# What's holding me back?



## NeoGenesis (4 February 2011)

Hi guys,

I've been contemplating getting into shares for a long time. I've managed to accumulated a substantial amount of money in my bank account (about $60K). It's sitting there in a high interest savings account giving me a steady income. I normally top it up every week with savings from my earnings, so money has grown steadily over the years. I'm quite young and still living at home, so don't have many expenses  I'm currently studying at uni and have several part time jobs.

Primarily I started to save in order to buy a house. I will move out soon and a huge chunk of my savings will disappear 

I thought about investing about $20K in shares and leave the rest in my savings account. Still a little bit worried I might loose all my money, despite reading countless articles and books saying the average trend of the market is up! And diversifying the portfolio is key.

I recently applied for a commsec account and will try it out with maybe $1000 and see how I go. I would like to make regular income through the shares, so not looking for compound growth at the moment. Maybe go for shares that pay dividends.

I have three questions that I haven't been able to find answers to:

Will I receive a monthly income, like I do with my saving account?
What is the expected return?
What are the costs involved: tax, brokerage with commsec etc?

I know these questions are difficult to answer and depends on shares I invest in and the amount of risk I'm willing to take. I'm just after a rough estimate and need to understand how my money will perform.

I saw commsec offered these "share packs" I will probably buy one of those. I still have so much to learn and any help will be appreciated.


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## ROE (4 February 2011)

NeoGenesis said:


> I have three questions that I haven't been able to find answers to:
> 
> Will I receive a monthly income, like I do with my saving account?
> What is the expected return?
> What are the costs involved: tax, brokerage with commsec etc?





Dividend get paid every 6 months usually for most stocks

Expected return no one know but if you buy decent business you can assume
it average 8% a year in capital appreciation.

Brokerage is cheap if you buy say $10,000 at a time ($19.95) 
buy $1000 still cost you 19.95

Tax most dividend is fully frank so tax already been paid (30%)

you pay the differences at tax time or claim back if you under 30% bracket.
Capital gain is subject to the same capital gain rules.

Common stock is as risky as you can get compared to other assets 
so don't be tempted if you are not confident, nothing wrong with getting 6% from
a bank account


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## Julia (4 February 2011)

NeoGenesis said:


> Hi guys,
> 
> I've been contemplating getting into shares for a long time. I've managed to accumulated a substantial amount of money in my bank account (about $60K). It's sitting there in a high interest savings account giving me a steady income. I normally top it up every week with savings from my earnings, so money has grown steadily over the years. I'm quite young and still living at home, so don't have many expenses  I'm currently studying at uni and have several part time jobs.



Good for you for saving that much while still a student.  Really well done.



> Primarily I started to save in order to buy a house. I will move out soon and a huge chunk of my savings will disappear



Don't wish to invade your privacy, but why have you made the decision to move out soon?   Obviously you'll be financially much better off if living at home is generally OK.



> I thought about investing about $20K in shares and leave the rest in my savings account. Still a little bit worried I might loose all my money, despite reading countless articles and books saying the average trend of the market is up! And diversifying the portfolio is key.



I don't know what you've been reading but anyone who tells you the current trend is up could be right or wrong.   There's not a lot of logic in how markets are trading at present imo.

You are worried you might lose all your money.  If you choose stocks carefully, that's unlikely, but you could be upset by seeing your capital diminish in the short/medium term.
How will you feel if this happens?   The fundamental investors on this forum don't worry about this, given they have carefully researched what they believe to be the intrinsic value of companies.  I'm guessing you're not at the stage of doing such research, or probably as an alternative getting a reasonable understanding of price action via charts.



> I recently applied for a commsec account and will try it out with maybe $1000 and see how I go. I would like to make regular income through the shares, so not looking for compound growth at the moment. Maybe go for shares that pay dividends.



I'll let someone else pick up this point.  I never buy for dividend yield.  There are companies which despite difficult conditions are still showing strong capital growth.
I'll always go for this over dividends which can always be reduced or wiped if the company runs into trouble.  Do some calculations to show you how much the dividend and franking credits balance out potential loss of capital value.
There are several threads on this within the forum.



> I have three questions that I haven't been able to find answers to:
> 
> Will I receive a monthly income, like I do with my saving account?





