# Awaiting a global downturn...??



## Tomboy77 (25 August 2019)

Hi all,

There has been plenty of news lately of a looming global downturn, with Trump and China's trade war, Australia's reliance on China as our major trading partner, and Australia's long overdue 'pendulum swing' into a what could be another 'recession we had to have'.

So, as a new investor with very little money currently 'in the market' this has got me thinking. Should I jump in now with my investments, or wait for the possible downturn to occur, and then try to buy in at a discount? (Buy low, sell high)

*MY POSITION:*
I have a bit less than 10,000AUD available to me that I will be investing, I am 41 years old, and want to see what I can do over the next 20 years. I have about 270,000 equity in my home, and no other debt besides a 150k mortgage. I have 2x kids (8 and 11), a cat, a dog and a wife. (classic, standard dad ) I am the sole breadwinner for the family. I work in retail FT, low income (47k p/a). My wife is a stay at home mum.

*INVESTMENT APPROACH:*
Given my position as above, (I know its pretty low powered...) I am looking at getting into ETF's as a starting point. I figure if I can plug away at investing in ETF's and slowly learn about the market more in depth I will be able to perhaps take bigger positions in individual stocks as time progresses.

Meanwhile I will have the ETF's bubbling away in the background as my main 'base' to my portfolio. I figure i will be able to invest between 5-10k per year on average, by living on about 40k p/a ....

So my main point of this post is, do you guys with more experience think it is better to just jump straight in now, or wait it out, and try to buy into ETF's when the market is lower? I am looking into 'Betashares' products, like their A200, etc.

Thanks for your time.

Any input much appreciated.


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## galumay (25 August 2019)

Welcome to the forum, always good to see new members popping up! For what its worth here is my personal view.

There has been plenty of news for the last 20 years of a looming downturn, you would have suffered massive opportunity cost if you had listened to the economic 'forecasters'. Invest now, invest in equities if your view is truly longterm, eg you are happy to stay invested regardless of drawdowns for 20 years +.

I have never listened to any macro economics, finance news, forecasts or predictions of market direction etc. They are all just distractions to the business of investing IMO.


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## qldfrog (25 August 2019)

Not that i im a fan of super but for a reasonably small amount, are you not better off putting an extra 10k a year in super, get the tax advantage and leave your super in a balanced portfolio with someone else stressing when to get in or out
Obviously a good super fund ideally not a union or bank one
Sunsuper or similar
Not an advice as i know nothing


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## Klogg (25 August 2019)

galumay said:


> Welcome to the forum, always good to see new members popping up! For what its worth here is my personal view.
> 
> There has been plenty of news for the last 20 years of a looming downturn, you would have suffered massive opportunity cost if you had listened to the economic 'forecasters'. Invest now, invest in equities if your view is truly longterm, eg you are happy to stay invested regardless of drawdowns for 20 years +.
> 
> I have never listened to any macro economics, finance news, forecasts or predictions of market direction etc. They are all just distractions to the business of investing IMO.



This. Much more money is lost waiting for the downturn, then in the downturn itself 

That doesn't mean it's worth buying everything. But macro timing is basically a dead end


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## PZ99 (25 August 2019)

Tomboy77 said:


> Hi all,
> 
> There has been plenty of news lately of a looming global downturn, with Trump and China's trade war, Australia's reliance on China as our major trading partner, and Australia's long overdue 'pendulum swing' into a what could be another 'recession we had to have'.
> 
> ...




My view is to wait it out. There will be a better time. Retail in general feels the pinch when there's a downturn. You might need that $10k as backup. Then do the ETF's when the market is lower.

Having cash doesn't make money - but it's better than loosing money


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## Tomboy77 (25 August 2019)

qldfrog said:


> Not that i im a fan of super but for a reasonably small amount, are you not better off putting an extra 10k a year in super, get the tax advantage and leave your super in a balanced portfolio with someone else stressing when to get in or out
> Obviously a good super fund ideally not a union or bank one
> Sunsuper or similar
> Not an advice as i know nothing




Hi qldfrog, thanks for the input. I have thought about super also. I am with REST, so a decent industry super fund, and have it as balanced at the moment.

