time if your investments are in the correct entity...get professional advice for this. I would suggest you look carefully into the area of trust structures.

4) Full service brokers - Having been a full service broker I have this to say...Brokers want to deal with ten clients with 5 million each. Not 1000 clients with 50 K each. If you have 50k to spend....you'll end end up with some guy who's ink is barely dry on their Commerce degree, who hasn't seen a corrective market since he got out of Uni and probably does not really know how to handle the market we have right now....so he'll follow the company line, which means following what the analyst says...lets hope his commerce degree is dry eh? . You want some old fart who's been around since '87 to watch over your portfolio...but you won't be interesting to him until you have a couple of mill floating around.

5) Index fund you say? hmmm....you can replicate any index you choose with an investment in direct equity with very little effort....why are you paying some index tracker a management fee for what you can do yourself for a cheaper rate?

Good Luck

Sir O


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## pepperoni (17 September 2008)

Sit it out until we are at least 15% up from here ... there should still be money to be made and the risks will be a fraction of what they are now. 

Nice and simple rule and a good way to start ... trade the momentum instead of knife catching or bottom picking.


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## Bananaman1983 (18 September 2008)

Hey

Thanks to everyone for their input. I'm a little surprised that the majority of replies are against it... but there you go, good thing I asked  =)

That said, I'm not ruling this out 100% yet. I think Sir Osisofliver & N1Spec might be a little more in tune with what i'm trying to start up.... i.e. a long term investment plan, rather than trading. You're right, I have no idea on how to trade, and me trying to pick stocks in this current climate would be financial suicide. 

What I _was_ trying to set up, was an investment that would take me approx 2 years to pay off, I would expect to dip & lower before it starts to rise again (due to volatility) and would borrow $20k on $15k of savings... this would provide me a lot of margin? 

So a couple of questions.... 

1) Is margin lending a bad idea for me because I'm an inexperienced trader & stockbrokers can't be trusted, or because the market is just too risky at the moment, or other reasons?

2) someone asked my why I thought banks presented great value at the moment. The answer is d) because their share prices are on a low. Is that not when you're supposed to buy shares? Especially given that the banks are still running profitable businesses with cash flow coming in etc. 

3) I thought the role of stockbrokers was to provide advice. Obviously you could get full service brokers to manage a portfolio for you, but I wouldn't bother with that, would just want a hand with some long term stock picks. The consensus here was asking stockbrokers for advice is a bad idea. Why is this the case?

4) Given that a few people think my idea sucks.... what WOULD you suggest then?

Thanks for all the feedback, keep it comin.

Cheers.


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## kam75 (18 September 2008)

Bananaman1983 said:


> Hey
> 
> Thanks to everyone for their input. I'm a little surprised that the majority of replies are against it... but there you go, good thing I asked  =)
> 
> ...





I would recommend not venturing into any form of leveraged instruments or taking out margin loans until you can consistently be profitable in your trading.  Taking advice from anyone especially stockbrokers is the worst thing you can do.  Best to learn the game and make your own decisions.  Read a few books on trading!

regards
Kam75

http://www.sharesmadeeasy.com


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## Trembling Hand (18 September 2008)

Bananaman1983 said:


> 4) Given that a few people think my idea sucks.... what WOULD you suggest then?




Learn what the hell you are doing rather than hoping that it will be alright.


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## Ageo (18 September 2008)

The best way to learn would be to understand what strategy you want to use (unleveraged would be the best IMO) then start small and even if you lose at least your understanding how things are. Paper trading is good up until a certain point.


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## Temjin (18 September 2008)

Bananaman1983 said:


> Hey
> 
> Thanks to everyone for their input. I'm a little surprised that the majority of replies are against it... but there you go, good thing I asked =)
> 
> That said, I'm not ruling this out 100% yet. I think Sir Osisofliver & N1Spec might be a little more in tune with what i'm trying to start up.... i.e. a long term investment plan, rather than trading. You're right, I have no idea on how to trade, and me trying to pick stocks in this current climate would be financial suicide.




That's fine as you are planning for the long term. Trading is definitely not for you at this moment. Like others have said, invest the time to learn the market before using real money. 


What I _was_ trying to set up, was an investment that would take me approx 2 years to pay off, I would expect to dip & lower before it starts to rise again (due to volatility) and would borrow $20k on $15k of savings... this would provide me a lot of margin? 

So a couple of questions.... 


> 1) Is margin lending a bad idea for me because I'm an inexperienced trader & stockbrokers can't be trusted, or because the market is just too risky at the moment, or other reasons?