No.  Dividends are paid twice yearly.  You will receive "income' via capital growth only when you sell the share.



> [*]What is the expected return?



With the greatest of respect, the fact that you are asking such a question means you need to get a lot more education.   If you put money into a downtrending stock on its last breath, and with no dividend payment, quite obviously your return will be negative.

If you manage to pick the stock out of all those on the ASX that is about to show massive growth, then you will make a motza.

And then there is everything in between.

How do you plan to decide what stocks to buy?




> [*]What are the costs involved: tax, brokerage with commsec etc?



Isn't this a question you should be directing to Comsec, rather than to anonymous respondents on a forum?



> I know these questions are difficult to answer and depends on shares I invest in and the amount of risk I'm willing to take. I'm just after a rough estimate and need to understand how my money will perform.



As above, no one can give you such an estimate with any accuracy because of the obvious variables.

If you haven't already pursued this, there is a pretty good Education section at www.asx.com.au.  I'd imagine Comsec will also have an education section which you can work your way through.  I know Etrade does.

I may quite wrong, but it sounds to me as though you have this money saved and want to get it making money for you.  Good idea.  But not before you have educated yourself about how markets work and how to choose what stocks will fulfil your criteria.  First you need to decide what your expectations are from the money you will invest.


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## howmanyru (4 February 2011)

Hi Neo,

From reading your post it seems you are afraid of losing your money and yes, this is a possibility. I was afraid of this when i started trading 6 years ago, and did lose a lot of my money. Don't worry, everyone loses money, what you have to do is make more than you lose. This comes with experience which comes with trial and error, you learn as you make and lose money, developing and refining your investing strategy and risk management as you go.  If you lose some money at the start, don't be too disappointed, put it down to experience and keep going, eventually you will feel more confident and realise the stock market is not gambling, it's just business.  

If you want a garunteed regular income, why not just leave your money in the bank? Divedends are a bonus of the stock market, but hardly the main reason to risk your money. I don't think they are paying much anyway these days, plus the company can cut them or lower them at will. The market is high risk, compared to other investments, so you want a decent return, more than a divedend will give you, IMO.

Hope it goes well for you


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## Tysonboss1 (5 February 2011)

NeoGenesis said:


> Hi guys,
> 
> I've been contemplating getting into shares for a long time. I've managed to accumulated a substantial amount of money in my bank account (about $60K). It's sitting there in a high interest savings account giving me a steady income. I normally top it up every week with savings from my earnings, so money has grown steadily over the years. I'm quite young and still living at home, so don't have many expenses  I'm currently studying at uni and have several part time jobs.
> 
> ...




Do yourself a favor and listen to this 24 video series, or better yet read the book.


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## tothemax6 (5 February 2011)

Tysonboss1 said:


> Do yourself a favor and listen to this 24 video series, or better yet read the book.



Do as the man says .

Firstly, you don't have to start by throwing in all $20k. You could buy, say, $2000 worth of a blue chip stock, so as to 'get your feet wet'. You will get a feel for the nature of stocks this way, as you see its price float up and down day to day. When you hear about 'people loosing all their money' in the stock-market, this does not apply to investing as a whole. There is a big spread in risk depending on what sort of stocks you choose to buy, and how much you invest in them. To loose lots, you pretty much have to put yourself in that position deliberately (chasing very high returns). 

Would recommend you look up Roger Montgomerys stuff, such as his videos on you-tube, his blog, his book etc. He gives a good insight into the australian stock market.


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## danago (5 February 2011)

Hey,

When i read your post it almost sounded as if i wrote it myself. I am in a strikingly similar situation: I'm a 20 year old university student with a similarly sized bank account, have several part time jobs, looking to invest some money in the markets (and hopefully purchase a house within the next 5 years) and have just opened up a Commsec account with a few thousand dollars. I think its great to see young people trying to set themselves up for future financial comfort (I could never understand how some of my friends still live at home yet have literally no savings  )

Because i am still in the learning phase, i started out by putting some money into listed investment companies like Argo. I figured that they can probably do a better job of picking stocks than i currently can, and the effective fees aren't too high. It also gives me a chance to see how they move into and out of different positions, which i guess can help in my learning process. 