So instead of investing regularly in ETF's, you're saying I could just set up a regular additional repayment into super before tax. That would reduce my taxable income each year right? Is that what you mean by a tax benefit? And that I am getting pre-tax dollars into the market before tax is applied.....I guess that does make a lot of sense, rather than using after tax income to buy ETF's.

*I still have some questions about ETF's vs boosting Superannuation:*

1. Are the investments made through super (in my case a REST balanced portfolio) as effective as an index tracking ETF though? Are the gains likely to be similar?

2. Wouldn't there be a difference in the dividends aspect of ETF's as opposed to just boosting super? Do dividends happen automatically through super also, and get reinvested in the background without me noticing? Or are there no dividends included in super?

I guess what mainly makes me more interested in ETF's is that it is slightly more active than boosting more into super, (which is absolutely 100% passive once it is set up). I want to try and learn about the market, and feel EFT's will give me more reason to be actively involved.

I also like the flexibility of being able to access the money before i turn 65 if i decide to.

Thanks again


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## willoneau (25 August 2019)

Hi Tomboy77, VSC are taken out of your pay and taxed at 15%, so if your income tax rate is say 30% you make 15% without doing anything but as you say unable to get to until at least 60, why not do both?
Better still increase mortgage payments while rates low and learn about trading/investing, if have a re-draw facility on mortgage can use a much larger amount once you know what you want.


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## So_Cynical (25 August 2019)

Tomboy77 said:


> I will have the ETF's bubbling away in the background as my main 'base' to my portfolio. ....




Welcome to ASF Tom - 10K in an ETF will bubble away at an incredibly slow rate, watching a car rust would be more exciting, as for timing - yep it's all very
strange now, uncharted waters in many ways, i'm starting to come around to thinking that there many not be a cliff to fall off with interest rates so low globally,
maybe we/the world can just stumble along for the next half decade or so.


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## willoneau (25 August 2019)

Learn as much as you can about the risks involved before putting your hard earned capital in the markets. Also any dividends you get from ETF's is added to your taxable income.


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## HelloU (25 August 2019)

random thoughts after reading ......in addition to that already said earlier (not going over any of them) .....

your wife presents opportunities for both super and investments.
the mortgage should also be considered.
i rarely see a Balanced outperform a Growth except for quite short time periods (relatively speaking).
if putting pre-tax money into super (concessional), and salary sacrifice is not a thing your boss does, then u can do this via lump sums out of your pocket (at least 1 month prior to fiscal year ending), and then fill out a REST form to tell them to treat the money as pre-tax ( and you get a tax deduction for it at tax return time).
comsec started some cheap fee etf product recently via an app using regular payments or something ...... ??
etf's generally use a trust structure so your tax return gets very slightly more complicated (if u do it yourself)


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## Tomboy77 (25 August 2019)

willoneau said:


> Hi Tomboy77, VSC are taken out of your pay and taxed at 15%, so if your income tax rate is say 30% you make 15% without doing anything but as you say unable to get to until at least 60, why not do both?
> Better still increase mortgage payments while rates low and learn about trading/investing, if have a re-draw facility on mortgage can use a much larger amount once you know what you want.




Thanks willoneau, the tax rate of 15% instead of 30% truly is enticing!!! That is essentially 15% profit before the investments within my REST account even do anything on the market!!! I mean, super is totally boring, but might still be a good way to go in many respects.

I am currently putting extra $ into mortgage redraw while I try to learn, so already got that part of things covered . I guess I just need to try and keep learning as i have only just started in the last month really.