You are pretty much spot on.  Bad idea because you aren't experienced yet. And yes, the market is extremely risky right now with massive price swings. Volatility is the worst enemy of margin lending. 



> 2) someone asked my why I thought banks presented great value at the moment. The answer is d) because their share prices are on a low. Is that not when you're supposed to buy shares? Especially given that the banks are still running profitable businesses with cash flow coming in etc.




You should spend more time doing a bit more research before coming in that conclusion. What you just said are basic cheerleader lines from alot of "investment experts" who have a vested interest in selling financial products. Of course, they could be right, but it's a lot more complex than that. 



> 3) I thought the role of stockbrokers was to provide advice. Obviously you could get full service brokers to manage a portfolio for you, but I wouldn't bother with that, would just want a hand with some long term stock picks. The consensus here was asking stockbrokers for advice is a bad idea. Why is this the case?




I don't have any real experiences with stockbrokers, but my understanding is that they are more "salesman" than the financial planners in the bank. You should look for quality advices from unbiased, fee for service only and with unlimited product offering financial planners. 



> 4) Given that a few people think my idea sucks.... what WOULD you suggest then?




There is no rule that requires a person to have his money invested in the share market at all time. Preservation of wealth is sometime an excellent strategy in times like this. 

Again, we are experience an event that may not happen again in our lifetime. READ AS MUCH AS YOU CAN because it's a learning experiences that you may not get again. 

Paper invest first to see how you go. 

Because you have such a small amount to invest, it is not economic viable for you to see a financial planner.


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## beamstas (18 September 2008)

*"2) someone asked my why I thought banks presented great value at the moment. The answer is d) because their share prices are on a low. Is that not when you're supposed to buy shares? Especially given that the banks are still running profitable businesses with cash flow coming in etc. "*

Buying Low =/= Profit

Normally when the share price is low there is a good reason why it is low.

Don't try and concentrate on always buying at the lowest price...


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## SM Junkie (18 September 2008)

'Bananaman1983 - congratulations for even looking at investing your money at your age, you are certainly on the right road.

I think when we start out we do get very eager to jump right in, but this is certainly not the time to do that.  I think you have been given some very good advice that you do need to take on board. Although you say you are not 100% sure you will be ruling out your plan yet, I believe the members that have responded are trying to save you a lot of pain and money. 

I'm a long term investor like yourself and I'm not buying at the moment.  I'm just saving my money, reviewing my watchlist, researching companies that were previously over priced and waiting my time.  

Please just don't buy into a company (like the banks you mentioned) just because you think they are a good price, you really need to know why you are buying a particular stock.  I've taken one hell of a kicking over the last few months, but I remain quietly confident because I believe I still have very good stock that will weather the storm in the long run.  Plus it is my money in the game, I might be thinking differently if I was leveraged.

But good luck and I do hope you take your time before getting your feet wet.


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## Sir Osisofliver (18 September 2008)

Bananaman1983 said:


> That said, I'm not ruling this out 100% yet. I think Sir Osisofliver & N1Spec might be a little more in tune with what i'm trying to start up.... i.e. a long term investment plan, rather than trading. You're right, I have no idea on how to trade, and me trying to pick stocks in this current climate would be financial suicide.
> 
> 
> 1) Is margin lending a bad idea for me because I'm an inexperienced trader & stockbrokers can't be trusted, or because the market is just too risky at the moment, or other reasons?




Banana - As I said before, you need to be highly aware that it is possible to be OVER LEVERAGED  - and be fully aware of the consequences if you are overleveraged. Suffice to say...it's not pretty. Being an *ex* Full Service Broker - you're not large enough a client to command the attention of a mover and shaker in the industry...if you start tire-kicking to try a broker on for size...at present if I was still in that industry I'd tell you to sod off and quit wasting my time. 



> 2) someone asked my why I thought banks presented great value at the moment. The answer is d) because their share prices are on a low. Is that not when you're supposed to buy shares? Especially given that the banks are still running profitable businesses with cash flow coming in etc.




As someone else mentioned it is a little more complex than that. Given that this is a financial crisis, with plenty of external influence driving our market trends within that sector, many have chosen to take a wait and see approach rather than trying to catch a falling sword. In my *opinion* there is still further falls to occur in the market *in general *but several sectors of the market and certain stocks within those sectors are at or close to their bottoms - ideal for a long term buy and hold strategy incorporating a _*small*_ amount of leverage. I'm currently buying under that basis for a fully invested series of portfolios and have at present bought 10% of my long-term portfolio. (We advised our clients to exit the market starting in mid November) ::: Some of them exited then and by mid January the rest decided we were telling the truth.