I am also strongly considering investing in the governments first home savings accounts scheme, whereby the government will contribute a tax free 17% of whatever deposit i make (max of ~$5500 per year, adjusted periodically for inflation). The 17% is a one-time bonus for each deposit i make, but the total deposited balance will earn the banks nominal interest rate, so overall it seems like a fairly good return. Catch is that it can only be withdrawn after certain conditions are met and only to make a deposit on a house, but for someone like me who is certain that i want to be a home owner within the next 4-5 years, the restrictions aren't so bad. 

I am in no way providing financial advice, but just thought I'd share the perspective of someone in a similar position 

All the best,
Dan.


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## c-unit (5 February 2011)

danago said:


> Hey,
> 
> When i read your post it almost sounded as if i wrote it myself. I am in a strikingly similar situation: I'm a 20 year old university student with a similarly sized bank account, have several part time jobs, looking to invest some money in the markets (and hopefully purchase a house within the next 5 years) and have just opened up a Commsec account with a few thousand dollars. I think its great to see young people trying to set themselves up for future financial comfort (I could never understand how some of my friends still live at home yet have literally no savings  )
> 
> ...




Yeah man the First Home Saver Account is koota. I'm 22 and signed up for one last year, putting in $5k per year (as the max the gov will contribute for you is $850, or 17% of $5000). Assuming you add the $5k per year, and a 5% interest rate the account gives an effective internal rate of return of 19%. Can't beat that, particularly for a AA rated asset (with Comm bank). The good thing about the FHS account is that it has a pretty high limit, I think the gov will continue contributing until it's at roughly $80k which is pretty solid. Everything else I add into my Commsec portfolio, which at the moment is about 70% cash 30% small-cap stocks.

To the first poster, if I were you I would put in maybe $5k to start with, get a good feel for whatever company it is you are investing in and understand what drives its performance. Don't be afraid to lose a little bit. You learn a lot from losing, and it's only $5k which isn't much in the scheme of things.


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## Wysiwyg (5 February 2011)

danago said:


> When i read your post it almost sounded as if i wrote it myself. I am in a strikingly similar situation: *I'm a 20 year old university student with a similarly sized bank account*,
> All the best,
> Dan.




Mate if you have accumulated near 60k in two or three years working part time while studying at University then you must be a) the General Managers boy Friday , b) have rich parents supplementing your part time wage with a salary or c) an internet forum exaggerator.
At 20 I was working 'full time', paying off a car, share renting a house, paying electricity/phone/gas bills, buying my own food and going out once a week and holidays once a year. 
This left very little to save.


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## danago (5 February 2011)

Wysiwyg said:


> Mate if you have accumulated near 60k in two or three years working part time while studying at University then you must be a) the General Managers boy Friday , b) have rich parents supplementing your part time wage with a salary or c) an internet forum exaggerator.
> At 20 I was working 'full time', paying off a car, share renting a house, paying electricity/phone/gas bills, buying my own food and going out once a week and holidays once a year.
> This left very little to save.




I have been somewhat fortunate to have had a well payed job for my level of qualification. Working as a tutor (of high school TEE subjects) i was seeing about 12-14 students per week, and the hourly rate working as a tutor is a little more (about three times more) than i was getting when i used to work at a supermarket. I am about to start my fourth year of university and so wont be taking on that many students this year, but it definitely did help with the bank account over the past few years. 

I must admit though that i have been lucky with the housing situation -- my parents don't charge me board, they pay for food and they did help me out a little bit when i bought my car. It helps, and i appreciate it.


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## Tyler Durden (5 February 2011)

If you are afraid of losing money then you shouldn't be in the market.


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## Tysonboss1 (5 February 2011)

Wysiwyg said:


> This left very little to save.




Some of us started early, I owned a house and had a 30K share portfolio.

I started investing at 14,


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## NeoGenesis (5 February 2011)

Wow thanks for all your comments and helpful advice.



> Don't wish to invade your privacy, but why have you made the decision to move out soon? Obviously you'll be financially much better off if living at home is generally OK.




Girlfriend and I are thinking about getting married. I'm just about to finish my studies and get a "real" job.



> Do yourself a favor and listen to this 24 video series, or better yet read the book.