Thanks again for your response


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## HelloU (25 August 2019)

message sent


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## willoneau (25 August 2019)

Tomboy77 said:


> Thanks willoneau, the tax rate of 15% instead of 30% truly is enticing!!! That is essentially 15% profit before the investments within my REST account even do anything on the market!!! I mean, super is totally boring, but might still be a good way to go in many respects.
> 
> I am currently putting extra $ into mortgage redraw while I try to learn, so already got that part of things covered . I guess I just need to try and keep learning as i have only just started in the last month really.
> 
> Thanks again for your response



That sounds like your on the right track, one quick questions if you don't mind. What is your goal or what are you trying to achieve?


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## willoneau (25 August 2019)

HelloU said:


> tom, do u understand franking (come tax time)?



I wish my daughter did , she did her own tax before telling me and didn't get any


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## Tomboy77 (25 August 2019)

Thanks guys,

I have looked into salary sacrifice through my employer already and it is definitely something that they can arrange easily, so no worries there. Because I am a low income earner though, I would say that any dividends earned from ETF's etc. would not make a big difference to my income p/a because I am starting from such a low point to begin with.

Cheers


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## willoneau (25 August 2019)

Tomboy77 said:


> Thanks guys,
> 
> I have looked into salary sacrifice through my employer already and it is definitely something that they can arrange easily, so no worries there. Because I am a low income earner though, I would say that any dividends earned from ETF's etc. would not make a big difference to my income p/a because I am starting from such a low point to begin with.
> 
> Cheers



If I'm right the funds like some stocks pay 30% tax on dividends, if your tax rate below 30% you get back the difference.
If above you pay the difference.


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## Tomboy77 (25 August 2019)

Hi willoneau,

No i don't understand franking come tax time (or any other time for that matter ). That's one thing I am yet to wrap my head around.

My overall goal is really to feel more like i am somewhat in control of my destiny, and that I am not just working the daily grind for no reason other than to pay my bills. As a low income earner who has never made more than 70k p/a, I am just trying my best to make small gains where I can.

So my goal is to learn as much as I can about investing, and hopefully to build a small passive income stream over time so that I can pull back on how much I need to work after another 10-20years in the full time grind!


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## HelloU (25 August 2019)

willoneau said:


> I wish my daughter did , she did her own tax before telling me and didn't get any



aside: an amendment is just a button press inside mygov, but if she did her own it would probably have been pre-filled by the ATO if her return was done just recently - like august (but certainly worth investigating what that is up to to get $$ back)


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## brickwalls (25 August 2019)

Tomboy77 said:


> Hi qldfrog, thanks for the input. I have thought about super also. I am with REST, so a decent industry super fund, and have it as balanced at the moment.




REST?  Hmmm.  Did you know as of earlier this year REST is no longer an award mandatory fund.  You can now swap out to funds with better performance.


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## willoneau (25 August 2019)

She has 10k invested made about $50 but could have claimed about $50 too as she is so low doesn't pay tax.


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## willoneau (25 August 2019)

Tomboy77 said:


> Hi willoneau,
> 
> No i don't understand franking come tax time (or any other time for that matter ). That's one thing I am yet to wrap my head around.
> 
> ...



Well your at a great place to start your journey down the road of investing/trading with a lot of smart people here that are doing it.


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## willoneau (25 August 2019)

HelloU said:


> aside: an amendment is just a button press inside mygov, but if she did her own it would probably have been pre-filled by the ATO if her return was done just recently - like august (but certainly worth investigating what that is up to to get $$ back)



Thanx HelloU, worth looking at if she is bothered.


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## willoneau (25 August 2019)

Tomboy77, often asking people here how to invest your money, you don't usually get much response. But asking people here how to learn how to invest/trade usually gets positive responses.


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## Tomboy77 (25 August 2019)

So_Cynical said:


> Welcome to ASF Tom - 10K in an ETF will bubble away at an incredibly slow rate, watching a car rust would be more exciting, as for timing - yep it's all very
> strange now, uncharted waters in many ways, i'm starting to come around to thinking that there many not be a cliff to fall off with interest rates so low globally,
> maybe we/the world can just stumble along for the next half decade or so.