> 3) I thought the role of stockbrokers was to provide advice. Obviously you could get full service brokers to manage a portfolio for you, but I wouldn't bother with that, would just want a hand with some long term stock picks. The consensus here was asking stockbrokers for advice is a bad idea. Why is this the case?




Because just like in any industry, their are good one's and bad one's....do _*you*_ know how to tell the difference?



> 4) Given that a few people think my idea sucks.... what WOULD you suggest then?




I don't think it sucks at all...I just think you need to be fully aware of what it is you are suggesting. This is not an area where a lack of knowledge does you any favours. So research well, construct a plan, make allowances for adverse events and good luck.

Sir O


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## cuttlefish (18 September 2008)

Bananaman1983 said:


> 2) someone asked my why I thought banks presented great value at the moment. The answer is d) because their share prices are on a low. Is that not when you're supposed to buy shares? Especially given that the banks are still running profitable businesses with cash flow coming in etc.




There is price and there is value.   Do you think it is more likely that bank profits will rise or fall over the next two years? Do you think the risks for banks in areas such as loan default rates, property LVR's, and sourcing funds to maintain capital adequacy requirements are higher or lower than they were two years ago?   Have the prices fallen enough to justify the current outlook?    My view is that a good time to enter bank stocks is when they have low PE ratio's, reducing risk environment and improving profit outlook.  I only see the first of those three criteria being satisfied at the moment.  But thats just one opinion.


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## jersey10 (18 September 2008)

cuttlefish said:


> There is price and there is value.   Do you think it is more likely that bank profits will rise or fall over the next two years? Do you think the risks for banks in areas such as loan default rates, property LVR's, and sourcing funds to maintain capital adequacy requirements are higher or lower than they were two years ago?   Have the prices fallen enough to justify the current outlook?    My view is that a good time to enter bank stocks is when they have low PE ratio's, reducing risk environment and improving profit outlook.  I only see the first of those three criteria being satisfied at the moment.  But thats just one opinion.




I remember someone's signature line on this forum said something along the lines of: the market can stay irrational for a lot longer than you can remain solvent


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## deadset (18 September 2008)

I think the general plan is sound in normal circumstances, except its definitely a risky time right now.

Advisor's, when it comes to stocks, you have to "treat all advice as a poisoned chalis".  (quote from Marcus Padley).  It sounds mean, but just have a look at some of the free advice out there and watch what happens.

I remember Rivkin commenting once, "if I can find an advisor that is consistently wrong, then he is useful to me".

Basically, you have to form your own ideas on what may happen from multiple sources and assume a few of them will be wrong as well.  Keep learning to understand how it works in your own mind.  I think most people realise soon how the markets work, its basic business inputs and outputs at the end of the day.  That's why most people eschew advice and simply learn to monitor the relevant data and indices that affects that stock.  On the simpliest level, for instance the oil price will affect oil stocks etc.  So you have to learn to interpret the relevant data yourself.  But there's no guarantee's so sometimes the market does things which seem inconsistent with the rest of the data.

Most of the free buy advice is given 2 weeks after the event, when its already risen alot.

In advisers defence, *its hard to put timelines on advice*, the advice may be valid only for that moment, then the next day it may be totally inappropriate, so its almost impossible to give advice unless you do it continuously to someone.  If the price goes up too high, you have to know that yourself, because then it will go down quickly after when people start selling to take momentary profits, so its all in the timing.  The advisor may not be able to tell everyone, sell right now at such and such a price.  So as soon as you advise someone, you basically have to then babysit them to tell them when to sell and buy it back again for instance.  You basically have to learn this for yourself.

In any case, there is plenty of good sound advice out there, even if it simply expands your knowledge on how it all works, its worthwhile to hear even if you don't act on it.


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## baer (18 September 2008)

I like your plan and I think the banks are a good medium term investment now. I wouldn't borrow to invest though.


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## cuttlefish (19 September 2008)

jersey10 said:


> I remember someone's signature line on this forum said something along the lines of: the market can stay irrational for a lot longer than you can remain solvent




Which is particularly true if the US govt is funding the irrationality.  (not quite sure why this comment was directed in response to my post though).


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## boags (18 December 2008)

You *do* have enough money to see a Financial Planner. They will take into account your full situation.  eg- if you want to use your $14k to buy a house in the next 3 years you shouldn't go near the sharemarket.  A First home owners savings account might even be useful (guaranteed 17% return as a co-contribution from the government). If you wanted to buy your first house in 5 years.
If you were to go into the market take advantage of dollar cost averaging by adding to your investment with your surplus income in something simple and low cost like an index fund or managed fund.  An internally geared managed fund would leverage your exposure to the share market without needing to take out a margin loan.