> Would recommend you look up Roger Montgomerys stuff, such as his videos on you-tube, his blog, his book etc. He gives a good insight into the australian stock market




I will definitely do that. Thanks for the resources.



> When i read your post it almost sounded as if i wrote it myself




Glad to see some other students believe in saving as well. It took me about 3 years to save that money. I don't go out drinking or partying every week  I've been lucky enough to get a scholarship at uni, got a teaching position there as well. And part time project work on the side... so it's pretty sweet. Best thing is my support from parents. I literally have no living expenses, but I have started to help out around the house with groceries etc (felt bad).

So my next step is to do some more reading and research. Then I will invest a bit of money to get my feet wet. I'll keep you guys posted.



> If you are afraid of losing money then you shouldn't be in the market.




I am scared... but want to overcome that fear. Must take a risk once in a while.


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## Tyler Durden (5 February 2011)

NeoGenesis said:


> I am scared... but want to overcome that fear. Must take a risk once in a while.




Well think about it this way: if you lose x amount (x being the amount you want to invest), how will you feel?


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## LiL_JaSoN (5 February 2011)

Neo, I am in the exact same position as you...

Im 21, I have saved up a chunk of money which i wont disclosed how much which i first saved to buy a house.

I am still living at home and a uni student.

Was thinking of buying a few blue chips to get my feet wet.

This thread has been helpful


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## Julia (5 February 2011)

NeoGenesis said:


> I am scared... but want to overcome that fear. Must take a risk once in a while.



It's quite reasonable to feel scared if you intend risking hard saved funds into something with which you are unfamiliar, and if you have not educated yourself about how markets function.
Maybe a simple question:  if you are determined that you must 'overcome your fear', how will you determine what stock(s) to buy?


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## tothemax6 (6 February 2011)

Tyler Durden said:


> Well think about it this way: if you lose x amount (x being the amount you want to invest), how will you feel?



I dunno, if for instance he invested it all in BHP, and it went to 0, in this kind of situation we'd probably all be doomed anyway. Shares strike me as being completely different to say, forex trading - i.e. own money vs huge margin debt.


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## tech/a (6 February 2011)

(1) Learn about managing risk
(2) $1000 trading account will see you disillusioned in no time Brokerage will kill you.
(3)* Paper trade using the full $60k* until you understand (1) and also understand
(4) Trade management
(5) Portfolio management
(6) "Universal Principals of Successful Trading --Brent Penfold
(7) Then develop a method and Prove it woks by doing (3)

I call this painless education.

*Then*

(8) Open an IB account ($6) Brokerage
(9) Take advantage of their 2;1 margin (you have $120K to now trade with )
Understand and* USE* the power of Compounding AND Leverage with the Knowledge that you know* HOW* to trade----see (1) to (7)

Now your cooking!
 Takes around 10,000hr ---but by now youre well versed in study!


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## NeoGenesis (6 February 2011)

> Well think about it this way: if you lose x amount (x being the amount you want to invest), how will you feel?




If I lose $1000 I wouldn't mind, if I lost all my savings I'd be devastated!



> how will you determine what stock(s) to buy?




Commsec has these things called "share packs" - I thought I might buy one of those after a bit of research.



> I dunno, if for instance he invested it all in BHP, and it went to 0, in this kind of situation we'd probably all be doomed anyway




I will never invest all my money in a single company.



> (1) Learn about managing risk
> (2) $1000 trading account will see you disillusioned in no time Brokerage will kill you.
> (3) Paper trade using the full $60k until you understand (1) and also understand
> (4) Trade management
> ...




Thanks for that Tech/a
You are correct about the $1000... brokerage will eat that up if I traded aggressively.
What if I buy for capital growth and let my investment sit there for 20 years? I'm not seeing the benefit in investing for dividends anymore.

I don't think I will put all of my savings into stocks, will leave some in a savings account for a rainy day.

Paper trading - is there a website that might offer something like this? Seems like a bit of work to do it manually. The ASX has the share market game, it starts at the end of this month I think. Maybe I will give that a go and see how I fare...

The current plan is to invest in blue chip companies for capital growth. Will start with a small amount of money and slowly build up my portfolio, perhaps investing once a month.