Hi So_Cynical,

Thanks for the warm welcome! I am already learning here so that's great!

I don't mean that I will buy 10k in ETF's and then just sit and watch.... I will be attempting to put in as close to 10k *p/a* as possible. This is still very 'small-fry' stuff I know, but it is the best I am able to do in my situation. Still probably as exciting as watching paint dry 

I also figure that If I learn about investing now, If I ever get any sort of inheritance in future (which could happen at some point) I will have a good idea of how to make it work for me and my family, instead of squandering the opportunity.


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## Tomboy77 (25 August 2019)

Thanks all, I will read back through this again in the morning with fresh eyes (and brain)... Thanks so much for the tips and ideas.


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## willoneau (25 August 2019)

Tomboy77 said:


> Hi So_Cynical,
> 
> Thanks for the warm welcome! I am already learning here so that's great!
> 
> ...



How would you feel about putting 10k in if the value drops to 5k in fund?


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## Tomboy77 (25 August 2019)

willoneau said:


> How would you feel about putting 10k in if the value drops to 5k in fund?




I am 41, so I guess if that happened but I was confident that the fund I chose was reputable and that the overall market was in a slump, then I would try my best not to be too bothered by it (easy to say I know). I have 20 odd years before I need to be in a better financial position, so there is still time for some fluctuations at this point...


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## willoneau (25 August 2019)

Tomboy77 said:


> I am 41, so I guess if that happened but I was confident that the fund I chose was reputable and that the overall market was in a slump, then I would try my best not to be too bothered by it (easy to say I know). I have 20 odd years before I need to be in a better financial position, so there is still time for some fluctuations at this point...



I have been were you are, don't be in rush to jump in. Start reading the threads and enjoy the journey.


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## Tomboy77 (25 August 2019)

Thanks willoneau,

I'll do my best!


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## willoneau (26 August 2019)

Learn the difference between investing and trading, using fundamentals or technicals.
Just a starting point of many.


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## aus_trader (26 August 2019)

Firstly welcome to the Forum, you must be our newest member. We need some fresh faces here at ASF.

You are doing the right thing. It's easy to just let life go by and say it's all too hard or I am on low income so it doesn't matter what little contribution I make to investments etc. But it's those small initial steps that could turn into a lifelong journey that could put you in a better position one day than if you never took that journey.

This forum is a really good educational source and better than other forums out there that resembles popularity contests with just stock tips and favourite tipsters who get a lot of votes.

ASF also runs stock tipping competitions, so just for fun and to test your skills test out your skills at picking stocks here:
_September_ _Stock_ _Tipping_ Competition Entry Thread!

Enjoy that. It's something you can enjoy without committing your own money to the markets.

Take your time educating yourself and although it's hard to do, try not to be impatient putting your money into the markets in a hurry. As willoneau said, there are good threads in this Forum that show how members approach the financial markets, whether it's through investing or trading. You are also welcome to look at my portfolios for educational purposes, since I try to document my reasoning behind investments and trades.

Best of luck on your journey Tomboy77, if you have further questions just ask, I found people on ASF are happy to help.


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## qldfrog (26 August 2019)

Overall my advise would be

Pay back any loan mortgage first with any spate cash AND start paper trading/learning via this forum
Do not put your hard earned money straight away into even eft
In a year or 2 you will be more confident
Share market is risky, as beginner we all make mistakes and yes you could get lucky but can not be confused with skills
.it takes a while
So learn learn learn but do not risk your money yet
So loan repayment and super in the meantime..hope it helps


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## Tomboy77 (26 August 2019)

Thanks so much guys. This is really all very good advice. It makes me less frantic about getting my money into the market hearing what you have said above. I will just keep hanging around on here and trying to learn what I can, happily knowing that I am doing the right thing just putting extra into my mortgage for now. I must confess that I have already made 2x investments in the market (albeit small ones). I have 2k worth of AFI (Aussie LIC I am certain you all know of), and 1.5k of SPX (speculative miner...much more risky I know).

