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coffee_snob

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Hi all

I am new to the share marketed (so new that I have not yet bought anything!).

I am starting out very small with $1500/$2000 available to put into some shares. I am on a disability pension, which is why I have so little to play with, but I'm in my final year of a social work degree so hopefully in the not to distant future all this will change.

So I am after low risk, obviously, and I guess this means blue chip. My idea is to sink the entire $2000 into one company or else whats the point? This is my best option isn't it? And can you guys give some suggestions on what you would do if you were in my situation? What companies would you look into?

I wish I had a money tree but I don't, so I am 'trying' to be sensible about this. BLue chip is good!
 
coffee_snob said:
I wish I had a money tree but I don't, so I am 'trying' to be sensible about this. BLue chip is good!
Click to expand...

You haven't enough in my not advice 'advice' to be buying anything.

For many reasons some being but not limited to,

Brokerage cost will kill you,
Too small an amount to spread the risk between companies,
Needing to hit a home run to make it worth your while,
Unable to take the smallest of loses (see the above 3 points)
Playing with what is clearly small yet very valuable funds,
Misconception that a so called "blue chip" is low risk.

And on and on.

Relax and save. That would be the best option, times 1000, in my opinion. :D
 
What is it you expect to do with your $2,000?
What is the motivation to place it in the market.

I'm guessing its to turn it into 50K and beyond.

Your actually highly likely to turn it into 1K or less.
Stick it in a bank account!
Start a demo account and trade as you thought you would.
Sit back and be happy that your hard earned is still in tact!
 
Hi and thanks for your reply.

I am looking at long term investment. So maybe in excess of 3 years. I am not really after cash in my pocket straight away as I am sure I will have the opportunity during employment next year.

What is the lowest amount you would invest?

I was thinking of investing in a financial institution (ANZ perhaps).

Also I am using Westpac's trading service so fees are at $24 per trade
 
$2k really is not enough. Min starting would be $10k IMO, but that is still no where near ideal.

I guess you could park the $2k in some bank shares and reinvest the dividends. Just don't expect a lot.
 
If you are adamant about having your funds in the share market, you may wish to consider STW, which is an exact proxy for the top 200 Oz companies.

Otherwise you could consider BHP, as it is by far the largest Australian company.

You must bear in mind that your capital could fall in value.

I agree with previous opinions that 2k is a bit too small, but hey everyone has to start somewhere

please do not consider the above to be advice, it is not permitted to give unlicenced financial advice on forums, only opinions
 
Pre-congratulations on getting your degree, well done.

Got a HECS debt? If so, the $2k might be best put to work reducing that. Just my :2twocents
 
Hi Coffee Snob

What brand of coffee do you drink ?

I can only agree with the previous posters and advise you to put the money in the bank.

The odds are heavily against you as a novice and with such a small amount of capital.

Buy a good book or two on trading (search this forum).

Read this forum (and others) to educate yourself whilst you build up your capital (and knowledge) once you have a job.

Congrats on getting a degree.

Cheers

dutchie

PS I know how keen you might be to get into the market but be patient.
 
Trembling Hand said:
You haven't enough in my not advice 'advice' to be buying anything.

For many reasons some being but not limited to,

Brokerage cost will kill you,
Too small an amount to spread the risk between companies,
Needing to hit a home run to make it worth your while,
Unable to take the smallest of loses (see the above 3 points)
Playing with what is clearly small yet very valuable funds,
Misconception that a so called "blue chip" is low risk.

And on and on.

Relax and save. That would be the best option, times 1000, in my opinion. :D
Click to expand...

Agreed. If you decide to trade with commsec for instance in and out youll need to make 2% to break even. I disagree with the 10k starting, I started out recently with 5k and that is fine (all in one company as im only looking to make more than I would in bank interest per year). But before you put anything into the market I would suggested reading and demo trading whether it be playing those stock market games or paper trading. I read and paper traded for 3-4 years before I decided I was ready to take the plunge.

(p.s congrats on finishing your degree (almost) ive still got another 4 years :( and then a 50-60k debt :mad:)
N.T
 
Trembling Hand said:
They never learn do they?:( blind leading the blind :cool:
Click to expand...

Hahaha shh! Well I started in the stock market about 50 days ago and im up about 6% profit thus far which is more than i'd make in a year from a bank. If I were to split 5k up, how many different stocks would I need to diversify seeing as though 5 stocks would equate to 4% in and out per trade, so i'd need to make back 20% all up to break even? :rolleyes:I think my goals (in relation to 'making money' from the stock market) at this stage in my life are different to most on this forum. I'm looking for experience and hopefully a small amount of profit, rather than trying to turn 5k into 50k.

N.T
 
awg said:
If you are adamant about having your funds in the share market, you may wish to consider STW, which is an exact proxy for the top 200 Oz companies.

Otherwise you could consider BHP, as it is by far the largest Australian company.

You must bear in mind that your capital could fall in value.