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## inq (6 February 2011)

Wysiwyg said:


> Mate if you have accumulated near 60k in two or three years working part time while studying at University then you must be a) the General Managers boy Friday , b) have rich parents supplementing your part time wage with a salary or c) an internet forum exaggerator.
> At 20 I was working 'full time', paying off a car, share renting a house, paying electricity/phone/gas bills, buying my own food and going out once a week and holidays once a year.
> This left very little to save.




Fail. I'm 20, built my own house a year ago, full time university student with a share portfolio floating around 45k. Its possible, there are some niche jobs out there where you can make a motza.

To the OP and all those of similar age with the fear, just put your feet in. I had the same problem, but my partner encouraged me and I started off with some blue chips to get a better understand, learning researching skills and Mr Market. Now I have small cap exposure and making some very good returns (30%+).

Get in the water, its mighty fine.


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## LiL_JaSoN (6 February 2011)

what are these 'niche jobs' your talking about?

care to share? in pm?


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## basilio (6 February 2011)

Hi Neo Genesis,

Good conversation to start. From my experience there is much extremely worthwhile analysis done in this forum (_thank you again Joe for hosting ASF_). I believe we can all do very well recognising new investments that are simply not taken seriously by larger funds until they are already so established the best value may have gone.

I have noticed that one of our forum members seem like  a contempory of yours. Very young and trying to build some funds. He is running his own blog site on his investments and for what it's worth I think he does some good work. His name is Parlevous and you can find some of his ideas in the HOG forum (amongst others)

Cheers


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## Wysiwyg (6 February 2011)

inq said:


> Fail. I'm 20, built my own house a year ago, full time university student with a share portfolio floating around 45k. Its possible, there are some niche jobs out there where you can make a motza. Now I have small cap exposure and making some very good returns (30%+).



Oh I made up for it.  By the time I was 30 I owned 5 houses and had a share portfolio valuation over 2 million dollars. Anyone who thinks it can't be done are kiddin' themselves. There are plenty of people out there doing it.


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## tothemax6 (6 February 2011)

NeoGenesis said:


> If I lose $1000 I wouldn't mind, if I lost all my savings I'd be devastated!
> 
> Commsec has these things called "share packs" - I thought I might buy one of those after a bit of research.
> 
> I will never invest all my money in a single company.



Well if you buy a share pack you are just relying on comsecs choice of shares. You won't actually gain experience in share investing this way. You may as well simply put the money in a index fund (like via anz investment account). 

Regarding BHP and the single company, my point was that BHP is huge. It has market capitalization bigger than a large number of smaller companies put together. In the situation in which it's share price dropped to zero, we are probably in a nuclear war or asteroid collision or something of that nature. My point is, loosing more than 50% of your money on a company like BHP would be *very* low odds, perhaps similar odds to loosing your money in a bank. Just my opinion though, DYOR of course.


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## LiL_JaSoN (6 February 2011)

Wysiwyg said:


> Oh I made up for it.  By the time I was 30 I owned 5 houses and had a share portfolio valuation over 2 million dollars. Anyone who thinks it can't be done are kiddin' themselves. There are plenty of people out there doing it.




wow, reading that is motivating. if i can own 5 houses & a portfolio of 2m by 30 that would be a dream.

how long have you been investing and when did you start?


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## Tysonboss1 (6 February 2011)

LiL_JaSoN said:


> wow, reading that is motivating. if i can own 5 houses & a portfolio of 2m by 30 that would be a dream.
> 
> how long have you been investing and when did you start?




Compounding interest and Exponetial growth does wonders. If you start early enough and deploy decent amounts of capital efficently the results seem to be defy logic.


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## ParleVouFrancois (6 February 2011)

RE OP: Well firstly you've got to decide if fundamental or technical investing appeals to you more, then learn more about whichever system you chose. 

I don't know all that much about technical investing but I'm big on fundamentals, so if this route appeals to you, firstly read "The Intelligent Investor" by Benjamin Graham, and "Security Analysis" by Benjamin Graham (a bit longer and more boring but worth it). Then you should find a financial newsletter called "The Intelligent Investor" which is run by a bunch of people who invest fundamentally, sign up for the two week free trial and read as much of the past reports and discussion as you can in the two weeks to get even more of a feel for the markets and fundamentals. Then finally go to Roger Montgomery's blog and read through it all, absorb the things he tends to focus on, such as return on equity etc. 