I bought AFI on the day of the inverse yield curve news a few weeks ago (they lost about 2.5% that day I think so i bought at a small discount). I bought SPX at 11c, so not so smart there I don't think. I bought that on back of a thread at HotCopper after hearing that a Canadian firm had invested millions of dollars in it.

Anyway, I'll cool my heels for now and try to learn some more first as suggested. 

Thanks all, and best of luck with your own endeavours.


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## sptrawler (26 August 2019)

Tomboy77 said:


> Thanks so much guys. This is really all very good advice. It makes me less frantic about getting my money into the market hearing what you have said above. I will just keep hanging around on here and trying to learn what I can, happily knowing that I am doing the right thing just putting extra into my mortgage for now. I must confess that I have already made 2x investments in the market (albeit small ones). I have 2k worth of AFI (Aussie LIC I am certain you all know of), and 1.5k of SPX (speculative miner...much more risky I know).
> 
> I bought AFI on the day of the inverse yield curve news a few weeks ago (they lost about 2.5% that day I think so i bought at a small discount). I bought SPX at 11c, so not so smart there I don't think. I bought that on back of a thread at HotCopper after hearing that a Canadian firm had invested millions of dollars in it.
> 
> ...



You could do a lot worse than picking up AFI on weakness, also they have dividend re investment, by the time you retire you could have a nice little income stream right there.
Best of luck.


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## craft (26 August 2019)

Tomboy77 said:


> Hi all,
> 
> There has been plenty of news lately of a looming global downturn, with Trump and China's trade war, Australia's reliance on China as our major trading partner, and Australia's long overdue 'pendulum swing' into a what could be another 'recession we had to have'.
> 
> ...



Do you want to invest and achieve market returns, whatever they may be?
This is easy to implement but not necessarily easy to stick too. Efficiency is the key to get right with this approach, little expenses make a big difference.

Or do you want to trade and try to do better than the market and/or try to control depth of loss?

This option requires much higher time commitments, both to learn and to implement. Its also what is called a zero-loss game, which means on average those who try will do worse than taking the first option. The potential rewards are the lure to compete. Gaining skill is the key to get right with this approach.

This seems to me, the first question you need to answer. It will determine so much about what are the right moves for you. And it will help people make relevant suggestions.

It could be that you want to do both. Implement the first option why you learn about the second option.

You are in a pretty good position thinking about accelerating your wealth creation at 41 with a fair bit of equity in your house and what seems to be a pretty happy life on a modest income. By the time you retire you could be financially independent on similar sort of income, part pension if still available or an inheritance could be bonuses.

Don’t think what you are doing at this point as small fry, you are striking out from a good base at a good time in your life, what you learn and do at this point will make a big difference.


So, fist question

Investor or trader?


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## Tomboy77 (26 August 2019)

craft said:


> Do you want to invest and achieve market returns, whatever they may be?
> This is easy to implement but not necessarily easy to stick too. Efficiency is the key to get right with this approach, little expenses make a big difference.
> 
> Or do you want to trade and try to do better than the market and/or try to control depth of loss?
> ...




Hi craft, thanks for the input. To answer your final question there I would like to think the answer could be both...trader (small time), and investor.

I have this idea that perhaps I could trade small amounts in penny stocks, or small caps as they are called, (say $500 or $1000 at a time), and then funnel any profits made back into things like AFI or similar.
 For example if SPX jumps to 0.16c (fingers crossed), after I bought 12,500 units at 0.11.5c ($1500 cost,) I'll likely sell 9,375 units (recoup my $1500 capital) and buy more AFI, or maybe just sit cash back in Mortgage and wait... Meanwhile extra $500 profit can stay in SPX to gain even more, or it could collapse to zero... This is a perfect world scenario where I have money 'in play' that I never had to start with

Then again Betashares has stuff like their NASDAQ ETF which could also be quite good for some capital growth...

I know trading is not something that you should attempt half heartedly though, so I think I will take advice given so far and try to learn via paper trading while I just pump what extra I can into my mortgage for now.