I agree with previous opinions that 2k is a bit too small, but hey everyone has to start somewhere

please do not consider the above to be advice, it is not permitted to give unlicenced financial advice on forums, only opinions
Click to expand...

Yes.

$2k is too small to "trade". But agree with awg here... if wanting to be in the market, STW, BHP or one of the banks as a buy and hold proposition for now.

...and stress once again that you might not get a positive return.


Also ditto the bit in red.
 
If you're with Westpac and use online banking you may want to consider opening a Maxi-Saver Account as an alternative. It's an account linked to your bank account. Interest is calculated monthly and unlike a term deposit you can transfer money from it into you bank account at any time.

If you decide to invest in a stock, understand that even with blue chips you can lose money. You would also pay $24 to sell so your total value of a stock would need to rise $48 just to break even.

I wish I could recomend stocks because I know which one I'd buy if I only had $2000, but that would be giving advice. Although a Maxi-Saver could be considered advice, I don't financially benifit from it nor does it envolve risk of loss.

(I don't work for Westpac or have shares in it. Just a customer)
 
Space Invader101 said:
I wish I could recomend stocks because I know which one I'd buy if I only had $2000, but that would be giving advice. Although a Maxi-Saver could be considered advice, I don't financially benifit from it nor does it envolve risk of loss.
Click to expand...

You can give an opinion without giving advice; it's all in the wording.

eg "You should by DOG" is giving advice.

"In my opinion, DOG is a good buy right now because of x reason, but DYOR" is giving your opinion, not advice.
;)
 
I'm going to go against the "non advice" given here, but only because of the amount. In a couple of years the $2k will feel like chickenfeed, compared to what a student has. The OP should be earning that every fortnight at least from employment.

The only real way to learn to trade, is by time spent in the market. My thoughts are that paper trading is almost useless as you never get the psychological effect of really trading, and with only $2k the OP does not have that much to lose.

If the OP spent 2/3 of the money on a stock, possibly something in the bottom third of the asx300, then started to buy some books to get educated on trading. I don't think any book will give the 'secret' but they are a start in the process of learning, while at the same time the OP would have skin in the game, so what he/she reads will have real meaning.

If you can't afford to lose the $2k, then why the hell ask the question in the first place??

WayneL, speaking of DOGs...

DOG ProShares Short Dow 30 (NYSE ARCA
Click to expand...

brty
 

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  • DOG chart.gif
    DOG chart.gif
    27.9 KB · Views: 1
Congratulations on saving anything at all while on a Disability Pension, and on being prepared to study.

Once you're working and earning a decent salary, you'll then be in a reasonable position to enter the market with less risk.

Just think about how you'd feel if your $2000 became $1000 which is quite possible, even in a blue chip.

Meantime, you can get 7% on a term deposit at CBA, ANZ, BOQ, and probably others. With just your DSP income you won't be paying any tax on the interest.

Best of luck and good on you for not just being prepared to sit on a DSP for the rest of your life.
 
Julia said:
Congratulations on saving anything at all while on a Disability Pension, and on being prepared to study.

Once you're working and earning a decent salary, you'll then be in a reasonable position to enter the market with less risk.

Just think about how you'd feel if your $2000 became $1000 which is quite possible, even in a blue chip.

Meantime, you can get 7% on a term deposit at CBA, ANZ, BOQ, and probably others. With just your DSP income you won't be paying any tax on the interest.

Best of luck and good on you for not just being prepared to sit on a DSP for the rest of your life.
Click to expand...


Thanks to everyone for your replies. In particular Julia. I am legally blind so it has taken me a LONG time to get through my studies (seven yrs) and its been a very frustrating road. I don't agree that sitting on a pension is a good idea unless you have absolutely no ability to work. In saying this though, its very hard to find work if you have a disability and have no experience or qualification so some people have no choice in the matter (which is why i have not been able to gain part time employment while I study).

I will save up some more dosh and go from there. I do have a bit of money coming my way from a term deposit I set up some time ago so this will help. In the meantime I will keep a watch on the market and my potential future shares. Just one question - in terms of banks, out of the big four - is there any one that performs 'better' than the others? Is there a particular one I should keep an eye on? And yes, BHP looks great.

This forum is a great resource so thank you all for your support. I particularly enjoy the thread about your top three holdings and why.
 
coffee_snob said:
So I am after low risk, obviously, and I guess this means blue chip. My idea is to sink the entire $2000 into one company or else whats the point? This is my best option isn't it?
Click to expand...
A listed managed fund such as Milton, Argo, Australian Foundation Investment Fund (just to name a few) will give you an investment in a diversified portfolio of shares thereby eliminating the risk of investing all your capital into one or two companies.

Over time you can also research the larger holdings in their portfolio's to see specifically what you prefer as your capital grows.

There are also index funds which invest equal weightings within the top 50, top 200 etc.

As also noted above if you have debt (such as HECS) your best return may be to pay off that debt depending on its interest rate (after tax).

Good rates too can be found with online savers. Close to 6% pa can be achieved in the current market.
 

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