By the time you've done all this you should be confident enough to have a go with that 20 grand, I'd suggest 3 or 4 positions in the big blue chips (just to get an idea of shares, and if this is going to work for you, perfectionists always get emotionally destroyed by the market). Imo the idea is to keep learning, there is no one book or article or essay that will "make" you an investor, it's a long process and you should never stop reading or learning. 

One thing I've begun to learn just recently is the idea that it's not what you buy that gives you the returns, it's what you don't buy. Imagine if you could buy the index, but only the shares that will end up higher in a years time, the out performance would be incredible just based off of not holding losers. Anyway I've digressed and you've still got a long way to go (just like me) before becoming anywhere near an old hand at investing.

PVF.


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## Julia (6 February 2011)

tothemax6 said:


> Well if you buy a share pack you are just relying on comsecs choice of shares. You won't actually gain experience in share investing this way. You may as well simply put the money in a index fund (like via anz investment account).
> 
> Regarding BHP and the single company, my point was that BHP is huge. It has market capitalization bigger than a large number of smaller companies put together. In the situation in which it's share price dropped to zero, we are probably in a nuclear war or asteroid collision or something of that nature. My point is, loosing more than 50% of your money on a company like BHP would be *very* low odds, perhaps similar odds to loosing your money in a bank. Just my opinion though, DYOR of course.



Agree absolutely.




ParleVouFrancois said:


> Then you should find a financial newsletter called "The Intelligent Investor" which is run by a bunch of people who invest fundamentally, sign up for the two week free trial and read as much of the past reports and discussion as you can in the two weeks to get even more of a feel for the markets and fundamentals.



I actually subscribed to this many years ago, in my ignorance, and - at least at that stage - they got about 80% wrong.  Could never recommend them.  Perhaps they have improved a bit since then.


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## ParleVouFrancois (6 February 2011)

I'd have to agree on the wrong bit Julia, but I never said invest in their picks blindly (I did this a few times, always burnt), just read it to see what parts of the company you should be looking at also, they have pretty solid results with the big blue chips, just when you get down to the medium caps they get rolled quite often imo. So read it for the two weeks as a more finding out how to research the fundamentals, as opposed to using their picks.


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## NeoGenesis (8 February 2011)

Thank you everyone for your comments and advice.

Many people are recommending Benjamin Graham, I will pick up that book and read it 
I'm not much of a reader though 

I registered for the ASX share market game. I will treat the $50k like my own money and try to manage risk. The game starts on the 17th Feb (next week). Let's see how I go. 

The game allows you to trade with 100 Australian companies, I downloaded the list and will go do some research. I haven't even heard of some of the companies!

Has anyone else here participated in the game? How did you go? Was it beneficial?


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## NeoGenesis (15 March 2011)

I'm taking the plunge. It looks like a good time to get into the market. I'm going to buy AVK and ADO shares tomorrow. $10k each. I'm prepared to lose 50% of my initial capital. I'm not investing all my savings, the majority will still be safe in a high interest savings account.

I have been playing the ASX game and got the hang of it... lost a lot of _fake_ money in the process, but now I know what not to do 

I've also been an avid reader of http://parlevoufrancoistrades.blogspot.com and I admire his insight. As he stated in one of his posts: I'm still young; if I lose it all, I can work for another 40 odd years. I like that thinking.


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## Tanaka (15 March 2011)

NeoGenesis said:


> I have been playing the ASX game and got the hang of it... lost a lot of _fake_ money in the process, but now I know what not to do




Firstly, congratulations!  The journey begins, which is exciting.  
But the question I have is did you make money in the ASX game at all? Live trading is lot more difficult than simulated trading. It would be preferable to make money in a game before going live. Having said that, if it is money you can burn why not learn with real money. <- this is not financial advice, just a generalised remark.


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## skc (15 March 2011)

NeoGenesis said:


> I've also been an avid reader of http://parlevoufrancoistrades.blogspot.com and I admire his insight. As he stated in one of his posts: I'm still young; if I lose it all, I can work for another 40 odd years. I like that thinking.




That thinking is wrong.

You should be thinking..."I am still young, if I only make 5% a year and compound for 40 years". 