Cheers


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## Struzball (27 August 2019)

Hey Tomboy,

You're never going to nail the timing 100%.
If you had $1million worth of stocks right at this moment, would you sell out now waiting for the downturn? Or would you continue to accumulate as prices fall?

In my opinion I don't think anybody should be fully out of the market, waiting for a fall.
But at the same time I think you should have some cash available to buy opportunities that come along.
It's no use seeing a bargain come along (a market crash) and having no cash spare to buy the opportunity.

In the long run, 20-50 years time the person who gradually accumulates is obviously going to be better off than the person who leaves it in a bank account earning 2%.


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## willoneau (27 August 2019)

How many saw the GFC before it happened or even while it was happening, but everyone saw it after it happened.


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## sptrawler (27 August 2019)

Tomboy77 said:


> I have this idea that perhaps I could trade small amounts in penny stocks, or small caps as they are called, (say $500 or $1000 at a time), and then funnel any profits made back into things like AFI or similar.
> For example if SPX jumps to 0.16c (fingers crossed), after I bought 12,500 units at 0.11.5c ($1500 cost,) I'll likely sell 9,375 units (recoup my $1500 capital) and buy more AFI, or maybe just sit cash back in Mortgage and wait... Meanwhile extra $500 profit can stay in SPX to gain even more, or it could collapse to zero... This is a perfect world scenario where I have money 'in play' that I never had to start with
> Cheers



What you have to be a little carefull of is constantly losing money in the penny stocks, that is neutralising any dividend from your investment holdings.
What I mean is, you have say $2000 in AFI and $1500 in penny dreadful's, the penny dreadful's go belly up. Meanwhile AFI has two dividends, that could have been re invested at a discount to market value.
It would be worth doing a couple of paper examples to see the difference, if you had bought $3500 of AFI and had a couple of dividends, then see how much you would have to make on the $1500 penny dreadful's to match it.
Easy enough to do the info is readily available. 
Just a thought.


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## craft (28 August 2019)

Tomboy77 said:


> Hi craft, thanks for the input. To answer your final question there I would like to think the answer could be *both*...trader (small time), and investor.



O.K lets address both, or at least give you some random opinions.

Starting with trading.

Firstly,  In relation to your thread title “Awaiting a global downturn?”

The advice that macro timing is basically dead is on the money, at least as far as predicting the Macro environment goes – it’s just too hard, too many moving parts.  Traders might switch off their trading businesses when they “observe” a macro level measure like an index is trending down. Trading on observation and reaction is vastly different to trading on predicting the big picture.

So lets tick up predicting the future as a basis for taking on risk as rookie mistake 1.
The mental accounting about free carry,  you demonstrate in your post is rookie mistake 2. 
without trying to put you off there is penty of other mistake evident as well.

By the way, the more mistakes you get under your belt (hopefully without doing harm) the better off you will be in the long run.  Make no mistake, the best traders are the ones that are best at fixing their mistakes, the things they get right, the upside, takes care of itself. So, don’t take offence when I say mistake. You have already shown an abilty to take action, learn, and pause for thought - that's exceptional qualities to move forward.

When you get right down to it, trading is either timing or stock selection. Stock selection is where you take position in a particular company based on the underlying business fundamentals.  Timing, you don’t care much about the business but a lot about the price and enter and exit based on price alone. I personally prefer stock selection, but I think you would be better off learning timing, at least first. It’s less risky and the feed back loop for learning is much quicker.

I haven’t been around the forum for a while, but when I was, @peter2  fitted the mould of a timing trader that had the gift of being able to educate and the desire to do so freely on this forum. @Skate  appears to be another one that has emerged in the same vain, their may be others I don't know. Go check out their respective threads. Natural teachers that just want to share their knowledge need and will appreciate somebody like you that wants to learn. You will be the student for a while, but it will be mutually beneficial, so go say hello and interact, I’m sure you’ll find them accommodating.