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## beerwm (18 December 2008)

Hi Bananaman

Im just a newbie like yourself, so this is the only advice i will give you.

Listen to what people on this forum say about this topic. Don't ignore it and put all your money in. They are only here to help.

Regardless of what u read, you still may think you can play the market and probably will dive in with some money.

My advice, start very small. Its a lesson many ppl learn by jumping in that the sharemarket can be cruel, so if you do jump short.

the way to go about it *properly*;although it can feel boring;

read, research, papertrade.

what ever you do good luck

NOTE:  just advice from a newbie


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## kam75 (18 December 2008)

Bananaman1983 said:


> Hi
> 
> ... I'm not an experienced stock trader at all, so I am assuming my best bet here is to take the advice of stockbrokers?




Be very, very careful who's advice you take.  I have family members who lost close to a million bucks dollars over the past 9 months by taking advice from brokers.  You do not need to be an experienced stock trader to make money.  That's a myth.  A myth propagated by spruikers and seminar sellers claiming you need knowledge to make money.  All bull****.  To trade well, read a few books and write up a set of rules you can follow.  Then the money will follow.


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## Julia (18 December 2008)

boags said:


> You *do* have enough money to see a Financial Planner. They will take into account your full situation.  eg- if you want to use your $14k to buy a house in the next 3 years you shouldn't go near the sharemarket.  A First home owners savings account might even be useful (guaranteed 17% return as a co-contribution from the government). If you wanted to buy your first house in 5 years.
> If you were to go into the market take advantage of dollar cost averaging by adding to your investment with your surplus income in something simple and low cost like an index fund or managed fund.  An internally geared managed fund would leverage your exposure to the share market without needing to take out a margin loan.



I'd prefer to see any newbie doing their own research rather than depending on the dubious advice of many financial planners who are more concerned with providing their own income streams from trail commissions.
The current huge debacle surrounding Storm Financial (who were apparently charging up to 7% of the gross invested just in consultation fees) is a case in point.
There's plenty of info available on the web.


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## gav (19 December 2008)

Julia said:


> I'd prefer to see any newbie doing their own research rather than depending on the dubious advice of many financial planners who are more concerned with providing their own income streams from trail commissions.
> The current huge debacle surrounding Storm Financial (who were apparently charging up to 7% of the gross invested just in consultation fees) is a case in point.
> There's plenty of info available on the web.




A bit harsh to put all FP's in that category Julia. Just like any job that provides a service, there will be good and bad...


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## tech/a (19 December 2008)

> To trade well, read a few books and write up a set of rules you can follow. Then the money will follow.





Yes evidently brain surgery and flying a jumbo are similar.


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## nulla nulla (19 December 2008)

Sir Osisofliver said:


> Bananaman,
> 
> Ready? Here goes.:bananasmi
> 
> ...





Like it or lump it - this is the best response I have seen to your enquiry. 

As a newbie on $60kpa with spare cash you should be looking to invest between $5-$7k pa for 3-4 years in blue chips that have already weathered the recapitilising/restructuring/reinforcing of their balance sheet to reduce debt/leverage. 
Look for 8%+ yield with good franking levels. Then sit on your investment while you learn, learn, learn. All the time keep rolling your dividends back into like shares. In 3-4 years you will have a solid capital base, knowledge and be better placed to consider the merits of using a margin loan for a more aggressive investment plan. By this time the market will have worked out whether it is going to recover, go sideways or find new bottoms.

Learn, Plan & constantly review. Good luck


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## kam75 (19 December 2008)

tech/a said:


> Yes evidently brain surgery and flying a jumbo are similar.




Actually they aren't.  You don't need high IQ to be a jumbo pilot - Companies like Lufthansa won't hire you if you're too clever.  As for brain surgeons, I don't know but I'd bet they'd make the worst of traders by over-complicating the game.  Anyway, best of luck.


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## Julia (19 December 2008)

gav said:


> A bit harsh to put all FP's in that category Julia. Just like any job that provides a service, there will be good and bad...



You don't seem to have read my post properly.
I said *many* financial planners.  Not *all*.
I have not heard even one of them, or any of the plethora of commentators in the media advise anything other than to "hold on, it will all be fine".
No proviso to people close to retirement, say a year or so ago, that they should consider protecting their capital.