If you have heaps of time, you should risk less.

If you have not much time, then you probably should look for higher return.


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## Julia (15 March 2011)

skc said:


> That thinking is wrong.
> 
> You should be thinking..."I am still young, if I only make 5% a year and compound for 40 years".
> 
> ...






NeoGenesis said:


> I'm taking the plunge. It looks like a good time to get into the market. I'm going to buy AVK and ADO shares tomorrow. $10k each. I'm prepared to lose 50% of my initial capital. I'm not investing all my savings, the majority will still be safe in a high interest savings account.
> 
> I have been playing the ASX game and got the hang of it... lost a lot of _fake_ money in the process, but now I know what not to do
> 
> I've also been an avid reader of http://parlevoufrancoistrades.blogspot.com and I admire his insight. As he stated in one of his posts: I'm still young; if I lose it all, I can work for another 40 odd years. I like that thinking.



 I'm 100% with skc.   You are prepared to lose 50% of your capital?
Why, for god's sake?


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## NeoGenesis (15 March 2011)

Tanaka said:


> Firstly, congratulations!  The journey begins, which is exciting.
> But the question I have is did you make money in the ASX game at all? Live trading is lot more difficult than simulated trading. It would be preferable to make money in a game before going live. Having said that, if it is money you can burn why not learn with real money. <- this is not financial advice, just a generalised remark.




Well lately I lost a lot of money because of the events in Japan. I'm down about 10% It will bounce back eventually when the media stops reporting on the devastation and goes back to the usual garbage about charlie sheen and lindsay lohan. 



skc said:


> That thinking is wrong.
> 
> You should be thinking..."I am still young, if I only make 5% a year and compound for 40 years".
> 
> ...




I will be old and wrinkly then. No point buying a Ferrari when you're 60 years old! I realise I'm taking a risk, but its an educated risk. I won't be losing all my savings if things go south. I don't want to lock away my money in shares for 40 years so I can retire rich. About having "heaps of time" you never know in life... I'd rather enjoy myself now rather than waiting for riches tomorrow.



Julia said:


> I'm 100% with skc.   You are prepared to lose 50% of your capital?
> Why, for god's sake?




I don't want to lose money. If the company doesn't look profitable at any stage I will pull out. I can't predict the market and the human/environment factors. In small cap markets the price can fluctuate rapidly (look at NMS), so I am prepared for the worst. I won't go throwing myself off a bridge if I loose it all.


Apologies for the rant. 
The points you guys bring up are excellent and make me think about what I'm doing. Your points of view are most appreciated and that is why I'm in this forum


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## Sir Osisofliver (16 March 2011)

Hi Neo,

You might benefit from reading the newbies thread in the beginners section.  A couple of pieces of advice I wish had been given to me when I was your age....

1) Your first property investment should not be your Principle Place of Residence. Doing so chains you to a large asset with inefficient taxation advantages. It is "bad debt" because it is not tax deductible. If you are looking at buying and living in the house, you might want to look at ways of purchasing the house through a corporate structure and renting from yourself.  <- not advice DYOR about the pro's and con's of such an action.

2) You don't know what you don't know. Investing in any asset class, what you don't know can *HURT* you. Go look at the Brisconnections thread for how devastating a lack of knowledge about the market can be.  You owe it to yourself to become *educated* before you risk real dollars.

_Well lately I lost a lot of money because of the events in Japan. I'm down about 10% It will bounce back *eventually* when the media stops reporting on the devastation and goes back to the usual garbage about charlie sheen and lindsay lohan._

3) You've just fallen into a trap. The trap is that you are displaying emotion towards an object that your personal emotion does not effect.  There is an old saying in the market.... *the market can stay irrational longer than you can stay solvent.* You are also about to experience Opportunity cost.  Whilst you wait for this stock to *eventually* recover, other stocks, other asset classes, other commodities which have different drivers behind capital appreciation will perform better. IE That 6% saving account is looking pretty good right now I imagine. You should be maintaining a stop loss trigger mechanism with your trading. A stop loss is specifically designed to PROTECT your gains and LIMIT your losses. It is *impartial* and unemotional. This is part of what Tech/A was talking about with your trade management - how do you sustain profits and limit losses.

Good Luck

Sir O


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