AFI is an investment type share, holding it whilst you gain some more investment knowledge shouldn’t cause you too much harm.

SPX is potentially very volatile. You’ve talked about the upside you hope for but nothing about the where or how you are going to protect against the downside if it doesn’t turn out as you wish. How you are going to protect your downside on this purchase is in my opinion the very first thing you need to concentrate on.

Nothing wrong with investing in your mortgage whilst you learn, it could arguably be the best option even if you had already gathered more knowledge on trading or investing – It is making a positive difference to your financial foundation, so don’t feel rushed that you have to take quick action.

Speaking of investing in your mortgage – Is the interest rate you are paying the best you can achieve. You have a heathy LVR that makes you attractive to lenders, especially if you are owner occupied and paying Principle and interest.  When did you last put pressure on your bank? New OO P&I from the big 4 banks are around 3.3% and peripheral lenders sub 3%. Do not underrate the long-term savings on reducing your interest rate and its risk free/tax free. If you have not got a competitive rate this could be the next action after sorting out protecting against SPX downside.

I’ll come back with some more things to think about in relation to investing in future posts when I get a bit more time.


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## Tomboy77 (28 August 2019)

craft said:


> O.K lets address both, or at least give you some random opinions.
> 
> Starting with trading.
> 
> ...




Thanks @craft . I will read the above posters threads as suggested. The more I learn the better .

I am in the process of transitioning to a new lender actually. I found 'WellHomeloans' who are on online lender with a current variable rate of 3%, (1.5% cheaper than my current 4.5% rate with Bankwest).

Once 'well' is set up, (new 30yr term at 3%) I will continue to pay into it at the rate I currently pay Bankwest. This will be as if 'well' is a 20 year loan at 4.5%. If I can pay new loan at that rate I should hit the principal faster and save about $50k over the next 20 years (assuming rates don't change... As if that would happen).

Anyway, I read today that rates are likely to stay low for a few years at least, so if I can hit the mortgage a bit harder for those years that will help.

Thanks again @craft .

Tom


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## craft (28 August 2019)

Tomboy77 said:


> Thanks @craft . I will read the above posters threads as suggested. The more I learn the better .
> 
> I am in the process of transitioning to a new lender actually. I found 'WellHomeloans' who are on online lender with a current variable rate of 3%, (1.5% cheaper than my current 4.5% rate with Bankwest).
> 
> ...



That is awesome that you have already addressed your loan interest rate.

I’ve done some quick numbers.




Calculation (a) is 150K for a 30-year P&I at 4.5%, your original situation.

Calculation (b) is your new situation of 3%. Clearly the savings of time and interest are huge. Kudos for getting this done, it makes the biggest difference and doesn’t cost you a cent. The key as you state is keeping your repayments the same so that you make quicker inroads into the capital.

Calculation (c) is lump summing the 10K you have for investing now into the mortgage.

Calculation (d) is the lump sum plus an additional $625 per month (halfway between the 5 & 10K you mentioned you could save.)

The calculations (c) and (d) should provide a basis for comparing alternative trading or investing opportunities against.

I assume your original loan was for more that 150K so your original loan repayments would be higher than these examples which means you crush the loan even quicker and save even more interest.

Understanding how much you can save by small changes in interest rates and hitting the principle as early as you can is a great start to appreciating the power of compounding – A vital investment insight.


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## Tomboy77 (30 August 2019)

Hi @craft .

Thanks very much for the numbers above. It certainly makes for a compelling argument looking at option C, and even more so option D!!! Knocking basically 10 years off my mortgage and paying only about 20k interest would be bloody amazing!!! If I was mortgage free at about 50 years old that would be a huge milestone for me.


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## bngood (17 September 2019)

Tomboy77 said:


> Hi @craft .
> 
> Thanks very much for the numbers above. It certainly makes for a compelling argument looking at option C, and even more so option D!!! Knocking basically 10 years off my mortgage and paying only about 20k interest would be bloody amazing!!! If I was mortgage free at about 50 years old that would be a huge milestone for me.