In another thread I have said that some years ago I received advice from a FP which altered my direction and I will be forever grateful.

We have a few on this forum who clearly know what they're talking about.

Bet the people who paid megabucks to Storm Financial aren't exactly feeling too happy about the service they received!


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## johenmo (19 December 2008)

Hi bananaman.  I'm a newbie and now is not the time to rush.  There is so much uncertainty out there.

Take CBA - blue chip, ASX20, etc etc.  And they have just come out with some "immaterial" bad debt.  And others are slowly revealing debt which is crippling/killing them.

I started with an "investing" mindset - got it 50% right and 50% wrong.  With everything as it is at the moment, I now think there's plenty of time (at least months) to watch and learn.  

Certainly, if you don't have a plan with a sound exit strategy (the exit strategy was what I lacked!  And to me, this is the most important thing) then you are not minimising risk.

Good luck.


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## sails (19 December 2008)

kam75 said:


> Actually they aren't.  You don't need high IQ to be a jumbo pilot - Companies like Lufthansa won't hire you if you're too clever.  As for brain surgeons, I don't know but I'd bet they'd make the worst of traders by over-complicating the game.  Anyway, best of luck.





I'd be surprised if Tech was talking about high IQ - I think it's more to do with time in training, disciplines, etc.  Of course they don't want pilots who will try to outsmart their training.  They need people who will stick to the systems they are taught.

LOL -my better half has been a pilot for most of his life and is now training airline pilots. It's not an easy thing to learn. Takes heaps of dedication and practice.  I'm sure it takes a bit more than reading a few books to become a brain surgeon - just becoming a doctor takes a fair bit of effort and dedication.


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## GumbyLearner (19 December 2008)

sails said:


> I'd be surprised if Tech was talking about high IQ - I think it's more to do with time in training, disciplines, etc.  Of course they don't want pilots who will try to outsmart their training.  They need people who will stick to the systems they are taught.




The good financial planners will come into their own when the recession is over next decade. All this talk of training is pretty useless in the current environment IMHO! It doesnt matter what discipline you are versed in, if your working exposure has been to make money in an almost unbroken (not including dot com) 17 year bull market for equities. The last person I want to talk to ATM is a superfund manager trying to tell me what to invest in at the moment. I'll stick to the cycles not fee-paying advisers!


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## sails (19 December 2008)

GumbyLearner said:


> The good financial planners will come into their own when the recession is over next decade. All this talk of training is pretty useless in the current environment IMHO! It doesnt matter what discipline you are versed in, if your working exposure has been to make money in an almost unbroken (not including dot com) 17 year bull market for equities. The last person I want to talk to ATM is a superfund manager trying to tell me what to invest in at the moment. I'll stick to the cycles not fee-paying advisers!





Sorry if I got the context wrong here - I thought we were discussing what it takes to become a successful trader or investor, not a financial planner


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## gav (20 December 2008)

Julia said:


> You don't seem to have read my post properly.
> I said *many* financial planners.  Not *all*.
> I have not heard even one of them, or any of the plethora of commentators in the media advise anything other than to "hold on, it will all be fine".
> No proviso to people close to retirement, say a year or so ago, that they should consider protecting their capital.
> ...




Sorry Julia, I misread your post and I apologise.

I recently seen a very successful Financial Planner (who is a close relative).   The advice I have been given so far has been great.  I thought the upfront fees were a bit much at first, but the ongoing fees are quite low compared to others I have researched and read about on this forum.  She was quite impressed with how organised I was, the information I gave her about my current financial situation, questions I asked, and the research I had done.  I thought anyone who was planning their financial future would be the same? (apparently not)  Although, I doubt I would see a Planner at all if I didnt know the person.  

I dont understand why people would be with places like Storm, especially with fees at 7%!  In a way I see it as partly being their own fault for not doing any research, but I do feel sorry for people who have lost their life savings through them.

Bananaman, I am the same age as you and very new to investing also.  I would recommend that you read, read, read!  I have learnt alot this year, and the more I learn, the more I realise I dont know!  Learn as much as you can before putting your hard earned money into anything.  

Some ppl may disagree, but dont take any advice from someone about your life savings unless you can trust that person with your life!


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## dutchie (20 December 2008)

Bananaman


"Bananaman, I am the same age as you and very new to investing also. I would recommend that you read, read, read! I have learnt alot this year, and *the more I learn, the more I realise I dont know!* Learn as much as you can before putting your hard earned money into anything."

This is the best advise you will get!

Don't rush in.

Cheers

Dutchie


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