So I think the question is can you make more on your $10,000 than 3% compound a year?  I think you can but you would have to be disciplined. 
If I were you (and I am not you but I have been in your position). I gave up my day job at 40 to trade for a living full time. 

1)      Get out of the ASX entirely until you have a trading plan. There are hundreds of ways to make money on the ASX you have to work out what suits you.

2)       See an accountant to see the best structure you should be using to invest in shares.  Your wife (while not working) has a tax free threshold of $18,200. If you had all your “investment” money in her name you could earn $18,200 before you pay any tax.

3)      Buy some books on trading and charting.  Go to the library.  I am not talking about day trading or forex but share trading. You need to have a written trading plan and know about candlesticks and chart setups before you buy any shares. Louise Bedford’s books are good – she shows you how to work out a trading plan and charting patterns (don’t get caught up in paying for educational stuff - you can do it yourself out of books without paying anything).

4)      You need to work out a trading plan that will work for you: that you are comfortable with, that suits your work, life and time commitments.  The most important thing about your trading plan is your exit.  You can buy anything at anytime but you need to know  when to get out.  An exit for me is a stop loss.  I personally don’t think anyone can make money without one especially with a small bank balance.  You cannot afford to lose money. I have an initial stop loss of $300 on every single trade.  You need to work out an amount you are happy to lose (and you will lose it so you have to be sure that you are prepared to cut your losses when you stop is hit).  Your aim is to have every cent of your capital working for you (gaining).

5)      Once you have your trading plan and you’ve chosen your first share because you have researched it to death fundamentally and you have been patiently waiting for a perfect set up on the chart according to your plan you get out your trading diary and work out when you will get out in writing.  So you are prepared to risk $2000 of your money and you look at 2,500 shares of DDD at 76c = $1900.  You are prepared to lose $300 so $1900 - $300 = $1600/2,500= 64c.  (If you include brokerage this will be higher). When your share closes below 64c you sell.  You can now buy your share. Watch your share. If it closes below 64c and you don’t sell you can’t trade shares so go back to your day job and put your extra money in the bank.

6)      If you are still determined to do this but can’t stick to stop losses you can set an automatic stop loss before you buy your share.  The disadvantage of this is that sometimes intraday trading will take out your stop loss but it is better than being stuck in an unsuccessful trade.

7)      Paper trading is a good way to go initially to see if you think you can trade and your system works but there is nothing like the test of a stop loss to see if you really can trade.


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## Tomboy77 (10 October 2019)

Hi again guys,

I have just read back over this thread after some time has elapsed. My SPX shares dropped from 0.11c to a low of less than 0.07c since I was last on here, then just today reached back up to 0.11c.... But now there is news of a legal battle about to begin, so SPX share price will likely take another hit (tank) tomorrow at 10am!

I just held on through the drop to 0.07c and was thinking that I might even start to see a climb but looks like this legal battle (between VMC and SPX) is about to hit that possibility on the head!

I'm assuming mass exodus from SPX tomorrow... I will watch and continue to hold in hope that a longer term outlook (another 12 months) sees SPX develop a great resource that is ready to be mined.

What a learning experience...!!!

Gulp


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## sptrawler (11 October 2019)

Tomboy77 said:


> Hi again guys,
> 
> I have just read back over this thread after some time has elapsed. My SPX shares dropped from 0.11c to a low of less than 0.07c since I was last on here, then just today reached back up to 0.11c.... But now there is news of a legal battle about to begin, so SPX share price will likely take another hit (tank) tomorrow at 10am!
> 
> ...



As long as you keep track of where you would have been, having taken other options, we will all learn something.


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## willoneau (6 February 2020)

Hi Tomboy77, just wondering how you are going now we are into the new year?


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## sptrawler (26 February 2021)

willoneau said:


> Hi Tomboy77, just wondering how you are going now we are into the new year?



Hi @Tomboy77, how about an update?


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